================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

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

                   For the fiscal year ended December 31, 2004


                        COMMISSION FILE NUMBER 001-14257


                                  XTRANA, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

           DELAWARE                                     58-1729436
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)


    P.O. BOX 668 SEDALIA, COLORADO                        80135
(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:

                               Title of each class

                     Common Stock, par value $.01 per share


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

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or 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. [X] Yes [_] No

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation  S-B is not  contained  in  this  form,  and no  disclosure  will  be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

State Issuer's revenues for its most recent fiscal year: $102,000.

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 1, 2004, was $2,111,438.

Number of shares of Common  Stock of Xtrana,  Inc.,  $.01 par value,  issued and
outstanding as of March 31, 2005:  16,533,269.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the  Registrant's  Definitive  Proxy  Statement  for the 2005 Annual
Meeting are incorporated by reference into Part III of this Form 10-KSB.

Transitional Small Business Disclosure Format (Check one): Yes [_]; No [X]

================================================================================


<PAGE>


                             INDEX TO ANNUAL REPORT

                                 ON FORM 10-KSB


PART I                                                                      PAGE
                                                                            ----
         Item 1.  Business.............................................       3
         Item 2.  Properties...........................................       6
         Item 3.  Legal Proceedings....................................       6
         Item 4.  Submission of Matters to a Vote of
                     Security-Holders..................................       6

PART II

         Item 5.  Market for the Registrant's Common
                     Equity and Related Stockholder Matters............       7
         Item 6.  Management's Discussion and Analysis
                     of Financial Condition and Results
                     of Operations.....................................       8
         Item 7.  Financial Statements and Supplementary Data..........      15
         Item 8.  Changes In and Disagreements with
                     Accountants on Accounting and
                     Financial Disclosure..............................      15
         Item 8A. Controls and Procedures..............................      15

PART III

         Item 9.  Directors and Executive Officers.....................      16
         Item 10. Executive Compensation...............................      16
         Item 11. Security Ownership of Certain Beneficial
                     Owners and Management.............................      16
         Item 12. Certain Relationships and Related Transactions.......      16
         Item 13. Exhibits, Financial Statement Schedules..............      16
         Item 14. Principal Accountant Fees & Services.................      17

         SIGNATURES....................................................      18


                                       2
<PAGE>


            CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

           This 2004 Annual  Report on Form  10-KSB  contains  statements  which
constitute  forward-looking  statements within the meaning of Section 27A of the
Securities Act of 1933, as amended,  and Section 21E of the Securities  Exchange
Act of 1934,  as amended.  Those  statements  include  statements  regarding the
intent,  belief or  current  expectations  of the  Company  and its  management.
Prospective investors are cautioned that any such forward-looking statements are
not guarantees of future  performance and involve risks and  uncertainties,  and
that  actual  results  may  differ   materially  from  those  projected  in  the
forward-looking  statements.  Such risks and uncertainties  include, among other
things,  whether  the  closing of the  proposed  merger  transaction  with Alpha
Innotech will occur in a timely manner,  if at all; our ability to continue as a
going concern;  and other risks and  uncertainties  that may be detailed herein.
See "Item 6,  Management's  Discussion  and Analysis of Financial  Condition and
Results of Operations - Risk Factors."


                                     PART I

ITEM 1.  BUSINESS

OVERVIEW

         Until  recently,  Xtrana,  Inc. ("we," "us," "Xtrana" or the "Company")
developed  and  marketed  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.

         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  office is located in Castle  Rock  Colorado,  where we
maintain the financial records.

RECENT DEVELOPMENTS

         SALE OF INTELLECTUAL PROPERTY

         On January 26,  2004,  we entered  into an  Assignment  Agreement  with
Applera Corporation through its Applied Biosystems Group.  Pursuant to the terms
of  the  Assignment   Agreement,   Applied  Biosystems   purchased  all  of  our
intellectual  property,  other  than  trademarks  and trade  names.  The  assets
purchased  by Applied  Biosystems  included  all our U.S.  and foreign  patents,
inventions, trade secrets and know-how, and constituted substantially all of our
assets. The total consideration of $4,000,000  consisted of: (a) a $100,000 cash
deposit,  which was paid to us prior to closing,  (b) $3,500,000 in cash paid to
us at  closing;  and (c)  $400,000  in cash  to be paid 90 days  after  closing,
subject  to  our  providing  certain  consulting  services  as  required  by the
Assignment  Agreement.  On March 31,  2004,  Applied  Biosystems  delivered  the
$3,500,000  closing cash  payment,  and we delivered our  intellectual  property
rights,  into an escrow  account  pending the final closing of the  transaction.
Such final closing took place on May 14, 2004, after Applied Biosystems' receipt
of certain  certifications from us required as part of the due diligence efforts
under the Assignment Agreement. On August 15, 2004, Applied Biosystems delivered
the final $400,000 in cash due to the  completion of our consulting  services as
required by the Assignment Agreement.

         The sale of our intellectual property to Applied Biosystems resulted in
our receipt of net proceeds of  approximately  $3,357,000,  after payment of all
expenses associated with the transaction.  After complying with the requirements
of the Assignment  Agreement  with Applera to provide  consulting  services,  we
terminated all of our remaining employees.  As of May 3, 2004, we terminated the
lease  for  our  prior  executive  offices  pursuant  to  an  early  termination
agreement.  As a  result,  we  no  longer  have  any  continuing  operations  or
significant assets other than cash.

         We could  distribute  the remaining  cash proceeds as a dividend to our
stockholders  as  part  of  liquidation,   after  satisfaction  of  all  of  our
liabilities and payment of all costs associated with the liquidation. If we were
to  make a  distribution  to  stockholders  before  the  expiration  of  certain
representations and warranties


                                       3
<PAGE>


we made under the Assignment Agreement (18 months from the date of closing),  we
would be required to reserve and hold back $1,000,000 for possible settlement of
potential  claims by Applied  Biosystems  against us for our  breaches  of those
representations and warranties.

         PRIOR MERGER DISCUSSIONS

         Our Board of Directors believes that we can attract interest from other
businesses that might benefit from access to our funds, as well as our status as
a public company with a clean reporting  history.  Such interest could result in
us merging or otherwise  joining  together with an existing  business that could
create much greater  long-term  stockholder  value than simply  liquidating  the
Company.  Since  completion  of the  sale of our  intellectual  property,  after
payment of employee  severance  and lease  terminations  costs,  we have limited
overhead costs of operation,  but remain a reporting company under the rules and
regulations of the Securities and Exchange Commission.

         In June 2004, the Company  entered into a non-binding  letter of intent
with  Aduromed  Corporation,  pursuant to which we would  acquire  Aduromed in a
reverse  merger  transaction.  The proposed  acquisition  was subject to certain
conditions,  including satisfactory completion of due diligence by both parties,
execution of a definitive agreement, approval by our stockholders, and obtaining
required third party  approvals,  among others.  In September 2004, our Board of
Directors  determined to terminate its negotiations with Aduromed and the letter
of intent based on the results of our due  diligence  investigation  of Aduromed
and its  business.  Following  termination  of  discussions  with  Aduromed,  we
continued to explore merger candidates.

         MERGER AGREEMENT WITH ALPHA INNOTECH CORPORATION

         In December  2004,  we entered into a definitive  Agreement and Plan of
Merger with Alpha  Innotech  Corporation  pursuant to which Alpha Innotech would
merge with our wholly-owned subsidiary in a reverse merger transaction. Security
holders of Alpha  Innotech  would receive  shares of our common  stock,  and all
outstanding  Alpha  Innotech  stock options and warrants would be converted into
options and warrants to purchase our common  stock.  Immediately  following  the
consummation of the transaction,  our stockholders  would own approximately 17%,
and the  shareholders  of Alpha  Innotech  would own  approximately  83%, of the
outstanding  shares of common  stock of the  combined  company.  Pursuant to the
definitive agreement,  we also loaned Alpha Innotech Corporation $500,000.  Upon
completion of the  transaction,  we are expected to change our corporate name to
Alpha Innotech Corp.

         Alpha Innotech  Corporation,  a privately held company founded in 1992,
is a supplier of innovative  solutions for life science and drug  discovery with
core expertise in  quantitative  imaging,  informatics,  and molecular  biology.
Alpha Innotech maintains its corporate offices in San Leandro, California and it
has distributors  located in over 35 countries  around the world.  Following the
merger,  the board of directors  will be  comprised of two of our current  board
members and four current Alpha Innotech board members.

          The Boards of Directors of both  companies have  unanimously  approved
the  merger  agreement  and each is  expected  to submit it to their  respective
stockholders for approval.  Completion of the transaction is subject to a number
of  conditions,  including  approval  of both  the  Xtrana  and  Alpha  Innotech
stockholders,  obtaining certain regulatory and third party approvals, and other
customary  conditions.  We expect to submit the merger for approval at a meeting
of our stockholders during the first six months of 2005.

STRATEGY

         Since the  acquisition  of the nucleic acid  technologies  in August of
2000, we had worked to continue the development of these  technologies  with the
ultimate goal of moving them into commercial products.

         The  first  of  these  products  were the  Xtra  Amp(TM)  nucleic  acid
extraction  kits.  These  reagent kits were  marketed  primarily to the research
laboratory  marketplace  through a distributor  network.  The market for nucleic
acid extraction kits is a fairly mature market,  and is dominated by a few large
firms.  The  majority of the  customers  in this market  operate  under  tightly
regulated  quality  systems,  which  require  them  to  go  through  a  rigorous
validation  of all new  products.  This  validation  process  can be quite  time
consuming  and costly.  Even though  customers  who  evaluated  the Xtra Amp(TM)
product  liked its ease of use, it was not enough to


                                       4
<PAGE>


convince them to make the investment in the  validation  process and change over
to Xtra Amp(TM) from the products they were currently  using.  As a result,  our
sales of these products did not meet expectations.

         The primary  product  that we were focused on  developing  was our SCIP
diagnostic  platform.  This device would reduce DNA testing to a  simple-to-use,
sample-in,  result-out  device  that  could  be used  outside  of a  traditional
laboratory.  Although  our SCIP  product  and our  technologies  had been funded
primarily through  government  research grants, we needed additional  funding to
complete  development  and move  into the  commercial  market.  As our cash flow
received  from the Xtra Amp(TM)  products was much lower than  anticipated,  the
Board of Directors  made the decision to seek outside  capital to fund continued
operations and development of our SCIP  technology.  Our cash flow problems were
exacerbated when we were sued by Trinity Biotech, plc. In December 2002, Trinity
filed  suit  against  us  alleging  breach of  contract,  breach of the  implied
covenant of good faith and fair  dealing,  fraud,  negligent  misrepresentation,
unjust  enrichment,  and  violation  of  the  Delaware  Consumer  Fraud  Act  in
conjunction  with the  sale of our  Hemostasis  business  to  Trinity.  The suit
alleged  that we  misrepresented  the  status of a single  product  that was the
subject of the Instrumentation Laboratory patent infringement suit settled by us
in January  2002,  and Trinity  sought $1.2 million in damages and $3 million in
punitive  damages.  We filed a counter  suit  against  Trinity  in  response  to
Trinity's suit seeking $27 million in actual damages and $30 million in punitive
damages for tortious interference with prospective economic advantage, breach of
contract,  and breach of the  covenant of good faith and fair  dealing.  We also
sought a declaratory  judgment that  Trinity's  suit was an improper  attempt to
avoid its  contractual  obligations  to us  because  Trinity  merely  instituted
litigation to force us to  renegotiate  the terms of the sale of our  Hemostasis
business. We settled this litigation in June 2003, but the cost of defending the
litigation  forced  us  to  radically  reduce  the  investment  in  our  product
development.

         Based on these  factors,  and advice from our  financial  advisor,  the
Board of Directors  determined that the best way to maximize  stockholder  value
was to examine  other  alternatives,  including  the sale of the  Company or our
assets.   Working  with  our  financial  advisor,   we  conducted  an  extensive
solicitation  process  to  obtain  proposals  for  transactions  ranging  from a
financing to the sale of our Company or our assets.  This process resulted in us
entering into the Assignment Agreement with Applera, as previously discussed.

         Since  completion of the sale of our  intellectual  property we have no
continuing  operations  or  significant  assets.  As a result,  we have  limited
overhead costs of operation,  but remain a reporting company under the rules and
regulations of the Securities  and Exchange  Commission.  The Board of Directors
believes that a  combination  with an existing  business,  which would entail us
merging or otherwise  joining  together  with an existing  business,  that could
create much greater  long-term  stockholder  value than simply  liquidating  the
Company. For these reasons, we have entered into the merger agreement with Alpha
Innotech Corporation as described above.

RESEARCH AND DEVELOPMENT

         All of our research and development  activities have been terminated we
have abandoned any remaining grants due to the sale of our intellectual property
to Applera Corporation in early 2004. In 2003, we spent $309,000 on research and
development.  In 2004,  research and development  expenses decreased to $99,000.
Due to the sale of our  intellectual  property  to  Applera,  all  research  and
development spending has been eliminated.

MANUFACTURING AND QUALITY CONTROL

         We conducted no manufacturing during 2004.

SALES AND MARKETING

         As a  result  of the  sale  of our  intellectual  property  to  Applied
Biosystems, we are no longer actively marketing any commercial products.


                                       5
<PAGE>


COMPETITION

         As a  result  of the  sale  of our  intellectual  property  to  Applied
Biosystems,  we are no longer  actively  engaged in  producing  or  selling  any
products or services and therefore is not in competition with other businesses.

SUPPLIERS

         As a  result  of the  sale  of our  intellectual  property  to  Applied
Biosystems, we are no longer purchasing materials for commercial products.

PATENTS, TRADEMARKS, AND PROPRIETARY INFORMATION

         As  described  above,  in  early  2004  we  sold  substantially  of our
intellectual  property rights, other than trademarks and trade names, to Applied
Biosystems.  We are no  longer  actively  pursuing  protection  of our  previous
trademarks and trade names.

EMPLOYEES

         As of December 31, 2004, we had no employees.

ITEM 2.  PROPERTIES

         We previously leased 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. On November 11, 2003, we
entered into an early termination  agreement with the landlord of this property.
The  early  termination  agreement  stipulated  that  we  would  pay  50% of the
remaining  base rent plus the abetted  gross rent plus any unpaid  interest.  We
terminated our lease on May 3, 2004 pursuant to this arrangement.

ITEM 3.  LEGAL PROCEEDINGS

         We are not involved in any legal proceedings that would have a material
adverse impact on our business, financial condition or results of operations.

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

         There were no matters submitted during the fourth quarter of the fiscal
year covered by this Report to a vote of stockholders,  through the solicitation
of proxies, or otherwise.


                                       6
<PAGE>


                                     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.  The
quotations  provided by the OTCBB reflect  inter-dealer  prices,  without retail
mark-up,  markdown or commission and may not represent actual  transactions.  We
have not paid any dividends since our inception and do not  contemplate  payment
of dividends in the foreseeable future.

                                          2004                      2003
                               -----------------------   -----------------------
                                   HIGH         LOW          HIGH         LOW
                               ----------   ----------   ----------   ----------
First quarter ..............   $    0.220   $    0.090   $    0.210   $    0.100

Second quarter .............        0.220        0.110        0.300        0.090

Third quarter ..............        0.220        0.160        0.220        0.100

Fourth quarter .............        0.230        0.150        0.180        0.090


(a)      On March 16,  2005,  the closing  trade price of our common  stock,  as
         reported by the OTCBB, was $0.14.

(b)      As of March 16, 2005, we had 223 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  2,492 beneficial  stockholders on
         the same date.

         DIVIDENDS

         We have never paid  dividends on our common stock.  We intend to retain
any future earnings for use in our business.


                                       7
<PAGE>


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

         The  following  discussion  should  be read  in  conjunction  with  our
financial  statements  provided  under Part II, Item 7, 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.

OVERVIEW

         We previously  developed and marketed 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.

         SALE OF INTELLECTUAL PROPERTY

         On January 26,  2004,  we entered  into an  Assignment  Agreement  with
Applera Corporation through its Applied Biosystems Group.  Pursuant to the terms
of  the  Assignment   Agreement,   Applied  Biosystems   purchased  all  of  our
intellectual  property,  other  than  trademarks  and trade  names.  The  assets
purchased  by Applied  Biosystems  included  all our U.S.  and foreign  patents,
inventions, trade secrets and know-how, and constituted substantially all of our
assets. The total consideration of $4,000,000  consisted of: (a) a $100,000 cash
deposit,  which was paid to us prior to closing,  (b) $3,500,000 in cash paid to
us at  closing;  and (c)  $400,000  in cash  to be paid 90 days  after  closing,
subject  to  our  providing  certain  consulting  services  as  required  by the
Assignment  Agreement.  On March 31,  2004,  Applied  Biosystems  delivered  the
$3,500,000  closing cash  payment,  and we delivered our  intellectual  property
rights,  into an escrow  account  pending the final closing of the  transaction.
Such final closing took place on May 14, 2004, after Applied Biosystems' receipt
of certain  certifications from us required as part of the due diligence efforts
under the Assignment Agreement. On August 15, 2004, Applied Biosystems delivered
the final $400,000 in cash due to the  completion of our consulting  services as
required by the Assignment Agreement.

         The sale of our intellectual property to Applied Biosystems resulted in
our receipt of net proceeds of  approximately  $3,357,000,  after payment of all
expenses associated with the transaction.  After complying with the requirements
of the Assignment  Agreement  with Applera to provide  consulting  services,  we
terminated all of our remaining employees.  As of May 3, 2004, we terminated the
lease  for  our  prior  executive  offices  pursuant  to  an  early  termination
agreement.  As a  result,  we  no  longer  have  any  continuing  operations  or
significant assets other than cash.

         We could  distribute  the remaining  cash proceeds as a dividend to our
stockholders  as  part  of  liquidation,   after  satisfaction  of  all  of  our
liabilities and payment of all costs associated with the liquidation. If we were
to  make a  distribution  to  stockholders  before  the  expiration  of  certain
representations and warranties we made under the Assignment Agreement (18 months
from the  date of  closing),  we would be  required  to  reserve  and hold  back
$1,000,000  for possible  settlement of potential  claims by Applied  Biosystems
against us for our breaches of those representations and warranties.

         PRIOR MERGER DISCUSSIONS

         Our Board of Directors believes that we can attract interest from other
businesses that might benefit from access to our funds, as well as our status as
a public company with a clean reporting  history.  Such interest could result in
us merging or otherwise  joining  together with an existing  business that could
create much greater  long-term  stockholder  value than simply  liquidating  the
Company.  Since  completion  of the  sale of our  intellectual  property,  after
payment of employee  severance  and lease  terminations  costs,  we have limited
overhead costs of operation,  but remain a reporting company under the rules and
regulations of the Securities and Exchange Commission.


                                       8
<PAGE>


         In June 2004, the Company  entered into a non-binding  letter of intent
with  Aduromed  Corporation,  pursuant to which we would  acquire  Aduromed in a
reverse  merger  transaction.  The proposed  acquisition  was subject to certain
conditions,  including satisfactory completion of due diligence by both parties,
execution of a definitive agreement, approval by our stockholders, and obtaining
required third party  approvals,  among others.  In September 2004, our Board of
Directors  determined to terminate its negotiations with Aduromed and the letter
of intent based on the results of our due  diligence  investigation  of Aduromed
and its  business.  Following  termination  of  discussions  with  Aduromed,  we
continued to explore merger candidates.

         MERGER AGREEMENT WITH ALPHA INNOTECH CORPORATION

         In December  2004,  we entered into a definitive  Agreement and Plan of
Merger with Alpha  Innotech  Corporation  pursuant to which Alpha Innotech would
merge with our wholly-owned subsidiary in a reverse merger transaction. Security
holders of Alpha  Innotech  would receive  shares of our common  stock,  and all
outstanding  Alpha  Innotech  stock options and warrants would be converted into
options and warrants to purchase our common  stock.  Immediately  following  the
consummation of the transaction,  our stockholders  would own approximately 17%,
and the  shareholders  of Alpha  Innotech  would own  approximately  83%, of the
outstanding  shares of common  stock of the  combined  company.  Pursuant to the
definitive agreement,  we also loaned Alpha Innotech Corporation $500,000.  Upon
completion of the  transaction,  we are expected to change our corporate name to
Alpha Innotech Corp.

         Alpha Innotech  Corporation,  a privately held company founded in 1992,
is a supplier of innovative  solutions for life science and drug  discovery with
core expertise in  quantitative  imaging,  informatics,  and molecular  biology.
Alpha Innotech maintains its corporate offices in San Leandro, California and it
has distributors  located in over 35 countries  around the world.  Following the
merger,  the board of directors  will be  comprised of two of our current  board
members and four current Alpha Innotech board members.

          The Boards of Directors of both  companies have  unanimously  approved
the  merger  agreement  and each is  expected  to submit it to their  respective
stockholders for approval.  Completion of the transaction is subject to a number
of  conditions,  including  approval  of both  the  Xtrana  and  Alpha  Innotech
stockholders,  obtaining certain regulatory and third party approvals, and other
customary  conditions.  We expect to submit the merger for approval at a meeting
of our stockholders during the first six months of 2005.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

         Our discussion  and analysis of our financial  condition and results of
operations are based upon our 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.

         INVENTORY ADJUSTMENTS

         Due to the sale of our  intellectual  property  to Applera  whereby the
inventory on hand at December  31, 2003,  was deemed  impaired  and,  therefore,
devalued to $0.00.

         INCOME TAXES

         Deferred income taxes are recognized for the expected tax  consequences
in the  future  years for the  differences  between  the tax bases of assets and
liabilities and their financial  reporting amounts,  based upon enacted tax laws
and statutory tax rates  applicable to the periods in which the  differences are
expected to affect taxable income. Our significant deferred tax asset is related
primarily to our net operating loss


                                       9
<PAGE>


carryforwards and foreign tax credits. We have had net income in fiscal 2004 and
a net loss  2003 and  received  a going  concern  explanatory  paragraph  in the
Independent  Auditors  Report of our  financial  statements  for the year  ended
December 31, 2004.  We have  concluded  that it is more likely than not that our
deferred  tax  assets  will not be  realized.  As a result,  we have  provided a
valuation  allowance for the total of our net deferred tax asset at December 31,
2004.  The  estimates  for  deferred tax asset and the  corresponding  valuation
allowance require complex judgments.  We periodically review those estimates for
reasonableness.  However,  because the recoverability of the deferred tax assets
is directly  dependent upon future operating results,  actual  recoverability of
deferred tax assets may differ materially form our estimates.

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

         REVENUE RECOGNITION

         Product  revenues are recorded on the day products are shipped from our
facilities. The products are warranted; however, to date, no significant returns
have  occurred.  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. We historically have been able to estimate
its percentage of completion on contracts reliably.  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.

         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.  As part of its review of its first  quarter  financial  results  and
executing  an  agreement  to sell all its  intellectual  property,  the  Company
performed an impairment  assessment of fixed assets.  The impairment  assessment
was  performed to  determine  whether any  impairment  existed.  The  impairment
indicators included, but were not limited to, the decline in the Company's stock
price,  the net book value of the assets,  and the overall decline in forecasted
growth  rates  which  have  negatively   impacted  the  Company's  revenues  and
forecasted  revenue growth rates, and the impact of the sale of the intellectual
property.


                                       10
<PAGE>


RESULTS OF OPERATIONS

         REVENUE

         Revenue from continuing  operations was $0.1 million for the year ended
December 31,  2004,  compared  with $1.2  million for the year ended 2003.  This
represents a decrease in revenue equal to $1.1 million, or 91%. The decrease was
the result of the sale of the  intellectual  property to Applied  Biosystems and
discontinuing our operations.

         COSTS AND EXPENSES

         Cost of sales, from continuing operations, decreased to $0.1 million in
2004, as a result of the sale of the intellectual property to Applied Biosystems
and discontinuing our operations.

         Selling,  general and administrative  expenses of continuing operations
decreased  by $.8  million,  or 35%, to $1.5  million in 2004 as compared to the
prior  year.  The  decline of $.8  million  was due to a  reduction  in expenses
resulting from the  termination of all employees and the termination and closing
of our  manufacturing  facility in  Broomfield,  Colorado  following the sale of
substantially all our assets.

         Research and development expenses of continuing operations decreased to
$0.01 million in fiscal 2004. This decrease was due to abandoning the grants and
terminating the employees as a result of the sale of our  intellectual  property
to Applied Biosystems.

         INCOME TAXES

         The  difference  between  our  effective  tax rate for 2004 and the 34%
federal  statutory  tax rate was  primarily  due to the effects of state  income
taxes,  non-deductible  goodwill  amortization,  and impairment,  as well as the
provision  for a  full  valuation  allowance  on all  net  deferred  tax  assets
available to us.

LIQUIDITY AND CAPITAL RESOURCES

         As of  December  31,  2004,  we had cash and cash  equivalents  of $2.4
million. As of December 31, 2004, our working capital position was $2.3 million,
with a current ratio of 21.0 to 1.0.

         We  generated  cash  of  $1.3  million  from  investing  and  operating
activities  in 2004  compared  to $0.4  million  generated  in  2003.  Net  cash
generated in  operating  activities  is primarily  the result of the sale of our
intellectual property to Applied Biosystems.

         In December  2002,  Trinity  Biotech plc filed suit against us alleging
breach  of  contract,  breach of the  implied  covenant  of good  faith and fair
dealing, fraud, negligent misrepresentation, unjust enrichment, and violation of
the Delaware  Consumer Fraud Act in conjunction  with the sale of our Hemostasis
business to Trinity in December  2001.  The suit alleged that we  misrepresented
the  status of a single  product  that was the  subject  of the  Instrumentation
Laboratory  patent  infringement suit settled by us in January 2002, and Trinity
sought $1.2  million in damages and $3 million in punitive  damages.  We filed a
counter suit against  Trinity in response to Trinity's  suit seeking $27 million
in actual damages and $30 million in punitive damages for tortious  interference
with  prospective  economic  advantage,  breach of  contract,  and breach of the
covenant of good faith and fair dealing.  We also sought a declaratory  judgment
that Trinity's suit was an improper attempt to avoid its contractual obligations
to us because  Trinity merely  instituted  litigation to force us to renegotiate
the terms of the sale of our Hemostasis business.  We settled this litigation in
June 2003,  but the cost of  defending  the  litigation  forced us to  radically
reduce the investment in our product development.

         On January 26,  2004,  we entered  into an  Assignment  Agreement  with
Applera Corporation through its Applied Biosystems Group.  Pursuant to the terms
of the Assignment  Agreement,  Applied Biosystems purchased all our intellectual
property other than our  trademarks and trade names,  for a total purchase price
of $4 million.  The assets purchased by Applied Biosystems included all our U.S.
and foreign  patents,  inventions,  trade secrets and know-how,  and constituted
substantially all of our assets.  The transaction was completed in May 2004. The
sale of our intellectual  property to Applied Biosystems resulted in our receipt
of


                                       11
<PAGE>


net  proceeds  of  approximately  $3,357,000,  after  payment  of  all  expenses
associated with the  transaction.  After complying with the  requirements of the
Assignment Agreement with Applied Biosystems to provide consulting services,  we
terminated all of our remaining employees.  As of May 3, 2004, we terminated the
lease  for  our  prior  executive  offices  pursuant  to  an  early  termination
agreement.

         In August 2001, we entered into an executive  employment agreement with
Timothy J. Dahltorp, pursuant to which Mr. Dahltorp agreed to serve as our Chief
Executive  Officer  and Chief  Financial  Officer  for a period of 3 years.  The
agreement provided for a base salary of $200,000 per year, plus annual incentive
compensation  as  determined  by the  Compensation  Committee  of the  Board  of
Directors.  The  agreement  also provided for severance of up to one year's base
salary if the  agreement was  terminated by us without cause or by Mr.  Dahltorp
upon a change in control.  Pursuant to the  employment  agreement,  our entering
into the Assignment  Agreement with Applied Biosystems  constituted a "change of
control"  and,  in  accordance  with the terms of the  Agreement,  Mr.  Dahltorp
terminated the employment agreement effective as of March 19, 2004. As a result,
we were  obligated  to continue to pay Mr.  Dahltorp  his current base salary of
$200,000 for a period of 12 months  following such  termination.  As of December
31, 2004, all severance obligations to Mr. Dahltorp have been satisfied.

         On November 11, 2003,  we entered into an early  termination  agreement
with the  landlord  from  which we lease or  executive  offices  in  Broomfield,
Colorado.  This  agreement  provided for rent  abatement and granted us an early
termination  option.  The gross  rent was  reduced  by $5,000  per month for the
period of December  2003  through  May 2004.  The abated  gross rent  carried an
accrued  interest charge at 6% per annum. We exercised the early  termination of
the  agreement  on May 3, 2004,  pursuant to which we paid 50% of the  remaining
base rent plus the abated gross rent plus any unpaid interest.

         The Company has never paid  dividends  on common stock and has no plans
to do so in fiscal 2004.  Our earnings if any will be retained for  reinvestment
in the business.

         Due to the sale of our intellectual property to Applied Biosystems,  we
no  longer  have any  continuing  operations  and are no longer  generating  any
revenues.  We are  currently  consuming  cash to fund  our  limited  operations.
However,  since  the  completion  of sale  our  intellectual  property,  we have
terminated  our remaining  employees  and  liquidated  substantially  all of our
assets. If the merger transaction with Alpha Innotech Corporation fails to close
for  any  reason,  we  could  continue  to  explore  other  potential   business
opportunities  that would provide  long-term  value to  stockholders or we could
distribute our cash as a dividend to our stockholders as part of liquidation and
after satisfaction of all of our liabilities and payment of all costs associated
with the liquidation.  If we were to make a distribution to stockholders  before
the  expiration  of certain  representations  and  warranties  we made under the
Assignment Agreement (18 months from the date of closing),  we would be required
to reserve and hold back $1,000,000 for possible  settlement of potential claims
by Applied Biosystems against us for our breaches of those  representations  and
warranties.  There  can be no  guarantee  that any of these  activities  will be
successful.

OFF-BALANCE SHEET ARRANGEMENTS

         At December 31, 2004 and 2003, we did not have any  relationships  with
unconsolidated  entities  or  financial  partnerships,  such as  entities  often
referred to as structured finance or special purpose entities,  which would have
been established for the purpose of facilitating  off-balance sheet arrangements
or other contractually  narrow or limited purposes.  As such, we are not exposed
to any  financing,  liquidity,  market or credit risk that could arise if we had
engaged in such relationships.


RELATED PARTY TRANSACTIONS

         We have a consulting  agreement in place with Mr. James Chamberlain,  a
member  of the  Board  of  Directors,  pursuant  to which  we have  engaged  Mr.
Chamberlain  as or Chief  Executive  Officer and Chief  Financial  Officer.  The
agreement  stipulates payments of $5,000 per month until a merger transaction is
complete.


                                       12
<PAGE>


RECENTLY ISSUED ACCOUNTING STANDARDS

FAS 123R DISCLOSURE

         In  December  2004,  the  FASB  issued  SFAS No.  123(R),  "Share-Based
Payment,"  which is a  revision  of SFAS No.  123,  Accounting  for  Stock-Based
Compensation.  SFAS No. 123(R) is effective for public  companies for interim or
annual  periods  beginning  after June 15, 2005,  supersedes APB Opinion No. 25,
Accounting for Stock Issued to Employees,  and amends SFAS No. 95,  Statement of
Cash Flows.

         SFAS  No.  123(R)  requires  all  share-based  payments  to  employees,
including  grants of employee  stock  options,  to be  recognized  in the income
statement  based on their  fair  values.  Pro-forma  disclosure  is no longer an
alternative.  The new  standard  will be effective  for the  Company,  beginning
August 1, 2005. The Company has not yet completed  their  evaluation but expects
the  adoption  to have an  effect on the  financial  statements  similar  to the
pro-forma effects reported above.

FAS 153 DISCLOSURE

         The FASB  issued  SFAS 153,  Exchanges  of  Nonmonetary  Assets,  which
changes the guidance in APB Opinion 29, Accounting for Nonmonetary Transactions.
This  Statement  amends  Opinion 29 to eliminate the  exception for  nonmonetary
exchanges of similar  productive assets and replaces it with a general exception
for exchanges of nonmonetary  assets that do not have  commercial  substance.  A
nonmonetary  exchange has  commercial  substance if the future cash flows of the
entity are expected to change  significantly  as a result of the exchange.  SFAS
153 is effective  during fiscal years beginning after June 15, 2005. The Company
does not  believe the  adoption  of SFAS 153 will have a material  impact on the
Company's financial statements.

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  occurs,  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 COMPANY

         WE ARE NO LONGER GENERATING REVENUES FROM OPERATIONS.  Our revenues for
the  year  ended  December  31,  2004  resulted  primarily  from the sale of our
intellectual property. Since the completion of that transaction,  we have closed
our operations and are no longer generating any revenues.  We are dependent upon
our cash reserves to fund our remaining overhead and administrative operations.

         WE MAY NOT BE ABLE TO  IDENTIFY  AND  EVALUATE  A  POTENTIAL  MERGER OR
REORGANIZATION  PARTNER IN A TIMELY MANNER,  WHICH MAY HAVE AN ADVERSE EFFECT ON
OUR  BUSINESS.  While we have entered into a  definitive  Agreement  and Plan of
Merger  with Alpha  Innotech  Corporation,  the  closing of the  transaction  is
subject to a number of conditions to closing.  These conditions include approval
of both the Xtrana and Alpha Innotech stockholders, obtaining certain regulatory
and third party approvals,  and other customary conditions.  We expect to submit
the merger for  approval at a meeting of our  stockholders  during the first six
months of 2005. However,  there can be no assurance that the transaction will be
completed in a timely manner, if at all. If the transaction is not completed, we
could  either  pursue  other  potential  business   combinations  or  propose  a
liquidation of the Company. Because we are no longer generating revenues, delays
in completion of any  transaction  will result in further  depletion of our cash
reserves.

         In addition,  there can be no assurance  following  consummation of any
acquisition  or merger  that the  business  venture  will  develop  into a going
concern  or, if the  business  is already  operating,  that it will  continue to
operate successfully.  Many of the potential business  opportunities  available,
including  Alpha  Innotech  Corporation,  for  acquisition  may  involve new and
untested products,  processes or market strategies that may not ultimately prove
successful.


                                       13
<PAGE>


         OUR  STOCKHOLDERS  MAY EXPERIENCE  SUBSTANTIAL  DILUTION IN A POTENTIAL
ACQUISITION,  MERGER OR REORGANIZATION.  In the event we do successfully acquire
or merge with an operating business  opportunity,  it is likely that our present
stockholders will experience  substantial  dilution;  and, in such event,  there
will be a probable change in control of our Company.  Most likely, the owners of
the business  opportunity  will acquire  control of our Company  following  such
transaction.  Our merger agreement with Alpha Innotech Corporation provides that
immediately  following the  consummation of the  transaction,  our  stockholders
would own  approximately  17%, and the  shareholders of Alpha Innotech would own
approximately  83%, of the  outstanding  shares of common  stock of the combined
company.  If we do not complete the Alpha Innotech  transaction and pursue other
opportunities,  we cannot predict the manner in which we might  participate in a
prospective new business  opportunity.  Each separate potential opportunity will
be reviewed and, upon the basis of that review,  a suitable  legal  structure or
method  of  participation  will be  chosen.  The  particular  manner in which we
participate in a specific  business  opportunity  will depend upon the nature of
that opportunity, the respective needs and desires of the Company and management
of the  opportunity,  and  the  relative  negotiating  strength  of the  parties
involved.  Actual  participation  in a business  venture may take the form of an
asset purchase,  lease,  joint venture,  license,  partnership,  stock purchase,
reorganization,  merger or  consolidation.  We may act  directly  or  indirectly
through an interest in a partnership,  corporation, limited liability company or
other form of organization.

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 over 30% of our outstanding  common stock,  based
upon the  beneficial  ownership of our common stock as of December 31, 2004.  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.

         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.


                                       14
<PAGE>


ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The following financial  statements of Xtrana, Inc. are included in the
report on the following pages:

                                                                        PAGE NO.
                                                                        --------
Report of independent registered public accounting firm................    20

Balance sheet as of December 31, 2004..................................    21

Statements of operations for the years ended
December 31, 2004 and 2003.............................................    23

Statements of stockholders' equity for the years
ended December 31, 2004 and 2003.......................................    24

Statements of cash flows for the years ended
December 31, 2004 and 2003.............................................    25

Notes to financial statements..........................................    26


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

         None.

ITEM 8A. CONTROLS AND PROCEDURES

         As of December 31, 2004,  the end of the period covered by this report,
our Chief Executive Officer and Chief Financial Officer,  with the participation
of our  management,  carried  out an  evaluation  of  the  effectiveness  of our
disclosure  controls and  procedures  pursuant to Exchange  Act Rule  13a-15(b).
Based upon that  evaluation,  the Chief  Executive  Officer and Chief  Financial
Officer believe that, as of the date of the evaluation,  our disclosure controls
and procedures are effective.

          There  were no  significant  changes  in our  internal  controls  over
financial  reporting or in other factors that could  significantly  affect these
internal  controls over  financial  reporting  after the date of our most recent
evaluation.


                                       15
<PAGE>


                                    PART III

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

         Incorporated by reference to the Company's  definitive  Proxy Statement
to be filed with the Securities  and Exchange  Commission on or before April 30,
2005.

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,
2005.

ITEM 11. SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL  OWNERS AND  MANAGEMENT  AND
         RELATED STOCKHOLDER MATTERS

         Incorporated by reference to the Company's  definitive  Proxy Statement
to be filed with the Securities  and Exchange  Commission on or before April 30,
2005.

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,
2005.

ITEM 13. EXHIBITS

EXHIBIT
  NO.    DESCRIPTION
-------  -----------
2.1      Assignment  Agreement  dated  January 24, 2004  between the Company and
         Applera Corporation, though its Applied Biosystems Group (7)

2.1.1    First  Amendment  to the  Assignment  Agreement  dated  March 31,  2004
         between  the  Company  and  Applera  Corporation,  through  its Applied
         Biosystems Group

2.2      Agreement  and Plan of Merger  dated as of December  14,  2004,  by and
         among the Company, AIC Merger Corp. and Alpha Innotech Corporation (9)

3.1      Certificate of Incorporation (1)

3.2      By Laws (1)

4.1      Shareholder Rights Plan (3)

4.2      Second  Rights  Agreement  Amendment  between the Company and  American
         Stock Transfer and Trust Company (10)

10.1     1993 Stock Incentive Plan (2) *

10.2     2000 Stock Incentive Plan (5) *

10.4     Lease Agreement - Broomfield, Colorado (6)

10.4.1   Lease Addendum Two for  Modification  of Rent and Early  Termination of
         Lease dated  November 11, 2003 between the Company and James M. Roswell
         d/b/a Burbank East Business Par.(7)

10.4.2   Lease Addendum Three for Modification of Rent and Early  Termination of
         Lease dated  February 12, 2004 between the Company and James M. Roswell
         d/b/a Burbank East Business Park (7)

10.5     Secured  Promissory Note Dated December 16, 2004 made by Alpha Innotech
         Corporation in favor of the Company

10.6     Pledge and General  Security  Agreement dated December  16,2004 between
         Alpha Innotech Corporation and the Company

14.1     Code of Ethical Conduct (8)

23.1     Consent of Independent Auditors

24.1     Power of Attorney (included on signature page)


                                       16
<PAGE>


31.1     Certificate of our Chief Executive  Officer and Chief Financial Officer
         pursuant to Rule 13a-14(a).

32.1     Certificate of our Chief Executive  Officer and Chief Financial Officer
         pursuant to Rule 13a-14(b).

*        Indicates a management contract or compensatory plan.

(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-KSB 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 10-KSB filed on March
         19, 2004.

(8)      Incorporated  by reference to the  Registrant's  Form 10-KSB/A filed on
         April 28, 2004.

(9)      Incorporated  by  reference  to the  Registrant's  Form  8-K  filed  on
         December 17, 2004.

(10)     Incorporated by reference to the Registrant's Form 8-K filed January 5,
         2005.


ITEM 14. PRINCIPAL ACCOUNTANT AND FEES

         Incorporated by reference to the Company's  definitive  Proxy Statement
to be filed with the Securities  and Exchange  Commission on or before April 30,
2005.


                                       17
<PAGE>


                                   SIGNATURES

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

                               Xtrana, Inc.

Date:  March 31, 2005          BY:  /S/ JAMES H. CHAMBERLAIN
                                    --------------------------------
                                    James H. Chamberlain
                                    Chief Executive Officer &
                                    Chief Financial Officer
                                    (Principal Executive, Financial
                                    and Accounting Officer)

         Each person whose  signature  appears  below  constitutes  and appoints
James H. Chamberlain and Michael Bick,  Ph.D., and each of them, as his true and
lawful   attorney-in-fact   and  agent  with  full  power  of  substitution  and
re-substitution,  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.

         In accordance with Section 13 or 15(d) of the Exchange Act, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.


/S/ MICHAEL D. BICK                Chairman of the Board          March 31, 2005
---------------------------
Michael D. Bick, Ph.D.


/S/ JAMES H. CHAMBERLAIN           Chief Executive Officer,       March 31, 2005
---------------------------        Chief Financial
James H. Chamberlain               Officer and Director


/S/ DOUGLAS L. AYER                Director                       March 31, 2005
---------------------------
Douglas L. Ayer


/S/ N. PRICE PASCHALL              Director                       March 31, 2005
---------------------------
Price Paschall


/S/ JOHN C. GERDES, PH.D.          Director                       March 31, 2005
---------------------------
John C. Gerdes, Ph.D.


/S/ JAMES MAHONY, PH.D.            Director                       March 31, 2005
---------------------------
James Mahony, Ph.D.


                                       18
<PAGE>


                         ANNUAL REPORT ON FORM 10-KSB

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

                              FINANCIAL STATEMENTS

                          YEAR ENDED DECEMBER 31, 2004

                                  XTRANA, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                                SEDALIA, COLORADO


                                       19
<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Board of Directors and Stockholders
Xtrana, Inc.
Sedalia, CO


We have audited the accompanying  balance sheet of Xtrana, Inc. (the Company), a
development  stage  enterprise,  as  of  December  31,  2004,  and  the  related
statements of  operations,  stockholders'  equity,  and cash flows for the years
ended  December  31,  2004  and  2003.   These  financial   statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States).Those  standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company has determined that it
is not required to have, nor were we engaged to perform an audit of its internal
control over financial reporting.  Our audit included  consideration of internal
control over financial  reporting as a basis for designing audit procedures that
are appropriate in the circumstances,  but not for the purpose of expressing and
opinion on the  effectiveness  of the Company's  internal control over financial
reporting.  Accordingly we express no such opinion. An audit includes examining,
on a  test  basis,  evidence  supporting  the  amounts  and  disclosures  in the
financial statements. An audit also includes assessing the accounting principles
used and  significant  estimates made by  management,  as well as evaluating the
overall financial statement  presentation.  We believe that our audits provide a
reasonable basis for our opinion.

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

The accompanying  financial  statements have been prepared  assuming the Company
will  continue  as a going  concern.  As  discussed  in Note 2 to the  financial
statements,  the Company has suffered significant losses from operations for the
years ended  December  31, 2004 and 2003.  Management's  plans to address  these
matters  are  also  included  in  Note  2 to  the  financial  statements.  These
conditions raise  substantial doubt about the Company's ability to continue as a
going  concern.  The financial  statements do not include any  adjustments  that
might result from the outcome of this uncertainty.


HEIN & ASSOCIATES LLP

Denver, Colorado
March 2, 2005


                                       20
<PAGE>


                                  XTRANA, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                                  BALANCE SHEET

                                DECEMBER 31, 2004
                                 (in thousands)


ASSETS

CURRENT ASSETS
     Cash and cash equivalents ...................................        $2,397
     Notes Receivable $500 (net of reserve of $500) ..............          --
     Prepaid expenses and other current assets ...................            13
                                                                          ------

TOTAL CURRENT ASSETS .............................................         2,410



TOTAL ASSETS .....................................................        $2,410
                                                                          ======


See accompanying notes to financial statements.


                                       21
<PAGE>


                                  XTRANA, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                                  BALANCE SHEET

                                DECEMBER 31, 2004
                        (in thousands except share data)
                                   (continued)


LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
     Accounts payable .............................................    $     59
     Accrued liabilities ..........................................          56
                                                                       --------

TOTAL CURRENT LIABILITIES .........................................         115

COMMITMENTS AND CONTINGENCIES (see notes 2 and 3)

STOCKHOLDERS' EQUITY:
     Common stock, $.01 par value, 50,000,000 shares authorized;
        16,533,269 shares issued and outstanding ..................         165
     Additional paid-in capital ...................................      19,446
     Accumulated deficit ..........................................     (18,574)
     Retained earnings during development stage ...................       1,258
                                                                       --------

TOTAL STOCKHOLDERS' EQUITY ........................................       2,295
                                                                       --------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ........................    $  2,410
                                                                       ========


See accompanying notes to financial statements.


                                       22
<PAGE>


                                  XTRANA, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                            STATEMENTS OF OPERATIONS

                                                               YEAR ENDED
                                                               DECEMBER 31,
                                                           --------------------
                                                             2004       2003
                                                           --------    --------
                                                           (in thousands except
                                                              per share data)
REVENUE:
Grant revenue ..........................................   $    102    $  1,159
Nucleic acid (DNA/RNA) testing kits ....................       --            32
                                                           --------    --------
Total revenue ..........................................        102       1,191

COST OF SALES:
Grant Cost of Sales ....................................         79         949
Nucleic acid (DNA/RNA) testing kits ....................       --             4
                                                           --------    --------
Total cost of sales ....................................         79         953
                                                           --------    --------

GROSS PROFIT ...........................................         23         238
Operating expenses:
     Selling, general and administrative ...............      1,492       2,300
     Research and development ..........................         99         308
     Fixed asset impairment charges ....................       --           493
                                                           --------    --------

TOTAL OPERATING EXPENSES ...............................      1,591       3,101
                                                           --------    --------

Reserve for loss on note receivable ....................       (500)       --
Gain (loss) on sale of intellectual property ...........      3,310        --
Other income, net ......................................         16          51
                                                           --------    --------

NET INCOME (LOSS) ......................................   $  1,258    $ (2,812)
                                                           ========    ========

WEIGHTED AVERAGE SHARES OUTSTANDING

     Basic and Diluted .................................     16,533      16,533
                                                           ========    ========

BASIC AND DILUTED EARNINGS (LOSS) PER SHARE ............   $   0.08    $  (0.17)
                                                           ========    ========

See accompanying notes to financial statements.


                                       23
<PAGE>


<TABLE>
                                  XTRANA, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                        (in thousands except share data)

<CAPTION>
                                                                                           RETAINED
                                                                                           EARNINGS
                                                                ADDITIONAL                  DURING
                                            COMMON STOCK         PAID-IN     ACCUMULATED  DEVELOPMENT
                                        SHARES       AMOUNT      CAPITAL       DEFICIT       STAGE        TOTAL
                                      ----------   ----------   ----------   ----------    ----------   ----------
<S>                                   <C>          <C>          <C>          <C>           <C>          <C>
BALANCE AT JANUARY 1, 2003 ........   16,533,269   $      165   $   19,438   $  (15,762)   $     --     $    3,841

    Net loss ......................         --           --           --         (2,812)         --         (2,812)

    Options issued to non-employees         --           --              8         --            --              8
                                      ----------   ----------   ----------   ----------    ----------   ----------

BALANCE AT DECEMBER 31, 2003 ......   16,533,269          165       19,446      (18,574)         --          1,037

    Net Income ....................         --           --           --           --           1,258        1,258
                                      ----------   ----------   ----------   ----------    ----------   ----------

BALANCE AT DECEMBER 31, 2004 ......   16,533,269   $      165   $   19,446   $  (18,574)   $    1,258   $    2,295
                                      ==========   ==========   ==========   ==========    ==========   ==========
</TABLE>


See accompanying notes to financial statements.


                                       24
<PAGE>


                                  XTRANA, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                            STATEMENTS OF CASH FLOWS

                                                                 YEAR ENDED
                                                                DECEMBER 31,
                                                             ------------------
                                                               2004       2003
                                                             -------    -------
                                                               (in thousands)
OPERATING ACTIVITIES
     Net Income (loss) from operations ...................   $ 1,258    $(2,812)
     Adjustments to reconcile income (loss) from
     operations to net cash used in by continuing
     operating activities:
        Options issued to non-employees ..................      --            8
        Depreciation and Amortization ....................        17        245
        Reserve for loss on note receivable ..............       500       --
        Loss on Fixed Asset Disposal .....................         5       --
        Gain on Patent Disposal ..........................    (3,357)      --
        Fixed Asset impairment charge ....................      --          493
        Inventory valuation allowance ....................      --           35
     Changes in operating assets and liabilities:
        Notes receivable - discount ......................      --         (225)
        Accounts and grants receivable ...................         7         65
        Prepaid expenses and other current assets ........        42         46
        Accounts payable and accrued expenses ............      (339)      (217)
                                                             -------    -------

     Net cash used in continuing operating activities ....    (1,867)    (2,362)

NET CASH USED IN OPERATING ACTIVITIES ....................    (1,867)    (2,362)

INVESTING ACTIVITIES
     Sale of Intellectual Property .......................     3,658       --
     Note Receivable .....................................      (500)      --
     Sale of Fixed Assets ................................        41       --
     Receipts on note receivable .........................      --        2,848
     Other ...............................................       (21)      --
     Additions to deferred patent cost ...................      --          (78)
                                                             -------    -------

NET CASH PROVIDED IN INVESTING ACTIVITIES ................     3,178      2,770


NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS .....     1,311        408

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR .............     1,086        678
                                                             -------    -------

CASH AND CASH EQUIVALENTS, END OF YEAR ...................   $ 2,397    $ 1,086
                                                             =======    =======


SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                                       25
<PAGE>


                                  XTRANA, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                          NOTES TO 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  previously  developed and marketed 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.  In  January  2004 the  Company  sold its  intellectual
property and is currently seeking a merger candidate (see note 2).

BASIS OF PRESENTATION

         Our financial  statements have been prepared  assuming the Company will
continue as a going  concern.  For the year ended December 31, 2004, we incurred
positive cash flow of approximately $1.3 million. This is the result of the sale
of our Intellectual  property to Applera. As described more fully in Notes 2 and
3 to the financial  statements,  during the latter part of 2002 and in 2003, the
Company  transitioned  its core line of business from Hemostasis to nucleic acid
testing. In connection with this transition, revenues from continuing operations
were substantially reduced.  Effective January 1, 2004 the Company determined it
went back into a  development  stage  enterprise as a result of and agreement to
sell its remaining revenue generating operations (see note 2). Activities during
the  development  stage  have  included  the sale of  assets  and  search  for a
potential merger company.

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  costs  incurred  in each  period is
charged to the contract loss reserve.

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 and  classifications
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 and the change could be material to the financial statements.

CASH AND CASH EQUIVALENTS

         Cash and cash equivalents  represent highly liquid  investments,  which
mature daily.


                                       26
<PAGE>


STOCK-BASED COMPENSATION

         As permitted under the Statements of Financial Accounting Standards No.
123  ("SFAS  123"),  "Accounting  for  Stock-Based  Compensation,"  the  Company
accounts for its  stock-based  compensation  for options  issued to employees in
accordance  with the provisions of Accounting  Principles  Board Opinion No. 25,
"Accounting  for Stock Issued to  Employees"  ("APB 25").  As such,  for options
granted to  employees  and  directors,  compensation  expense is  recorded  on a
straight-line  basis  over the  shorter  of the  period  that the  services  are
provided  or the  vesting  period,  only  if the  current  market  price  of the
underlying  stock exceeds the exercise  price.  Certain pro forma net income and
earnings  per share  disclosures  for  employee  stock  option  grants  are also
included  below as if the fair  value  method  as  defined  in SFAS 123 had been
applied.  Transactions in equity  instruments  with  non-employees  for goods or
services are accounted for by the fair value method.

         Had compensation  cost for the Plan been determined based upon the fair
value at the grant date for options  granted,  consistent with the provisions of
SFAS 123, the Company's net income/loss and net income/loss per share would have
been increased to the pro forma amounts indicated below:

                                                          2004          2003
                                                       ---------      ---------
Net income (loss) - as reported ..................     $   1,258      $  (2,812)
Effect of stock-based compensation
   included in reported net loss .................          --             --
Effect of stock-based compensation
   per SFAS 123 ..................................           (66)          (148)
                                                       ---------      ---------
Net income (loss) applicable to
   common stock - pro forma ......................     $   1,192      $  (2,960)
                                                       =========      =========

Basic and diluted:
   Net income (loss) per share - as reported .....     $    0.08      $   (0.17)
   Effect of stock-based compensation
      included in reported net loss ..............          --             --
   Effect of stock-based compensation
      per SFAS 123 ...............................         (0.01)         (0.01)
                                                       ---------      ---------
   Net loss applicable to common stock -
      pro forma ..................................     $    0.07      $   (0.18)
                                                       =========      =========

         The fair value of each option  grant under the Plan is estimated on the
date of grant using the  Black-Scholes  option-pricing  model with the following
assumptions:

                                                   2004              2003
                                                 ---------         ---------
Risk-free interest .........................        4.0%              4.0%
Expected life ..............................     6.9 years         6.9 years
Expected volatility ........................       167.0%            167.0%
Expected dividend ..........................         --                --

         The expected life was determined based on the Plan's vesting period and
exercise behavior of the employees.

NOTE RECEIVABLE

         Pursuant to the  definitive  merger  agreement  see (note 2), we loaned
Alpha Innotech Corporation  $500,000.  The note matures and becomes due 6 months
following the date of  termination  and  automatically  terminates as closing as
defined in the  merger  agreement.  The note  carries  interest  at a rate of 8%
annually


                                       27
<PAGE>


payable  at  maturity.  Concentration  of credit  risk with  respect to the note
receivable is  collateralized by the assets of Alpha Innotech  Corporation.  The
note  receivable  is  subordinated  to BFI  Business  Finance  under a loan  and
security  agreement  dated March 9, 2004.  The Company has  reserved  the entire
amount of the note due to the questionable collectability of the note should the
merger not be consummated.

PROPERTY AND EQUIPMENT

         Property and equipment was stated at cost.  Depreciation  was generally
calculated on a  straight-line  basis over their estimated  useful lives,  which
ranged from 3 to 10 years.  Leasehold  improvements  were generally  depreciated
over their estimated useful lives or over the period of the lease, whichever was
shorter.  As part of its review of its 2004 first quarter  financial results and
entering into an agreement to sell all its  intellectual  property,  the Company
performed an impairment  assessment of fixed assets.  The impairment  assessment
was  performed to  determine  whether any  impairment  existed.  The  impairment
indicators included, but were not limited to, the decline in the Company's stock
price,  the net book value of the assets,  and the overall decline in forecasted
growth  rates  which  have  negatively   impacted  the  Company's  revenues  and
forecasted  revenue growth rates, and the impact of the sale of the intellectual
property.  As a result the Company recorded a $33,000  impairment charge in 2004
to reduce fixed assets to reflect their current estimated fair value of $0.00.

DEFERRED PATENT COSTS

         Prior to the sale of its  patents  in  January  2004  (see  note 2) the
Company   capitalized   legal  costs  directly   incurred  in  pursuing   patent
applications as deferred  patent costs.  When such  applications  resulted in an
issued patent, the related costs were amortized over the remaining legal life of
the patents, generally 15 years, using the straight-line method.

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.
Research and development  costs were $99,000 and $308,000 during the years ended
December 31, 2004 and December 31, 2003 respectively.

INCOME TAXES

         The Company  accounts for income taxes in accordance with the Statement
of Financial  Accounting Standards No. 109, "Accounting for Income Taxes," which
requires the  recognition  of deferred tax  liabilities  and assets at currently
enacted tax rates for the expected  future tax  consequences of events that have
been included in the financial  statements or tax returns. A valuation allowance
is  recognized  to reduce the net  deferred  tax asset to an amount that is more
likely than not to be  realized.  The tax  provision  shown on the  accompanying
statement of operations is zero since the deferred tax asset  generated from the
net operating loss is offset in its entirety by a valuation allowance.

CONCENTRATION OF CREDIT RISK

         Financial  instruments,   which  potentially  subject  the  Company  to
concentrations of credit risk, consist principally of temporary cash investments
and a note  receivables to Alpha Innotech  Corporation (see note 2). At December
31, 2004,  substantially  all cash and cash equivalents were on deposit with one
financial  institution.  Concentration  of credit risk with  respect to the note
receivable  is  secured by the assets of Alpha  Innotech  Corporation.  The note
receivable  is  subordinated  to BFI Business  Finance under a loan and security
agreement dated March 9, 2004. The Company has reserved the entire amount of the
note due to the questionable collectability of the note should the merger not be
consummated.

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


                                       28
<PAGE>


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  1,746,389 and  2,373,802  shares with
exercise  prices  greater  than the average  market  prices of common stock were
outstanding  during the years ended  December  31, 2004 and 2003,  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,  note
receivable,  payables  and accrued  expenses  approximate  fair value due to the
short maturity of these instruments.

RECENT ACCOUNTING PRONOUNCEMENTS

FAS 123R DISCLOSURE

         In  December  2004,  the  FASB  issued  SFAS No.  123(R),  "Share-Based
Payment,"  which is a  revision  of SFAS No.  123,  Accounting  for  Stock-Based
Compensation.  SFAS No. 123(R) is effective for public  companies for interim or
annual  periods  beginning  after June 15, 2005,  supersedes APB Opinion No. 25,
Accounting for Stock Issued to Employees,  and amends SFAS No. 95,  Statement of
Cash Flows.

         SFAS  No.  123(R)  requires  all  share-based  payments  to  employees,
including  grants of employee  stock  options,  to be  recognized  in the income
statement  based on their  fair  values.  Pro-forma  disclosure  is no longer an
alternative.  The new  standard  will be effective  for the  Company,  beginning
August 1, 2005. The Company has not yet completed  their  evaluation but expects
the  adoption  to have an  effect on the  financial  statements  similar  to the
pro-forma effects reported above.

FAS 153 DISCLOSURE

         The FASB  issued  SFAS 153,  Exchanges  of  Nonmonetary  Assets,  which
changes the guidance in APB Opinion 29, Accounting for Nonmonetary Transactions.
This  Statement  amends  Opinion 29 to eliminate the  exception for  nonmonetary
exchanges of similar  productive assets and replaces it with a general exception
for exchanges of nonmonetary  assets that do not have  commercial  substance.  A
nonmonetary  exchange has  commercial  substance if the future cash flows of the
entity are expected to change  significantly  as a result of the exchange.  SFAS
153 is effective  during fiscal years beginning after June 15, 2005. The Company
does not  believe the  adoption  of SFAS 153 will have a material  impact on the
Company's financial statements.

2.       GOING CONCERN

         The accompanying  financial  statements have been prepared on the basis
that the Company is a going  concern,  which  contemplates  the  realization  of
assets and the satisfaction of liabilities in the normal course of business. The
accompanying financial statements reflect net income of $1,258,000 and a loss of
$2,812,000  for the years  ended,  December  31,  2004 and  2003,  respectively.
Working  capital  and   stockholders'   equity  is  $2,295,000  and  $2,295,000,
respectively, as of December 31, 2004.

         On January 26, 2004, the Company  entered into an Assignment  Agreement
with Applera Corporation  through its Applied Biosystems Group.  Pursuant to the
terms of the Assignment Agreement, Applied Biosystems purchased all intellectual
property of the Company,  other than the Company's  trademarks  and trade names.
The assets purchased by Applied  Biosystems  included all the Company's U.S. and
foreign  patents,  inventions,  trade  secrets  and  know-how,  and  constituted
substantially all of the Company's assets. The total consideration of $4,000,000
consists  of: (a) a $100,000  cash  deposit,  which was  previously  paid to the
Company, (b) $3,500,000 in cash paid to the Company at closing; and (c) $400,000
in cash to be paid 90 days  after  closing,  subject  to the  Company  providing
certain consulting services as required by the Assignment  Agreement.  The total
purchase  price  paid  by  Applied  Biosystems  was  determined  in  arms-length
negotiations between the parties.


                                       29
<PAGE>


         On March 31, 2004, Applied Biosystems  delivered the $3,500,000 closing
cash payment,  and the Company delivered its intellectual  property rights, into
an escrow  account  pending  the final  closing of the  transaction.  Such final
closing took place on May 14, 2004, after Applied Biosystems' receipt of certain
certifications  from the Company  required as part of the due diligence  efforts
under the Assignment Agreement.

         On August 15, 2004, Applied  Biosystems  delivered the $400,000 in cash
due to the completion of the  consulting  services as required by the Assignment
Agreement.

         The sale of the Company's  intellectual  property to Applied Biosystems
resulted  in the  receipt of net  proceeds of  approximately  $3,357,000  by the
Company,  after payment of all expenses  associated with the transaction.  After
complying  with the  requirements  of the  Assignment  Agreement with Applera to
provide  consulting  services,  the  Company  terminated  all of  its  remaining
employees.  As of May 3, 2004,  the Company  terminated  the lease for its prior
executive offices pursuant to an early termination agreement.

         The Company could  distribute the remaining cash proceeds as a dividend
to the Company's stockholders as part of liquidation,  after satisfaction of all
of the  Company's  liabilities  and  payment  of all costs  associated  with the
liquidation.  If the Company were to make a  distribution  of the remaining cash
proceeds to its  stockholders  before the expiration of certain  representations
and warranties  the Company made under the Assignment  Agreement (18 months from
the date of  closing),  the  Company  would be required to reserve and hold back
$1,000,000  for possible  settlement of potential  claims by Applied  Biosystems
against the  Company for the  Company's  breaches of those  representations  and
warranties.

         The Company and Alpha Innotech  Corporation  announced in December 2004
that they entered into a merger  agreement.  Security  holders of Alpha Innotech
will receive shares of the Company's  common stock,  and all  outstanding  Alpha
Innotech  stock options and warrants will be converted into options and warrants
to purchase  shares of the  Company's  common stock.  Immediately  following the
consummation  of the  transaction,  the  stockholders  of the  Company  will own
approximately 17%, and the stockholders of Alpha Innotech will own approximately
83%, of the outstanding  shares of common stock of the combined  company.  Alpha
Innotech Corporation, a privately held company founded in 1992, is a supplier of
innovative  solutions for life science and drug discovery with core expertise in
quantitative  imaging,  informatics,  and  molecular  biology.  Pursuant  to the
definitive agreement, The Company also agreed to loan Alpha Innotech Corporation
$500,000. The agreement requires Stockholder approval.

3.       COMMITMENTS AND CONTINGENCIES

LEASES

         On November 11,  2003,  the Company  entered into an early  termination
agreement  with the landlord.  The agreement  provides for rent abatement and an
early termination option. The gross rent was reduced by $5,000 per month for the
period of December  2003  through  May 2004.  The abated  gross rent  carried an
interest charge at 6% per annum.  The lease was terminated May 3, 2004 under the
agreement  that  stipulated  the Company pay 50% of the remaining base rent plus
the abetted gross rent plus any unpaid  interest.  The Company paid $201,159 for
early termination.

4.       RELATED PARTY TRANSACTIONS

         The Company has an  agreement  in place with Mr.  James  Chamberlain  a
member of the Company's  Board of  Directors,  pursuant to which the Company has
engaged Mr.  Chamberlain  as the  Company's  Chief  Executive  Officer and Chief
Financial Officer. The agreement stipulates payments of $5,000 per month until a
merger transaction is complete.


                                       30
<PAGE>


5.       STOCK OPTION PLANS AND WARRANTS

         The Company has two stock option plans (the "Plans") for the benefit of
employees,  officers,  directors, and consultants of the Company. As of December
31,  2004,  a total of  3,946,634  shares of the  Company's  common  stock  were
reserved  for  issuance  under the Plans.  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 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 2004 and 2003 was as follows:

                                                                        WEIGHTED
                                                                        AVERAGE
                                      SHARES                            EXERCISE
                                   OUTSTANDING       PRICE RANGE         PRICE
                                    ---------     -----------------    ---------
BALANCE AT JANUARY 1, 2003 .....    1,890,179     $0.2300 - $2.5000    $   0.83

Granted ........................         --                    --           --
Exercised ......................         --                    --           --
Cancelled ......................     (201,132)    $0.2900 - $1.3750    $   0.92
                                    ---------

BALANCE AT DECEMBER 31, 2003 ...    1,689,047     $0.2300 - $2.5000    $   0.82
Granted ........................         --                    --           --
Exercised ......................         --                    --           --
Cancelled ......................      617,413     $0.2600 - $1.5000    $   1.10
                                    ---------

BALANCE AT DECEMBER 31, 2004 ...    1,071,634     $0.2300 - $2.5000    $   0.67


         The  following  information  summarizes  stock options  outstanding  at
December 31, 2004:

                             OUTSTANDING                       EXERCISABLE
                    --------------------------------   -------------------------
                                  Weighted Average
                                -------------------
                                 Remaining                             Weighted
                                Contractual                             Average
                      Number      Life in   Exercise      Number       Exercise
Exercise Price     Outstanding    Months     Price     Exercisable       Price
--------------------------------------------------------------------------------
$ 0.00 - $ 0.31        110,000      91      $ 0.230      110,000       $ 0.230
$ 0.31 - $ 0.63        495,000      88      $ 0.370      458,332       $ 0.370
$ 0.63 - $ 0.94        128,000      54      $ 0.765      123,999       $ 0.764
$ 0.94 - $ 1.25        276,634      55      $ 0.993      276,634       $ 0.993
$ 1.25 - $ 1.56          8,250      13      $ 1.438        8,250       $ 1.438
$ 1.56 - $ 1.88         12,500      31      $ 1.687       12,500       $ 1.687
$ 2.19 - $ 2.50         41,250      26      $ 2.396       41,250       $ 2.396
                     ---------      --      -------    ---------       -------
                     1,071,634      72      $ 0.665    1,030,965       $ 0.675

         At December 31, 2004, 3,460,630 shares were available for future grants
under the Plans.

         The weighted average remaining  contractual life of outstanding options
at December 31, 2004, was 6.0 years. At December 31, 2004,  there were 1,030,965
options exercisable with weighted average exercise prices of $0.68.

         As of December 31, 2004,  the Company had 674,755  warrants to purchase
common stock outstanding and exercisable for prices ranging from $0.01 to $1.875
with a weighted  average  exercise  price of $0.9047  per  share.  The  weighted
average  remaining  contractual life of these warrants at December 31, 2004, was
2.9 years. These warrants have expiration dates ranging from 2005 to 2010.


                                       31
<PAGE>


6.       INCOME TAXES

         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,
                                                               ---------------
                                                               2004       2003
                                                               ----       ----

Tax at U.S. statutory rate (34%) .........................      (34%)      (34%)
Permanent differences ....................................      --           1%
Effect of gain on sale ...................................      --         --
State income tax expense net of federal benefit ..........       (3%)        2%
Valuation allowance ......................................       37%        31%
                                                               ----       ----

     Net expense (benefit) ...............................     0.00%      0.00%
                                                               ====       ====

         The components of the Company's  deferred tax assets and liabilities at
December 31, 2004 are as follows:

                                                               (in thousands)
                                                            CURRENT    LONG TERM
                                                            -------     -------
         Deferred tax assets:
              Net operating loss carryforwards .........    $     0     $ 2,756
              Reserve for Note Receivable ..............        186           0
              Accumulated depreciation amortization ....          0           0
              R & D credit .............................          0          45
              Foreign tax credit .......................          0         564
              Valuation reserve ........................       (186)     (3,365)
                                                            -------     -------
           Subtotal ....................................       --          --

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

         At December 31, 2004,  the Company had  available  net  operating  loss
carryforwards  of  approximately  $7,427,000  in the United  States.  The United
States  carryforwards  expire in varying amounts through 2023. 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.

7.       RETIREMENT PLAN

         The Company had 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.
As of December 31, 2004, the Company has terminated the 401K plan.


                                       32