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

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

                    For the fiscal year ended: July 31, 2008

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

       For the transition period from _______________ to ________________

                         Commission file number 0-11485

                         ACCELR8 TECHNOLOGY CORPORATION
                  --------------------------------------------
                 (Name of small business issuer in its charter)

           Colorado                                         84-1072256
           --------                                         ----------
(State or other jurisdiction of                (I.R.S. Employer incorporation or
         organization)                                  Identification No.)

              7000 North Broadway, Building 3-307, Denver, CO 80221
              -----------------------------------------------------
                    (Address of principal executive offices)

                    Issuer's telephone number: (303) 863-8088

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

                           Common Stock, no par value
                           --------------------------
                                (Title of class)

Securities registered pursuant to Section 12(g) of the Exchange Act:  None.

Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not 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. [ ]

The Registrant's revenues for the fiscal year ended July 31, 2008 were $475,520.


<PAGE>


The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of October 16, 2008 was approximately $27,953,986 based upon the
last reported sale on that date. For purposes of this disclosure, Common Stock
held by persons who hold more than 5% of the outstanding voting shares and
Common Stock held by officers and directors of the Registrant have been excluded
in that such persons may be deemed to be "affiliates" as that term is defined
under the rules and regulations promulgated under the Securities Act of 1933, as
amended. This determination is not necessarily conclusive.

The number of shares of the Registrant's Common Stock outstanding as of October
16, 2008 was 10,226,210.

Documents incorporated by reference None

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


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                                TABLE OF CONTENTS

                                                                            PAGE
PART I

     Item 1.   Description of Business........................................3

     Item 2.   Description of Property.......................................20

     Item 3.   Legal Proceedings.............................................20

     Item 4.   Submission of Matters to a Vote of Security Holders...........20

PART II

     Item 5.   Market for Common Equity and Related Stockholder Matters
                   and Small Business Issuer Purchase of Equity Securities...20

     Item 6.   Management's Discussion and Analysis or Plan of Operation.....21

     Item 7.   Financial Statements..........................................30

     Item 8.   Changes in and Disagreements with Accountants on
                   Accounting and Financial Disclosure.......................30

     Item 8A.  Controls and Procedures.......................................31

     Item 8B.  Other Information.............................................31

PART III

     Item 9.   Directors, Executive Officers, Promoters, Control Persons and
                   Corporate Governance; Compliance With Section 16(a) of the
                   Exchange Act..............................................31

     Item 10.  Executive Compensation........................................35

     Item 11.  Security Ownership of Certain Beneficial Owners and
                    Management and Related Stockholder Matters...............43

     Item 12.  Certain Relationships and Related Transactions, and
                    Director Independence....................................44

     Item 13.  Exhibits......................................................45

     Item 14.  Principal Accountant Fees and Services........................45

SIGNATURES...................................................................47

Financial Statements........................................................F-1

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



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FORWARD-LOOKING STATEMENTS

         This Annual Report on Form 10-KSB contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act") and Section 21E of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the Company, as defined below,
intends that such forward-looking statements be subject to the safe harbors
created thereby. These forward-looking statements include the plans and
objectives of management for future operations, including plans and objectives
relating to the products and future economic performance of the Company. The
forward-looking statements included herein are based on current expectations
that involve a number of risks and uncertainties. These forward-looking
statements are based on assumptions that the Company will retain key management
personnel, that the Company's operating expenses will not materially increase,
BD (as defined below) will exercise its option to acquire the BACcelr8r, and
that there will be no material adverse change in the Company's operations or
business. Assumptions relating to the foregoing involve judgments with respect
to, among other things, future economic, competitive and market conditions and
future business decisions, all of which are difficult or impossible to predict
accurately and many of which are beyond the control of the Company. Although the
Company believes that the assumptions underlying the forward-looking statements
are reasonable, any of the assumptions could prove inaccurate and, therefore,
there can be no assurance that the results contemplated in forward-looking
information will be realized. Although management believes that the assumptions
underlying the forward-looking statements are reasonable, any of the assumptions
could prove inaccurate and, therefore, there can be no assurance that the
results contemplated in forward-looking information will be realized. We
undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In addition, as disclosed elsewhere in this Annual Report, the business and
operation of the Company are subject to substantial risks that increase the
uncertainty inherent in such forward-looking statements. In light of the
significant uncertainties inherent in the forward-looking information included
herein, the inclusion of such information should not be regarded as a
representation by the Company or any other person that the objectives or plans
of the Company will be achieved.


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<PAGE>


                                     PART I

Item 1.  Description of Business

History and Development of the Company

         Accelr8 Technology Corporation ("Accelr8" or "the Company"), a Colorado
corporation, was incorporated on May 26, 1982. The Company's office and
laboratory are located at 7000 North Broadway, Building 3-307, Denver, Colorado
80221, and our telephone number is 303-863-8088.

         On January 18, 2001, we acquired the OpTest portfolio of technologies
("OpTest") from DDx, Inc. ("DDx"). Since the acquisition of the OpTest assets,
we have focused primarily upon furthering the research and development of the
acquired technologies, and the development of revenue producing products related
to that technology. The purchase of OpTest provided us with a proprietary
surface chemistry formulation and quantitative bio-analytical measurement
instruments. We have supplemented these assets to develop the BACcel(TM)
technology platform for applications related to rapid identification of bacteria
and their antibiotic resistance.

         Before our acquisition of OpTest, we provided software tools and
consulting services for system modernization solutions for Digital Equipment
Corporation's VMS legacy systems. On July 30, 2004, we completed the sale of the
assets related to the software business.

Business Strategy

         Our vision is to develop and commercialize an innovative, integrated
system to rapidly identify bacteria and their mechanisms of antibiotic
resistance in critically ill patients. Our business strategy for primary
products in vertical markets is to prove the validity of our technology and
recruit an industry leader as a commercial partner or licensee. We also plan to
spin off specific OEM technology components through additional licenses
applications that do not compete with our platform licensees.

         We envision our continuing role as licensor and alliance partner as one
of leading the technical development of new technology, validating the
application methods, expanding platform applications, and integrating additional
capabilities into our proprietary platforms.

Application:  Hospital-Acquired Infection (HAI)

         Every 6 minutes another American dies from a hospital-acquired
infection (HAI). The US Centers for Disease Control and Prevention estimates
that 98,987 HAI fatalities occur annually that are attributable to bacterial
infections acquired in a US healthcare facility. HAI occurs when a patient
enters the hospital for some reason other than an infectious disease, then
contracts infection more than two days after admission. The HAI mortality rate


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is more than double that from auto fatalities, far more than any type of cancer
except lung cancer, and more than seven and one-half times that from AIDS.
Despite intensive efforts to improve prevention and care, the mortality rate has
remained the same for more than ten years.

         Yet, in theory, none of these patients should die. An effective
antibiotic exists for almost every one of them. Even though bacterial strains
exist that resist any particular drug, strains that resist all antibiotics
remain fortunately rare.

         Lab delay is a major culprit. Medical experts believe that inadequate
initial therapy substantially elevates the risk of severe morbidity and
mortality in critically ill patients. For critically ill patients, the physician
must start antibiotics within 2-4 hours of symptom onset. But lab cultures
typically take 2-3 days to identify organisms and assess their antibiotic
susceptibility. The physician has no choice but to start therapy without knowing
the organism or its drug susceptibility. Most often, the physician must choose a
combination of two or three broad-spectrum antibiotics, based on the patient's
history, clinical indicators, and the hospital's recent history of antibiotic
effectiveness in similar infections. Unfortunately, widespread and increasingly
complex multiple antibiotic resistance causes such empiric therapy to prove
inadequate in 20% to 40% of cases.

         Further, switching to adequate therapy as soon as the next day fails to
improve outcomes. Once an infection passes a critical point, the patient's fate
is sealed.

         Management believes that the development of new classes of antibiotics
has almost stopped. Improved prevention and infection control have limited
potential. In the meantime, bacteria continue to evolve and share emerging
mechanisms of drug resistance. Bacteria have become so well adapted to the
hospital that even the best preventive efforts do not eradicate them. Hospitals
that lead in best preventive practices still suffer from endemic
hospital-adapted strains that continue to cause high rates of attributable
morbidity and mortality. Such examples suggest that each passing year sees a
reduction in the number of cases that can be treated successfully with any
particular drug.

         Management believes that dramatically speeding up laboratory
diagnostics will help to improve the success rate for initial therapy.

Products

BACcel(TM) System Development

         We are developing an innovative rapid diagnostic platform, the
BACcel(TM) system, intended for rapid diagnosis in life-threatening bacterial
infections. Our goal is to reduce the failure rate of initial therapy by
shortening the lab turnaround time to less than 8 hours, rather than the 2-3
days now required. Rapid testing would provide guidance in time to influence
initial therapy.


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         The BACcel(TM) system applies our proprietary technology to eliminate
time-consuming bacterial culturing, thus eliminating the major source of delay
with current testing methods. Proprietary technologies include our patented
"Quantum Microbiology(TM)" analytical methods, and our patented OptiChem(R)
surface coatings.

         The BACcel(TM) system uses long-accepted bacteriological testing
principles, but applies our proprietary technology to adapt them to analyze live
bacteria extracted directly from a patient specimen. The instrumentation uses an
automated digital microscope to measure the responses of individual extracted
bacterial cells to various test conditions. The system analyzes thousands of
these individual cells to arrive at organism identification and antibiotic
resistance characteristics.

         Based on internal lab data, Management believes that the BACcel(TM)
system will identify the organisms present in a patient's specimen and count the
number of organisms of each type in less than 2 hours after receiving a
specimen. Management believes that it will then additionally report major
categories of antibiotic resistance mechanism present for each type of organism
within a total of 4-6 hours after receiving a specimen. The clinical purpose of
this version is to narrow the drug choices available for initial therapy by
rapidly reporting presumptive identification and major resistance types, thus
ruling out antibiotic classes that are most likely to fail.

         Quantitative identification in less than 2 hours also enables
near-real-time assessment of the effects of therapy, and monitoring for emerging
resistance or secondary infection.

         Popular news media have reported widely about MRSA as a multi-resistant
"superbug." However, organizations such as the CDC (US Centers for Disease
Control and Prevention) and IDSA (Infectious Diseases Society of America) have
also identified other multi-drug resistant organisms as presenting even greater
threats. They include Pseudomonas, Acinetobacter, E. coli, and Klebsiella. In
the hospital ICU, MRSA typically causes no more than about 30% of mortality from
acquired infections. The other organisms just listed account for a much higher
percentage.

         Management believes that the BACcel(TM) system is the only new
diagnostic technology to address a clinically adequate range of species and
antibiotic resistance mechanisms needed to help manage critical infectious
diseases. Management also believes that other rapid technologies, such as gene
detection, are better suited to screening non-infected carriers of a small
number of species and resistance mechanisms, but are too limited to compete with
the BACcel(TM) platform for managing infected patients.


                                       5
<PAGE>


Additional Products

         In addition to BACcel(TM) system development, we have developed and
out-licensed OptiChem(R) surface coatings for use in microarraying components.
As a coating for analytical devices, Management believes that OptiChem(R) offers
superior noise rejection (non-specific binding by interfering substances) and
high capacity for target binding, compared with other bio-coatings. For example,
in microarraying this results in higher sensitivity and simplified sample
preparation. OptiChem(R) also offers the ability to apply micro-patterns,
enabling novel advanced analyzer designs. The coating is widely adaptable to
virtually any base material, such as plastics, and even highly sophisticated
designs can be economically scaled to high-volume production. We have licensed
OptiChem(R) microarraying variations to SCHOTT (Germany) and NanoString (WA),
described below. See "Sales, Licensing, And Alliances."

         In this business segment we provide development services to potential
licensees and industrial customers. For these customers, we also produce limited
quantities of new products for technical and market evaluations.

         Patented OptiChem(R) coatings have potential value in other
applications as well. When appropriate, we fund limited technical projects with
outside organizations or adapt our own development to assess feasibility.
Examples include:

     o    Analytical devices such as molecular sensors;
     o    Tissue and cell culturing labware for live-cell analysis;
     o    Invasive medical devices to reduce bacterial biofilm formation;
     o    Patient specimen containers to reduce loss of critical analytes;
     o    Pharmaceutical packaging to extend shelf life and reduce the loss of
          costly biotech drugs; and
     o    Coatings to prevent bio-fouling (microbial mat formation and
          corrosion) in a variety of industrial and commercial applications.

Research and Development

         The BACcel(TM) system will include a fixed instrument and proprietary
single-use (disposable) test cassettes. Each cassette will test a single patient
specimen and then be discarded.

         We have used two laboratory prototype instruments in our development
laboratory for longer than two years. Early in calendar 2008, we placed two
additional, identical research prototype systems in collaborating research
institutions: Denver Health Medical Center, and Barnes-Jewish Hospital at
Washington University in St. Louis. The two institutions have replicated and
extended the Company's own research using analytical methods developed by the
Company. Management believes that the joint studies will continue and maybe
presented periodically to the relevant scientific and medical communities. In
fiscal 2008, we made multiple presentations in September 2007 and June 2008 at


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two major global scientific and clinical congresses. We intend to expand the
scale of our publication program and include it as a permanent part of our
business development program.

         In May, 2008 we began a technical development project with funding from
Becton, Dickinson and Company ("BD," NYSE: BDX). BD is an industry leader in
manufacturing diagnostic products used in hospital laboratories for Clinical
Microbiology. As part of the project agreement, BD also obtained an option to
purchase a royalty-bearing global exclusive license for commercial product
development, manufacturing, and marketing of the BACcel(TM) system and its
technology for application in human infectious diseases. The licensing option
expires October 31, 2009. If BD exercises the licensing option, Management
believes that the agreement would then relieve Accelr8 of the need to raise the
large amount of funding required for BACcel(TM) product development, while
protecting shareholders from potentially significant dilution and mitigating the
risks associated with BACcel(TM) commercialization.

         The agreement also enables Accelr8 to seek additional commercial
applications for its proprietary technology. Management believes that this
expands the opportunity horizon for shareholders.

         In the current technical development project, our internal technical
team designs the analytical methods and validates them through well-controlled
experiments. Studies include comparison between standard methods and BACcel(TM)
system results on well-characterized bacterial strains and clinical patient
specimens.

         In addition to developing analytical methods, we develop custom
antibodies for species identification. Commercial antibody sources do not exist
for some of the species contained in our bacterial panels. In other cases,
commercial sources cannot provide antibodies that meet our performance criteria.
We believe that custom antibodies derived from this development program will add
significant asset value and competitive advantages. In this program we own the
antibodies and any intellectual property that may emerge as a result of our
proprietary antibody development methods.

         As an example of the success of our innovative antibody development
process, we have scaled up a unique antibody against Acinetobacter baumannii.
This organism can be one of the most highly resistant pathogens and difficult to
analyze. It often causes major outbreaks in hospitals, and has become a major
problem with warfighters and civilians wounded in the Middle East. Our novel
antibody makes it possible to rapidly detect the organism using simple test kits
as well as playing a key role in the BACcel(TM) system.

         We are also developing OptiChem(R) coating methods for use in
BACcel(TM) system cassette production. We plan to use OptiChem(R) to prevent
bacteria from adhering to flow channel walls and being lost to analysis, and in
a target zone to immobilize bacteria where the system's automated microscope
views them.


                                        7
<PAGE>


         Academic collaborators have published research papers in appropriate
scientific journals and made presentations at international professional
organization meetings concerning OptiChem(R) applications and characteristics.

         During the years ended July 31, 2008 and 2007, we spent $880,984 and
$991,581, respectively, on research and development activities.

Sales, Licensing, and Alliances

         The Company originally signed a licensing agreement for microarraying
slides using OptiChem(R) coatings with Schott Jenaer Glas GmbH ("SCHOTT") on
November 4, 2004. On November 24, 2007 the Company extended a non-exclusive
Slide H license to SCHOTT for three additional years, to expire on November 23,
2010. The Company had also granted another royalty-bearing license to Schott
Jenaer Glas GmbH for Streptavidin slides (Slide HS) for two years that expires
on December 31, 2008. The Company additionally entered into an exclusive
seven-year license with NanoString Technologies, Inc. on October 5, 2007. The
license grants to NanoString the right to apply OptiChem(R) coatings to
NanoString's proprietary molecular detection products.

         In addition, from time to time we may enter into other types of funded
development agreements for custom OptiChem(R) coatings. Part of such
relationships may include supply agreements for prototype and pilot
manufacturing of the resulting products.

         Management believes that microarray substrate and other
OptiChem(R)-related sales will continue at or near levels experienced in the
past, and that there will be nominal royalties and licensing fees with SCHOTT in
the next fiscal year; however, there can be no assurance that sales will occur
or that revenues will be generated.

         During the fiscal year ended July 31, 2008, total revenues from BD were
$300,000 or 63.09% and total revenues from SCHOTT were $95,695 or 20.1% of
revenues. During the fiscal year ended July 31, 2007, total revenues from BD
were $0 and total revenues from SCHOTT were $83,464 or 45.6% of total revenues.

Competition

         To the best of Management's knowledge, no other company now has a
product or is developing a product intended for the same clinical application as
the BACcel(TM) system. Therefore we are not aware of any actual or impending
competitor. However, the industry in which we compete is subject to rapid
technological changes, and we do and may face competition for our products,
including the BACcel(TM) system. We may also face competition from non-medical
device companies, including pharmaceutical companies that may offer alternatives
to our products.

         Publicity frequently appears in the press concerning new products for
rapid bacterial identification using genes or other molecular markers


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("molecular diagnostics"). Numerous acquisitions, licenses, and distribution
arrangements have been announced over the last few years for such innovations.

         The leading companies with automated microbiological testing include
Becton Dickinson (NYSE: BDX), bioMerieux (France), Dade Behring (acquired by
Siemens, Germany), and Trek Diagnostics (acquired by Magellan Biosciences,
private). These products provide broad-based culturing and analysis of a wide
variety of bacteria. Such products require purified bacterial strains or
"isolates" for analysis, which requires at least overnight culturing to produce
enough organisms to test. These products then require at least one additional
growth cycle as part of the test.

         Many of our potential competitors have greater financial,
manufacturing, marketing and sales resources than we do. In addition, some of
our potential competitors may, individually or together with companies
affiliated with them, have greater human and scientific resources than we do.
Our potential competitors could develop technologies and methods for materials
that render the BACcel(TM) system and our technologies and methodologies less
competitive.

Operations

         We own all of our laboratory equipment. We lease approximately 6,400
square feet of laboratory and administrative space. Within our laboratory
facility, we constructed a cleanroom for R&D and pilot production. We believe
the facility has adequate capacity to implement the current product development
plan.

         We have identified second sources for all materials used in OptiChem(R)
formulation.

         BACcel(TM) system development requires certain components that are
custom-fabricated to our specifications. Such components include
injection-molded plastic components, die-cut laminates, and machined mechanical
components. In all applicable cases, we own the production tooling and believe
that we will be able to qualify secondary sources. We plan to maintain inventory
levels sufficient to bridge second-source response times and include an adequate
safety factor to support ongoing development.

         We do not plan significant additional product development activity.
Effectively all internal operations are now devoted to assay and antibody
development.

         We have sold a manufacturing and marketing license to SCHOTT for the
production of microarraying slides and therefore do not perform production
activities related to microarraying products.


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<PAGE>


Intellectual Property

         We rely upon a combination of patent, copyright, trademark and trade
secret laws; employee and third party non-disclosure agreements, license
agreements and other intellectual property protection methods to protect our
proprietary rights. We are committed to aggressively develop a continuing stream
of intellectual property and to defend our position in key technologies.

         Accelr8's first patent on the OptiChem(R) technology, U.S. Patent No.
6,844,028 titled "Functional Surface Coating" was issued on January 18, 2005.
The patent specification covers the core OptiChem(R) technology. On June 27,
2006, the United States Patent Office issued Patent No. 7,067,194 which awarded
the Company a patent for devices that use OptiChem(R) coatings.

         Accelr8's first patent on the core BACcel(TM) technology, U.S. Patent
No. 7,341,841 titled "Rapid microbial detection and antimicrobial susceptibility
testing" was issued on March 11, 2008. The patent specification covers methods
used to derive identification and antibiotic susceptibility from tests on
individual immobilized bacterial cells.

         The Company has additional United States and international patent
filings in progress.

         There can be no assurance that third parties will not assert
infringement or other claims against us with respect to any existing or future
products. We cannot assure you that licenses would be available if any of our
technology was successfully challenged by a third party, or if it became
desirable to use any third-party technology to enhance the Company's products.
Litigation to protect our proprietary information or to determine the validity
of any third-party claims could result in a significant expense to us and divert
the efforts of our technical and management personnel, whether or not such
litigation is determined in our favor.

         While we have no knowledge that we are infringing upon the proprietary
rights of any third party, there can be no assurance that such claims will not
be asserted in the future with respect to existing or future products. Any such
assertion by a third party could require us to pay royalties, to participate in
costly litigation and defend licensees in any such suit pursuant to
indemnification agreements, or to refrain from selling an alleged infringing
product or service.

         We have registered trademarks for: OptiChem(R), BACcel(TM),
BACcelr8r(TM), and Quantum Microbiology(TM) and Accelr8 Technology Corporation.

Employees and Consultants

         We have seven full-time employees and contracts with three consultants.
We have not entered into any collective bargaining agreements.


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<PAGE>


Factors That May Affect Future Results

         Investing in our securities involves risk. In evaluating the Company,
careful consideration should be given to the following risk factors, in addition
to the other information included or incorporated by reference in this Annual
Report. Each of these risk factors could materially adversely affect our
business, operating results or financial condition, as well as adversely affect
the value of an investment in our common stock. In addition, the
"Forward-Looking Statements" located in this Form 10-KSB, and the
forward-looking statements included or incorporated by reference herein describe
additional uncertainties associated with our business that should be carefully
evaluated prior to making a decision to invest in our securities.

         Dependence on key employees. Our success depends to a significant
extent upon a number of key management and technical personnel, the loss of one
or more of whom could have a material adverse effect on our results of
operations. We carry key man life insurance in the amount of $5 million on
Thomas V. Geimer. The Board of Directors has adopted resolutions under which
one-half of the proceeds of any such insurance will be dedicated to a
beneficiary designated by the insured. There can be no assurance that the
proceeds from such life insurance would be sufficient to compensate us for the
loss of Mr. Geimer, and these policies do not provide any benefits to the
Company if Mr. Geimer becomes disabled or is otherwise unable to render services
to the Company. Further, the loss of David Howson, as President of the Company,
may have a significant adverse effect upon the Company and its business. We
believe that our continued success will depend in large part upon our ability to
attract and retain highly skilled technical, managerial, sales and marketing
personnel. There can be no assurance that we will be successful in attracting
and retaining the personnel we require to develop and market new and enhanced
products and to conduct our operations successfully.

         Need to develop additional market for products. We have received only
nominal revenue from sales based on products using our OptiChem(R) technology
and have conducted on sales of the BACcel(TM) system. While we have received
nominal revenues from sales of our OptiChem(R) products, there is no assurance
that we will be successful in marketing our OptiChem(R) products or the
BACcel(TM) system. Further, there is no assurance we will receive additional
revenues in the future. Further, we have experienced losses from operations and
negative cash flow that is likely to continue unless we are able to successfully
complete the development of the BACcel(TM) system and license it to a third
party for development, manufacturing, and marketing or sell it into the
marketplace. If we are unsuccessful in obtaining revenue from sales of our
OptiChem(R) technology or to license the BACcel(TM) system to a third party for
development, manufacturing, and marketing, we will likely continue to experience
losses from operations and negative cash flow as we have in the past, which may
have a material adverse effect upon the Company, its results of operations and
the price of our Common Stock may be adversely affected.


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         Our success depends partly on our ability to successfully introduce new
products. In a market primarily driven by the need for innovative products, our
revenue growth will depend on overcoming various technological challenges to
successfully introduce new products, including but not limited to the BACcel(TM)
system or other technology based upon the intellectual property included in the
BACcel(TM) system into the marketplace in a timely manner. Our technology
requires significant knowledge and experience in biochemistry. In addition, we
must continue to develop new applications for our existing technologies,
including but not limited to additional commercial applications for the
BACcel(TM) system proprietary technology. Market acceptance of these products
will depend on many factors, including, but not limited to, demonstrating that
our technologies perform as intended and are superior to other technologies and
products that are currently available or may become available in the future.

         If we are unable to overcome these technological challenges, or even if
we experience difficulties or delays, we may be unable to attract additional
customers for our products or license our products to other strategic partners,
which would seriously harm our business and future growth prospects.

         If we are unable to effectively protect our intellectual property, we
may be unable to prevent infringement. Our success depends in part on our
ability to obtain and maintain patent protection for the technology underlying
our products, especially that used in the BACcel(TM) system, both in the United
States and in other countries. We cannot assure you that any of the presently
pending or future patent applications will result in issued patents, or that any
patents issued to us or licensed by us will not be challenged, invalidated or
held unenforceable. Further, we cannot guarantee that any patents issued to us
will provide us with a significant competitive advantage.

         If we fail to successfully enforce our proprietary technology or
otherwise maintain the proprietary nature of our intellectual property with
respect to our significant current and proposed products, our competitive
position, our ability to complete the development of the BACcel(TM) system and
future sales of this product could suffer.

         Notwithstanding our efforts to protect our intellectual property, our
competitors may independently develop similar or alternative technologies or
products that are equal to or superior to our technology and products without
infringing on any of our intellectual property rights or design around our
proprietary technologies. If customers prefer these alternative technologies as
compared to our technology, it may have a material adverse effect upon the
Company, its results of operations and the price of our Common Stock may be
adversely affected.

         Our products could infringe on the intellectual property rights of
others. Due to the significant number of U.S. and foreign patents issued to, and
other intellectual property rights owned by entities operating in the industry
in which we operate, we believe that there is a significant risk of litigation
arising from infringement of these patents and other rights. Third parties may
assert infringement or other intellectual property claims against us or our
licensees. We may have to pay substantial damages, including treble damages, for
past infringement if it is ultimately determined that our products infringe on a
third party's proprietary rights. In addition, even if such claims are without
merit, defending a lawsuit may result in substantial expense to us and divert
the efforts of our technical and management personnel.


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<PAGE>


         We may also be subject to significant damages or injunctions against
development and sale of some of our products, which could have a material
adverse effect on our future revenues. Furthermore, claims of intellectual
property infringement may require us to enter into royalty or license agreements
with third parties, and we may be unable to obtain royalty or license agreements
on commercially acceptable terms, if at all.

         Third parties may seek to challenge, invalidate or circumvent issued
patents owned by or licensed to us or claim that our products and operations
infringe their patent or other intellectual property rights. In addition to our
patents, we possess an array of unpatented proprietary technology and know-how
and we license intellectual property rights to and from third parties. The
measures that we employ to protect this technology and these rights may not be
adequate. Moreover, in some cases, the licensor can terminate a license or
convert it to a non-exclusive arrangement if we fail to meet specified
performance targets.

         We may incur significant expense in any legal proceedings to protect
our proprietary rights or to defend infringement claims by third parties. In
addition, claims of third parties against us could result in awards of
substantial damages or court orders that could effectively prevent us from
manufacturing, using, importing or selling our products in the United States or
abroad.

         Competition. The industry in which we compete is subject to rapid
technological changes, and we do and may face competition for our products. We
may also face competition from non-medical device companies, including
pharmaceutical companies that may offer alternatives to our products. Many of
our competitors have greater financial, manufacturing, marketing and sales
resources than we do. In addition, some of our competitors may, individually or
together with companies affiliated with them, have greater human and scientific
resources than we do. Our competitors could develop technologies and methods
that render our technologies and methodologies less competitive. Accordingly, if
competitors introduce products that are more effective than our current and
proposed technologies, including but not limited to the BACcel(TM) system, it
could have a material adverse effect upon the Company, its results of operations
and the price of our Common Stock may be adversely affected.

         Ability to respond to technological change. Our future success will
depend significantly on our ability to enhance our current products and develop
or acquire and market new products that keep pace with technological
developments and evolving industry standards as well as respond to changes in
customer needs. There can be no assurance that we will be successful in
developing or acquiring product enhancements or new products to address changing
technologies and customer requirements adequately, that we can introduce such
products on a timely basis or that any such products or enhancements will be


                                       13

<PAGE>


successful in the marketplace. Our delay or failure to develop or acquire
technological improvements or to adapt our products to technological change
would have a material adverse effect on our business, results of operations and
financial condition.

         Control by management. At October 15, 2008, our officers and directors
owned or controlled of record approximately 966,400 or 10.62% of the outstanding
shares of our Common Stock (excluding shares held in the Rabbi Trust). If they
exercise all of the options that they currently hold, they will own 1,751,400 or
17.72% of the then outstanding shares of our Common Stock (excluding shares held
in the Rabbi Trust). Due to their stock ownership, the officers, directors and
key employees may be in a position to elect the Board of Directors and to
control the business and affairs of the Company, including certain significant
corporate actions such as acquisitions, the sale or purchase of assets and the
issuance and sale of the Company's securities.

         Shares eligible for future sale. As of July 31, 2008, we had reserved
1,500,000 shares of Common Stock for issuance upon exercise of options which
have been or may be granted pursuant to our stock option plans. As of July 31,
2008, 699,000 options had been granted pursuant to the Qualified Plan with
17,500 of these options exercised, 231,500 options that expired, leaving 351,000
available for grant and 315,000 options had been granted pursuant to the
Non-Qualified Plan with 125,000 of these options exercised, 0 options that
expired, 50,000 that were cancelled and 130,000 available for grant. As of July
31, 2008, 620,000 options had been granted pursuant to the Omnibus Plan with
5,000 of these options exercised, 120,000 expired leaving 0 available for grant.

         As of October 25, 2008, to our knowledge there were approximately
255,000 outstanding shares of our Common Stock, not held by our officers,
directors or in the Rabbi Trust that are restricted securities whose
restrictions have lapsed and may be sold as unrestricted securities. Although
the Securities Act and Rule 144 place certain prohibitions on the sale of
restricted securities, restricted securities may be sold into the public market
under certain conditions.

         The 1,129,110 warrants exercised by Mr. Geimer were exercised at $0.24
per share on October 14, 1997 and contributed to a Rabbi Trust. Under the terms
of the Rabbi Trust, we will hold the shares in the trust, and carry them as
treasury stock. The Rabbi Trust provides that upon Mr. Geimer's death,
disability or termination of his employment, the shares will be released ratably
over the subsequent ten (10) years, unless the Board of Directors determines
otherwise. See Note 7 to the Financial Statements for further information. Sales
of Common Stock underlying Plan Options may adversely affect the price of the
Common Stock.

         BD may not exercise its option. In May 2008 we began a technical
development project with funding from BD. As part of the project agreement, BD
also obtained an option to purchase a royalty-bearing global exclusive license
for commercial product development, manufacturing, and marketing of the
BACcel(TM) system and its technology for application in human infectious


                                       14

<PAGE>


diseases. The licensing option expires September 30, 2009. If BD exercises the
licensing option, Management believes that the agreement would then relieve
Accelr8 of the need to raise the large amount of funding required for BACcel(TM)
product development, while protecting shareholders from potentially significant
dilution and mitigating the risks associated with BACcel (TM) commercialization.
If BD does not exercise the option, we would have to seek another strategic
partner to develop, manufacture and market the BACcel(TM) system, of which there
can be no assurance we would be successful in finding such a strategic partner.
Further, if BD does not exercise the option, we may have to seek capital to
continue its proposed operations, of which there can be no assurance we would be
successful in locating such capital or such capital would be available on terms
reasonable to us.

         The loss of our major customers or technological development partner
could significantly reduce our revenue. During the fiscal year ended July 31,
2008, total revenues from BD were $300,000 or 63.09% and total revenues from
SCHOTT were $95,695 or 20.1% of revenues. During the fiscal year ended July 31,
2007, total revenues from BD were $0 and total revenues from SCHOTT were $83,464
or 45.6% of total revenues. Further, we expect we will be reliant on BD and
SCHOTT for revenue for the foreseeable future. There can be no assurance that
revenue from BD, SCHOTT or any customer will continue at their historical
levels. Loss of BD as our technological development partner, or SCHOTT or
another one or more of our current clients or the failure of BD to exercise its
option could have a material adverse effect on our business, financial condition
and results of operations.

         We use hazardous materials in some of our research, development and
manufacturing processes. Our research activities sometimes involve the
controlled use of various hazardous materials. Although we believe that our
safety procedures for handling and disposing of such materials comply with the
standards prescribed by state and federal regulations, the risk of accidental
contamination or injury from these materials cannot be completely eliminated. We
could be held liable for any damages that might result from any accident
involving such materials. Any such liability could have a material adverse
effect on our business, financial condition and results of operations.

         Changes in governmental regulations may reduce demand for our products
or increase our expenses. We compete in markets in which we or our customers
must comply with federal, state, local and foreign regulations, such as
environmental, health and safety and food and drug regulations. We develop,
configure and market our products to meet customer needs created by these
regulations. Any significant change in these regulations could reduce demand for
our products.

         We have a single research and development facility and we may lose
revenue and be unable to continue to conduct our research and development and
product development activities if we lose this facility. We conduct all of our
research and development and product development activities in our existing
facility in Denver, Colorado. If our production facility becomes incapable of
allowing us to conduct our research and development and product development


                                       15

<PAGE>


activities there for any reason, we would have no other means of conducting such
activities until we were able to restore such capabilities at our facility or
develop an alternative facility. Further, in such an event, we may lose revenue
and we may not be able to maintain our relationships with our customers and
strategic development partners. If for any reason our research and development
and product development activities could not be conducted at this facility, we
would have no other location or means of conducting our research and development
and product development activities. While we carry a nominal amount of business
interruption insurance to cover lost revenue and profits, this insurance does
not cover all possible situations. In addition, our business interruption
insurance would not compensate us for the loss of opportunity and potential
adverse impact on relations with our existing licensees resulting from our
inability to produce products for them or our failure to conduct our research
and development and product development activities.

         Our results of operations will be adversely affected if we fail to
realize the full value of intellectual property. As of July 31, 2008, our total
assets of $5,827,466 included $3,346,701 of Intellectual Property. These assets
have historically been amortized on a straight-line basis over their estimated
useful lives. Intangible assets to be held and used by the Company are reviewed
for impairment whenever events or circumstances indicate that the carrying
amount of the asset may not be recoverable. We continuously evaluate the
recoverability of these items based on estimated future cash flows from and
estimated fair value of such assets, and provide for impairment if such
undiscounted cash flows are insufficient to recover the carrying amount of the
asset. Future impairment testing may result in additional intangible asset
write-offs, which could adversely affect our financial condition and results of
operations.

         Our business strategy approach may be adversely affected by potential
healthcare reform. Our vision is to develop and commercialize the BACcel(TM)
system, an innovative, integrated system for rapid identification of bacterial
and its antibiotic resistance in critically ill patients. Healthcare reform and
the growth of managed care organizations have been considerable forces in the
medical diagnostics industry. These forces continue to place constraints on the
levels of overall pricing and thus could have a material adverse effect on our
future profit margins of our products or the amounts that we are able to receive
from third parties for the licensing of such products. Such continuing changes
in the United States healthcare market could also force us to alter our approach
to selling, marketing, distributing and servicing our customer base. In and
outside the United States, changes to government reimbursement policies could
reduce the funding that healthcare service providers have available for
diagnostic product expenditures, which could have a material adverse impact on
the use of the products we are developing and our future sales, license and
royalty fees and /or profit margin.

         We make significant investments in research and development, but there
is no guarantee that any of these investments will ultimately result in a
commercial product that will generate revenues. The BACcel(TM) system integrates
several of our component systems and processes. For the year ended July 31,
2008, we spent $880,984 and during the fiscal year ended July 31, 2007 we spent
$991,581 on research and development expenses. Notwithstanding these


                                       16

<PAGE>


investments, we anticipate that we will have to spend additional funds in the
research and development of the BACcel(TM) System. There can be no assurance
that the BACcel(TM) system will be successful, or even if it is successful will
be accepted in the marketplace. Further, we might also encounter substantial
delays in getting products to market in a timely fashion.

         Our future success is dependent in large part upon the successful
development of the BACcel(TM) system. Our future success and profitability is
dependent in large part on our successful development of the BACcel(TM) system.
We have spend a significant amount of resources developing the BACcel(TM) system
and there can be no assurance that we will successfully develop the BACcel(TM)
system. If we are not successful in the development of the BACcel(TM) system, it
would have a material adverse effect upon the Company's revenues and results of
operations, it could lead to impairment of certain of our intellectual property
and would likely have a material adverse effect upon the price of the our Common
Stock.
         Changes in our business strategy or plans may adversely affect our
operating results and financial condition. If our business strategy or plans
change, whether in response to changes in economic conditions or developments in
the diagnostics industry, or otherwise, we may be required to expend
significantly more resources than planned to develop the BACcel(TM) system or
other new products. The expense of such change could adversely affect our
operating results and financial condition.

         Compliance costs with recently enacted changes in the securities laws
and regulations pursuant to the Sarbanes-Oxley Act of 2002 will increase our
costs. The Sarbanes-Oxley Act of 2002 that became law in July 2002 has required
changes in some of our corporate governance, securities disclosure, accounting
and compliance practices. In response to the requirements of that act, the
Securities and Exchange Commission and the American Stock Exchange have
promulgated rules on a variety of subjects. Compliance with these rules as well
as the Sarbanes-Oxley Act of 2002 has increased our legal, financial and
accounting costs, and we expect the cost of compliance with these new rules to
continue to increase and to be permanent. Further, the new rules may increase
the expenses associated with our director and officer liability insurance.

         Section 404 of the Sarbanes Oxley Act of 2002 Compliance. We became
subject to Section 404 of the Sarbanes-Oxley Act of 2002 ("Section 404") during
the fiscal year ended July 31, 2008, which requires us to include management's
assessment of the effectiveness of our internal controls over financial
reporting in our Annual Report on Form 10-K. A material weakness is defined as a
significant deficiency or combination of significant deficiencies, that results
in a reasonable possibility that a material misstatement of our financial
statements will not be prevented by our internal control over financial
reporting. A significant deficiency means a control deficiency, or combination
of control deficiencies, that adversely affects our ability to initiate, record,
process or report financial data reliably in accordance with generally accepted
accounting principles such that there is more than a remote likelihood that a
misstatement of our financial statements that is more than inconsequential will
not be prevented or detected by our internal control over financial reporting.


                                       17

<PAGE>


         In the event that we find material weaknesses in the future and do not
adequately remedy these material weaknesses, and if we fail to maintain proper
and effective internal controls in future periods, we could become subject to
potential review by the American Stock Exchange, the Securities and Exchange
Commission or other regulatory authorities, which could require additional
financial and management resources, could result in our delisting from the
American Stock Exchange and could compromise our ability to run our business
effectively, could cause investors to lose confidence in our financial reporting
and could result in a reduction in the price of our Common Stock.

         We maintain cash balances in our bank account that exceed the FDIC
insurance limitation. We maintain our cash assets at a commercial bank in an
amount in excess of the Federal Deposit Insurance Corporation insurance limit of
$250,000. At July 31, 2008 and 2007, the Company's uninsured cash balance was
approximately $983,100 and $1,293,669, however, this amount is invested under a
repurchase agreement with the bank and is collateralized by securities of the
United States Federal agencies with approximate market values of 102% of the
investment. However, due to the recent economic downturn and the failures of
several financial institutions, there is a risk that in the event of a failure
at the commercial bank where we maintain our deposits, we may incur a loss of
the amount of our cash balance that exceeds the insurance limitation, which
would have a material adverse effect upon us and our results of operations.

         Our stock price has been volatile and may continue to be volatile;
Dividend Policy. The trading price of our common stock has been, and is likely
to continue to be, highly volatile, in large part attributable to developments
and circumstances related to factors identified in "Forward-looking Statements"
and "Risk Factors." The market value of your investment in our common stock may
rise or fall sharply at any time because of this volatility, and also because of
significant short positions taken by investors from time to time in our stock.
During the fiscal year ended July 31, 2008, the closing sale price for our
common stock ranged from $1.90 to $5.11 per share. The market prices for
securities of medical technology companies historically have been highly
volatile, and the market has experienced significant price and volume
fluctuations that are unrelated to the operating performance of particular
companies. We do not intend to pay any cash dividends on our Common Stock in the
foreseeable future.

         Colorado law and our Articles of Incorporation may protect our
directors from certain types of lawsuits. Colorado law provides that our
directors will not be liable to us or our stockholders for monetary damages for
all but certain types of conduct as directors. Our Articles of Incorporation
permit us to indemnify our directors and officers against all damages incurred
in connection with our business to the fullest extent provided or allowed by
law. The exculpation provisions may have the effect of preventing stockholders
from recovering damages against our directors caused by their negligence, poor
judgment or other circumstances. The indemnification provisions may require us
to use our limited assets to defend our directors and officers against claims,
including claims arising out of their negligence, poor judgment, or other
circumstances.


                                       18

<PAGE>


         We may require additional capital in the future and we cannot assure
you that capital will be available on reasonable terms, if at all, or on terms
that would not cause substantial dilution to your stock holdings. We have
historically relied upon our existing cash balance, revenues and capital from
the sale of our securities to fund our operating losses and will continue to
incur operating losses until we are able to complete the development of the
BACcel(TM) system and sell it into the marketplace or license it to a third
party for its development, manufacturing and marketing. If capital requirements
vary materially from those currently planned, we may require additional capital
sooner than expected and may have to raise these funds through the sale of our
securities There can be no assurance that such capital will be available in
sufficient amounts or on terms acceptable to us, if at all. Further, any sale of
a substantial number of additional shares will cause dilution to your investment
and could also cause the market price of our Common Stock to decline.

         We have the authority to issue up to 14,000,000 shares of Common Stock
(of which, as of October 15, 2008, 10,226,210 shares were outstanding) and to
issue options and warrants to purchase shares of our Common Stock (of which
1,085,000 options and 100,000warrants to acquire shares of our common stock were
issued and outstanding. Issuances of additional shares of our stock in the
future could dilute existing shareholders and may adversely affect the market
price of our Common Stock.

Glossary

         Antibody: a specialized protein (immunoglobulin) produced by the immune
response that binds to a particular molecular surface that has previously been
presented to certain cells in the organism's blood. The end-product of the
"humoral" component of the immune response. Key component of immunoassays
detecting as the analyte-specific detection agent.

         Antigen: the material used to stimulate immune antibody production in
an organism.

         Assay, Qualitative: a chemical test in which the result is expressed as
the presence or absence of an analyte. Also referred to as "detection," as
opposed to measuring the amount of material.

         Assay, Quantitative: a test in which the result is expressed as the
quantity of analyte in a sample. Quantitative assays may be used to determine
whether the amount of analyte is above or below a "cut-point" that distinguishes
an acceptable level of the analyte, such as a food pathogen, from an
unacceptable level.

         Culturing (Bacterial): the analytical process of growing bacteria from
a patient specimen (blood, sputum, etc.) to a quantity suitable for isolation
and analysis.

         DNA: the nucleic acid biomolecules that carry an organism's genetic
code. The famous "double helix" molecular model of Watson and Crick.


                                       19

<PAGE>


         Gene: a sequence of DNA or RNA that produces a functional protein
product when translated by the normal biosynthetic route.

         Genomics: the study, including sequencing, of molecules that carry an
organism's genetic code (nucleic acids, DNA and RNA).

         Genotype: the DNA gene sequence makeup that distinguishes one type of
organism from another. Genotype differences may or may not directly correlate
with phenotypes (see definition below).

         Immunoassay: any type of biochemical assay that uses antigen-antibody
affinity as the assay basis of selection and detection.

         Isolation (Bacterial): the technique of growing bacterial cultures on
selective media in such a way that only particular species grow successfully,
thereby isolating colonies of the species for further analysis.

         Microarray: a regular geometric array (matrix or grid pattern) of
individual reactive chemical probes affixed to a physical substrate such as a
microscope slide. Used in assays to conduct thousands of analyses at one time on
sample materials presented to the microarray. The high-density evolution of the
microtiter plate.

         Microtiter Plate: a multi-well plate (typically 96 wells) of standard
dimensions in which individual reactions occur near-simultaneously with
different reagents. Analyzed visually or by automated optical plate readers.
Currently the most widely-used standard laboratory assay format.

         Nucleic Acid: DNA (deoxyribo-nucleic acid) or RNA (ribo-nucleic acid).
Polymeric chains of nucleotides whose particular sequence constitutes an
organism's genetic code (DNA and genomic RNA) or that participate in the
biosynthesis of new protein molecules (other types of RNA such as messenger RNA,
transfer RNA, and ribosomal RNA).

         Pathogen: an infectious organism (bacteria, viruses, molds and fungi,
prions) that when invading a host causes a disease. Pathogens may be transmitted
through food, water, air, and/or contact with infected individuals or their
biological fluids.

         Phenotype: for microorganisms, the functional responses or observable
characteristics that differentiate one set of organisms from another within the
same species. The basis for strain differentiation based on observable behavior
or properties other than those expressed in the genotype.

         Protein: biological polymeric macromolecules formed by long chains of
amino acids (twenty in humans) and which provide the mechanism for cellular
physiology and metabolism. All life functions are carried out through the
mediation of proteins (typically enzymes).


                                       20
<PAGE>


         Sensitivity: the smallest quantity of analyte that the assay can
detect. Same as "Limit Of Detection." Statistically, the proportion of false
negatives reported for a population sample.

         Strain (Bacterial): variants or phenotypes of a bacterial species that
exhibit significant characteristics that allow discrimination of one strain from
another. In clinical application usually distinguished on the basis of disease
severity, toxic products, antibiotic resistance, and other medically relevant
properties.

         Surface Chemistry: the chemistry of materials that provide a barrier or
contact surface. In the context of biochemical assays, the chemistry of all
exposed surface area that may come into contact with assay reagents.

         Ventilator Associated Pneumonia (VAP): a version of hospital-acquired
pneumonia whose symptoms first appear at least 48 hours after starting
mechanical ventilation.

Item 2.  Description of Property

         We lease approximately 6,400 square feet of office and laboratory space
at 7000 North Broadway, Building 3-307, Denver, Colorado 80221. The monthly rent
and utilities average $5,950 per month. The lease expires on September 30, 2009.
Item 3. Legal Proceedings

         Not Applicable.

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

         No matters were submitted by the Company to a vote of our security
holders through the solicitation of proxies or otherwise, during the fourth
quarter of the fiscal year covered by this Annual Report.


                                     PART II

Item 5. Market For Common Equity and Related Stockholder Matters and Small
Business Issuer Purchase of Equity Securities

         On October 9, 2003, the Company's common stock began trading on the
American Stock Exchange under the trading symbol AXK.

         The table set forth below presents the range, of the high and the low
sales price per share of Common Stock for the past two years on a quarterly
basis as quoted by the NASDAQ.


                                       21
<PAGE>


                      Quarter Ended             High        Low
                      ------------------------------------------

                      Fiscal 2008
                      October 31, 2007         $3.80      $1.90
                      January 31, 2008         $4.97      $3.30
                      April 30, 2008           $4.50      $3.81
                      July 31, 2008            $5.11      $3.70

                      Fiscal 2007
                      October 31, 2007         $2.76      $1.99
                      January 31, 2007         $2.50      $1.75
                      April 30, 2007           $2.20      $1.69
                      July 31, 2007            $2.45      $1.65

         The closing price for our Common Stock on October 16, 2008 was $3.43.
On October 15, 2008, the Company had approximately 245 shareholders of record,
which does not include shareholders whose shares are held in street or nominee
names. The Company believes that there are approximately 1,484 beneficial owners
of its Common Stock.

         Holders of Common Stock are entitled to receive dividends as may be
declared by the Board of Directors out of funds legally available therefore. To
date, no dividends have been declared by the Board of Directors, nor does the
Board of Directors anticipate declaring and paying cash dividends in the
foreseeable future.

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

Overview

         On January 18, 2001, Accelr8 purchased the OpTest portfolio of
technology assets and commenced investment in development and optimization of
OpTest's surface chemistry (OptiChem(R)) and quantitative instrument (QuanDx).
Our proprietary surface chemistry and its quantitative instruments support rapid
assessment of medical diagnostics, food-borne pathogens, water-borne pathogens
and bio-warfare assessments. The Company sells advanced microarray slides coated
with its proprietary OptiChem(R) activated surface chemistry for use in academic
research, drug discovery and molecular diagnostics. This surface coating has the
ability to shed sticky biomolecules that interfere with bio-analytical assays
such as microarrays and immunoassays. This property substantially improves
analytical performance by enabling higher sensitivity, greater reproducibility,
and higher throughput by virtue of simplified application methods.

         On November 24, 2004 the Company entered into an exclusive two year
manufacturing and marketing agreement (the "License Agreement") with SCHOTT
Jenaer Glas (GMBH) of Jena Germany for OptiChem(R) coated amine-reactive slides
(Slide H). Pursuant to the License Agreement, SCHOTT paid the Company a
non-refundable fee of $100,000, of which $50,000 was credited against future
royalties. An additional $15,000 in deferred revenue was recorded for training
supplied to SCHOTT. During the 2-year term of the License Agreement, SCHOTT
agreed to pay the Company a royalty payment equal to 6% of net sales of products


                                       22

<PAGE>


licensed under the License Agreement. An optional 1-year non-exclusive license
extension to market and manufacture Slide H was exercised by SCHOTT on September
27, 2006. This license expired November 23, 2007.

         On June 2, 2005 the Company signed a second Supply Agreement (Slide HS)
with SCHOTT which expired on December 31, 2005. The Company also granted an
option for SCHOTT to receive a non-exclusive right to manufacture and sell, up
to 12,500 glass slides, from January 1, 2006 to December 31, 2006. SCHOTT
exercised this right and paid the Company $15,000 for training on manufacturing
of Slide HS. Subsequently, SCHOTT paid $9626 in royalties for Slide HS sold
during 2006.

         On December 21, 2006, the Company and SCHOTT entered into an agreement
for the manufacturing and worldwide sales of Slide HS coatings on microarraying
slides (the "Slide HS Agreement"). The Slide HS Agreement granted SCHOTT the
right to manufacture and market Streptavidin coated microarray slides for 2
years through December 31, 2008. In connection with the Slide HS Agreement,
SCHOTT paid the Company a $50,000 license fee and $50,000 prepaid royalty
payment. On November 24, 2007, the Company and SCHOTT extended the non-exclusive
Slide H license for three more years, to expire on November 23, 2010 for an
aggregate payment of $100,000, $50,000 of which was for a prepaid license and
$50,000 in prepaid royalties.

         During the fiscal year ended July 31, 2008, SCHOTT paid the Company
$50,000 in license fees and deferred revenues of $45,695 in prepaid royalties
were recognized.

         The Company entered into an exclusive seven-year license with
NanoString Technologies Inc. on October 5, 2007. The license grants to
NanoString the right to apply OptiChem(R) coatings to NanoString's proprietary
molecular detection products. Pursuant to the license agreement, NanoString paid
the Company a non-refundable fee of $100,000 of which $50,000 was credited
against future royalties. Under the royalty-bearing license, NanoString is to
pay the Company a royalty at the rate of eight percent (8%) of net sales for
sales up to $500,000 of NanoString licensed products. The royalty rate on the
second $500,000 of net sales is six percent (6%), and the royalty thereafter is
four percent (4%).

         On May 22, 2008, the Company and Becton, Dickinson and Company ("BD")
entered into a Research and Option Agreement (the "Agreement").

         The Agreement provides for the establishment of a research program from
the date of the Agreement until September 30, 2009 whereby BD will fund certain
research work by the Company relating to the Company's BACcel(TM) rapid pathogen
diagnostics platform (the "BACcel(TM) Platform"). The research program includes
mutually agreed upon milestones to support BD's product development planning.
Under the terms of the Agreement, in connection with the research program, the
Company will receive certain periodic payments from BD between the date of the
Agreement and July 1, 2009.


                                       23
<PAGE>


         The Agreement also grants BD an option to acquire for an upfront
payment an exclusive license (the "Exclusive License") from the Company for
certain know-how and patent rights relating to the BACcel(TM) Platform. The
Exclusive License also provides for the Company to receive royalty payments on
worldwide sales. The Exclusive License contains certain diligence requirements
for BD to develop and commercialize such products. If BD exercises the option
but fails to meet certain terms of the Exclusive License, the Company has the
option to convert the Exclusive License to a non-exclusive license. If BD does
not exercise the Exclusive License, Accelr8 will receive a non-exclusive license
from BD for certain intellectual property.

         Pursuant to the Agreement, from the date of the Agreement until
September 30, 2009, the Company agreed not to engage in or participate in any
discussions or negotiations with parties other than BD for the joint development
of, licensing of or intellectual property relating to the BACcel(TM) Platform.

         Unless earlier terminated pursuant to the terms of the Agreement, the
Agreement shall terminate upon the Exclusive License Agreement or the
non-exclusive license from BD to the Company coming into effect.

         During the fiscal year ending July 31, 2009 we intend to continue
BACcel(TM) system analytical design, including custom antibody development for
rapid pneumonia pathogen identification. In addition, we expect to conduct
further custom OptiChem(R) coating developments in projects funded by industrial
customers. We intend to license OptiChem(R) for the exclusive application to
these products.

Selected Financial Data

         The following selected financial data should be read in conjunction
with the financial statements and related notes thereto appearing elsewhere in
this Form 10-KSB. The selected financial data as of July 31, 2008 and 2007 and
for each of the two years in the period ended July 31, 2008 have been derived
from our financial statements which have been audited by our independent
auditors and included elsewhere in this Form 10-KSB. The selected financial data
provided below is not necessarily indicative of our future results of operations
or financial performance.

                                             Year Ended July 31
Statement of Operations Data:                           2008       2007
                                                        ----       ----
          (In thousands, except per share data)

Total Revenue                                            475             183
                                           ---------------------------------
Loss from operations                                 (1,730)          (2,114)
                                           ---------------------------------
Weighted average shares outstanding              10,059,717        9,967,034
Basic and diluted net loss per share                 $(0.17)          $(0.19)


                                       24

<PAGE>


Balance Sheet Data:                                    2008            2007
                                                       ----            ----
Working capital                                        1,104          1,376
Current assets                                         1,376          1,532
Current liabilities                                      272            155
Total assets                                           5,827          6,138
Total liabilities                                      1,414          1,258
Shareholders' equity                                   4,413          4,880






                                       25
<PAGE>


Results of Operations

         The following table sets forth, for the periods indicated, the
percentage of net sales represented by certain items included in the Company's
Statements of Operations:

Fiscal year ended July 31                                     2008         2007
                                                              ----         ----

Total revenues from operations                                 475          183
Research and development                                      (881)        (992)
General and administrative                                  (1,001)        (920)
Amortization                                                  (243)        (240)
Depreciation                                                   (51)         (73)
Cost-of-sales                                                   (9)         (57)
Marketing and sales                                            (17)         (15)
Interest and dividend  income                                   63          112
Unrealized holding gain (loss) on investments                   70           65
Miscellaneous                                                   54           14
                                                            --------------------
Net (loss)                                                  (1,680)      (1,924)
                                                            ====================


Changes in Results of Operations: Year ended July 31, 2008 compared to year
ended July 31, 2007

         Technological development fees were $200,000 for the year ended July
31, 2008 as compared to $0 for the year ended July 31, 2007. The technological
development fees are the result of the Development Agreement with BD.

         OptiChem(R) slide revenues for the year ended July 31, 2008 were
$75,520 as compared to $108,280 for the year ended July 31, 2007, resulting in a
decrease of $32,760, or 30%. The decrease in OptiChem(R) revenues was primarily
due to a decrease in sales of slides to SCHOTT and NanoString, which are now
manufactured by them pursuant to license agreements and subject to royalty
payments.

         Consulting fees for the year ended July 31, 2008 were $0 as compared to
$22,000 during the fiscal year ended July 31, 2007. The consulting fees were
recognized from the completion of phase 2 of the Feasibility Testing Agreement
with Promega during the fiscal year ended July 31, 2007.

         License fees for the year ended July 31, 2008 were $100,000 as compared
to $50,000 during the fiscal year ended July 31, 2007, an increase of $50,000 or
100%. The increase in license fees was primarily the result of licensing the
manufacturing of slide H to SCHOTT. Option fees for the year ended July 31, 2008
were $100,000 as compared to $2,850 during the fiscal year ended July 31, 2007
an increase of $97,150 or 3400%. The increase in option fees was the result of
the agreement with BD.

         Cost of sales for the year ended July 31, 2008 were $9,649 compared to
$56,646 during the year ended July 31, 2007, a decrease of $46,997 or 83 %. This


                                       26

<PAGE>


decrease was due to a decrease sales of slides. The cost of sales as a
percentage of OptiChem(R) revenues was 12.8% for the year ended July 31, 2008 as
compared to 52.3% for the year ended July 31, 2007.

         Research and development expenses for the year ended July 31, 2008,
were $880,984 as compared to $991,581 during the year ended July 31, 2007, a
decrease of $110,597 or 11%. This decrease was primarily the result of
reductions in salaries to research and development staff from $541,739 to
$336,390 during the year ended July 31, 2008, a decrease of $205,349 or 38%, a
reduction in laboratory expense and supplies to $55,410 for the year ended July
31, 2008 from $175,101 for the year ended July 31, 2007, a decrease of $119,691
or 68%. The decrease in the laboratory expense and supplies was primarily the
result of decreased direct supply costs related to the development of the
BACcel(TM) system.

         General and administrative expenses for the year ended July 31, 2008
were $1,001,284 as compared to $920,175 during the year ended July 31, 2007, an
increase of $81,109 or 9%. The following summarizes the major components of the
changes:

                                                                      Increase
                                               2008         2007      (Decrease)
                                               ----         ----      ----------

Audit and Accounting                       $   53,983   $   34,821   $   19,162
Consulting Fees                               284,499       29,479      255,020

Corporate and Shareholder                      80,381       52,744       27,637

Corporate Insurance                            15,435       42,105      (26,670)

Deferred Compensation                          39,777      156,135     (116,358)

Employee Benefits                              74,432       82,317       (7,885)

Payroll Taxes                                  57,404       67,956      (10,552)

Salaries                                      314,694      362,879      (48,185)

Travel                                          1,778        5,450       (3,672)

Legal                                          25,782       47,606      (21,824)

Other General Administrative Expenses          53,119       38,683       14,436
                                           ------------------------------------
                                           $1,001,284   $  920,175   $   81,109


         The increase in consulting fees of $255,020 was primarily due to an
increase in expenses incurred as a result of the issuance of stock options. The
change in deferred compensation was due to market losses on related investments.
Payroll taxes decreased and employee benefits were reduced by $18,437 during
fiscal year ended July 31, 2008, because of a reduction in the


                                       27

<PAGE>


number of full time employees. Salaries decreased due to a decrease in the
number of employees. Legal fees decreased by $21,824 due to an increase in
patent filings with certain costs being capitalized versus being expensed.

         The increase in amortization of $2,861 for the year ended July 31, 2008
was negligible.

         Depreciation for the year ended July 31, 2008 was $51,182 as compared
to $73,528 during the year ended July 31, 2007 a decrease of $22,346 or 30%. The
decreased depreciation was primarily due to not replacing equipment.

         Marketing and sales expenses were $17,005 for the year ended July 31,
2008 as compared to $15,496 during the year ended July 31, 2007, an increase of
$1,509 or 9.7%. The increase was primarily the result of producing marketing
materials or product literature.

         As a result of these factors, loss from operations for the year ended
July 31, 2008 was $1,727,628as compared to a loss of $2,114,479 for the year
ended July 31, 2007, a decreased loss of $386,851 or 18. 3%.

         Interest and dividend income for the year ended July 31, 2008 was
$63,075 as compared to $111,567 for the year ended July 31, 2007, a decrease of
$48,492 or 43%. The decrease was due to lower interest rates earned on our cash
balances and lower cash balances in our accounts.

         Unrealized loss on marketable securities held in the deferred
compensation trust for the year ended July 31, 2008 was $69,590 as compared to
an unrealized gain of $64,849 during the year ended July 31, 2007. The
unrealized loss was a result of market fluctuations on the securities that are
held in the deferred compensation trust.

         Miscellaneous Other Income was $53,801 for the year ended July 31, 2008
as compared to $13,820 for the year ended July 31, 2007, an increase of $39,981
or 289%. The increase in Miscellaneous Other Income was due to sales of
equipment that are no longer germane to the Company's operations. As a result of
these factors, net loss for the year ended July 31, 2008 was $1,680,342 as
compared to $1,924,243 during the year ended July 31, 2007, a decreased loss of
$243,901 or 12.5%.


                                       28
<PAGE>


Capital Resources and Liquidity

         During the fiscal year ended July 31, 2008, we did not generate
positive cash flows from operating activities. The primary sources of capital
have been from revenues from operations, sale of additional common stock in
March 2008 totaling $925,800 and our existing cash balance. As of July 31, 2008,
the Company had $1,233,100 in cash and cash equivalents, a decrease of $160,569
from $1,393,669 at July 31, 2007. The primary reasons for change in cash and
cash equivalents were cash used for operating activities of $963,728 plus
$803,159 net cash provided by investing and financing activities.

         For the year ended July 31, 2008, we spent $880,984 on research and
development expenses. As of the date of this annual report, we have only
realized nominal revenues from the sale of our products. Notwithstanding our
investments in research and development, there can be no assurance that the
BACcel(TM) system or any of our other products will be successful, or even if
they are successful, will provide sufficient revenues to continue our current
operations. As of July 31, 2008, management believes that current cash balances
will be sufficient to fund our capital and liquidity needs for the next 12-24
months.

         The following summarizes the Company's capital resources at July 31,
2008 compared with July 31, 2007:


Increase (Decrease)
                                                July 31, 2008      July 31, 2007
                                                -------------      -------------

Cash and cash equivalents                        $ 1,233,100        $ 1,393,669

Current assets                                   $ 1,376,040        $ 1,531,615

Total assets                                     $ 5,827,466        $ 6,138,087

Current liabilities                              $   272,168        $   155,331

Working capital                                  $ 1,103,872        $ 1,376,284

Net cash (used in) operating
activities                                       $  (122,641)       $(1,535,667)

Net cash (used in) provided by
investing activities                             $   803,159        $   (75,000)

Net cash (used in) provided by
financing activities                             $   925,800        $         0


         Our primary use of capital has been for the research and development of
the BACcel(TM) system. Our working capital requirements are expected to increase
in line with the growth of our business. We have no lines of credit or other
bank or off balance sheet financing arrangements. We believe our capital
requirements will continue to be met with our existing cash balance,
technological development fees and revenues provided by potential licensors of
our products, additional issuance of equity or debt securities and/or a capital
infusion from potential partners in the development of the BACcel(TM) system.


                                       29

<PAGE>


Further, if capital requirements vary materially from those currently planned,
we may require additional capital sooner than expected. There can be no
assurance that such capital will be available in sufficient amounts or on terms
acceptable to us, if at all. Additional issuances of equity or convertible debt
securities will result in dilution to our current Common Stockholders.

Recent Accounting Pronouncements

         In May 2008, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 163, "Accounting for Financial Guarantee Insurance Contracts-and
interpretation of FASB Statement No. 60". SFAS No. 163 clarifies how Statement
60 applies to financial guarantee insurance contracts, including the recognition
and measurement of premium revenue and claims liabilities. This statement also
requires expanded disclosures about financial guarantee insurance contracts.
SFAS No. 163 is effective for fiscal years beginning on or after December 15,
2008, and interim periods within those years. SFAS No. 163 has no effect on the
Company's financial position, statements of operations, or cash flows at this
time.

         In May 2008, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles". SFAS
No. 162 sets forth the level of authority to a given accounting pronouncement or
document by category. Where there might be conflicting guidance between two
categories, the more authoritative category will prevail. SFAS No. 162 will
become effective 60 days after the SEC approves the PCAOB's amendments to AU
Section 411 of the AICPA Professional Standards. SFAS No. 162 has no effect on
the Company's financial position, statements of operations, or cash flows at
this time.

         In March 2008, the Financial Accounting Standards Board, or FASB,
issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging
Activities--an amendment of FASB Statement No. 133. This standard requires
companies to provide enhanced disclosures about (a) how and why an entity uses
derivative instruments, (b) how derivative instruments and related hedged items
are accounted for under Statement 133 and its related interpretations, and (c)
how derivative instruments and related hedged items affect an entity's financial
position, financial performance, and cash flows. This Statement is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008, with early application encouraged. The Company has not yet
adopted the provisions of SFAS No. 161, but does not expect it to have a
material impact on its consolidated financial position, results of operations or
cash flows.

         In December 2007, the SEC issued Staff Accounting Bulletin (SAB) No.
110 regarding the use of a "simplified" method, as discussed in SAB No. 107 (SAB
107), in developing an estimate of expected term of "plain vanilla" share


                                       30

<PAGE>


options in accordance with SFAS No. 123 (R), Share-Based Payment. In particular,
the staff indicated in SAB 107 that it will accept a company's election to use
the simplified method, regardless of whether the company has sufficient
information to make more refined estimates of expected term. At the time SAB 107
was issued, the staff believed that more detailed external information about
employee exercise behavior (e.g., employee exercise patterns by industry and/or
other categories of companies) would, over time, become readily available to
companies. Therefore, the staff stated in SAB 107 that it would not expect a
company to use the simplified method for share option grants after December 31,
2007. The staff understands that such detailed information about employee
exercise behavior may not be widely available by December 31, 2007. Accordingly,
the staff will continue to accept, under certain circumstances, the use of the
simplified method beyond December 31, 2007. The Company currently uses the
simplified method for "plain vanilla" share options and warrants, and will
assess the impact of SAB 110 for fiscal year 2009. It is not believed that this
will have an impact on the Company's consolidated financial position, results of
operations or cash flows.

         In December 2007, the FASB issued SFAS No. 160, Noncontrolling
Interests in Consolidated Financial Statements--an amendment of ARB No. 51. This
statement amends ARB 51 to establish accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an
ownership interest in the consolidated entity that should be reported as equity
in the consolidated financial statements. Before this statement was issued,
limited guidance existed for reporting noncontrolling interests. As a result,
considerable diversity in practice existed. So-called minority interests were
reported in the consolidated statement of financial position as liabilities or
in the mezzanine section between liabilities and equity. This statement improves
comparability by eliminating that diversity. This statement is effective for
fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2008 (that is, January 1, 2009, for entities with calendar
year-ends). Earlier adoption is prohibited. The effective date of this statement
is the same as that of the related Statement 141 (revised 2007). The Company
will adopt this Statement beginning March 1, 2009. It is not believed that this
will have an impact on the Company's consolidated financial position, results of
operations or cash flows.


         In December 2007, the FASB, issued FAS No. 141 (revised 2007), Business
Combinations.'This Statement replaces FASB Statement No. 141, Business
Combinations, but retains the fundamental requirements in Statement 141. This
Statement establishes principles and requirements for how the acquirer: (a)
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, and any noncontrolling interest in the
acquiree; (b) recognizes and measures the goodwill acquired in the business
combination or a gain from a bargain purchase; and (c) determines what


                                       31

<PAGE>


information to disclose to enable users of the financial statements to evaluate
the nature and financial effects of the business combination. This statement
applies prospectively to business combinations for which the acquisition date is
on or after the beginning of the first annual reporting period beginning on or
after December 15, 2008. An entity may not apply it before that date. The
effective date of this statement is the same as that of the related FASB
Statement No. 160, Noncontrolling Interests in Consolidated Financial
Statements. The Company will adopt this statement beginning March 1, 2009. It is
not believed that this will have an impact on the Company's consolidated
financial position, results of operations or cash flows.

                                       32

<PAGE>


Application of Critical Accounting Policies

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 estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities as of
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

Revenue Recognition

         We generate revenue as follows:

          o    Consulting revenue is recognized as services are performed.
          o    OptiChem(R) revenue is recognized upon shipping of the product to
               the customer.
          o    Deferred revenue represents amounts billed but not yet earned
               under consulting agreements.

Deferred Taxes

         We recognize deferred tax assets and liabilities based on the
differences between the financial statement carrying amounts and the tax bases
of assets and liabilities. We regularly review our deferred tax assets for
recoverability and establish a valuation allowance based on historical taxable
income, projected future taxable income, and the expected timing of the
reversals of existing temporary differences. As of July 31, 2008 and July 31,
2007, we have established a valuation allowance equal to our net deferred tax
asset, as we have not been able to determine that we will generate sufficient
future taxable income to allow us to realize the deferred tax asset.

Intangible Assets

         We amortize our intangible assets over the period the asset is expected
to contribute directly or indirectly to our future cash flows. We evaluate the
remaining useful life of each intangible asset that is being amortized each
reporting period to determine whether events and circumstances warrant a
revision to the remaining period of amortization.

         We review our intangible assets for impairment each reporting period as
discussed below under "Impairment of long-lived and intangible assets." An
impairment loss will be recognized if the carrying amount of an intangible asset
is not recoverable and its carrying amount exceeds its fair value.


                                       33
<PAGE>



Impairment of Long-Lived and Intangible Assets

         We assess the impairment of identifiable intangibles and long-lived
assets whenever events or changes in circumstances indicate that the carrying
value may not be recoverable. Factors we consider important which could trigger
an impairment review include the following:

          o    Significant underperformance relative to expected historical or
               projected future operating results;
          o    Significant changes in the manner of our use of the acquired
               assets or the strategy for our overall business;
          o    Significant negative industry or economic trends;
          o    Significant decline in our stock price for a sustained period;
               and
          o    Our market capitalization relative to net book value.

         When we determine that the carrying value of intangibles and long-lived
assets may not be recoverable based upon the existence of one or more of the
above indicators of impairment, we measure any impairment based on a projected
discounted cash flow method using a discount rate determined by our management
to be commensurate with the risk inherent in our current business model. Our
judgments regarding the existence of impairment indicators are also based on
legal factors, market conditions and expected future operational performance of
related product lines of the identifiable intangible. Future events could cause
us to conclude that impairment indicators exist and that our identifiable assets
are impaired. Management believes that the amounts carried on our balance sheet
are recoverable, and that our intangible assets are not impaired at this time.
Management's belief is based upon an independent valuation of our intangibles
that was obtained from a third party valuation firm and management's assessment
of the fair value of our intangibles. Our intangibles constitute a significant
portion of our assets, and as a result, any resulting impairment loss could have
a material adverse impact on our financial condition and results of operations
in the future. We also evaluate the remaining estimated useful lives of each
asset each reporting period and determine whether events or circumstances
require revised useful lives.

Research and Development

         Research and development expenses are expensed as incurred. Research
and development expenses include salaries and related expenses associated with
the development of our technology and include compensation paid to engineering
personnel and fees to consultants.


                                       34
<PAGE>


Contractual Obligations

         The following table sets forth information with respect to our
contractual obligations and commercial commitments as of July 31, 2008.

                             Contractual Obligations
                                      (3)

Payments Due By Period
                                           1 to 3         4 to 5      More than
                               Total       years           years       5 years
                                         --------------------------------------

Office and Laboratory                       $69,362      $ 69,362        -0-
Lease Payments (1)

Thomas V. Geimer                         $1,375,000      $720,000     $480,000

          (1)  Includes monthly deposits for taxes and assessments, landlord's
               liability insurance and common facilities charges. We have a
               two-year lease agreement that began on October 1, 2007 and
               expires on September 30, 2009 for our office and laboratory
               located at 7000 North Broadway, Building 3-307, Denver, Colorado
               80221.

          (2)  Calculated as of July 31, 2008. Includes the $75,000 payment of
               the deferred compensation for the fiscal year ended July 31,
               2008, which payment was made on October 29, 2008. Mr. Geimer's
               employment agreement on substantially similar terms as his
               previous employment agreement provides for an annual base salary
               of $165,000 with annual deferred compensation of $75,000 and
               expires on December 31, 2012. See "Item 10-Executive
               Compensation." The amounts from the new employment agreement are
               reflected above.

          (3)  Excludes accounts payable and accrued liabilities. Item 7.
               Financial Statements

         The response to this item is submitted as a separate section of this
report beginning on page F-1.

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

         Not Applicable.


                                       35
<PAGE>


Item 8A.  Controls and Procedures

Disclosure Controls and Procedures

         Our Chief Executive Officer and Chief Financial Officer, referred to
collectively herein as the Certifying Officer, has concluded that the Company's
disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934, as amended ("Exchange Act") were
effective as of July 31, 2008 to ensure that information required to be
disclosed by the Company in reports that it files or submits under the Exchange
Act is (i) recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission rules and forms and (ii)
accumulated and communicated to the Company's management, including its
principal executive officer and principal financial officer, as appropriate to
allow timely decisions regarding required disclosure.

         Management's Report on Internal Control over Financial Reporting

         Management is responsible for establishing and maintaining adequate
internal control over financial reporting. A company's internal control over
financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles. Because of its inherent limitations, internal control
over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may
deteriorate.

         Management, including the Chief Executive Officer and Chief Financial
Officer, has conducted an evaluation of the effectiveness of the Company's
internal control over financial reporting as of July 31, 2008, based on based on
the criteria for effective internal control described in Internal Control --
Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Based on its assessment, management concluded that the
Company's internal control over financial reporting was effective as of July 31,
2008.

         This Annual Report does not include an attestation report of the
Company's independent registered public accounting firm regarding internal
control over financial reporting. Management's report was not subject to
attestation by the Company's independent registered public accounting firm
pursuant to temporary rules of the SEC that permit the Company to provide only
management's report in this Annual Report.

         This report shall not be deemed to be filed for purposes of Section 18
of the Securities Exchange Act of 1934, or otherwise subject to the liabilities
of that section, and is not incorporated by reference into any filing of the
Company, whether made before or after the date hereof, regardless of any general
incorporation language in such filing.


                                       36

<PAGE>


         Changes in Internal Control over Financial Reporting

         There was no change in our internal control over financial reporting
during the quarter ended July 31, 2008 that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting. I

Item 8B. Other Information

         Not Applicable.


                                    PART III

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

         Set forth below is certain information concerning the directors,
executive officers and key employees and consultants of the Company as of the
date hereof.
      Directors, Executive Officers, and Key Employees and Key Consultants


Thomas V. Geimer                 61   Secretary, Chief Executive Officer,
                                      Chief Financial Officer, Chairman
                                      of the Board
David C. Howson                  64   President
Charles E. Gerretson (1)         62   Director
A. Alexander Arnold III (1)      67   Director
Steven W. Metzger                34   Senior Scientist
                                 48   Chairman of the Scientific Advisory Board
David W. Grainger, PhD                and Consultant

Marin Kollef, MD                 51   Consultant

         (1) Members of the Audit and Compensation Committees

         Officers are appointed by and serve at the discretion of the Board of
Directors. Each director holds office until the next annual meeting of
shareholders or until a successor has been duly elected and qualified. All of
our officers devote their full-time to our business and affairs. There are no
family relationships between any directors, executive officers or key employees
or consultants.

         Thomas V. Geimer has been the Chairman of the Board of Directors and a
director of Accelr8 since 1987. He currently serves as the Chief Executive
Officer, Chief Financial Officer and Secretary of the Company. Mr. Geimer is
responsible for development of our business strategy, day-to-day operations,
accounting and finance functions. Before assuming full-time responsibilities at
the Company, Mr. Geimer founded and operated an investment banking firm.


                                       37
<PAGE>


         David Howson became the President of the Company in April 2004.
Previously Mr. Howson was a consultant to the Company and had acted as the
Director for Business Development since January 2001. Mr. Howson is responsible
for coordinating business plan development and execution. Before assuming
responsibilities at the Company, Mr. Howson founded and operated the Altro
Group, LLC, a medical technology consulting firm. His clients at Altro included
medical industry leaders such as Pfizer, Boston Scientific, and Becton
Dickinson. Mr. Howson had previously founded and managed three companies for
advanced medical devices. From 1966 through 1970, Mr. Howson was enrolled in the
Neurobiology Doctoral Program at Cornell University and received a Bachelor of
Science degree from Hobart College in 1966.

         A. Alexander Arnold III has served as a director of the Company since
September 1992. For the past 25 years Mr. Arnold has served as a Managing
Director of Trainer, Wortham & Co., Inc., a New York City-based investment
counseling firm. Mr. Arnold received a Bachelor of Arts degree from Rollins
College in 1964 and a Masters of Business Administration from Boston University
in 1966.

         Charles E. Gerretson was appointed a director of the Company on July
19, 2003. For the past 28 years, Mr. Gerretson has served as the President of
Gerretson Realty, Inc., a Denver Colorado based real estate firm, which Mr.
Gerretson founded. Mr. Gerretson received a Bachelor of Science degree in
Business Administration from the University of Minnesota in 1968. Mr. Gerretson
was formerly a CPA with Arthur Andersen and Company and currently heads the
Company's Audit Committee.

         Employees and Consultants

         Steven W. Metzger has been a Research Scientist with the Company since
April 2001, and is now a Senior Scientist. From 2000 through 2001, Mr. Metzger
was responsible for the implementation of merging core technologies at Heska
Corporation. He was previously employed by Geo-Centers, Inc. under contract at
the Naval Research Laboratory in Washington, D.C. where he focused on
bio-warfare pathogen detection. Mr. Metzger received a Bachelor of Arts degree
in Chemistry from Colorado College in 1996. David W. Grainger, Ph.D. has been a
consultant to the Company since January 2001. Since September 2007, Dr. Grainger
has been the Professor, Department Chair, and Inaugural George S. & Dolores Dore
Eccles at the University of Utah. From 1994 to 2007, Dr. Grainger taught as a
Professor and Assistant Professor of Chemistry at Colorado State University.
From 1998 through 1999, Dr. Grainger was the President and Chief Scientific
Officer for Gamma-A Technologies, Inc. Dr. Grainger received a Bachelor of Arts
degree in Engineering from Dartmouth College in 1983 and a Ph.D. in
Pharmaceutical Chemistry from the University of Utah in 1987. Dr. Grainger
chaired the prestigious Gordon Conference on Tissue Engineering and Biomaterials
in 2001. He has been a consultant to companies such as Novartis, Johnson &
Johnson, 3M, Ciba-Geigy, and others.


                                       38
<PAGE>


         Marin Kollef, M.D., FACP, FCCP has been a consultant to the Company
since October of 2004. For the past five years Dr. Kollef has been self employed
as a consultant to Barnes-Jewish Hospital. Dr. Kollef is a Professor of Medicine
at the Washington University School of Medicine in St. Louis, Director of the
Medical Intensive Care Unit, and Director of Respiratory Care Services at
Barnes-Jewish Hospital. Dr. Kollef is a graduate of the United States Military
Academy at West Point (1979) and received his degree as Doctor of Medicine at
the University of Rochester School of Medicine and Dentistry (1983). Dr. Kollef
has advised the Company on clinical applications and the major issues involved
in managing infectious diseases in critically ill patients. Scientific Advisory
Board

         The Company established a Scientific Advisory Board in 2003. Dr. David
Grainger is Chairman. Involvement in Certain Legal Proceedings

         During the past five years, none of our directors, executive officers
or persons that may be deemed promoters is or has been involved in any legal
proceeding concerning (i) any bankruptcy petition filed by or against any
business of which such person was a general partner or executive officer either
at the time of the bankruptcy or within two years prior to that time; (ii) any
conviction in a criminal proceeding or being subject to a pending criminal
proceeding (excluding traffic violations and other minor offenses); (iii) been
subject to any order, judgment or decree, not subsequently reversed, suspended
or vacated, of any court of competent jurisdiction permanently or temporarily
enjoining, barring, suspending or otherwise limiting involvement in any type of
business, securities or banking activity; or (iv) been found by a court, the SEC
or the Commodity Futures Trading Commission to have violated a federal or state
securities or commodities law (and the judgment has not been reversed, suspended
or vacated).


                                       39
<PAGE>


Board Committees

         The Board of Directors maintains a Compensation Committee and an Audit
Committee. The members of the Compensation Committee and the Audit Committee are
Mr. Arnold and Mr. Gerretson, the Company's independent directors. The
Compensation Committee held one meeting during the last fiscal year. The Audit
Committee held four meetings during the last fiscal year. The Audit Committee's
financial expert is Charles E. Gerretson.

Audit Committee Report

         The Audit Committee has reviewed and discussed with management the
Company's audited financial statements for the year ended July 31, 2008.

         The Audit Committee has also discussed with Comiskey & Company, P.C.
the matters required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees, as amended, by the Auditing Standards Board
of the American Institute of Certified Public Accountants.

         The Audit Committee has received and reviewed the written disclosures
and the letter from Comiskey & Company, P.C. required by Independence Standards
Board Standard No. 1, Independence Discussions with Audit Committees, as
amended, and has discussed with Comiskey & Company, P.C. their independence.

         Based on the reviews and discussions referred to above, the Audit
Committee has recommended to the Board of Directors that the audited financial
statements referred to above be included in the Company's Annual Report on Form
10-KSB for the year ended July 31, 2008 filed with the Securities and Exchange
Commission.

Audit Committee of The Board of Directors

A. Alexander Arnold III
Charles E. Gerretson

Compliance With Section 16(a) of The Exchange Act

         Section 16(a) of the Exchange Act, generally requires the Company's
directors and executive officers and persons who own more than 10% of a
registered class of the Company's equity securities ("10% owners") to file with
the SEC initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Directors and executive
officers and 10% owners are required by Securities and Exchange Commission
regulation to furnish the Company with copies of all Section 16(a) forms they
file. To the Company's knowledge, based solely on review of copies of such
reports furnished to us and verbal representations that no other reports were


                                       40

<PAGE>


required to be filed during the fiscal year ended July 31, 2008, all Section
16(a) filing requirements applicable to its directors, executive officers and
10% owners were met except that Thomas V. Geimer filed a delinquent Form 4 on
January 7, 2008 reporting one delinquent transaction that was required to be
filed on January 3, 2008 and Mr. Geimer filed a delinquent Form 4 on May 30,
2008 reporting one delinquent transaction that was required to be filed on May
25, 2008.

Code of Ethics

         The Company has adopted a code of ethics for its principal executive
officer and senior financial officers and a code of ethics and standards of
conduct, that is applicable to all directors, officers and employees.
Stockholders may request a free copy of these documents from:

Accelr8 Technology Corporation
7000 North Broadway, Building 3-307
Denver, Colorado 80221

Item 10.  Executive Compensation

Compensation Discussion and Analysis

         Our executive compensation program for Thomas V. Geimer and David C.
Howson, the named executive officers (the "NEOs") is administered by the
Company's compensation committee, which is comprised of A. Alexander Arnold III
and Charles E. Gerretson.

Compensation Objectives

         We believe that the compensation programs for the NEOs should reflect
our performance and the value created for the Company's stockholders. In
addition, the compensation programs should support the long-term strategic goals
and values of the Company, and should reward individual contributions to the
Company's success. We believe that the structure of the compensation programs
for our executives reflects these objectives. Our compensation programs consist
of two basic components: base salary and long-term compensation.

Elements of Compensation

         The elements of our compensation program include: (1) base salary and
(2) long term compensation.

         Base Salary. The NEOs are paid a base salary. Base salary for the NEOs
is established based on the scope of their responsibilities, professional
qualifications and the other elements of his/her compensation.

         Long-term Compensation. Long-term compensation is comprised of various
forms of equity compensation. The long-term elements are designed to assist the
Company in long-term retention of key personnel and further align the interests
of the NEOs with our shareholders.


                                       41
<PAGE>


         The determination of each element of compensation to the NEOs is
entirely in the discretion of the Compensation Committee. We do not currently
use any specific benchmarks or performance goals in determining the elements of
and the size of awards and compensation.

Equity Award Practices

         All equity awards are approved before or on the date of grant. The
exercise price of at-the-money stock options and the grant price of all
full-value awards is the closing price on the date of grant.

         Our equity award approval process specifies the individual receiving
the grant, the number of units or the value of the award, the exercise price or
formula for determining the exercise price and the date of grant. The Company
has no program, plan or practice to the timing of its option grants.

Summary Compensation Table

<TABLE>
<CAPTION>

         The following table summarizes the compensation of the NEO's for the fiscal years ended July 31, 2008 and 2007.

Name and                   Fiscal                    Stock           Option       All other
Principal Position         Year        Salary        Bonus           Awards         Awards    Compensation     Total ($)
-----------------------------------------------------------------------------------------------------------------------

<S>                         <C>       <C>           <C>                  <C>           <C>    <C>              <C>
Thomas V. Geimer            2008      $165,000      $      0             0             0      $ 75,000(1)      $240,000
   Chief Executive          2007      $165,000      $      0             0             0      $ 75,000(1)      $240,000
   Officer and
   Chief Financial
   Officer

David C. Howson             2008      $150,000      $      0             0             0      $      0         $150,000
   President                2007      $138,807      $      0             0             0      $      0         $138,807

         (1)    Represents deferred compensation for Mr. Geimer pursuant to the
                Company's deferred compensation plan, $75,000 of which vested
                during each of the fiscal years ended July 31, 2008 and 2007 but
                such payments were not made until October 29, 2008 and October
                26, 2007 of the subsequent fiscal year.

Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based
Awards Table

Individual Arrangements and Employment Agreements

         The following is a description of the individual arrangements that we
have made to each of the NEO's with respect to their compensation. Mr. Geimer
was paid during the fiscal year ended July 31, 2008 in accordance with his prior


                                       42

<PAGE>


and his new employment agreement with us. Mr. Howson does not have an employment
agreement with the Company. In addition, Mr. Geimer also has a Change-in-Control
payment that is described in the "Potential Payments Upon Termination" below.

Thomas V. Geimer - Chief Executive Officer, Chief Financial Officer,
Secretary and Chairman of the Board of Directors

         Effective December 1, 2008, we entered into an employment agreement
with Mr. Geimer. The agreement was negotiated and approved by the Compensation
Committee. The agreement provides for an annual base salary of $165,000 with
annual deferred compensation of $75,000. The agreement expires on December 31,
2012. The compensation committee reviewed the prior employment agreement of Mr.
Geimer in connection with the approval of Mr. Geimer's employment agreement.

         In the event of termination by mutual agreement, termination "with
cause," as defined in the agreement, death or permanent incapacity or voluntary
termination, Mr. Geimer, or his estate, would be entitled to the sum of the base
salary and unreimbursed expenses accrued to the date of termination and any
other amounts due under the agreement. In the event of termination "without
cause," as defined in the agreement, Mr. Geimer would be entitled to the sum of
the base salary and unreimbursed expenses accrued to the date of termination and
any other amounts due under the agreement and an amount equal to the greater of
Mr. Geimer's annual base salary (12 months of salary) or any other amounts
remaining due to Mr. Geimer under the agreement, which as of July 31, 2008 would
be $817,500. Additionally, in the event of a change in control, any unpaid
amounts due under the initial term of the agreement for both base salary and
deferred compensation would be payable plus five times the sum of the base
salary and deferred compensation. In his positions as Chief Executive Officer
and Chief Financial Officer, Mr. Geimer exercises detailed supervision over the
operations of the Company and is ultimately responsible for the operations of
the Company. Mr. Geimer is also responsible for all duties incident to the title
of Chief Financial Officer and Secretary.

David C. Howson - President

         During the fiscal year ended July 31, 2008, we paid Mr. Howson $138,807
in cash compensation. During the fiscal year ended July 31, 2008, the
Compensation Committee increased Mr. Howson's salary to $150,000. Mr. Howson
does not have an employment agreement with the Company. In his position as
President, Mr. Howson supervises the technical development and develop product
strategies. Mr. Howson further performs all duties incident to the title of
President and such other duties as from time to time may be assigned to him by
the Board of Directors.


                                       43
<PAGE>



Outstanding Equity Awards at Fiscal Year End

         The following table sets forth information concerning options awards to
Messrs. Geimer and Howson at the fiscal year ended July 31, 2008. The Company
granted additional options during the fiscal year ended July 31, 2008 as shown
below:

Option Awards
-------------------------------------------------------------------------------------------------------------------------
                             Number of         Number of
                            Securities        Securities
                            Underlying        Underlying
                            Unexercised       Unexercised          Option             Option
                            Option (#)        Options (#)         Exercise          Expiration
Name                        Grant Date        Exercisable      Unexercisable           Price               Date
-------------------------------------------------------------------------------------------------------------------------
Thomas V. Geimer         December 11, 2007      100,000              0                 $3.60         December 11, 2017
                          August 2, 2001        200,000              0                 $1.45          August 1, 2011
                          August 27, 1999       100,000              0                 $1.50          August 26, 2009
David Howson              March 16, 2005        225,000              0                 $2.57          March 16, 2015
                          March 16, 2005           0               75,000              $2.57          March 16, 2015

Option Exercises During Fiscal Year

         There were no options exercised by the NEO's during the year ended July
31, 2008.

Potential Payments Upon Termination

Cash Compensation

         Mr. Geimer's employment agreement contains provisions under which the
Company will be obligated to pay Mr. Geimer certain compensation upon his
termination. The following tables set forth the details of the estimated
payments and benefits that would be provided to Mr. Geimer in the event that his
employment with us is terminated for any reason, including a termination for
cause, resignation or retirement, a constructive termination, a without cause
termination, death, long term disability, and termination in connection with a
change in control as of July 31, 2008.

                                                                                                             Termination in
                         Termination by                                                                        connection
                             Mutual        Illness or                    Resignation/                        with a change
Thomas V. Geimer            Agreement      Incapacity   With cause       Without cause      Retirement         in control
---------------------------------------------------------------------------------------------------------------------------

Cash Compensation               0               0             0            $817,500             0              $2,280,000
                                                                            (1)(2)                               (1)(2)


                                       44

<PAGE>


         (1)    Represents the amounts due under Mr. Geimer's employment
                agreement. See "Individual Arrangements and Employment
                Agreements."
         (2)    Includes the $75,000 payment of the deferred compensation for
                the fiscal year ended July 31, 2008, which payment was made on
                October 29, 2008.
         (3)    A change of control is defined in Mr. Geimer's employment
                agreement to mean the occurrence of one or more of the following
                three events:
                  (a)   Any person becomes a beneficial owner (as such term is
                        defined in Rule 13d-3 promulgated under the Securities
                        Exchange Act of 1934, as amended) directly or indirectly
                        of securities representing 33% or more of the total
                        number of votes that may be cast for the election of
                        directors of the Company;
                  (b)   Within two years after a merger, consolidation,
                        liquidation or sale of assets involving the Company, or
                        a contested election of a Company director, or any
                        combination of the foregoing, the individuals who were
                        directors of the Company immediately prior thereto shall
                        cease to constitute a majority of the Board; or
                  (c)   Within two years after a tender offer or exchange offer
                        for voting securities of the Company, the individuals
                        who were directors of the Company immediately prior
                        thereto shall cease to constitute a majority of the
                        Board.

Effects of Termination Events or Change in Control on Unvested Equity Awards

            All unvested stock option awards granted to Mr. Howson provide that
upon a change of control, the unvested stock options will not immediately vest
unless the contingencies to the stock options have been met.

Compensation of Non-Management Directors

            The Company did not pay its non-management directors any
compensation during the fiscal year ended July 31, 2008.

Cash Compensation

            We have not paid any cash compensation to our directors for their
service on our Board of Directors.

Liability Insurance

            The Company provides liability insurance for its directors and
officers. Carolina Casualty Insurance Company is the underwriter of the current
coverage, which extends until January 7, 2009. The annual cost of this coverage
is approximately $20,000.


                                       45
<PAGE>


Compensation Pursuant to Plans

Deferred Compensation Plan.

         In January 1996, we established a deferred compensation plan for our
employees. Contributions to the plan are provided for under the employment
agreement detailed above. For each of the fiscal years ended July 31, 2008 and
2007, we contributed $75,000 to the plan. The $75,000 contribution for the
fiscal year ended July 31, 2008 was made on October 29, 2008.

         On October 14, 1997, Thomas V. Geimer exercised an aggregate of
1,140,000 warrants and options to acquire 1,140,000 shares of the Company's
Common Stock at an exercise price of $0.24 per share. Under the terms of the
Rabbi Trust, we will hold the shares in trust and carry the shares as held for
employee benefit by the Company. The Rabbi Trust provides that upon Mr. Geimer's
death, disability, or termination of his employment the shares will be released
ratably over the subsequent ten (10) years, unless the Board of Directors
determines otherwise. See Note 7 to the Financial Statement for further
information.

Securities Authorized For Issuance Under Compensation Plans

            The table set forth below presents the securities authorized for
issuance with respect to compensation plans under which equity securities are
authorized for issuance as of July 31, 2008:

                           Equity Compensation Plan Information

                            umber of securities    eighted average               Number of securities
                           No be issued upon       xercise price of              remaining for future
                           tlan category          Wvailable outstanding          issuance under
                           pxercise of            eptions, warrants and          equity compensation
                           eutstanding options    aights                         plans (excluding
                           oarrants and rights    o                              securities reflected
                           w                      r                              in the 1st column)

Equity Compensation               897,500                   $2.06                       510,000
Plans approved by
security holders
-------------------------------------------------------------------------------------------------------

Equity Compensation                  0                        0                            0
Plans not approved by
security holders
-------------------------------------------------------------------------------------------------------

Total                             897,500                                               510,000


                                       46
<PAGE>


The 1996 Stock Option Plans

         The Board of Directors of the Company has adopted an incentive stock
option plan (the "Qualified Plan") which provides for the grant of options to
purchase an aggregate of not more than 700,000 shares of the Company's Common
Stock. The purpose of the Qualified Plan is to make options available to
management and employees of the Company in order to provide them with a more
direct stake in the future of the Company and to encourage them to remain with
the Company. The Qualified Plan provides for the granting to management and
employees of "incentive stock options" within the meaning of Section 422 of the
Internal Revenue Code of 1986 (the "Code").

         The Board of Directors of the Company has adopted a non-qualified stock
option plan (the "Non-Qualified Plan") which provides for the grant of options
to purchase an aggregate of not more than 300,000 shares of the Company's Common
Stock. The purpose of the Non-Qualified Plan is to provide certain key
consultants, independent contractors, technical advisors and directors of the
Company with options in order to provide additional rewards and incentives for
contributing to the success of the Company. These options are not incentive
stock options within the meaning of Section 422 of the Code.

         The Qualified Plan and the Non-Qualified Plan (the "Stock Option
Plans") are administered by a committee (the "Committee") appointed by the Board
of Directors which determines the persons to be granted options under the Stock
Option Plans and the number of shares subject to each option. No options granted
under the Stock Option Plans are transferable by the optionee other than by will
or the laws of descent and distribution and each option is exercisable, during
the lifetime of the optionee, only by such optionee. Any options granted to an
employee terminate 90 days after his ceasing to be an employee, except in
limited circumstances, including death of the employee, and where the Committee
deems it to be in the Company's best interests not to terminate the options.

         The exercise price of all incentive stock options granted under the
Qualified Plan must be equal to the fair market value of such shares on the date
of grant as determined by the Committee, based on guidelines set forth in the
Qualified Plan. The exercise price may be paid in cash or (if the Qualified Plan
shall meet the requirements of rules adopted under the Exchange Act) in Common
Stock or a combination of cash and Common Stock. The term of each option and the
manner in which it may be exercised will be determined by the Committee, subject
to the requirement that no option may be exercisable more than 10 years after
the date of grant. With respect to an incentive stock option granted to a
participant who owns more than 10% of the voting rights of the Company's
outstanding capital stock on the date of grant, the exercise price of the option
must be at least equal to 110% of the fair market value on the date of grant and
the option may not be exercisable more than five years after the date of grant.

         The Stock Option Plans were approved by our shareholders at a special
shareholders meeting held on November 8, 1996. At the annual meeting of
shareholders held on December 12, 2002, shareholders approved the following


                                       47

<PAGE>


amendments to the Qualified Plan and the Non-Qualified Plan: (i) the Committee
was given the power to amend and alter the Qualified Plan and the Non-Qualified
Plan so long as the amendments do not affect any outstanding options; (ii)
provide that any shares cancelled, terminated, or expired pursuant to the
Qualified Plan and the Non-Qualified Plan be made available for purposes of the
Qualified Plan and the Non-Qualified Plan; (iii) provide that the cashless
exercise provision of the Qualified Plan and the Non-Qualified Plan be in the
sole discretion of the Committee; and (iv) extended the expiration date of the
Qualified Plan and the Non-Qualified Plan until December 12, 2012.

         As of July 31, 2008, 699,000 options had been granted pursuant to the
Qualified Plan with 17,500 of these options exercised, 231,500 options that
expired, leaving 351,000 available for grant and 315,000 options had been
granted pursuant to the Non-Qualified Plan with 125,000 of these options
exercised, 0 options that expired, 50,000 that were cancelled and 130,000
available for grant. 2004 Omnibus Stock Option Plan

         On December 14, 2004, the shareholders approved the Company's 2004
Omnibus Stock Option Plan (the "Omnibus Plan"). The Omnibus Plan authorizes the
issuance of up to five hundred thousand (500,000) shares of the Company's Common
Stock. The purpose of the Omnibus Plan is to promote the growth of the Company
by permitting the Company to grant options ("Options") to purchase shares of its
Common Stock, to attract and retain the best available personnel for positions
of substantial responsibility and to provide certain key employees, independent
contractors, consultants, technical advisors and directors of the Company with a
more direct stake in the future of the Company and provide an additional
incentive to contribute to the success of the Company.

         The Omnibus Plan is administered by the Compensation Committee of the
Board or any committee of the Board performing similar functions, as appointed
from time to time by the Board (the "Omnibus Committee"). Pursuant to the terms
of the Omnibus Plan, the Omnibus Committee may grant either "incentive stock
options" within the meaning of Section 422 of the Internal Revenue Code of 1986
(the "Code") or nonqualified stock options, provided that incentive stock
options may not be granted to independent contractors and consultants. The
exercise price of all incentive stock options granted under the Omnibus Plan
must be equal to the fair market value of such shares on the date of grant as
determined by the Omnibus Committee, based on guidelines set forth in the
Omnibus Plan. The exercise price of nonqualified stock options granted under the
Omnibus Plan shall be not less than 50% of the fair market value of a share on
the date of grant of such Option. The Omnibus Committee may grant on behalf of
the Company, Options to purchase shares of the Company's Common Stock to any key
employee, independent contractor, consultant, technical advisor or director.

         As of July 31, 2008, 620,000 options had been granted pursuant to the
Omnibus Plan with 5,000 of these options exercised, 120,000 expired leaving 0
available for grant.


                                       48
<PAGE>


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

         The following table sets forth certain information regarding beneficial
ownership of our Common Stock as of October 15, 2008 by (i) each person who is
known by the Company to own beneficially more than 5% of the Company's
outstanding Common Stock; (ii) each of the Company's executive officers and
directors; and (iii) all executive officers and directors as a group. The
calculation excludes 1,129,110 shares which are held by the Rabbi Trust for the
benefit of Thomas V. Geimer. Further, Mr. Geimer does not have voting power over
the shares that are held in the Rabbi Trust. Common Stock not outstanding but
deemed beneficially owned by virtue of the right of an individual to acquire
shares is treated as outstanding only when determining the amount and percentage
of Common Stock owned by such individual. Except as noted, each person or entity
has sole voting and sole dispositve power with respect to the shares shown.


Name and Address of Beneficial Owner                             Shares Beneficially Owned
------------------------------------                             -------------------------
                                                             Number                      Percent
                                                             ------                      -------

Thomas V. Geimer (1)                                        454,000                       4.27%
7000 North Broadway, Building 3-307
Denver, Colorado 80221

A. Alexander Arnold III(2)                                  868,000                       8.47%
845 Third Ave., 6th Floor
New York, NY 10021

Charles E. Gerretson(3)                                     128,150                       1.26%
7000 North Broadway, Building 3-307
Denver, Colorado 80221

David Howson(4)                                             300,000                       2.85%
7000 North Broadway, Building 3-307
Denver, Colorado 80221

Executive Officers and Directors                          1,751,400                      15.91%
as a Group (4 persons)

         (1)   Does not include 1,129,110 shares, which were purchased by Mr.
               Geimer upon exercise of warrants and options. Mr. Geimer
               exercised these options and warrants on October 14, 1997, and
               simultaneously contributed the shares acquired to a Rabbi Trust.
               See Note 7 to Financial Statements for further information.
               Includes 400,000 shares, which may be purchased by Mr. Geimer
               upon exercise of options. Includes 400 shares held in brokerage
               accounts for Mr. Geimer's children, in which Mr. Geimer has the
               power and authority to dispose of the shares held by these
               accounts.


                                       49
</TABLE>
<PAGE>


         (2)   Includes 730,000 shares held by four trusts. Mr. Arnold merely
               serves as trustee for each of those trusts, but is not a
               beneficiary of and has no pecuniary interest in any of those
               trusts. Also includes 63,000 shares held in investment advisory
               accounts for which Mr. Arnold serves as the investment advisor.
               Also includes 75,000 shares, which may be purchased by Mr. Arnold
               upon exercise of options.

         (3)   Includes: (i) 103,250 shares owned directly by Mr. Gerretson and
               (ii) 10,000 shares, which may be purchased by Mr. Gerretson upon
               exercise of options which options expire on March 15, 2015. Also
               includes 14,900 shares held in brokerage and retirement accounts
               of individuals in which Mr. Gerretson has the power and authority
               to dispose of the shares held by these accounts. Mr. Gerretson
               disclaims any beneficial ownership with respect to such shares.

         (4)   Includes 300,000 shares, which may be purchased by Mr. Howson
               upon exercise of options which options expire on March 15, 2015,
               of which 75,000 stock options shall vest if and only if prior to
               the expiration date of the Options, the Company closes on a
               transfer for the sale of the Company assets or the acquisition of
               the Company in which the Company's shareholders receive aggregate
               consideration at closing equal to or greater than $250,000,000.


Item 12. Certain Relationships and Related Transactions, and Director
Independence

         During fiscal year 1996, we established a deferred compensation plan
for our employees. We may make discretionary contributions to the plan based on
recommendations from the Board of Directors. As of July 31, 2008, the Board of
Directors had authorized deferred compensation totaling $1,050,000 since fiscal
year 1996 to Mr. Geimer of which $975,000 had been funded. The $75,000
representing the difference between the authorized deferred compensation and the
funded deferred compensation was funded on October 29, 2008.

         There were no other transactions or series of transactions for the
fiscal year ended July 31, 2008, nor are there any currently proposed
transactions, or series of the same to which we are a party, in which the amount
involved exceeds $60,000 and in which, to the knowledge of the Company, any
director, executive officer, nominee, 5% shareholder or any member of the
immediate family of the foregoing persons, have or will have a direct or
indirect material interest.


                                       50
<PAGE>


Item 13.  Exhibits

(a) Exhibits

31.1 Certification of Principal Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.

31.2 Certification of Principal Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.

32.1 Certification of Principal Executive Officer and Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 (b) Financial Statements

The following financial statements of the Company are included in Item 7:

     Report of Independent Registered Public Accounting Firm- Comiskey &
     Company, P.C.

     Balance Sheets as of July 31, 2008 and 2007

     Statements of Operations for the years ended July 31, 2008 and 2007

     Statements of Stockholders' Equity for the years ended July 31, 2008
         and 2007

     Statements of Cash Flows for the years ended July 31, 2008 and 2007

     Notes to Financial Statements

Item 14.  Principal Accountant Fees and Services

         The aggregate fees billed by Comiskey & Company, P.C. for professional
services rendered for the audit of the Company's annual consolidated financial
statements for the years ended July 31, 2008 and 2007, including the reviews of
the unaudited interim financial statements of the Company's Form 10-QSBs was
approximately $35,000 and $32,000, respectively.

Tax Fees

         The aggregate fees billed by Comiskey & Company, P.C. for professional
services rendered for the tax compliance, tax advice and tax planning for the
fiscal years ended July 31, 2008 and 2007 ("Tax Fees") was $0 and $0,
respectively.


                                       51
<PAGE>


All other Fees

         Comiskey & Company, P.C. did not perform any professional services
other than those set forth above for the fiscal years ended July 31, 2008 and
2007.

Audit Committee Pre-Approval Policies

         The Audit Committee shall pre-approve all auditing services and
permitted non-audit services (including the fees and terms thereof) to be
performed for the Company by its independent auditor, subject to any de minimus
exceptions that may be set for non-audit services described in Section
10A(i)(l)(B) of the Exchange Act which are approved by the Committee prior to
the completion of the audit.

         None of the hours expended on the principal accountant's engagement to
audit the Company's financial statements for the most recent fiscal year were
attributed to work performed by persons other than the principal accountant's
full-time permanent employees.


                                       52
<PAGE>


                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                         ACCELR8 TECHNOLOGY CORPORATION

Date:  October 29, 2008                      By:  /s/ David C. Howson
                                             ----------------------------------
                                             David C. Howson, President

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

Date:  October 29, 2008                      By:  /s/ Thomas V. Geimer
                                             ----------------------------------
                                             Thomas V. Geimer, Chairman,
                                             Secretary, Chief Executive Officer,
                                             and Chief Financial Officer

Date:  October 29, 2008                      By:  /s/ Bruce McDonald
                                             ----------------------------------
                                             Bruce McDonald, Principal
                                             Accounting Officer

Date:  October 29, 2008                      By:  /s/ A. Alexander Arnold, III
                                             ----------------------------------
                                             A. Alexander Arnold, III, Director

Date:  October 29, 2008                      By:  /s/ Charles E. Gerretson
                                             ----------------------------------
                                             Charles E. Gerretson, Director


                                       53
<PAGE>


                         ACCELR8 TECHNOLOGY CORPORATION
                              FINANCIAL STATEMENTS

                             July 31, 2008 and 2007

                         ACCELR8 TECHNOLOGY CORPORATION

                                TABLE OF CONTENTS

                                                                   PAGE
                                                                  --------

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM             F-1

BALANCE SHEETS                                                      F-2

STATEMENTS OF OPERATIONS                                            F-3

STATEMENTS OF SHAREHOLDERS' EQUITY                                  F-4

STATEMENTS OF CASH FLOWS                                            F-5

NOTES TO FINANCIAL STATEMENTS                                       F-6


                                       54
<PAGE>


Report of Independent Registered Public Accounting Firm

Board of Directors
Accelr8 Technology Corporation
Denver, Colorado

We have audited the accompanying balance sheets of Accelr8 Technology
Corporation (a Colorado corporation) as of July 31, 2008 and 2007, and the
related statements of operations, shareholders' equity and cash flows for the
years ended July 31, 2008 and 2007. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with 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
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 audits 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
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Accelr8 Technology Corporation
as of July 31, 2008 and 2007, and the results of its operations and changes in
its cash flows for the years ended July 31, 2008 and 2007, in conformity with
U.S. generally accepted accounting principles. Denver, Colorado October 20, 2008


                             /s/ COMISKEY & COMPANY
                            PROFESSIONAL CORPORATION


                                      F-1

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

                                     ACCELR8 TECHNOLOGY CORPORATION
                                             BALANCE SHEETS
                                         JULY 31, 2008 and 2007

                                                 ASSETS
                                                                                     2008            2007
                                                                                     ----            ----
Current assets:
Cash and cash equivalents                                                    $  1,233,100    $  1,393,669

Trade accounts receivable                                                           6,334           5,625

Inventory (Note 3)                                                                 97,268         107,855

Prepaid expenses and other (Note 4)                                                39,338          24,466
                                                                             ------------    ------------

Total current assets                                                            1,376,040       1,531,615
Property and equipment, net (Note 5)                                               37,398         106,819
Investments, net (Note 10)                                                      1,067,327       1,027,550
Intellectual property, net (Note 6)                                             3,346,701       3,472,103
                                                                             ------------    ------------
Total assets                                                                 $  5,827,466    $  6,138,087
                                                                             ============    ============

                                  LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable                                                             $    133,628    $     64,599

Accrued compensation and other liabilities                                         25,889          32,386

Deferred revenue (Note 11)                                                        112,651          58,346
                                                                             ------------    ------------
Total current liabilities                                                         272,168         155,331
Long-term liabilities:

Deferred compensation                                                           1,142,327       1,102,549
                                                                             ------------    ------------
Total liabilities                                                               1,414,495       1,257,880
                                                                             ------------    ------------

Shareholders' equity (Note 7):
Common stock, no par value;
14,000,000 shares authorized;
10,226,210 (2008) and 9,971,210 (2007) shares issued and outstanding           13,803,820      12,878,020
Contributed capital                                                               922,586         635,280
Accumulated (deficit)                                                         (10,039,835)     (8,359,493)
        Shares held for employee benefit (1,129,110 shares at cost)
                                                                                 (273,600)       (273,600)
                                                                             ------------    ------------

Total shareholders' equity                                                      4,412,971       4,880,207
                                                                             ------------    ------------

Total liabilities and shareholders' equity                                   $  5,827,466    $  6,138,087
                                                                             ============    ============

                             See accompanying notes to financial statements.

                                                  F-2
<PAGE>

                              ACCELR8 TECHNOLOGY CORPORATION
                                 STATEMENTS OF OPERATIONS
                          FOR YEARS ENDED JULY 31, 2008 and 2007

                                                                      2008            2007
                                                                      ----            ----
Revenues (Note 9 and Note 11):
Technical development Fees                                    $    200,000    $          0

OptiChem (TM) revenue                                               75,520         108,280

Consulting Fees                                                          0          22,000

License Fees                                                       100,000          50,000

Option Fees                                                        100,000           2,850
                                                              ------------    ------------


Total revenues                                                $    475,520    $    183,130
                                                              ------------    ------------


Cost of sales                                                        9,649          56,646
                                                              ------------    ------------


Gross profit                                                       465,871         126,484
                                                              ------------    ------------

Costs and expenses:
Research and development                                           880,984         991,581

General and administrative                                       1,001,284         920,175

Amortization (Note 6)                                              243,044         240,183

Depreciation (Note 5)                                               51,182          73,528

Marketing and sales                                                 17,005          15,496
                                                              ------------    ------------


Total costs and expenses                                         2,193,499       2,240,963
                                                              ------------    ------------

(Loss) from operations                                          (1,727,628)     (2,114,479)
                                                              ------------    ------------

Other (expense) income:
Interest and dividend income                                        63,075         111,567
Unrealized holding gain (loss) on investments (Note 2)             (69,590)         64,849
Miscellaneous                                                       53,801          13,820
                                                              ------------    ------------

Total other income                                                  47,286         190,236
                                                              ------------    ------------

Net (loss)                                                    $ (1,680,342)   $ (1,924,243)
                                                              ============    ============

Net loss per share:  Basic and diluted net (loss) per share          (0.17)          (0.19)
                                                              ============    ============

Weighted average shares outstanding                             10,059,717       9,967,034
                                                              ============    ============

                      See accompanying notes to financial statements.

                                            F-3
<PAGE>

                                                  ACCELR8 TECHNOLOGY CORPORATION
                                                STATEMENTS OF SHAREHOLDERS' EQUITY



                                                                                                           Shares
                                                                                           Retained         Held
                                              Common Stock         Stock                   Earnings          For          Total
                                       --------------------------  To Be   Contributed    Accumulated      Employee    Shareholder's
                                         Shares         Amount     Issued    Capital       (Deficit)       Benefit        Equity
                                       -----------    -----------  ------  -----------    -----------    -----------    -----------

Balances, July 31, 2006                  9,971,210     12,878,020              570,150     (6,435,250)      (273,600)     6,739,320
                                       -----------    -----------          -----------    -----------    -----------    -----------

Extension of Stock Option Expiration
  Dates                                                                         16,812                                       16,812

Stock option expense under SFAS 123R                                            48,318                                       48,318

Net loss                                                                                   (1,924,243)            (0)    (1,924,243)

Balances, July 31, 2007                  9,971,210     12,878,020              635,280     (8,359,493)      (273,600)     4,880,207
                                       -----------    -----------          -----------    -----------    -----------    -----------

Net Loss                                                                                   (1,680,342)                   (1,680,342)
Exercise of Options                         55,000        125,800                                                           125,800
Sale of Common Shares                      200,000        800,000                                                           800,000
Extension of Stock Option Expiration
  Dates                                                                         15,956                                       15,956
Stock Option Expense Under SFAS 123R                                           271,350                                      271,350
                                       -----------    -----------  ------  -----------    -----------    -----------    -----------
Balances, July 31, 2008                 10,226,210     13,803,820              922,586    (10,039,835)      (273,600)       441,297





                                           See accompanying notes to financial statements.

                                                                F-4
<PAGE>

                              ACCELR8 TECHNOLOGY CORPORATION
                                 STATEMENTS OF CASH FLOWS
                        FOR THE YEARS ENDED JULY 31, 2008 and 2007

                                                                      2008          2007
                                                                   ----------    ----------

Cash flows from operating activities:
     Net loss                                                      (1,680,342)   (1,924,243)
     Adjustments to reconcile net (loss) to net cash
       (used in) operating activities:
       Depreciation                                                    51,182        73,528
       Amortization                                                   243,044       240,183
       Fair value of stock options
          granted for services                                        287,306        65,130
       Unrealized (gain) loss on investments                           69,590       (64,849)
       Realized (gain) loss on sale of investments, interest and
          dividends reinvested                                        (34,368)      (16,286)
       Realized (gain) on sale of fixed assets                        (51,761)
       (Increase) decrease in assets:
          Accounts receivable                                            (709)        5,227
          Inventory                                                    10,587       (81,968)
          Prepaid expense and other                                   (14,872)       18,634
       Increase (decrease) in liabilities:
          Accounts payable                                             69,029        (6,972)
          Accrued liabilities                                          (6,497)          997
          Deferred revenue                                             54,305        (1,183)
          Deferred compensation                                        39,778       156,135
                                                                   ----------    ----------


       Net cash (used in) operating activities                       (963,728)   (1,535,667)
                                                                   ----------    ----------

Cash flows from investing activities:
     Proceeds on sale of fixed assets                                  70,000         (--)
Purchase of equipment and patent costs                               (117,641)        (--)
     Contribution to deferred compensation trust                      (75,000)      (75,000)
                                                                   ----------    ----------


Net cash provided by (used in) investing activities                  (122,641)      (75,000)
                                                                   ----------    ----------

Cash flows from financing activities:
     Issuance of Common Stock                                         925,800             0
                                                                   ----------    ----------

Net cash provided by (used in) financing activities                   925,800             0


Increase (decrease) in cash and cash equivalent                       160,569    (1,610,667)
Beginning balance:                                                  1,393,669     3,004,336
                                                                   ----------    ----------

Ending Balance:                                                     1,233,100     1,393,669
                                                                   ==========    ==========

                                            F-5
</TABLE>
<PAGE>

                         ACCELR8 TECHNOLOGY CORPORATION

                         NOTES TO FINANCIAL STATEMENTS


NOTE 1 ORGANIZATION AND NATURE OF BUSINESS

We were incorporated on May 26, 1982, under the laws of the State of Colorado.
Prior to the acquisition of the OpTest(TM) suite of technologies ("OpTest"),
which occurred in January of 2001, Accelr8 Technology Corporation ("Accelr8" or
the "Company") was primarily a provider of software tools and consulting
services. We provided software tools and consulting services for system
modernization solutions for Digital Equipment Corporation VMS legacy systems. We
sold the assets related to the software business on July 30, 2004.

On January 18, 2001, the Company acquired the OpTest(TM) suite of technologies
from DDx, Inc. ("DDx"). The purchase of the assets of DDx provided the Company
with a proprietary surface chemistry and quantitative instruments.

Since the acquisition of the assets, we have focused primarily upon research and
development relating to the technologies acquired, and the development of
revenue producing products related to that technology. We have manufactured and
marketed OptiChem(R) coated microarraying slides ("OptiChem") for a variety of
custom applications for specific customers. During most of the fiscal years
ended July 31, 2008 and 2007, our primary focus shifted to development of a
program to integrate our OptiChem(R) surface chemistry ("OptiChem"), QuanDx(TM)
light-scattering quantitative assay instrumentation ("QuanDx"), and YoDx(TM)
assay acceleration process ("YoDx") into a novel system for rapid bacterial
identification and antibiotic resistance testing, the BACcel(TM) system
("BACcel"). We intend to customize our technologies to the specific requirements
of large licensees as well as develop new rapid pathogen detection assays.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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
estimates and assumptions that affect the reported amounts of assets and

                                       F-6
<PAGE>

liabilities and disclosure of contingent assets and liabilities as of the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of
credit risk consist primarily of cash equivalents and accounts receivable,
including receivables from major customers.

The Company places its cash equivalents with a high credit quality financial
institution. The Company periodically maintains cash balances at a commercial
bank in excess of the Federal Deposit Insurance Corporation insurance limit of
$250,000. At July 31, 2008 and 2007, the Company's uninsured cash balance was
approximately $983,100 and $1,293,669, however, this amount is invested under a
repurchase agreement with the bank and is collateralized by securities of the
United States Federal agencies with approximate market values of 102% of the
investment.

The Company grants credit to domestic and international clients in various
industries. Exposure to losses on accounts receivable is principally dependent
on each client's financial position. The Company performs ongoing credit
evaluations of its clients' financial condition.

Estimated Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, investments and other
long-term liabilities approximates fair value at July 31, 2008 and 2007.

The carrying value of all other financial instruments potentially subject to
valuation risk, principally consisting of accounts receivable and accounts
payable, also approximate fair value.

The following methods and assumptions were used to estimate the fair value of
financial instruments:

Cash and Cash Equivalents - The carrying amount approximates fair value.
Investments - The carrying amount is based on quoted market prices plus cash.
Other Long-Term Liabilities - The carrying amount approximates fair value.

                                      F-7
<PAGE>

Cash and Cash Equivalents

All highly liquid investments with an original maturity of three months or less
at time of purchase are considered to be cash equivalents.

Investments

The Company accounts for its investments in accordance with FAS 115. All
investments are recorded as trading and reported at fair value with unrealized
gains and losses reported with current earnings.

Inventory

Inventory is maintained by specific identification and valued at cost using the
first-in first out method. Amounts of any particular inventory item are small
and are used depending on particular characteristics.

Property and Equipment

Property and equipment are recorded at cost. Maintenance and repairs are charged
to expense as incurred and expenditures for major improvements are capitalized.
Gains and losses from retirement or replacement are included in costs and
expenses. Depreciation of property and equipment is computed using the
straight-line method over the estimated useful life of the assets, ranging from
five to seven years.

Research And Development

Research and development costs charged to operations for the years ended July
31, 2008 and 2007 were $889,984 and $991,581, respectively.

Intellectual Property

Intellectual property is amortized over the period the asset is expected to
contribute directly or indirectly to the Company's future cash flows. The
Company evaluates the remaining useful life of each intellectual property that
is being amortized each reporting period to determine whether events and
circumstances warrant a revision to the remaining period of amortization.
Included in intellectual property are patents, trademarks and technology.
Intellectual properties are amortized over their estimated useful lives of 20
years.

                                      F-8
<PAGE>

Long-lived Assets

Long-lived assets and certain identifiable intangibles to be held and used by
the Company are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The Company continuously evaluates the recoverability of its
long-lived assets based on estimated future cash flows from and the estimated
fair value of such long-lived assets, and provides for impairment if such
undiscounted cash flows or the estimated fair value are insufficient to recover
the carrying amount of the long-lived asset.

Revenue Recognition

Technical development fees

Consulting Services

Consulting revenue is recognized as services are performed.

OptiChem(R) Slides

Revenue is recognized when the Company ships the product to customers.

Sales Returns and Allowances

Allowances on accounts receivable and notes receivable are recorded when
circumstances indicate collection is doubtful for particular accounts
receivable. Receivables are written off if reasonable collection efforts prove
unsuccessful. The Company provides for sales returns and allowances on a
specific account basis.

Deferred Revenue

Deferred revenue represents amounts billed but not yet earned under existing
agreements.

Income Taxes

The Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes," which
requires an asset and liability approach to financial accounting and reporting
for income taxes. Deferred income tax assets and liabilities are computed
annually for differences between the financial statement basis and the income
tax basis of assets and liabilities that will result in taxable or deductible
amounts in the future. Such deferred income tax computations are based on
enacted tax laws and rates applicable to the years in which the differences are

                                       F-9
<PAGE>

expected to affect taxable income. A valuation allowance is established when
necessary to reduce deferred income tax assets to the amounts expected to be
realized.

Earnings Per Share

The Company follows SFAS No. 128, "Earnings Per Share," which requires companies
to present basic earnings per share and diluted earnings per share. Basic
earnings (loss) per share includes no dilution and is computed by dividing
income (loss) available to common shareholders by the weighted average number of
common shares outstanding for the period. Diluted earnings per share reflect the
potential dilution of securities that could share in the earnings of an entity.

The Company's net losses for the periods presented cause the inclusion of
potential common stock instruments outstanding to be antidilutive. During the
years ended July 31, 2008 and 2007, common stock options exercisable for
$1,085,000 and 806,250 shares of common stock were not included in diluted loss
per share as the effect was antidilutive due to the Company recording losses in
each of those years. In addition, at July 31, 2008 and July 31, 2007, 200,000
contingently issuable options were not included in loss per share. See Note 8.

Stock Based Compensation

For the six months ended January 31, 2006, the Company accounted for stock based
compensation to employees and directors using the intrinsic value method in
accordance with Accounting Principles Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees," and related interpretations. The Company
accounted for stock based compensation to non-employees in accordance with SFAS
No. 123, "Accounting for Stock Based Compensation", as amended by SFAS No. 148,
"Accounting for Stock-Based Compensation--Transition and Disclosure--an
amendment to FASB No. 123." See Note 8 for further information.

As of February 1, 2006, the Company applied SFAS No. 123R in valuing all options
granted using the Black-Scholes option-pricing model. The fair value is recorded
as consulting expense as the vesting period lapses. Options granted for which
vesting is contingent based on future performance are measured at their then
current fair value at each period end, until vested.

The Company elected to use the modified prospective transition method for
adopting SFAS No. 123R, which required the recognition of stock-based
compensation cost on a prospective basis; therefore, prior period financial
statements have not been restated. Under this method, the provisions of SFAS No.
123R are applied to all awards granted after the adoption date and to awards not

                                      F-10
<PAGE>

yet vested with unrecognized expense at the adoption date based on the estimated
fair value at grant date as determined under the original provisions of SFAS No.
123. The impact of forfeitures that may occur prior to vesting is also estimated
and considered in the amount recognized. Pursuant to the requirements of SFAS
No. 123R, the Company will continue to present the pro forma information for
periods prior to the adoption date.

The Company has historically used the Black-Scholes option pricing model to
determine the fair value of stock options on the date of grant. This model
derives the fair value of stock options based on certain assumptions related to
expected stock price volatility, expected option life, risk-free interest rate
and dividend yield. The Company's expected volatility is based on the historical
volatility of the Company's stock price over the most recent period commensurate
with the expected term of the stock option award. The estimated expected option
life is based primarily on historical employee exercise patterns. The Company
has not paid dividends in the past and does not have any plans to pay any
dividends in the future. See Note 7 for further information.

Comprehensive Income (loss)

The Company follows SFAS No. 130, "Reporting Comprehensive Income," which
establishes standards for reporting and displaying comprehensive income (loss)
and its components (revenues, expenses, gains and losses) in a full set of
general-purpose financial statements. The Company has no other items that would
be included in comprehensive income (loss).

Recent Accounting Pronouncements

     In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 163, "Accounting for Financial Guarantee Insurance Contracts-and
interpretation of FASB Statement No. 60". SFAS No. 163 clarifies how Statement
60 applies to financial guarantee insurance contracts, including the recognition
and measurement of premium revenue and claims liabilities. This statement also
requires expanded disclosures about financial guarantee insurance contracts.
SFAS No. 163 is effective for fiscal years beginning on or after December 15,
2008, and interim periods within those years. SFAS No. 163 has no effect on the
Company's financial position, statements of operations, or cash flows at this
time.

     In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 162, "The Hierarchy of Generally Accepted Accounting Principles". SFAS No.
162 sets forth the level of authority to a given accounting pronouncement or
document by category. Where there might be conflicting guidance between two
categories, the more authoritative category will prevail. SFAS No. 162 will
become effective 60 days after the SEC approves the PCAOB's amendments to AU
Section 411 of the AICPA Professional Standards. SFAS No. 162 has no effect on
the Company's financial position, statements of operations, or cash flows at
this time.

                                      F-11
<PAGE>

     In March 2008, the Financial Accounting Standards Board, or FASB, issued
SFAS No. 161, Disclosures about Derivative Instruments and Hedging
Activities--an amendment of FASB Statement No. 133. This standard requires
companies to provide enhanced disclosures about (a) how and why an entity uses
derivative instruments, (b) how derivative instruments and related hedged items
are accounted for under Statement 133 and its related interpretations, and (c)
how derivative instruments and related hedged items affect an entity's financial
position, financial performance, and cash flows. This Statement is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008, with early application encouraged. The Company has not yet
adopted the provisions of SFAS No. 161, but does not expect it to have a
material impact on its consolidated financial position, results of operations or
cash flows.

     In December 2007, the SEC issued Staff Accounting Bulletin (SAB) No. 110
regarding the use of a "simplified" method, as discussed in SAB No. 107 (SAB
107), in developing an estimate of expected term of "plain vanilla" share
options in accordance with SFAS No. 123 (R), Share-Based Payment. In particular,
the staff indicated in SAB 107 that it will accept a company's election to use
the simplified method, regardless of whether the company has sufficient
information to make more refined estimates of expected term. At the time SAB 107
was issued, the staff believed that more detailed external information about
employee exercise behavior (e.g., employee exercise patterns by industry and/or
other categories of companies) would, over time, become readily available to
companies. Therefore, the staff stated in SAB 107 that it would not expect a
company to use the simplified method for share option grants after December 31,
2007. The staff understands that such detailed information about employee
exercise behavior may not be widely available by December 31, 2007. Accordingly,
the staff will continue to accept, under certain circumstances, the use of the
simplified method beyond December 31, 2007. The Company currently uses the
simplified method for "plain vanilla" share options and warrants, and will
assess the impact of SAB 110 for fiscal year 2009. It is not believed that this
will have an impact on the Company's consolidated financial position, results of
operations or cash flows.

     In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements--an amendment of ARB No. 51. This statement
amends ARB 51 to establish accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an
ownership interest in the consolidated entity that should be reported as equity
in the consolidated financial statements. Before this statement was issued,
limited guidance existed for reporting noncontrolling interests. As a result,

                                      F-12
<PAGE>

considerable diversity in practice existed. So-called minority interests were
reported in the consolidated statement of financial position as liabilities or
in the mezzanine section between liabilities and equity. This statement improves
comparability by eliminating that diversity. This statement is effective for
fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2008 (that is, January 1, 2009, for entities with calendar
year-ends). Earlier adoption is prohibited. The effective date of this statement
is the same as that of the related Statement 141 (revised 2007). The Company
will adopt this Statement beginning March 1, 2009. It is not believed that this
will have an impact on the Company's consolidated financial position, results of
operations or cash flows.

In December 2007, the FASB, issued FAS No. 141 (revised 2007), Business
Combinations.'This Statement replaces FASB Statement No. 141, Business
Combinations, but retains the fundamental requirements in Statement 141. This
Statement establishes principles and requirements for how the acquirer: (a)
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, and any noncontrolling interest in the
acquiree; (b) recognizes and measures the goodwill acquired in the business
combination or a gain from a bargain purchase; and (c) determines what
information to disclose to enable users of the financial statements to evaluate
the nature and financial effects of the business combination. This statement
applies prospectively to business combinations for which the acquisition date is
on or after the beginning of the first annual reporting period beginning on or
after December 15, 2008. An entity may not apply it before that date. The
effective date of this statement is the same as that of the related FASB
Statement No. 160, Noncontrolling Interests in Consolidated Financial
Statements. The Company will adopt this statement beginning March 1, 2009. It is
not believed that this will have an impact on the Company's consolidated
financial position, results of operations or cash flows.

NOTE 3 INVENTORY

The Company purchases raw materials (custom chemicals and glass substrates) for
producing OptiChem(R) coated slides. Raw material on hand at the end of each
reporting period is priced at cost based on the first-in first-out method. There
was no work-in-process or finished goods inventory as of July 31, 2008 and July
31, 2007 as slides currently are made for specific orders and shipped as
produced.

NOTE 4 PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets for the year ended July 31, 2008 were
$39,338 as compared to $24,466 for the year ended July 31, 2007.

                                      F-13
<PAGE>

NOTE 5 PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost
and consisted of the following at July 31:                  2008           2007
                                                       ---------      ---------

Computer equipment                                     $  21,102      $  21,102
Laboratory and scientific equipment                      302,981        394,175
Furniture and fixtures                                    16,601         16,601
                                                       ---------      ---------

Total property and equipment                             340,684        431,878
Accumulated depreciation                                (303,286)      (325,059)
                                                       ---------      ---------

Net property and equipment                             $  37,398      $ 106,819
                                                       =========      =========

Depreciation expense for the years ended July 31, 2008 and 2007 was $51,182 and
$73,528, respectively.


NOTE 6 INTELLECTUAL PROPERTY

Intellectual property consisted of:

The following at July 31:                              2008                2007
                                                -----------         -----------

OptiChem technologies                           $ 4,454,538         $ 4,454,538
Patents                                             411,632             293,991
Trademarks                                           49,019              49,019
                                                -----------         -----------

                                                  4,915,189           4,797,548
Accumulated amortization                         (1,568,488)         (1,325,445)
                                                -----------         -----------

                                                $ 3,346,701         $ 3,472,103
                                                ===========         ===========

Future amortization expense for the intangible assets is estimated as follows:

                   Years Ending July 31,

                     2009                   243,000
                     2010                   243,000
                     2011                   243,000
                     2012                   243,000
                   Thereafter             2,374,701
                                         ----------

Total future amortization                $3,346,701
                                         ==========

                                      F-14
<PAGE>

Intellectual properties are recorded at cost and are being amortized on a
straight-line basis over their estimated useful lives of 20 years, the patent
and patent application life of the OptiChem(R) Technologies. Amortization
expense was $243,044 and $240,183 respectively, for the years ended July 31,
2008 and 2007. The Company routinely evaluates the recoverability of its
long-lived assets based upon estimated future cash flows from and estimated fair
value of such long-lived assets. If in management's judgment, the anticipated
undiscounted cash flows or estimated fair value are insufficient to recover the
carrying amount of the long-lived asset, the Company will determine the amount
of the impairment and the value of the asset will be written down. As of July
31, 2008 and 2007, management believes there was no impairment of the Company's
long-lived assets.

NOTE 7 SHAREHOLDERS' EQUITY

Authorized Shares of Common Stock

On December 6, 2006 the Shareholders adopted an amendment to the Company's
Articles of Incorporation, as amended, to increase the number of authorized
shares of the Company's no par value common stock from 12,000,000 to 14,000,000.

Stock Option Plans

The Company has option agreements with key executives and two stock-based
compensation plans, which are discussed below:

Option And Warrant Agreement With Key Executive

In fiscal 1998, options for the purchase of 1,129,110 shares held by the Chief
Executive Officer ("Executive Options and Warrants") were exercised and placed
into a "Rabbi" Trust as discussed in Note 12. Such shares are issuable upon the
occurrence of retirement, death or termination of the Chairman's employment over
a ten-year period after such occurrence, unless the Board of Directors
determines otherwise.

In accordance with generally accepted accounting principles, the Company has
included the assets and liabilities of the "Rabbi" Trust in its financial
statements, and the shares of the Company's common stock held by the "Rabbi"
Trust have been treated as treasury stock for financial reporting purposes and
have no voting rights.

Qualified Stock Option Plan

The Company has reserved 700,000 shares of its authorized but unissued common
stock for stock options to be granted to officers and employees of the Company
under its Incentive Stock Option Plan (the "Incentive Plan"). The exercise price
of each option, which has a maximum ten-year life, is established by the
Company's compensation committee on the date of grant.

                                      F-15
<PAGE>

     As of July 31, 2008, 699,000 options had been granted pursuant to the
Qualified Plan with 17,500 of these options exercised, 231,500 options that
expired, leaving 351,000 available for grant.

Non-qualified Stock Option Plan

     The Company has reserved 300,000 shares of its authorized but unissued
common stock for stock options to be granted to independent contractors,
technical advisors and directors of the Company under its Non-Qualified Stock
Option Plan (the "Non-Qualified Plan"). The exercise price of each option, which
has a maximum ten-year life, is established by the Company's compensation
committee on the date of grant.

     As of July 31, 2008, 315,000 options had been granted pursuant to the
Non-Qualified Plan with 125,000 of these options exercised, 0 options that
expired, 50,000 that were cancelled and 130,000 available for grant.

Omnibus Stock Option Plan

     On December 14, 2004 the Shareholders approved an Omnibus Stock Option Plan
and reserved 500,000 shares of its authorized but unissued common stock for
stock options to be granted to employees, independent contractors, technical
advisors and directors of the Company.

     As of July 31, 2008, 620,000 options had been granted pursuant to the
Omnibus Plan with 5,000 of these options exercised, 120,000 expired leaving 0
available for grant.

Contingent Options

     In connection with the purchase of the YoDx technology discussed above, the
Company agreed to issue an additional 200,000 stock options with the same terms
upon the earlier of (a) the Company achieving certain accumulated revenue levels
associated with the YoDx technology, as defined in the agreement, or (b) a
change in control of the Company prior to the expiration date of the options. As
of July 31, 2008, the contingent provisions had not been met and the options
have expired; however, an additional grant of 60,000 options to acquire shares
of the Company's common stock was issued in August 2008 in settlement of a
disagreement relating to the cancellation such options. The Company has reserved
a sufficient number of shares for such options. See "Subsequent Events."

                                      F-16
<PAGE>

Accounting for Employee Based Option Plans

As is discussed in Note 2, the Company accounted for all option grants using the
Black-Scholes option pricing model in accordance with SFAS 123R for option
granted or extending after February 1, 2006.

As of July 31, 2008 and 2007, total unrecognized share-based compensation cost
related to unvested stock options was approximately $10,176. For the years ended
July 31, 2008 and 2007, the Company recognized $271,350 in stock based
compensation costs related to the issuance of options to employees under SFAS
123R. For the year ended July 31, 2008 and 2007, the total recognized stock
based compensation costs related to the extension of currently existing, fully
vested options was $15,956 and $16,812. These costs were calculated in
accordance with SFAS No. 123R and are reflected in operating expenses.

The following weighted-average assumptions were used for grants for the year
ended July 31, 2008: no dividend yield; risk free interest rate between 2.37%
and 5%; expected life between 3 and 10 years; and expected volatility between
44% and 66% The weighted average fair value of options granted in fiscal 2008
was $3.67. The weighted average remaining contractual life of options
outstanding at July 31, 2008 was 4.13 years. The expected forfeiture rate used
was 37%.

The following table summarizes information on stock option activity for the
Executive Options, the Omnibus Plan, the Qualified Plan and the Non-Qualified
Plan, excluding the 200,000 contingent options noted above.

                                                                       Weighted
                                                                       Average
                                                                       Exercise
                                          Number of   Exercise Price   Price Per
                                            Shares       Per Share       Share
                                            ------       ---------       -----

Options outstanding, July 31, 2006          945,000    $1.45 - $3.20    $2.08

Options granted                              67,500     2.00 - 2.36     $2.03

Options exercised                                 0          0              0

Options expired                            (115,000)    2.00 - 2.70     $2.20

Options outstanding, July 31, 2007          897,500    $1.45 - $3.20    $2.06
 Granted                                    290,000     2.50 - 4.50      3.57
Options outstanding, July 31, 2008
 Exercised                                  (55,000)    2.25 - 2.66      2.29
 Expired                                    (47,500)    2.10 - 3.10      2.68
Options Outstanding 7/31/08               1,085,000     1.45 - 4.00      2.42


                                      F-17
<PAGE>

As of July 31, 2008 and 2007, and 798,750 options outstanding were currently
exercisable and carried weighted average exercise prices of $ 2.00 and $2.00
respectively. The following table summarizes information about stock options
outstanding and exercisable at July 31, 2008:

                                         Outstanding            Exercisable

                                  Weighted
                                   Average       Weighted               Weighted
                                  Remaining       Average                Average
Range of                        Contractural     Exercise               Exercise
Exercise Price     Number            Life          Price      Number      Price
--------------------------------------------------------------------------------
$1.45-$1.50        375,000           2.4           $1.47      375,000     $1.47
$2.00-$2.36        117,500           1.9           $2.18      108,750     $2.18
$2.57-$2.90        390,000           5.7           $2.57      250,000     $2.59
$3.00-$3.20        202,500           6.1           $4.04      102,500     $3.59
$1.45-$3.20        1,085,000         .2            $2.42      836,250     $2.16


NOTE 8 INCOME TAXES

The following items comprise the Company's net deferred tax assets (liabilities)
as of July 31:

                                                            2008           2007
                                                     -----------    -----------

Deferred tax assets:
Net operating loss                                   $ 4,850,000    $ 3,540,000
Deferred revenue and gains                              (100,000)       (91,286)
Depreciation and amortization                            (51,000)       (92,000)
Stock options issued to consultants and employees        288,000         45,000
General business credit                                  266,000        266,000
Contribution and timing differences                        8,000          4,700
                                                     -----------    -----------

Total                                                  5,261,000      3,763,700
Less valuation allowance                              (5,261,000)    (3,763,700)
                                                     -----------    -----------

Net deferred tax asset                               $         0    $         0
                                                     ===========    ===========

As of July 31, 2008, a valuation allowance increase of $1,497,300 has been
recorded for the deferred tax asset, as management has determined that it is
more likely than not that the deferred tax asset will not be realized.

                                      F-18
<PAGE>

Total income tax expense (benefit) differed from the amounts computed by
applying the U.S. Federal statutory tax rates to pre-tax loss for the fiscal
years ended July 31, 2008 and 2007 as follows:

                                                         2008          2007
                                                         ----          ----

Total expense (benefit) computed by:
Applying the U.S. Federal statutory rate                (34.0)%       (34.0)%
State income taxes, net of Federal tax benefit           (3.0)         (3.0)
General business credits and other                       (3.8)         (3.8)
Valuation allowance                                      40.8          40.8
                                                     --------------------------

Effective tax rate (benefit)                                -%           -%
                                                     ==========================

The Company has unused net operating loss carry forward of approximately
$8,300,000 and general business credits of approximately $265,000 that are
available to offset future income taxes. The net operating loss will expire
beginning in 2013 and the general business tax credits expire from 2008 through
2024.

NOTE 9 MAJOR CUSTOMERS AND FOREIGN REVENUE

For the years ending July 31, 2008 and 2007, revenues were $475,520 and $183,130
respectively. Of the total revenues, revenues from one customer were $300,000
(63. 0%) in the year ended July 31, 2008 and $83,464 (45.6%) for the year ended
July 31, 2007. Foreign Revenues were as follows:

Foreign Revenues                          2008               2007
                                      --------           --------

OptiChem (R) Revenues                 $ 45,695           $108,280
License Fees                            50,000             50,000
Option Fees                                  0              2,850
Consulting Fees                              0             22,000
                                      --------           --------

          Total                       $ 95,695           $183,130


NOTE 10 COMMITMENTS

Investments And Deferred Compensation Arrangement

In January 1996, the Company established a deferred compensation plan for key
employees. Contributions to the plan are provided for under the employment
agreement with Thomas V. Geimer, which is detailed at the end of this note. For
each of the fiscal years ended July 31, 2008 and 2007, the Company contributed
$75,000 to the plan which was accrued but unpaid by the Company at year end. On
October 29, 2008, $75,000 was paid to the deferred compensation plan.

The following information is provided related to the trust assets, which consist
of cash and equity securities as of July 31, 2008 and 2007. These assets, which
based upon the Company's intended use of the investments, have been classified
as trading securities. Unrealized holding gains or loss on trading securities
are included in other income (expense).

                                      F-19
<PAGE>

                                          2008               2007
                                      -----------        -----------

Cost basis                            $ 1,136,917        $   971,380
Unrealized holding gain (loss)            (69,590)            56,270
                                      -----------        -----------

     Aggregate fair value             $ 1,067,327        $ 1,027,550
                                      ===========        ===========

Deferred compensation related to the Rabbi Trust was $1,142,327 and $1,102,549
as of July 31, 2008 and 2007, respectively. The difference between the aggregate
fair value and the deferred compensation amounts represents the award of $75,000
for each of the years ended July 31, 2008 and 2007 which was accrued but unpaid
by the Company at year end. On October 29, 2008, $75,000 was paid to the
deferred compensation plan.

Operating Lease

The Company is a party to a two-year lease for its office and laboratory space
that expires on September 30, 2009. Total rent expense including maintenance
fees was approximately $71,480 and $68,901 during the years ended July 31, 2008
and 2007, respectively. Future minimum lease payments on the office and
laboratory lease are as follows:

   Year Ending          Premises
     July 31              Rent
     -------              ----

       2009               59,454
       2010                9,908
                         -------

                         $69,362
                         ========

Employment Agreement

Effective December 1, 2007, we entered into an employment agreement with Mr.
Geimer. The agreement was negotiated and approved by the Compensation Committee.
The agreement provides for an annual base salary of $165,000 with annual
deferred compensation of $75,000. The agreement expires on December 31, 2012. In
the event of termination by mutual agreement, termination "with cause," as
defined in the agreement, death or permanent incapacity or voluntary
termination, Mr. Geimer or his estate would be entitled to the sum of the base
salary and unreimbursed expenses accrued to the date of termination and any
other amounts due under the agreement. In the event of termination "without
cause," as defined in the agreement, Mr. Geimer would be entitled to the sum of
the base salary and unreimbursed expenses accrued to the date of termination and
any other amounts due under the agreement and an amount equal to the greater of
Mr. Geimer's annual base salary (12 months of salary) or any other amounts
remaining due to Mr. Geimer under the agreement, which as of July 31, 2008 would
be $817,500. Additionally, in the event of a change in control, any unpaid
amounts due under the initial term of the agreement for both base salary and
deferred compensation would be payable plus five times the sum of the base
salary and deferred compensation.

NOTE 11 DEFERRED REVENUE

Deferred revenue was $112,651 and $58,346 at year ends July 31, 2008 and 2007.
Deferred revenue consists of prepaid royalty fees from SCHOTT. All services and
material requirements for the Feasibility Testing Agreement with Promega have
been completed as of September 12, 2006, and no further work on the part of
Accelr8 is required. Therefore, deferred revenue of $22,000 for prepaid
technology license fees was recognized in the first quarter of fiscal year 2008.

NOTE 12 SUBSEQUENT EVENTS

On August 1, 2008, the Company granted 60,000 stock options to a former
consultant in settlement for a disagreement regarding the cancellation of
certain contingent stock options. The stock options expire in five years from
the date of grant.

                                      F-20