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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

              [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2001


                         COMMISSION FILE NUMBER 0-17714


                                  XTRANA, INC.
             (Exact name of Registrant as specified in its charter)

         DELAWARE                                               58-1729436
(State or Other Jurisdiction                                  (I.R.S. Employer
of Incorporation or Organization)                            Identification No.)

590 BURBANK STREET, SUITE 205, BROOMFIELD, COLORADO                 80020
(Address of Principal Executive Offices)                         (ZIP CODE)

        Registrant's telephone number including area code (303) 466-4424


        Securities registered pursuant to section 12(b) of the Act: None

           Securities registered pursuant to section 12(g) of the Act:

                                                           NAME OF EACH EXCHANGE
        TITLE OF EACH CLASS                                 ON WHICH REGISTERED

Common Stock, par value $.01 per share                         Not Applicable
Common Stock Purchase Rights
--------------------------------------------------------------------------------


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  proceeding 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 [_]

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the best
of  Registrant's  knowledge,  in  definitive  proxy  or  information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. [_]

State Issuer's revenues for its most recent fiscal year: $479,000.

The aggregate market value of Xtrana, Inc. Common Stock, $.01 par value, held by
non  affiliates,  computed  by  reference  to the average of the closing bid and
asked prices as reported by OTCBB on March 20, 2002, was $7,043,612.

Number of shares of Common  Stock of Xtrana,  Inc.,  $.01 par value,  issued and
outstanding as of December 31, 2001: 17,323,498.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the  Registrant's  Definitive  Proxy  Statement  for the 2002 Annual
Meeting are incorporated by reference into Part III of this Form 10-KSB.
================================================================================


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                             INDEX TO ANNUAL REPORT

                                 ON FORM 10-KSB

PART I                                                                      PAGE

Item 1.    Business.....................................................       3
Item 2.    Properties...................................................       9
Item 3.    Legal Proceedings............................................       9
Item 4.    Submission of Matters to a Vote of Security-
               Holders..................................................      10

PART II

Item 5.    Market for the Registrant's Common Equity and
               Related Stockholder Matters..............................      10
Item 6.    Management's Discussion and Analysis of
               Financial Condition and Results of
               Operations...............................................      10
Item 7.    Financial Statements and Supplementary Data..................      20
Item 8.    Changes In and Disagreements With Accountants
               on Accounting and Financial Disclosure...................      20

PART III

Item 9.    Directors and Executive Officers.............................      20
Item 10.   Executive Compensation.......................................      20
Item 11.   Security Ownership of Certain Beneficial Owners
               and Management...........................................      20
Item 12.   Certain Relationships and Related Transactions...............      20
Item 13.   Exhibits, Financial Statement Schedules and
               Reports on Form 8-K......................................      21

SIGNATURES .............................................................      22


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                                     PART I

ITEM 1. BUSINESS

OVERVIEW

     Xtrana,  Inc.  ("Xtrana"  or the  "Company"),  formerly  known  as  Biopool
International,  Inc.,  develops and commercializes  technologies to simplify the
analysis  of  DNA/RNA,  so that  nucleic  acid-based  detection  systems  can be
utilized in point-of-care, point-of-service applications. The proprietary assays
developed  by Xtrana are  designed  to be easy to use  outside of a  traditional
molecular  biology  laboratory  at a cost  per  test  that is  competitive  with
existing rapid test technologies. These diagnostic tests are intended for use in
drug discovery, detection of environmental and food contaminants,  forensics and
identity testing, human and animal diseases,  genetic predisposition to disease,
and other applications.

     We were initially incorporated in Delaware in 1987. The name of the company
was changed from Biopool International,  Inc., to Xtrana, Inc., in June of 2001.
Our corporate headquarters is located in Broomfield,  Colorado, where we conduct
manufacturing  operations  as  well  as  significant  research  and  development
activities.

     On August 10, 2000, we completed a merger with the former  Xtrana,  Inc., a
company based in Denver,  Colorado,  and primarily engaged in the development of
new proprietary nucleic acid (DNA/RNA) testing technology.

     On December 21, 2001, we completed  our strategy of divesting  ourselves of
our Hemostasis  business segment by selling  substantially  all of the assets of
that  business  to  Trinity  Biotech  plc,  an  Irish  corporation,   for  total
consideration of US$6,250,000  plus the assumption of certain of our liabilities
associated with that business. The assets sold included the operations of Xtrana
located in Ventura, California, and our wholly owned Swedish subsidiary, Biopool
AB.  The total  consideration  of  US$6,250,000  consisted  of cash and notes as
follows:  (a)  US$3,658,000  in cash which was paid on December 21, 2001;  (b) a
note in the amount of  US$855,200  due on December 21,  2002;  (c) a note in the
amount of US$1,166,200 due on December 21, 2003; and (d) a note in the amount of
US$570,100  due December 21, 2004.  The notes carry interest at a rate of 5% per
annum, and are secured by a second position on  substantially  all of the assets
of Trinity Biotech plc that are located in the United States.

NUCLEIC ACID (DNA/RNA) TESTING INDUSTRY

     The growing  understanding  of genetics and the genetic basis of biological
activity  is driving  renewed  growth in the  research  and  commercial  testing
markets.  Genomics  research is being applied to identify  specific genes and to
use the identity of the gene to identify its source, as in forensics,  paternity
and  pathogen  testing,  or to reveal  possible  linkages  between  the gene and
biologic  activity  and  disease,  as in  diagnostic  testing.  Highly  specific
detection tests and, where applicable, precisely targeted therapeutic approaches
are being  designed to address  not only human  disorders  but also  veterinary,
environmental,  food safety, forensics, and other applications.  These new tests
and approaches  require  specialized  research  reagents,  supplies,  tools, and
instruments.   Currently,  demand  for  these  reagents,  supplies,  tools,  and
instruments  arise  from  both  academic  and  industrial  researchers  and from
commercial testing applications,  such as forensics,  paternity,  and diagnostic
testing.

     In order to capitalize on increasing  demand generated by both the research
and commercial markets, the Company, along with other industry participants, are
developing a wide range of products and services including genomic  information,
diagnostic tests and assays,  testing  services,  drugs and gene therapies,  and
environmental  services. We are already participating in both the commercial and
research segments of the genetics market. Further, one segment of the commercial
market--human  diagnostic  testing--offers  particular  opportunities due to the
size of the market and the limited  development  of nucleic  acid-based  testing
products to date.


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<PAGE>


     Historically,  the analysis of nucleic acid has been a very  expensive  and
time-consuming  process,  requiring  extensive  and  well-equipped  microbiology
laboratories  and highly  trained  personnel.  The process can be segmented into
three  independent  steps.  First,  the DNA or RNA  must be  extracted  from the
sample, which could be blood, tissue,  urine, food products,  etc., and isolated
from  contaminants.  This  process is also  referred  to as sample  preparation.
Second,  the  specific  gene  sequence  related to the target to be  analyzed is
amplified,  making  thousands  of copies of the sequence if it is present in the
sample.  Lastly,  the gene  sequence  must be  detected  and  analyzed.  We have
developed proprietary  technologies in sample preparation and detection, and are
working  on  the  development  of  an  amplification  technology.  Each  of  the
technologies,  once  commercialized,  could be marketed as standalone  products.
When  combined,   the  technologies  could  permit  the  development  of  rapid,
easy-to-use,  and  cost-effective  nucleic  acid  testing  devices  that  can be
employed in place of the current  complex  and  time-consuming  laboratory-based
procedures, either in a laboratory setting or at the point of sample collection.

STRATEGY

     Our  strategy  is to  become  the  leader  in  the  development  of  rapid,
easy-to-use,  cost-effective  nucleic  acid-based  technology  products.  We are
attempting  to develop  diagnostic  platforms  that  combine  all three steps of
nucleic  acid   analysis,   extraction,   amplification,   and   detection,   in
user-friendly,  point-of-service  products. Because our technology is applicable
to nearly any  nucleic  acid  testing  situation,  we believe we will be able to
successfully  develop an  extremely  broad  range of  potential  commercial  and
research applications using our proprietary technologies. In order to facilitate
this strategy, the Company:

     o    Divested  itself  of  its  Hemostasis   business  segment  by  selling
          substantially  all of the assets of that  business to Trinity  Biotech
          plc in order to fully focus on the development and sale of its nucleic
          acid-based technology products;

     o    Began investing more resources in research and development than in its
          prior  operating  periods.  In 2000, we spent $302,000 on research and
          development.  In 2001,  research and  development  expenses  increased
          approximately  $1.1 million to  $1,372,000,  or 354% over 2000 levels,
          and we anticipate  increasing  that spending in 2002 to  approximately
          $2.3 million.  We expect this  investment will result in completion of
          our  diagnostic  platforms and the  introduction  of a number of novel
          products based on our technologies; and

     o    Is  continuing to expand its  worldwide  distribution  network for the
          sale of our  extraction  products,  as well  as  evaluating  potential
          partners  for  the   co-development/distribution   of  our  diagnostic
          platforms.

     The Company is focused on directly  participating in the following industry
segments for nucleic acid testing:

     o    EXTRACTION/SAMPLE PREPARATION - Total annual sales of reagents for the
          preparation and purification of nucleic acids in 2001 was estimated to
          be $760 million, and is expected to grow to over $1.3 billion annually
          by the year 2005.

     o    CLINICAL  DIAGNOSTICS  -  The  total  annual  sales  of  all  clinical
          diagnostic  applications  was estimated to be in excess of $21 billion
          in 2001. Of this total,  nucleic  acid-based  diagnostics  represented
          approximately  7%, or $1.5 billion.  It is anticipated  that the total
          clinical  diagnostics  industry  will grow to over $35  billion by the
          year 2005. The nucleic acid segment is expected to grow at a much more
          rapid rate as new technologies  enable new testing and cannibalize old
          testing methodologies.

     o    BIOLOGICAL  WARFARE  AGENT  DETECTION - The current and future size of
          this market are unknown at this time,  but we anticipate it becoming a
          significant market in the area of nucleic acid diagnostics.


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<PAGE>


     Because of our limited size and resources,  our current  strategy for other
industries  and  potential  applications  for  our  products  and  technologies,
including but not limited to food pathogen detection,  water pathogen detection,
veterinary  diagnostics,  and forensics, is to license our technologies to third
parties.

TECHNOLOGIES

     Xtra  Bind(TM) is a family of nucleic  acid  extraction  matrices  that the
Company  has  developed,   representing  the  foundation  technologies  for  the
Company's  current and future  commercial  products.  These matrices capture and
stabilize DNA and RNA and allow for enzymatic  manipulation of the nucleic acid,
resulting in an extremely rapid and efficient extraction protocol.

     The Xtra  Bind(TM)  matrices  are  unique  in that  they not only  serve to
selectively  bind DNA and RNA, but also  interface  with multiple  amplification
technologies and downstream  applications.  For example, DNA can be amplified by
Polymerase  chain  reaction  (PCR),  and RNA can be copied  and  amplified  by a
similar  process known as RT-PCR,  directly off of the solid phase bound nucleic
acid  without  elution.  This permits the use of our Xtra  Bind(TM)  material to
create an extremely  rapid  extraction  protocol and eliminates the need for the
vacuum filtration,  centrifugation,  or hazardous  chemicals commonly associated
with other extraction methods.  The protocol merely requires pipetting or liquid
handling steps for the addition of the sample, lysis buffer, and a wash buffer -
thus  making it  ideally  suited for  automated  platforms  and high  throughput
screening or sample processing.  Nucleic acid is highly stable when bound to the
Xtra Bind(TM) matrix and can be stored at room  temperature for extended periods
rather than using valuable freezer space.

     Additionally,  Xtra Bind(TM)  provides both multiplex and  re-amplification
capabilities.  The multiplex protocol requires no primer optimization and can be
used to  amplify  up to 25  targets  in a single  reaction.  The  Xtra  Bind(TM)
material  also acts as an archival  platform,  allowing  the user to  re-amplify
either the same target or different targets from the original Xtra Amp(TM) tube.
This  ability  to  re-amplify  when  combined  with  Xtra  Amp(TM)'s   multiplex
capability provides researchers with a powerful and efficient tool.

     The Xtra Bind(TM)  matrix can be coated on many  different  surfaces.  This
capability,  combined with the simple and efficient extraction  protocol,  makes
this  material  ideal  for  incorporating  sample  preparation  onto  diagnostic
platforms.

     We are also working on the development of several proprietary amplification
technologies.  These  technologies  are  isothermal  strategies,  using a single
temperature combined with enzyme interaction in order to promote  amplification.
These technologies are in their early stages of development.  If the development
process were to be successful,  this  technology  would give us all three of the
processes necessary for the development of our diagnostic platforms.

     We also have several  detection  technologies  that we have developed.  Our
primary  detection  methodology  is  a  lateral  flow  strip  for  nucleic  acid
detection.  This patented  method is similar in function to the detection  strip
utilized in home pregnancy  tests. The sample is added to the lateral flow strip
post-amplification,  and in less than one minute a blue line will  appear on the
strip if the sample is present.  This qualitative  detection method is much more
rapid than  traditional  agarose gel methods,  and when used with Xtra  Bind(TM)
extraction, can provide higher levels of sensitivity.

     For  quantitative  detection,  where the user needs to know not only if the
sample  is  present,  but in  what  number,  we  have  developed  a  proprietary
florescence  detection method.  This strategy employs florescent probes that are
attached to the amplified product if it is present.  These florescent probes can
then be detected and counted.  The incorporation of the probes is similar to the
lateral flow technology in that it is simple and rapid.

     SCIP(TM)  (Self-Contained  Integrated  Particle) is a strategy that we have
developed  to combine all three  aspects of nucleic acid  analysis,  extraction,
amplification,  and detection,  into a self-contained,  point-of-care device. We
have  several  device  patents  surrounding  the  SCIP(TM)  concept,  and  it is
envisioned that SCIP(TM) will be a family of diagnostic platforms, each specific
to the requirements of various applications.


                                       5


<PAGE>


     We have  numerous  other  technologies  in various  areas of  nucleic  acid
analysis.

PRODUCTS

     Our  initial  commercial  product,  the  Xtra  Amp(TM)  Extraction  System,
utilizes our proprietary  Xtra Bind(TM)  material,  and provides the user with a
rapid and  easy-to-use  extraction  kit. The Xtra Amp(TM) System is sold for use
with amplification and detection products and processes  currently  available in
the  marketplace.  This system  enables the extraction of nucleic acid with only
three minutes of hands-on time and the  elimination  of  centrifugation,  vacuum
filtration,  product  transfer,  or elution  steps,  all of which are  currently
necessary with competing  technologies.  This saves valuable laboratory time and
minimizes  the  risks  of  cross-contamination,  as the  entire  extraction  and
amplification  process  takes  place in the same  tube.  Additionally,  the Xtra
Amp(TM) kits provide for  long-term  dry storage of the nucleic acid sample that
can be used later for tracking or follow-up testing.

     Xtra  Amp(TM)  Extraction  Kits are sold in both 8x12 PCR tubes and 96-well
plate formats. The kits come in three series for various applications:

     o    SERIES I - For the  extraction  and isolation of DNA from whole blood,
          buccal swab, buffy coat fraction, and E. coli cells.

     o    SERIES  II - For the  extraction  and  isolation  of RNA  from  tissue
          culture cells.

     o    SERIES  III - For the  extraction  and  isolation  of DNA  from  whole
          tissues, tissue culture cells, rodent tails, yeast, and blood stains.

CUSTOMERS

     Prior to our sale of the  Hemostasis  business,  we had over 50 independent
dealers in 40 countries.  Because of the limited  nature of our sales of nucleic
acid-based products to date, none of our current customers account for more than
10% of our revenue. We expect this to change over the course of the current year
as we increase our sales levels.

RESEARCH AND DEVELOPMENT

     All  of  our  research  and  development  activities  are  focused  on  the
development  of  technologies  that  can be  brought  to  market  in the form of
commercialized  products.  These research and  development  activities have been
funded by internal capital as well as via various  government  grants. The major
projects under development in 2002 are:

     o    384-well plate format for Xtra Amp(TM)  Extraction  Kits.  This format
          will  provide  access to the  high-end  automated  sample  preparation
          market.

     o    Additional Xtra Amp(TM)  applications,  including  plant, and RNA from
          whole blood, thus continuing to broaden the product line.

     o    Development and optimization of a proprietary isothermal amplification
          technology.

     o    Modular  SCIP(TM)  - A  kit  for  the  extraction,  amplification  and
          detection  of  nucleic  acid.  This kit would not be a  self-contained
          device,  but would include  components  of an Xtra Amp(TM)  extraction
          kit, amplification reagents, and a lateral flow cassette.  Assays will
          be initially targeted at food pathogen detection.

     o    SCIP(TM)  for  infectious  disease  -  Intended  to be a point of care
          diagnostic  device for the doctor's  office.  Provides a highly simple
          device:  sample  in,  result  out.  The test is  processed  during the
          patient  visit,  thus allowing for more  effective  treatment.  Device
          design is a base unit with disposable cartridges.  The first cartridge
          under development is a test for chlamydia/gonorrhea.


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     On  November  8, 2000,  we were  issued  U.S.  patent  6,153,425,  entitled
"Self-Contained Device Integrating Nucleic Acid Extraction,  Amplification,  and
Detection."  This  patent is a  continuation,  in part,  of an  earlier  patent,
expanding  upon our  development  strategy  for a  self-contained  nucleic  acid
detection  system to include a modular  design that will interface with multiple
amplification technologies.

     On  September  18,  2001,  we were issued U.S.  patent  6,291,166  entitled
"Nucleic Acid Archiving." This patent covers the Xtra Bind(TM) family of nucleic
acid  extraction  matrices  representing  the  foundation  technologies  for the
Company's  current and future  commercial  products.  These matrices capture and
stabilize DNA and RNA and allow for enzymatic  manipulation of the nucleic acid,
resulting in an extremely rapid and efficient extraction protocol.

     During 2001 and 2000, we spent $1,372,000 and $302,000,  respectively,  for
research  and  development.  We expect  research  and  development  spending  to
continue to increase in 2002 as we continue to expand our  technology  portfolio
and push our technologies to commercial product.

     In nucleic acid  detection,  we utilize the  expertise of advisors.  Two of
these are Michael P. Doyle, Ph.D., and Jim Mahony, Ph.D. Dr. Doyle is well known
in the food microbiology industry and provides  consultation  regarding our food
pathogen detection assays,  including E. coli 0157:H7,  Listeria  monocytogenes,
Salmonella,  Coliforms,  and  Campylobacter.  He  received  his B.S.  degree  in
Bacteriology in 1973, an M.S. in Food  Microbiology in 1975, and a Ph.D. in Food
Microbiology  in 1977,  all  from the  University  of  Wisconsin-Madison.  After
working  for the  Ralston  Purina Co. from  1977-80,  he  accepted an  Assistant
Professor  position  at  the  Food  Research  Institute  at  the  University  of
Wisconsin-Madison in 1980. He remained there, advancing to full Professor in the
Department  of Food Science,  until 1991.  In 1991,  Dr. Doyle moved to Griffin,
Georgia,  where he  remains as  Professor  and  Director  of the Center for Food
Safety  and  Quality  Enhancement,  and Head,  Department  of Food  Science  and
Technology, University of Georgia. Dr. Mahony is well known in clinical virology
and  chlamydiology.  He is consulting and  collaborating on the development of a
SCIP(TM)-based  assay for urine  detection of  chlamydia  and  gonorrhea.  He is
Professor  and  Director  at  McMaster  University  Virology  and  Chlamydiology
Laboratory, Hamilton, Ontario, Canada. Dr. Mahony has authored 104 publications,
most of which deal with either chlamydia or gonorrhea.  He has also published 25
articles  in books,  all  discussing  STD's and  chlamydia.  His lab  frequently
conducts  and  publishes  validation  studies of new  methods for  detection  of
sexually transmitted disease infectious agents.

MANUFACTURING AND QUALITY CONTROL

     During  2001,  we  manufactured  our Xtra  Amp(TM)  product in our Ventura,
California,  facility. Following the sale of our Hemostasis business in December
2001, we moved manufacturing to our Broomfield, Colorado, facility.

     All of our products are manufactured in accordance with Good  Manufacturing
Practices for Medical  Devices as promulgated by the FDA. We are registered as a
Device Manufacturing Establishment with the FDA. We are also registered with the
U.S.  Drug  Enforcement   Administration  to  handle  Schedules  I-V  controlled
substances.  Our facility is  currently  undergoing  preparations  to become ISO
certified.

     Many of our technical  employees hold advanced degrees or certifications in
medical  technology.  Five  individuals  hold Ph.D.  degrees  in the  biological
sciences.

SALES AND MARKETING

     Historically,  we sold our products worldwide.  The U.S. typically accounts
for some 35% of the total worldwide  diagnostics  market,  Europe  approximately
35%, Japan 10%, and 20% for the rest of the world.  We anticipate  that sales of
our nucleic acid-based products will also be worldwide.

     Within  the U.S.,  we  historically  marketed  and sold our  products  both
directly  and  through  regional  and  national  distributors,  and we expect to
continue  that  strategy  with  respect  to  our  nucleic  acid-based  products.
Currently,  our sales  force  consists of one outside  sales  representative,  a
product manager, and a customer


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service/technical   support  specialist.   These  personnel  have  been  closely
associated with our research and development efforts, and are experienced in the
technical aspects of our nucleic acid-based products.

     We sell our products outside of the U.S. through independent  distributors.
We  currently  have  exclusive   distribution   relationships  for  our  nucleic
acid-based products in the UK, Australia,  Canada, and Japan.  Additionally,  we
have non-exclusive  distribution relationships in other European and Pacific Rim
countries.  We actively work with our partner  distributors  in  supporting  our
customers,  and are  actively  seeking to add new  distributors  to broaden  our
market coverage.

     We augment these sales activities through active  participation in a number
of key regional,  national,  and international industry trade shows, such as the
American  Association  of Clinical  Chemistry,  Clinical  Laboratory  Management
Association,   Medica  (Dusseldorf,   Germany),   Analytica  (Munich,  Germany),
Cambridge Health Institute's  Genomics and Proteomics Sample Prep (Boston,  MA),
Frenzy 2002 (Washington,  DC), Drug Discovery 2002, NIH Research  Festival,  and
the American  Society for Human  Genetics.  Additional  promotional  activity is
conducted via the web site and via industry journals such as Biotechniques.

COMPETITION

     We compete on a  worldwide  basis  against a number of  companies,  some of
which are  subsidiaries of large  pharmaceutical,  chemical,  and  biotechnology
firms whose  financial  resources and research and  development  facilities  are
substantially  greater  than ours.  Specifically,  in the area of  nucleic  acid
extraction, we compete with, among others, Applied Biosystems,  Qiagen, Promega,
and Aclara Biosciences.

     Competition is based upon a number of factors,  including  product quality,
customer service, price, continuous availability of product,  breadth of product
range,   and  the  strength  and   effectiveness  of  the  sales  and  marketing
organization.  We  believe  our test kits and  reagents  compete on the basis of
relative ease of use, quality, accuracy, and precision.

SUPPLIERS

     We obtain raw materials from numerous  outside  vendors.  Key raw materials
include PCR tubes,  microtiter plates, and enzymes.  We generally have more than
one  source  for our key  raw  materials.  We  continually  evaluate  additional
suppliers and are not dependent on any single vendor.

PATENTS, TRADEMARKS, AND PROPRIETARY INFORMATION

     We consider the protection of  discoveries in connection  with our research
and  development  on  test  kits  important  to our  business.  We  seek  patent
protection for technology when deemed appropriate and, to date, have been issued
six patents in the United States and foreign  jurisdictions  specific to nucleic
acid  diagnostics.  We also have five  patents  pending for  additional  nucleic
acid-related technologies.

     We are also reliant on trade secrets,  unpatented proprietary know-how, and
continuing  technological  innovation to develop our  competitive  position.  We
require that all of our employees  and  consultants  enter into  confidentiality
agreements  and agree to assign to us any  inventions  relating to our  business
made by them while in our employ, or in the course of services  performed on our
behalf. We perform an ongoing assessment of the value of our intangible assets.

     We have  established  rights in the trademarks  "XTRANA," "Xtra Amp," "Xtra
Bind," and "SCIP."

GOVERNMENT REGULATIONS

     The manufacture  and sale of diagnostic  products are subject to regulation
by the FDA in the United States and by comparable regulatory agencies in certain
foreign  countries  in which  our  diagnostic  products  are  sold.  The FDA has
established   guidelines  and  safety  standards  that  are  applicable  to  the
preclinical  evaluation and clinical  investigation  of diagnostic  products and
regulations  that govern the manufacture and


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<PAGE>


sale of such products.  The FDA and similar  agencies in foreign  countries have
substantial regulations that apply to the testing, marketing (including export),
and  manufacturing  of products to be used for the diagnosis of disease.  In the
United States, many diagnostic products may be accepted by the FDA pursuant to a
510(k)  notification,  which must contain  information that establishes that the
product in question is "substantially equivalent" to similar diagnostic products
already in general use.

     Our  manufacturing  facility,  as  well  as  any  additional  manufacturing
operations  that may be  established  within or outside the United  States,  are
subject to compliance  with Good  Manufacturing  Practices  regulations.  We are
registered as a medical device  manufacturer  with the FDA and as a manufacturer
with  the U.S.  Drug  Enforcement  Administration.  We may  also be  subject  to
regulation  under the  Occupational  Safety and Health  Act,  the  Environmental
Protection Act, the Toxic  Substance  Control Act, Export Control Act, and other
present and future laws of general application.

     We believe that the  manufacture  and use of our products  have no material
adverse environmental impact.

     Except as we  indicated  above,  we are not subject to direct  governmental
regulation  other  than  the  laws  and  regulations   generally  applicable  to
businesses in the  jurisdictions in which we operate,  including those governing
the handling and disposal of hazardous wastes and other  environmental  matters.
Our research and  development  activities  involve the  controlled  use of small
amounts of hazardous materials and chemical compounds.  Although we believe that
our safety  procedures for handling and disposing of such materials  comply with
applicable  regulations,  the risk of  accidental  contamination  or injury from
these  materials  cannot  be  completely  eliminated.  In the  event  of such an
accident,  we could be held liable for resulting  damages.  This liability could
have a material adverse effect on us.

EMPLOYEES

     At the end of 2001, we had 21 regular (full- and part-time) employees.

ITEM 2. PROPERTIES

     The Company  leases a 14,671  square-foot  corporate  office,  research and
development,  and  manufacturing  facility in  Broomfield,  Colorado.  The lease
commenced  in  April  2001  and has a term of five  years.  Base  rent  for this
facility is  $214,894  per year,  increasing  3% per year.  We believe  that our
facilities are in good condition,  are adequately covered by insurance, and will
be adequate for our occupancy needs for the foreseeable future.

     From January 2001 until  December 21, 2001,  we also leased  20,000  square
feet of corporate,  laboratory, and manufacturing space in Ventura,  California.
Our base rent on that  facility was $110,000 per year. We assigned that lease to
Trinity Biotech plc in connection  with the sale of our Hemostasis  business and
received a complete release and novation from the landlord.

ITEM 3. LEGAL PROCEEDINGS

     On March 26, 2001,  the Company  entered into a settlement  agreement  with
Agen  Biomedical  Ltd. with regard to a patent  infringement  filed on March 10,
2000,  by Agen. As a part of the  settlement,  the Company and Agen have entered
into a non-exclusive  license agreement for the underlying patent and all claims
by Agen and counter  claims made by us have been dropped.  As a part of the sale
of the  Hemostasis  business,  the Company signed an amendment to the settlement
agreement  that  consented to the  assignment  and  assumption of the settlement
agreement by Trinity Biotech plc. As a part of the agreement, the Company made a
lump sum payment of $250,000 to Agen,  which is reflected as a transaction  cost
in the gain on the sale of the discontinued operations as of December 31, 2001.

         On January 24, 2002,  the Company  entered into a settlement  agreement
with  Instrumentation  Laboratory  Company with regard to a patent  infringement
filed on August 9, 2001, by  Instrumentation


                                       9


<PAGE>


Laboratory Company relating to a product sold by our Hemostasis  operations.  As
part of the settlement,  the Company and Instrumentation Laboratory Company have
agreed to enter a consent judgment with the court, and the Company has agreed to
pay  damages  and costs in the amount of  $20,000.  We do not  believe  that the
settlement will have a material impact on our results of continuing operations.

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

     (a)  A Special Meeting of the  Registrant's  stockholders was held December
          20, 2001.

     (b)  The  matters  voted upon at the Special  Meeting,  the number of votes
          cast for, against,  or withheld,  as well as the number of abstentions
          and non-votes as to each such matter were as follows:

          1.   Approval of the proposed  sale of certain  assets  related to the
               hemostasis  business of Xtrana to Trinity Biotech plc ("Trinity")
               pursuant  to  the  Asset  Purchase  Agreement,  entered  into  on
               November 9, 2001, by and between Trinity and Xtrana:

               11,854,826  votes for;  131,215 votes against;  0 votes withheld;
               7,020 abstentions; 5,330,437 non-votes.


                                     PART II

ITEM 5.  MARKET  FOR THE  REGISTRANT'S  COMMON  EQUITY AND  RELATED  STOCKHOLDER
MATTERS

     Our common  stock  currently  trades on the OTC Bulletin  Board(R)  (OTCBB)
under the symbol XTRN.  The  following  sets forth the high and low trade prices
for our common stock for the periods indicated as reported by the OTCBB. We have
not paid any dividends  since our inception  and do not  contemplate  payment of
dividends in the foreseeable future.

                                             2001                    2000
                                       HIGH         LOW        HIGH         LOW
                                       ----         ---        ----         ---

     First quarter ........      $    1.500  $    0.781  $    2.000  $    0.656

     Second quarter .......           0.950       0.530       1.688       0.750

     Third quarter ........           0.850       0.420       1.844       0.844

     Fourth quarter .......           1.480       0.430       2.030       0.844

(a)  On March 20, 2002, the closing trade price of our common stock, as reported
     by the OTCBB, was $0.62.

(b)  As of March 20, 2002, we had 238 holders of record of our common  stock.  A
     large  number of shares are held in nominee  name.  Based upon  information
     provided by our transfer agent,  American Stock Transfer and Trust Company,
     we had approximately 2,497 beneficial shareholders on the same date.

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

     Historically,  we  sold  Hemostasis  products  to the  worldwide  in  vitro
diagnostics  market.  Our products were used, in general,  to diagnose  disease,
identify  individuals  at risk  for  developing  certain  diseases  and  monitor
patients  undergoing  therapy.  These  products  are  typically  referred  to as
reagents or test kits and are used by highly  trained  laboratory  technologists
utilizing a wide range of testing devices, which perform the


                                       10


<PAGE>


ultimate analysis. Our in vitro diagnostic products were utilized by health care
professionals in hospital-based laboratories, commercial reference laboratories,
blood centers, and physician office laboratories.

     On August 10, 2000, we merged with Xtrana,  Inc.,  pursuant to an Agreement
and Plan of  Reorganization  dated May 3, 2000, as further  described in our 8-K
filed  with the SEC on August 11,  2000.  The  merger  was  accounted  for as an
acquisition of Xtrana,  and the consolidated  financial results for 2000 include
the results of Xtrana since the date of the merger.

     On December 21, 2001, we completed  our strategy of divesting  ourselves of
our Hemostasis  business segment by selling  substantially  all of the assets of
that  business  to  Trinity  Biotech  plc,  an  Irish  corporation,   for  total
consideration of US$6,250,000  plus the assumption of certain of our liabilities
associated with that business. The assets sold included the operations of Xtrana
located in Ventura, California, and our wholly owned Swedish subsidiary, Biopool
AB.  The total  consideration  of  US$6,250,000  consisted  of cash and notes as
follows:  (a)  US$3,658,000  in cash which was paid on December 21, 2001;  (b) a
note in the amount of  US$855,200  due on December 21,  2002;  (c) a note in the
amount of US$1,166,200 due on December 21, 2003; and (d) a note in the amount of
US$570,100  due December 21, 2004.  The notes carry interest at a rate of 5% per
annum and are secured by a second position on substantially all of the assets of
Trinity  Biotech plc that are located in the United States.  As a result of this
transaction,  our continuing operations no longer include the sale of Hemostasis
products.  Consequently,  the discussion of our results of operations  should be
read  in  light  of  the  significant  changes  in our  business  and  with  the
understanding  that our  historical  results  of  operations  have  little or no
relevance to our continuing operations.

     Our  financial  statements  have been  prepared  assuming  the Company will
continue as a going concern. For the year ended December 31, 2001, we incurred a
loss from  continuing  operations  of  approximately  $4.1 million and sustained
negative cash flows from operations of approximately  $2.9 million due primarily
to the  development  and  expansion  of our nucleic acid  testing  business.  As
described  more fully in Notes 2 and 3 to the financial  statements,  during the
latter  part of 2000 and in 2001,  the  Company  transitioned  its core  line of
business  from  Hemostasis  to nucleic acid  testing.  In  connection  with this
transition,  revenues from our  continuing  operations  have been  substantially
reduced,  while at the same time, we are incurring  significant costs to develop
and expand our nucleic acid testing  business  by,  among other  things,  adding
staff  to sell  our  products  and  increasing  our  manufacturing  and  product
development  costs.  Management  intends to address  these  issues  through  the
generation of increased  revenues as the Company continues to expand its nucleic
acid testing business,  the implementation of certain general and administrative
cost reductions, and potential equity and/or debt financing. Management believes
that its  operational  plans will be  sufficient to allow the Company to sustain
its operations through December 31, 2003.

     We currently  manufacture  products for inventory and ship products shortly
after  receipt of orders and  anticipate  that we will  continue to do so in the
future. Accordingly, we have not developed a significant backlog of products and
do not anticipate we will develop a material backlog of products in the future.

     The  following   discussion   should  be  read  in  conjunction   with  our
consolidated  financial statements provided under Part II, Item 8 of this annual
report on Form  10-KSB.  Certain  statements  contained  herein  may  constitute
forward-looking   statements  within  the  meaning  of  the  Private  Securities
Litigation  Reform  Act of 1995.  These  statements  involve  a number of risks,
uncertainties,  and other  factors  that could  cause  actual  results to differ
materially, as discussed more fully herein.

     The  forward-looking  information  set forth in this annual  report on Form
10-KSB  is as of  March  20,  2002,  and we  undertake  no duty to  update  this
information.  Should  events occur  subsequent  to March 20, 2002,  that make it
necessary  to update  the  forward-looking  information  contained  in this Form
10-KSB,  the  updated  forward-looking   information  will  be  filed  with  the
Securities and Exchange Commission in a quarterly report on Form 10-QSB or as an
earnings  release  included  as an exhibit to a Form 8-K,  each of which will be
available at the Securities and Exchange  Commission's  website at  www.sec.gov.
More  information  about  potential  factors  that could affect our business and
financial  results is included in the section entitled "Risk Factors"  beginning
on page 15 of this Form 10-KSB.


                                       11


<PAGE>


CRITICAL ACCOUNTING POLICIES

     GENERAL

     Our  discussion  and  analysis of our  financial  condition  and results of
operations are based upon our consolidated financial statements, which have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United States. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues  and  expenses,   and  related  disclosure  of  contingent  assets  and
liabilities.  On an on-going  basis,  we  evaluate  our  estimates.  We base our
estimates on historical  experience  and on various other  assumptions  that are
believed to be reasonable under the circumstances, the results of which form the
basis for making  judgments  about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these  estimates  under  different  assumptions  or  conditions.   Specifically,
management must make estimates in the following areas:

     ALLOWANCE FOR DOUBTFUL ACCOUNTS

     The Company has $51,000 in gross trade  accounts  receivable  and $5,000 in
allowance for doubtful  accounts on the  consolidated  balance sheet at December
31, 2001.  A review of our  allowance  for doubtful  accounts is done timely and
consistently  throughout  the year.  As of  December  31,  2001,  we believe our
allowance for doubtful  accounts is fairly stated.  Because of our limited sales
of our  nucleic  acid-based  products,  we do not  believe  that a change in the
financial  condition of any of our current customers could result in the need to
create a  significant  allowance,  nor could  any such  change  have a  material
adverse effect on our financial results for 2002.

     INVENTORY ADJUSTMENTS

     We review the  components  of our  inventory on a regular basis for excess,
obsolete  and  impaired  inventory  based on  estimated  future usage and sales.
Additionally,  material  write-downs  in our inventory can occur if  competitive
conditions  or new product  introductions  by our  customers or us vary from our
current expectations.

     We believe  the  following  critical  accounting  policies  affect our more
significant  judgments and estimates  used in  preparation  of our  consolidated
financial statements.

     REVENUE RECOGNITION

     Product  revenues  are  recorded on the day  products  are shipped from the
Company's facilities.  Grant revenues are recorded when earned,  pursuant to the
respective grant  agreements.  Shipping costs are included in the cost of sales.
Grant  revenues and profit on long-term  contracts  are recorded as the contract
progresses using the percentage of completion method of accounting, which relies
on estimates of total expected contract revenues and costs.  Revisions in profit
estimates  are  reflected in the period in which the facts that give rise to the
revision become known.  Accordingly,  favorable  changes in estimates  result in
additional profit  recognition,  and unfavorable  changes in estimates result in
the  reversal of  previously  recognized  revenue and  profits.  When  estimates
indicate a loss under a  contract,  cost of revenue is charged  with a provision
for such loss. As work progresses under a loss contract, revenue continues to be
recognized,  and a portion of the  contract  costs  incurred  in each  period is
charged to the contract loss reserve.  As of December 31, 2001, a loss provision
totaling  $33,000 is  included in other  current  liabilities  in the  financial
statements.  The Securities and Exchange  Commission's Staff Accounting Bulletin
No. 101, "Revenue Recognition," ("SAB 101") provides guidance on the application
of generally  accepted  accounting  principles to selected  revenue  recognition
issues. We believe that our revenue  recognition  policy is consistent with this
guidance and in accordance with generally accepted accounting principles.  We do
not anticipate any changes to our revenue  recognition and shipping  policies in
the future.


                                       12


<PAGE>


     LONG-LIVED ASSETS

     In October 2001, the Financial  Accounting  Standards Board ("FASB") issued
Statement on Financial  Accounting  Standards ("SFAS") No. 144,  "Accounting for
the  Impairment or Disposal of Long-Lived  Assets,"  which  addresses  financial
accounting  and reporting for the  impairment or disposal of long-lived  assets.
While SFAS No. 144  supersedes  SFAS No.121,  "Accounting  for the Impairment of
Long-Lived  Assets and for Long-Lived Assets to be Disposed Of," it retains many
of the fundamental  provisions of that statement.  The standard is effective for
fiscal years beginning after December 15, 2001. It is our policy, and consistent
with SFAS No. 144, to account for long-lived assets,  including intangibles,  at
amortized  cost. As part of an ongoing review of the valuation and  amortization
of long-lived assets,  management  assesses the carrying value of such assets if
facts and  circumstances  suggest  that  they may be  impaired.  If this  review
indicates that  long-lived  assets will not be  recoverable,  as determined by a
non-discounted  cash flow analysis over the remaining  amortization  period, the
carrying  value of the  Company's  long-lived  assets  would be  reduced  to its
estimated fair value based on discounted cash flows.  Long-lived  assets consist
primarily of leasehold improvements,  computer equipment,  office furniture, and
equipment.

     GOODWILL

     In June 2001, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statements  of  Financial   Accounting  Standards  ("SFAS")  No.  141,  Business
Combinations,  and SFAS No. 142, Goodwill and Other Intangible Assets.  SFAS No.
141 requires  that the purchase  method of  accounting  be used for all business
combinations  initiated after June 30, 2001. SFAS No. 141 also includes guidance
on the initial  recognition  and  measurement  of goodwill and other  intangible
assets arising from business  combinations  completed  after June 30, 2001. SFAS
No. 142  prohibits  the  amortization  of goodwill  and  intangible  assets with
indefinite useful lives. SFAS No. 142 requires that these assets be reviewed for
impairment at least annually.  Intangible assets with finite lives will continue
to be amortized over their estimated useful lives. These statements are required
to be adopted by the  Company  on  January  1,  2002,  and for any  acquisitions
entered  into after July 1, 2001.  The Company  does not believe the adoption of
the  statements  will  negatively  impact  its  financial  position,  results of
operations,  and cash flows.  Goodwill  amortization expense aggregated $989,000
and $388,000 in 2001 and 2000, respectively.

2001 VERSUS 2000

     REVENUE

     Revenue  from  continuing  operations  was $0.5  million for the year ended
December 31,  2001,  compared  with $0.1  million for the year ended 2000.  This
represents an increase in revenue equal to $0.4 million,  or 313%.  The increase
was  primarily  the result of a full year of  operations in 2001 for the nucleic
acid business.

     We expect that future revenue will increase as we further commercialize our
nucleic  acid  technologies.  Rapid  changes in  technologies,  demand level for
certain  diagnostic  tests,  price  competition,  continued efforts worldwide to
reduce health care costs (including diagnostic testing), and the availability of
high-quality  raw  materials  may also have a material  impact on our short- and
long-term revenue.

     COSTS AND EXPENSES

     Cost of sales, from continuing  operations,  increased by $0.1 million,  or
84%, to $0.3 million in 2001, primarily as the result of increased revenue. As a
percentage of sales,  cost of goods sold from  continuing  operations was 62% in
2001 compared with 138% in 2000.  This decrease in cost as a percentage of sales
was the result of research and development grants, a portion of which was funded
on a cost  reimbursement  basis by various government grants. We anticipate that
our costs of sales will  increase  dramatically  as our revenue  increases,  and
should decrease  slightly as a percentage of sales due to increased sales of our
Xtra Amp(TM) kits, which carry a lower cost of goods sold.


                                       13


<PAGE>


     Selling,  general  and  administrative  expenses of  continuing  operations
increased  by $1.5  million,  or 98%,  to $3.0  million  in 2001.  The  increase
primarily  related to the inclusion of a full year of the nucleic acid business,
which  accounted for $0.9 million of the increase.  Amortization  expense on the
goodwill  generated by the merger  resulted in an additional $0.6 million of the
increase.

     Research  and  development  expenses  of  continuing  operations  increased
$1.1 million, or 354%,  over 2000 levels.  This  increase was a result of a full
year of the nucleic acid business and increased investment in the development of
the Company's  nucleic acid  technologies.  We anticipate that our investment in
research and  development  will  continue to increase as we further  develop our
nucleic acid technologies.

     INCOME TAXES

     The difference  between our effective tax rate for 2001 and the 34% federal
statutory  tax rate was  primarily  due to the  effects of state  income  taxes,
non-deductible goodwill amortization,  and the sale transaction,  as well as the
provision for a full valuation allowance on all net operating loss carryforwards
available to the Company.

     FINANCIAL CONDITION

     During the 4th quarter of 2001, the Company sold  substantially  all of the
assets of its  Hemostasis  business for $6.25  million in cash and notes,  which
resulted in a $0.8 million gain over net asset value.  This inflow of cash added
to the  Company's  existing  liquidity  position.  As of December 31, 2001,  the
Company's working capital position was $3.9 million, with a current ratio of 5.9
to 1.0.

     The Company used cash of $2.9 million from  continuing  operations  in 2001
compared to $1.6 million in 2000  reflecting a full year of  operations  for the
nucleic  acid  business.   Additionally  net  cash  provided  from  discontinued
operating activities decreased by $1.1 million from $1.8 million in 2000 to $0.7
million  recorded  in 2001.  Included in the net cash  provided by  discontinued
operations in 2000 were proceeds from the sale of assets of $2.1 million.

     Capital expenditures,  excluding discontinued operations, were $1.0 million
in 2001. The majority of these  expenditures  relate to the build out of the new
facility  in  Broomfield,   Colorado.  We  anticipate  capital  expenditures  of
approximately $0.2 million in 2002.

     The Company has never paid dividends on common stock and has no plans to do
so in fiscal  2002.  Our  earnings  will be  retained  for  reinvestment  in the
business.

     The following  table  summarizes  our cash  obligations  as of December 31,
2001:

CONTRACTUAL OBLIGATIONS                    PAYMENTS DUE BY PERIOD (IN THOUSANDS)
                                            2002    2003    2004    2005    2006
                                            ----    ----    ----    ----    ----
Operating Leases .......................    $226    $232    $238    $241    $ 60
Contractual Cash Obligations ...........    $ 18    $ 24    $ 12

     The  Company  is  currently   consuming  cash  to  fund  the  research  and
development of its nucleic acid diagnostic  technologies.  The Company  believes
that some of this  investment  will be offset by  government  grants and revenue
from the sale of nucleic acid products over the next  twenty-four  months.  This
revenue  combined with the Company's  current  availability  of cash and working
capital are adequate to meet the  Company's  ongoing needs for at least the next
twenty-four  months.  However,  should revenues from  government  grants and the
nucleic acid product  lines not  materialize,  it may become  necessary  for the
Company  to  raise   additional   capital  to  fund  its   ongoing   operations.
Additionally,  the  Company  may  investigate  and pursue  additional  financing
options in the near term to accelerate the development and  commercialization of
the nucleic acid technologies.


                                       14


<PAGE>


     The  Company  issued  8,829,461  shares  of  Common  Stock  to  the  Xtrana
stockholders  on August 10,  2000,  and 998,366  warrants to warrant  holders of
Xtrana and certain financial advisors. This issuance will have a dilutive effect
on earnings per share in the near term.

RECENTLY ISSUED ACCOUNTING STANDARDS

     In June 1998, the Financial  Accounting Standards Board issued Statement of
Financial Accounting  Standards No. 133, "Accounting for Derivative  Instruments
and Hedging  Activities,"  ("SFAS 133"). The Company adopted SFAS 133 on January
1, 2001. The Company has no derivative instruments and, therefore,  the adoption
of SFAS No. 133 had no effect on the Company's financial statements.

     In June 2001, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statements  of  Financial   Accounting  Standards  ("SFAS")  No.  141,  Business
Combinations,  and SFAS No. 142, Goodwill and Other Intangible Assets.  SFAS No.
141 requires  that the purchase  method of  accounting  be used for all business
combinations  initiated after June 30, 2001. SFAS No. 141 also includes guidance
on the initial  recognition  and  measurement  of goodwill and other  intangible
assets arising from business  combinations  completed  after June 30, 2001. SFAS
No. 142  prohibits  the  amortization  of goodwill  and  intangible  assets with
indefinite useful lives. SFAS No. 142 requires that these assets be reviewed for
impairment at least annually.  Intangible assets with finite lives will continue
to be amortized over their estimated useful lives. These statements are required
to be adopted by the  Company  on  January  1,  2002,  and for any  acquisitions
entered  into after July 1, 2001.  The Company  does not believe the adoption of
the  statements  will  negatively  impact  its  financial  position,  results of
operations,  and cash flows.  Goodwill  amortization expense aggregated $989,000
and $388,000 in 2001 and 2000, respectively.

     In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived  Assets,  which establishes one accounting model to be
used  for  long-lived  assets  to  be  disposed  of by  sale  and  broadens  the
presentation of discontinued  operations to include more disposal  transactions.
SFAS  No.  144  supersedes  SFAS  No.  121,  Accounting  for the  Impairment  of
Long-Lived Assets to Be Disposed Of, and the accounting and reporting provisions
of  Accounting  Principles  Board  Opinion  No.  30,  Reporting  the  Results of
Operations - Reporting  the Effects of Disposal of a Segment of a Business,  and
Extraordinary,  Unusual and Infrequently Occurring Events and Transactions.  The
Company will adopt SFAS No. 144 as of January 1, 2002,  and does not  anticipate
any immediate impact from the adoption of this statement.

RISK FACTORS

     You should  carefully  consider  the  following  risk factors and all other
information  contained  in this report  before  purchasing  shares of our common
stock.  Investing in our common stock  involves a high degree of risk. If any of
the  following  events or  outcomes  actually  occur,  our  business,  operating
results,  and financial  condition would likely suffer. As a result, the trading
price of our common  stock  could  decline,  and you may lose all or part of the
money you paid to purchase our common stock.

RISKS RELATED TO OUR BUSINESS

     SALE OF THE HEMOSTASIS BUSINESS WILL SIGNIFICANTLY  REDUCE OUR REVENUE. The
Hemostasis  business was a mature  operation that generated a relatively  stable
revenue base.  The sale of this business to Trinity  Biotech plc has  eliminated
98.8% and 94.8% of the  Company's  revenue  for the years  ended  2000 and 2001,
respectively.  As a result,  the Company is dependent  upon its current  capital
resources  to fund its overhead and  operations.  Should sales of the  Company's
nucleic acid products and government  research  grants not  materialize,  it may
become  necessary  for the  Company  to  raise  additional  capital  to fund its
operations.

     REDUCTION OR DELAYS IN RESEARCH AND  DEVELOPMENT  BUDGETS AND IN GOVERNMENT
FUNDING MAY NEGATIVELY  IMPACT OUR SALES. Our customers  include  researchers at
pharmaceutical  and  biotechnology   companies,   academic   institutions,   and
government  and  private   laboratories.   Fluctuations   in  the  research  and
development  budgets of these researchers and their  organizations  could have a
significant  effect on the demand for our  products.  Research  and  development
budgets  fluctuate due to numerous  factors that are


                                       15


<PAGE>


outside our control and are difficult to predict, including changes in available
resources,   spending  priorities  and  institutional  budgetary  policies.  Our
business could be seriously damaged by any significant decrease in life sciences
research  and  development  expenditures  by  pharmaceutical  and  biotechnology
companies, academic institutions, or government and private laboratories.

     A significant  portion of our sales has been to researchers,  universities,
government laboratories, and private foundations whose funding is dependent upon
grants  from  government  agencies  such as the U.S.  Department  of Defense and
similar domestic and international  agencies. In addition, a significant portion
of our own  revenue  and our  anticipated  future  revenue is from such  grants.
Although  the level of research  funding has  increased  during the past several
years, we cannot assure you that this trend will continue. Government funding of
research  and  development  is  subject  to  the  political  process,  which  is
inherently fluid and unpredictable. Our revenues may be adversely affected if we
fail to receive a material  portion of the grants for which we have applied,  or
if our customers  delay purchases as a result of  uncertainties  surrounding the
approval of government budget proposals. Also, government proposals to reduce or
eliminate  budgetary deficits have sometimes included reduced allocations to the
Department  of Defense and other  government  agencies  that fund  research  and
development activities.  A reduction in government funding for the Department of
Defense  or other  government  research  agencies  could  seriously  damage  our
business.

     Many of our  customers  receive  funds from  approved  grants at particular
times of the year, as determined by the federal government.  Grants have, in the
past, been frozen for extended periods or have otherwise  become  unavailable to
various  institutions without advance notice. The timing of the receipt of grant
funds  affects  the timing of  purchase  decisions  by our  customers  and, as a
result, can cause fluctuations in our sales and operating results.

     OUR OPERATING  RESULTS MAY FLUCTUATE  SIGNIFICANTLY.  Our operating results
have  fluctuated  in the  past  and are  likely  to do so in the  future.  These
fluctuations  could cause our stock price to decline.  Some of the factors  that
could cause our  operating  results to  fluctuate  include:  (1)  expiration  or
termination of research  contracts  with  collaborators  or government  research
grants, which may not be renewed or replaced;  (2) the timing and willingness of
collaborators  to  commercialize  our  products;  (3) the timing,  release,  and
competitiveness of our products; and (4) general and industry-specific  economic
conditions,   which  may  affect  our   customers'   research  and   development
expenditures and use of our products. If revenue declines in a quarter,  whether
due to a delay in recognizing  expected revenue or otherwise,  our earnings will
decline because many of our expenses are relatively fixed in the short-term.  In
particular, research and development and general and administrative expenses are
not affected  directly by  variations  in revenue.  Due to  fluctuations  in our
revenue and operating expenses, we believe that period-to-period  comparisons of
our results of operations are not a good  indication of our future  performance.
It is possible that in some future  quarter or quarters,  our operating  results
will be below the  expectations  of securities  analysts or  investors.  In that
case, our stock price could fluctuate significantly or decline.

     FAILURE TO MANAGE OUR GROWTH AND EXPANSION COULD IMPAIR OUR BUSINESS. Since
we have sold the Hemostasis business,  our sales and profitability will increase
primarily through the acquisition or internal  development of new product lines,
additional customers, and new businesses. We expect that future acquisitions, if
successfully  consummated,  will create increased working capital  requirements,
which will likely  precede by several  months any  material  contribution  of an
acquisition to our net income.  Our ability to achieve our expansion  objectives
and to manage our growth  effectively  and profitably  depends upon a variety of
factors,  including: (1) our ability to internally develop new products; (2) our
ability to make profitable acquisitions;  (3) integration of new facilities into
existing operations; (4) hiring, training, and retention of qualified personnel;
(5)  establishment of new  relationships or expansion of existing  relationships
with customers and suppliers;  and (6) availability of capital. In addition, the
implementation  of a growth  strategy  could  place  significant  strain  on our
administrative, operational and financial resources and increased demands on our
financial  systems and controls.  Our ability to manage our growth  successfully
will require us to continue to improve and expand these  resources,  systems and
controls.  If our  management  is  unable  to  manage  growth  effectively,  our
operating  results  could  be  adversely  affected.  Moreover,  there  can be no
assurance  that we will  continue  to  successfully  expand  or that  growth  or
expansion will result in profitability.


                                       16



<PAGE>


     FAILURE TO ATTRACT AND RETAIN QUALIFIED  SCIENTIFIC OR PRODUCTION PERSONNEL
OR  LOSS OF KEY  MANAGEMENT  OR KEY  PERSONNEL  COULD  HURT  OUR  BUSINESS.  Our
continued  success  depends  to a  significant  extent  on  the  members  of our
management team.  Recruiting and retaining  qualified  scientific and production
personnel  in  order to  perform  research  and  development  work  and  product
manufacturing are critical to our success as well. Because the industry in which
we compete is very competitive,  we face significant  challenges  attracting and
retaining members of our management team and personnel base. Although we believe
we have been and will be able to attract and retain these  members of management
and  personnel,  there can be no  assurance  that we will be able to continue to
successfully attract such qualified individuals. In addition, we do not maintain
insurance on the lives of anyone at the Company. The loss of services of any key
employee could have a material adverse effect upon our business.

     IF WE FAIL TO INTRODUCE NEW PRODUCTS,  OR OUR NEW PRODUCTS ARE NOT ACCEPTED
BY POTENTIAL  CUSTOMERS,  WE MAY NOT CAPTURE MARKET SHARE.  Rapid  technological
change and frequent new product  introductions are typical for our market. Since
we have  sold the  Hemostasis  business,  our  future  success  will  depend  on
continuous,  timely  development  and  introduction of new products that address
evolving market  requirements.  We believe successful new product  introductions
provide a significant competitive advantage because customers make an investment
of time in selecting  and learning to use a new product,  and then are reluctant
to switch.  To the extent we fail to introduce new and innovative  products,  we
may not  capture  enough  market  share  to be  successful.  An  inability,  for
technological  or other  reasons,  to  successfully  develop and  introduce  new
products could limit or reduce our growth rate and damage our business.

     In the  past we have  experienced,  and are  likely  to  experience  in the
future, delays in the development and introduction of products. We cannot assure
you that we will  keep pace  with the  rapid  rate of  change  in life  sciences
research,  or that our new products will adequately meet the requirements of the
marketplace or achieve market  acceptance.  Some of the factors affecting market
acceptance  of new  products  include:  (1)  availability,  quality,  and  price
relative to competitive products;  (2) the timing of introduction of the product
relative to  competitive  products;  (3)  scientists'  opinion of the  product's
usefulness;  (4) citation of the product in published research;  and (5) general
trends  in life  sciences  research.  The  expenses  or losses  associated  with
unsuccessful product development  activities or lack of market acceptance of our
new products could materially adversely affect our business,  operating results,
and financial condition.

     OUR  ABILITY  TO RAISE THE  CAPITAL  NECESSARY  TO  MAINTAIN  OR EXPAND OUR
BUSINESS IS UNCERTAIN.  In the future,  in order to expand our business  through
internal  development  or  acquisitions,   we  may  need  to  raise  substantial
additional  funds through equity or debt  financings,  research and  development
financings, or collaborative relationships. However, this additional funding may
not be available  or, if  available,  it may not be  available  on  economically
reasonable terms. In addition,  any additional funding may result in significant
dilution to existing stockholders.  If adequate funds are not available,  we may
be required to curtail our  operations  or obtain  funds  through  collaborative
partners that may require us to release material rights to our products.

     INTELLECTUAL   PROPERTY  OR  OTHER  LITIGATION  COULD  HARM  OUR  BUSINESS.
Litigation regarding patents and other intellectual property rights is extensive
in the biotechnology  industry.  We are aware that patents have been applied for
and, in some cases,  issued to others,  claiming  technologies  that are closely
related to ours. In the event of an  intellectual  property  dispute,  we may be
forced to litigate.  This litigation could involve  proceedings  declared by the
U.S. Patent and Trademark Office or the International Trade Commission,  as well
as proceedings brought directly by affected third parties. Intellectual property
litigation  can be  extremely  expensive,  and  these  expenses,  as well as the
consequences should we not prevail, could seriously harm our business.

     If a third party claimed an  intellectual  property  right to technology we
use, we might need to  discontinue an important  product or product line,  alter
our products and  processes,  pay license fees,  or cease our affected  business
activities.  Although  we might under  these  circumstances  attempt to obtain a
license to this intellectual  property, we may not be able to do so on favorable
terms, or at all.

     In  addition  to  intellectual  property  litigation,   other  substantial,
complex,  or extended  litigation  could result in large  expenditures by us and
distraction of our management. For example, lawsuits by employees,


                                       17


<PAGE>


stockholders,   collaborators,   or  distributors   could  be  very  costly  and
substantially disrupt our business. Disputes from time to time with companies or
individuals  are not uncommon in our industry,  and we cannot assure you that we
will always be able to resolve them out of court.

     We regard our trademarks,  trade secrets, and similar intellectual property
as  important  to our  success.  We  rely on  trademark  law  and  trade  secret
protection  and  confidentiality   and/or  license  agreements  with  employees,
customers,  partners,  and others to protect  our  proprietary  rights.  We have
pursued the  registration  of our  trademarks  in the U.S. and  internationally.
Effective  trademark and trade secret  protection  may not be available in every
country in which our products are  available.  We cannot be certain that we have
taken adequate steps to protect our proprietary rights,  especially in countries
where the laws may not protect our rights as fully as in the United  States.  In
addition,  third parties may infringe or misappropriate our proprietary  rights,
and we could be required to incur significant expenses in preserving them.

     Our  success  will  depend in part on our  ability to obtain  and  maintain
meaningful patent protection for our products,  both in the United States and in
other countries. We rely on patents to protect some of our intellectual property
and  our  competitive  position.  We  own  issued  patents  and  pending  patent
applications,   including   both   domestic  and  foreign   patents  and  patent
applications.  We cannot assure you that any of the presently  pending or future
patent applications will issue as patents, or that any patents issued to us will
not be challenged, invalidated, held unenforceable, or circumvented. Further, we
cannot  assure you that claims in patents that have been issued,  or that may be
issued to us in the future,  will be sufficiently broad to prevent third parties
from  producing  competing  products  similar  in  design  to our  products.  In
addition, laws of foreign countries may not protect our intellectual property to
the same extent as would laws in the United States.  Failure to obtain  adequate
patent  protection for our proprietary  technology could have a material adverse
effect on our  business,  operating  results,  financial  condition,  and future
growth prospects.

     POTENTIAL  PRODUCT LIABILITY CLAIMS COULD AFFECT OUR EARNINGS AND FINANCIAL
CONDITION. Despite product testing prior to sale, our products have from time to
time experienced  performance problems discovered after we sold the products. If
a customer  experiences  performance  problems,  errors in  shipment  or product
defects, it could result in:

     o    injuries to persons;
     o    loss of sales;
     o    delays in or elimination of market acceptance;
     o    damage to our brand or reputation; and
     o    product returns.

     Although our distributors  and  manufacturers  have return policies,  if we
accept a product  returned by a customer,  but it is not  accepted for return by
the distributor,  we will incur the cost. Because we depend on third parties for
certain of the  components of our products,  if those  components are defective,
the performance of our products would be reduced or undermined.  Any increase in
the rate of returns would affect our financial condition,  operating results and
cash flows.

     ACCIDENTS  RELATED  TO  HAZARDOUS  MATERIALS  COULD  ADVERSELY  AFFECT  OUR
BUSINESS. Portions of our operations require the controlled use of hazardous and
radioactive materials. Although we believe our safety procedures comply with the
standards prescribed by federal, state, local, and foreign regulations, the risk
of  accidental  contamination  of property or injury to  individuals  from these
materials cannot be completely eliminated. In the event of an accident, we could
be liable for any damages that result, which could seriously damage our business
and results of operations.

RISKS ASSOCIATED WITH OUR INDUSTRY

     WE ARE ENGAGED IN A COMPETITIVE INDUSTRY,  AND WE MAY BE UNABLE TO CONTINUE
TO COMPETE  EFFECTIVELY  IN THIS  INDUSTRY  IN THE  FUTURE.  We are engaged in a
segment of the human health care products  industry that is highly  competitive.
Many of our  competitors,  both in the United  States and  elsewhere,  are major
pharmaceutical,  chemical,  and biotechnology  companies,  and many of them have
substantially  greater capital  resources,  marketing  experience,  research and
development  staffs,  and facilities  than we do. Any of


                                       18


<PAGE>


these  companies  could succeed in developing  products that are more  effective
than the  products  that we have or may develop and may also be more  successful
than us in producing and marketing their  products.  Not only do we face intense
competition in the marketplace against our competitors, but we also must compete
with  these  same  companies  for the  services  of  personnel.  We expect  this
competition to continue and intensify in the future.

     Our industry has also seen substantial consolidation in recent years, which
has led to the creation of competitors  with greater  financial and intellectual
property resources than us. In addition, we believe that the success that others
have had in our industry will attract new  competitors.  Some of our current and
future  competitors  also may cooperate to better compete against us. We may not
be able to compete  effectively  against  these  current or future  competitors.
Increased competition could result in price reductions for our products, reduced
margins,  and loss of market  share,  any of which  could  adversely  impact our
business, financial condition, and results of operations.

     WE ARE SUBJECT TO EXTENSIVE GOVERNMENT  REGULATION.  We operate in a highly
regulated industry.  Our business is currently subject to extensive  regulation,
supervision,   and  licensing  by  federal,   state,   and  local   governmental
authorities.  Also,  from time to time we must expend  resources  to comply with
newly adopted  regulations,  as well as changes in existing  regulations.  If we
fail to comply  with these  regulations,  we could be  subject  to  disciplinary
actions or  administrative  enforcement  actions.  These actions could result in
penalties, including fines.

RISKS ASSOCIATED WITH OUR COMMON STOCK

     OUR PRINCIPAL  STOCKHOLDERS AND MANAGEMENT OWN A SIGNIFICANT  PERCENTAGE OF
OUR CAPITAL STOCK AND WILL BE ABLE TO EXERCISE  SIGNIFICANT  INFLUENCE  OVER OUR
AFFAIRS.  Our executive  officers,  directors,  and principal  stockholders will
continue to beneficially own 40% of our outstanding common stock, based upon the
beneficial ownership of our common stock as of March 1, 2002. In addition, these
same persons also hold options to acquire additional shares of our common stock,
which may increase their percentage ownership of the common stock further in the
future.  Accordingly,  these  stockholders:  (1)  will be able to  significantly
influence  the  composition  of our board of directors;  (2) will  significantly
influence  all  matters  requiring  stockholder  approval,  including  change of
control  transactions;  and (3) will continue to have significant influence over
our affairs.  This concentration of ownership of our common stock could have the
effect  of  delaying  or  preventing  a change  of  control  of us or  otherwise
discouraging a potential acquirer from attempting to obtain control of us. This,
in turn,  could have a negative  effect on the market price of our common stock.
It could also prevent our stockholders  from realizing a premium over the market
prices for their shares of common stock.

     OUR STOCK PRICE HAS BEEN  VOLATILE.  Our common  stock is quoted on the OTC
Bulletin Board(R),  and there can be substantial  volatility in the market price
of our common  stock.  The trading  price of our common  stock has been,  and is
likely to continue to be, subject to significant  fluctuations  due to a variety
of factors,  including:  (1) variations in our quarterly operating results;  (2)
the gain or loss of  significant  contracts;  (3)  changes  in  management;  (4)
announcements  of  technological  innovations  or  new  products  by us  or  our
competitors;  (5) legislative or regulatory  changes;  (6) general trends in the
industry; (7) recommendations by securities industry analysts; (8) biological or
medical  discoveries;   (9)  developments   concerning   intellectual  property,
including patents and litigation  matters;  (10) public concern as to the safety
of new  technologies;  (11)  developments in our  relationships  with current or
future customers and suppliers;  and (12) general economic  conditions,  both in
the United States and abroad.

     In addition,  the stock market in general has experienced extreme price and
volume  fluctuations that have affected the market price of our common stock, as
well as the stock of many biotechnology companies. Often, price fluctuations are
unrelated to operating  performance  of the  specific  companies  whose stock is
affected.  In the past, following periods of volatility in the market price of a
company's  stock,  securities  class action  litigation has occurred against the
issuing company. If we were subject to this type of litigation in the future, we
could incur substantial costs and a diversion of our management's  attention and
resources, each of which could have a material adverse effect on our revenue and
earnings.  Any  adverse  determination  in this type of  litigation  could  also
subject us to significant liabilities.


                                       19


<PAGE>


     ANTI-TAKEOVER  PROVISIONS IN OUR GOVERNING  DOCUMENTS AND UNDER  APPLICABLE
LAW COULD IMPAIR THE ABILITY OF A THIRD PARTY TO TAKE OVER OUR  COMPANY.  We are
subject to various legal and contractual  provisions that may impede a change in
our control,  including our adoption of a stockholders' rights plan, which could
result in the significant dilution of the proportionate  ownership of any person
that  engages  in an  unsolicited  attempt  to  take  over  our  company.  These
provisions,  as well as other provisions in our certificate of incorporation and
bylaws  and  under  the  Delaware  General  Corporations  Law,  may make it more
difficult  for a third party to acquire  our  company,  even if the  acquisition
attempt was at a premium over the market value of our common stock at that time.

     ABSENCE OF DIVIDENDS COULD REDUCE OUR ATTRACTIVENESS TO YOU. Some investors
favor  companies that pay dividends,  particularly  in general  downturns in the
stock  market.  We have not  declared or paid any cash  dividends  on our common
stock. We currently intend to retain any future earnings for funding growth, and
we do not currently  anticipate paying cash dividends on our common stock in the
foreseeable  future.  Because  we may not pay  dividends,  your  return  on this
investment likely depends on your selling our stock at a profit.

ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The financial  statements and  supplementary  data have been included under
Item 13.

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

     None.


                                    PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS

     Incorporated by reference to the Company's definitive Proxy Statement to be
filed with the Securities and Exchange Commission on or before April 30, 2002.

ITEM 10. EXECUTIVE COMPENSATION

     Incorporated by reference to the Company's definitive Proxy Statement to be
filed with the Securities and Exchange Commission on or before April 30, 2002.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Incorporated by reference to the Company's definitive Proxy Statement to be
filed with the Securities and Exchange Commission on or before April 30, 2002.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Incorporated by reference to the Company's definitive Proxy Statement to be
filed with the Securities and Exchange Commission on or before April 30, 2002.


                                       20


<PAGE>


ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

     (a)  (1) and (2) The following consolidated financial statements of Xtrana,
          Inc.,  and  subsidiaries  are hereby  included by reference to Item 7:

                                                                        Page No.

          Report of independent auditors..................................... 24

          Consolidated balance sheets as of December 31, 2001 and 2000....... 25

          Consolidated statements of operations for the years ended
                   December 31, 2001 and 2000................................ 27

          Consolidated statements of stockholders' equity for the years
                   ended December 31, 2001 and 2000.......................... 28

          Consolidated statements of cash flows for the years
                   ended December 31, 2001 and 2000.......................... 29

          Notes to consolidated financial statements......................... 30

          Financial statement schedules
                   Schedules have been omitted since they are either not
                   required or are not applicable.

          (3)  Listing of Exhibits

          Exhibit No.

          3.1   Certificate of Incorporation (1)
          3.2   By Laws (1)
          4.1   Shareholder Rights Plan (3)
          10.1  Executive Employment Agreement of Michael D. Bick, Ph.D. (4)
          10.2  1987 Stock Option Plan (1)
          10.2  1993 Stock Incentive Plan (2)
          10.3  2000 Stock Incentive Plan (5)
          10.4  Lease Agreement - Broomfield, Colorado (6)
          23.1  Consent of Independent Auditors
          ----------------------------------------------------------------------
          (1)  Incorporated  by  reference  to  the  Registrant's   Registration
               Statement on Form S-1 (File No. 33-20584).
          (2)  Incorporated  by reference to the  Registrant's  Annual Report on
               Form 10-K for the fiscal year ended December 31, 1994.
          (3)  Incorporated by reference to Registrant's Form 8-A filed June 26,
               1998.
          (4)  Incorporated  by reference to the  Registrant's  Annual Report on
               Form 10-KSB for the fiscal year ended December 31, 1999.
          (5)  Incorporated  by  reference  to  Registrant's   Definitive  Proxy
               Statement filed on June 23, 2000.
          (6)  Incorporated by reference to Registrant's  Form 8-K filed January
               25, 2001.
          (7)  Incorporated by reference to Registrant's  Form 8-K filed January
               7, 2002.

     (b)  Reports on Form 8-K filed during the fourth quarter of 2001:

          8-K filed  November 14,  2001,  disclosing  the  agreement to sell the
          Registrant's  Hemostasis  business and financial  results of the third
          quarter ended September 30, 2001.


                                       21


<PAGE>


                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  Report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.

                                             Xtrana, Inc.


Date:   March 29, 2002                       BY:  /s/ Timothy J. Dahltorp
                                                  ----------------------------
                                                  Timothy J. Dahltorp
                                                  Chief Executive Officer &
                                                  Chief Financial Officer

Each person whose signature  appears below  constitutes and appoints  Timothy J.
Dahltorp  as his true and lawful  attorney-in-fact  and agent with full power of
substitution and  resubstitution,  for him and his name, place and stead, in any
and all  capacities to sign this Form 10-KSB and to file any  amendments  hereto
under the  Securities  and Exchange  Act of 1934 and to file the same,  with all
exhibits  thereto,  and  other  documents  in  connection  therewith,  with  the
Securities  and Exchange  Commission,  granting unto said  attorney-in-fact  and
agent full power and  authority  to do and perform  each and every act and thing
requisite and necessary to be done in and about the  foregoing,  as fully to all
intents and  purposes as he might or could do in person,  hereby  ratifying  and
confirming all that said  attorney-in-fact  and agent or their substitutes,  may
lawfully do or cause to be done by virtue hereof.

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


/s/ Michael D. Bick               Chairman of the Board           March 29, 2002
--------------------------
Michael D. Bick, Ph.D.

/s/ Timothy J. Dahltorp           Chief Executive Officer,        March 29, 2002
--------------------------        Chief Financial Officer,
Timothy J. Dahltorp               and Director



/s/ John C. Gerdes                Chief Scientific Officer        March 29, 2002
--------------------------        and Director
John C. Gerdes, Ph.D.


/s/ Douglas L. Ayer               Director                        March 29, 2002
--------------------------
Douglas L. Ayer


/s/ N. Price Paschall             Director                        March 29, 2002
--------------------------
N. Price Paschall


/s/ James H. Chamberlain          Director                        March 29, 2002
--------------------------
James H. Chamberlain


/s/ Stephen K. Schultheis         Director                        March 29, 2002
--------------------------
Stephen K. Schultheis


                                       22


<PAGE>





                          ANNUAL REPORT ON FORM 10-KSB

                              ITEM 13(A)(1) AND (2)

              LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
                                    SCHEDULES

                          YEAR ENDED DECEMBER 31, 2001

                                  XTRANA, INC.

                              BROOMFIELD, COLORADO





                                       23


<PAGE>


                         REPORT OF INDEPENDENT AUDITORS






Board of Directors and Stockholders
Xtrana, Inc.

     We have audited the  accompanying  consolidated  balance  sheets of Xtrana,
Inc., as of December 31, 2001 and 2000, and the related consolidated  statements
of  operations,  stockholders'  equity and cash flows for the years then  ended.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our audits.

     We conducted our audits in accordance  with  auditing  standards  generally
accepted in the 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 consolidated  financial position of Xtrana, Inc.,
at December 31, 2001 and 2000,  and the  consolidated  results of its operations
and its cash  flows for the  years  then  ended in  conformity  with  accounting
principles generally accepted in the United States.






                                                               Ernst & Young LLP


Denver, Colorado
March 13, 2002


                                       24


<PAGE>


                                  XTRANA, INC.

                           CONSOLIDATED BALANCE SHEETS



                                                                 DECEMBER 31,
                                                              2001         2000
--------------------------------------------------------------------------------
                                                               (in thousands)

ASSETS

CURRENT ASSETS
     Cash and cash equivalents .......................    $  3,726     $  4,011
     Accounts receivable, net of allowance
         for doubtful accounts of $5 in
         2001 and 2000 ...............................          46           37
     Note receivable .................................         855         --
     Inventories .....................................          66         --
     Prepaid expenses and other current assets .......          56          125
     Net assets of discontinued operations ...........        --          4,165
                                                          --------     --------

TOTAL CURRENT ASSETS .................................       4,749        8,338

PROPERTY AND EQUIPMENT
     Leasehold improvements ..........................         642         --
     Processing and lab equipment ....................          53         --
     Furniture and fixtures ..........................         167           14
                                                          --------     --------

TOTAL PROPERTY AND EQUIPMENT .........................         862           14
     Less accumulated depreciation ...................         (98)          (6)
                                                          --------     --------

PROPERTY AND EQUIPMENT, NET ..........................         764            8

NOTES RECEIVABLE .....................................       1,736         --
OTHER ASSETS
     Goodwill, net of amortization of $1,377 and
        $388 in 2001 and 2000, respectively ..........       8,516        9,505
     Patents, net of amortization of $11 and $5
        in 2001 and 2000, respectively ...............         148           20
                                                          --------     --------

TOTAL ASSETS .........................................    $ 15,913     $ 17,871
                                                          ========     ========

See accompanying notes to consolidated financial statements.


                                       25


<PAGE>


                                  XTRANA, INC.

                           CONSOLIDATED BALANCE SHEETS

                                   (continued)



                                                                 DECEMBER 31,
                                                              2001         2000
--------------------------------------------------------------------------------
                                                (in thousands except share data)

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
     Accounts payable ................................    $    120     $    213
     Accrued expenses ................................         567          398
     Other accrued liabilities .......................         122         --
                                                          --------     --------

TOTAL CURRENT LIABILITIES ............................         809          611

     Other long-term liabilities .....................          36         --
                                                          --------     --------

TOTAL LIABILITIES ....................................         845          611

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
     Common stock, $.01 par value, 50,000,000
        shares authorized; 17,323,498 and
        17,163,012 shares issued and outstanding
        at December 31, 2001 and 2000,
        respectively .................................         173          171
     Additional paid-in capital ......................      19,407       19,280
     Accumulated deficit .............................      (4,512)      (1,656)
     Accumulated other comprehensive loss ............        --           (535)
                                                          --------     --------


TOTAL STOCKHOLDERS' EQUITY ...........................      15,068       17,260
                                                          --------     --------


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ...........    $ 15,913     $ 17,871
                                                          ========     ========

See accompanying notes to consolidated financial statements.


                                       26


<PAGE>


                                  XTRANA, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS



                                                                 DECEMBER 31,
                                                              2001         2000
--------------------------------------------------------------------------------
                                                (in thousands except share data)

SALES ..............................................     $    479      $    116
Cost of sales ......................................          295           160
                                                         --------      --------
GROSS PROFIT .......................................          184           (44)

Operating expenses:
     Selling, general and administrative ...........        2,972         1,512
     Research and development ......................        1,372           302
                                                         --------      --------
TOTAL OPERATING EXPENSES ...........................        4,344         1,814
                                                         --------      --------
Other income, net ..................................           69           135
                                                         --------      --------

LOSS FROM CONTINUING OPERATIONS BEFORE TAXES .......       (4,091)       (1,723)
Income tax expense .................................         --            --
                                                         --------      --------
LOSS FROM CONTINUING OPERATIONS ....................       (4,091)       (1,723)

DISCONTINUED OPERATIONS:
     Income from discontinued operations -
         net of income tax effect ..................          391           614
     Gain on disposal - net of income tax ..........          844          --
                                                         --------      --------

NET LOSS ...........................................     $ (2,856)     $ (1,109)
                                                         ========      ========


WEIGHTED AVERAGE SHARES OUTSTANDING
     Basic .........................................       17,219        11,842
     Effect of dilutive shares .....................         --            --
                                                         --------      --------
     Diluted .......................................       17,219        11,842
                                                         ========      ========

BASIC AND DILUTED EARNINGS PER SHARE
     Continuing operations .........................     $  (0.24)        (0.14)
     Discontinued operations .......................         0.02          0.05
     Gain on disposal ..............................         0.05          --
                                                         --------      --------
     Net loss ......................................     $  (0.17)     $  (0.09)
                                                         ========      ========


See accompanying notes to consolidated financial statements.


                                       27


<PAGE>

<TABLE>

                                  XTRANA, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                        (in thousands except share data)

<CAPTION>

                                                                     ADDITIONAL                     ACCUMULATED
                                              COMMON STOCK            PAID-IN       ACCUMULATED    OTHER COMPRE-
                                          SHARES        AMOUNT        CAPITAL         DEFICIT      HENSIVE LOSS      TOTAL
-----------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>          <C>            <C>            <C>            <C>            <C>
BALANCE AT JANUARY 1, 2000 ........     8,286,986    $        83    $    10,593    $      (547)   $      (295)   $     9,834


    Net loss ......................          --             --             --           (1,109)          --           (1,109)
    Foreign currency translation ..          --             --             --             --             (240)          (240)
                                                                                                                 -----------
       Comprehensive loss .........                                                                                   (1,349)

    Issuance of warrants related
       to acquisition .............          --             --              587           --             --              587

    Shares issued for exercise
       of options .................        46,565           --               59           --             --               59

    Shares issued related to
       acquisition ................     8,829,461             88          8,041           --             --            8,129
----------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 2000 ......    17,163,012            171         19,280         (1,656)          (535)        17,260

    Net loss ......................                                                     (2,856)                       (2,856)
    Foreign currency translation ..          --             --             --                            (212)          (212)
    Net foreign currency trans-
       lation gains, included in
       gain on disposal of
       discontinued operations ....                                                                       747            747
                                                                                                                 -----------
    Comprehensive loss ............                                                                                   (2,321)
    Warrants issued in connection
       with the manufacturing
       agreement ..................                                         127                                          127

    Options issued to non-employees                                           2                                            2

    Shares issued for exercise
       of warrants ................       163,851              2             (2)                                        --

    Shares canceled related to
       acquisition, Footnote 7 ....        (3,365)

BALANCE AT DECEMBER 31, 2001 ......    17,323,498    $       173    $    19,407    $    (4,512)   $         0    $    15,068
============================================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.


                                       28


<PAGE>

                                  XTRANA, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                         YEAR ENDED DECEMBER 31,
                                                              2001         2000
--------------------------------------------------------------------------------
                                                               (in thousands)

OPERATING ACTIVITIES
     Loss from continuing operations .................     $(4,091)     $(1,723)
     Adjustments to reconcile loss from
     continuing operations to net cash
     provided by continuing operating
     activities:
        Warrants issued in connection with
          manufacturing agreements ...................         127         --
        Options issued to non-employees ..............           2         --
        Depreciation .................................          92            3
        Amortization .................................       1,000          388
     Changes in operating assets and
     liabilities:
        Accounts receivable ..........................          (9)         110
        Inventories ..................................         (66)        --
        Prepaid expenses and other current assets ....          69            7
        Accounts payable and accrued expenses ........          24         (421)
                                                            -------      -------
     Net cash used in continuing operating
        activities ...................................      (2,852)      (1,636)

     Net cash provided by discontinued
        operating activities .........................         729        1,754
                                                           -------      -------
NET CASH (USED IN) PROVIDED BY OPERATING
     ACTIVITIES ......................................      (2,123)         118

INVESTING ACTIVITIES
     Additions to property and equipment .............        (848)          (3)
     Additions to deferred patent cost ...............        (139)        --
     Business acquisition, net of cash acquired ......        --           (641)
                                                           -------      -------
     Net cash used in continuing investing
        activities ...................................        (987)        (644)

     Net cash provided by discontinued
        investing activities .........................       3,037        1,969
                                                           -------      -------
NET CASH PROVIDED BY INVESTING ACTIVITIES ............       2,050        1,325

FINANCING ACTIVITIES
      Repurchase of common stock .....................        --             59
                                                           -------      -------
NET CASH PROVIDED BY CONTINUING FINANCING
     ACTIVITIES ......................................        --             59

Effect of exchange rates - discontinued
     operations ......................................        (212)        (241)
                                                           -------      -------
NET INCREASE (DECREASE) IN CASH AND CASH
     EQUIVALENTS .....................................        (285)       1,262

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR .........       4,011        2,749
                                                           -------      -------

CASH AND CASH EQUIVALENTS, END OF YEAR ...............     $ 3,726      $ 4,011
                                                           =======      =======


                                       29


<PAGE>


                                  XTRANA, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

     Xtrana,  Inc.  ("Xtrana"  or the  "Company"),  formerly  known  as  Biopool
International,  Inc.,  was  incorporated  in 1987 in the state of Delaware.  The
Company develops and markets nucleic acid-based tests for use in drug discovery,
detection  of  environmental  and  food  contaminants,  forensics  and  identity
testing, human and animal diseases, genetic predisposition to disease, and other
applications.

BASIS OF PRESENTATION

     The  accompanying  financial  statements  have been  prepared  assuming the
Company will continue as a going concern.  For the year ended December 31, 2001,
the Company  incurred a loss from continuing  operations of  approximately  $4.1
million  and  sustained  negative  cash  flows  from  continuing  operations  of
approximately $2.9 million due primarily to the development and expansion of its
nucleic acid testing business.  As described more fully in Notes 2 and 3, during
the latter part of 2000 and in 2001, the Company  transitioned  its core line of
business  from  Hemostasis  to nucleic acid  testing.  In  connection  with this
transition,   revenues  from  the  Company's  continuing  operations  have  been
substantially  reduced,  while the  Company is  incurring  significant  costs to
develop and expand its nucleic  acid testing  business  by, among other  things,
adding staff to sell the Company's products and increasing its manufacturing and
product  development  costs.  Management intends to address these issues through
the  generation  of  increased  revenues as the Company  continues to expand its
nucleic  acid  testing  business,  the  implementation  of certain  general  and
administrative  cost  reductions  and potential  equity  and/or debt  financing.
Management  believes that its operational  plans will be sufficient to allow the
Company to sustain its operations through at least December 31, 2003.

PRINCIPLES OF CONSOLIDATION

     The consolidated  financial  statements of the Company include the accounts
of Xtrana, Inc., and its wholly owned subsidiary.  All significant  intercompany
balances  and  transactions   were  eliminated  in  the   consolidation  of  the
discontinued operations. The results of operations include the results of Xtrana
for the period of 2000 and 2001  restated  for the  results of the  discontinued
operations.

RECLASSIFICATION

     Certain data in the prior year consolidated  financial statements have been
reclassified  to conform to the 2001  presentation.  The  financial  information
presented  in  the  notes  to the  consolidated  financial  statements  excludes
discontinued operations, except where noted.

REVENUES

     Product  revenues  are  recorded on the day  products  are shipped from the
Company's facilities.  Grant revenues are recorded when earned,  pursuant to the
respective grant agreements. Shipping costs are included in the cost of sales.

     Grant  revenues  and profit on  long-term  contracts  are  recorded  as the
contract  progresses  using the  percentage of completion  method of accounting,
which  relies on  estimates  of total  expected  contract  revenues  and  costs.
Revisions  in profit  estimates  are  reflected in the period in which the facts
that give rise to the revision become known.  Accordingly,  favorable changes in
estimates result in additional profit  recognition,  and unfavorable  changes in
estimates result in the reversal of previously  recognized  revenue and profits.
When estimates indicate a loss under a contract, cost of revenue is charged with
a provision for such loss. As work  progresses  under a loss  contract,  revenue
continues to be recognized, and a portion of the contract


                                       30


<PAGE>


costs  incurred in each period is charged to the contract  loss  reserve.  As of
December  31,  2001,  a loss  provision  totaling  $33,000 is  included in other
current liabilities in the financial statements.

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 reporting period. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

     Cash and cash equivalents  represent highly liquid investments which mature
within three months of date of purchase.

INVENTORIES

     Inventories  are  stated  at the  lower of cost  (first-in,  first-out)  or
market.

PROPERTY AND EQUIPMENT

     Property  and  equipment  are  stated at cost.  Depreciation  is  generally
calculated on a  straight-line  basis over their estimated  useful lives,  which
range from 3 to 10 years.  Leasehold improvements are generally depreciated over
their  estimated  useful  lives or over the  period of the lease,  whichever  is
shorter.

GOODWILL

     Goodwill  consists  of the  excess  of cost  over net  assets  of  acquired
companies and is being amortized using the straight-line method primarily over a
period of ten years.

DEFERRED PATENT COSTS

     The Company  capitalizes  legal costs directly  incurred in pursuing patent
applications  as deferred  patent  costs.  When such  applications  result in an
issued patent,  the related costs are amortized over the remaining legal life of
the patents,  generally 15 years,  using the straight-line  method.  The Company
reviews its issued patents and pending patent applications, and if it determines
to abandon a patent  application or that an issued patent no longer has economic
value, the unamortized  balance in deferred patent costs relating to that patent
is immediately expensed.

     It is possible the above estimates of future economic life of the Company's
commercialization  revenues, the amount of anticipated future  commercialization
revenues,  or  both,  will be  reduced  significantly  in the  near  term due to
alternative  technologies  developed by other  biotechnology  or  pharmaceutical
companies.  As a result,  the  carrying  amount of deferred  patent costs may be
reduced in the future.

LONG-LIVED ASSETS

     The  Company  recognizes  impairment  losses on  long-lived  assets used in
operations when indicators of impairment are present and the  undiscounted  cash
flows  estimated  to be  generated  by those  assets  are less than the  assets'
carrying  amount.  In such  circumstances,  those  assets  are  written  down to
estimated fair value. Long-lived assets consist primarily of computer equipment,
office furniture, equipment, and goodwill.


                                       31


<PAGE>


RESEARCH AND DEVELOPMENT COSTS

     Research and development  costs are expensed when incurred and include both
internal research and development costs and payments to third parties.

INCOME TAXES

     The  Company  accounts  for  income  taxes  under  Statement  of  Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (see Footnote 9).

FOREIGN CURRENCY TRANSLATION

     The financial  statements of Biopool Sweden are prepared in Swedish SEK and
translated  into U.S.  dollars based on the current  exchange rate at the end of
the period for the balance  sheet and a weighted  average rate for the period of
the statement of operations.  Translation  adjustments  are reflected as foreign
currency  translation  adjustments within  comprehensive income in stockholders'
equity. In 2001, as the result of the decision to sell our Hemostasis  business,
the Company  included  the  $747,000  cumulative  foreign  currency  translation
adjustment in the gain on the sale of the discontinued operations.

     Exchange adjustments  resulting from transactions  denominated in a foreign
currency are recognized in net earnings and are generally insignificant.

CONCENTRATION OF CREDIT RISK

     Financial   instruments,   which   potentially   subject   the  Company  to
concentrations of credit risk, consist principally of temporary cash investments
and trade  receivables.  At December 31, 2001,  substantially  all cash and cash
equivalents were on deposit with two financial  institutions.  Concentrations of
credit risk with respect to trade receivables are limited due to the majority of
the  outstanding   accounts  receivable  being  from  Government   institutions.
Generally,  the Company does not require collateral or other security to support
customer receivables.

EARNINGS PER SHARE

     Basic  earnings  per  share is based  upon the  weighted-average  number of
common  shares  outstanding.  Diluted  earnings  per  share  is  based  upon the
weighted-average  number of common shares and dilutive  potential  common shares
outstanding. Potential common shares are outstanding options under the Company's
stock  option  plans and  outstanding  warrants,  which are  included  under the
treasury stock method.

     Options and  warrants  to  purchase  1,515,756  and  1,051,663  shares with
exercise  prices  greater  than the average  market  prices of common stock were
outstanding  during the years ended  December  31, 2001 and 2000,  respectively.
These  options  and  warrants  were,  therefore,  excluded  from the  respective
computations  of  diluted  earnings  per share  because  their  effect  would be
anti-dilutive.

FAIR VALUE OF FINANCIAL INSTRUMENTS

     The carrying value of the Company's cash and cash equivalents, receivables,
payables and accrued  expenses  approximate fair value due to the short maturity
of these instruments.

ACCOUNTING FOR STOCK BASED COMPENSATION

     Stock option grants are set at the closing  price of the  Company's  common
stock on the date of grant.  Therefore,  under the principles of APB Opinion No.
25,  "Accounting  for Stock Issued to Employees," the Company has not recognized
compensation  expense  associated  with the grant of stock options to employees.
SFAS No. 123,  "Accounting  for Stock-Based  Compensation,"  requires the use of
option valuation models to provide  supplemental  information  regarding options
granted after 1994. Proforma results of operations, which would have resulted as
a result of  recognizing  the fair value of such  grants,  are  disclosed  under
Footnote 9.


                                       32


<PAGE>


SEGMENT INFORMATION

     Statement of  Financial  Accounting  Standards  No. 131,  Disclosure  About
Segment of an Enterprise and Related Information,  establishes standards for the
reporting of information  about  operating  segments.  The Company's  continuing
operations are one operating segment.

RECENT ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial  Accounting Standards Board issued Statement of
Financial Accounting  Standards No. 133, "Accounting for Derivative  Instruments
and Hedging  Activities,"  ("SFAS 133"). The Company adopted SFAS 133 on January
1, 2001. The Company has no derivative instruments and, therefore,  the adoption
of SFAS No. 133 had no effect on the Company's financial statements.

     In June 2001, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statements  of  Financial   Accounting  Standards  ("SFAS")  No.  141,  Business
Combinations,  and SFAS No. 142, Goodwill and Other Intangible Assets.  SFAS No.
141 requires  that the purchase  method of  accounting  be used for all business
combinations  initiated after June 30, 2001. SFAS No. 141 also includes guidance
on the initial  recognition  and  measurement  of goodwill and other  intangible
assets arising from business  combinations  completed  after June 30, 2001. SFAS
No. 142  prohibits  the  amortization  of goodwill  and  intangible  assets with
indefinite useful lives. SFAS No. 142 requires that these assets be reviewed for
impairment at least annually.  Intangible assets with finite lives will continue
to be amortized over their estimated useful lives. These statements are required
to be adopted by the  Company  on  January  1,  2002,  and for any  acquisitions
entered  into after July 1, 2001.  The Company  does not believe the adoption of
the  statements  will  negatively  impact  its  financial  position,  results of
operations,  and cash flows.  Goodwill  amortization expense aggregated $989,000
and $388,000 in 2001 and 2000, respectively.

     In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived  Assets,  which establishes one accounting model to be
used  for  long-lived  assets  to  be  disposed  of by  sale  and  broadens  the
presentation of discontinued  operations to include more disposal  transactions.
SFAS  No.  144  supersedes  SFAS  No.  121,  Accounting  for the  Impairment  of
Long-Lived Assets to Be Disposed Of, and the accounting and reporting provisions
of  Accounting  Principles  Board  Opinion  No.  30,  Reporting  the  Results of
Operations - Reporting  the Effects of Disposal of a Segment of a Business,  and
Extraordinary,  Unusual and Infrequently Occurring Events and Transactions.  The
Company will adopt SFAS No. 144 as of January 1, 2002,  and does not  anticipate
any immediate impact from the adoption of this statement.

2.   MERGER WITH FORMER XTRANA, INC.

     Effective  August 10, 2000,  the former  Xtrana,  Inc., was merged with and
into the Company pursuant to an Agreement and Plan of  Reorganization  dated May
3, 2000, between the former Xtrana and the Company, as reported on the Company's
Current Report on Form 8-K filed with the Securities and Exchange  Commission on
August 11, 2000,  and amended  October 24, 2000.  The Company  issued  8,829,461
shares of the Company's common stock in exchange for all the outstanding capital
stock of the former  Xtrana,  with an additional  540,000 shares to be issued in
connection  with the  exercise  of certain  warrants,  for a total of  9,369,461
shares.  During 2001,  270,000 of the 540,000  warrants were exercised using the
cashless  exercise  feature for a total of 163,851 shares  issued.  Of the total
shares  issued,  936,946  shares were held in escrow for purposes of  satisfying
Xtrana's indemnification obligations.  These shares, less 3,365 shares that were
canceled pursuant to the merger agreement  relating to excess warrants issued to
certain financial  advisors,  were released to the former Xtrana shareholders on
November  6,  2001.  In  addition,  936,946  shares  are held in escrow  and are
contingently  cancelable if certain sales objectives for the Xtrana business are
not met. Also, an additional  1,030,641 shares are issuable to the former Xtrana
shareholders if certain sales objectives are exceeded. The escrow period for the
contingent  shares  expired on September 30, 2001,  without  achieving the sales
objectives.  Pursuant  to the  Merger  Agreement,  the  earnout  period has been
extended  automatically to September 30, 2002, to meet certain  additional sales
objectives.  Management does not currently anticipate that such sales objectives
will be achieved.  If such sales  objectives  are not achieved on September  30,
2002,  the  936,946  shares  in  escrow  will be  canceled,  and the  additional
1,030,641 shares will not be issued. The 936,946 contingent shares are reflected
as outstanding common stock as the holders of


                                       33


<PAGE>


these shares have full right to vote the shares  while in escrow.  Additionally,
as a part of the  merger,  998,366  warrants  with an  estimated  fair  value of
$587,000  were  issued to  warrant  holders  of  Xtrana  and  certain  financial
advisors.   At  the  merger  date,  the  former   stockholders  of  Xtrana  held
approximately  50% of the outstanding  stock of the Company,  on a fully diluted
basis.

     The total  estimated fair value of stock and warrants  issued in connection
with the  merger  was  approximately  $8.7  million,  and the  Company  incurred
additional  cash expenses  related to the merger of $0.4  million.  The purchase
price was  allocated to the assets  acquired,  based on their fair market value.
The excess of the purchase  price over the fair value of the $0.8 million in net
liabilities  assumed  (goodwill)  was  approximately  $9.9  million and is being
amortized on a straight-line  basis over 10 years.  The results of operations of
Xtrana  have  been  included  in the  accompanying  consolidated  statements  of
operations from the date of merger.

3.   DISCONTINUED OPERATIONS

     In April  1999,  the  Company  decided to  discontinue  its blood  serology
business,  BCA, a Division of Biopool. The Company decided to sell this business
in order to concentrate on its core businesses that  manufacture  Hemostasis and
fibrinolysis  products.  At  December  31,  1999,  net  assets  of  discontinued
operations  consisted  primarily of the BCA property and plant amounting to $2.1
million.  The property  and plant were sold for $2.1  million  during the second
quarter of 2000. During 2000, the final expenses related to the BCA discontinued
operations  were  recognized in the amount of $78,000,  which is included in the
$614,000 income from discontinued operations.

     On December 20, 2001, the shareholders  approved the sale of the Hemostasis
business. On December 21, 2001, the Company closed the sale of substantially all
of the  assets of its  Hemostasis  business  to  Trinity  Biotech  plc for total
consideration of US$6,250,000,  plus the assumption of certain liabilities.  The
assets sold  included the  operations  located in Ventura,  California,  and the
Company's wholly owned Swedish  subsidiary,  Biopool AB. The total consideration
paid to the Company of US$6,250,000  consisted of cash and notes as follows: (a)
US$3,658,000 in cash at closing;  (b) a note in the amount of US$855,200 due one
year from the closing  date;  (c) a note in the amount of  US$1,166,200  due two
years from the  closing  date;  and (d) a note in the amount of  US$570,100  due
three years from the closing date.  The notes carry interest at a rate of 5% per
annum and are  secured by a second  position  on  substantially  all of the U.S.
assets of Trinity Biotech plc.  Included in Accrued Expenses is $175,000 related
to transaction  costs associated with the sale of the Hemostasis  business.  The
total amount in other long-term liabilities of $36,000 is related to transaction
costs  that  are the  result  of a  broker  commission  payable  over 3 years as
follows:  $24,000 due December 21, 2003, and $12,000 due December 21, 2004. This
note bears interest at a rate of 5% per annum.

     The Hemostasis  business was a distinct  operating  segment,  whose sale is
accounted  for  as   discontinued   operations  in  accordance  with  Accounting
Principles  Board  Opinion 30 - Reporting  the Results of Operations - Reporting
the Effects of Disposal of a Segment of a Business,  and Extraordinary,  Unusual
and Infrequently  Occurring Events and  Transactions.  As a result,  the Company
reclassified  its prior period  financial  statements to reflect the appropriate
accounting for the sale of the Hemostasis business, as discontinued operations.

     The gain on the sale of the hemostasis  business was reduced by $747,000 to
remove the cumulative foreign currency  translation  adjustment generated by the
Sweden operations, which were disposed of in the sale transaction.


                                       34


<PAGE>


     A  summary  of the  results  of  discontinued  operations  and net  gain on
disposal is as follows:


     YEAR ENDED DECEMBER 31,     (in thousands)            2001       2000
     -----------------------                            -------    -------

     Sales ..........................................   $ 8,689    $ 9,722
                                                        =======    =======

     Cost of goods sold .............................     4,829      5,153
     Selling, general and administrative and other ..     3,419      3,258
                                                        -------    -------

     Income before taxes ............................       441      1,311
     Income tax .....................................       (50)      (697)
                                                        -------    -------

     Income from discontinued operations ............       391        614
     Net gain on disposal, net of income tax effect .       844       --
                                                        -------    -------

              Net income from discontinued operations   $ 1,235    $   614
                                                        =======    =======

     The assets and  liabilities  of  discontinued  operations,  which have been
reflected as net assets of discontinued  operations in the consolidated  balance
sheets, are summarized as follows:

     YEAR ENDED DECEMBER 31,     (in thousands)            2001       2000
     -----------------------                            -------    -------

     Current assets .................................   $  --      $ 3,516
     Long-term assets ...............................      --        1,506
                                                        -------    -------
     Total assets ...................................      --        5,022

     Current liabilities ............................      --          693
     Long-term liabilities ..........................      --          164
                                                        -------    -------
     Total liabilities ..............................      --          857
                                                        -------    -------

     Net assets of discontinued operations ..........   $  --      $ 4,165
                                                        =======    =======

4.   INVENTORIES (in thousands)

     Inventories consist of the following:                  DECEMBER 31,
                                                           2001       2000
                                                        -------    -------
     Raw materials .....................                $    15    $  --
     Finished goods ....................                     56       --
                                                        -------    -------

                                                        $    66    $  --
                                                        =======    =======

5.   REVOLVING LINE OF CREDIT

     As of December  31,  2001,  the Company  had a $125,000  standby  letter of
credit  issued  as a  security  deposit  in  conjunction  with the  lease of the
Broomfield,  Colorado,  facility. This letter of credit is secured by restricted
cash balances equal to the amount outstanding under the letter of credit.


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<PAGE>


6.   COMMITMENTS AND CONTINGENCIES

LEASES

     The Company leases certain  equipment and facilities  under  non-cancelable
operating  leases.  Continuing  operations  lease  expense for 2001 and 2000 was
approximately  $226,000  and  $53,000,   respectively.  At  December  31,  2001,
approximate  future  minimum  annual  lease  commitments  are  $226,000 in 2002,
$232,000 in 2003, $238,000 in 2004, $241,000 in 2005, and $60,000 in 2006.

LITIGATION

     On March 26, 2001,  the Company  entered into a settlement  agreement  with
Agen  Biomedical  Ltd. with regard to a patent  infringement  filed on March 10,
2000,  by Agen. As a part of the  settlement,  the Company and Agen have entered
into a non-exclusive  license agreement for the underlying patent and all claims
by Agen and counter  claims made by us have been dropped.  As a part of the sale
of the  Hemostasis  business,  the Company signed an amendment to the settlement
agreement  that  consented to the  assignment  and  assumption of the settlement
agreement by Trinity Biotech plc. As a part of the agreement, the Company made a
lump sum payment of $250,000 to Agen,  which is reflected as a transaction  cost
in the gain on the sale of the discontinued operations as of December 31, 2001.

     On January 24, 2002, the Company  entered into a settlement  agreement with
Instrumentation Laboratory Company with regard to a patent infringement filed on
August  9,  2001,  by  Instrumentation   Laboratory  Company.  As  part  of  the
settlement,  the Company and  Instrumentation  Laboratory Company have agreed to
enter a consent  judgment  with the  court,  and the  Company  has agreed to pay
damages  and costs in the  amount  of  $20,000,  which is  included  in  accrued
expenses at December 31, 2001.  The Company does not believe that the settlement
will have a material impact on the results of continuing operations.

7.   EQUITY

     Effective August 10, 2000, the former Xtrana, Inc. was merged with and into
the Company  pursuant to an Agreement  and Plan of  Reorganization  dated May 3,
2000,  between the former  Xtrana and the Company,  as reported on the Company's
Current Report on Form 8-K filed with the Securities and Exchange  Commission on
August 11, 2000,  and amended  October 24, 2000.  The Company  issued  8,829,461
shares of the Company's common stock in exchange for all the outstanding capital
stock of the former  Xtrana,  with an additional  540,000 shares to be issued in
connection  with the  exercise  of certain  warrants,  for a total of  9,369,461
shares.  During 2001,  270,000 of the 540,000  warrants were exercised using the
cashless  exercise  feature for a total of 163,851 shares  issued.  Of the total
shares  issued,  936,946  shares were held in escrow for purposes of  satisfying
Xtrana's indemnification obligations.  These shares, less 3,365 shares that were
canceled pursuant to the merger agreement  relating to excess warrants issued to
certain financial  advisors,  were released to the former Xtrana shareholders on
November  6,  2001.  In  addition,  936,946  shares  are held in escrow  and are
contingently  cancelable if certain sales objectives for the Xtrana business are
not met. Also, an additional  1,030,641 shares are issuable to the former Xtrana
shareholders if certain sales objectives are exceeded. The escrow period for the
contingent  shares  expired on September 30, 2001,  without  achieving the sales
objectives.  Pursuant  to the  Merger  Agreement,  the  earnout  period has been
extended  automatically to September 30, 2002, to meet certain  additional sales
objectives.  Management does not currently anticipate that such sales objectives
will be achieved.  If such sales  objectives  are not achieved on September  30,
2002,  the  936,946  shares  in  escrow  will be  canceled,  and the  additional
1,030,641  shares will not be issued.  The  contingent  shares are  reflected as
outstanding  common stock as the holders of these shares have full right to vote
the shares while in escrow.

8.   STOCK OPTION PLANS

     The Company has three stock option  plans (the  "Plans") for the benefit of
employees, officers, directors, and consultants of the Company. Under the Plans,
a total of 5,226,639  shares of the  Company's  common  stock were  reserved for
issuance. Options granted under the Plans are generally exercisable for a period
of ten years from the date of grant at an  exercise  price that is not less than
the  closing  price of the


                                       36


<PAGE>


common stock on the date of grant.  Options  granted  under the Plans  generally
vest over a one- to five-year period from the date of the grant.

     Stock option activity for 2000 and 2001 was as follows:
                                                                        WEIGHTED
                                                                        AVERAGE
                                    SHARES                              EXERCISE
                                  OUTSTANDING        PRICE RANGE         PRICE
                                  -----------        -----------         -----

BALANCE AT JANUARY 1, 2000        1,267,350       $0.6250 - 2.6800       $1.49

Granted                           1,575,000        0.8750 - 1.7500        1.14
Exercised                           (46,565)       0.9375 - 1.4400        1.13
Cancelled                          (488,854)       0.6250 - 2.5000        1.69
                                  ---------

BALANCE AT DECEMBER 31, 2000      2,306,931        0.6600 - 2.6800        1.22
Granted                             509,000        0.4800 - 1.1875        0.69
Exercised                            --                  --                --
Cancelled                          (874,174)       0.6000 - 1.7500        1.09
                                  ---------

BALANCE AT DECEMBER 31, 2001      1,941,757        0.4800 - 2.6800        1.14
                                  =========

     At December 31, 2001,  2,949,168  shares were  available  for future grants
under the Plans.

     The weighted average remaining  contractual life of outstanding  options at
December 31, 2001, was 5.7 years.  At December 31, 2001 and 2000,  respectively,
there were  1,009,310 and 633,983  options  exercisable  with  weighted  average
exercise prices of $1.27 and $1.35.

     Pro forma information regarding net loss and earnings per share shown below
was  determined as if the Company had  accounted for its employee  stock options
under the fair value  method of SFAS No. 123.  The fair value of the options was
estimated at the date of grant using a  Black-Scholes  option pricing model with
the following weighted average assumptions: risk-free interest rates of 5.0% for
2001 and 6.38% in 2000;  dividend  yields of 0.0% for 2001 and 2000;  volatility
factors of the expected  market price of the Company's  common stock of 104% for
2001 and 73% for 2000;  and expected life of the options of one to five years as
grouped by specific  employee  classifications.  These  assumptions  resulted in
weighted  average  fair  values of $0.42  and $0.55 per share for stock  options
granted in 2001 and 2000, respectively.

     The  Black-Scholes   option  valuation  model  was  developed  for  use  in
estimating  the fair  value of traded  options.  The  Company's  employee  stock
options  have  characteristics  significantly  different  from  those of  traded
options such as vesting restrictions and extremely limited transferability.

     For  purposes of pro forma  disclosures,  the  estimated  fair value of the
options is amortized  over the option vesting  periods.  The pro forma effect on
net income  through  1999 is not  representative  of the pro forma effect on net
income in future  years  because it does not take into  consideration  pro forma
compensation expense related to grants made prior to 1995. In 2001, however, the
pro forma  results  include  a full  four  years  worth of  option  grants.  The
Company's pro forma  information  is as follows (in  thousands  except per share
data):
                                                        YEARS ENDED DECEMBER 31,
                                                               2001        2000
                                                               ----        ----

     Pro forma net loss from continuing operations .....   $ (4,287)   $ (1,948)

     Pro forma loss per share from continuing operations
       Basic ...........................................      (0.25)      (0.16)
       Diluted .........................................      (0.25)      (0.16)


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<PAGE>


     As of December  31,  2001,  the  Company  had 954,755  warrants to purchase
common stock outstanding and exercisable for prices ranging from $0.01 to $1.875
with a weighted  average  exercise  price of $0.7219  per  share.  The  weighted
average  remaining  contractual life of these warrants at December 31, 2001, was
6.6 years. These warrants have expiration dates ranging from 2003 to 2011.

9.   INCOME TAXES

     Included in the  discontinued  operations  for the year ended  December 31,
2000, is net income tax expense of $697.

     The  reconciliation  of income tax  attributable  to continuing  operations
computed at the U.S.  Federal  Statutory rates to the income tax provision is as
follows:

                                                        YEARS ENDED DECEMBER 31,
                                                               2001       2000
                                                            -------    -------

     Tax at U.S. statutory rate (34%) ...................   -34.00%    -34.00%
     Permanent differences ..............................    12.81%     13.29%
     Effect of gain on sale .............................    11.81%      --
     State income tax expense net of federal benefit ....    -1.18%     -2.28%
     Valuation Allowance ................................    10.56%     22.99%
                                                            -------    -------
          Net expense (benefit) .........................     0.00%      0.00%
                                                            =======    =======

     The  components of the  Company's  deferred tax assets and  liabilities  at
December 31 are as follows:

                                                               2001       2000
                                                            -------    -------
     Deferred tax assets:
          Net operating loss carryforwards ..............   $ 1,407    $   861
          Foreign Tax Credit ............................       564       --
          Other .........................................        97        146
                                                            -------    -------
                                                              2,068      1,007
          Valuation reserve .............................    (2,060)      (936)
                                                            -------    -------

     Deferred tax liabilities:
          Depreciation ..................................        (8)       (71)
                                                            -------    -------

     Net deferred tax (liability) asset .................   $  --      $  --
                                                            =======    =======

     The difference  between our effective tax rate for 2001 and the 34% federal
statutory  tax rate was  primarily  due to the  effects of state  income  taxes,
non-deductible goodwill amortization,  and the sale transaction,  as well as the
provision for a full valuation allowance on all net operating loss carryforwards
available to the Company.

     At December  31,  2001,  the  Company  had  available  net  operating  loss
carryforwards  of  approximately  $3,674,000  in the United  States.  The United
States  carryforwards  expire in varying amounts through 2011. Under section 382
of the Internal  Revenue Code, the utilization of the federal net operating loss
carryforwards  may be limited based on changes in the percentage of ownership in
the Company

10.  RETIREMENT PLAN

     The Company has a defined  contribution  plan for its  domestic  operations
under which  employees who have satisfied  minimum age and service  requirements
may defer compensation  pursuant to Section 401(k) of the Internal Revenue Code.
Participants in the plan may contribute between 1% and 12% of their pay, subject
to the limitations placed by the IRS. The Company, at its discretion,  may match
a portion of the amount contributed by the employee.  The Company  contributions
are offset by forfeitures of unvested


                                       38


<PAGE>


balances for terminated  employees.  The net Company  contributions were $21,000
and $0 in 2001 and 2000, respectively.

11.  RELATED PARTY TRANSACTIONS

     Company director Stephen K. Schultheis is also the chief executive  officer
of Ansys  Technologies.  On October 1, 2001, the Company and Ansys Technologies,
Inc.,  entered into a Settlement  and Mutual Release  Agreement.  This Agreement
terminated  certain letter  agreements  between Ansys and the Company that among
other things had granted Ansys exclusive  manufacturing rights for the Company's
Xtra Amp(TM)  products.  In  consideration  for the  termination of such rights,
along with the transfer of all trade secrets and intellectual  property relating
to the manufacture of Xtra Amp(TM) from Ansys to the Company, the Company issued
to Ansys a warrant to purchase 166,389 shares of the Company's common stock. The
warrant is immediately exercisable at a strike price of $0.01 per share.


                                       39