U.S. SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549


                                   FORM 10-KSB

                                   (Mark One)

       [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2004


        [_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
              For the transition period from ________ to __________


                         Commission file number 0-30119

                             DNAPrint genomics, Inc.
                 (Name of small business issuer in its charter)


                                      Utah
                         (State or other jurisdiction of
                         incorporation or organization)

                                   59-2780520
                      (I.R.S. Employer Identification No.)

             900 Cocoanut Avenue, Sarasota, FL 34236 (941) 366-3400
 (Address of principal executive offices) (Zip Code) (Issuer's telephone number)


Securities registered under Section 12(b) of the Exchange Act:

                                      NONE

Securities registered under Section 12(g) of the Exchange Act:

                                (Title of class)
                          Common Stock, par value $.01

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. Yes [X] 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. [_]

State issuer's revenues for its most recent fiscal year. $785,632

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days. (See definition of affiliate in Rule
12b-2 of the Exchange Act.) As of February 28, 2005, the aggregate market value
of the voting and non-voting common equity held by non-affiliates was
$8,702,597.

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. As of February 28, 2005:
1,006,516,261.

<PAGE>

                       DOCUMENTS INCORPORATED BY REFERENCE

If the following documents are incorporated by reference, briefly describe them
and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into
which the document is incorporated: (1) any annual report to security holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant to
Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act"). The list
documents should be clearly described for identification purposes (e.g., annual
report to security holders for fiscal year ended December 24, 1990). NONE.

Transitional Small Business Disclosure Format (check one):

Yes [_] No [X]


                                TABLE OF CONTENTS


PART I

 Item 1. Description of Business Item 2. Description of Property Item 3. Legal

 Proceedings

 Item 4. Submission of Matters to a Vote of Security Holders PART II

 Item 5. Market for Common Equity and Related Stockholder Matters

 Item 6. Management's Discussion and Analysis or Plan of Operation

 Item 7. Financial Statements

Report on Independent Registered Public Accounting Firm

Consolidated Balance Sheet as of December 31, 2004

Consolidated Statements of Operations

Consolidated Statements of Stockholders' Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

 Item 8. Changes In and Disagreements With Accountants on Accounting and
         Financial Disclosure

 Item 8A. Controls and Procedures

 Item 8B. Other Information

 PART III

 Item 9. Directors, Executive Officers, Promoters and Control Persons;
         Compliance With Section 16(a) of the Exchange Act

 Item 10. Executive Compensation

 Item 11. Security Ownership of Certain Beneficial Owners and Management and
          Related Stockholder Matters

 Item 12. Certain Relationships and Related Transactions

 Item 13. Exhibits and Reports on Form 8-K

Item 14. Principal Accountant Fees and Services

SIGNATURES

EX-31.1 Section 302 Certification of CEO

EX-31.2 Section 302 Certification of CFO

EX-32.1 Section 906 Certification of CEO

EX-32.2 Section 906 Certification of CFO

<PAGE>

                                     PART I

                           FORWARD-LOOKING STATEMENTS

Although we do not qualify for the "forward-looking statements" safe harbor
because we issue "penny stock" and are exempt therefrom pursuant to Section
27A(b)(1)(C) of the Securities Act of 1933, as amended, and Section 21E(b)(1)(C)
of the Securities Exchange Act of 1934, as amended, certain statements contained
in this filing are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995, such as statements relating to
financial results and plans for future business development activities, and are
thus prospective. These statements appear in a number of places in this Annual
Report and include all statements that are not statements of historical fact
regarding intent, belief or current expectations of the Company, its directors
or its officers with respect to, among other things: (i) the Company's financing
plans; (ii) trends affecting the Company's financial condition or results of
operations; (iii) the Company's growth strategy and operating strategy; and (iv)
the declaration and payment of dividends. The words "may," "would," "could,"
"expect," "estimate," "anticipate," "believe," "intend," "plans," and similar
expressions and variations thereof are intended to identify forward-looking
statements. Investors are cautioned that any such forward-looking statements are
not guarantees of future performance and involve risks and uncertainties, many
of which are beyond the Company's ability to control. Actual results may differ
materially from those projected in the forward-looking statements as a result of
various factors. Among the key risks, assumptions and factors that may affect
operating results, performance and financial condition are changes in
technology, fluctuations in the Company's quarterly results, ability to continue
and manage its growth, liquidity and other capital resources issues,
competition, fulfillment of contractual obligations by other parties and the
other factors.

Item 1. Description of Business.

Business Description

DNAPrint genomics, Inc. ("we" or the "Company") was initially incorporated under
the laws of the State of Utah on January 3, 1983 as Lexington Energy, Inc, and
subsequently changed its focus to human genome sciences. We are a genomics based
science company focused on the sale of genetic testing products and services.
Our products are targeted toward three distinct markets: pharmacogenomics,
forensics and consumer products. We currently have five products available for
sale an increase from 3 products last year. Our products in the consumer
products market are ANCESTRYbyDNA(TM) 2.5, and EURO-DNA(TM) 1.0, a new
searchable database that allows consumers to search for similar DNA results
among anonymous files for similar reported cultural similarities (such as
country of origin or other pertinent information that might help a consumer
understand their genetic heritage with respect to their Geo-political and social
origins). We also provide paternity services. Our products in the forensic
market are DNAWitness(TM) 2.5, EUROWitness(TM) 1.0 and RETINOME(TM) 1.0. We have
no currently available products for the pharmacogenomics market. We are
currently developing products for all three markets, which are in various stages
of progress. We also provide contract genotyping services to the contract
service outsourcing market.

We are working to establish a technology platform, named ADMIXMAP, for the
identification of functional human genes through the measurement of population
structure. This system is currently for internal use solely by our scientists,
and we do not generate revenue from any sales thereof. This platform of products
will allow us to measure population structure as it was inherited from our
ancestors. We can also measure certain effects of an individual's inherited
traits in relationship to the general population of people - such as Native
American, East Asian, sub-Saharan African and Indo-European and any combination
of those four major population groups. We have identified characteristic markers
for these population groups, and they are called Ancestry Information Markers or
"AIMs". We believe we have identified these AIMs and associated them to specific
traits that can be linked to an individual. For example, eye color, hair color
and skin color are inherited traits, as is the ability of an individual's body
metabolism to respond to a particular medication. By linking a drug's measurable
response in an individual to our AIMs, we are able to predict whether or not an
individual may or may not respond to a medication. There are many complex
mathematical formulas involved in this analysis, and we plan to keep this
technology and information closely guarded (patented when appropriate) and to
sell our products and services to consumers, physicians and law enforcement.

Currently, we have 12 full time employees, and we expect to increase our
personnel in accordance with our operating plan. In addition to our full time
employees, composed of scientific and production staff, sales, administrative
and executive management, we outsource employees for specific services on an as
needed basis. These services include additional statistical geneticists,
mathematicians, and programmers, an advisory committee in medical and population
genetics, and general business and administrative support.

We continue to devote substantially all of our efforts to initiating and
developing our planned principal operations. While sales of our genealogy
product, ANCESTRYbyDNA(TM) , are increasing, our forensic product,
DNAWitness(TM), was introduced in the marketplace last year. Our
pharmacogenomics products are still in development, and genotyping services are
in the initial introductory stage.

In addition, although we discuss distinct markets for our products, management
does not manage or make decisions regarding allocation of our assets and
resources or in assessing our performance based on segments. At this time, our
resources, including assets and personnel, are commingled among all areas of our
business.


<PAGE>

History and Development of the Business 2001-2004

We began with the discovery and development of our TruLine products -
TruSeq(TM), SNiPscan(TM) and TruSpin(TM) . We were actively engaged in human
identification analysis and used our proprietary TruLine products to reduce the
cost of producing a genetic profile to less than 50% of the standard price. Our
strategy was to sell our proprietary reagent to geneticists at universities,
hospitals and commercial laboratories working on genotyping projects. The
reagent kit was designed to save researchers money in reagent costs. Companies
that sold the reagents, however, made advances in their own reagents, which
lowered the cost and ultimately negated the benefit of using our products. The
technology was thus abandoned.

In 2001, Dr. Tony Frudakis, our founder, teamed with other scientists to conduct
research to develop new genomics products with consumer, forensic and
pharmacogenomics applications. Lack of funding required a reduction in the
amount of research conducted. We implemented cost cutting measures to conserve
cash. In spite of these hardships; we were able to continue our research and
development efforts on a reduced and limited basis throughout most of 2002 and
2003.

During 2002, our Board of Directors began a search for new leadership. After an
exhaustive and difficult search for a new CEO/President, Mr. Richard Gabriel
agreed to accept the position without requiring immediate cash compensation.
Because we did not have cash available to pay Mr. Gabriel's salary, he agreed to
enter into an employment contract for one year that granted him 30,000,000
shares of our stock in lieu of immediate cash compensation.

As CEO /President, Mr. Gabriel agreed to seek additional executive management,
particularly a Chief Financial Officer, a Chief Operating Officer and a Chief
Medical Officer and to locate a firm to represent us in raising investment
capital sufficient to build and sustain the business over the next 2-3 years.
Mr. Gabriel and the new management team have successfully completed these goals.

Mr. Gabriel hired our Chief Financial Officer and Chief Operating Officer,
Monica Tamborini, and our Chief Medical Officer, Dr. Hector J. Gomez. In May of
2003, Mr. Gabriel also convinced Ms. Tamborini and Dr. Gomez to agree to work
initially without requiring immediate cash compensation. They agreed to enter
into employment contracts with us for one year in return for stock grants of
20,000,000 and 25,000,000 shares respectively.

With executive management in place, we next developed a strategic plan to
achieve our short term goal of securing financing and our longer term goals of
growth and stability. Where prior management saw partnering and licensing
arrangements as the way to success, new management's view was that growth would
occur with proven success. Management has emphasized demonstrating that our
current products are viable, and management believes the shortest path to that
goal is through concentrating our initial sales efforts on the consumer and
forensic markets. While we expect pharmacogenomics products to outperform other
market products in the long run, their introduction to market has a longer time
horizon and requires larger investments of time, personnel and capital before
they produce revenue and generate cash flow. This is supported by the
Pharmaceutical Manufacturers Association which has confirmed that the drug
development process is lengthy and expensive.

Management sought investment bankers to represent us in our search for
financing. In April 2003, we engaged an investment banking firm to assist us in
our efforts to raise debt and/or equity capital. In December 2003, we
successfully agreed to place $8,000,000 of our securities over approximately a
20-month period. Prior to completing this transaction, we had received funds
from earlier private offerings. Together, these transactions gave us the
critically required capital to fund our ongoing operations until our new
financing was in place. In addition to the previously raised capital, management
sought additional capital to fund expansion and acquisitions. Along with its
investment bankers the Company secured a commitment from Dutchess Private Equity
Partners, LLC for the sum of $35 Million over a 24-month period. The Company
also negotiated in good faith to acquire a stake in Biofrontera, a privately
held German Biotechnology company Mr. Richard Gabriel and Ms Monica Tamborini
are common, non-voting shareholders of less than 1% combined ownership in
Biofrontera AG. Mr. Gabriel was made aware of the opportunity to invest in
Biofrontera AG and presented it to our Board of Directors and was given
instructions to proceed with the investment opportunity.

Effective September 28, 2004, we agreed to acquire a majority interest in
Biofrontera AG over a 24-month period for a purchase price of 20 million Euros
(approximately $27 million). Prior to the closing of the transaction, however,
several factors led to the termination of the agreement with Biofrontera AG. Our
S-2 registration statement with respect to our funding facility with Dutchess
did not become effective as quickly as we had anticipated, and Biofrontera AG
was unable to raise bridge capital financing prior to closing as contemplated by
its agreement with us. We attempted to salvage the transaction by providing a
140,000 EU loan to Biofrontera AG in December 2004. Upon recognizing the
deteriorating state of the Biofrontera operations, we concluded that proceeding
with the proposed acquisition was not in DNAPrint's best interests. Therefore,
we terminated the Biofrontera agreement on February 18, 2005. We have called the
December Biofrontera loan for repayment in accordance with its terms, and we
expect it to be repaid as soon as practicable. We intend to keep good relations
with Biofrontera AG and hope in the future to participate with Biofrontera AG in
joint venture development projects, once it is adequately funded by other
investors.

It is clear to our Board of Directors and executive management that a
restructuring of our equity is necessary in 2005. The current shareholder base
and capitalization are insufficient to promote growth and to capitalize on
expansion opportunities. Management expects to bring a plan for capital
restructuring of the Company to the shareholders for approval during 2005.

During 2004, we continued to evolve from a research-based company to a revenue
generating genomic products company. Management continues to review investment
opportunities for our consumer products, and the forensic and pharmacogenomics
markets. Should opportunities mature, management will bring them before our
Board for investment consideration. We continue to seek new products;
technologies, relationships and acquisitions or licensing opportunities that can
help build the markets and revenues we seek to capture.


<PAGE>

The Pharmacogenomics Market

Testing individuals to predict their genetic pre-disposition to drug response is
known as pharmacogenomics. Pharmacogenomics enables physicians to tailor drug
therapies (formulation and dosage) for individuals based on their genetic
composition. By using predictive response genetic testing, rates of therapeutic
success are increased and rates of adverse side effects are decreased.

Historically, drugs have been developed and approved by the FDA for the overall
population only. Drug discovery companies are now beginning to use
pharmacogenomics technologies to develop drugs that are suitable for individuals
or groups of individuals based upon their overall genetic composition. The
advent of genomics and genomic based diagnostic testing has brought about the
possibility of personalized medicine. In fact, over the next 10 years, the
worldwide pharmaceutical market is expected to grow from $320 billion to an
anticipated $1 trillion, according to recent IMS reports. We believe the
increase will be driven primarily by the flood of new drug targets identified
through genomics and through the co-development of drugs and accompanying
genomics response tests. Indeed recent press releases and television programs
featuring Dr. Francis Collins, Head of the National Institutes of Health Human
Genome Project, and Dr. Craig Venter, President of Celera, Inc. the firm that
along with the NIH published the Human Genome, both have stated the importance
of understanding the genetic heredity of diseases and their foundations in the
human genome. DNAPrint has continued to explore and mine the relationship of a
person's genetic ancestry with respect to genetic markers for disease, treatment
of disease with medications and the origins of disease within the human genome.

Recent articles in Nature Genetics - Genetics of the Human Race; November 2004,
Volume 36 No 11s have highlighted many of the issues relating to the
determination of genetic markers among the world's highly diverse populations
and sub-populations. The ethics of genetic testing as well as the potential
implications, benefits and abuses are discussed by a number of leading thinkers
in the field of human genetics. Pharmacogenomics, a medical exploration of our
differences and our inherited genes from generations removed, are important
steps in the direction of understanding the relationship of the variations among
all of the world's peoples and human health. Although no clear decisions have
been made by the scientific community, the dialogue between proponents of
population genetics and the dissenters have adequate public forums such as
Nature Genetics, public hearings and legal procedures to voice their approval or
disapproval over current research and development of pharmacogenomics.

It is anticipated that genomics spending at pharmaceutical companies will
increase to a level of $13 billion by 2010 from nearly $2.5 billion in 2000.
Current spending is largely concentrated in the discovery phase. By the end of
the decade, however, spending in discovery and clinical development will be
roughly equivalent. Analysts have suggested that over 50% of clinical trials
will use genomic testing in the near future. According to Data Monitor (Reuters
Business Insight Report), the global market for genomics based diagnostic
products will reach $3.3 billion by 2005. The current market is valued at $1.5
billion (2002). Genome Technology Magazine predicted in July of 2002 that the
DNA-based diagnostics market will grow by 50% and reach $3.7 billion in four
years (2006). "The molecular diagnostics market will expand to $12 billion by
2010. About half of this ($6 billion) will be attributed to knowledge gained
from genomics" according to K.K. Jain, M.D., author of `Molecular Diagnostics,'
a current market research report.

In a recent release, the FDA announced that pharmaceutical and
bio-pharmaceutical companies should consider genetic testing during clinical
trials and for post approval drug monitoring. Pharmaceutical and
bio-pharmaceutical companies will need to incorporate genetic testing in their
drug discovery, clinical development as well as post drug approval monitoring in
the very near future.

The FDA estimates that 2.4 million patients had adverse drug reactions in 2000,
leading to the deaths of more than 125,000 patients. As part of the FDA's
mandate to reduce the number of deaths caused by adverse drug reactions, on
January 31, 2003 the FDA released an initial statement of initiatives related to
pharmacogenomics.

Within the next 2 to 5 years there will likely be a clearer path to market for
pharmacogenomic tests linked to drugs. Moreover, with greater FDA recognition of
pharmacogenomics, we believe the pharmaceutical industry is likely to accelerate
its rate of adoption for pharmacogenomics tests.

After its initial statement in January 2003, the FDA issued a more recent
guideline in November 2003. Titled "Guidance for Industry Pharmacogenomic Data
Submissions," we believe this guideline offers FDA support for pharmaceutical
companies developing drugs using genetic testing and genomic research for drug
approvals. Under the guideline, if a genetic test is new or is not widely
accepted, then its use is `voluntary' to the drug's submission. If a test is
`validated and accepted' then the guidelines suggest its inclusion in the
submission. In both cases, our products and services can provide a valuable tool
for drug development and drug discovery management. We can help identify
patients who might not respond favorably to a new medication, and thus eliminate
those patients from the treatment or clinical trial. This testing will improve
the drug's efficacy and reduce its toxicity, increasing the drug's chances for
meeting FDA requirements and ultimate approval. The FDA released an additional
document covering the field of pharmacogenomics on March 22, 2005, titled
Pharmacogenomic Data Submissions. In a press release announcing the new
guidelines, the FDA said that they are part of an agency-wide initiative "to
speed development of new medical products through the science of
pharmacogenomics."

According to Dr. Janet Woodcock, Deputy Director for Operations at FDA, "FDA's
efforts will bring us one step closer to 'personalizing' medical treatment." She
added, "We hope ultimately to bring pharmacogenomics . . . to every healthcare
professional's prescription pad for the benefit of their patients and U.S.
consumers." Personalized medicine, according to the FDA, will eventually replace
"the standard hit-or-miss approach to treating patients."


<PAGE>

Soon after the FDA announcement, the Personalized Medicine Coalition (PMC), of
which DNAPrint is a member, issued its own release applauding the guidelines as
"paving the way to a new generation of diagnostics and therapeutics." The agency
noted "that our members are looking forward to additional protocols,
specifically those on the co-development of pharmacogenomic diagnostics and
therapeutics and on the use of micro-arrays in DNA analysis.

From the vantage point of the future, today's FDA announcement is likely to be
regarded as a milestone in drug discovery and development that will help lead to
a new generation of medicine and healthcare, that of tailoring treatment to the
individual based on his or her genetic and molecular makeup".

Although this document has been delayed several times, it is expected to help
the industry understand and report early genetic testing information in their
clinical trials programs. The FDA is expected to offer the industry a position
of `no action' on early reported genetic testing information. What this means is
that should information become helpful but not yet scientifically confirmed or
validated in understanding the treatment of a disease, it does not necessarily
have to be reported on the drug label. Previously, the FDA would hold the
applicant accountable for all information available in a drug development
program. If the applicant was unable to explain the data, then the FDA could
recommend that further study of the topic be continued prior to the application
being reviewed. This action of `no review' would effectively place the
application on hold, exactly what the applicant does not want during a drug
submission. Under a "no action" policy, the FDA will take a position that all
research in the pharmacogenomics area is encouraged to be reported, but will not
be used in the evaluation of a drug for approval unless requested by the
applicant. This process will probably remain in effect until the FDA and its
advisory panels obtain sufficient understanding on a disease treatment and the
effectiveness of genes in predicting treatment and response. It is clear that
when a diagnostic test can be used in conjunction with a drug therapy to help
identify the patients whose response is monitored by the diagnostic, the patient
usually does better in the treatment. The goal of the FDA is to protect the
individual patient from as much harm as possible, but all drugs have side
effects that can create problems for the patient, some more than others.

The FDA continues to have an overriding influence in the pharmaceutical market
and its movements. Healthcare payers and government officials, however,
including Congress, are recognized forces in the market. Increasingly,
pharmaceutical companies must validate a drug's efficacy and cost effectiveness
in order for it to remain on lists of approved, reimbursable drugs of healthcare
payers (pharmacy benefit managers, managed care, Medicaid, Medicare, and
commercial insurers). For example, Pfizer agreed in 2002 to provide disease
management services (defined as all secondary activities involved in the
diagnosis, prevention and treatment of diseases, beyond primary therapeutic
treatments)to Florida Medicaid recipients in order to have its full slate of
drugs on the State Medicaid program's formulary. A formulary is a list of FDA
approved drugs, tests and devices, compiled by States, Medicare and Medicaid or
Health Maintenance Organizations (HMOs), hospitals and medical centers that
specifically tells doctors what they are allowed to order and what is covered
under their reimbursement programs. Physicians can of course prescribe outside
the formulary, allowing the patient to pay full price for the medication or
treatment or test. Unlike most of Europe, Canada, and Japan, where
pharmaceutical prices are controlled by the governments and through competitive
bidding with the government agencies, the U.S. market remains unregulated and
free from government controls of prices and approved medicines. The Pfizer deal
with the State of Florida could be the forerunner of similar initiatives by
payers and pharmaceutical companies to increase drug prescriptions and reduce
drug costs through increased diagnostic accuracy. Using a genomics test to
determine the most appropriate drug and dosage can lead to reduced health plan
costs, while genomics testing can predict a patient's drug response and minimize
the high cost related to adverse drug reactions. At present, no health care
provider, pharmaceutical company or government agency has used our products or
services for this purpose.

In recent months we have also seen the FDA and Kaiser Permanente, a large health
insurance company, teaming up to test and report on Vioxx and its use in
patients with compromised health, explicably linking Vioxx use to coronary
problems that have resulted in a higher than normal heart attack death rate
amongst various high risk people. Vioxx (or products similar to Vioxx known as
COX-2 inhibitors) became widely dosed among a broad segment of the population.
This has led to speculation by physicians that products like Vioxx might be
implicated in the unusually high rate of sudden death heart attacks among their
COX-2 inhibitor treated patients. Merck, the manufacturer of Vioxx pulled the
product from the market and will limit its use, if it is reintroduced, to a more
targeted group of patients, eliminating prescriptions to high risk patients.
Although no association has been shown to exist between the inherited genes of
an individual with Vioxx or any COX-2 inhibitor, it is our intent to explore
large product opportunities such as `pain relief' with COX-2 inhibitors and
other drug treatments and attempt to explain variations among people taking the
medications with respect to their genetic ancestry, their response to
medications and their particular state of health.

We continue to develop our relationship with the Moffitt Cancer Center in Tampa,
Florida and have expanded our co-development of technologies using our
proprietary technologies to study the relationship with medication treatment of
cancer cells and genetic inheritance of specific genes that may affect a
person's ability to respond to medications such as Taxol or Taxotere and other
such medications used to treat cancer. We have seen several companies, including
Celera and Genaissance; make public statements regarding the use of medicines
and relationship to inherited markers. We will continue to explore, develop and
test new approaches to problems that heretofore have been classified as the
result of a drug treatment program gone awry. We believe generally that under
each drug interaction can be found a series of genetic markers that may be
linked to inherited markers, markers that we can track and identify, and prior
to drug treatment, providing the patient, the doctor and the health care
institution tangible savings in capital and patient aggravation. To date, no
pharmaceutical company, health care provider or other government or state agency
has used our technology to separate patients by drug response.


<PAGE>

Growth Strategies for the Pharmacogenomic Market

By leveraging our proprietary technologies, we are positioned to serve the
growing compliance and operational needs of pharmaceutical companies. We will
continue to seek product and market relationships that expand and enhance our
ability to apply our technology to existing medications or new medications,
improving drug efficacy and reducing patient side effects by testing the
patient. We believe the future of drug development and drug approval as outlined
by recent FDA writings will force the industry to recognize smaller market
opportunities with higher efficacy profiles and significantly reduced or
diminished side effects. No drug available today is free of side effects on a
broad population from around the world. All drugs have side effects, some more
deadly than others, but the side effects are often balanced against the
potential benefit. For example most cancer treating medicines are lethal to the
patient if administered at a higher dose, but more lethal to the cancer cells at
lower doses. However, these anti-cancer drugs kill healthy cells as well as
cancer cells, creating a dilemma -- treat the cancer and harm the patient, do
not treat the cancer and the patient dies. In medicine, there are no miracle
cures; each drug appears to have a specific and narrow range of application to
certain groups of individuals and may or may not provide a benefit to each and
every patient and may in fact kill some patients. The power of pharmacogenomic
testing or the testing of patient populations for genetic markers and other
inherited traits can be seen in the recent treatment of a particular form of
cancer.

An article in MedAd News in June 2003 titled, "From Blockbusters to
Multibusters" highlighted the first successful use of pharmacogenomics to obtain
the approval of a drug. Genetech's Herceptin(TM), according to IMS Health
sources, would not have made it to the market had not the company's scientists
discovered the HER-2 receptor which is found in 15-20% of the population. The
overall success rate of the drug in metastatic breast cancer in combination with
Taxol is just 6%. But with the HER-2 test to identify the patient, the drug's
efficacy is now nearly 100%. Sales of the drug are projected to approach $400
million in 2003. Additionally, nearly all the female patients diagnosed for
metastatic breast cancer are tested for the HER-2 receptor, generating
additional sales for a pharmacogenomic test procedure not included in the $400
million in drug sales for 2003. We have located no reported figures specifically
for the size of the diagnostic test market for HER-2.

This article highlights the potential explosion of pharmacogenomics and drug
approval within the pharmaceutical industry. If drugs are approved faster, the
current 400 drug targets that represent about $380 billion in potential sales
could leap to 4,000 targets with sales approaching $1 to $2 trillion by 2020. We
have no assurance, however, that the FDA and foreign governments would
accelerate their drug approval processes to accommodate such a high projection.
The FDA regularly reports on the drugs approved from year to year, and industry
watchers continue to expect the FDA to increase its rate of New Drug Approvals
from the current 40-50 per year to several hundred per year. However, there are
no corresponding increases in funding to accommodate this exceptional projected
growth. Therefore, we believe a more conservative approach to the potential drug
market would include a review of the effect of pharmacogenomics on drug
approval. Price-Waterhouse-Coopers recently issued a report titled `Personalized
Medicine - The Emerging Pharmacogenomics Revolution' (February 2005). The report
focuses on the high failure rate of drugs after an Investigational New Drug
("IND") is filed with the FDA -- nearly 79% of the drugs fail in clinical
trials. The report suggests that better patient understanding and mechanisms of
action within patient groups might help bring the failure rate down. Additional
information indicates what physicians across the globe have been reporting for
years, that blockbuster drugs or drugs that have worldwide sales of more than a
billion dollars per year only work in 40 to 60 percent of the patients treated
with the drugs. If these drugs express failures in sub-populations, then if
enough fatalities are the result, the drug is voluntarily pulled from the market
by the company or forcibly by the FDA. The net result is a large number of
patients that have had positive experience with a drug are denied its benefits.

The Price-Waterhouse-Coopers report goes on to say that by stratifying the
market opportunities for drugs; `pharmacogenomics could expand markets and
revenues by defining new uses or targets for existing drugs, "rescuing" drugs in
development, managing product life-cycles, and dominating niche markets.' The
article goes on to point out some of the immediate demands for pharmacogenomic
products in the clinical laboratory for determining a patient's response to
medications earlier, rather than waiting several weeks to months and diagnosing
diseases earlier. Additional improvements are being made in the third-party
payers segment of the market, crucial to gaining acceptance for pharmacogenomics
in clinical development, testing and practice. Many of the large third-party
payers are drafting policies and procedures for a pharmacogenomics approach to
drug applications once drugs are approved. Pharmacogenomics is not just about
developing new drugs but also testing patients for potential side effect risks,
emerging diseases and other potential disorders. Third-party payers would be
remiss to pursue exclusionary practices with their subscriber populations as
that will surely bring governmental oversight, punishment and new legal
procedures that could be counter productive to the benefit of improving the
overall health and efficacy of the drugs that their subscribers will all
eventually use.

Additionally, the report highlights that the first likely application of a
pharmacogenomics drug will continue to be the oncology area since by definition
of the disease automatically places patients in disease categories which appear
to be treatable by either a cocktail of chemotherapy agents or specific
chemotherapy agents and practices. Further segmentation depending upon a
patient's ability to absorb or metabolize medicines or to form chemotherapy
resistant cancer cells are all pharmacogenomic targets and will help to more
narrowly focus a patient's treatments. It is unlikely, according to the report,
that blockbuster drugs will disappear, but it is likely that large
pharmaceutical companies will gravitate toward more of the global marketing,
sales and channel dominations that they are currently controlling and less
likely to continue the high capital expenditures on research and development.

We can, through research and development, and over time, identify the genes
involved with a patient's positive response to a drug. Once the genes have been
identified, researchers are then able to find the receptors coupled to those
genes; thereby providing a predictive test to determine those patients who will
respond positively to the drug. In addition, we can identify the genes that are
involved with the rejection of the drug and from that find the receptors coupled
to those genes. Both choices open new opportunities for drug development and the
treatment of existing diseases. To date, best estimates put the time somewhere
between one and two years and at a cost of $500,000 to $750,000 per gene set.
Perlegen, one of our competitors through one of its sponsored research
affiliates, has recently announced at the March 2-6, 2005 American Society of
Clinical Pharmacology and Therapeutics meeting in Orlando, Florida that using
their technology platform, SNP or Single Nucleotide Polymorphism identifications
of disease genes can be accomplished for about $250,000 to $500,000 per gene.
Another scientist at the meeting, James Watters, PhD; Washington University:
PGRN Member reiterated the earlier presentation and pointed out the isolation of
6 candidate genes sets for poor patient response to Docetaxel treatment.
However, neither Watters nor McLeod were able to acknowledge a validation of
their work and hinted that the six isolated genes, might in fact, not be the
correct genes associated with drug metabolism. They are continuing their work
using the Perlegen/Affymetrix system.

Once gene sets are identified and blind study trials are completed, additional
benefits and future growth potential can result from:


<PAGE>

Enhanced Drug Marketing- By using our products and services, pharmaceutical
companies may enhance the effectiveness of their marketing campaign resulting in
improved profitability. The overlap of demographic segments and genetic
predispositions offers a compelling opportunity for focused drug marketing.
Armed with studies that indicate a drug is most effective within certain
demographic segments, pharmaceutical companies can more effectively engage in
target marketing. Although we do believe that pharmaceutical companies may
enhance the effectiveness of their marketing campaign by using our products and
services, as of December 31, 2004, no pharmaceutical companies have used our
products or services with respect to demographic segments, genetic
predispositions and drug marketing and achieved such results.

Expanded Drug Patent Life - There is also potential that packaging a drug with a
genomic diagnostic test may extend the drug's patent life. Pharmaceutical
companies that are struggling to find replacements for their aging drugs could
benefit from a patent extension. Although we do believe that pharmaceutical
companies can prepare a genomic diagnostic test and extend a drug's patent life,
as of December 31, 2004, no pharmaceutical companies have used our products or
services for such purpose or achieved such results. Our current technologies and
services could be utilized by a pharmaceutical company to identify and develop a
genomic diagnostic test. Alternatively, we could work with generic drug
manufacturers and assist them in developing a genetic diagnostic test for off
patent drugs. Our greatest, and possibly the most immediate, market potential is
to create a testing service for physicians and patients that will allow them to
determine if a particular medicine is right for the disease that has been
diagnosed.

Increased Drug Development Success Rates - By incorporating genomic variation,
clinical trials can be designed to include those patients most likely to benefit
from the proposed therapeutic product. The use of a genomics strategy has the
potential to yield improved response rates. While the number of clinical trial
participants may not be reduced, drug trial efficacy would be greatly enhanced.

Rescue Failed Drugs - A pharmaceutical company may choose to initiate new
clinical trials on drug candidates that previously failed. The failure of the
earlier trial could have been because the earlier trial was conducted on a broad
patient population. We could design a genetic test to predict patient response
which would allow a smaller, more clearly defined group of patients to be
identified for the new clinical trial; thereby enhancing the drug's efficacy and
compliance and improving the likelihood of approval within a targeted group.
Although we do believe that pharmaceutical companies can utilize our genetic
test to predict patient response, as of December 31, 2004, no pharmaceutical
companies have used our products or services for such purpose or achieved such
results. Approval may require a physician to use the test to determine if a
patient would be within the response group prior to prescribing the drug. We
believe that this strategy will lead to more drug approvals and longer product
life cycles, improving the return on capital for the pharmaceutical company and
increasing the use of our tests.

The Forensics Market

Testing DNA to create a physical profile from crime scene DNA is a new market
based on evolving technologies. Common hereditary traits such as skin
pigmentation, eye color, hair color, earlobe attachment and height can
theoretically be predicted through analysis of DNA sequences. We believe that we
are the first to use DNA evidence to successfully profile crime scene DNA by
predicting the donor's continental genetic origin and linking that to our
photo-database gallery, providing law enforcement officers with a general
description of the donor.

The forensic market is expected to grow to $600 million in annual sales by 2005
according to Data Monitor. There are approximately 1,200,000 reported incidents
of violent crime (rape, robbery, and aggravated assault) in the U.S. each year.
In the vast majority of violent crimes, DNA evidence is left at a crime scene or
on a victim's body. Of these 1.2 million reported incidents, only about 600,000
cases result in arrests. Forensic DNA tests can enable a greater degree of
success in prosecuting violent criminals.

In addition, on March 11, 2003 Attorney General John Ashcroft announced that the
administration plans to commit $1 billion to DNA testing within the criminal
justice system over the next five years. The money will be used to develop
better genetics testing techniques, to eliminate DNA backlog of nearly 360,000
cases and to provide funds for police departments to use DNA testing more
frequently in their investigations, reducing the likelihood of wrongful
prosecution and imprisonment. There is a recent trend in the legal system to
test DNA evidence left at crime scenes to confirm or invalidate the previous
conviction of incarcerated defendants. Our technology could be used to screen
the DNA samples and categorize them. For example, if test results shows that DNA
from the crime scene belongs to an Indo European individual and the incarcerated
individual is an African American, that DNA would have priority for conventional
testing because the likelihood of vindication is high. In recent years there
have been more than 130 exonerations of previously convicted individuals based
on DNA evidence. With the use of DNAWitness(TM), the length of wrongful
incarceration for innocent individuals could be shortened, and, in some case,
perhaps eliminated.


<PAGE>

Forensic Products

DNAWitness(TM) 2.5

Law enforcement officers use this testing service to determine genetic heritage
from DNA samples obtained from crime scenes, narrowing the potential DNA donor
pool to a more focused group of likely donor candidates. This test reduces the
cost and time needed to process potential leads and ultimately, to apprehend
suspects. Current forensic DNA products in the market act like a fingerprint;
they can only be used to match DNA specimens. We have the first forensic product
that provides predictive or presumptive testing capability.

Current DNAWitness(TM) customers include medical examiner's offices, special
task forces, sheriffs' departments, and district attorney's offices and
detectives from various cities. These cities include the three largest U.S.
metropolitan areas: New York City, Los Angeles, and Chicago. To date, our
product is being used in nearly 80 crime scene investigations and cold cases, up
from 20 cases last year. Due to the sensitive nature and potential court
proceedings associated with investigations, we can only comment on our
participation in cases once law enforcement and prosecutors have approved the
release of such information, usually following the arrest and incarceration of a
suspect. Based upon the release of such information, we had sales from
approximately 50 customers in 2004 and five of those were at reduced rates, up
from 10 paying customers and three at reduced rates in 2003. The total revenue
was approximately $52,000 during 2004. In addition, we performed approximately
45 pro bono tests during 2004 for various agencies worldwide.

Growth Strategy in Forensics

We provide a potential suspect's genetic heritage with DNAWitness(TM) 2.5. We
are investigating avenues to encourage federal, state and local governments,
crime laboratories and law enforcement agencies to use DNAWitness(TM) to help
solve cold cases, current serial killer cases and other violent crimes. We
believe DNAWitness(TM) could help revolutionize investigative procedures. By
using DNAWitness(TM) on a regular basis, witness information can be
corroborated, and where no witness is present, DNAWitness(TM) can provide a
"fuzzy sketch" of the donor, possibly reducing the cost of examining a large
donor pool and shortening the investigation.

During 2004 we added new sales agents that included Orchid Biosciences and
Reliagene, Inc. and we are seeking to expand our list to other forensic testing
laboratories across the world. Nevertheless, to date no appreciable sales have
been derived from our developing base of sales representatives.

We anticipate an increase in marketing and sales costs throughout 2005 as we
implement our marketing and sales plan to increase product awareness. We expect
to incur costs for additional sales personnel, the expenses associated with
trade shows and promotions, and our planned seminars and training programs.

Our future plans also include seeking or acquiring American Society of Crime
Laboratory Directors or "ASCLD" accreditation of our laboratory for forensics
work tied to court testimony. Once accredited, either through acquisition of
another forensic operation or development of our own operation, we will also be
able to offer conventional DNA testing to our clients. Accreditation would allow
us to capture a portion of this market and to offer a full range of services to
our clients.

It is our intention, over time, to broaden our forensics product line.
Additional tests that we hope to add to our product line include hair color, and
skin shade. Other tests that we could develop in the future include bone mass,
to predict body size, height, and detached and attached ear lobes. We have added
nearly 3,000 hair samples to our hair color research and as with eye color
service, RETINOME(TM); we are in the early stages of researching and developing
the necessary marker combinations in order to be able to validate the test. We
do not expect validation to be completed in 2005 but perhaps in early 2007 a
hair color version will be beta tested.

We introduced RETINOME(TM), our eye color test, to the forensics community, and
the test have thus far has not been used on any cases. We have, however
performed over 20 pro bono tests and we are not permitted to discuss the results
due to confidentiality. The service was introduced in late 2004, and we are
working on developing a kit format for the test as well. We do not anticipate
that this kit to be available until late 2005. Earlier in the year, we
introduced our EUROWitness(TM) 1.0 test to the forensics community, and to date,
this new service has been used on three cases. This test helps narrow the field
of investigation by providing investigators with more detailed information on
the potential inherited genes. We have expanded our database to include markers
from four major ancestry groups to eight. The total number of markers now
represent Sub Saharan African, Indo European, East Asian, Native American,
Northern European, Middle Eastern, Mediterranean, and Indo. Combining this with
our RETINOME(TM) test, a DNA sample obtained at a crime scene could describe a
person of interest in much greater detail. Although to date, no agency has used
the combined test to describe a person of interest.

Over the course of 2004 we have also added nearly 1,500 volunteers to our photo
database and eye color database arrays. These volunteers have received a free
ANCESTRYbyDNA(TM) 2.5 report for providing their DNA and photos of their faces
and eyes. We now have nearly 3.000 individual donors in our database covering a
wide diversity of individuals from around the world. We expect the database to
continue to grow through 2005 as we add new service and product features. Our
goal is to provide the investigators with as much information as possible on the
crime scene DNA samples so that they may narrow the focus of their
investigations, corroborate eye witness reports or develop a `person of
interest' description from the scientific data that we supply.


<PAGE>

The Consumer Products Market

There is an established market of consumers who research their genealogy and
ancestral origin. There is also a market for paternity and other tests related
to family lineage. We serve both of these consumer markets through direct sales
and independent distributors.

The consumer genealogy market is fueled by a natural desire to understand our
family lineage and our genetic heritage. The total world market is currently
estimated at $75 million and is expected to grow 5% annually. We are one of the
first companies to offer DNA tests that predict genetic heritage for this
market. During 2004 we have added a number of distributors that include:
Sorenson, DNA Structures, LTD, Ciboney, DNA Diagnostics Center, and Health-Link
Paramedical Services. We will continue to add distributors of our services
throughout 2005. Although, the consumer market is not large, to date we have
provided nearly 11,000 customers with our service. During 2005 we will also
introduce our ANCESTRYbyDNA(TM) 2.5 test kit to paternity labs around the world,
enabling paternity laboratories to purchase our test kit and run the
ANCESTRYbyDNA(TM) 2.5 test on their own equipment. The Company will provide the
laboratory with a secure link up and provide the customer with an ever growing
database of information on the application of ANCESTRYbyDNA(TM) to genealogy
research. Also, during 2005 we will be improving our web site, product packaging
and service reporting. Additionally, we will be improving our customer turn
around time, currently set at 6 to 8 weeks and offering a customer service call
line.

We continue to perform research on specific market segments and build our
database of volunteer DNA for Native Americans and hope to expand our database
to African Americans in conjunction with leading researchers in the field of
health and inherited genes. Although our first objective will be to be able to
help individuals interested in their family's genealogy, our long term benefit
will be in understanding the relationship of inherited genes to disease and
disease management. We believe that understanding how a genealogy search fits
with our genetic ancestry test is a crucial component to understanding how our
technology can be used in the forensics field and in the medical field. We
believe it is crucial to our success in either field to understand the
association of family hierarchies of inheritance, relationships and reported
relationships and their associated genes. Therefore, we will continue to expand
and enhance our database or services, products and information to our consumers
so that we may learn more about genealogy and understand more about inheritance.

Consumer Products

ANCESTRYbyDNA(TM) 2.0

We introduced our first product in the genealogy market in late 2002.
ANCESTRYbyDNA(TM) 2.0 determines genetic heritage and is marketed to consumers
interested in determining their BioGeographical Ancestry ("BGA"). We have
identified DNA sequences that are more prevalent in people from one continental
region or regions than another. Using complex statistical algorithms, the test
can determine, with confidence, to which of the major continental regions
-sub-Saharan African, Indo-European, East Asian or Native American - a person
belongs, as well as the relative proportions of each. This marker test had 71
markers and as of March 2004 is no longer available as a service to our
customers.

ANCESTRYbyDNA(TM) 2.5

We introduced the newest version of our genealogy product line in February,
2004. ANCESTRYbyDNA(TM) 2.5 increases the 71 marker assay of version 2.0 to 175
markers, improving accuracy over version 2.0. During its first month of
production, we sold 100 ANCESTRYbyDNA(TM) 2.5 tests. For 2004 in total we have
sold approximately 1,360 tests in ANCESTRYbyDNA(TM) 2.5. Also in 2004 we
introduced a new product called EURO-DNA(TM) 1.0 introduced in late 2004. To
date we have sold eleven EURO-DNA(TM) tests.

Growth Strategy in Consumer Products

Without a significant investment in sales or marketing, we have generated
considerable interest in ANCESTRYbyDNA(TM) 2.5. We have sold, on average, 4
ANCESTRYbyDNA(TM) tests per day during 2004. An average of 2.5 of those test
sales have come from our website and 1.5 tests per day from our distributors.
Sales of ANCESTRYbyDNA(TM) for 2004 were approximately $435,000. We do not
currently have specific information on the average price. However, in general
distributors, pricing is $99 and customer pricing is $158. This was for
ANCESTRYbyDNA(TM) 2.0 only. ANCESTRYbyDNA(TM) 2.5 has a market price of $219.00
and our average distributor price is $164.25. Our EURO-DNA(TM) 1.0 price is an
additional $130 to our consumer and $97.50 to our distributors. Sales of
EURO-DNA(TM) 1.0 were approximately $4,000 during 2004.

Promotional efforts to date have been fruitful but sporadic. We have been
featured on or in ABC's Prime Time Thursday, the CBS Evening News with Dan
Rather, The New York Times, Miami Channel 10 WPLG, UPI, US News and World
Report, Popular Science Magazine, Tampa's Fox Channel 13 News, Germany's ZDF
News Channel, The Australian Broadcasting Corporation and The Sarasota-Bradenton
Herald Tribune KTTV Fox 11 in LA, ABC Tampa, Howard Stern's radio show, PBS WEDU
Sarasota, USA Today, and Dallas Morning News.

In order to build consistent sales, we have begun to implement formal sales and
marketing plans, including advertising and promotional campaigns. Implementing
these plans results in increased expenses for personnel, advertising, promotion,
and the collateral materials associated with these programs.

We have entered into a license agreement with Pearl Street Software. It will
provide a link within their new release of Family Tree Legends software allowing
our customers to upload their ANCESTRYbyDNA(TM) results to a secure web page.
Other family members will have the ability to add their test results, too.
Together, family members can "pool" their results and create and construct a
genetic family tree. Beta site tests were conducted, and we launched the service
in late 2004, there is no charge for the service and in addition we also
constructed a `geo-political' database where individuals can enter their
ANCESTRYbyDNA(TM) results and add their self-reported family origins, comparing
this origin to other similar origins. This allows individuals to search
geo-political areas for similar DNA values, perhaps helping a genealogist,
narrow their search for ancestral links.

Our paternity sales continue to grow and during 2004 we recorded $26,000 in
sales.


<PAGE>

The Contract Service Outsourcing Market

We provide universities and drug discovery companies the ability to screen for
genes responsible for certain disease states and to incorporate genetic
targeting in their drug discovery or disease pathology studies. The
pharmaceutical and drug discovery segments of the outsourcing market continue to
grow. In 1999, the US drug outsourcing market stood at $5 billion and was
expected to grow to $20 billion by 2002. Actual market value for 2002 was $18
billion, slightly lower than original expectations.

As more researchers look to genotyping as a means of studying disease
progression and patients' reaction to medications, our outsourcing opportunities
should increase. We have one of approximately a dozen known Ultra High
Throughput SNP machines in the world. The Beckman Ultra High Throughput machine
is used to perform contract Genotyping, ANCESTRYbyDNA(TM) and DNAWitness(TM)
tests as well as our research projects, including, but not limited to,
OVANOME(TM). Eight machines are solely dedicated to internal research at
pharmaceutical companies and universities; one works exclusively on veterinary
applications; and two are believed to be owned by Orchid, the original inventor
and producer of the equipment. However, Beckman has substantially increased its
efforts in 2004 to sell more machines in the market and we expect that during
the next several years, the SNP machine to have a greater market penetration and
thereby increase our competition not only in the genotyping contract services
but in areas such as consumer products, forensics and pharmaceuticals.

Contract Genotyping

Contract genotyping is the process of reading a genetic sequence and identifying
differences in the sequence letters. For example, in comparing diseased tissue
with normal tissue, we are able to see the differences in the sequence letters.
This information helps researchers understand how human differences are
expressed at the gene level. They can then search for and develop preventative
treatment and effective therapeutic courses to alleviate disease symptoms.

We use our laboratory capacity to provide university research laboratories and
other private companies with contract genotyping services. We perform all of the
work in our facilities to protect our customers' intellectual property and trade
secrets. We retain no intellectual property and do not contribute our
intellectual property to this screening service. We performed approximately
$268,000 of contracted genotyping services during 2004 with approximately five
customers, up from approximately $219,000 in 2003.

Growth Strategy for Contract Genotyping

We continue to pursue customers within the contract genotyping market. To date,
our customers have come to us either through client referrals or our general
website. In the future, we plan to concentrate our genotyping services on
specific diseases, including cancer, neurological disorders, and heart disease.
By concentrating on specific diseases, we hope to develop an expertise that will
attract customers in those areas requiring external assistance and additional
research capacity. Through this strategy, we will continue to build our
reputation as a reliable and cost effective supplier of high quality data using
our UHT SNP machine.

Research and Development

The primary objective of our near term research and development efforts in
pharmacogenomics will be to expand our library of predictive drug response tests
to include multiple therapeutic areas including commonly used FDA approved drug
therapies. We currently have two pharmacogenomic tests in development,
OVANOME(TM) and STATINOME(TM). In addition, it is our goal to continue to
expand, improve and broaden our current products, ANCESTRYbyDNA(TM) and
DNAWitness(TM) through research and development. Although our products are
diverse and address different market areas and needs, the base technology is the
same. Research in one area often provides benefit to our other products.
Research spending in 2001 was approximately $1.9 million and for 2002 was
approximately $2.2 million, increasing to $2.7 million in 2003 and decreasing to
$1.6 million in 2004. We will continue to support research and development
because it is a vital component of our overall strategy for sustained growth.


<PAGE>

OVANOME(TM)

Our scientists are working on a genomic-based diagnostic tool to match ovarian
cancer patients with the most suitable form and dose of chemotherapy,
particularly, Taxol-treated patients. Currently, cancer patients, especially
women with breast and uterine cancer are treated with anti-cancer drugs whose
efficacy is known in terms of population averages. In reality, individual cancer
patients exhibit unpredictable and unique responses to virtually all commonly
used chemotherapeutic compounds. Individual genetic differences have long been
suspected to play a role in this variable drug response. For cancer patients,
decisions about treatment regimes are often fateful, and second chances at
treatment are usually unsuccessful. A better understanding of the relationship
between genes and related chemistries and drug response can replace the current
trial and error process of chemotherapy treatment. This new drug prescription
strategy can help guide physicians and patients toward the optimal treatments at
the outset of therapy.

We have completed our initial phase of research and development on a test to
determine genetic predisposition for response to the Taxol-Carboplatin drug
combination. The Taxol-Carboplatin drug combination therapy is a treatment for
breast, ovarian, prostate and other cancers. In FDA clinical trials the
Taxol-Carboplatin drug combination therapy demonstrated efficacy in only 60-70%
of patients. In preliminary trials, our therapeutic response tests were 95%
effective in distinguishing Taxol-Carboplatin responders from non-responders.

We had previously identified a number of SNPs and certain AIMs associated with
variable Taxol/Carboplatin response in ovarian cancer patients. The markers were
useful for stratifying ovarian cancer patients into two groups: patients that
will respond to Taxol as intended, with essentially no risk of non-response, and
patients that carried a 50/50 risk of not responding. Since these results were
obtained, we have expanded our screen by an additional 11,000 AIMs/SNPs, and we
are still evaluating this data. After this data is evaluated and integrated with
our previous data, the next step is to blindly challenge the predictive power of
the markers and methods on other ovarian cancer patients that have been treated
or are being treated with Taxol/Carboplatin. We intend to extend these trials to
other Taxol derivatives and combinations to improve the overall market
penetration of our test.

We are identifying the next clinical group to establish a data set of patients
whose test information can be reviewed by the FDA either in a filing for a 510K
device application or as laboratory testing service provided to physicians. A
510K is an approval from the FDA that allows the sale of a diagnostic test in
the United States. FDA's review and approval process normally takes one to two
years from the start of the clinical trials to final approval. The length of a
clinical trial averages a year or more. The data obtained from the trial will
form the basis for a 510K filing. Once trials are completed, the data is
compiled, the report is written and finally the 510K is submitted for FDA review
and approval. FDA rules regarding pharmacogenomics testing are evolving, and
management believes that a 510K filing may not be required in order to perform
the service. We are seeking additional guidance from the FDA on this issue.

Initial research results will be the basis for our continued development. We
must expand our studies and address other aspects of drug treatment performance
that will likely be required before OVANOME(TM) could be used in the clinic to
assist chemotherapy decisions.

We are developing a clinical trial for OVANOME(TM). We must validate our
research findings further through a clinical trial in order to commercialize
OVANOME(TM). The trial will use our test to predict trial participants'
responses to the Taxol and Carboplatin drug therapy. Our Chief Medical Officer,
Dr. Hector Gomez, will lead the clinical development process and expects to
enroll 250 patients in the trial. Currently, we have enrolled 100 new patients
into this trial for 2005 and expect to add additional patients later in the
year. We are also exploring other clinical relationships to increase our patient
sample enrollment. We do not anticipate meeting with the FDA until our trials
are completed.

Statins and Ace Inhibitors

We are developing a test, STATINOME(TM), for the cardiac drug market. Statins
are drugs used to treat patients at increased risk of heart disease.
Approximately 50% of the U.S. population is at risk of heart disease as a result
of high cholesterol and related hormonal and other chemical imbalances. While
Statins have demonstrated effectiveness at cholesterol reduction, reportedly
decreasing incidence of heart disease by 10.3% from 1990 to 1994, adverse
reactions from statins can include liver damage, kidney failure and a form of
advanced muscular degeneration. Approximately 2-5% of patients must discontinue
statin use due to these adverse side effects. If accepted for commercial use, we
believe STATINOME(TM) will reduce substantially, the risks associated with
adverse response.

Our current study includes two adverse side effects associated with statins,
liver and adverse muscular response. These two side effects comprise most of the
side effects associated with statins. We have identified numerous markers
associated with these potentially life-threatening responses. We have performed
initial research in conjunction with a group of physicians to study and classify
patients taking statins. The research combined liver toxicity studies with our
AIMs to determine and identify patient response.

After the liver studies, we conducted research on the second adverse side
effect, adverse muscular response. We have obtained hundreds of DNA samples from
individuals who have experienced adverse muscular (myopathological) response to
the two statin drugs currently on the market, Lipitor and Zocor. We screened
these samples at over 12,000 AIMs spread throughout the human genome. The 12,000
AIMs represents an increase of 11,000 over our original screenings.

We will continue to evaluate the data we have already received and seek clinical
patients to develop a comprehensive retrospective test. Our goals are to broaden
our products' reach across all statins, not just Lipitor and Zocor, and to
evaluate all potential toxic side effects relating to AIMs/SNPs.

In addition to statins, we are focusing on coronary diseases and cardiac
disorders and the associated drugs to treat those diseases. Among the most
widely used treatment protocols are a set of compounds known as ACE Inhibitors.
These compounds along with other medications are used to treat cardiac patients.
While statins are used to treat patients before they express a cardiac problem,
ACE inhibitors are used to treat patients after they express a cardiac problem,
including a heart attack or angina. ACE inhibitors show a wide range of
toxicities among patient groups, and we suspect their application to a broad
patient group can be stratified, providing patients a higher rate of efficacy in
treatment at reduced toxicities.


<PAGE>

DNAWitness(TM)

In forensics, it is our intent to offer our products as a suite that includes
genetic heritage, eye and hair color tests. The tests will also be sold
separately as Heritage (genetic heritage), RETINOME(TM) (eye color) and
RETINOME-HA(TM) (hair color). Although hair and eye color remain the most
challenging research areas in genomics, we have successfully predicted in 2003,
with 85% accuracy, the eye color of individuals based on a donor DNA sample. Our
goal was to reach an accuracy rate of 95% or higher before commercializing this
test. RETINOME(TM) was commercialized in August, 2004 and thus far we have not
sold any tests and have performed 20 validation tests for the forensics
community. Hair color research continues, and we do not expect a product launch
of RETINOME-HA(TM) during 2005. Hair color is even more complex a relationship
and involves many more interrelated genes, increasing the complexity and ability
to predict. We will continue to work on this research.

We have filed a patent application for RETINOME(TM), a test for the inference of
eye color from DNA. The SNP based method for testing eye color is the first of
its kind. The method employs complex math and human pigmentation gene SNP
combinations to predict human eye color accurately and sensitively. We have been
working over the past year to update the RETINOME(TM) panel of SNPs in order to
predict eye color shade and actual eye colors with greater accuracy.

Currently, we have the ability to determine the first three distinctions, blue,
brown or some other color. Validation experiments necessary to define precise
accuracy continue. If test performance is satisfactory, we will begin selling
the test to the forensics community as an integrated component of the DNAWitness
(TM) 3.0 suite. Once we have reached this objective, our focus will turn to
increasing the bands of color from 2 to 3 or 4 distinct colors.

We are attempting to accomplish for human hair color what has been accomplished
for eye color, through the development of the RETINOME-HA(TM) test. If
successful RETINOME -HA(TM) will be available as an integrated component of the
DNAWitness (TM) 3.0 suite. We have also begun studies to add skin shade to our
expanded product line, but it will require further testing and experimentation
to advance this application.

We hope to enlist universities and other personnel to help us collect DNA
samples from across the globe. We have initiated plans to expand our scientific
advisory board to include other scientists who will actively contribute to our
effort in increasing the number of BGA sub-categories from our current four, to
as many as 20.

ANCESTRYbyDNA(TM)

In February 2004, we launched our 2.5 version of ANCESTRYbyDNA(TM) , increasing
accuracy and the number of markers from 71 to 175 from ANCESTRYbyDNA(TM) 2.0. We
are developing ANCESTRYbyDNA(TM) 3.0, which will expand the resolution of
ANCESTRYbyDNA(TM) 2.5 by including the inference of population affiliations
within a continent and proportionality (proportion or range of a given ancestry
marker). ANCESTRYbyDNA(TM) 2.5 can predict mixture of continental origin, but
cannot predict mixtures of ancestral composition within a continent. For
example, ANCESTRYbyDNA(TM) 2.5 might indicate that someone is of Indo-European
descent, while ANCESTRYbyDNA(TM) 3.0 might indicate that someone is 60% Northern
European and 20% Indo-European and 20% Middle Eastern descent. If successful,
ANCESTRYbyDNA(TM) 3.0 will provide additional accuracy and a broader application
in the genealogy market. We have launched EURO-DNA(TM) 1.0 in 2004 as the first
step in completing our stated 2004 goal of developing ANCESTRYbyDNA(TM) 3.0 and
will be looking at other product features as well to enhance and consider
finalizing our test.

These added benefits will assist our other two product categories, forensics and
pharmacogenomics, by broadening our abilities to identify and search for new
associations in phenotype descriptors for forensics and improving our
understanding of drug response across a wider population.

We are also adding features to our product including a `genetic family tree'
capability that allows all family members willing to participate, to take our
test and add their data to the family genetic tree. If we are able to collect
enough associations, the data may help us predict the genetic profile of a
deceased ancestor. Currently we are able to predict only one generation back
with 70-80% statistical accuracy. This may be helpful to individuals wishing to
know more about a lost parent, grandparent or great grand parent, depending upon
how many generations are still living. We will continue to explore and develop
our technology so that our goal of 95% prediction for one generation removed is
achieved, however, that can only be achieved through a significant increase in
our population database. We estimate that over several hundred thousand tests
will have to be performed in order to achieve our goal. We do not expect to
achieve this goal during 2005 but rather see it as a long range development
goal, extending over several years. The benefit for predicting genetic
relationships once removed is not only a benefit to genealogists but also
forensic scientists and pharmaceutical researchers. This will allow researchers
in all three fields to study genetic inherited markers to other phenotypic
descriptors such as hair color, eye color, height, skin shade and other less
visible responses such as drug metabolism, disease inheritance as well as family
lineage.

Patent Applications

We have filed claims for international and domestic patent protection. The
patents, if issued, will help ensure protection of our bioinformatics platforms,
analytical software, genome maps and genetic classifiers in forensic, consumer
products, and pharmacogenomics applications. The most significant patent
applications cover the bioinformatics platforms and genome maps. Other
applications describe the mathematical process of finding complex genetic
information and the actual processes that find the gene variants responsible for
specific complex genetic traits.

Two of our patent applications, 'Compositions...Pigmentation' and
'Compositions...Statin', have entered National Phases and are pending review and
we believe, approval in the U.S. and designated countries. The pigmentation
patent is important because it includes the methods and compositions for
determining skin shade, eye color or any other pigmentation application. Our
Statin patent application includes the use of method for determining a person's
ability to respond favorably to a particular Statin. We have covered all Statins
and the use of our AIMs and any assay developed that might use those markers in
the development of the assay.

Additional national phases will began for the other patents during the second
quarter of 2004 and will likely run through 2005. As discoveries warrant, we
will continue to apply for future additional patents. Listed below is our
current patent pending applications.


<PAGE>

Pending Patent Applications

<TABLE>
<CAPTION>
<S>           <C>                                                                      <C>             <C>
Efficient Methods and Apparatus for High-Throughput Processing of Gene Sequence Data                    US2003/0171875A1

Methods for the Identification of Genetic                                                               US2003/0171878A1
Features for Complex Genetics Classifiers                                                               WO 03/048318

Methods and Apparatus for use in Genetics Classification Including Classification Tree                  WO 03/048999
Analysis

Methods and Apparatus for use in Complex Genetics Classification                                        WO 03/048372
Based on Correspondence Analysis and Linear-Quadratic Analysis

Composition and Methods for the Inference                                                               US10/156,995
Of Pigmentation Traits                                                                                  PCT/US02/16789
                                                                                                        AU2002/312112
                                                                                                        CA2,448,569
                                                                                                        EP02739467.5
                                                                                                        JP2003/500216

Compositions and Methods for Inferring                                                                  US10/188,359
A Response to a Statin                                                                                  PCT/US02/20847
                                                                                                        AU2002/316485
                                                                                                        EP02746794.3
                                                                                                        JP2003/509083

Single Nucleotide Polymorphisms and Combinations Thereof Predictive of                                  PCT/US02/38345
Paclitaxel Responsiveness in Cancer Patients

Compositions and Methods for Inferring                                                                  US10/644,594
Ancestry                                                                                                PCT/US03/26229
</TABLE>


Licensing and Partnering Agreements

We have the rights to license, sell or partner our products exclusively within
the United States and abroad, subject to the terms of an option with Orchid
Biosciences. On October 24, 2001, we signed an Option agreement with Orchid
Biosciences of Princeton NJ, a leader in high-throughput genotyping. Under the
terms of the agreement, Orchid provided an up-front payment of $350,000 for the
option to negotiate exclusively for a license to co-develop and/or
co-commercialize certain products in the future. We will continue to negotiate
agreements with universities and businesses to apply our proprietary products
and resources to other product development projects.

Competition

Our expertise in finding and modeling AIMs form the cornerstone of our strategy
to penetrate the consumer products, forensic and pharmacogenomics markets with
our genomic testing products. We are one of the first companies to develop
infrastructure for this purpose. Due to limited competition in the field of
complex genomics classification to date, these market opportunities remain
attractive. Other companies and researchers seeking to develop genomic
classification or diagnostic products to bring to market are currently screening
hundreds of thousands to millions of markers across the genome. This process is
not commercially viable for many markets, due to cost.

By developing unique genome maps, however, we allow researchers to efficiently
and cost effectively discover and decipher complex, common genetic traits. Our
AIMs are novel because they allow a genome screen to be accomplished in certain
populations with as few as 2,000 markers, making it cost effective to develop
genomic based tests.

We compete against a limited number of companies in pharmacogenomics, including
Genaissance, Seryx, Variagenics, and Genset; deCODE Genetics, Celera Genomics,
Incyte Genomics, Orchid BioSciences, and Sequenom. The latter two principally
offer tools and services for sequencing and scoring SNPs, while Celera and
Incyte are involved primarily in creating SNP databases. DeCODE Genetics focuses
on gene discovery, drug target validation, as well as pharmacogenomic analysis
through use of its proprietary informatics system and its Icelandic Health
Sector Database. Genset also has an interest in pharmacogenomics through its
development of genomic markers using its proprietary technology platform;
however, it has dedicated its resources to internal drug discovery and
development in the areas of central nervous system and metabolic disorders.


<PAGE>

In addition, we face competition in these areas from pharmaceutical,
biotechnology and diagnostic companies, academic and research institutions and
government and other publicly-funded agencies, both in the United States and
abroad, most of which have substantially greater capital resources, research and
development staffs, facilities, manufacturing and marketing experience,
distribution channels and human resources than do we. Our key competitors
include, but are not limited to, PPGx, Inc., a leading international developer
and supplier of research-based pharmacogenomics services and products which
recently announced the launch of its GeneTrials(TM) Bioinformatics Platform.
PPGx is a joint venture of PPD, Inc. (NASDAQ: PPDI) and Axys Pharmaceuticals,
Inc. (NASDAQ: AXPH). Also, large pharmaceutical companies have their own
internal research and development efforts that could surpass or eliminate our
technology from the market.

Entities have developed or plan to develop databases containing gene sequence,
genomic variation or other genomic information and are marketing or plan to
market their data to pharmaceutical and biotechnology companies or plan to make
freely available their databases. Said entities include, but are not limited to:

      o     Genaissance Pharmaceuticals: a provider of pharmacogenomic support
            services, including high-throughput sequencing.

      o     Evolutionary Bioinformatics: Bioinformatics and genomics consulting,
            specializing in comparative genomics, functional genomics and model
            organisms.

      o     deCODE Genetics: Advanced bioinformatics and high throughput
            genotyping facility

      o     Celera Genomics: Drug discovery systems and services.

      o     Cellular Genomics: A biotechnology company focused on the discovery
            and validation of novel drug targets.

      o     Correlogic Systems: Developing tools and processes for proteomic and
            genomic-based clinical diagnostic systems and new drug discovery.

      o     Epoch Biosciences: Technologies useful in genetic research,
            diagnostics, drug development, infectious disease detection,
            prenatal testing and population screening to assess risk of disease
            or to predict response to drugs.

      o     Eragen Biosciences: Designs, develops, and markets functional
            genomic and drug/diagnostic discovery platform products, and
            technologies to the pharmaceutical, biotechnology and agro-biology
            industries. One of these technologies was our DNAWITNESS test, which
            soon after its release assisted with the successful resolution of a
            notorious serial killer case by the Louisiana MultiAgency Homicide
            Task Force.


These competitors may discover, characterize or develop important technologies
applying genomics before us or our customers that are more effective than those
technologies which we develop or which our customers develop. Additionally,
these competitors may obtain regulatory approvals for their drugs and
diagnostics more rapidly than our customers for our developed proprietary
products and services do, any of which could limit our ability to market
effectively our developed proprietary products and services. If our patent
applications are not awarded or if our competitors develop and receive approval
of patents that supersede our applications, we could be forced to cease the
development of our products, services and technologies.


<PAGE>

Similarly, we have competitors in the field of forensics that includes the
following list of companies:

      o     Orchid- The original inventors of Single Nucleotide Polymorphism
            analysis machines and SNP technologies through its Orchid Cellmark
            division is considered one of the premier independent DNA testing
            laboratories in forensics. This competitor not only has the
            scientific background but the financial means and expertise to
            create a product that eliminates our service, DNAWitness(TM) and
            RETINOME(TM) from the forensics market.

      o     FSS- A United Kingdom based firm that processes nearly 85% of the
            UK's criminal DNA samples also has the ability to create a product
            that is competitive to our products and is exploring entering into
            the U.S. market as well as other parts of Europe and Asia.

      o     Bode Systems, A division of Choicepoint- A significant competitor to
            the FSS and Orchid has the ability to create and market a similar
            product to our DNAWitness(TM) and RETINOME(TM) and eliminate us from
            the market.

      o     FBI, Quantico Laboratories- The Federal Bureau of Investigation
            (FBI) has significant development resources and is contracting with
            Orchid and others to develop identity tests that will help them
            identify potential DNA donors from crime scene DNA. The bureau also
            invests federal research money on its own research to develop
            testing process and procedures that it would approve for law
            enforcement.

      o     The NIJ  regularly  provides  grants to local and state police crime
            laboratories and University  researchers that are competitive to our
            technology.  We have  applied  for two grants and will  continue  to
            apply in 2005 but have been rejected.  In each application,  despite
            the rejection, we have developed the proposed technology and brought
            it to the  forensics  market.  One of  these  technologies  was  our
            DNAWITNESS  test,  which soon after its  release  assisted  with the
            successful  resolution  of a  notorious  serial  killer  case by the
            Louisiana MultiAgency Homicide Task Force.

Forensic DNA and consumer DNA technologies have undergone, and are expected to
continue to undergo, rapid and significant change. Our future success will
depend in large part on maintaining a competitive position in these fields.
Others may rapidly develop new technologies that may result in our tests or
technologies becoming obsolete before we recover the expenses that we incur in
connection with the development of these products. Our programs could become
obsolete if our competitors offer less expensive or more effective discovery and
development technologies, including technologies that may be unrelated to
genomics.

<PAGE>


                                  RISK FACTORS

      Before deciding to invest in us or to maintain or increase your
investment, you should carefully consider the risks described below, in addition
to other information contained in this report. Each of the following risks could
cause our business, financial condition and results of operations to be
materially harmed. These risks could cause the trading price of our common stock
to decline and you could lose all or part of your investment.

              Risks Related to Our Financial Condition and Business

Regulatory oversight of our developed proprietary products and services may
increase the costs we will incur to market our products and services and
adversely affect our ability to market our products and services.

      Currently, there is limited Food and Drug Administration, or FDA,
regulation of genetic tests. Within the field of personalized health and
medicine, governmental and other entities may enact patient privacy and
healthcare laws and regulations that may limit the generation and use of genomic
variation data. "Genomic variation data" is the information obtained when our
scientists search the gene for differences across the entire human genome for
changes and variations. We are looking for clues or information that would be
able to link to other biological information such as human disease, drug
metabolism, eye color or genetic ancestry. We have found, as have many other
genetic scientists across the globe, that the variation in the amount of
information in certain regions of the human genome is important to discovery.

      If our products, services or technologies have already been used by the
industry and we are merely supplying an alternative source of supply, there is a
significant risk that our products, services or technologies do not meet the
standards set out by the Food and Drug Administration upon inspection of that
product, service or technology in the course of the FDA evaluating an
application for review or during a review inspection by the FDA. Also, customers
of our products, services or technologies will view or evaluate the product,
service or technology and may consider it too risky or not in compliance with
industry standards. In addition, the FDA may believe that certain action should
or should not be taken in the adoption of a new technology, service or product
and the industry may believe that the guidelines for applying this new
technology, product or service are too severe. In this case, the pharmaceutical
industry participants may decide not to use that product, service or technology
for fear that they will not be able to maintain the standards necessary to pass
an FDA review or inspection.

      To the extent that FDA laws and regulations limit the use of our products
and services or impose additional costs on our customers, we may be unable to
market effectively our developed proprietary products and services and we may
not generate sufficient revenue to sustain our operations. Furthermore, we may
be directly subject to regulations as a provider of diagnostic information. A
diagnosis is the evaluation of a patient or a sample to determine what the
status of the patient might be. The information that results from this
evaluation is called `diagnostic information' and would include such information
as height, weight, sex, age, blood pressure, sugar levels and many other pieces
of data. All of this information is usually recorded by the doctors into a
patient's health record and is reviewed and studied to determine the next course
of treatment for the patient.

      To the extent that these regulations restrict the sale of our products and
services or impose other costs, we may be unable to provide our products and
services to our customers on terms sufficient to recover our expenses.

Our success will depend, in part, on how rapidly the pharmaceutical and
biotechnology industry implements guidance from the U.S. Department of Health
and the FDA regarding a potential expansion of regulation of our industry.
Without this implementation by the pharmaceutical and biotechnology industry, we
may be unable to market effectively any test we may have as well as any of our
services and we may not generate sufficient revenue to sustain our operations.

      The Secretary's Advisory Committee on Genetic Testing, an advisory panel
to the Secretary of the U.S. Department of Health and Human Services, has
recommended that the FDA expand its regulation of genetic testing to require FDA
approval for all new genetic tests and labeling of genetic tests. If the FDA
adopts this recommendation, it may require that we, or our customers, apply for
FDA approval as a prerequisite to marketing genetic tests that incorporate our
intellectual property. If the FDA were to deny any application of this kind, it
could adversely affect our business and we may be unable to generate sufficient
revenue to sustain our operations.

      The FDA has only once required that a physician must have genomic
variation information determined about a patient before the doctor prescribes a
drug. In this one instance, the FDA has stipulated that this requirement can be
fulfilled with either gene expression information or genomic variation
information. The human genome is composed of four simple chemical compounds, A,
C, T and G or Adenine, Cytosine, Thiamine and Guanine as found in the Merck
Index of chemical compounds. These four compounds align in a double stranded
spiral or helix that is coiled up inside the human cell. The cell uses the DNA
to produce other compounds and genetic scientists and biologists refer to the
production of these proteins, sugars, hormones, lipids and other chemical
compounds vital to the healthy functions of the cell as `gene expression'. This
means is that the DNA is either turned on or turned off. When a gene is turned
on it is expressing or producing certain chemical compounds or causing other
parts of the cell to produce chemical compounds that are needed by the cell.
When the cell has had enough of a particular compound and doesn't need anymore
of the compound, the gene is often turned off and stops producing it. Scientists
look directly at the gene and also study the data obtained from testing the
compounds that are produced by the cell or looking at the gene expression
information in a data set and analyzing that information for hidden or related
information that might help us understand the function of the gene or section of
a gene.


<PAGE>

      On November 3, 2003, the FDA issued draft guidance that encourages drug
and biologic developers to conduct pharmacogenomic tests during drug development
and clarified how the FDA will evaluate the resulting data. "Pharmacogenomic
tests" are clinical laboratory tests of all kinds to determine whether a drug is
working or not working on a patient that is experiencing a particular illness or
expressing a disease. It has only been recently that genetic scientists have
been able to link genetic testing to the performance of a drug. The term often
used within the pharmaceutical industry to describe the testing of individuals
for their genetic influences on the effectiveness of a drug or more precisely is
there something in a person's genes that would either enhance or prevent the
treatment of that individual's disease with a particular drug and this is often
called `pharma-co-genomic tests' or `pharmacology and genomics' or the study of
pharmaceuticals and genetics.

      The FDA guidance provides specific criteria and recommendations on the
submission of pharmacogenomic data in connection with Investigational New Drug
Applications, New Drug Applications and Biological License Applications. Before
any company or individual can treat a single human patient with a new chemical
entity often referred to as a NCE or a new biological entity, referred to as the
NBE, scientists must first prove that the potential drug is safe within existing
treatment regimes. For example, new chemical entities used to treat cancer might
be allowed to be much more toxic to other cells in the body than would a
treatment for other less lethal diseases. Scientists then perform a pre-clinical
or before filing for permission to the FDA to treat human patients and package
all the information into an application with the FDA called the `Investigational
New Drug Application' or IND. The FDA has the right to request additional
testing prior to human testing or it may reject or approve the IND application
to perform further testing on humans using either the New Chemical Entity or the
New Biological Entity as described in the IND application. In addition,
"Biological License Applications" are the licensing of biological compounds.

      The draft FDA guidance includes information on the type of data needed and
how the FDA will or will not use such data in regulatory decisions. The FDA
asked for voluntary submissions of research information in order to gain
experience as the field of pharmacogenomics evolves. In addition, the FDA held a
workshop in November 2003 to discuss its draft guidance and stated that the
agency plans in the near future to issue final guidance on the co-development of
a pharmacogenomic test and drug. The FDA has as of March 22, 2005 released its
newest guidelines titled `Guidance for Industry: pharmacogenomic data
submissions' and can be found at the following web address:
http://www.fda.gov/cber/gdlns/pharmdtasub.pdf. Our success will depend, in part,
on how rapidly the pharmaceutical and biotechnology industry implements the
guidance and, accordingly, the validity of our test and services as a basis for
identifying genomic variation and for correlating drug response with genomic
variation. Without this implementation by the pharmaceutical and biotechnology
industry, we may be unable to market effectively any test we may have as well as
any of our services and we may not generate sufficient revenue to sustain our
operations.

Public opinion on ethical issues related to the confidentiality and appropriate
use of genetic testing could reduce the potential markets for our products and
services, which could prevent us from generating sufficient revenue to sustain
our operations.

      Public opinion on ethical issues related to the confidentiality and
appropriate use of genetic testing results may influence governmental
authorities to call for limits on, or regulation of the use of, genetic testing.
In addition, governmental authorities or other entities may call for limits on,
or regulation of the use of, genetic testing or prohibit testing for genetic
predisposition to certain conditions, particularly for those that have no known
cure. The occurrence of any of these events could reduce the potential markets
for our products and services, which could prevent us from generating sufficient
revenue to sustain our operations.

      For example, the FDA has approved a medication for use in African
Americans called BilDil that was developed by a pharmaceutical company called
NitroMed. Recently, articles have appeared accusing the FDA and NitroMed of
`racial discrimination' and claim that no drugs should be developed using
genetic testing that might separate out individuals by `race, color or creed',
without regard to the benefit which might be caused for the African American
patient. According to such critics, the potential harm in the form of increased
discrimination far outweighs the benefits. Several noteworthy genetic scientists
have also voiced their opinions that our technology and technologies similar to
those developed by NitroMed and others are discriminating and should not be
developed or approved by our Federal, State or local governments.

If we do not successfully distinguish and commercialize our developed
proprietary products and services, we will not attract a sufficient number of
customers. Accordingly, we may be unable to compete successfully with our
competitors or to generate revenue significant to sustain our operations.

      Numerous entities are attempting to identify genomic variation predictive
of specific diseases and drug response and to develop products and services
based on these discoveries. We face competition in these areas from
pharmaceutical, biotechnology and diagnostic companies, academic and research
institutions and government and other publicly-funded agencies, both in the
United States and abroad, most of which have substantially greater capital
resources, research and development staffs, facilities, manufacturing and
marketing experience, distribution channels and human resources than do we. Our
key competitors include, but are not limited to, PPGx, Inc., a leading
international developer and supplier of research-based pharmacogenomics services
and products which recently announced the launch of its GeneTrials(TM)
Bioinformatics Platform. PPGx is a joint venture of PPD, Inc. (NASDAQ: PPDI) and
Axys Pharmaceuticals, Inc. (NASDAQ: AXPH). Also, large pharmaceutical companies
have their own internal research and development efforts that could surpass or
eliminate our technology from the market.

      These competitors may discover, characterize or develop important
technologies applying genomics before us or our customers for our developed
proprietary products and services that are more effective than those
technologies which we develop or which our customers for our developed
proprietary products and services develop. Additionally, these competitors may
obtain regulatory approvals for their drugs and diagnostics more rapidly than
our customers for our developed proprietary products and services do, any of
which could limit our ability to market effectively our developed proprietary
products and services. If our patent applications are not awarded or if our
competitors in the field of genetic research, as it applies to our technologies,
products and services develop and receive approval of patents that supersede our
applications, we could be forced to cease the development of our products,
services and technologies.


<PAGE>

      Some companies and governments are marketing or developing a number of
databases and informatics tools to assist participants in the healthcare
industry and academic researchers in the management and analysis of genomic
data. "Informatics tools" is a term used by scientists to describe software,
computer programs or mathematical programs that analyze data sets or collected
information that is stored in data files. Such computer programs can take an
apparently meaningless block of numbers that are recorded from a laboratory
experiment and evaluate trends, look for statistical relationships and group or
segregate the numbers according to their levels of importance to the scientist.
They are tools to evaluate information. Our competitors have developed or plan
to develop databases containing gene sequence, genomic variation or other
genomic information and are marketing or plan to market their data to
pharmaceutical and biotechnology companies or plan to make freely available
their databases. Said entities include, but are not limited to:

      o     Genaissance Pharmaceuticals: a provider of pharmacogenomic support
            services, including high-throughput sequencing.

      o     Evolutionary Bioinformatics: Bioinformatics and genomics consulting,
            specializing in comparative genomics, functional genomics and model
            organisms.

      o     deCODE Genetics: Advanced bioinformatics and high throughput
            genotyping facility

      o     Celera Genomics: Drug discovery systems and services.

      o     Cellular Genomics: A biotechnology company focused on the discovery
            and validation of novel drug targets.

      o     Correlogic Systems: Developing tools and processes for proteomic and
            genomic-based clinical diagnostic systems and new drug discovery.

      o     Epoch Biosciences: Technologies useful in genetic research,
            diagnostics, drug development, infectious disease detection,
            prenatal testing and population screening to assess risk of disease
            or to predict response to drugs.

      o     Eragen Biosciences: Designs, develops, and markets functional
            genomic and drug/diagnostic discovery platform products, and
            technologies to the pharmaceutical, biotechnology and agro-biology
            industries.

      In addition, numerous pharmaceutical and biotechnology companies, either
alone or in collaboration with our competitors, are developing genomic research
programs that involve the use of information that can be found in these
databases. Furthermore, companies have technologies for using genetic variation
in diagnostics and in the drug development process and have collaborations with
companies employing these technologies.

      Genomic technologies have undergone, and are expected to continue to
undergo, rapid and significant change. Our future success will depend in large
part on maintaining a competitive position in the genomics field. Others may
rapidly develop new technologies that may result in our test or technologies
becoming obsolete before we recover the expenses that we incur in connection
with the development of these products. Our developed proprietary products and
services could become obsolete if our competitors offer less expensive or more
effective drug discovery and development technologies, including technologies
that may be unrelated to genomics.

We also face serious competition from competitors in the forensic DNA testing
market, consumer DNA products market and the contract services outsourcing
market which we are also a participant. Accordingly, we may be unable to compete
successfully with our competitors in said markets to generate revenue
significant to sustain our operations.

      In the forensic DNA testing market, consumer DNA products market and
contract services outsourcing market, we have introduced new products in the
last year and improved our flagship product, ANCESTRYbyDNA(TM) , part of the
consumer DNA market, by upgrading it from a 2.0 version with 76 marker sets to
our ANCESTRYbyDNA(TM) 2.5 test with 175 marker sets. Additionally, we have
increased our ability to include DNA sampling from Northern European, Middle
Eastern, Mediterranean and Indo by introducing EURO-DNA(TM) 1.0. However, sales
have not improved as dramatically as expected as we have also increased our
pricing of our product from $199 to $249 for the ANCESTRYbyDNA(TM) product and a
combined price of $399 for inclusion of a EURO-DNA(TM) test along with the
ANCESTRYbyDNA(TM) test should the Indo-European score be equal to or greater
than 50% of the reported four component score value.

      We remain skeptical that in the consumer market which is mainly supported
by genealogy enthusiasts that our potential gain or reward from developing
products for these markets will be limited by the sudden lack of interest. Our
competitors include companies like:

      o     Trace Genetics- A supplier of mitochondrial DNA testing for
            ancestry, paternity testing and y-chromosome testing for ancestry.

      o     Sorenson Genetics- One of the larger suppliers of paternity and
            ancestry testing.

      o     DNA Testing Center, Inc. - A testing service for mitochondrial,
            paternity and y chromosome testing for the consumer market and
            forensics market as well.

      Any one of these firms could with enough research and development create a
product that is competitive to our products, ANCESTRYbyDNA(TM) and EURO-DNA(TM),
and reduce our current sales volumes.


<PAGE>

      Similarly, we have competitors in the field of forensics that includes the
following list of companies and agencies:

      o     Orchid- The original inventors of Single Nucleotide Polymorphism
            analysis machines and SNP technologies through its Orchid Cellmark
            division is considered one of the premier independent DNA testing
            laboratories in forensics. This competitor not only has the
            scientific background but the financial means and expertise to
            create a product that eliminates our service, DNAWitness(TM) and
            RETINOME(TM) from the forensics market.

      o     FSS- A United Kingdom based firm that processes nearly 85% of the
            UK's criminal DNA samples also has the ability to create a product
            that is competitive to our products and is exploring entering into
            the U.S. market as well as other parts of Europe and Asia.

      o     Bode Systems, A division of Choicepoint- A significant competitor to
            the FSS and Orchid has the ability to create and market a similar
            product to our DNAWitness(TM) and RETINOME(TM) and eliminate us from
            the market.

      o     FBI, Quantico Laboratories- The Federal Bureau of Investigation
            (FBI) has significant development resources and is contracting with
            Orchid and others to develop identity tests that will help them
            identify potential DNA donors from crime scene DNA. The bureau also
            invests federal research money on its own research to develop
            testing process and procedures that it would approve for law
            enforcement.

      o     The NIJ regularly provides grants to local and state police crime
            laboratories and University researchers that are competitive to our
            technology. We have applied for two grants and will continue to
            apply in 2005 but have been rejected. In each application, despite
            the rejection, we have developed the proposed technology and brought
            it to the forensics market.

      Forensic DNA and consumer DNA technologies have undergone, and are
expected to continue to undergo, rapid and significant change. Our future
success will depend in large part on maintaining a competitive position in these
fields. Others may rapidly develop new technologies that may result in our tests
or technologies becoming obsolete before we recover the expenses that we incur
in connection with the development of these products. Our developed proprietary
products and services could become obsolete if our competitors offer less
expensive or more effective discovery and development technologies, including
technologies that may be unrelated to genomics.

Although many of our competitors practice similar technologies, their approach
to data analysis might be completely different and more efficient than ours.
This may cause our consumers to choose our competitor's products and services
over ours and force us to change our products and services to the more efficient
form of data analysis of our competitors

      We evaluate the mixture of genetic inheritance within individuals and
relate that information to biological information. Another perfectly reasonable
approach is to evaluate large groups of individuals in `pools' of DNA and look
for differences or similarities amongst the data. Our approach may prove to be
too cumbersome for the industry to adapt and in fact may not want to accept
because it is `too personal', meaning that overall `generic' descriptors might
be more immediately valuable to the industry than knowing whether or not a
single individual will respond favorably to a medication treatment. The `pooled'
approach is more often the approach that many pharmaceutical companies and our
competitors practice. Additionally, our technology depends upon looking at
individuals within a population pool and therefore projecting the results of
many individual samples upon a general population that may not be clearly
identified. Our competitors rely upon self reporting descriptors such as
`African American', `Caucasian' or `Hispanic' to pool their DNA samples. We do
not presuppose the reported identity of an individual but rather look at their
inherited genetic markers that will tell us what group with which to associate
them. This approach may not be accepted by the industry and a more standardized
method, although not as accurate, may become the standard significantly
impacting our ability to promote, sell, license of further develop our products,
services or technologies within any of our current markets that include,
consumer, forensic and pharmaceuticals.

We may never become profitable and continue as a going concern because we have
had losses since our inception which may negatively impact our ability to
achieve our business objectives. We may never be able to reduce these losses,
which will require us to seek additional debt or equity financing that may not
be available to us.

      We were incorporated under the laws of the State of Utah on January 3,
1983 as Lexington Energy, Inc. We may never become profitable and continue as a
going concern because we have incurred losses and experienced negative operating
cash flow since our formation. For the year ended December 31, 2004, we had a
net loss of $3,734,982 and a working capital deficit of $165,417. We expect to
continue to incur significant expenses. Our operating expenses have been and are
expected to continue to outpace revenues and result in significant losses in the
near term. We may never be able to reduce these losses, which will require us to
seek additional debt or equity financing. If such financing is available you may
experience significant additional dilution.

Our independent auditors have expressed doubt about our ability to continue as a
going concern, which may hinder our ability to obtain future financing.

      In their report dated February 25, 2005, our independent registered public
accounting firm has expressed doubt about our ability to continue as a going
concern in our financial statements for the year ended December 31, 2004 and
2003. Our ability to continue as a going concern is an issue raised as a result
of recurring losses from operations, a working capital deficit, and requirement
for a significant amount of capital financing to proceed with our business plan.
Our ability to continue as a going concern is subject to our ability to generate
a profit and/or obtain necessary funding from outside sources, including
obtaining additional funding from the sale of our securities, increasing sales
or obtaining loans and grants from various financial institutions where
possible.

      Our business plan targets the sale of unique, proprietary, genetic testing
products and services. Our products are geared towards three distinct markets:
pharmacogenomics (the study of pharmaceuticals and genetics), forensics and
consumer products. In the consumer products market, we introduced
ANCESTRYbyDNA(TM) 2.0 and 2.5. ANCESTRYbyDNA(TM) was the first service of its
kind and helped people understand their genetic inheritance. We gave information
on the four major groups that have been demonstrated by cultural anthropologists
and archeologists to be the origins of modern men and women. These four groups,
Native American, East Asian, Indo-European and Sub-Saharan African represent our
oldest sources of ancient inherited DNA. Founder populations were identified by
anthropologists and samples were either purchased or donated to build our
initial database of samples.

      In forensics, our challenge was and is considerably different than in our
genealogy market. Forensic scientists, detectives and prosecutors are on the
other hand more interested in the physical description of an individual than
they are interested in inherited genealogy relationships. We have over the
course of the last 4 years since our formation, created unique databases of
information and are continuing to create more databases to help our genealogy
customers' link to the genetic heritage and allow our forensic investigators a
more detailed description of the crime scene sample donor. DNAWitness(TM) 2.5 is
our product which we will introduce to the forensic market.


<PAGE>

      When we decided to enter into the pharmaceutical market we in some cases
is combining both the technologies we have developed for the consumer market and
the forensics market. We have no currently available products for the
pharmacogenomics market. We are currently developing products for all three
markets, which are in various stages of progress.

We may need immediate funds and may not be able to obtain any additional
financing in the amounts or at the times that we may require the financing or,
if we do obtain any financing, that it would be on acceptable terms.
Accordingly, we may have to curtail our business if we cannot find adequate
funding.

      We currently have no legally binding commitments with any third parties to
obtain any material amount of additional equity or debt financing. However,
management intends to continue its relationship with La Jolla Cove Investors,
Inc. and it will continue under its agreement to receive funding totaling $8
million. As of December 31, 2004, La Jolla Cove Investors, Inc. (LJCI) converted
$310,000 of convertible debenture into our common stock and exercised
non-detachable warrants to purchase 4,650,000 shares of our common stock. The
combined transactions resulted in us receiving cash of $4,752,169 net of
$397,831 of cash stock issuance costs. We also received $255,000 prepayment for
future warrant exercises. It is anticipated that the minimum conversions of the
outstanding debenture into common stock and the related exercise of the
non-detachable warrants will fund our operating activities through 2004 and that
together with the additional funding anticipated to be received from Dutchess,
our operations will be funded through 2006.

      Despite the LJCI financing, we may need immediate funds and may not be
able to obtain any additional financing in the amounts or at the times that we
may require the financing or, if we do obtain any financing, that it would be on
acceptable terms because of the following:

      -     we have no assets to pledge as security for the loan

      -     we are in poor financial condition

      -     we may be viewed as a high market risk

      Our failure to obtain sufficient additional financing could result in the
delay or abandonment of some or all of our development, expansion and
expenditures, which could harm our business and the value of our common stock.

We cannot assure that we will have in place patent protection and
confidentiality agreements for our proprietary technology. If we do not
adequately protect our intellectual property rights, there is a risk that they
will be infringed upon or that our technology infringes upon one of our
competitor's patents. As a result, we may experience a loss of revenue and our
operations may be materially harmed.

      To the extent possible, we anticipate filing patent applications for
protection on future products that we develop. We cannot assure that patents
applied for will be issued, that any current or future patents will afford us
commercially significant protection of our products or that we will have
adequate resources to enforce our patents. Inasmuch as we intend to sell our
products in foreign markets, we also intend to seek foreign patent protection
for our products and technologies. The patent laws of other countries may differ
from those of the United States as to patentability of our products and
technologies, and the degree of protection afforded. Other companies may develop
similar or equivalent products and may obtain patent or similar rights prior to
its obtaining protection. We cannot assure that our products do not and will not
infringe on the patents of others, nor can we assure that we will have the
financial or other resources necessary to successfully defend a claim of
violation of proprietary rights. We also rely on confidentiality and
nondisclosure arrangements with our employees and entities we do business with.
We cannot assure that these agreements will provide us meaningful protection.

If we are unable to retain the services of Ms. Monica Tamborini or Messrs.
Richard Gabriel, Tony Frudakis and Hector Gomez, or if we are unable to
successfully recruit qualified personnel, we may not be able to continue
operations.

      Our success depends to a significant extent upon the continued service of
Mr. Richard Gabriel, our President and Chief Executive Officer, Ms. Monica
Tamborini, our Chief Financial Officer and Chief Operating Officer, Mr. Tony
Frudakis, our Founder and Chief Scientific Officer, and Mr. Hector Gomez, our
Chairman of the Board and Chief Medical Officer. Loss of the services of Ms.
Tamborini or Messrs. Gabriel, Frudakis, and Gomez could have a material adverse
effect on our growth, revenues, and prospective business. We have employment
agreements in place with Ms. Tamborini and Messrs. Gabriel, Frudakis, and Gomez,
which are incorporated by reference from our Form 10-KSB, filed March 30, 2004.
We do not maintain key-man insurance on the lives of Ms. Tamborini or Messrs.
Gabriel, Frudakis, and Gomez. If Ms. Tamborini or Messrs. Gabriel, Frudakis, and
Gomez were to resign, the loss could result in loss of sales, delays in new
product development and diversion of management resources, and we could face
high costs and substantial difficulty in hiring qualified successors and could
experience a loss in productivity while any such successor obtains the necessary
training and experience. In addition, in order to successfully implement and
manage our business plan, we are dependent upon, among other things,
successfully recruiting qualified personnel who are familiar with the specific
issues facing the deciphering of complex genetic traits. In particular, we must
hire and retain experienced management personnel to help us continue to grow and
manage our business, and skilled genetic technicians to further our research and
development efforts. Competition for qualified personnel is intense. If we do
not succeed in attracting new personnel or in retaining and motivating our
current personnel, our business could be harmed.


<PAGE>

                       Risks Relating To Our Common Stock

Our common stock is subject to "penny stock" rules of the SEC and the trading
market in our stock is limited, which makes transactions in our stock cumbersome
and may reduce the value of an investment in our stock.

      The Securities and Exchange Commission has adopted Rule 15g-9 which
establishes the definition of a "penny stock," for the purposes relevant to us,
as any equity security that has a market price of less than $5.00 per share or
with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require:

      -     that a broker or dealer approve a person's account for transactions
            in penny stocks; and

      -     the broker or dealer receive from the investor a written agreement
            to the transaction, setting forth the identity and quantity of the
            penny stock to be purchased.

      In order to approve a person's account for transactions in penny stocks,
the broker or dealer must:

      -     obtain financial information and investment experience objectives of
            the person; and

      -     make a reasonable determination that the transactions in penny
            stocks are suitable for that person and the person has sufficient
            knowledge and experience in financial matters to be capable of
            evaluating the risks of transactions in penny stocks.

      The broker or dealer must also deliver, prior to any transaction in a
penny stock, a disclosure schedule prepared by the Commission relating to the
penny stock market, which, in highlight form:

      -     sets forth the basis on which the broker or dealer made the
            suitability determination; and

      -     that the broker or dealer received a signed, written agreement from
            the investor prior to the transaction.

      In addition, unless you have had an account with your brokerage firm for
more than one year, or you have previously bought three different penny stocks
from that firm, your brokerage firm must send you a written statement for you to
sign that accurately describes your financial situation, your investment
experience, and your investment goals, and that contains a statement of why your
firm decided that penny stocks are a suitable investment for you. The firm also
must get your written consent to buy the penny stock.

      If penny stocks are sold to you in violation of federal or state
securities laws, you may be able to cancel your purchase and get your money
back. If the stocks are sold in a fraudulent manner, you may be able to sue the
persons and firms that caused the fraud for damages. If you have signed an
arbitration agreement, however, you may have to pursue your claim through
arbitration.

Our historic stock price has been volatile and the future market price for our
common stock is likely to continue to be volatile. Further, the limited market
for our shares will make our price more volatile. This may make it difficult for
you to sell our common stock for a positive return on your investment.

      The public market for our common stock has historically been very
volatile. Any future market price for our shares is likely to continue to be
very volatile. This price volatility may make it more difficult for you to sell
shares when you want at prices you find attractive. We do not know of any one
particular factor that has caused volatility in our stock price. However, the
stock market in general has experienced extreme price and volume fluctuations
that have often been unrelated or disproportionate to the operating performance
of companies. Broad market factors and the investing public's negative
perception of our business may reduce our stock price, regardless of our
operating performance. Further, the market for our common stock is limited and
we cannot assure you that a larger market will ever be developed or maintained.
The average daily trading volume of our common stock over the past year was
approximately 112,331 shares. Market fluctuations and volatility, as well as
general economic, market and political conditions, could reduce our market
price. As a result, this may make it difficult or impossible for you to sell our
common stock.

If we fail to remain current on our reporting requirements, we could be removed
from the OTC Bulletin Board which would limit the ability of broker-dealers to
sell our securities and the ability of stockholders to sell their securities in
the secondary market

      Companies trading on the OTC Bulletin Board, such as us, must be reporting
issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and
must be current in their reports under Section 13 in order to maintain price
quotation privileges on the OTC Bulletin Board. If we fail to remain current on
our reporting requirements, we could be removed from the OTC Bulletin Board. As
a result, the market liquidity for our securities could be severely affected by
limiting the ability of broker-dealers to sell our securities and the ability of
stockholders to sell their securities in the secondary market.


<PAGE>

Item 2. Description of Property.

We currently lease our operating facility at 900 Cocoanut Avenue, Sarasota,
Florida. This lease runs until May 31, 2005 and we have the option to renew the
lease for an additional one-year term. The lease requires monthly rent of
approximately $5,400 (plus sales tax). The building consists of approximately
4,000 square feet of laboratory and office space.

Item 3. Legal Proceedings.

On October 27, 2003, DNAPrint genomics, Inc. filed suit in the Circuit Court of
the Twelfth Judicial Circuit of Florida in and for Sarasota County, Florida,
Civil Division moving for an emergency order requiring impoundment of any and
all computers and associated materials of one of our former employees. On
October 28, 2003, the Circuit Court Judge granted the order. The order was
carried out on the same day.

Our Complaint alleges that a former employee inappropriately took confidential
company materials and then disclosed or threatened to disclose the information.
The Complaint seeks return of the property, a permanent injunction against
further and future disclosures by the former employee, attorney's fees and
related costs.

On December 19, 2003, the former employee filed an Answer, Affirmative Defenses,
and Counterclaim with the Court generally denying the allegations of our claim.
In addition, the Defendant counterclaimed and sued us for breach of an
Employment Agreement, based on a purported failure to pay certain health
benefits, and stock options.

On January 9, 2004, the Court granted our Motion to Inspect, Examine and
Download Information from the Impounded Computer, subject to certain limitations
designed to protect the confidentiality of any information contained on the
computer.

On June 17, 2004, a promissory note holder (who is also a shareholder of the
Company) filed suit in the Circuit Court of the Twelfth Judicial Circuit of
Florida in and for Sarasota County, Florida. This matter involves a claim for
payment due under certain promissory notes that we issued to the note holder. We
have tendered, on numerous occasions, all monies due and owing to the promissory
note holder. The note holder does not dispute that such monies were tendered,
but rather has taken the position that he is entitled to payment in discounted
stock as opposed to cash. We filed a counterclaim for unjust enrichment as to
benefits conferred upon the promissory note holder without our knowledge or
consent. This matter was mediated on December 10, 2004, and the parties agreed
on a settlement. Therefore, this matter is concluded.

Item 4. Submission of Matters to a Vote of Security Holders.

NONE



<PAGE>

                                     PART II


Item 5. Market for Common Equity and Related Stockholder Matters.

Our common stock is eligible for quotation on the OTC Bulletin Board. Set forth
below is a table summarizing the high and low bid quotations for our common
stock during its last two fiscal years.

Summary of Quarterly High & Low Price of Common Stock

                 QUARTER                 HIGH BID               LOW BID
                 -------                 --------               -------
          1st  Quarter 2003                .033                  .013
          2nd  Quarter 2003                .185                  .017
          3rd  Quarter 2003                .096                  .047
          4th  Quarter 2003                .083                  .023
          1st  Quarter 2004                .070                  .036
          2nd  Quarter 2004                .050                  .025
          3rd  Quarter 2004                .030                  .013
          4th  Quarter 2004                .020                  .005

The above table is based on Over-The-Counter quotations. These quotations
reflect inter-dealer prices, without retail mark-up, markdown or commissions,
and may not represent actual transaction. All historical data was obtained from
the integratIR.com OTCBB web site.

As December 31, 2004 there were 927 owners of record of our common stock.

We have never paid any cash dividends. The payment of dividends, if any, in the
future is within the discretion of our Board of Directors, and will depend upon
our earnings, capital requirements and financial condition, and other relevant
factors. Management does not expect to declare dividends in the foreseeable
future.

Use of Proceeds

We filed, with the SEC, a Registration Statement on Form S-2 (Registration No.
333-111169), which was declared effective by the SEC on December 19, 2003. The
offering described in the Registration Statement has commenced, and as of
December 31, 2004, we had received $5,405,000 in total proceeds associated with
the offering. We incurred stock issuance costs and fees of $397,831 for a net
receipt of $5,007,169.

The offering relates to the issuance to La Jolla Cove Investors, Inc. ("LJCI")
of a $500,000, 8% convertible debenture with attached warrants. We pay interest
on a monthly basis with a principal balloon payment due on the maturity date of
November 24, 2005. Under the agreement, LJCI must convert at least 5% of the
face value of the debenture, and exercise the related warrants, each calendar
month. If they do not convert at least 5%, they may wire monies for the warrant
conversion as prepayment toward the future exercise of the warrants.

We received $4,905,000 during 2004 and incurred $301,283 in associated stock
issuance costs and fees. During 2004, we used approximately $3,970,000 of the
total net proceeds for payroll of approximately $1,767,000, lease and note
repayments of approximately $149,000, property and equipment of approximately
$57,000 and miscellaneous monthly payments to our vendors for materials and
supplies of approximately $1,997,000 leaving a cumulative balance of the net
proceeds of the offering of approximately $720,000. Cumulative use of proceeds
is approximately $4,287,000 comprised of payroll of approximately $1,816,000,
lease and note repayments of approximately $157,000, working capital of
approximately $2,257,000 and equipment purchases of approximately $57,000. We
intend to use the remaining net proceeds from the offering for the purchase of
capital equipment and for working capital. In addition, we may use a portion of
the proceeds to fund acquisitions or lease real property.

Sales of Unregistered Securities

In the fourth quarter of 2004, there were no sales of unregistered securities.


<PAGE>

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

The following discussion and analysis should be read in conjunction with the
balance sheet as of December 31, 2004 and the financial statements as of and for
the years ended December 31, 2004 and 2003 included with this Form 10-KSB.

                                     SUMMARY

Although we have been in existence for a number of years, management's efforts
to develop our business have not yet resulted in the generation of significant
revenues. Initially, management's efforts focused on developing licensing
relationships from our research and development. More recently, management has
chosen to focus on increasing sales volume in the consumer market and building
sales in the forensic market while continuing to develop products for
introduction to the pharmacogenomics market. We continue to devote substantially
all of our efforts in initiating and developing our planned principal
operations. While sales of our forensic product DNAWitness(TM) , paternity
service and genotyping services have increased compared to the prior year, sales
of our ancestry product, ANCESTRYbyDNA(TM) decreased. Our new consumer product
EURO-DNA(TM) 1.0 was introduced in the marketplace in late 2004 with a few sales
during December 2004. Our DNAWitness(TM) product was introduced in late 2003 and
in 2004; therefore during 2004 we had the opportunity to increase our customer
base thereby increasing our sales of this product. Our pharmacogenomics products
are still in development. Because our products are relatively new to the market,
we believe that sales will continue to fluctuate from period to period until we
can better determine through continued market research and experience how and
where to best market and sell the products.

In late 2003, we successfully secured funding of a convertible debenture of
$500,000 with non-detachable warrants. During 2004, some of the warrants were
exercised as well as some of the debenture converted to our common stock. The
exercise of the warrants provided $4.6 million ($4.2 million, net of offering
costs) of funding during 2004 and we received $255,000 prepayment for the
exercise of warrants during early 2005. We also sold preferred stock during 2004
which provided $255,000 of proceeds. Management continues to implement and
refine operational procedures and controls to support future growth and
development. We intend to support research and development as a vital component
of our overall growth strategy. Until potential customers are familiar with our
technology and products, which will come from continued research and development
and proven market use, it is unlikely that we will generate significant revenue.
The following discussion of our historical financial results should be read
against that background.

Management plans to continue to focus on increasing sales in the market areas of
forensics and genealogy and to move towards the introduction of new and expanded
products in these markets. We plan to continue market research within both
segments to further expand our knowledge and understanding of the most efficient
way to market and sell our products.

We will continue work on OVANOME(TM), a Taxol screening diagnostic test, and
STATINOME(TM), a test for the cardiac drug market, which are both currently
under development. We will also continue our efforts on other research and
development projects that are underway. We will continue to explore joint
venture opportunities, particularly within the pharmacogenomic segment, in order
to potentially expand our position within the pharmaceutical market. A major
goal of our joint venture program is to seek opportunities for drug pipeline
acquisition.

Internally, management will continue to develop and implement organizational
policies and procedures to increase operating efficiency and move us closer to
our goal of attaining and maintaining our planned principal operations.

Our plan of operations for the ensuing twelve months includes efforts to: 1)
increase sales of our existing products; 2) introduce new and expanded products
in the genealogy and forensic markets; 3) continue promoting our genotyping and
paternity services while continuing to concentrate on research and development
for both our existing products and our anticipated pharmacogenomic products and
services. We expect to add personnel in the laboratory and in administration, as
growth warrants. Capital expenditures needed for the next twelve months are
discussed in this 10-KSB below under the section entitled "Liquidity and Capital
Resources".


<PAGE>

                              RESULTS OF OPERATIONS

REVENUES AND COST OF SALES

For the years ended December 31, 2004 and 2003, revenues were $785,632 and
$709,638, respectively. A $75,994 increase in revenues from the prior year is an
11% increase that was a result of our sales of DNAWitness(TM) increasing by
approximately $44,000, paternity services increasing by approximately $24,000
and genotyping services increasing approximately $49,000 compared to the prior
year. These increases are due to our increased promotion and marketing of these
products. Also EURO-DNA(TM) 1.0 was introduced to the general public in the
fourth quarter of 2004 and contributed $4,000 of revenue for 2004. This was
offset by a decrease of approximately $45,000 from our ANCESTRYbyDNA(TM) sales.

Our sales of DNAWitness(TM) increased due to our increased marketing efforts to
promote awareness of this product during 2004. Our forensic sales are generated
through marketing to various agencies, our attendance at trade shows and through
our relationship with Lynn Peavey catalog. During 2004, we entered into a
contract with the Lynn Peavey Company. Lynn Peavey Company is a well-recognized
and highly respected supplier of crime scene support materials to over 17,000
police and crime laboratories around the world. Our product, DNAWitness(TM) 2.0,
is now featured in the Lynn Peavey Company catalog. We also plan to work with
Lynn Peavey Company personnel to establish and conduct seminars and training
programs for detectives, crime laboratory personnel and crime scene personnel on
DNAWitness(TM). Because this is a new product and there are no similar products
being marketed, we believe that forensic revenues will continue to fluctuate as
we continue to research the markets and refine our sales and marketing strategy
for the products.

Paternity sales are generated primarily through our various distributors and
from our website www.ancestrybydna.com. The majority of the increase in sales
during 2004 compared to 2003 is because paternity testing was not offered prior
to the second quarter of 2003. Paternity testing is an add-on service, and we
expect revenues to continue to fluctuate in this market. While we have not yet
implemented a formal marketing and sales plan for this service, we continue to
perform market research and gather information in order to define and implement
a formal marketing strategy.

Genotyping sales were generated primarily through work with universities with
one university being our major client of this service. To date, our genotyping
service customers have come to us either through client referrals or our general
website. In the future, we plan to concentrate our genotyping services on
specific diseases, including cancer, neurological disorders, and heart disease.
By concentrating on specific diseases, we hope to develop an expertise that will
attract customers in those areas requiring external assistance and additional
research capacity.

During 2004, our sales of ANCESTRYbyDNA(TM) decreased from the prior year.
Because this product is relatively new to the market we believe that sales will
continue to fluctuate from period to period until we can better determine
through continued market research and time how and where to best market and sell
this product. We introduced another ancestry product, EURO-DNA(TM) 1.0, during
late 2004. Sales of our ancestry products were generated through advertising in
Family Tree, a genealogy periodical, and through public exposure that we
received during the year in newspapers, magazines and television. In addition,
sales were generated through our various distributors and from our website
www.ancestrybydna.com. During early 2005, we have entered into agreements with
five new distributors to sell our ancestry products.

Promotional efforts to date have been fruitful but sporadic. We have been
featured on or in ABC's Prime Time Thursday, the CBS Evening News with Dan
Rather, The New York Times, Miami Channel 10 WPLG, UPI, US News and World
Report, Popular Science Magazine, Tampa's Fox Channel 13 News, Germany's ZDF
News Channel, The Australian Broadcasting Corporation and The Sarasota-Bradenton
Herald Tribune KTTV Fox 11 in LA, ABC Tampa, Howard Stern's radio show, PBS WEDU
Sarasota, USA Today, and Dallas Morning News.

In order to build consistent sales, we have begun to implement formal sales and
marketing plans, including advertising and promotional campaigns. Implementing
these plans results in increased expenses for personnel, advertising, promotion,
and the collateral materials associated with these programs. We plan to continue
to add to our advertising and presentation campaign throughout 2005, as cash
flow permits. Overall, our goal is to focus on increasing market awareness of
all of our products, particularly within the consumer and forensic markets.

While we continue to improve and refine our accounting systems, we currently do
not segregate product costs by product or service. At December 31, 2004, we
began recording inventory since during the last half of 2004, we were increasing
the amount of raw materials we have on hand. We have been and continue to be a
development stage company as described in Financial Accounting Standards Board
Statement No. 7. We continue to devote substantially all of our efforts to
initiating and developing our planned principal operations. We expect that our
pharmacogenomic products and services, once introduced, will be our major
revenue generator.

Management does not manage on a product cost basis at this time. Further,
management does not allocate resources based on product lines. For the most
part, personnel are not solely devoted to a product or a specific task. As a
development stage company, personnel are required to perform a multitude of
tasks including production and research and development. Revenue generation to
date has not been substantial or steady enough to warrant segregation of duties.
As such, labor costs vary from period to period. Further, we have not reached a
stage where economies of scale are available to us. Production costs vary from
period to period due to the level of revenue produced and research performed. We
anticipate, as stated previously, that as we move from a development stage
company to an operating company, management will focus on product revenues,
costs and the associated margins. As part of our effort to become an operating
company, we continue to develop and refine our production processes for our
introduced products; so that over time and as sales increase, an efficient
process can be implemented and managed on an ongoing basis. In addition, we
continue to work towards designing and establishing a cohesive marketing and
sales effort for our introduced products. Although both the forensic and
genealogy markets have been in existence for several years, our products are new
and unique to their markets, and it requires market research and testing in
order to arrive at the best way to present our products. We continue to test
markets through primary market research and advertising. This effort is ongoing
and will continue to develop as we gather information.

Cost of sales increased from $432,224 (61% of revenues) in 2003 to $507,927 (65%
of revenues) in 2004. The increase in cost of sales as a percent of revenues is
due to our refinement of our estimate and allocation of research and development
costs. Because of our small sales volume, these results are not indicative of
the margins that we expect to attain if our long-term goals are achieved. We
anticipate that as we gain experience and can begin to take advantage of
economies of scale benefits through increased revenues and our margins will
stabilize and begin to track in line with other companies in similar industries.
However, in the near term, while we continue to be a development stage
enterprise, we expect that our margins will continue to fluctuate.


<PAGE>

RESEARCH AND DEVELOPMENT EXPENSES

Our research and development costs consist of raw materials, laboratory
supplies, equipment expense, facilities costs and employment-related costs. The
expenses were incurred in support of our currently available consumer and
forensics products and genotyping services and for our anticipated
pharmacogenomics products.

In 2003 and 2004, we also conducted research for future enhancements to
DNAWitness(TM). The research included much needed sample collection for our eye
and hair color studies. As a result of our past research, in early June of 2004,
we introduced a new tool to our forensic customers. We compiled a volunteer
photo database that we can use to help investigators visualize the DNA donor.
This new tool augments the effectiveness of our product, DNAWithness(TM). During
the third quarter, we completed work on our eye color service, RETINOME(TM), and
EURO-DNA(TM), a service that allows customers to determine their Northern
European, Mediterranean, Middle Eastern and Indo European ancestry and
introduced them to the market. In addition, we continued our research work on
STATINOME(TM) and ace inhibitor projects. We also, in conjunction with
researchers at the Moffitt Cancer Center, continued work on OVANOME(TM) and
other identified cancer projects. Some of this research involved the acquisition
and evaluation of new samples with corresponding medical histories. We continued
to evaluate and analyze our preliminary results and to extend those results to
other patients' samples for Taxol, Statins, and Ace inhibitor work.

We continue our work in forensics to expand the physical descriptors that can be
derived from crime scene DNA samples. Our research also continued in hair color,
skin shade, and we carried on work to improve our recently introduced eye color
predictor model. Additionally, we have collected nearly 1,500 volunteer photo
database samples and will incorporate those new samples into our forensic photo
database array in the near future.

Research and development costs decreased from $2,654,259 in 2003 to $1,561,142
in 2004, a decrease of $1,093,117, or 41%. This decrease is primarily the result
of the stock-based compensation and the associated tax bonus received by our
Chief Scientific Officer during 2003 in return for his services to us. Some
differences could also result from our refinement in estimates and allocation of
research and development costs.

Because we are in the development stage of our long-term business, it is not
possible to directly correlate our current research and development costs to our
future costs. Currently we do not manage on a project cost basis with respect to
research and development. We are implementing revenue recognition and project
status measures which will in the future disclose such information. Our revenue
generation to date has not been substantial or steady enough to warrant
segregation of time, costs and revenue. We are a development stage enterprise
with new products that are not available through competitors for forensics and
genealogy. For example, many of our products and services are in the development
stage, such as ANCESTRYbyDNA(TM) and DNAWitness(TM), and the segregation of each
project by its particular cost, revenue and cash flow is currently not feasible.

We continue to support research and development to attain our long-term business
strategy, and it will remain a high priority and a necessary resource to sustain
future growth. We will continue to hire research and development personnel and
invest in the infrastructure required to support future innovation, including
equipment, supplies and other asset purchases. In order to advance our
pharmacogenomic products, OVANOME(TM) and STATINOME(TM), to commercialization,
our development costs for these products will increase in 2005. In addition, as
we move other pharmacogenomic products forward, research and development costs
will likely increase proportionately.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Another significant component of our operating expenses is selling, general and
administrative expenses. These expenses resulted from (i) accounting and other
fees associated with being a public company and other regulatory compliance
activities, (ii) legal fees associated with our patent filings and maintenance,
a lawsuit against a former employee and preparation of our securities law
filings, (iii) selling and marketing costs to promote our products and (iv)
administrative and other salaries and expenses.

For the year ended December 31, 2004, selling, general and administrative
expenses decreased $1,806,944, from $3,857,925 in 2003 to $2,050,981, in 2004.
During 2003 compared to 2004, we incurred approximately $700,000 of higher
compensation from the stock-based compensation paid to the three top executives
that were recruited during 2003. We also incurred approximately $1.5 million
higher consulting expense during 2003 compared to 2004 for consulting services
principally from our consulting agreements with a former director and a
marketing consultant. These decreases were offset by an increase in selling,
general and administrative expenses, including our costs associated with being a
public company.

As discussed in Research and Development expenses, we are not able to
extrapolate current general and administrative costs to our future costs. As our
long-term business develops, we believe our general and administrative costs
will increase with revenue growth. For example, to increase sales, an increase
in marketing and sales expenditures will be required to broaden and expand our
market awareness and penetration. We expect all costs associated with normal
marketing and sales activities to increase including trade shows, advertising,
promotion, and marketing and sales tools such as brochures and sales pamphlets.
In addition, our current facility of approximately 4,000 square feet, will not
meet our growth plans, and we will need to expand our facilities to accommodate
new personnel, increased production and future research and development. Our
general and administrative cost will rise accordingly, along with the associated
costs such as utilities, taxes and maintenance. Over the long-term, as we become
an established business, we anticipate that our costs will be comparable to
other similar businesses of our size and type.

STOCK-BASED SETTLEMENT EXPENSE

During 2003, Tampa Bay Financial, Inc. exercised a right to purchase 4,763,662
shares of our common stock at a price of $0.05 per share. Because the fair
market value of our stock was $0.082 at the date they exercised their right, we
have recognized $152,437 of expense, the difference between the fair market
value and the exercise price. This amount has been reflected as a settlement
expense as this right was granted to Tampa Bay Financial in connection with the
termination of their funding agreement. This expense did not recur in 2004.


<PAGE>

INTEREST EXPENSE

For the year ended December 31, 2004, interest expense decreased significantly
from $902,698 in 2003, to $81,429 in 2004. During 2004, we recorded interest
expense of approximately $29,000 on related party notes and certain capital
leases and $52,000 on the convertible debenture and related deferred financing
fee. During 2003, we recorded interest expense of approximately $26,000 on
related party notes and certain capital leases, $5,000 on the convertible
debenture and related deferred financing fee and $872,000 for the issuance of
our common stock for the payment of related party notes payable, at an agreed
upon per share price which was less than the market price of our stock. We
accounted for the difference between the stock issue price and the market price
as interest expense.

During 2004, we will continue to incur interest on the related party note and
the convertible debenture. We may elect to pay the remaining notes outstanding
to Tony Frudakis with common stock. If we elect to do so, these payments will
result in additional interest expense for the difference between the stock issue
price and the market price at the date the common stock is issued. Our interest
expense will decrease on our convertible debenture as the principal has been
reduced during 2004.

INTRINSIC VALUE OF CONVERTIBLE DEBT AND NON-DETACHABLE WARRANTS

During 2003, we recorded $500,000 of expense to record the intrinsic value of
the conversion feature of the convertible debt and non-detachable warrant. There
was no such expense during 2004.

OTHER EXPENSES

Effective September 28, 2004, we entered into an Investment Agreement (the
"Biofrontera Agreement") with Biofrontera AG, a German corporation
("Biofrontera") and the shareholders of Biofrontera to purchase certain Series B
preferred shares of Biofrontera. This transaction was conditioned upon the
effectiveness of a registration statement to be filed under the Securities Act
of 1933 by us with respect to a financing agreement with Dutchess Private
Equities Fund, II, L.P. The Biofrontera Agreement provided that if the
registration statement did not become effective on or before February 7, 2005,
either party had the ability to terminate the Biofrontera Agreement without
liability. The registration statement had not become effective as of such date.
After discussions with Biofrontera, on February 18, 2005, we exercised our right
to terminate the Biofrontera Agreement. We expensed $293,007 of costs that
related to this transaction.

During 2004, the Company paid $75,000 to George Frudakis (father of our Chief
Scientific Officer and a shareholder of the Company) to pay the principal of
approximately $45,000, accrued interest of approximately $4,000 and
approximately $26,000 was recorded as other expense on our Consolidated
Statements of Operations to satisfy in full any other claims related to his note
and funding agreement.

                        LIQUIDITY AND CAPITAL RESOURCES

During 2004, our operating requirements generated negative cash flow from
operations as we continue to engage in testing and development of our products.
Our cash used by operating activities for the year ended December 31, 2004 was
$3,764,425. We also invested in equipment, software and computers of
approximately $57,000, had principal payments on capital lease obligations of
approximately $66,000 and made principal note payments of approximately $83,000.
The resulting cash shortfall was financed primarily through the exercise of
non-detachable warrants, prepayment for future warrant exercises and proceeds
from the issuance of Series A preferred stock.

Based upon our current plans, we will continue to focus on increasing market
awareness of our products and developing sales for our currently available
consumer and forensic products and to begin introductory marketing for our new
products, EUROWitness(TM), RETINOME(TM) and EURO- DNA(TM). Our efforts are
ongoing; however, it is difficult to predict what revenue stream, if any, they
will generate.

Although consumer products and forensics are cornerstones of our technology, our
single largest opportunity remains applying our technology for the benefit of
patients. Management has developed and has begun to implement a global strategy
for our growth and development in the pharmaceutical market. Our strategy is to
partner certain specialized tasks rather than create them internally. Developing
a pharmaceutical product is a long, complex and diverse mission. It requires a
multitude of diverse scientific expertise and technologies. This is complicated
further by recent FDA promulgations that we believe will compel the
pharmaceutical industry to develop genetic specific drugs that are more
efficacious.

As part of our development strategy during late 2004, we entered into a
relationship with Biofrontera AG, a cutting edge genomics/pharmaceutical company
based in Europe. This transaction was conditioned upon the effectiveness of a
registration statement to be filed under the Securities Act of 1933 by us with
respect to a financing agreement with Dutchess Private Equities Fund, II, L.P.
The Biofrontera Agreement provided that if the registration statement did not
become effective on or before February 7, 2005, either party had the ability to
terminate the Biofrontera Agreement without liability. The registration
statement had not become effective as of such date. After discussions with
Biofrontera, on February 18, 2005, we exercised our right to terminate the
Biofrontera Agreement and expensed $293,007 of costs associated with this deal.


<PAGE>

Although the Biofrontera acquisition was terminated, the Company expects to use
its $35 million dollar funding facility with Dutchess Equity Partners because of
its previously stated goals and objectives to grow the business. The Company is
currently seeking acquisition candidates that will meet criteria set out by the
Board of Directors of the Company that include but are not limited to:

              1.  Positive Cash Flow
              2.  Profitable Operations
              3.  Market Recognition
              4.  Talented and Dedicated Staff
              5.  Complimentary Certifications that can include: American
                  Society of Forensic Laboratory Directors, American Blood Bank
                  Certification or Clinical Laboratory Certification or other
                  complementary certifications that will help the Company expand
                  its products, services and research and development into
                  consumer, forensics and pharmaceutical applications.

In order to complete future acquisitions and to provide working capital for us,
on September 28, 2004, we entered into an Investment Agreement and a
Registration Rights Agreement with Dutchess Private Equities Fund, II, L.P.,
("Dutchess", or the "Investor") a Delaware limited partnership. The agreement
will require us to register a sufficient number of shares that we will then
issue to Dutchess in return for up to $35 million in cash over a two-year
period. The Company will be required to seek additional shareholder approval for
a restructuring of the capital stock of the Company in order to use fully the
Dutchess facility in order to continue operations and complete acquisitions.

We evaluated a number of other investment vehicles, including private placement
through venture capital sources and concluded that not only were the terms and
conditions prohibitive to our Company but they also brought high equity
dilution. The Dutchess Agreement provided the lowest dilution (dependent upon
our share price) with the fewest restrictions.

The Dutchess Agreement provides that we from time to time may deliver a notice
to the Investor that will state the dollar amount of common stock that we desire
the Investor to purchase. The maximum amount permitted pursuant to any such
notice is $600,000, and we can give approximately three such notices per month.
Upon receipt of the notice, the Investor is obliged to purchase the dollar
amount of common stock set forth in the notice at a purchase price equal to 96%
of the average of the two lowest closing bid prices of the common stock during
the five trading days after the notice.

The obligation of the Investor to purchase under the Dutchess Agreement is
contingent upon our filing and having declared effective a registration
statement registering the resale of the shares by the Investor. Simultaneously,
the parties entered into a Registration Rights Agreement requiring us to file
such a registration statement. In addition, we are not permitted to provide a
notice, and the Investor is not obliged to purchase any shares, in the event
that we do not have sufficient authorized shares available for purchase to
fulfill such commitment.

We do not expect our revenue stream to be sufficient to cover costs of
operations in the immediate future. We anticipate that the funding we expect to
receive from the minimum conversions of the outstanding debenture into common
stock, the related exercise of the non-detachable warrants and the Dutchess
agreement will fund our operating activities through 2005. The Dutchess
agreement that we recently negotiated will provide up to $35 million in
additional cash over a 24-month period to fund future acquisitions, if any, and
provide operating cash flow. If our share price continues to remain weak; if our
shareholders' do not approve an increase in capitalization when required; if the
SEC S-2 registration is not completed, and if any number of adverse factors or
events occur, we will not have enough equity to complete future acquisitions or
possibly to continue operations beyond 2005. Management is adequately confident
that equity financing or debt will be available to fund our operations until
revenue streams are sufficient to fund operations; however, the terms and timing
of such equity or debt cannot be predicted.

We have issued securities, including our convertible debentures and our
convertible preferred stock, that are convertible into our common stock at a
continuously adjustable conversion price based on a discount on the trading
price of our common stock. In addition, our Investment Agreement with Dutchess
requires us, in order to raise capital from it, to sell our common stock to it
at a continuously adjustable conversion price at a discount to the trading price
of our common stock. As we draw down advances under the Investment Agreement
with Dutchess and more of our common stock is sold pursuant thereto, the market
price of our common stock could decrease significantly and make further advances
impractical or impossible during time periods in which we may need to raise
capital to fund our operations and market and sell our products and services. In
addition, the issuance of our common stock upon exercise or conversion of our
other securities, may create a downward pressure on the market price of our
common stock.

Our consolidated financial statements are prepared using accounting principles
generally accepted in the United States of America applicable to a going
concern, which contemplate the realization of assets and liquidation of
liabilities in the normal course of business. We have incurred losses since our
inception, and have experienced and continue to experience negative cash flows
from operations. In addition, we have working capital deficiency of
approximately $165,417 at December 31, 2004, and will continue to have ongoing
requirements for substantial additional capital investment to accomplish our
business plan over the next several years. Over the past two years, our
operations have been funded through related party funding, sales of common stock
and preferred stock, and the issuance of a convertible debenture and the
exercise of non-detachable warrants. We continue to experience some success
generating operating revenues; however, we do not expect our revenue stream to
be sufficient to cover costs of operations in the immediate future. We
anticipate that the funding we expect to receive from the minimum conversions of
the outstanding debenture into common stock, the related exercise of the
non-detachable warrants and the Dutchess funding will fund our operating
activities through 2005. However, there can be no assurance the minimum
conversions of the outstanding debenture into common stock, the related exercise
of the non-detachable warrants will be exercised and the requirements to
initiate the Dutchess funding will be met and/or that we will have the cash flow
to meet our operating requirements. These factors, among others, indicate that
we may be unable to continue as a going concern for a reasonable period of time.

Implementing our plan of operations results in increased expenses for personnel,
advertising, promotion, and the collateral materials associated with these
plans. Availability of funding and sales growth will determine to what extent
and how quickly these plans can be implemented. Costs will vary according to
timing and level of commitment. To date, management has maintained a lower level
of commitment in order to preserve liquidity.


<PAGE>

Capital Expenditures

During 2005, we anticipate developing the required infrastructure to realize our
2005 operational growth plan, including acquiring or leasing property, equipment
and other operating assets.

We are actively seeking to acquire or lease a new building that has 15,000 to
20,000 square feet with additional expansion potential. We estimate that lease
costs will be between $15 and $25 per square foot. This does not include
leasehold improvements or other associated costs such as utilities, taxes and
maintenance. The initial build out of 7,000 square feet is estimated at
approximately $780,000 that includes laboratory, office and warehouse space.
Additional costs for equipment, furniture and fixtures are estimated at
approximately $257,000. Timing of the incurrence of the expense will depend upon
the length of time required to find the appropriate facility.

In addition, it is anticipated that new laboratory and computer equipment will
be purchased during 2005. Computer purchases for programming, modeling and
business use is estimated at approximately $100,000 and scientific and business
programs and software at approximately $65,000. Capital expenditures for
laboratory equipment are estimated at approximately $250,000 during 2005. In
December 2004, we leased a new robotic SNP machine at a value of approximately
$203,000.

During the first quarter of 2004, in line with our capital expenditure plan, we
purchased new laboratory equipment for approximately $4,000 and financed new
computers for approximately $20,500. During the second quarter of 2004 we
purchased scientific software for approximately $13,000. During the third
quarter of 2004 we purchased scientific computers for approximately $25,000.
During the fourth quarter of 2004 we purchased laboratory equipment of
approximately $15,000. Capital expenditures are expected to continue during 2005
as our operational plans are realized and cash flow allows.

It is our intent, during 2005, to increase our marketing and sales personnel in
our forensic and possibly our consumer markets. Current plans expect to add up
to three personnel in these areas. It is also our intent to add a
shipping/receiving clerk in administration and as cash flow permits to increase
our research staff through the addition of up to two post doctors. The post
doctors would be responsible for internal research projects that will be
directed by our Chief Scientific Officer. In addition, we are considering
increasing our programming staff in order to expedite our research projects.
Costs associated with the hiring process would include normal expenditures
including advertising costs and possible search fees from outside consultants.
For higher-level positions, additional interviews, sign on bonuses and
relocation expenses may also be incurred. Although this is our current personnel
hiring plan, conditions and other unforeseen factors could impact the decision
making process and as a result plans may change.

RELATED PARTY TRANSACTIONS

We entered into certain related party transactions during the years ended 2004
and 2003. See item 7 for a discussion of these transactions.

OFF-BALANCE SHEET ARRANGEMENTS

As of December 31, 2004, we have no off-balance sheet arrangements.

             CRITICAL ACCOUNTING POLICIES AND RESULTS OF OPERATIONS

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that have a significant impact on the results we
report in our financial statements. Some of our accounting policies require us
to make difficult and subjective judgments, often as a result of the need to
make estimates of matters that are inherently uncertain. Actual results may
differ from these estimates under different assumptions or conditions. Below, we
discuss this further, as well as the estimates and judgments involved.

Asset Impairment

We review our long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of the asset exceeds its fair
value and may not be recoverable. In performing the review for recoverability,
we estimate the future cash flows expected to result from the use of the asset
and its eventual disposition. If the sum of the expected future cash flows
(undiscounted and without interest charges) is less than the carrying amount of
the asset, an impairment loss is recognized. Otherwise, an impairment loss is
not recognized. Management estimates the fair value and the estimated future
cash flows expected. Any changes in these estimates could impact whether there
was impairment and the amount of the impairment. Since we are in the
developmental stage, we do not have much history to determine our estimated cash
flows. If we do not meet our targeted cash flows for our services and if the
estimated disposition of the equipment is lower, this could result in a
write-down of our equipment. Our equipment is very specialized equipment related
to genomics research and there probably will not be a large demand for our used
equipment. The amount of our net fixed assets is the amount of the maximum risk
if our assumptions were not correct. Each year the assets will have higher
depreciation and the maximum risk will decrease correspondingly.


<PAGE>

                       Accruals and deferred compensation

We estimate the various accruals we record based upon the information we have
available at the time the accruals are recorded. Any changes to these estimates
could impact the accrual and related expense accounts. We recorded an accrual
for federal and state income taxes that we agreed to pay for various executives
on stock grants based upon the information we had at the time the entry was
recorded. This estimate could change based upon the actual tax that is paid by
the various executives which is based upon their actual circumstances at the
time they file their taxes compared to the accrual we booked based upon
estimated assumptions. During 2004, the accrual for federal and state income
taxes payable for various executives on stock grants decreased by approximately
$50,000 based upon actual taxes paid vs. our 2003 estimated accrual. We do not
anticipate this accrual changing in the future.

Allocation of Research and Development Costs

Prior to 2004, our research and development costs were derived by allocating
certain costs based on total labor effort. The percentage of total labor effort
expended on research and development was an estimate by management. During 2004,
we refined our process of allocating costs by identifying and directly expensing
certain costs related to research and development and allocating certain other
costs based on total labor effort that is estimated by management and employees.
With some of these costs, a percentage of a total purchase order price is
allocated to research and development. Also during 2004, we implemented a time
card process that gives us a more refined estimate of certain employees' time.
We continue to refine our process of estimating specific invoice costs to
research and development as well as our process of identifying time associated
with research and development. These refinements to estimates could increase or
decrease our income statement expense categories of research and development,
cost of sales and selling, general and administrative. Over time we believe this
change in allocating costs during 2004 based upon actual labor effort vs.
estimated labor effort for 2003 will result in a lower allocation of
administrative costs to research and development. Also, as the Company hires
employees, the department in which the employee is hired will have a direct
impact on the allocation of administrative costs to research and development.
For example if a person is hired in research and development the allocation to
research and development for other administrative costs will increase as labor
effort percentage for research and development will have increased. If a person
is hired in administration, the allocation to research and development for other
administrative costs will decrease as the labor effort percentage for research
and development will have decreased. Changes to these estimates could have a
significant impact on the accrual and related compensation expense and/or
deferred compensation.


<PAGE>


Item 7. Financial Statements.


                             DNAPrint genomics, Inc.
                        (A Development Stage Enterprise)

                                  Consolidated
                         Financial Statements as of and
              for various periods ended December 31, 2004 and 2003
           and Independent Registered Public Accounting Firm's Report


<PAGE>


                             DNAPrint genomics, Inc.
                        (A Development Stage Enterprise)

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                    Page
                                                                                    ----
<S>                                                                                 <C>
Report on Independent Registered Public Accounting Firm                              F-1

Consolidated Financial Statements:

       Consolidated Balance Sheet as of December 31, 2004                            F-2

       Consolidated Statements of Operations for the years ended December 31,        F-3
       2004 and 2003, and for the period December 10, 1998 (date of inception)
       to December 31, 2004

       Consolidated Statements of Stockholders' Equity for the period ended          F-4
       December 10, 1998 to December 31, 1999 and for the years ended
       December 31, 2000, 2001, 2002, 2003 and 2004

       Consolidated Statements of Cash Flows for the years ended December 31,       F-14
       2004 and 2003 and for the period December 10, 1998 (date of inception)
       to December 31, 2004

       Notes to Financial Statements                                                F-16

</TABLE>


<PAGE>

             Report on Independent Registered Public Accounting Firm


Board of Directors
DNAPrint genomics, Inc. and Subsidiary
Sarasota, Florida


We have audited the accompanying consolidated balance sheet of DNAPrint
genomics, Inc. and Subsidiary (a development stage enterprise) as of December
31, 2004 and the related consolidated statements of operations, changes in
stockholders' equity, and cash flows for the years ended December 31, 2004 and
2003 and the period December 10, 1998 (date of inception) through December 31,
2004. These consolidated financial statements are the responsibility of the
management of DNAPrint genomics, Inc. and Subsidiary. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits. The consolidated financial statements as of December 31, 2002 and for
the period December 10, 1998 (date of inception) through December 31, 2002 were
audited by other auditors whose report dated April 11, 2003 included an
explanatory paragraph regarding substantial doubt about the Company's ability to
continue as a going concern. The consolidated financial statements for the
period December 10, 1998 (date of inception) through December 31, 2002 include
total sales and net loss of $270,938 and $6,849,650, respectively. Our opinion
on the consolidated statements of operations, changes in stockholders' equity,
and cash flows for the period December 10, 1998 (date of inception) through
December 31, 2004 insofar as it relates to amounts for periods through December
31, 2002 is based solely on the report of other auditors.

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 audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. The Company
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 an 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 consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, based on the audit and the report of other auditors on the
previous years' consolidated financial statements, the consolidated financial
statements referred to above present fairly, in all material respects, the
consolidated financial position of DNAPrint genomics, Inc. and Subsidiary as of
December 31, 2004 and the consolidated results of its operations and its cash
flows for the years ended December 31, 2004 and 2003 and the period from
December 10, 1998 (date of inception) through December 31, 2004 in conformity
with generally accepted accounting principles in the United States of America.

The accompanying consolidated financial statements of DNAPrint genomics, Inc.
and Subsidiary have been prepared assuming that the Company will continue as a
going concern. As more fully described in Note B, the Company has had recurring
operating losses since inception, has negative working capital as of December
31, 2004, and has used approximately $3,764,000 of cash in operations for the
year ended December 31, 2004. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans regarding
these matters are also described in Note B. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.


Pender Newkirk & Company
Certified Public Accountants
Tampa, Florida
February 25, 2005

<PAGE>

                             DNAPrint genomics, Inc.
                        (A Development Stage Enterprise)

               CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2004
<TABLE>
<CAPTION>
<S>                                                                                                 <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                                                                       $    978,535
Accounts receivable (net of allowance for doubtful accounts of $500)                                  43,566
Inventory                                                                                             65,279
Receivable from Biofrontera                                                                          193,683
Prepaid expenses and other current assets                                                            125,065
Total current assets                                                                               1,406,128
PROPERTY AND EQUIPMENT (net of accumulated depreciation and amortization of $504,101)
                                                                                                     380,262
OTHER ASSETS                                                                                           5,000
TOTAL                                                                                           $  1,791,390
                                                                                                ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable                                                                                $    352,718
Accrued expenses                                                                                     145,436
Accrued compensation expense                                                                         527,103
Deferred revenue                                                                                      42,126
Notes payable to related parties                                                                     215,034
Capital lease obligation                                                                             128,128
Convertible debentures - current                                                                     161,000
Total current liabilities                                                                          1,571,545
Capital lease obligation - long-term                                                                  95,310
Convertible debenture - (converted after yearend through February 25, 2005)                           29,000
Total liabilities                                                                                  1,695,855
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 10,000,000 shares authorized of which 50,000 shares are
  designated as Series A                                                                                  --
    Series A convertible preferred stock - 50,000 shares authorized; 40,000 shares issued and
      outstanding; $400,000 liquidation value                                                            400
Common stock, $.01 par value, 1,500,000,000 shares authorized; 939,124,254 shares issued and
  outstanding                                                                                      9,391,243
Common stock subscribed                                                                               94,162
Additional paid-in capital                                                                        18,170,988
Prepaid warrant exercises                                                                            255,000
Deferred stock compensation                                                                          (26,071)
Deficit incurred prior to development stage                                                       (7,427,422)
Deficit accumulated during the development stage                                                 (20,362,765)
Total stockholders' equity                                                                            95,535
TOTAL                                                                                           $  1,791,390
                                                                                                ============
</TABLE>
                 See notes to consolidated financial statements
<PAGE>

                             DNAPrint genomics, Inc.
                        (A Development Stage Enterprise)

                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                                                          For the Period
                                                                                           December 10,
                                                         For the Year       For the        1998 (date of
                                                             Ended         Year Ended      inception) to
                                                         December 31,       December        December 31,
                                                             2004           31, 2003            2004
                                                         -------------    -------------    -------------
<S>                                                      <C>              <C>              <C>
SALES                                                    $     785,632    $     709,638    $   1,766,208

COST OF SALES                                                  507,927          432,224        1,113,027
                                                         -------------    -------------    -------------

GROSS PROFIT                                                   277,705          277,414          653,181
                                                         -------------    -------------    -------------

OTHER OPERATING EXPENSES:
Research and development                                     1,561,142        2,654,259        8,645,667
Selling, general and administrative                          2,050,981        3,857,925        7,899,936
                                                         -------------    -------------    -------------
   Total other operating expenses                            3,612,123        6,512,184       16,545,603
                                                         -------------    -------------    -------------

LOSS FROM OPERATIONS                                        (3,334,418)      (6,234,770)     (15,892,422)
                                                         -------------    -------------    -------------

OTHER INCOME (EXPENSE):
Sale of option to Orchid Biosciences                                --               --          353,090
Loss on disposal of investments                                     --               --         (349,006)
Stock-based settlement expense                                      --         (152,437)        (152,437)
Interest expense                                               (81,429)        (902,698)      (1,467,857)
Intrinsic value of convertible debt and non-detachable
  warrants                                                          --         (500,000)        (500,000)
Other expenses                                                (319,135)              --         (365,905)
                                                         -------------    -------------    -------------
     Total other income (expense) - net                       (400,564)      (1,555,135)      (2,482,115)
                                                         -------------    -------------    -------------

NET LOSS                                                 $  (3,734,982)   $  (7,789,905)   $ (18,374,537)
                                                         =============    =============    =============

NET LOSS PER SHARE  - Basic and Diluted                  $        (.01)   $        (.02)   $        (.04)
                                                         =============    =============    =============

SHARES USED IN COMPUTING NET
   LOSS PER SHARE - Basic and Diluted                      707,474,628      499,603,483      445,343,852
                                                         =============    =============    =============
</TABLE>
                 See notes to consolidated financial statements

<PAGE>

                             DNAPrint genomics, Inc.
                        (A Development Stage Enterprise)

            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>



                                                                        Additional           Common           Stock
                                             Common Stock                Paid-In             Stock        Subscriptions
                                       Shares            Amount          Capital          Subscribed       Receivable
                                    ------------     -------------    ------------       -------------    ------------
<S>                                  <C>               <C>             <C>               <C>             <C>
BALANCES, DECEMBER 10, 1998           29,400,986          294,010        4,977,381                                 --

Stock issued for acquisition
  of DNAPrint genomics, Inc.
  (FL) in Pooling of Interests       192,000,000        1,920,000         (920,000)                        (1,000,000)

Common stock issued for
  reorganization/court order
  at $0.02 per share                 125,000,000        1,250,000        1,687,480

Adjustment due to subsidiaries
  liquation in bankruptcy

Net loss for the year
  ended December 31, 1999

BALANCES, DECEMBER 31, 1999          346,400,986        3,464,010        5,744,861                --       (1,000,000)

Stock issued for advertising
  and marketing services
  at $.02 per share                    8,000,000           80,000           80,000

Increases in stock issued
  for acquisition of land
  at $.075 per share                  30,000,000          300,000        1,700,000

Net loss for the year
  ended December 31, 2000

Unrealized loss on securities

Subscription
   receivable payments                                                                                        539,500

Deferred stock compensation
  related to stock option
  grants                                                                   731,450

Dividend paid in common
  stock of Heroes, Inc.

BALANCES, DECEMBER 31, 2000          384,400,986        3,844,010        8,256,311                --         (460,500)

Common stock issuances:

  Via 506 Private Placement
     at $.05 per share                14,324,000          143,240          572,960                                 --

  For consulting services
     at $.05 per share                   800,000            8,000           32,000                                 --

  Through funding agreement
    with TBFI at $.05 per share        7,816,620           78,166          312,665                                 --

 From exercise of
  nonqualified stock
  options at $.05 per
  share                               11,250,000          112,500          574,375                                 --

 For bankruptcy settlements
   at $.02 per share                  10,695,768          106,958          106,958                                 --

Loss on investment                            --               --               --                                 --

Recovery of subscription
  receivables                                 --               --               --                            460,500
Deferred stock compensation
  related to stock option
  grants                                      --               --           22,100                                 --

Amortization of deferred
  stock compensation                          --               --               --                                 --

Net loss for the year ended
  December 31, 2001                           --               --               --                                 --

BALANCES, DECEMBER 31, 2001          429,287,374        4,292,874        9,877,369                --               --
</TABLE>




<TABLE>
<CAPTION>
                                                                          Deficit
                                                         Deficit        accumulated
                                                        incurred          during          Accumulated
                                         Deferred       prior to            the              Other
                                          Stock        development      development       Comprehensive
                                      Compensation        stage            stage             Income            Total
                                     -------------    -------------    --------------     ------------     ---------------
<S>                                   <C>             <C>             <C>                 <C>             <C>
BALANCES, DECEMBER 10, 1998                   --        (7,427,422)      (44,244,627)          222,443       (46,178,215)

Stock issued for acquisition
  of DNAPrint genomics, Inc.
  (FL) in Pooling of Interests                --                                                                      --

Common stock issued for
  reorganization/court order
  at $0.02 per share                                                                                           2,937,480

Adjustment due to subsidiaries
  liquation in bankruptcy                                                 63,355,809                          63,355,809

Net loss for the year
  ended December 31, 1999                                                (20,061,513)                        (20,061,513)

BALANCES, DECEMBER 31, 1999                   --        (7,427,422)         (950,331)          222,443            53,561

Stock issued for advertising
  and marketing services
  at $.02 per share                                                                                              160,000

Increases in stock issued
  for acquisition of land
  at $.075 per share                                                                                           2,000,000

Net loss for the year
  ended December 31, 2000                                                   (191,789)                           (191,789)

Unrealized loss on securities                                                                 (197,298)         (197,298)

Subscription
   receivable payments                                                                                           539,500

Deferred stock compensation
  related to stock option
  grants                                (731,450)

Dividend paid in common
  stock of Heroes, Inc.                                                   (1,988,228)                         (1,988,228)

BALANCES, DECEMBER 31, 2000             (731,450)       (7,427,422)       (3,130,348)           25,145           375,746

Common stock issuances:

  Via 506 Private Placement
     at $.05 per share                        --                --                --                --           716,200

  For consulting services
     at $.05 per share                        --                --                --                --            40,000

  Through funding agreement
    with TBFI at $.05 per share               --                --                --                --           390,831

 From exercise of
  nonqualified stock
  options at $.05 per
  share                                       --                --                --                --           686,875

 For bankruptcy settlements
   at $.02 per share                          --                --                --                --           213,916

Loss on investment                            --                --                --           (25,145)          (25,145)

Recovery of subscription
  receivables                                 --                --                --                --           460,500
Deferred stock compensation
  related to stock option
  grants                                 (22,100)               --                --                --                --

Amortization of deferred
  stock compensation                     219,530                --                --                --           219,530

Net loss for the year ended
  December 31, 2001                           --                --        (2,593,906)               --        (2,593,906)

BALANCES, DECEMBER 31, 2001             (534,020)       (7,427,422)       (5,724,254)               --           484,547
</TABLE>

                                                                     (Continued)

<PAGE>

                            DNAPrint genomics, Inc.
                        (A Development Stage Enterprise)

            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                                  (CONTINUED)
<TABLE>
<CAPTION>
                                                                                         Common Stock             Additional
                                                                                         ------------              Paid-In
                                                                                    Shares           Amount        Capital
                                                                                    ------           ------        -------
<S>                                                                                <C>               <C>            <C>
Common stock issuances:
Via 506 Private Placement
at $.018 per share                                                                 1,388,888         13,889         11,111

 For consulting services at $.04 per share                                            50,000            500          1,500

 For consulting services at $.063 per share                                           42,063            420          2,229

 For consulting services at $.067 per share                                           50,000            500          2,850

 From exercise of nonqualified stock options at $.051 per share                    2,555,555         25,556         97,943

 From exercise of nonqualified stock options at $.059 per share                    2,500,000         25,000        122,500

 From exercise of employee stock options                                             944,978          9,450         (9,450)

 For settlement of related party notes payable  at $.035 per share                14,547,355        145,473        771,010

Per settlement agreement with TBFI                                                        --             --         34,200

Deferred stock compensation related to stock option grants                                --             --        171,800

Amortization of deferred stock compensation                                               --             --             --

Net loss for the year ended December 31, 2002                                             --             --             --

BALANCES, DECEMBER 31, 2002                                                      451,366,213   $  4,513,662   $ 11,083,062

Common stock issuances:

     For settlement of related party notes payable and interest
       at $0.032                                                                  17,307,983        173,079        380,776

     For settlement of related party notes payable and interest
       at $0.032                                                                   8,067,238         80,672        177,479

     For settlement of related party notes payable and interest
      at $0.074                                                                    2,710,043         27,100        173,443

     For settlement of related party notes payable and interest
       at $0.072                                                                   8,092,592         80,926        501,741

     For consulting services at $.030 per share                                    2,780,867         27,809         55,617

     For consulting services at $.048 per share                                      333,725          3,337         12,665

     For consulting and scientific advisory board services
       at $.073 per share                                                            269,937          2,699         17,133

     For scientific advisory board services at $.048 per share                       100,000          1,000          3,750

     For accounting services at $.026 per share                                       84,150            841          1,358

     For legal services at $.068 per share                                            58,330            583          3,360

     For legal services at $.077 per share                                            70,778            708          4,756
</TABLE>

(Continued)
<PAGE>

                            DNAPrint genomics, Inc.
                        (A Development Stage Enterprise)

            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                                  (CONTINUED)
<TABLE>
<CAPTION>
                                                                                     Common        Stock        Deferred
                                                                                     Stock      Subscriptions    Stock
                                                                                   Subscribed    Receivable   Compensation
                                                                                   ----------    ----------   ------------
<S>                                                                                   <C>           <C>             <C>
Common stock issuances:
Via 506 Private Placement
at $.018 per share                                                                     --            --               --

 For consulting services at $.04 per share                                                           --               --

 For consulting services at $.063 per share                                                          --               --

 For consulting services at $.067 per share                                                          --               --

 From exercise of nonqualified stock options at $.051 per share                                      --               --

 From exercise of nonqualified stock options at $.059 per share                                      --               --

 From exercise of employee stock options                                                             --               --

 For settlement of related party notes payable  at $.035 per share                                   --               --

Per settlement agreement with TBFI                                                                   --               --

Deferred stock compensation related to stock option grants                                           --         (171,800)

Amortization of deferred stock compensation                                                          --          269,694

Net loss for the year ended December 31, 2002                                                        --               --

BALANCES, DECEMBER 31, 2002                                                     $      --            --      $  (436,126)

Common stock issuances:

     For settlement of related party notes payable and interest
       at $0.032

     For settlement of related party notes payable and interest
       at $0.032

     For settlement of related party notes payable and interest
       at $0.074

     For settlement of related party notes payable and interest
       at $0.072

     For consulting services at $.030 per share

     For consulting services at $.048 per share

     For consulting and scientific advisory board services
       at $.073 per share

     For scientific advisory board services at $.048 per share

     For accounting services at $.026 per share

     For legal services at $.068 per share

     For legal services at $.077 per share
</TABLE>

(Continued)
<PAGE>

                             DNAPrint genomics, Inc.
                        (A Development Stage Enterprise)

            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                                   (CONTINUED)
<TABLE>
<CAPTION>
                                                                                         Deficit
                                                                         Defict        accumulated      Accumulated
                                                                      incurred prior    during the        Other
                                                                      to development   development    Comprehensive
                                                                         stage            stage           Income          Total
                                                                         -----            -----           ------          -----
<S>                                                                            <C>            <C>            <C>          <C>
Common stock issuances:
Via 506 Private Placement
at $.018 per share                                                              --             --             --          25,000

 For consulting services at $.04 per share                                      --             --             --           2,000

 For consulting services at $.063 per share                                     --             --             --           2,649

 For consulting services at $.067 per share                                     --             --             --           3,350

 From exercise of nonqualified stock options at $.051 per share                 --             --             --         123,499

 From exercise of nonqualified stock options at $.059 per share                 --             --             --         147,500

 From exercise of employee stock options                                        --             --             --              --

 For settlement of related party notes payable  at $.035 per share              --             --             --         916,483

Per settlement agreement with TBFI                                              --             --             --          34,200

Deferred stock compensation related to stock option grants                      --             --             --              --

Amortization of deferred stock compensation                                     --             --             --         269,694

Net loss for the year ended December 31, 2002                                   --     (3,113,624)            --     ( 3,113,624)

BALANCES, DECEMBER 31, 2002                                            $(7,427,422)   $(8,837,878)  $         --     $(1,104,702)

Common stock issuances:                                                                                                       --

     For settlement of related party notes payable and interest
       at $0.032                                                                                                         553,855

     For settlement of related party notes payable and interest
       at $0.032                                                                                                         258,151

     For settlement of related party notes payable and interest
       at $0.074                                                                                                         200,543

     For settlement of related party notes payable and interest
       at $0.072                                                                                                         582,667

     For consulting services at $.030 per share                                                                           83,426

     For consulting services at $.048 per share                                                                           16,002

     For consulting and scientific advisory board services
       at $.073 per share                                                                                                 19,832

     For scientific advisory board services at $.048 per share                                                             4,750

     For accounting services at $.026 per share                                                                            2,199

     For legal services at $.068 per share                                                                                 3,943

     For legal services at $.077 per share                                                                                 5,464
</TABLE>

(Continued)
<PAGE>

                            DNAPrint genomics, Inc.
                        (A Development Stage Enterprise)

            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFECIT)
                                   (CONTINUED)
<TABLE>
<CAPTION>


                                                                    Common Stock          Additional    Common       Stock
                                                                    ------------           Paid-In      Stock     Subscriptions
                                                               Shares         Amount       Capital    Subscribed   Receivable
                                                               ------         ------       -------    ----------   ----------
<S>                        <C>                                 <C>              <C>         <C>          <C>           <C>
     For legal services at $.064 per share                     63,594           636         3,447

     For legal services at $.05 per share                      59,803           598         2,422

     For legal services at $.048 per share                    128,074         1,281         4,918

     For consulting services at $.031 per share               134,589         1,346         2,876

     For legal services at $0.027 per share                   843,912         8,439        14,566

     For consulting services at $.050                         652,166         6,522        25,781

     From exercise of nonqualified stock options
       at $.029 per share                                   5,882,352        58,824       111,764

     From exercise of nonqualified stock options
       at $.135 per share                                   4,166,666        41,667       520,833

     From exercise of nonqualified stock options
       at $.110 per share                                   4,166,666        41,667       416,666

     From exercise of nonqualified stock options
       at $.072 per share                                   3,030,303        30,303       187,879

     From exercise of nonqualified stock options
      at $.061 per share                                    3,225,806        32,258       164,516

     Via 506 private placement at $A.015 per share            666,667         6,667         3,333

     Via 506 private placement at $.014 per share           2,777,778        27,778        12,222

     For settlement with TBFI. at $.082 per share           4,763,662        47,637       342,983

     Conversion of debt to common stock and exercise
       of non-detachable warrants                           1,063,829        10,638        29,362

     Conversion of debt to common stock and exercise
       of non-detachable warrants                           1,030,912        10,309        29,691

Amortization of deferred stock compensation

Deferred stock compensation costs

Stock options cancelled                                                                  (170,883)

Common stock subscribed                                                                 1,836,824    1,153,663

Intrinsic value of convertible debt and warrants                                          500,000

Stock issuance costs                                                                     (173,523)

Warrants issued for stock issuance costs                                                   80,000

Net loss for the year ended December 31, 2003

BALANCES, DECEMBER 31, 2003                               523,898,635     5,238,986    16,360,817    1,153,663         --
</TABLE>

(Continued)
<PAGE>

                             DNAPrint genomics, Inc.
                        (A Development Stage Enterprise)

            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFECIT)
                                   (CONTINUED)
<TABLE>
<CAPTION>
                                                                                           Deficit
                                                                            Deficit       accumulated    Accumulated
                                                          Deferred       incurred prior   during the        Other
                                                           Stock         to development   development    Comprehensive
                                                        Compensation         stage          stage           Income         Total
                                                        ------------         -----          -----           ------         -----
<S>                                                          <C>               <C>             <C>             <C>           <C>
     For legal services at $.064 per share                                                                                   4,083

     For legal services at $.05 per share                                                                                    3,020

     For legal services at $.048 per share                                                                                   6,199

     For consulting services at $.031 per share                                                                              4,222

     For legal services at $0.027 per share                                                                                 23,005

     For consulting services at $.050                                                                                       32,303

     From exercise of nonqualified stock options
       at $.029 per share                                                                                                  170,588

     From exercise of nonqualified stock options
       at $.135 per share                                                                                                  562,500

     From exercise of nonqualified stock options
       at $.110 per share                                                                                                  458,333

     From exercise of nonqualified stock options
       at $.072 per share                                                                                                  218,182

     From exercise of nonqualified stock options
      at $.061 per share                                                                                                   196,774

     Via 506 private placement at $A.015 per share                                                                          10,000

     Via 506 private placement at $.014 per share                                                                           40,000

     For settlement with TBFI. at $.082 per share                                                                          390,620

     Conversion of debt to common stock and exercise
       of non-detachable warrants                                                                                           40,000

     Conversion of debt to common stock and exercise
       of non-detachable warrants                                                                                           40,000

Amortization of deferred stock compensation               1,378,637                                                      1,378,637

Deferred stock compensation costs                        (1,848,750)                                                    (1,848,750)

Stock options cancelled                                     170,883                                                             --

Common stock subscribed                                                                                                  2,990,487

Intrinsic value of convertible debt and warrants                                                                           500,000

Stock issuance costs                                                                                                     (173,523)

Warrants issued for stock issuance costs                                                                                    80,000

Net loss for the year ended December                                                     (7,789,905)                    (7,789,905)

BALANCES, DECEMBER 31, 2003                                (735,356)      (7,427,422)   (16,627,783)          --        (2,037,095)
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                                                                                          Additional       Common
                                                      Preferred Stock              Common Stock            Paid in         Stock
                                                     Shares      Amount         Shares        Amount       Capital       Subscribed
                                                     ------      ------         ------        ------       -------       ----------
<S>                                                    <C>             <C>   <C>             <C>          <C>                <C>
Common stock issuances:

Stock issued that was subscribed in the prior year                           115,366,291     1,153,663                   (1,153,663)

For accrued expenses at $.03 per share                                         1,522,364        15,224        26,641

For consulting services and accrued expenses
  at $.030 per share                                                           5,000,000        50,000       230,000

For consulting services at $.03 per share                                         50,000           500         1,000

For consulting services at $.04 per share                                         50,000           500         1,600

For consulting services at $.01 per share                                                                                     2,506

For consulting services at $.02 per share                                                                      1,566          1,565

For consulting services at $.03 per share                                        195,418         1,954         1,923

Conversion of debt to common stock and exercise
of $1.00 per share non-detachable warrants                                   292,856,546     2,928,566     1,461,343         90,091

Exercise of options                                                              185,000         1,850        (1,850)

Prepaid monies for future exercise of warrants

Preferred stock Series A issued to investors           40,000          400                                   399,600

Stock options cancelled                                                                                      (19,950)

Amortization of deferred stock compensation

Stock issuance costs                                                                                        (489,335)

Warrants issued for stock issuance costs                                                                     197,633

Net loss for the year ended December 31, 2004
                                                  -----------  -----------   -----------   -----------   -----------    -----------
BALANCE DECEMBER 31, 2004                              40,000          400   939,124,254     9,391,243    18,170,988         94,162
                                                  ===========  ===========   ===========   ===========   ===========    ===========
</TABLE>


<TABLE>
<CAPTION>
                                                                                                               Deficit
                                                      Deferred       Stock                     Deferred     incurred prior
                                                       stock      Subscription    Prepaid       Stock        development
                                                     issue cost    Receivable     Warrants   Compensation       stage
                                                     ----------    ----------     --------   ------------       -----
<S>                                                    <C>                <C>       <C>           <C>         <C>
Common stock issuances:

Stock issued that was subscribed in the prior year

For accrued expenses at $.03 per share

For consulting services and accrued expenses
  at $.030 per share

For consulting services at $.03 per share

For consulting services at $.04 per share

For consulting services at $.01 per share

For consulting services at $.02 per share

For consulting services at $.03 per share

Conversion of debt to common stock and exercise
of $1.00 per share non-detachable warrants                                          (90,000)

Exercise of options

Prepaid monies for future exercise of warrants                                      345,000

Preferred stock Series A issued to investors

Stock options cancelled                                                                            19,950

Amortization of deferred stock compensation                                                       689,335

Stock issuance costs

Warrants issued for stock issuance costs

Net loss for the year ended December 31, 2004
                                                    -----------   -----------   -----------   -----------    -----------
BALANCE DECEMBER 31, 2004                                    --            --       255,000       (26,071)    (7,427,422)
                                                    ===========   ===========   ===========   ===========    ===========
</TABLE>

                      See notes to consolidated statements

(Continued)
<PAGE>

<TABLE>
<CAPTION>
                                                      Deficit
                                                     accumulated    Accumulated
                                                     during the       Other
                                                    Comprehensive Comprehensive
                                                       stage         Income         Total
                                                       -----         ------         -----
<S>                                                 <C>             <C>              <C>
                                                                                          --

Common stock issuances:                                                                   --

Stock issued that was subscribed in the prior year                                        --

For accrued expenses at $.03 per share                                                41,865

For consulting services and accrued expenses
  at $.030 per share                                                                 280,000

For consulting services at $.03 per share                                              1,500

For consulting services at $.04 per share                                              2,100

For consulting services at $.01 per share                                              2,506

For consulting services at $.02 per share                                              3,131

For consulting services at $.03 per share                                              3,877

Conversion of debt to common stock and exercise
of $1.00 per share non-detachable warrants                                         4,390,000

Exercise of options                                                                       --

Prepaid monies for future exercise of warrants                                       345,000

Preferred stock Series A issued to investors                                         400,000

Stock options cancelled                                                                   --

Amortization of deferred stock compensation                                          689,335

Stock issuance costs                                                                (489,335)

Warrants issued for stock issuance costs                                             197,633

Net loss for the year ended December 31, 2004        (3,734,982)                  (3,734,982)
                                                    -----------    -----------   -----------
BALANCE DECEMBER 31, 2004                           (20,362,765)            --        95,535
                                                    ===========    ===========   ===========
</TABLE>

                      See notes to consolidated statements

END OF TABLE
<PAGE>

                            DNAPrint geonomics, Inc.
                        (A Development Stage Enterprise)

                      CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                                                    For the Period
                                                                                                                     December 10,
                                                                                                                    1998 (Date of
                                                                                   For the          For the           Inception)
                                                                                  Year Ended       Year Ended          through
                                                                                  December 31,     December 31,      December 31,
                                                                                     2004             2003              2004
                                                                                     ----             ----              ----
CASH FLOWS FROM OPERATING ACTIVITIES:

<S>                                                                               <C>             <C>             <C>
Net loss                                                                          $ (3,734,982)   $ (7,789,905)   $(18,374,537)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization                                                          182,774         125,640         671,691
Provision for bad debts                                                                     --          (1,750)         11,738
Impairment of assets                                                                        --              --         254,434
Loss on disposal of investments                                                             --              --          11,772
Loss on disposal of property and equipment                                                  --              --           5,039
Amortization of deferred stock compensation                                            689,335         174,231       1,352,790
Amortization of deferred compensation                                                  179,691         740,101         919,792
Common stock issued for interest expense on related party notes payable                     --         893,052       1,300,378
Common stock issued for reorganization/court order                                          --              --         343,000
Common stock issued for services                                                        27,114       1,647,254       2,263,782
Common stock issued for bankruptcy settlement                                               --              --          28,080
Stock issued for settlement                                                                 --         152,437         152,437
Intrinsic value of convertible debt and non-detachable warrants                             --         500,000         500,000
Stock based compensation                                                                    --       1,943,906       1,943,906
(Increase) decrease in receivables                                                     (34,263)          2,058         270,387
(Increase) decrease in inventory                                                       (65,279)             --         (65,279)
Decrease (increase) in prepaid expenses and other assets                               (42,055)     (1,029,425)     (1,090,233)
(Decrease) Increase in accounts payable and accrued liabilities                       (966,760)      1,535,544       1,361,219
                                                                                  ------------    ------------    ------------
NET CASH USED IN OPERATING ACTIVITIES                                               (3,764,425)     (1,106,857)     (8,139,604)
                                                                                  ------------    ------------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment                                                    (56,969)        (14,165)       (832,498)
Loan to Biofrontera                                                                   (193,683)             --        (193,683)
Proceeds from disposal of property and equipment                                            --              --          10,100
Net bankruptcy adjustment                                                                   --              --         511,274
                                                                                  ------------    ------------    ------------
NET CASH USED IN INVESTING ACTIVITIES                                                 (250,652)        (14,165)       (504,807)
                                                                                  ------------    ------------    ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable - related party                                                 --         231,657       1,487,036
Proceeds from settlement with Tampa Bay Financial                                           --         238,183         272,383
Advances from Tampa Bay Financial, net                                                      --              --         384,581
Proceeds from issuance of common stock , net of issuance costs                       4,348,718         483,523       6,319,190
Proceeds from issuance of Series A preferred stock, net of stock issuance costs
                                                                                       272,535              --         272,535
Prepayment for future warrant exercises                                                255,000              --         255,000
Proceeds from convertible debenture                                                         --         500,000         500,000
Repayment of notes payable                                                             (83,009)             --        (433,809)
Collections from stock subscriptions                                                        --              --         836,960
Principal payments on capital lease obligation                                         (65,553)        (78,200)       (270,930)
                                                                                  ------------    ------------    ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                            4,727,691       1,375,163       9,622,946
                                                                                  ------------    ------------    ------------
 NET INCREASE IN CASH AND CASH EQUIVALENTS                                             712,614         254,141         978,535
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                         265,921          11,780              --
                                                                                  ------------    ------------    ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                          $    978,535    $    265,921    $    978,535
                                                                                  ============    ============    ============
<CAPTION>


<PAGE>


                                                                                                 For the Period
                                                                      For the       For the     December 10, 1998
                                                                     year ended    year ended  (date of inception)
                                                                     December 31,  December 31,  to December 31,
                                                                        2004          2003            2004
                                                                        ----          ----            ----
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
<S>                                                                <C>            <C>            <C>
Approximate Interest Paid                                          $    40,366    $        --    $    93,666
Income taxes paid                                                  $        --    $        --    $        --

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
  ACTIVITIES:
 Stock subscription receivable arising from acquisition of
  DNAPrint genomics, Inc. (Florida)                                $        --    $        --    $ 1,000,000
Common stock issued for related party notes payable                $        --    $   702,164    $ 1,211,322
Unrealized loss on long-term investments                           $        --    $        --    $  (222,443)
Common stock issued for land subsequently swapped for investment
  in Heroes, Inc                                                   $        --    $        --    $ 2,000,000
Dividend paid in stock of Heroes, Inc.                             $        --    $        --    $(1,988,228)
Common stock issued for reorganization /court order arising from
  conversion of claim to stock                                     $        --    $        --    $(2,905,500)
Conversion of Tampa Bay Financial advances to stock                $        --    $        --    $   453,331
Equipment leased under capital leases                              $   223,762    $    11,193    $   483,667
Deferred compensation on grants of stock options                   $        --    $        --    $   925,350
Deferred compensation reduced for stock options cancelled
                                                                   $   (19,950)   $  (170,883)   $  (190,833)
Stock to be issued for deferred compensation                       $        --    $ 2,588,250    $ 2,588,250
Common stock issued for satisfaction of accrued expenses
                                                                   $   307,865    $        --    $   307,865
Debenture converted into common stock                              $   280,000    $    30,000    $   310,000
Preferred stock issued for satisfaction of accrued expenses        $   110,000    $        --    $   110,000
Warrants issued for stock issuance costs                           $   197,633    $    80,000    $   277,633
</TABLE>
                 See notes to consolidated financial statements

<PAGE>

                             DNAPrint genomics, Inc.
                        (A Development Stage Enterprise)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

DNAPrint genomics, Inc. ("DNAP Utah"), was initially incorporated under the laws
of the  State  of  Utah on  January  3,  1983  as  Lexington  Energy,  Inc,  and
subsequently changed its focus to human genome sciences. In connection with this
change in focus, on July 15, 2000, DNAP Utah acquired DNAPrint genomics,  Inc. a
Florida  corporation ("DNAP Florida") through the issuance of 192,000,000 shares
of its common  stock which was  accounted  for as a pooling of  interests.  DNAP
Florida  specializes  in the research and  development  of genomic  products and
provides   scientific   services   and   tests  to  the   genealogy,   forensic,
pharmaceutical  and  genetics  markets.  As a result  of this  acquisition,  the
accompanying consolidated financial statements include the accounts of DNAP Utah
and its wholly-owned  operating subsidiary,  DNAP Florida (collectively referred
to as "we", "us",  "our").  All significant  intercompany  accounts and balances
have been eliminated in consolidation.

On October 19, 2000, we merged with S.D.E. Holdings 1, Inc., an unrelated Nevada
company.  S.D.E. Holdings,  Inc. was a reporting company under Section 12 (g) of
the  Securities  Exchange Act of 1934. The purpose of the merger was to allow us
to file a 211 application with the National  Association of Securities  Dealers,
Inc., as a successor reporting company to become listed on the NASD OTC Bulletin
Board.  S.D.E.  Holdings had no  substantive  assets,  liabilities,  revenues or
expenses since its  inception,  and all equity of S.D.E.  Holdings,  1, Inc. was
cancelled as part of the transaction.

DNAPrint genomics, Inc. has been and continues to be a development stage company
as  described  in  Financial  Accounting  Standards  Board  Statement  No. 7. We
continue to devote substantially all of our efforts in initiating and developing
our planned  principal  operations.  While sales of our consumer  products,  our
forensic  products,   paternity   services  and  our  genotyping   services  are
increasing, our pharmacogenomics products are still in development.

Revenue Recognition

In  accordance  with SEC  Staff  Accounting  Bulletin  Topic  13,  revenues  are
recognized when we have persuasive  evidence an arrangement  exists  including a
fixed price,  collection is reasonably assured,  the services have been provided
and delivered to the customer and no additional  performance  is required by us.
We  are  currently  providing  ancestry,   forensic,  paternity  and  genotyping
services.  Deferred revenue represents the unearned portion of payments received
in advance of our tests being  completed  and  delivered to our  customers.  Our
services  are   performed  at  the  request  of  our  customers  and  after  the
agreement/arrangement has been entered into, we do not generally give refunds to
our  customer as we have begun to incur or incurred  the costs  associated  with
that service. Our software program ADMIXMAP is currently for internal use solely
by our scientists, and we do not generate revenue from any sales thereof.

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
certain estimates and assumptions that affect the reported amounts of assets and
liabilities and the 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.

Financial Instruments

Our financial instruments include cash, receivables,  current assets and current
liabilities.  We believe the estimated fair value of such financial  instruments
at December  31, 2004  approximate  their  carrying  value as  reflected  in the
consolidated   balance  sheets  due  to  their  short-term  nature.  It  is  not
practicable  for us to estimate the fair value of our  convertible  debenture as
there  are  not  currently  any  quoted  market  prices  available.  We  are  in
development  stage,  and it is difficult  to get debt  financing as well as this
debenture has a convertible feature,  thus it is difficult to determine what the
fair value  would be. The  carrying  amount for this  convertible  debenture  at
December 31, 2004 is $190,000 and the interest rate is 8% payable monthly.

Accounts Receivable

Accounts  receivable consist of ancestry,  forensic,  and genotyping services to
customers.  We generally require prepayment for ancestry  services,  and perform
ongoing credit evaluations of our customers. We record an allowance for doubtful
accounts to allow for any amounts that may not be recoverable, which is based on
an analysis of our prior collection experience,  customer credit worthiness, and
current economic trends. Based on management's review of accounts receivable, an
allowance  for  doubtful  accounts  of $500 at December  31, 2004 is  considered
adequate.  We determine receivables to be past due based on the payment terms of
original invoices.

<PAGE>

Concentrations of Credit Risk

Financial   instruments,   which   potentially   subject   us   to   significant
concentrations of credit risk,  consist primarily of cash and receivables.  With
respect to cash and cash  equivalents,  we  maintained  all of our cash and cash
equivalents  in deposit  accounts with one financial  institution  in the United
States,  which deposit  accounts at times may exceed  federally  insured limits.
Generally,  these  deposits  may be redeemed  upon demand and,  therefore,  bear
minimal  risk.  At December 31, 2004,  we have a current  loan  receivable  from
Biofrontera in the amount of $193,683.

Inventory

Inventories  are  stated at the  lower of cost  (first-in,  first-out  basis) or
market. At December 31, 2004, inventory consisted of $65,279 of raw material.

Property and Equipment

Property and  equipment  are recorded at the lower of cost or fair value.  Major
additions are  capitalized,  while minor  additions and maintenance and repairs,
which do not extend the useful life of an asset,  are charged to operations when
incurred.  When property and  equipment  are sold or otherwise  disposed of, the
asset account and related accumulated depreciation account are relieved, and any
gain or loss is included in operations. Depreciation is provided primarily using
the straight-line method over the assets' estimated useful lives of three to six
years.  Amortization of leasehold improvements,  included with depreciation,  is
computed using the  straight-line  method over the estimated  useful life of the
asset or the term of the lease, whichever is shorter. Estimated useful lives are
periodically  reviewed and, where appropriate,  changes are made  prospectively.
For  income  tax  purposes,  we use the  accelerated  methods  for all assets as
required by the Internal Revenue Service.

Long Lived Assets

We  periodically  review our  long-lived  assets for  indications  of impairment
whenever  circumstances  and situations  change such that there is an indication
that the carrying amounts may not be recoverable.  If the non-discounted  future
cash flows of the enterprise are less than their carrying amount, their carrying
amounts are reduced to fair value,  and an impairment loss is recognized.  There
was no impairment of long-lived  assets during the years ended December 31, 2004
and 2003.

Research & Development

Research and Development  ("R&D") expenses are fully charged to the consolidated
statements of operations when incurred.  Our entire R&D is performed internally,
and no R&D is contracted,  nor do we perform R&D for other entities.  We do have
consulting   arrangements   which  provide  added  depth  to  our  team.   These
arrangements  are typically based upon a fee paid monthly or quarterly.  We also
purchase samples that we use in our testing, and these samples are expensed when
purchased.  Our R&D costs also include salaries and related personnel  expenses,
direct materials,  laboratory  supplies,  equipment  expenses and administrative
expenses that are allocated to R&D based upon personnel costs.

Income Taxes

Deferred tax assets and liabilities are recognized for the estimated  future tax
consequences  attributable  to  differences  between  the  financial  statements
carrying amounts of existing assets and liabilities and their respective  income
tax bases.  Deferred tax assets and  liabilities  are measured using enacted tax
rates expected to apply to taxable income in the years in which those  temporary
differences are expected to be recovered or settled.  The effect on deferred tax
assets and  liabilities  of a change in tax rates is recognized as income in the
period that included the enactment date.

Valuation  allowances have been established  against our deferred tax assets due
to uncertainties in our ability to generate  sufficient taxable income in future
periods to make  realization  of such  assets  more likely than not. We have not
recognized an income tax benefit for our operating  losses generated during 2004
and 2003 based on  uncertainties  concerning  our  ability to  generate  taxable
income in future  periods.  There was no income  tax  receivable  or  payable at
December 31, 2004 and 2003. In future periods, tax benefits and related deferred
tax assets will be recognized  when  management  considers  realization  of such
amounts to be more likely than not.

Statement of Cash Flows

For  purposes of the  statement  of cash flows,  we consider  all highly  liquid
investments  purchased  with an original  maturity of three months or less to be
cash equivalents.

Advertising

Advertising costs, which approximated $24,585 and $2,075, respectively,  for the
years ended December 31, 2004 and 2003, are expensed as they are incurred.

<PAGE>

Stock-Based Compensation

We account for equity  instruments issued to employees for services based on the
fair value of the equity  instruments  issued and account for equity instruments
issued to non-employees based on the fair value of the consideration received or
the fair value of the equity instruments, whichever is more reliably measurable.
We recognize as expense the fair value of all stock-based awards to employees on
the date of grant and to  non-employees  based upon the  measurement  date.  The
amount related to the value of the stock awards is amortized on a  straight-line
basis over the required service periods.

<PAGE>

For all stock option awards to employees and board of directors, we have elected
to apply the  intrinsic  value  based  method of  accounting  as  prescribed  by
Accounting  Principles  Board  Opinion No. 25  "Accounting  for Stock  Issued to
Employees" and related Interpretations.  Under the intrinsic value based method,
compensation cost is the excess of the quoted market price of the stock at grant
date or other  measurement  date over the amount an employee must pay to acquire
the stock.  The following table  illustrates the effect on net loss and loss per
share as if the fair  value  based  method of  accounting  had been  applied  to
stock-based employee compensation,  as required by SFAS No. 123, "Accounting for
Stock-Based  Compensation" and SFAS 148 "Accounting for Stock-Based Compensation
- transition and  disclosure",  an amendment of SFAS No. 123 for the years ended
December 31, 2004 and 2003:

<TABLE>
<CAPTION>
                                                                        2004            2003
                                                                        ----            ----
<S>                                                                <C>             <C>
Net loss as reported                                               $  3,734,982    $  7,789,905
Total stock-based employee compensation expenses determined
   under fair value based method for all awards, net of
   related tax effects                                                  211,777          42,195
                                                                   ------------    ------------
                                                                   $  3,946,759    $  7,832,100
Pro forma net loss                                                 ============    ============

                                                                   $        .01    $        .02
Loss per share basic and diluted:                                  ============    ============
                                                                   $        .01    $        .02
As reported                                                        ============    ============


Pro forma
</TABLE>


This table above  includes  the fair value of the  20,000,000  options that were
granted to  employees  on January 7, 2005 for  services  already  provided  (See
footnote K).

See footnote G, for additional  disclosure and discussion of our option plan and
option activity.

Foreign Currency Translation

We have a loan receivable that is in Euros.  This loan will be translated at the
exchange  rate in  effect  at each  reporting  date.  Any gain or loss from this
foreign currency translation will be included in our Statement of Operations for
that period.  There were no foreign currency  translation gains or losses during
2004.

Patent Costs

We incur costs to file patents to protect our intellectual property.  Given that
we are in our research and  development  stage,  currently the future benefit is
unknown,  and we are unable to discern if there will be a future benefit related
to the patents.  Given that the future benefit is unknown,  the costs associated
with the patent are expensed in the periods incurred.

Recent Pronouncements

In January 2003,  the  Financial  Accounting  Standards  Board  ("FASB")  issued
Interpretation  No.  46,   "Consolidation  of  Variable  Interest  Entities,  an
Interpretation   of   Accounting   Research   Bulletin   ("ARB")  No.  51"  (the
"Interpretation").  The  Interpretation  requires the  consolidation of variable
interest  entities in which an  enterprise  absorbs a majority  of the  entity's
expected losses,  receives a majority of the entity's expected residual returns,
or both, as a result of ownership,  contractual, or other financial interests in
the entity. Currently, entities are generally consolidated by an enterprise that
has  controlling  financial  interest  through  ownership  of a majority  voting
interest in the entity. The Interpretation was originally  immediately effective
for variable  interest entities created after January 31, 2003, and effective in
the fourth  quarter of our fiscal  2003 for those  created  prior to February 1,
2003.  However,  in October 2003, the FASB deferred the effective date for those
variable  interest  entities  created prior to February 1, 2003, until our first
quarter of fiscal 2004. We adopted this  interpretation  on January 1, 2004, and
it did not have a material impact on our consolidated financial statements.

In November 2004,  the FASB issued  Statement of Financial  Accounting  Standard
("SFAS")  No.  151,  "Inventory  Costs."  The new  statement  amends APB No. 43,
Chapter 4, "Inventory  Pricing," to clarify the accounting for abnormal  amounts
of idle facility  expense,  freight,  handling costs, and wasted material.  This
statement requires that those items be recognized as current-period  charges and
requires that allocation of fixed production overheads to the cost of conversion
be based on the normal capacity of the production facilities.  This statement is
effective  for fiscal  years  beginning  after June 15,  2005.  We do not expect
adoption of this statement to have a material impact on our financial  condition
or results of operations.

In December 2004,  the FASB issued SFAS No. 123 (revised 2004) ("SFAS  123(R)"),
"Share-Based   Payment."  This   statement   replaces  SFAS  Statement  No.  123
"Accounting  for Stock-Based  Compensation,"  and supersedes APB Opinion No. 25,
"Accounting  for Stock Issued to  Employees."  SFAS 123(R) will require the fair
value of all stock  option  awards  issued to  employees  to be  recorded  as an
expense  over the related  vesting  period.  The  statement  also  requires  the
recognition  of  compensation  expense for the fair value of any unvested  stock
option awards  outstanding at the date of adoption.  The adoption FASB 123R will
impact us by requiring us to use the  fair-value  based method of accounting for
future and unvested employee stock transactions rather than the intrinsic method
we  currently  use.  We will adopt  this SFAS as of  January 1, 2006.  We do not
expect  the  adoption  of this  SFAS  to  have a  material  impact  relating  to
outstanding  options since a majority of the awards under the existing incentive
stock option plan will be fully vested prior to our adoption.

<PAGE>

Net Loss Per Common Share

Basic net loss per share is  computed  by  dividing  the net loss  available  to
common  stockholders by the weighted average number of common shares outstanding
during the period.  Diluted  net loss per share is computed by dividing  the net
loss for the  period  by the  weighted  average  number  of  common  and  common
equivalent  shares  outstanding  during the  period.  Common  equivalent  shares
outstanding  as of December 31, 2004 and 2003,  which consist of employee  stock
options, warrants, convertible debenture as well as the issuance of common stock
under  compensation  agreements,  have been  excluded  from diluted net loss per
common share calculations because they are anti-dilutive. Accordingly, basic and
diluted net loss per share is identical as of December 31, 2004 and 2003 and for
the  period  December  10,  1998 to  December  31,  2004.  The  following  table
summarizes our common stock  equivalents  outstanding at December 31, 2004 which
may dilute future earning per share.

         Convertible notes **                        338,723,034
         Convertible preferred stock **               44,943,820
         Warrants and options                         26,650,308
                                                  --------------
                                                     410,217,162
                                                  ==============

       **The amount of shares the convertible  notes  and convertible  preferred
         stock was estimated  using the  conversion  price at December 31, 2004.
         The conversion price varies based upon the price of our common stock

Reclassifications

Certain minor  reclassifications have been made in the 2003 financial statements
to conform to the classifications used in 2004.

NOTE B - GOING CONCERN

Our consolidated  financial statements are prepared using accounting  principles
generally  accepted  in the  United  States  of  America  applicable  to a going
concern,  which  contemplate  the  realization  of  assets  and  liquidation  of
liabilities in the normal course of business.  We have incurred losses since our
inception,  and have experienced and continue to experience  negative cash flows
from  operations.  In addition,  we have  negative  working  capital and deficit
accumulated   during  the  development  stage  of  approximately   $165,417  and
$20,362,765 at December 31, 2004, and will continue to have ongoing requirements
for substantial  additional  capital  investment to accomplish our business plan
over the next several years.  Over the past few years,  our operations have been
funded through related party funding,  sales of common stock,  the issuance of a
convertible  debenture and the related exercise of non-detachable  warrants.  We
continue to experience some success generating  operating revenues;  however, we
do not expect our revenue  stream to be  sufficient to cover costs of operations
in the immediate  future.  We  anticipate  that the funding we expect to receive
from the minimum conversions of the outstanding  debenture into common stock and
the related  exercise of the  non-detachable  warrants  will fund our  operating
activities  through  2005.  However,  there  can  be no  assurance  the  minimum
conversions  of the  outstanding  debenture  into  common  stock and the related
exercise of the  non-detachable  warrants will be exercised  and/or that we will
have the cash flow to meet our  operating  requirements.  These  factors,  among
others,  indicate  that we may be unable to  continue  as a going  concern for a
reasonable period of time.

NOTE C - PROPERTY AND EQUIPMENT - NET

Property and equipment consists of the following at December 31, 2004:

                                                                 2004
                                                                 ----

Leased equipment under capital lease                         $    231,359
Furniture, fixtures and other equipment                           481,277
Leasehold improvements                                            171,727
                                                             ------------
Subtotal                                                          884,363
Less accumulated depreciation and amortization                   (504,101)
                                                             ------------
Property and equipment - net                                 $    380,262
                                                             ============

Accumulated   depreciation  and  amortization  includes  $8,038  of  accumulated
depreciation of leased equipment as of December 31, 2004.

Depreciation and amortization  expense for the years ended December 31, 2004 and
2003 amounted to $182,774 and $125,640, respectively.

NOTE D - INCOME TAXES

We recognized  losses for both financial and tax reporting  purposes during each
of the periods in the  accompanying  statements of operations.  Accordingly,  no
provision  for income  taxes  and/or  deferred  income  taxes  payable  has been
provided for in the accompanying financial statements.

Since our acquisition of DNAP Florida, we have incurred net operating losses for
income tax purposes of approximately $21 million. These net operating loss carry
forwards  expire in various  years  through the year ended  December  31,  2024,
however  because  we have  experienced  changes  in  control  and have  incurred
significant operating losses,  utilization of the income tax loss carry forwards
are not assured. As a result, the non-current  deferred income tax asset arising
from  these  net  operating  loss  carry  forwards  and  from  other   temporary
differences  are not  recorded in the  accompanying  balance  sheets  because we
established  a  valuation  allowance  to fully  reserve  such  assets due to the
uncertainty of our realization of this benefit.

<PAGE>

It will be very  difficult for the Company to use the $6.4 million net operating
loss  related  to 1999  because of our  bankruptcy  proceedings  and  changes in
control,  and various other  matters.  It is included in the net operating  loss
above and in the  deferred tax asset  recorded on our balance  sheet with a full
valuation allowance against it.

At December 31, 2004 our non-current net deferred income tax assets (assuming an
effective income tax rate of approximately 38%) consisted of the following:

      Non-current deferred income tax asset at December 31, 2004:



Deferred income tax asset:
   Net operating loss carry forwards                           $  7,834,000
   Bonus and deferred compensation accrual                          181,000
   Option expense                                                   267,000
   Impairment of assets                                              96,000
                                                               ------------
   Total deferred income tax asset                                8,378,000
   Less valuation allowance                                      (8,378,000)
                                                               ------------
   Net deferred income tax asset                               $         --
                                                               ============

Differences  between the federal  benefit  computed at a statutory  rate and our
effective tax rate and provision are as follows for the years ended December 31,
2004 and 2003:

<TABLE>
<CAPTION>
                                                                                2004                  2003
                                                                                ----                  ----
<S>                                                                         <C>                  <C>
      Statutory benefit                                                     $(1,269,000)         $(2,648,000)
      State tax benefit, net of federal effect                                 (136,000)            (283,000)
      Increase in deferred income tax valuation allowance                     1,398,000            1,937,000
      Intrinsic value of convertible debt and non-detachable warrants                --              328,000
      Non-deductible expenses                                                        --              473,000
      Non-deductible interest expense                                                --              188,000
      Other                                                                       7,000                5,000
                                                                            -----------          -----------
                                                                            $        --          $        --
                                                                            ===========          ===========
</TABLE>

NOTE E - CONVERTIBLE DEBENTURE

On November 25, 2003, we closed on a $500,000,  8%  convertible  debenture  with
non-detachable  warrants with La Jolla Cove  Investors,  Inc.  ("LJCI").  We pay
interest on a monthly basis with a principal balloon payment due on the maturity
date of November 24, 2005. Per the agreement,  LJCI shall convert at least 5% of
the face value of the debenture  each  calendar  month into common shares of the
Company.  The number of common  stock  shares into which this  debenture  may be
converted  is  equal to the  dollar  amount  of the  debenture  being  converted
multiplied by sixteen,  minus the product of the conversion  price multiplied by
fifteen times the dollar amount of the debenture being converted, and the entire
foregoing result shall be divided by the conversion  price. The conversion price
is equal to the  lesser  of (i)  $0.20  or (ii) 80% of the  average  of the five
lowest daily value weighted  average price of our common stock during the twenty
trading days prior to LJCI's election to convert.

Per the  agreement,  if LJCI would be deemed the  beneficial  owner of more than
4.99% of the then  outstanding  share of our common  stock,  then LJCI shall not
have the right to convert any portion of this debenture that would exceed 4.99%

The non-detachable  warrants must be exercised  concurrently with the conversion
of debt to  common  stock by  LJCI.  LJCI has the  right  to  exercise  warrants
equaling  fifteen times the dollar amount of the debenture being converted at an
exercise  price of $1.00.  If LJCI does not convert at least 5% of the  warrants
per month,  then LJCI will not be able to collect  interest on the debenture for
that month. The 2,850,000 warrants issued to LJCI expire on November 25, 2006.

On February 18, 2004, the  Convertible  debenture and Warrant to Purchase Common
Stock  agreements  were amended between LJCI and us. If LJCI does not convert at
least 5% of the face  value of the  debenture  and  exercise  at least 5% of the
warrants in any particular calendar month, LJCI may wire to us $375,000 less the
dollar  amount of warrants  exercised in that month within five business days of
the end of the month.  Should LJCI fail to wire us such funds, LJCI shall not be
entitled to collect  interest on the debenture for that month.  If breached more
than once,  than we may terminate the  agreements  with LJCI,  and the debenture
becomes due six months thereafter with accrued  interest.  The agreement between
LJCI and us has been amended  several times to allow the prepayment of up to the
5% of the warrants for the months of  September,  October and December  2004 and
January 2005.

<PAGE>

If the debenture  principal  amount declines below $100,000,  LJCI is permitted,
for a period of 30 days,  to add up to $250,000 of  additional  principal to the
debenture on the same terms and  conditions as the  debenture,  except that such
additional principal shall bear interest at 2%.

During 2003, we recorded  $500,000 for the intrinsic  value  associated with the
convertible  debt and  non-detachable  warrants  which was  recorded as interest
expense  and  capitalized  $30,070 of  deferred  financing  costs  which will be
amortized to interest  expense over the two-year  life of the note.  We recorded
approximately  $52,000 (includes $23,000 of deferred  financing fees) and $5,000
(includes  $3,000 of deferred  financing fees) of interest  expense on this note
during 2004 and 2003, respectively.

During December 2003, LJCI converted $30,000 of convertible  debentures into our
common stock and exercised non-detachable warrants to purchase 450,000 shares of
our common stock. During 2004, LJCI converted $280,000 of convertible debentures
into our common  stock and  exercised  non-detachable  warrants to purchase  4.2
million shares of our common stock. See Note G below for a further discussion of
this conversion.

LJCI converted additional debentures into common stock after yearend. See Note K
below for additional information on these conversions.

NOTE F - NOTES PAYABLE TO RELATED PARTIES

At December 31, 2004,  our notes payable to related  parties is $215,034 owed to
our Chief  Scientific  Officer.  The annual  interest  rate is 8% and is accrued
throughout the loan term. At December 31, 2004, our accrued  interest payable on
this note is $40,715. During 2004, this note was reduced by $38,068 for payments
made on his behalf to third  parties.  During late 2004, he agreed to extend the
funding  agreement with him under the same terms until December 31, 2005 with an
additional  provision  that if we are in  default  of the  note,  then  the only
recourse to pay the note is with our stock. While we currently anticipate having
the  funds  to  satisfy  this  remaining  indebtedness  at its  maturity,  if we
liquidate the indebtedness  using discounted  stock, then we will be required to
record additional  interest expense arising from the difference between the fair
value and issuance price of our stock.

During 2004,  the Company paid $75,000 to George  Frudakis  (father of our Chief
Scientific  Officer and a  shareholder  of the Company) to pay the  principal of
approximately   $45,000,   accrued   interest   of   approximately   $4,000  and
approximately  $26,000  was  recorded  as  other  expense  on  our  Consolidated
Statements of Operations to satisfy in full any other claims related to his note
and funding agreement.

NOTE G - CERTAIN EQUITY TRANSACTIONS

Series A Convertible Stock

During 2004, we amended our articles of incorporation to designate 50,000 shares
of our  preferred  stock as  Series A  preferred  stock,  $0.01 par  value.  The
liquidation  value is $10 per share.  Each share of Series A preferred stock has
the right to one vote for each share of common  stock  into which such  holder's
shares of  Series A  preferred  stock  could  then be  converted.  The  Series A
preferred  stock holders have the right to convert on the first day of the month
after the month in which a  registration  statement  (other than a  registration
statement on Form S-4,  Form S-8 or any successor  form  thereto)  filed by DNAP
with the  Securities  and  Exchange  Commission  becomes  effective.  The  other
conversion  dates are the first day of the  fourth,  seventh  and a tenth  month
after the month in which such registration  statement becomes  effective.  If on
any conversion  date, the conversion  price would be less than $0.025 per share,
we may elect to defer the  conversion  date to the first day of the next  month.
If, on such deferred  conversion  date, the conversion  price would be less than
$0.025 per share, we may again defer the conversion date to the first day of the
next month.  Upon such second deferred  conversion  date, the Series A preferred
stock shall be converted  without further  deferral.  Such  conversion  shall be
effected at our office or any transfer agent for such stock, into such number of
fully paid and nonassessable shares of common stock as is determined by dividing
the  original  Series A  preferred  stock issue  price by the  conversion  price
applicable  to such share,  determined as hereafter  provided,  in effect on the
date the certificate is surrendered for conversion.  The conversion price is the
lesser of (i)  eighty  percent  (80%) of the  average of the five  lowest  daily
volume  weighted  average  prices of our common  stock  during  the twenty  (20)
trading days prior to the  conversion  date, or (ii) eighty percent (80%) of the
closing  price of our common  stock on the trading  day prior to the  conversion
date.  Each share of Series A preferred  stock not  previously  converted  shall
automatically  be converted,  without the payment of  additional  consideration,
into shares of common stock at the conversion price, as applicable, in effect on
the date of and immediately prior to the last conversion date described above.

During 2004, we issued 40,000  shares of Series A preferred  stock.  We received
$272,535 of cash (net of $17,465 of stock issuance costs) and reduced an accrued
liability for $110,000 related to the issuance of these 40,000 shares.

Common Stock

Common Stock Issued for Stock Subscribed

During  2004,  we issued the  115,366,291  shares of our  common  stock that was
issuable at December 31, 2003. This included:  105,000,000  shares of our common
stock  issued to four of our  executive  management  in  accordance  with  their
agreements with us; 10,309,120 shares of our common stock issued to LJCI as part
of our agreement with them; and, 57,171 shares of our common stock issued to two
service providers in return for their services to us.

<PAGE>

Conversion of Debenture and Exercise of Warrants

During 2004, LJCI converted  $280,000 of convertible  debentures into our common
stock and exercised  non-detachable  warrants to purchase 4.2 million  shares of
our common  stock.  The combined  transaction  resulted in us receiving  cash of
$3,925,763   (net  of  $274,237  of  cash  stock  issuance  costs)  and  issuing
301,865,737  shares of our common stock of which 292,856,546  shares were issued
at December 31, 2004 and 9,009,191 shares were issued in early 2005. At December
31, 2004, we have $90,091 recorded in our common stock subscribed equity account
for the unissued shares.

Prepayment for Future Warrant Exercises

At December  31, 2004,  LJCI had not  converted at least 5% of the face value of
the  debenture  and  exercised  at least  5% of the  warrants  for the  month of
December.  In accordance with the LJCI amended  agreement,  during December LJCI
prepaid $255,000 for the future exercise of warrants.  During January 2005, LJCI
exercised 255,000 warrants which decreased the prepaid balance to $-0-.

Agreement with Tampa Bay Financial, Inc.

Tampa Bay Financial,  Inc. retains the rights to purchase  14,786,018  shares of
our common stock at a price of $.05 per share at any time through February 2005.
Tampa Bay Financial,  Inc. did not exercise their rights prior to February 2005;
therefore this right expires on March 1, 2005.

Consulting Agreement

On January 19, 2004,  we accepted the services that were provided by a marketing
consultant and issued  5,000,000 common stock shares that we had committed to as
payment for the  services.  The shares were valued at the quoted market price of
$0.056  based  on the date  the  services  were  completed.  As a result  of the
transaction,  we  recorded  approximately  $14,000 and  $266,000  of  consulting
expense during 2004 and 2003, respectively.

Consulting Agreement with Scientific Advisory Board Member

During 2004, we issued 295,418 shares of our common stock in accordance  with an
agreement  with a consultant.  Based upon the date the services were  completed,
50,000  shares were valued at the quoted  market price of $0.03,  50,000  shares
were valued at the quoted market price of $0.042 and 195,418  shares were valued
at the  quoted  market  price of  $0.026.  As a result of this  transaction,  we
recorded approximately $14,000 of expense during the year 2004 for these shares.
At December 31, 2004, we had not issued additional  407,101 shares of our common
stock to this  consultant.  156,541 of these  shares  were  valued at the quoted
market price of $0.02 and 250,560  shares were valued at the quoted market price
of $0.01 based upon the date the services were  completed  which  resulted in us
recording  $5,637 of expense  during  the third and  fourth  quarter of 2004 for
these shares.  At December 31, 2004,  $4,071 is recorded as stock subscribed for
the 407,101 shares to be issued.

Stock Award

During the second quarter of 2003, the Board of Directors approved the immediate
grant of  30,000,000  shares to our Chief  Scientific  Officer,  and in addition
agreed to pay the related  federal and state income taxes that this officer will
incur  as  a  result  of  these  stock  grants.   As  a  result,  we  recognized
approximately $1,047,000 of compensation during 2003. These shares were recorded
as stock subscribed at December 31, 2003 and were issued during 2004.

Deferred Compensation and Stock Issued to Executives

In May 2003, we entered into one-year  employment  agreements  with three of our
officers.   These  agreements  automatically  extend  for  unlimited  successive
one-year  periods unless it is terminated in accordance  with the agreement that
includes  either party  furnishing  the other with written notice at least sixty
days  prior  to the  expiration  of such  period.  As  consideration  for  their
services,  we  agreed  to  issue,  at no cost  to the  executives,  a  total  of
75,000,000  shares of our common stock, and to pay the related federal and state
income  taxes  they  will  incur as a  result  of these  stock  grants.  We have
estimated  that the total  compensation  expense  under  these  agreements  will
approximate $2,769,000 over the term of the employment agreements. We recognized
approximately  $1,945,000 of compensation  expense during 2003 and the remainder
of 824,000 during 2004.  The 75,000,000  shares of common stock were recorded as
stock  subscribed at December 31, 2003 and were issued to these officers  during
2004.

Agreement with Investment Banking Firm

In April  2003,  we  engaged  an  investment-banking  firm to  assist  us in our
long-term financial planning efforts, including our efforts to raise debt and/or
equity capital. Pursuant to the agreement, we granted this firm, for a period of
twelve months,  exclusive  authorization  to act as our agent (on a best efforts
basis) in  substantially  all of our investment  banking  activities,  which may
include efforts to place various securities  (potentially through private and/or
public  transactions),  and to assist us in  obtaining  grant money from various
governmental  entities.  As consideration  for such services,  we have agreed to
compensate this entity as follows:

<PAGE>

      o     A non-refundable retainer,  payable in warrants to purchase stock of
            our Company valued at $80,000. During 2003, these 3,636,363 warrants
            were recorded as stock issuance costs in additional paid-in-capital.
            These  warrants  have an  exercise  price of $0.022 and expire  five
            years from the grant date.  As of December 31,  2004,  none of these
            warrants were exercised.

      o     Upon  closing  of a  transaction,  a fee  equal  to the  greater  of
            $165,000  or 6% of the  aggregate  dollar  value  of  the  aggregate
            consideration paid by investors.

      o     Upon  closing of a  transaction,  warrants to purchase (at a nominal
            price)  shares of our common stock having a value equal to 4% of the
            aggregate  consideration paid by investors. We get to apply a credit
            of one-half  the value of the $80,000  warrants  discussed  above to
            these warrants.  During 2004, warrants to purchase 11,463,945 shares
            of common  stock were  granted at a range of  exercise  prices  from
            $0.0096 to $0.0328 and expire five years from the grant date.  As of
            December 31, 2004, none of these warrants were exercised.

      o     Upon the receipt of any grant  money,  warrants  to  purchase  (at a
            nominal  price) such number of shares of our common  stock  having a
            value of $35,000.

In  addition,  we have  agreed to  compensate  this  entity  for any  merger and
acquisition  services  provided.  In  addition to billings on a time and expense
basis,  this  compensation  shall include a success fee equal to a percentage of
any transaction value.

Dutchess Agreement

Effective  September  28,  2004,  entered  into  an  Investment  Agreement  (the
"Dutchess  Agreement") and a Registration Rights Agreement with Dutchess Private
Equities  Fund,  II,  L.P., a Delaware  limited  partnership  (the  "Investor").
Pursuant to the Dutchess  Agreement,  the Investor has committed to purchase our
common  stock up to an aggregate  purchase  price of $35 million over a two-year
period, subject to the contingencies described below.

The Dutchess  Agreement  provides that we from time to time may deliver a notice
to the Investor.  Such notices will state the dollar amount of common stock that
we desire the Investor to purchase. The maximum amount permitted pursuant to any
such notice is $600,000,  and we can give  approximately  three such notices per
month.  Upon  receipt of the notice,  the  Investor  is obliged to purchase  the
dollar amount of common stock set forth in the notice at a purchase  price equal
to 96% of the average of the two lowest  closing bid prices of the common  stock
during the five trading days after the notice.

The  obligation  of the  Investor to purchase  under the  Dutchess  Agreement is
contingent  upon  our  filing  and  having  declared  effective  a  registration
statement registering the resale of the shares by the Investor.  Simultaneously,
the parties entered into a Registration  Rights  Agreement  requiring us to file
such a registration  statement.  In addition,  we are not permitted to provide a
notice,  and the  Investor is not obliged to purchase  any shares,  in the event
that we do not have  sufficient  authorized  shares  available  for  purchase to
fulfill such  commitment.  Although it is dependent on the trading  price of our
stock, it is very likely that we would have to obtain  shareholder  approval for
an increase in capitalization in order to take advantage of the full $35 million
facility.

Employee Stock Options and Awards

We have a stock option plan that  provides for the granting of stock options and
awards to officers and employees. The objectives of this plan include attracting
and  retaining  the  best  personnel,   providing  for  additional   performance
incentives,  and promoting our success by providing employees the opportunity to
acquire common stock. On April 29, 2004, the Board of Directors amended the 2001
Scientist  Stock Option Plan.  The Plan was amended by  increasing  the original
options  available  under the plan from  19,200,000 to 45,000,000.  Options were
granted at exercise prices from $ .006 - $ .03 per share (or  approximately 40 %
of the  market  price of our  stock on the  respective  grant  dates).  With the
exception of the options  issued to one of our  directors,  which vests  monthly
over four  years,  the  options  issued vest 25% per year for four years and all
expire in ten years.  During 2004, we issued  185,000 shares of our common stock
in a cashless exercise of stock options by an employee.

The status of our stock options is summarized below:
<TABLE>
<CAPTION>
                                                                             Weighted
                                                          Number of           Average
                                                            Shares         Exercise Price
                                                            ------         --------------
<S>                                                  <C>                  <C>
Outstanding at December 31, 2002                          14,092,500                0.013
Granted                                                           --                   --
Exercised                                                         --                   --
Cancelled                                                 (5,142,500)               0.007
                                                                          ---------------
Outstanding at December 31, 2003                           8,950,000      $         0.015
Granted                                                           --                   --
Exercised                                                   (250,000)     $         0.013
Cancelled                                                         --                   --
                                                                          ---------------
Outstanding at December 31, 2004                           8,700,000      $         0.015
                                                                          ===============
Options exercisable at December 31, 2004                   7,626,042      $         0.013
                                                     ===============
Options available for grant at December 31, 2004          37,612,500
                                                     ===============
</TABLE>

<PAGE>

The  following  table  summarizes  the  information   about  our  stock  options
outstanding at December 31, 2004:

                    Options Outstanding              Options Exercisable
                ---------------------------   ----------------------------------
                                Weighted
                                 Average      Weighted                 Weighted
                                Remaining     average                  Average
                   Number      contractual    exercise     Number       Exercise
Exercise Price  Outstanding    life (years)    price     exercisable    Price
--------------  -----------   -------------   --------   -----------   --------
  $.006           4,837,500       5.8         $  0.006    4,837,500     $ 0.006
  $.010             125,000       5.7         $  0.010      125,000     $ 0.010
  $.020           1,137,500       6.6         $  0.020      821,875     $ 0.020
  $.030           2,600,000       7.2         $  0.030    1,841,667     $ 0.030
                  ---------       ---         --------    ---------     -------
                  8,700,000       6.3         $  0.015    7,626,042     $ 0.013
                  =========       ===         ========    =========     =======

NOTE H - OTHER COMMITMENTS AND CONTINGENCIES

Operating Lease Commitments

We amended our operating  facility lease during late 2004. The amended operating
lease  agreement  expires on May 31,  2005 with an option to extend the lease an
additional one year at the same rental rate and if we relocate by the end of the
extended term which is June 1, 2006 to anywhere in Sarasota or Manatee counties,
the landlord will pay up to $65,000 of our tenant relocation expenses.  Prior to
August 26,  2003,  this  operating  facility  was leased from  Atlantic  Pacific
Corporation,  a related entity  controlled by the father of our Chief Scientific
Officer. Future minimum lease payments under this lease are $26,939 for 2005.

Rent expense  amounted to $64,653 and $107,689 for the years ended  December 31,
2004 and  December  31, 2003,  respectively.  The 2003 rent  expense  included a
charge of $41,865 that was for  renegotiating  the lease (prior lease expired in
2010) with Atlantic  Pacific  Corporation  (a related  entity  controlled by the
father of one of our major shareholders) and was paid by issuing common stock.

The above amounts are not necessarily indicative of the amounts which would have
been incurred had  comparable  transactions  been entered into with  independent
parties.

Obligations under Capital Leases

We  have  capitalized  rental   obligations  under  leases  of  equipment.   The
obligations, which mature in 2005 and 2006, represent the total present value of
future rental payments  discounted at the interest rates implicit in the leases.
Future minimum lease payments under capital leases are:

2005                                                  $  143,288
2006                                                     100,088
                                                      ----------
Total minimum lease payments                             243,376
Less amount representing interest                        (19,938)
                                                      ----------
Present value of net minimum lease payments              223,438
Less current portion                                    (128,128)
                                                      ----------
                                                      $   95,310
                                                      ==========

During 2004, we purchased, through a capital lease, computer equipment. In order
to qualify for the lease; the financing company required a letter of credit. Our
bank issued a letter of credit of  approximately  $20,129 and  required  that we
purchase a  certificate  of  deposit  in the amount of the letter of credit.  We
recorded  the  restricted  certificate  of  deposit in other  current  assets at
December 31, 2004.

Employment Agreement with Chief Scientific Officer

On May 8, 2001, we entered into an employment agreement with Tony Frudakis,  our
Chief Science  Officer.  The agreement runs for a term that commenced August 22,
2001 and expires  August 22,  2005,  subject to  extension  from year to year by
mutual  agreement.  Dr. Frudakis salary increased to $200,000  beginning May 27,
2004 with $60,000 being accrued and $140,000 being paid annually. The employment
agreement  also  permits  the  Board  of  Directors  to  authorize   payment  of
discretionary  bonuses or other benefits to Dr. Frudakis.  At December 31, 2004,
the deferred compensation for this executive is approximately $48,000.

Three Executive Officers

Beginning May 27, 2004,  the CEO's salary is $240,000 with $65,000 being accrued
and $175,000 being paid annually.  Beginning May 27, 2004, the COO/CFO's  salary
is $210,000  with  $63,000  being  accrued  and  $147,000  being paid  annually.
Beginning May 27, 2004,  the CMO's salary is $120,000 with $36,000 being accrued
and $84,000 being paid annually. At December 31, 2004, the deferred compensation
for these three executives is approximately $134,000.

<PAGE>

Scientific Advisory Board and Board of Consultant

Currently  we have  one  Scientific  Advisory  Board  member.  For the  services
performed by this member,  we are committed to issue 50,000 shares of our common
stock each through 2007. The other  Scientific  Advisory  Board member  resigned
during 2004. In prior years,  we also had another board of  consultants  member;
however, this member has not been active;  therefore,  no future compensation is
owed to him.

During June 2002,  we entered  into a two-year  agreement  with this  Scientific
Advisory  Board  member,  to  collaborate  with us to develop a kit product that
could be used to infer Ancestry Admixture Ratios in human beings. We have agreed
to compensate the consultant with quarterly payments of $4,000 and 50,000 shares
of our  common  stock  for the term of this  contract.  We have  also  agreed to
provide the consultant with a number of shares of our common stock equal to 2.5%
of the Net Revenues derived from a product  developed with his help. The term of
this  agreement  is two  years,  and the  parties  may  agree  to  renew  it for
consecutive two-year terms.

Consulting Agreements

Effective  September 28, 2004, we have entered into a letter  agreement with The
Wall Street  Group,  Inc.  ("WSG").  Pursuant to the letter  agreement,  we have
retained WSG as financial public relations counsel.  Under the letter agreement,
we will pay WSG a cash fee of  $7,500  per  month  and will  reimburse  them for
reasonable and customary  out-of-pocket  expenses. In addition, we will grant an
affiliate  of WSG a  five-year  option to  purchase as many shares of our common
stock as could be  purchased  on the open market for $100,000 at the closing bid
price on September 24, 2004. Either party may terminate the agreement on 90 days
written notice. Unless terminated,  the agreement will continue in force, and on
each anniversary of the agreement,  we will grant WSG or its affiliate a similar
option to purchase our common stock at our then-current trading price.

Litigation

We are  involved in certain  legal  actions  arising in the  ordinary  course of
business.  We are  defending  these  proceedings.  While it is not  feasible  to
predict or determine the outcome of these matters, we do not anticipate that any
of these matters or these matters in the aggregate will have a material  adverse
effect on our  business  or our  consolidated  financial  position or results of
operations.

NOTE I - OTHER RELATED PARTY TRANSACTIONS

Agreements with Directors

On February  26, 2002,  we agreed to pay one of our Board of  Directors  $20,000
annual  compensation  and  2,600,000 of stock  options for his Board of Director
services.  The options have an exercise price of $0.03 and expire in four years.
We recorded an expense associated with these services of $20,000 for each of the
years ended 2004 and 2003, respectively.

GenBiomics, LLC Consulting Agreement

A consulting agreement between GenBiomics, LLC and us was terminated on April 1,
2003.  The original  consulting  agreement was signed on May 17, 2002 and was an
agreement that we entered into for consultation and advice on the development of
our scientific and business  plans.  Since that time, two of GenBiomics  members
have agreed to become  executives in our Company and Board of Director  members,
and the prior consulting agreement was terminated.  At December 31, 2003, we had
accrued  $35,475  owed to  GenBiomics  for the  services  provided  prior to the
termination of this agreement and the $35,475 was paid during early 2004. During
2003 we recorded consulting expense related to this agreement of $10,000.

Rent negotiations

During the third quarter of 2004, we issued 1,522,364 shares of our common stock
to the  father of a  shareholder  as  payment  for the  $41,865  accrual  we had
recorded at December 31, 2003 for renegotiating our lease during 2003.

Bonus payment to executives

During 2004, we paid, in cash,  $920,000 of the  approximately  $1,219,000 bonus
owed to four of our executive management.  The remaining  approximately $299,000
was accrued at December 31, 2004.

Biofrontera loan

On December 28, 2004, we entered into a loan  agreement with  Biofrontera  AG, a
German  corporation  whereby  we  loaned  140,000  euros  to  Biofrontera.  This
converted to 193,426 US dollars at yearend. At December 31, 2004 we recorded the
loan of  $193,426  and  accrued  interest  of $257  for a  total  receivable  of
$193,683.  This note has a 12 % annual interest rate. The Interest and principal
payments  are due by  December  31,  2005.  During  2004,  we had an  investment
agreement  with  Biofrontera  to acquire a portion of their  company (see Note J
below). During February 2005, this investment agreement was terminated,  however
the loan  remains  outstanding  and the  terms of the loan  agreement  remain in
effect.

<PAGE>

NOTE J - INVESTMENT

Biofrontera Agreement

Effective  September  28, 2004,  we entered into an  Investment  Agreement  (the
"Biofrontera   Agreement")   with   Biofrontera   AG,   a   German   corporation
("Biofrontera") and the shareholders of Biofrontera. Pursuant to the Biofrontera
Agreement,   we  agreed  to  purchase  certain  Series  B  preferred  shares  of
Biofrontera.  The purchase of the shares would have given us an equity  interest
of  approximately  52% in  Biofrontera.  The purchase price of the shares was 20
million Euros, payable in installments.

In connection with the Biofrontera Agreement, we and Biofrontera  Pharmaceutical
GmbH, a  wholly-owned  subsidiary of  Biofrontera,  entered into a joint venture
framework agreement. The framework agreement outlines the procedures pursuant to
which  Biofrontera and we intend to exchange  proprietary  information and enter
into commercial  development activities with respect to projects that one or the
other party currently has under development.

This  transaction  was  conditioned  upon the  effectiveness  of a  registration
statement to be filed under the  Securities  Act of 1933 by us with respect to a
financing   agreement  with  Dutchess   Private  Equities  Fund,  II,  L.P.  The
Biofrontera Agreement provided that if the registration statement did not become
effective  on or before  February  7,  2005,  either  party had the  ability  to
terminate  the  Biofrontera   Agreement  without  liability.   The  registration
statement  had not become  effective  as of such date.  After  discussions  with
Biofrontera,  on February 18,  2005,  we  exercised  our right to terminate  the
Biofrontera Agreement.

We expensed $293,007 of costs that related to this transaction which is included
in other expenses on our consolidated statement of operations.

During 2004, we loaned monies to  Biofrontera.  At December 31, 2004,  this loan
receivable and accrued interest balance was $193,683. See Note I.

NOTE K- SUBSEQUENT EVENTS

Conversion of Debenture and Exercise of Warrants

From year end to  February  25,  2005,  LJCI  converted  $29,000 of  convertible
debentures  into our  common  stock and  exercised  non-detachable  warrants  to
purchase 435,000 shares of our common stock. This combined  transaction resulted
in our reducing the prepayment for future  exercises of warrants by $255,000 and
receiving $169,110 of cash which is net of approximately  $10,800 stock issuance
costs. We issued 58,332,817  shares of our common stock.  Early in 2004, we also
issued the  9,009,191  shares of stock to LJCI that was unissued at December 31,
2004 (see Note G above).

On January 7, 2005, the Board of Directors granted  20,000,000  million of stock
options to employees  for  services  already  performed at an exercise  price of
$0.03 per share. Since the exercise price exceeds the quoted market price of our
common  stock  on  the  grant  date,  the  intrinsic  value  is  $-0-,  thus  no
compensation expense will be recognized in 2005 for these options.

During February 2005, the investment  agreement with Biofrontera was terminated,
however the loan remains  outstanding and the terms of the loan agreement remain
in effect.

<PAGE>

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

None.

ITEM 8A. CONTROLS AND PROCEDURES

Under the supervision and with the  participation  of management,  including the
CEO  and  CFO,  we  conducted  an  evaluation  of our  disclosure  controls  and
procedures,  as such term is defined under Rule 13a-15(e)  promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of December
31,  2004.  Based  on this  evaluation,  our  principal  executive  officer  and
principal   financial  officer  concluded  that  our  disclosure   controls  and
procedures are effective.

There have been no significant  changes in the Company's internal controls or in
other factors that could  significantly  affect these controls subsequent to the
date of their evaluation.

ITEM 8B. OTHER INFORMATION

None.

                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
With Section 16(a) of the Exchange Act.


Our  directors  are elected at our annual  meetings by a plurality of the shares
represented  and our officers  serve at the pleasure of the Board of  Directors.
Our current officers and directors are:

        Name           Age                     Position
        ----           ---                     --------
Tony Frudakis           37      Director, Secretary, Chief Scientific Officer
Richard Gabriel(2)      56      Director, Chief Executive Officer, President
Hector Gomez            65      Director, Chief Medical Officer
Monica Tamborini(3)     48      Chief Financial Officer, Chief Operating Officer

(2) Married to Monica Tamborini
(3) Married to Richard Gabriel

Dr.  Frudakis  has  served  on our  board  and has  been an  officer  since  our
inception. Dr. Gomez has served as a director since 2002 and as an officer since
May of 2003.  Mr.  Gabriel has served as a director since 2002 and as an officer
since March of 2003. Ms. Tamborini has been an officer since May of 2003.

Tony  Frudakis,  Ph.D.  Dr.  Frudakis,  our founder,  has been with us since the
Company's inception. He has served in many capacities,  including CEO/President.
Dr. Frudakis now serves as Chief Scientific Officer (CSO) and is responsible for
executing research and development goals and objectives,  under the direction of
the Board of Directors. As a member of the Board of Directors, Dr. Frudakis also
participates  in strategic  planning,  concentrating  on his field of expertise,
biologic and genomics science and innovation.

Prior to DNAPrint  genomics,  Inc.,  Dr.  Frudakis  founded GAFF  biologic,  our
predecessor in interest, in 1998. He served as its President and Chief Executive
Officer.  Early in his career,  Dr. Frudakis was a research scientist for Corixa
Corporation.  While at  Corixa  he  developed  several  new  techniques  for RNA
fingerprinting, managed and executed high-throughput gene discovery programs for
various  cancers  and  was  instrumental  in  the  company's  early  success  in
attracting research and development partners. In all, his work has resulted in a
patent portfolio for over 350 unique genes and 2 products.

Richard  Gabriel.  Mr.  Gabriel  joined  us in 2002 as a member  of our Board of
Directors.  As Chief  Executive  Officer  (CEO),  he, along with our other Board
members,  formulates and communicates strategic direction.  He continues in that
capacity and in addition,  in March of 2003,  he agreed to join us as President.
In his role as  President,  Mr.  Gabriel is  responsible  for and  oversees  all
aspects of the organization.

Prior to joining us, Mr. Gabriel consulted for several start-up  companies while
working as a partner at Genbiomics, LLC and as head of Life Sciences Practice at
Semaphore,  Inc. From 1998 until 2001,  Mr.  Gabriel  served as Chief  Executive
Officer  and  President  of  Calix  Corporation,  parent  company  to  Pharm-Eco
Laboratories,  Inc.  He was one of five Core Team  Members  that set the overall
strategic   direction  for  Pharm-Eco   Laboratories,   Inc.  and  helped  guide
Pharm-Eco's high  performance  self-directed  organization.  He obtained his MBA
from Suffolk University's Executive MBA Program,  Boston,  Massachusetts in 1985
and his B.S. in Chemistry from Ohio Dominican College, Columbus, Ohio in 1978.

<PAGE>

Hector  Gomez MD, Ph.D.  Dr.  Gomez has served on our board of  directors  since
March 1, 2002 and serves as Chairman of the Board. In addition,  in May of 2003,
Dr. Gomez agreed to join us as Chief Medical Officer (CMO). In this capacity, he
is  responsible  for overseeing  and managing our efforts to  commercialize  our
pharmacogenomic products.

From  2001  to  2002,  he  was  Chief  Executive  Officer  of  Zengen,  Inc.,  a
biotechnology  company.  From 2000 to 2001,  he was Chief  Executive  Officer of
Nutri Logics, Inc., a consumer products company.  Prior to joining Nutri Logics,
from 1994 to 1999, he was Chief Executive Officer of Transcend  Therapeutics,  a
biotechnology  company.  Concurrent with these positions,  since 1999, Dr. Gomez
has served as a Clinical Associate Professor of Pharmacology and Medicine at the
University  of South  Florida,  College of  Medicine  (voluntary  faculty).  His
research   career  to  date  has  focused  on  the  clinical   pharmacology   of
Hypertension, Hypokalemia,  Hyperglycemia,  Hyperuricemia and Hypercholesteremia
drugs.

Monica  Tamborini.  In May of 2003, Ms.  Tamborini  joined us as Chief Financial
Officer (CFO) and Chief Operating Officer (COO). As CFO, Ms. Tamborini  oversees
and manages all accounting functions,  including financial reporting, as well as
helping  to  obtain  outside  capital  to fund our  operations.  As COO,  she is
responsible  for seeing that operations run efficiently and effectively and that
we have the  necessary  personnel  and  infrastructure  required  to execute the
Board's strategic plan of operations.

Prior to joining us, Ms.  Tamborini had served in  controller  and CFO positions
since  1988.  From 1992 to 2001,  she was CFO for Calix Corp and its  subsidiary
Pharm-eco Laboratories. Ms. Tamborini was also one of the five core team members
for  Pharm-eco  Laboratories  that set the overall  strategic  direction  of the
company. Her main focus was operations and finance.  From 2001 through 2003, Ms.
Tamborini was not employed.

Ms. Tamborini serves on our audit committee and has been designated by our Board
of Directors as our Audit Committee Financial Expert. Ms Tamborini, in the Board
of Directors'  opinion,  has the required  experience to serve in this capacity.
She  has an  understanding  of  generally  accepted  accounting  principles  and
financial  statements  and has the ability to assess the general  application of
such  principles in connection  with the accounting for estimates,  accruals and
reserves.  She  also  has  over 20 years  experience  preparing  and  evaluating
financial  statements  that had a breadth and level of  complexity of accounting
issues that are  generally  comparable  to the breadth and  complexity of issues
that can  reasonably be expected to be raised by our financial  statements.  She
has an understanding of internal controls and procedures for financial reporting
and an understanding of audit committee  functions.  Because of her positions as
chief  operating  officer and chief  financial  officer,  Ms.  Tamborini  is not
"independent" with respect to the Company.

The other member on the audit committee is Hector Gomez. Because of his position
as chief medical  officer,  Dr. Gomez is not  "independent"  with respect to the
Company.

Section 16(a) Beneficial Ownership Reporting Compliance

The following table sets forth the names, number of late reports; number of late
reported  transactions  and known that  failures to file a required  report with
respect  to  required  filings  under  Section  16(a)  the  Exchange  Act by our
officers, directors and stockholders.

    Name               Late Reports        Transactions        Known Failure
------------           ------------        ------------        -------------
Hector Gomez                2                   3                    0


Code of Ethics

We have  adopted  a code of  ethics  that  applies  to our  principal  executive
officer, principal financial officer and our accountant. The text of the code of
ethics is available for public  viewing at our website at  www.dnaprint.com.  In
addition, we will briefly describe on our website the nature of any amendment to
our code of ethics and the nature of any  waiver of a  provision  of our code of
ethics,  the name of the person to whom the waiver was granted,  and the date of
the waiver.

Item 10. Executive Compensation.

The  compensation  and awards that have been earned by our executives are listed
below.

<PAGE>


                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                         Restricted
                                                                            Stock            All Other
Name and Principal Capacity             Year            Salary            Awards(4)        Compensation(5)
---------------------------             ----            ------            ---------        ---------------
<S>                                 <C>               <C>               <C>                <C>
Richard Gabriel(6)                        2002        $      --         $         --       $           --
Director, Chief Executive                 2003               --              870,000(7)           444,808
Officer , President                       2004          148,615(13)               --              (56,646)

Hector Gomez, M.D., Ph.D.(14)             2002        $      --         $         --       $       20,000
Director, Chairman of the                 2003               --              725,000(8)           277,988
Board, Chief Medical Officer              2004           74,678(13)               --               28,664

Tony Frudakis, Ph.D.(9)                   2002        $ 130,000         $         --       $           --
Chief Scientific Officer,                 2003          130,000              870,000(10)          307,888
Director, Secretary                       2004          183,010(13)               --               (8,488)

Monica Tamborini(11)                      2003        $      --         $    580,000(12)   $      257,372
Chief Financial Officer,                  2004          130,132(13)               --                9,280
Chief Operations Officer
</TABLE>


(4) The dollar value of the restricted  stock is calculated by  multiplying  the
closing  market price of our  unrestricted  stock on the date of grant,  May 16,
2003,  by the  number of shares  awarded as  required  in  instructions  to Item
402(b)(2)(iii)(C).  For book purposes, the value is calculated by applying a 15%
discount on the closing price.

(5)  Because  the  grantees  can not sell their  stock for cash to cover the tax
liability that will be due, we agreed to cover the tax liability associated with
the stock grant in cash by the date that the tax will be due by the grantee. The
table  reflects  amounts that were earned in 2003 and 2004, but paid in 2004 and
2005,  respectively.  The 2004 amounts also  reflect an  adjustment  to this tax
liability for these executives.  Dr. Gomez's 2002, 2003 and 2004 amounts include
$20,000 of additional compensation.

(6) Mr. Gabriel  joined our Board of Directors  during 2002 and became our Chief
Executive Officer and President in 2003.

(7)  Calculated on 30,000,000  shares at a price of .029, the close price of the
stock on May 16, 2003, the date the award was granted by the Board of Directors.

(8)  Calculated on 25,000,000  shares at a price of .029, the close price of the
stock on May 16, 2003, the date the award was granted by the Board of Directors.

(9) Dr.  Frudakis has been with us since  inception and has held many titles and
positions  during that time  including CEO,  President and CFO. Dr.  Frudakis is
currently our CSO.

(10) Calculated on 30,000,000  shares at a price of .029, the close price of the
stock on May 16, 2003, the date the award was granted by the Board of Directors.

(11) Ms. Tamborini joined us in 2003.

(12) Calculated on 20,000,000  shares at a price of .029, the close price of the
stock on May 16, 2003, the date the award was granted by the Board of Directors.

(13) The  executives  deferred  part of their 2004 salary.  The deferred  salary
amounts included in the 2004 amounts above were $54,170 for Mr. Gabriel, $29,231
for Mr. Gomez, $48,346 for Mr. Frudakis and $50,763 for Ms. Tamborini.

(14) Dr. Gomez  joined our Board of  Directors  during 2002 and became our Chief
Medical Officer in 2003.

Employment Agreements

On May 8, 2001, we entered into an Employment Agreement with Tony Frudakis,  our
Chief  Scientific  Officer.  The Agreement runs for a term that commenced August
22, 2001 and expires August 22, 2005,  subject to extension from year to year by
mutual  agreement.  The Agreement  provided a base salary of $95,000 per year to
Dr.  Frudakis.  We  increased  this  salary  to  $130,000  per  year in 2001 and
increased  to  $200,000  with  $140,000  being  paid in cash and  $60,000  being
deferred  during May 2004.  Our Board of Directors  may increase the salary from
time to time in its discretion.  The Employment Agreement also permits the Board
of Directors to pay  discretionary  bonuses or other  benefits to Dr.  Frudakis.
Upon  termination  of  employment,  the Agreement  prohibits  Dr.  Frudakis from
competing with the Company for a period of two years in the state of Florida. On
November 30, 2001, we also entered into a Performance  Stock  Agreement with Dr.
Frudakis that requires us to grant him 30 million shares of our restricted stock
upon  achieving  certain  milestones.  The Board of Directors  renegotiated  the
milestones  in  light  of  changes  in  the  Company's   operational   strategy.
Thereafter, Dr. Frudakis met the milestone and we granted the stock in 2003.

In May 2003,  we  entered  into  one-year  employment  agreements  with  Richard
Gabriel,  Hector Gomez, and Monica  Tamborini.  These  agreements  automatically
extend for unlimited successive one-year periods unless terminated in accordance
with the agreement. As consideration for the first year of employment, we agreed
to issue,  at no cost to the  executives,  a total of  75,000,000  shares of our
common  stock,  and to pay the related  federal and state income taxes they will
incur as a result of these  stock  grants.  The  Agreements  prohibit  them from
competing  with us for a period of two  years  from the date of  termination  or
leaving our employ.  During May 2004,  the  agreements  were renewed,  and these
executives  began  receiving a salary.  Beginning  May 2004,  Richard  Gabriel's
annual  salary is $210,000  with  $147,000  paid in cash and  $63,000  deferred;
Hector  Gomez's  annual salary is $120,000 with $84,000 paid in cash and $36,000
deferred; and Monica Tamborini's annual salary is $240,000 with $175,000 paid in
cash and $65,000 deferred.

Compensation of Directors

On February 22, 2002, we entered into an agreement with Dr. Gomez when he joined
our board of directors. In consideration of Dr. Gomez' agreement to serve on the
Board of Directors,  we granted him options to purchase  2,600,000 shares of our
stock at an exercise  price of $0.03 per share.  The options vest ratably over a
period of four years from the date of the  contract.  As of December  31,  2004,
approximately  1,841,667 options to purchase shares had vested, and none of such
options had been exercised.  In addition, we agreed to pay him a cash director's
fee of $20,000 per year.

<PAGE>

                       FISCAL 2004 YEAR-END OPTION VALUES

                Number of Securities Underlying        Value of Unexercised
                Unexercised Options at December      In-The-Money Options at
                       December 31, 2004              December 31, 2004 (13)
                -------------------------------   ------------------------------
Name              Exercisable    Unexercisable      Exercisable   Unexercisable
---------         -----------    -------------      -----------   -------------

Hector Gomez        1,841,667          758,333      $        --   $         --

There were no options exercised during fiscal year 2004.

(13) Since the exercise  price of $0.03  exceeds the closing  price of $0.011 on
December 31, 2004 there is no value  associated  with these  options at December
31, 2004.

Item 11.  Security  Ownership of Certain  Beneficial  Owners and  Management and
Related Stockholder Matters.


The  following  table sets forth,  as of February 28, 2005  certain  information
concerning  beneficial  ownership  of shares  of our  stock and the  approximate
percentage of shares of our stock owned by (i) each person known to us to own 5%
or more of the  outstanding  shares of stock,  (ii) each  director and executive
officer, and (iii) all directors and executive officers as a group.

<PAGE>


                Name And Address Of           Amount Of           Percentage Of
Title Of Class  Beneficial Owner(14)      Beneficial Ownership      Class (15)
--------------  --------------------      --------------------    -------------
Common          Tony Frudakis                   61,256,579              6.09%
Common          Richard Gabriel                 30,000,000              2.98%
Common          Hector Gomez                    27,178,333(16)          2.69%
Common          Monica Tamborini                20,000,000              1.99%
Common          Directors and Officers
                  as a Group (4 persons)       138,434,912             13.73%

(14) Unless otherwise noted, c/o DNAPrint  genomics,  Inc., 900 Cocoanut Avenue,
Sarasota, FL 34236.

(15)  Percentage of ownership is based on  1,006,516,261  shares of Common Stock
outstanding at February 28, 2004.

(16)  Represents  25,120,000  shares  directly  owned by Dr. Gomez and 2,058,333
shares which may be acquired within 60 days by exercise of options.


Securities Authorized for Issuance Under Equity Compensation Plans

The  following  table sets forth certain  information,  as of December 31, 2004,
with  respect  to  compensation   plans   (including   individual   compensation
arrangements) under which our equity securities of the registrant are authorized
for issuance.


<TABLE>
<CAPTION>
                                                                                    Number of securities
                              Number of securities     Weighted-average       remaining available for future
                                 to be issued         exercise price of           issuance under equity
                               upon exercise of          outstanding                compensation plans
                             outstanding options,     options, warrants      (excluding securities reflected
                             warrants and rights          and rights                  in column (a))
                             ---------------------   -----------------       --------------------------------
<S>                             <C>                       <C>                      <C>
Equity compensation plans               0                       N/A                           0
  approved by security
  holders
Equity compensation plans       8,700,000                 $    0.015                 37,612,500
  not approved by security
  holders
Total                           8,700,000                 $    0.015                 37,612,500
</TABLE>


<PAGE>

The  material  features  of  the  equity  compensation  plans  reflected  in the
foregoing table are described in Note G to our financial statements contained in
Item 7 of this Annual Report on Form 10-KSB,  under the caption  "Employee Stock
Options and Awards."

Item 12. Certain Relationships and Related Transactions.

Until  August  2003,  we leased  our  principal  office  from  Pacific  Atlantic
Corporation,  a corporation  controlled by George  Frudakis,  the father of Tony
Frudakis.  On October 15, 2001, we signed a lease for this space.  The lease ran
for 10 years at $5,333 per month plus  increases  annually based on increases in
the Consumer Price Index.  In June of 2003, we renegotiated  the lease.  The new
two year  operating  lease  expires on May 31, 2005 with an option to extend the
lease an  additional  five years at monthly rent of  approximately  $5,400.  The
building was sold to JSD Sarasota, LLC on August 26, 2003.

In connection with the renegotiation of the lease, we agreed to pay Mr. Frudakis
an amount equal to 6 months rent, payable in our common stock. On July 28, 2004,
we issued  1,522,364  shares of our common stock in exchange for a charge valued
at $41,900 for renegotiating our building lease. These shares were issued to Mr.
Frudakis,  an accredited and sophisticated  investor. We believe the transaction
was exempt from  registration  under Section 4(2) of the  Securities Act of 1933
and Rule 506 promulgated thereunder.

In February 2002, we entered into a funding  agreement with 4 shareholders,  one
of whom is Dr.  Tony  Frudakis,  our Chief  Scientific  Officer,  and one of our
directors,  and another of whom is George Frudakis,  Dr. Frudakis' father. These
shareholders  initially  agreed to loan us  $2,000,000  between  March  2002 and
December 2002.  These loans were to be repaid along with all accrued interest at
8% on January 31, 2003.  In June 2002,  we elected to satisfy  $509,160 of these
notes through the issuance of 14,547,355 shares of our common stock.

During  October  2002 the terms of this  agreement  were  modified,  effectively
terminating  the  participation  of  two of the  shareholders.  Pursuant  to the
amended  agreement,  the remaining two shareholders  (including Dr. Frudakis and
Mr.  Frudakis)  agreed to loan us $1,000,000  between December 2002 and December
2003.  These loans were scheduled to mature,  along with all accrued interest at
8%, on December 31, 2003. In the event of our default,  the lenders' only remedy
is to require us to issue shares of our stock as consideration  for satisfaction
of the debt. The number of shares to be issued for satisfaction of the debt will
be based on a price of $.035  per  share if the  weighted  average  price of our
stock is $.05 per share or above; alternatively if the weighted average price of
our shares is less than $.05, the number of shares due will be calculated  using
a 40% discount to the market price.  Notwithstanding  this, in no event will the
shares to be issued under this arrangement be based on a price of less than $.01
per share.

During 2004, the Company paid $75,000 to George Frudakis to pay the principal of
approximately   $45,000,   accrued   interest   of   approximately   $4,000  and
approximately $26,000 was recorded as other expense to satisfy in full any other
claims related to his note and funding agreement.

Also,  during 2004,  the note to Tony Frudakis was reduced by a $38,068  payment
made to him by making payments on his behalf to third parties. During late 2004,
Tony Frudakis and we agreed to extend the funding  agreement  with him under the
same terms until  December 31, 2005 with an additional  provision that if we are
in  default  of the  note,  then the only  recourse  to pay the note is with our
stock.  At December 31, 2004,  our notes payable to Tony Frudakis have a balance
of $215,034.

We agreed to pay one of our directors,  Hector Gomez,  $20,000  annually for his
role as Chairman of our Board of  Directors.  In  addition,  he has an option to
purchase 2,600,000 shares of our common stock at an exercise price of $0.03. The
options vest monthly over four years.

On April 1, 2003, we terminated a consulting  agreement with GenBiomics,  LLC, a
company in which Mr. Gabriel and Dr. Gomez were members. The original consulting
agreement was signed on May 17, 2002. Since that time, Mr. Gabriel and Dr. Gomez
agreed to become officers and directors of the Company.  As a result,  the prior
consulting  agreement  was  terminated.   During  2003  and  2002,  we  recorded
consulting   expense   related  to  this   agreement  of  $10,000  and  $41,250,
respectively.

On December 28, 2004, we entered into a loan  agreement with  Biofrontera  AG, a
German  corporation  whereby  we  loaned  140,000  euros  to  Biofrontera.  This
converted  to 193,426 US dollars at year end. At  December  31, 2004 we recorded
the loan of $193,426  and accrued  interest  of $257 for a total  receivable  of
$193,683.  This note has a 12 % annual interest rate. The Interest and principal
payments  are due by  December  31,  2005.  During  2004,  we had an  investment
agreement  with  Biofrontera  to  acquire a  portion  of their  company.  During
February  2005,  this  investment  agreement  was  terminated,  however the loan
remains outstanding and the terms of the loan agreement remain in effect.

<PAGE>

Item 13. Exhibits.


3     Articles of Amendment to the Articles of Incorporation

10.1  Supply & License Agreement+

10.2  Agreement & Plan of exchange  between  Catalyst  Communications,  Inc. and
      DNAPrint Genomics, Inc. and Shareholders+

10.3  Equipment  Agreement dated September 19, 2001 between Orchid  Biosciences,
      Inc. and the Company. ++

10.4  Purchase  Agreement dated  September 19, 2001 between Orchid  Biosciences,
      Inc. and the Company. ++

10.5  Employment  Agreement  dated May 8, 2001  between  Tony  Frudakis  and the
      Company. ++

10.6  Lease  Agreement   dated  October  15,  2001  between   Pacific   Atlantic
      Corporation and the Company. ++

10.7  Option Agreement dated September 19, 2001 between Orchid Biosciences, Inc.
      and the Company.++

10.8  Equipment Lease  Agreement dated May 18, 2001 between Orchid  Biosciences,
      Inc. and the Company.+++

10.9  Funding and Stock Subscription  Agreement dated June 8, 2001 between Tampa
      Bay Financial, Inc. and the Company.+++

10.10 Consulting and Marketing  License  Agreement  between the Company and Mark
      Neuhaus.&

10.11 Agreement dated February 22, 2002, among the Company, Tampa Bay Financial,
      Inc., Carl Smith, Mathew Veal, and the Company.&&

10.12 Contract  Genotyping  Agreement dated January 15, 2002 between the Company
      and GenoMed LLC.&&

10.13 Funding Agreement dated February 22, 2002 among the Company Tony Frudakis,
      George Frudakis, Carl Smith Iii, and Richard Craig Hall. &&

10.14 Performance  Stock  Agreement  dated November 30, 2001 between the Company
      and Tony Frudakis. &&

10.15 Consulting  Agreement dated February 24, 2002 between the Company and Jack
      Luchese. &&

10.16 Stock Purchase Option dated February 25, 2002 between the Company and Jack
      Luchese. &&

10.17 Consulting  Agreement  dated June 12, 2002  between  Mark  Shriver and the
      Company. &&&

10.18 Letter of  Commitment  between Mark Shriver and the  Company's  Scientific
      Advisory Board. &&&

10.19 Agreement between Startup Florida and the Company. &&&

10.20 Service Agreement dated April 15, 2002 between Altura LLC and the Company.
      &&&

10.21 License Agreement between Penn State Research  Foundation and the Company.
      &&&
<PAGE>

10.22 Private Placement Agreement between John Oskarep and the Company. &&&

10.23 Consulting  Agreement  dated May 17, 2002 between  Genbiomics  LLC and the
      Company. &&&

10.24 Amendment to Consulting  Agreement between  Genbiomics LLC and the Company
      dated May 31, 2002. &&&

10.25 Amendment to  Consulting  Agreement  between Mark Shriver and the Company.
      &&&

10.26 Funding Agreement between Tony Frudakis, George Frudakis and the Company.#

10.27 Employment Agreement between the Company and Richard Gabriel. ##

10.28 Employment Agreement between the Company and Monica Tamborini. ##

10.29 Employment Agreement between the Company and Hector Gomez. ##

10.30 Termination Agreement between the Company and Genbiomics, LLC. ###

10.31 Lease  between  Florida West  Construction  dba Pacific  Atlantic Corp and
      DNAPrint genomics, Inc. ###

10.32 Amendment to Consulting Agreement between DNAPrint genomics, Inc. and Mark
      Neuhaus. ###

10.33 Conversion Agreement between the Company and Jack Luchese. ##

10.34 Amendment to Funding  Agreement between DNAPrint  genomics,  Inc. and Tony
      Frudakis.*

10.35 Securities Purchase Agreement with La Jolla*

10.36 Registration Rights Agreement with La Jolla*

10.37 Convertible Debenture with La Jolla*

10.38 Warrant with La Jolla*

10.39 Letter Agreements with La Jolla*

10.47 Investment Agreement between the Company and Biofrontera AG. **

10.48 Joint  Venture  Framework  Agreement  between the Company and  Biofrontera
      Pharmaceutical GmbH. **

10.49 Investment  Agreement  between the Company and Dutchess  Private  Equities
      Fund, II, L.P. **

10.50 Registration  Rights  Agreement  between the Company and Dutchess  Private
      Equities Fund, II, L.P. **

10.51 Letter Agreement between the Company and The Wall Street Group, Inc. **

31.1  Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer, Richard
      Gabriel

31.2  Rule 13a-14(a)/15d-14(a)  Certification of Chief Financial Officer, Monica
      Tamborini

32.1  Section 1350 Certification, Richard Gabriel

32.2  Section 1350 Certification, Monica Tamborini


+     Incorporated by reference from Form 8-K, filed November 6, 2000.

++    Incorporated by reference from Form 10-KSB, filed April 2, 2001.

+++   Incorporated by reference from Form 10-QSB, filed August 15, 2001.

&     Incorporated by reference from Form 10-QSB, filed November 15, 2001.

&&    Incorporated by reference from Form 10-KSB, filed April 9, 2002.

&&&   Incorporated by reference from Form 10-QSB, filed August 14, 2002.

#     Incorporated by reference from Form 10-QSB, filed November 14, 2002.

##    Incorporated by reference from Form 10-QSB, filed August 15, 2003.

###   Incorporated by reference from Form 10-QSB, filed November 14, 2003.

*     Incorporated by reference from Form S-2, filed December 15, 2003.

**    Incorporated by reference from Form 8-K, filed October 5, 2004.
<PAGE>

Item 14. Principal Accountant Fees and Services.

The audit committee approved Pender, Newkirk and Company to render the audit for
the 2004 fiscal year and to prepare the 2002 and 2003 tax returns.

Audit Fees

During 2003, we were billed by Kingery,  Crouse and Hohl,  approximately $17,000
for audit and review fees  associated  with our 10-QSBs and 10-KSB  filings.  In
addition  during 2003,  we were billed by Pender,  Newkirk and Company,  our new
accountants,  approximately  $49,000 for audit and review fees.  During 2004, we
were  billed by  Kingery,  Crouse and Hohl,  approximately  $1,000  and  Pender,
Newkirk and Company billed $59,000 for audit and review fees associated with our
10-QSBs and 10-KSB.

Audit related fees

None.

Tax Fees

During 2003,  we were billed  approximately  $1,400 by our  accountants  Pender,
Newkirk and Company for the tax services that they  supplied us. These  services
did not  include  the  preparation  and  filing  of our 1120 tax  forms  but for
researching  other tax issues as  requested by us.  During 2004,  we were billed
approximately  $3,945  by  our  accountants  Pender,  Newkirk  and  Company  for
preparing 2002 and 2003 tax returns.

All Other Fees

None.

<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.

         DNAPrint genomics, Inc.

         By: /s/ Richard Gabriel
             ----------------------------------
                 Richard Gabriel, CEO, Director
         Date:   March 31, 2005

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

       SIGNATURE                   TITLE                 DATE
       ---------                   -----                 ----

/s/ Richard Gabriel            CEO/President,       March 31, 2005
--------------------           Director
    Richard Gabriel

/s/ Monica Tamborini           CFO                  March 31, 2005
--------------------
    Monica Tamborini

/s/ Hector Gomez               Director             March 31, 2005
--------------------
    Hector Gomez

/s/ Tony Frudakis              Director             March 31, 2005
--------------------
    Tony Frudakis