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, 2007

[ ]  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, 2007 were $183,130.

The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of October 25, 2007 was approximately $26,948,061 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 July 31,
2007 was 9,971,210.

Documents incorporated by reference       None

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

<PAGE>

TABLE OF CONTENTS
                                                                           PAGE
PART I                                                                     ----

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

     Item 2.   Description of Property....................................  16

     Item 3.   Legal Proceedings..........................................  16

     Item 4.   Submission of Matters to a Vote of Security Holders........  16

PART II

     Item 5.   Market for Common Equity and Related Stockholder Matters
                 and Small Business  Issuer Purchase of Equity Securities.  16

     Item 6.   Management's Discussion and Analysis or Plan of Operation..  17

     Item 7.   Financial Statements.......................................  24

     Item 8.   Changes in and Disagreements With Accountants on
                 Accounting and Financial Disclosure......................  24

     Item 8A.  Controls and Procedures....................................  24

     Item 8B.  Other Information..........................................  25

PART III

     Item 9.   Directors, Executive Officers, Promoters, Control Persons
                 and Corporate Governance; Compliance With Section 16(a)
                 of the Exchange Act......................................  25

     Item 10.  Executive Compensation.....................................  28

     Item 11.  Security Ownership of Certain Beneficial Owners and
                 Management and Related Stockholder Matters...............  35

     Item 12.  Certain Relationships and Related Transactions, and
                 Director Independence....................................  36

     Item 13.  Exhibits...................................................  36

     Item 14.  Principal Accountant Fees and Services.....................  37

SIGNATURES................................................................  38

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 forecasts will accurately anticipate market demand
for the Company's products 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.

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(R)
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
(DEC), VMS legacy systems. On July 30, 2004, we completed the sale of the assets
related to the software business.

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<PAGE>

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 broad strategy is to prove the validity of our
technology and recruit a medical device or diagnostics industry leader as an
alliance partner for commercialization.

     We plan a phased introduction and secondary technology "spin-off" licenses
in non-competing applications. The phased strategy reduces technical and
regulatory risks while preserving the impact potential on medical opinion
leaders and decision makers.

     We envision our role as licensor and alliance partner as leading the
technical development, validating the analytical methods, expanding the product
line, and integrating additional capabilities into the platform.

Products

BACcel(R) System Development

     We are developing an innovative diagnostic product, the BACcel(R) system,
intended for rapid diagnosis in life-threatening bacterial infections.
Management believes that Accelr8 has the only development program in the world
that addresses a major, overlooked gap in managing hospital acquired infections
(HAI). The gap is the high failure rate of initial antibiotic therapy caused by
laboratory delay in identifying adequate antibiotics. Widespread and complex
antibiotic resistance now results in approximately 20% to 40% of cases receiving
inadequate initial therapy. Medical experts believe that inadequate initial
therapy substantially elevates the risk of severe morbidity and mortality in
critically ill patients.

     Our goal is to reduce the time required to guide initial therapy from 2-3
days typically required by current methods to less than 8 hours, intending
thereby to reduce the failure rate of initial therapy. To summarize the current
situation:

1.   Each year in the US, 2 million patients contract a bacterial infection
     after being admitted to a hospital. Of these, approximately 90,000 die from
     the infection.
2.   Hospital Intensive Care Units (ICUs) have the highest mortality rates from
     hospital acquired infection. Risk increases with length of stay, and the
     use of invasive devices such as mechanical ventilators and vascular
     catheters.
3.   When an ICU patient begins to show symptoms of infection, the physician
     must begin treatment within 2-4 hours. Otherwise, a rapidly progressing
     infection can overwhelm a patient who is already critically ill.
4.   Lab cultures typically take 2-3 days to identify the infectious organism
     and test its drug susceptibility. The physician cannot wait, but must
     proceed with an empiric cocktail of broad-spectrum antibiotics based on
     clinical judgment.
5.   Initial empiric therapy proves inadequate in approximately 20% to 40% of
     cases because of widespread and complex antibiotic resistance. However,
     switching from inadequate therapy to lab-directed therapy as soon as the
     next day fails to improve outcomes.
6.   Because of the lack of rapid diagnostic tests, HAI remains a major cause of
     severe complications and mortality in the ICU.

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<PAGE>

     Despite best efforts at prevention, HAI will remain a major challenge.
Novel rapid diagnostics therefore have a unique opportunity to establish a
permanent role in managing HAI.

     The rate of new antibiotic development has declined markedly since the
1960s, but bacteria continually evolve and share new mechanisms of drug
resistance. These trends mean that each passing year reduces the number of cases
that can be treated successfully with any particular drug. Initial empiric
therapy, lacking laboratory guidance, tends to become less successful over time.
According to the Infectious Diseases Society of America and other medical
organizations, the lack of new drugs has become a major threat to public health.
In reviewing the trends, medical experts ask whether medicine is approaching
"the end of the antibiotic era" and fighting an "unwinnable war."

     New emphasis on hygiene and other preventive practices does have beneficial
impact. However, bacteria have become so well adapted to the hospital that the
best preventive efforts do not eradicate them. Even in hospitals that lead in
best preventive practices, endemic hospital-adapted strains continue to cause
high rates of attributable morbidity and mortality.

     Management believes that the diagnostics industry and the biomedical
research community have overlooked the gap caused by slow diagnostic methods.
Accordingly, we conceived the BACcel(R) rapid diagnostic system to close this
vital gap.

     The system applies our proprietary technology to provide advantages in
bacterial strain identification, particularly with regard to antibiotic
resistance. Proprietary technologies include our OptiChem(R) surface coatings
and assay processing methods. We have received patents or we have patent
applications pending for the BACcel(R) system differentiating technology
components and methods.

     The BACcel(R) system achieves speed by eliminating bacterial cultures. It
applies well-accepted bacteriological principles, but uses proprietary
technology to adapt them to analyze live bacteria extracted directly from a
patient specimen. Management believes that the BACcel(R) system will make it
possible to individually analyze each of thousands of extracted bacterial cells
and to produce results in a few hours rather than the 2-3 days typically
required by current methods.

     Based on internal lab data, we believe that the BACcel(R) 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. We
believe 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.

     The goal for the BACcel(R) system is to rule out drugs that are likely to
fail and to monitor the effects of therapy. The 2-hour quantitative
identification is quick enough to help guide initial therapy. The 4-6 hour
resistance type identification is quick enough to guide a change in therapy
while a change can still make a difference in outcomes. 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.


                                        5
<PAGE>

Additional Products

     In addition to BACcel(R) system development, we have developed and
out-licensed OptiChem(R) surface coatings for use in microarraying components.
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.

     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    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(R) system will include a fixed instrument and proprietary
single-use (disposable) analytical cassette or cartridge. Each patient test (a
single specimen) will require one single-use cassette.

     We have used two laboratory prototype instruments in development for more
than two years in our own studies. As the design for single-use cassettes
evolved, we have successfully adapted and simplified the instrumentation.
Similarly, the cassette design has evolved to a simplified form that minimizes
technical risks for the first commercialized products.

     For BACcel(R) system product development, our internal technical team leads
the development by advancing the biological methods, establishing the
performance requirements, and designing the system architecture. For product
design, we have contracted with specialist engineering firms under the direction
of a single prime contractor. These firms are well established in medical device
development. In all cases these organizations pre-assign all new intellectual
property to Accelr8 without future obligations by Accelr8. We retain full
ownership without needing a license or payment of royalties.

     We are developing custom antibodies for species identification and other
assays using proprietary processes that we have developed. 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 development methods.

     We are also developing new OptiChem(R) coating methods for BACcel(R) system
cassette production. In one formulation, we use OptiChem(R) to prevent bacteria
from adhering to flow channel walls and being lost to analysis. In another
formulation, we are adapting OptiChem(R) to immobilize bacteria in specific
locations where the BACcel(R) system's automated microscope views them.

     Using lab prototype instruments, our technical team has developed
successful analytical methods. We periodically publish the research results at
peer-reviewed scientific meetings.

                                       6
<PAGE>

During the years ended July 31, 2007 and 2006, we spent approximately $991,581
and $2,155,988 respectively on research and development activities.

Sales, Licensing, And Alliances

     In 2004 we granted Schott Jenaer Glas GmbH ("SCHOTT"), which is a global
leader in high-quality glass manufacturing, a two-year exclusive global license
with an additional one-year option to manufacture and market OptiChem(R)
microarraying products. The license includes the use of OptiChem(R) on glass
slides for gene and protein microarraying. SCHOTT has exercised its right to a
third year of non-exclusive production, which expires in November 2007. SCHOTT
has indicated its intent to renew this license however, there can be no
assurance that SCHOTT will renew the license. We also granted SCHOTT a two-year
license on a different version of OptiChem(R), which expires in December 2008.

     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, 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 years ended July 31, 2007 and 2006, total revenues were
$183,130 and $212,701, respectively of which $108,280 and $155,701, respectively
were related to OptiChem(R) slide revenues. Of the total OptiChem(R) slide
revenues during the fiscal years ended July 31, 2007 and 2006, $83,464 (45.6%)
and $121,353 (57.1%) were from SCHOTT.

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(R) system. Therefore we are not aware of any actual or impending
competitor.

     Publicity frequently appears in the press concerning new products for rapid
bacterial identification using genes or other molecular markers ("molecular
diagnostics"). Numerous acquisitions, licenses, and distribution arrangements
have been announced over the last few years for such innovations. Nevertheless,
management's assessment based on scientific data and discussions with industry
experts is that known marker methods are not likely to obsolesce the BACcel(R)
system's methods. Antibiotic resistance is highly complex, and even the simplest
apparent mechanisms reveal complexity upon close analysis. Although a few gene
markers have clinical value, most resistance mechanisms have no known reliable
genetic correlates.

     The BACcel(R) system offers performance that we believe cannot be
duplicated by known molecular diagnostics methods. For practical clinical
application, a diagnostic method must be able to differentiate mixed organisms
from whole patient specimens on the basis of genus and species, live and dead
bacterial cells, heterogeneous character expression, and quantitative content.
To the best of management's knowledge, the BACcel(R) system is the only platform
that offers this analytical capability combined with same-shift turnaround.

     We believe that future diagnostics will continue to require "phenotyping"
methods to determine antibiotic resistance. Phenotyping characterizes bacterial
strains by measuring the behavior of live cells upon challenge with different
materials.

                                       7
<PAGE>

     We further believe that we will not need to displace installed
general-purpose culturing systems in order to sell the BACcel(R) system. We have
identified specific diseases for which there is an urgent clinical need for
same-shift detection. These diseases also result in major hospital costs that we
believe can only be reduced, in the absence of effective prevention, by a
product that performs as we intend the BACcel(R) system to perform.

     Even so, we assume that market leaders in diagnostic products may discover,
invent, or acquire competing technology at some point in the future.

     The leading companies with automated microbiological testing include Becton
Dickinson (NYSE: BDX), bioMerieux (France), Dade Behring (being acquired by
Siemens), and Trek Diagnostics (recently acquired by Magellan Biosciences,
private). These products provide broad-based culturing and analysis of a wide
variety of bacteria.

     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 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 the 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(R) system instrumentation 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.

     We have sold a manufacturing and marketing license to SCHOTT for the
production of microarray slides. As we approach commercialization for the
BACcel(R) system, we plan to engage experienced outsource vendors to produce
finished goods thus avoiding costly investment for a manufacturing facility.





                                       8
<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. Additional
OptiChem(R) United States and international patent filings are in prosecution.

     Accelr8 broadened the scope of its instrument patent claims by filing
additional provisional patent applications during the 2006 fiscal year.
Management believes that these filings address many of the core BACcel(R) system
methods, and include additional instrumentation and specimen preparation
inventions related to the BACcel (R)system.

     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 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(R), Oter(R),
BACcelr8r(TM), and Quantum Microbiology(TM).

Employees and Consultants

     We have 10 full-time employees and contracts with four consultants. We have
not entered into any collective bargaining agreements

Factors That May Affect Future Results

     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

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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 Market For Products. We have received only nominal revenue
from sales based on products using our OptiChem(R) technology. Our principal
competitors and the areas in which they compete with us are described more fully
in "Competition." 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(R) system when its development
is complete. 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 complete the
development of the BACcel(R) system and sell it into the marketplace. If we
continue to experience losses from operations and negative cash flow as we have
in the past, 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 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(R)
system and BACcelr8r(R) 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. Market
acceptance of these products will depend on many factors, including, but not
limited to, demonstrating that our technologies 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, 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, 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(R) 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 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

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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.

     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 for
materials that render our technologies and methodologies less competitive.
Accordingly, if new competitors introduce new products that are more effective
than our current and proposed technologies, 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.

     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 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 25, 2007, our officers and directors
owned or controlled of record approximately 962,550 or 10.89% 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 1,647,550 or
17.29% 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.

                                       11
<PAGE>

     Shares Eligible For Future Sale. As of July 31, 2007, 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,
2007, 599,000 options had been granted pursuant to the Qualified Plan with
17,500 of these options exercised, 224,000 options that expired, leaving 342,500
available for grant and 310,000 options had been granted pursuant to the
Non-Qualified Plan, 50,000 options were cancelled, 75,000 of these options
exercised, 0 options that expired leaving 115,000 available for grant. As of
July 31, 2007, 435,000 options had been granted pursuant to the Omnibus Plan
with none of these options exercised, 80,000 of these options expired leaving
145,000 were available for grant. As of October 25, 2007, there were 537,295
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 8 to the Financial Statements for further information. Sales
of Common Stock underlying Plan Options may adversely affect the price of the
Common Stock.

     The Loss Of Our Major Customers Could Significantly Reduce Our Revenue.
During the fiscal year ended July 31, 2007, total revenues from SCHOTT were
$83,464 or 45.6% of revenues. During the fiscal year ended July 31, 2006, total
revenues from SCHOTT were $121,353 or 57.1% of total revenues. There can be no
assurance that revenue from SCHOTT or any customer will continue at their
historical levels. Loss of SCHOTT or another one or more of our current clients
could have a material adverse effect on our business, financial condition and
results of operations. If we cannot broaden our customer base, we will continue
to depend on a few clients for the majority of our revenue.

     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 Manufacturing and 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
manufacture all of the products we sell and 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 manufacturing
products for any reason, we would have no other means of manufacturing products

                                       12
<PAGE>

incorporating our coating technologies until we were able to restore the
manufacturing capability at our facility or develop an alternative manufacturing
facility. Further, we may be unable to meet production requirements, we may lose
revenue and we may not be able to maintain our relationships with our customers.
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. Although we carry business interruption insurance to
cover lost revenue and profits in an amount we consider adequate, 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, 2007, our total assets
of $6,138,087 included $3,472,103 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 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 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. 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 our future sales 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(R) system will
integrate many of our component systems and processes. For the year ended July
31, 2007, we spent $991,581 and during the fiscal year ended July 31, 2006 we
spent $2,155,988 on research and development expenses. Notwithstanding these
investments, we anticipate that we will have to spend additional funds in the
research and development of the BACcel(R) System. There can be no assurance that
the BACcel(R) 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.

     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 BACcelr(R) 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

                                       13
<PAGE>

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.

     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, 2007, the closing sale price for our
common stock ranged from $2.76 to $1.65 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.

     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 cash assets to fund our operating losses and will
continue to incur operating losses until we are able to complete the development
of the BACcel(R) system and sell it into the marketplace. 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. 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 26, 2007, 9,971,210 shares were outstanding) and to issue
options and warrants to purchase shares of our Common Stock. 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.

                                       14
<PAGE>

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.

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).

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.

                                       15
<PAGE>

Superinfection: a second infection that occurs after treatment has begun for a
diagnosed infection.

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 $5200 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

     From November 21, 2000 to October 8, 2003, the Company's common stock
traded on the NASDAQ Electronic Bulletin Board. 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.

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

         Fiscal 2007
         October 31, 2006                  $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

         Fiscal 2006
         October 31, 2005                  $3.33            $2.94
         January 31, 2006                  $3.30            $2.70
         April 30, 2006                    $3.25            $2.75
         July 31, 2006                     $3.15            $2.01


     The closing price for our Common Stock on October 25, 2007 was $3.42. On
October 25, 2007, the Company had approximately 280 shareholders of record,
which does not include shareholders whose shares are held in street or nominee
names. The Company believes that there are approximately 1,650 beneficial owners
of its Common Stock.

                                       16
<PAGE>

     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 of Financial Condition and Results
of Operations

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
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 expires 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 $9626.45 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.

     During the fiscal year ended July 31, 2007, SCHOTT paid the Company $50,000
in royalties and license fees and deferred revenues of $30,614 in prepaid
royalties were recognized.

     For a complete description of the research and development we intend to
perform during the fiscal year ending July 31, 2008, see "Item 1. Description of
Business." We also intend to begin BACcel(R) system product design and
development during the fiscal year ending July 31, 2008. In addition, we expect
to conduct further custom OptiChem(R) coating development in projects funded by
industrial customers.

                                       17
<PAGE>

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, 2007 and 2006 and for
each of the two years in the period ended July 31, 2007 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:                          2007             2006
                                                   -----------      -----------
                                                    (In thousands, except per
                                                            share data)

Total Revenue                                              183              213
                                                   -----------      -----------

Loss from operations                                    (2,114)          (3,204)
                                                   -----------      -----------


Weighted average shares outstanding                  9,967,034        9,967,034


Basic and diluted net loss per share               $     (0.19)     $     (0.30)
                                                   -----------      -----------

Balance Sheet Data:                                    2007             2006
                                                   -----------      -----------

Working capital                                    $     1,376      $     2,922
Current assets                                           1,532            3,084
Current liabilities                                        155              162
Total assets                                             6,138            7,848
Total liabilities                                        1,258            1,109
Shareholders' equity                                     4,880            6,739





                                       18
<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,                         2007         2006
                                                        ----         ----
     Total revenues from operations                      100%         100%
     Research and development                           (541)       (1014)
     General and administrative                         (502)        (390)
     Amortization                                       (131)        (111)
     Cost of sales                                       (31)         (20)
     Marketing and sales                                  (9)         (35)
     Depreciation                                        (40)         (37)

     Net loss                                          (1051)%      (1425)%
                                                       =======      =======

Changes in Results of Operations: Year ended July 31, 2007 compared to year
ended July 31, 2006

     OptiChem(R) slide revenues for the year ended July 31, 2007 were $108,280
as compared to $155,701 for the year ended July 31, 2006, resulting in a
decrease of $47,421, or 30.5%. The decrease in OptiChem(R) revenues was
primarily due to a decrease in sales of slide H to SCHOTT.

     Consulting fees for the year ended July 31, 2007 were $22,000 as compared
to $0 during the fiscal year ended July 31, 2006. The consulting fees were
recognized from the completion of phase 2 of the Feasibility Testing Agreement
with Promega.

     License fees for the year ended July 31, 2007 were $50,000 as compared to
$57,000 during the fiscal year ended July 31, 2006, a decrease of $7,000 or
12.3%. The decrease in license fees was primarily the result of the focus of the
Company on research and development of the BACcel(R) system as compared to the
marketing and sales of Optichem(R) slides.

     Option fees for the year ended July 31, 2007 were $2,850 as compared to $0
during the fiscal year ended July 31, 2006. The option fees were was the value
of slides provided by SCHOTT for an option to exercise the Slide HS Agreement.

     Cost of sales for the year ended July 31, 2007 were $56,646 compared to
$41,604 during the year ended July 31, 2006, a decrease of $15,042 or 36.2%.
This increase was due to an increase in material costs for chemicals for
Optichem(R). The cost of sales as a percentage of OptiChem(R) revenues was 52.3%
for the year ended July 31, 2007 as compared to 26.7% for the year ended July
31, 2006.

     Research and development expenses for the year ended July 31, 2007, were
$991,581 as compared to $2,155,988 during the year ended July 31, 2006, a
decrease of $1,164,407 or 54%. This major decrease was due to a decrease in
BACcel(R) system consulting fees paid for outside engineers to $32,028 during
the year ended July 31, 2007 from $1,062,166 during the year ended July 31,
2006, a decrease of $1,030,138 or 96.99%. The laboratory expense and supplies
were $175,101 for the year ended July 31, 2007 as compared to $217,527 for the
year ended July 31, 2006, a decrease of $42,426 or 19.5%. The decrease in the
laboratory expense and supplies was primarily the result of decreased direct
supply costs related to the development of the BACcel(R) system.

                                       19
<PAGE>

     General and administrative expenses for the year ended July 31, 2007 were
$920,175 as compared to $828,745 during the year ended July 31, 2006, an
increase of $91,430 or 11.3%. The following summarizes the major components of
the changes:

                                                                       Increase
                                             2007          2006       (Decrease)
                                             ----          ----       ----------
Audit and Accounting                       $ 34,821      $ 37,170      $ (2,349)
Consulting Fees                              29,479        40,150       (10,671)
Corporate and Shareholder                    52,744        51,023         1,721
Corporate Insurance                          42,105        43,161        (1,056)
Deferred Compensation                       156,135        86,169        69,966
Employee Benefits                            82,317       103,821       (21,504)
Payroll Taxes                                67,956        70,334        (2,378)
Salaries                                    362,879       319,227        43,652
Travel                                        5,450        13,105        (7,655)
Legal                                        47,606        30,078        17,528
Miscellaneous Other                          38,683        34,507         4,176
                                           --------      --------      --------
                                           $920,175      $828,745      $ 91,430

     The decrease in consulting fees of $10,671 was due to a decrease in fees
paid to several consultants who performed software development services. The
change in deferred compensation was due to a market gain on related investments.
Payroll taxes decreased and employee benefits were reduced by $23,882 during
fiscal year ended July 31, 2007, because of a fewer full time employees.
Salaries expense increased due to certain employee compensation increases. Legal
fees increased by $17,528 due to an increase in patent filings.

     The increase in amortization for the year ended July, 31 2007 was
negligible.

     Depreciation for the year ended July 31, 2007 was $73,528 as compared to
$79,295 during the year ended July 31, 2006 a decrease of $5,767 or 7.3%. The
decreased depreciation was primarily due to not replacing equipment.

     Marketing and sales expenses were $15,496 for the year ended July 31, 2007
as compared to $74,909 during the year ended July 31, 2006, a decrease of
$59,413 or 79.3%. The decrease was primarily the result of not producing any
marketing materials or product literature.

     As a result of these factors, loss from operations for the year ended July
31, 2007 was $2,114,479 as compared to a loss of $3,204,523 for the year ended
July 31, 2006, a decreased loss of $1,090,044 or 34.02%.

     Interest and dividend income for the year ended July 31, 2007 was $111,567
as compared to $181,243 for the year ended July 31, 2006, a decrease of $69,676
or 38.4%. The decrease was due to a lower interest rate earned on our cash
balances and lower balances as the company continued to support the research and
development of the BACcel(R) system.

     Unrealized gain on marketable securities held in the deferred compensation
trust for the year ended July 31, 2007 was $64,849 as compared to an unrealized
loss of $15,671 during the year ended July 31, 2006. The unrealized gain was a
result of market fluctuations on the securities that are held in the deferred
compensation trust.

                                       20
<PAGE>

     Miscellaneous Other Expenses were $13,820 for the year ended July 31, 2007
as compared to $8,330 for the year ended July 31, 2006, an increase of $5,490 or
61.5%. The increase in Miscellaneous Other Expenses was due to increased refunds
for overcharges for workers compensation insurance premium and occupational tax.

     As a result of these factors, net loss for the year ended July 31, 2007 was
$1,924,243 as compared to $3,030,621 during the year ended July 31, 2006, a
decreased loss of $1,106,378 or 36.5%.

Capital Resources and Liquidity

     During the fiscal year ended July 31, 2007, we did not generate positive
cash flows from operating activities. The primary sources of capital have been
from sales and our existing cash balance. As of July 31, 2007, the Company had
$1,393,669 in cash and cash equivalents, a decrease of $1,610,667 from
$3,004,336 at July 31, 2006. The primary reasons for change in cash and cash
equivalents were cash used for operating activities of $1,535,667 plus $75,000
net cash used in investing activities.

     For the year ended July 31, 2007, we spent $991,581 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(R) 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, 2007, management believes that current cash balances
will be sufficient to fund our capital and liquidity needs for the next twelve
months.

     The following summarizes the Company's capital resources at July 31, 2007
compared with July 31, 2006:

                                                                      Increase
                                     July 31, 2007  July 31, 2006    (Decrease)
                                     -------------  -------------   ------------

Cash and cash equivalents             $ 1,393,669    $ 3,004,336    $(1,610,667)
Current assets                        $ 1,531,615    $ 3,084,175    $(1,552,560)
Total Assets                          $ 6,138,087    $ 7,848,223    $(1,710,136)
Current liabilities                   $   155,331    $   162,488    $    (7,157)
Working capital                       $ 1,376,284    $ 2,841,848    $(1,465,564)
Net cash (used in) operating
  activities                          $(1,535,667)   $(2,640,956)   $(1,105,289)
Net cash (used in) provided by
  investing activities                $   (75,000)   $    81,033    $  (156,033)


     Our primary use of capital has been for the research and development of the
BACcel(R) 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, additional issuance of
equity or debt securities and/or a capital infusion from potential partners in
the development of the BACcel(R) system. 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'.

                                       21
<PAGE>

Capital Commitments

     As of July 31, 2007, the Company had one outstanding lease commitment in
the amount of $120,271 through September 30, 2009 and an employment agreement
with Tom Geimer, our Chairman and Chief Executive Officer which calls for the
aggregate payments of approximately $175,000 during the period from July 31,
2007 to December 31, 2007. See Note 12 to financial statements "Operating
Leases" and "Employment Agreement." On September 29, 2007, the Compensation
Committee approved entering into a new employment agreement with Mr. Geimer,
effective on January 1, 2008 on substantially similar terms as Mr. Geimer's
current employment agreement, which will provide for an annual base salary of
$165,000 with annual deferred compensation of $75,000. The new employment
agreement would expire on December 31, 2012.

Recent Accounting Pronouncements

     In June 2006, the FASB issued Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes" (an interpretation of FASB Statement No. 109) ("FIN
48"). This interpretation prescribes a more likely than not recognition
threshold and a measurement attribute for the financial statement recognition
and measurement of a tax position taken or expected to be taken in a tax return.
FIN 48 also provided guidance on derecognition of a tax position, classification
of a liability for unrecognized tax benefits, accounting or interest and
penalties, accounting in interim periods, and expanded income tax disclosures.
FIN 48 becomes effective for the Company on October 31, 2007.

     In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements"
(SFAS 157). The changes to current practice resulting from the application of
this Statement relate to the definition of fair value, the methods used to
measure fair value, and the expanded disclosures about fair value measurements.
This issuance is effective for fiscal year ends beginning after November 15,
2007.

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:

          Consulting revenue is recognized as services are performed.

          OptiChem revenue is recognized upon shipping of the product to the
          customer.

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

                                       22
<PAGE>

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, 2007 and July 31, 2006, 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.

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:

          Significant underperformance relative to expected historical or
          projected future operating results;

          Significant changes in the manner of our use of the acquired assets or
          the strategy for our overall business;

          Significant negative industry or economic trends;

          Significant decline in our stock price for a sustained period; and

          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.

                                       23
<PAGE>

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.

Contractual Obligations

     The following table sets forth information with respect to our contractual
obligations and commercial commitments as of July 31, 2007.

                           Contractual Obligations(3)

Payments Due By Period
                                              1 to 3       4 to 5     More than
                                  Total        years        years      5 years
                               ----------   ----------   ----------   ----------
Office and Laboratory          $  120,271   $  120,271          -0-          -0-
Lease Payments(1)

Thomas V. Geimer               $1,375,000   $  720,000   $  480,000   $  175,000
Employment Contracts(2)

(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 for our office and laboratory located at 7000
     North Broadway, Building 3-307, Denver, Colorado 80221.
(2)  Calculated as of July 31, 2007. Includes the $75,000 payment of the
     deferred compensation for the fiscal year ended July 31, 2007, which
     payment was made on October 26, 2007. On October 29, 2007, the Compensation
     Committee approved a new employment agreement with Mr. Geimer upon the
     expiration of Mr. Geimer's current employment agreement on substantially
     similar terms as his previous employment agreement, which 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.

Item 8A. Controls and Procedures

     An evaluation was conducted under the supervision and with the
participation of the Company's management, including Thomas V. Geimer, the
Company's Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"),
of the effectiveness of the design and operation of the Company's disclosure
controls and procedures as of July 31, 2007. Based on that evaluation, Mr.
Geimer concluded that the Company's disclosure controls and procedures were
effective as of such date to ensure that information required to be disclosed in
the reports that it files or submits under the Exchange Act of 1934, is
recorded, processed, summarized and reported within the time periods specified
in SEC rules and forms. Such officers also confirm that there was no change in
the Company's internal control over financial reporting during the year ended
July 31, 2007.

                                       24
<PAGE>

Item 8B. Other Information.

     Not Applicable.

PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; 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              60    Secretary, Chief Executive Officer,
                                         Chief Financial Officer, Chairman of
                                         the Board
     David C. Howson               63    President
     Charles E. Gerretson (1)      62    Director
     A. Alexander Arnold III (1)   66    Director
     Ken Emoto, Ph.D.              43    Senior Scientist
     Steven W. Metzger             33    Senior Scientist
     David W. Grainger, Ph.D.      47    Chairman, Scientific Advisory Board,
                                         Consultant
     David Goldberg, Ph.D.         53    Consultant
     Marin Kollef, MD              50    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.

     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.

                                       25
<PAGE>

     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.

     Ken Emoto Ph.D. has been a Senior Scientist with Accelr8 since June 2004.
From 2001 through 2003, Mr. Emoto contributed to three projects for the delivery
of small to large drug molecules utilizing polymers at Nektar Therapeutics. Mr.
Emoto earned his Ph.D. in Materials Science from the University of Alabama. He
specializes in the preparation of polymer coated surfaces for biomedical and
biotechnical applications.

     David W. Grainger, Ph.D. has been a consultant to the Company since January
2001. Since 1994, Dr. Grainger has 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.

     David Goldberg, Ph.D. has been a consultant to the Company since October
2002. Dr. Goldberg received his Doctorate in Biology from the California
Institute of Technology. He did postdoctoral studies at Harvard and at the
Molecular Biology Laboratory of the MRC, Cambridge. Dr. Goldberg has
wide-ranging expertise in analytical systems and engineering as well as
molecular biology. He is the inventor of the Company's proprietary molecular
capture methodology and has been an officer / founder of various startup
technology companies that have focused on areas that apply to our business, i.e.
vapor deposition sputtering and tunable thin film filter technologies.

     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.

                                       26
<PAGE>

Scientific Advisory Board

     The Company established a Scientific Advisory Board in 2003. Dr. David
Grainger is Chairman and Dr. David Goldberg is a member.

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).

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 five 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, 2007.

     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, 2007 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

                                       27
<PAGE>

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
required to be filed during the fiscal year ended July 31, 2007, 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 4, 2007 reporting one transaction that was required to be filed on
January 3, 2007.

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.

                                       28
<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>
<S> <C> <C> <C> <C> <C> <C>

     The following table summarizes the compensation of the NEOs for the fiscal
years ended July 31, 2007 and 2006.

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

Thomas V. Geimer    2007    $165,000   $0       0         0     $75,000(1)     $240,000
  Chief Executive   2006    $165,000   $0       0         0     $75,000(1)     $240,000
  Officer and
  Chief Financial
  Officer

David C. Howson     2007    $138,807   $0       0         0        $0          $138,807
  President         2006    $120,000   $0       0         0        $0          $120,000


(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, 2007 and 2006.

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 the with respect to their compensation. Mr. Geimer was
paid during the fiscal year ended July 31, 2007 in accordance with his
employment agreement with us, which is described. 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, 2002, 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

                                       29
<PAGE>

annual deferred compensation of $75,000. The agreement expires on December 31,
2007. On September 29, 2007, the Compensation Committee approved entering into a
new employment agreement with Mr. Geimer, effective on January 1, 2008 on
substantially similar terms as Mr. Geimer's current employment agreement, which
provides for an annual base salary of $165,000 with annual deferred compensation
of $75,000. The new employment agreement would expire 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, 2007 would
be $175,000. 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, 2007, we paid Mr. Howson $138,807 in
cash compensation. Mr. Howson's salary is $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.

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, 2007. The Company
did not grant any options during the fiscal year ended July 31, 2007.

Option Awards
---------------------------------------------------------------------------------------------
                                      Number of     Number of
                                      Securities    Securities
                                      Underlying    Underlying
                                      Unexercised   Unexercised     Option     Option
                                      Options (#)   Options (#)     Exercise   Expiration
Name                Grant Date        Exercisable   Unexercisable   Price      Date
-----------------   ---------------   -----------   -------------   --------   --------------
Thomas V. Geimer    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


                                       30
<PAGE>

Option Exercises During Fiscal Year

     There were no options exercised by the NEO's during the year ended July 31,
2007.

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, 2007.

                                                                                              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            $415,000        0             $1,375,000
                                                                (1)(2)                        (1)(2)

(1)  Represents the amounts due under Mr. Geimer's current employment agreement
     and not Mr. Geimer's new 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, 2007, which payment was made on October 26, 2007.

     A change of control is defined in the employment agreement to mean the
occurrence of one or more of the following three events:

          (1) 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;

          (2) 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

                                       31
<PAGE>

          (3) 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, 2007.

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, 2008. The annual cost of this coverage is
approximately $20,000.

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, 2007 and 2006, we contributed $75,000 to the plan. The $75,000
contribution for the fiscal year ended July 31, 2007 was made on October 26,
2007.

     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 14 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, 2007:


                                       32
<PAGE>

                                 Equity Compensation Plan Information

                             Number of securities
                              to be issued upon     Weighted-average     Number of securities remaining
     Plan Category                exercise          exercise price of    available for future issuance
                               of outstanding          outstanding      under equity compensation plans
                                  options,          options, warrants   (excluding securities reflected
                            warrants and rights        and rights              in the 1st column)
-------------------------- ----------------------- -------------------- ---------------------------------
Equity Compensation               897,500                 $2.06                      510,000
Plans approved by
security holders
-------------------------- ----------------------- -------------------- ---------------------------------
Equity Compensation              200,000 (1)              $2.25                        N/A
Plans not approved by
security holders
-------------------------- ----------------------- -------------------- ---------------------------------
Total                             1,097,500                                          510,000
-------------------------- ----------------------- -------------------- ---------------------------------

     (1) In connection with the purchase of the YoDx technology, the Company
agreed to issue an additional 200,000 stock options with the same terms as the
Company's Non-Qualified Stock Option Plan upon the earlier of (a) the Company
achieving certain accumulated revenue levels associated with the YoDx(TM)
technology or (b) a change in control of the Company prior to the expiration
date of the options. As of October 15, 2007, the contingent provisions have not
been met and the options have not been granted. The Company has reserved a
sufficient number of shares for such options.

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.

                                       33
</TABLE>
<PAGE>

     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
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, 2007, 599,000 options had been granted pursuant to the
Qualified Plan with 12,500 of these options exercised, 179,000 options that
expired, leaving 280,000 available for grant and 300,000 options had been
granted pursuant to the Non-Qualified Plan with 75,000 of these options
exercised, 50,000 options that expired and 50,000 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, 2007, 377,500 options had been granted pursuant to the
Omnibus Plan with none of these options exercised, 15,000 expired leaving
137,500 available for grant.

                                       34
<PAGE>

Item 11. Security Ownership of Certain Beneficial Owners and Management

     The following table sets forth certain information regarding beneficial
ownership of our Common Stock as of October 25, 2007 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)                           351,400            3.84%
    7000 North Broadway, Building 3-307
    Denver, Colorado 80221

    A. Alexander Arnold III(2)                     868,000            9.73%
    845 Third Ave., 6th Floor
    New York, NY 10021

    Charles E. Gerretson(3)                        128,150            1.44%
    7000 North Broadway, Building 3-307
    Denver, Colorado 80221

    David Howson(4)                                300,000            3.28%
    7000 North Broadway, Building 3-307
    Denver, Colorado 80221

    Executive Officers and Directors             1,647,550           17.29%
    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 9 to Financial Statements for further
     information. Includes 300,000 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.
(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.

                                       35
<PAGE>

(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

     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, 2005, the Board of
Directors had authorized deferred compensation totaling $900,000 since fiscal
year 1996 to Mr. Geimer of which $750,000 had been funded. The $75,000
representing the difference between the authorized deferred compensation and the
funded deferred compensation was funded on October 26, 2007.

     There were no other transactions or series of transactions for the fiscal
year ended July 31, 2007, 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.

Item 13. Exhibits and Reports on Form 8-K

(a)  Exhibits

     14.1 Code of Ethics for Accelr8's principal executive officer and senior
          financial officers (1)

     14.2 Code of Ethics and Standards of Conduct (1)

     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.

----------
     (1) Attached to the Company's Form 10-KSB for the year ended July 31, 2007.

(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, 2007 and 2006
     Statements of Operations for the years ended July 31, 2007 and 2006
     Statements of Stockholders' Equity for the years ended July 31, 2007 and
       2006
     Statements of Cash Flows for the years ended July 31, 2007 and 2006
     Notes to Financial Statements

                                       36
<PAGE>

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, 2007 and 2006, including the reviews of
the unaudited interim financial statements of the Company's Form 10-QSBs was
approximately $32,000 and $ 37,000, 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, 2007 and 2006 ("Tax Fees") was $0 and $0,
respectively.

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, 2007 and 2006.

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.









                                       37
<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, 2007                     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, 2007                     By: /s/ Thomas V. Geimer
                                             -----------------------------------
                                             Thomas V. Geimer, Chairman,
                                             Secretary, Chief Executive Officer
                                             and Chief Financial Officer


Date: October 29, 2007                     By: /s/ Bruce McDonald
                                             -----------------------------------
                                             Bruce McDonald, Principal
                                             Accounting Officer


Date: October 29, 2007                     By: /s/ A. Alexander Arnold III
                                             -----------------------------------
                                             A. Alexander Arnold III, Director


Date: October 29, 2007                     By: /s/ Charles E. Gerretson
                                             -----------------------------------
                                             Charles E. Gerretson, Director










                                       38
<PAGE>


                         ACCELR8 TECHNOLOGY CORPORATION

                              FINANCIAL STATEMENTS

                             JULY 31, 2007 and 2006


<PAGE>

                         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


<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, 2007 and 2006, and the
related statements of operations, shareholders' equity and cash flows for the
years ended July 31, 2007 and 2006. 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, 2007 and 2006, and the results of its operations and changes in
its cash flows for the years ended July 31, 2007 and 2006, in conformity with
U.S. generally accepted accounting principles.


Denver, Colorado
October 19, 2007

                                                        /s/ COMISKEY & COMPANY
                                                        PROFESSIONAL CORPORATION

                                       F-1
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>

                                ACCELR8 TECHNOLOGY CORPORATION
                                        BALANCE SHEETS
                                    JULY 31, 2007 and 2006

                                            ASSETS
                                                                       2007           2006
                                                                   -----------    -----------

Current assets:
   Cash and cash equivalents                                         1,393,669      3,004,336
   Trade accounts receivable                                             5,625         10,852
   Inventory (Note 3)                                                  107,855         25,887
   Prepaid expenses and other current assets (Note 4)                   24,466         43,100
                                                                   -----------    -----------

         Total current assets                                        1,531,615      3,084,175

Property and equipment, net (Note 5)                                   106,819        180,347
Investments, net (Note 12)                                           1,027,550        871,415
Intellectual property, net (Note 6)                                  3,472,103      3,712,286
                                                                   -----------    -----------

Total assets                                                         6,138,087      7,848,223
                                                                   ===========    ===========

                             LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Accounts payable                                                   64,599         71,570
     Accrued compensation and other liabilities                         32,386         31,389
     Deferred revenue (Note 13)                                         58,346         59,529
                                                                   -----------    -----------
         Total current liabilities                                     155,331        162,488

Long-term liabilities:
     Deferred compensation                                           1,102,549        946,415

         Total liabilities                                           1,257,880      1,108,903
                                                                   -----------    -----------

Shareholders' equity (Notes 8):
     Common stock, no par value; 14,000,000(2007) and
       12,000,000(2006) shares, respectively, authorized;
       9,971,210(2007) and 9,971,210(2006) shares issued
       and Outstanding                                              12,878,020     12,878,020
     Contributed capital                                               635,280        570,150
     Accumulated (deficit)                                          (8,359,493)    (6,435,250)
     Shares held for employee benefit (1,129,110 shares at cost)      (273,600)      (273,600)
                                                                   -----------    -----------
          Total shareholders' equity                                 4,880,207      6,739,320
                                                                   -----------    -----------

 Total liabilities and shareholders' equity                          6,138,087      7,848,223
                                                                   ===========    ===========


                        See accompanying notes to financial statements.

                                              F-2
<PAGE>

                           ACCELR8 TECHNOLOGY CORPORATION
                              STATEMENTS OF OPERATIONS
                     FOR THE YEARS ENDED JULY 31, 2007 and 2006

                                                               2007          2006
                                                            ----------    ----------

Revenues (Note 7 and 10):
   OptiChem(TM) revenue                                        108,280       155,701
   Consulting Fees                                              22,000          --
   License Fees                                                 50,000        57,000
   Option Fees                                                   2,850          --
                                                            ----------    ----------
     Total revenues                                            183,130       212,701

   Cost of sales                                                56,646        41,604
                                                            ----------    ----------

     Gross profit                                              126,484       171,097
                                                            ----------    ----------

Costs and expenses:
   Research and development                                    991,581     2,155,988
   General and administrative                                  920,175       828,745
   Amortization (Note 6)                                       240,183       236,683
   Depreciation (Note 5)                                        73,528        79,295
   Marketing and sales                                          15,496        74,909
                                                            ----------    ----------

     Total costs and expenses                                2,240,963     3,375,620
                                                            ----------    ----------

(Loss) from operations                                      (2,114,479)   (3,204,523)
                                                            ----------    ----------

Other (expense) income:
   Interest and dividend income                                111,567       181,243
   Unrealized holding gain (loss) on investments (Note 2)       64,849       (15,671)
   Miscellaneous                                                13,820         8,330
                                                            ----------    ----------
     Total other income                                        190,236       173,902
                                                            ----------    ----------


Net (loss)                                                  (1,924,243)   (3,030,621)
                                                            ==========    ==========

Net loss per share:

Basic and diluted net (loss) per share                           (0.19)        (0.30)
                                                            ==========    ==========

Weighted average shares outstanding                          9,967,034     9,967,034
                                                            ==========    ==========


                   See accompanying notes to financial statements.

                                         F-3
<PAGE>

                                               ACCELR8 TECHNOLOGY CORPORATION
                                             STATEMENTS OF SHAREHOLDERS' EQUITY


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


Balances, July 31, 2005                       9,961,210   12,863,020     --        483,549   (3,404,629)     (273,600)    9,668,340


Exercise of options                              10,000       15,000                  --                                     15,000
Extension of Stock Option Expiration Dates                                          67,836                                   67,836

 Stock option expense under SFAS 123R                                               18,765                                   18,765


 Net loss                                          --           --       --           --     (3,030,621)         --      (3,030,621)
                                             ----------   ----------   ------   ----------   ----------    ----------    ----------


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

Stock option expense under SFAS 123R                                                48,318                                   65,130


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







                                                             F-4

<PAGE>

                                ACCELR8 TECHNOLOGY CORPORATION
                                   STATEMENTS OF CASH FLOWS
                          FOR THE YEARS ENDED JULY 31, 2007 and 2006

                                                                        2007          2006
                                                                     ----------    ----------
Cash flows from operating activities:
     Net loss                                                        (1,924,243)   (3,030,621)
     Adjustments to reconcile net (loss) to net cash
        (used in) operating activities:
         Depreciation                                                    73,528        79,295
         Amortization                                                   240,183       236,683
         Fair value of stock options
            granted for services                                         65,130        86,601
         Unrealized (gain) loss on investments                          (64,849)       15,671
         Realized (gain) loss on sale of investments, interest and
           dividends reinvested                                         (16,286)      (17,608)
         (Increase) decrease in assets:
           Accounts receivable                                            5,227        33,495
           Inventory                                                    (81,968)        1,357
           Prepaid expense and other                                     18,634       184,997

         Increase (decrease) in liabilities:
           Accounts payable                                              (6,972)      (81,840)
           Accrued liabilities                                              997      (247,293)
           Deferred revenue                                              (1,183)       (5,471)
           Deferred compensation                                        156,135       103,778
                                                                     ----------    ----------

       Net cash (used in) operating activities                       (1,535,667)   (2,640,956)
                                                                     ----------    ----------

Cash flows from investing activities:
     Purchase of laboratory equipment                                      --         (28,794)
     Cost of obtaining patents and trademarks                              --         (70,000)

     Contribution to deferred compensation trust                        (75,000)     (101,840)
     Issuance of common stock                                              --          15,000
     Receipt of note payment                                               --         266,667
                                                                     ----------    ----------

       Net cash provided by (used in) investing activities              (75,000)       81,033
                                                                     ----------    ----------

Increase (decrease) in cash and cash equivalents                     (1,610,667)   (2,559,923)

Beginning balance:                                                    3,004,336     5,564,259
                                                                     ----------    ----------

Ending balance:                                                       1,393,669     3,004,336
                                                                     ==========    ==========

                        See accompanying notes to financial statements.

                                              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 (DEC), VMS legacy
systems. We sold the assets related to the software business on July 30, 2004 to
Transoft Group Ltd.

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. The Company
expects that its proprietary surface chemistry and quantitative instruments will
support real-time analysis of medical diagnostic markers, pathogens, and
bio-warfare agents.

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. In November of 2004 we licensed the
use of OptiChem(R) (See Note 7). During most of the fiscal years ended July 31,
2007 and 2006, 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(R) 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
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.

                                       F-6
<PAGE>

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
$100,000. At July 31, 2007, the Company's uninsured cash balance was
approximately $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 value 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, 2007 and 2006.

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.

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 FAS 115. All investments
are recorded as trading and reported at fair value with unrealized gains and
losses are reported with current earnings.

                                       F-7
<PAGE>

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, 2007 and 2006 were $991,581 and $2,155,988, respectively.

Intellectual Property

Intellectual properties are 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.

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

Consulting Services:

Consulting revenue is recognized at the completion of the contract.

OptiChem(R) Slides:

                                       F-8
<PAGE>

Revenue is recognized when the Company ships the product.

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
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, 2007 and 2006, common stock options exercisable for 806,250
and 945,000 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, 2007 and July 31, 2006, 200,000
contingently issuable options were not included in loss per share. See Note 8.

                                       F-9
<PAGE>

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 applies 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
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 8 for futher 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).

                                      F-10
<PAGE>

Recent Accounting Pronouncements:

In June 2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty
in Income Taxes" (an interpretation of FASB Statement No. 109) ("FIN 48"). This
interpretation prescribes a more likely than not recognition threshold and a
measurement attribute for the financial statement recognition and measurement of
a tax position taken or expected to be taken in a tax return. FIN 48 also
provided guidance on derecognition of a tax position, classification of a
liability for unrecognized tax benefits, accounting or interest and penalties,
accounting in interim periods, and expanded income tax disclosures. FIN 48
becomes effective for the Company on October 31, 2007.

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" (SFAS
157). The changes to current practice resulting from the application of this
Statement relate to the definition of fair value, the methods used to measure
fair value, and the expanded disclosures about fair value measurements. This
issuance is effective for fiscal year ends beginning after November 15, 2007.

NOTE 3 INVENTORY

The Company purchases raw materials (custom chemicals and glass substrates) for
producing OptiChem 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, 2007 and July
31, 2006 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, 2007 were
$24,466 as compared to $43,100 for the year ended July 31, 2006.

NOTE 5 PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost
 and consisted of the following at July 31:      2007         2006
                                              ---------    ---------
Computer equipment                            $  21,102    $  21,102
Laboratory and scientific equipment             394,175      394,175
Furniture and fixtures                           16,601       16,601
                                              ---------    ---------
   Total property and equipment                 431,878      431,878
Accumulated depreciation                       (325,059)    (251,531)
                                              ---------    ---------
   Net property and equipment                 $ 106,819    $ 180,347
                                              =========    =========

Depreciation expense for the years ended July 31, 2007 and 2006 was $73,528 and
$79,295, respectively.

                                      F-11
<PAGE>

NOTE 6 INTELLECTUAL PROPERTY

Intellectual property consisted of
   the following at July 31:             2007           2006
                                     -----------    -----------

OptiChem technologies                $ 4,454,538    $ 4,454,538
Patents                                  293,991        293,991
Trademarks                                49,019         49,019
                                     -----------    -----------
                                       4,797,548      4,797,548
Accumulated amortization              (1,325,445)    (1,085,262)
                                     -----------    -----------
                                     $ 3,472,103    $ 3,712,286
                                     ===========    ===========

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


               Years Ending July 31,
               ---------------------
                       2008                        240,000
                       2009                        240,000
                       2010                        240,000
                       2011                        240,000
                    Thereafter                   2,512,103
                                                ----------
             Total future amortization          $3,472,103
                                                ==========

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 $240,183 and $236,683, respectively, for the years ended July 31,
2007 and 2006. 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, 2007 and 2006, management believes there was no impairment of the Company's
long-lived assets.

                                      F-12
<PAGE>

NOTE 7. LICENSE AND SUPPLY AGREEMENTS

On November 24, 2004 the Company entered into an exclusive two year
manufacturing and marketing 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 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 expires 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 $9,656 in royalties for Slide HS sold during 2007.

The Company also granted SCHOTT the right to negotiate an exclusive right for
the manufacturing and worldwide sales of Slide HS coatings on microarraying
slides. SCHOTT signed the license December 21, 2006. The agreement grants SCHOTT
the right to manufacture and market streptavidin coated microarray slides for 2
years through December 31, 2008. A $50,000 license fee and $50,000 prepaid
royalty payment were made on January 24, 2007.

NOTE 8 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


                                      F-13
<PAGE>

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.

As of July 31, 2007, 357,500 options remain outstanding as granted pursuant to
the Qualified Plan. Prior grants of 17,500 had been exercised in prior years and
325,000 remained 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, 2007, 185,000 options remain outstanding pursuant to the
Non-Qualified Plan. Prior grants of 75,000 options had been exercised in prior
years and 40,000 options remained 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.

                                      F-14
<PAGE>

As of July 31, 2007, 355,000 options remain outstanding pursuant to the Omnibus
Plan. No prior grants have been exercised and 145,000 options remain 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, 2007, the contingent provisions have not been met and the options
have not been granted. The Company has reserved a sufficient number of shares
for such options.

Accounting For Employee Based Option Plans

As is discussed in Note 2, the Company accounted for stock based compensation to
employees and directors using the intrinsic value method in accordance with APB
No. 25 until January 31, 2007.

The fair value of options granted under the stock option agreements and
stock-based compensation plans discussed above is estimated on the date of grant
using the Black-Scholes option pricing model with the following weighted-average
assumptions used for grants for the year ended July 31, 2006: no dividend yield;
risk free interest rate of 5.0%; expected life of 3-4 years; and expected
volatility of 51%. The weighted average fair value of options granted in fiscal
2006 was $4.46. The weighted average remaining contractual life of options
outstanding at July 31, 2006 was 4.46 years.

The following table illustrates the effect on net loss if the Company had
applied the fair value recognition provisions of SFAS 123:

                                             Year Ended
                                            July 31, 2006
                                            -------------

Net loss - as reported                       $(3,030,621)
Deduct:  Total stock-based compensation
         expense determined under fair
         value based method for all awards            (0)
                                             -----------

Pro forma net loss                           $(3,030,621)
                                             ===========
    Earnings per share:
    Basic and diluted - as reported          $      (.30)
                                             ===========
    Basic and diluted - pro forma            $      (.30)
                                             ===========



                                      F-15
<PAGE>

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."

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, 2007.

As of July 31, 2006, total unrecognized share-based compensation cost related to
unvested stock options was approximately $25,896. For the year ended July 31,
2006, the Company recognized $18,765 in stock based compensation costs related
to the issuance of options to employees under SFAS 123R. For the year ended July
31, 2006, the total recognized stock based compensation costs related to the
extension of currently existing, fully vested options was $67,836. 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, 2006: no dividend yield; risk free interest rate between 3.27 and
5.0%; expected life between 2 and 4 years; and expected volatility between 47
and 59% The weighted average fair value of options granted in fiscal 2006 was
$3.06. The weighted average remaining contractual life of options outstanding at
July 31, 2006 was 5.0 years. The expected forfeiture rate used was 37%.

As of July 31, 2007, total unrecognized share-based compensation cost related to
unvested stock options was approximately $10,176. For the year ended July 31,
2007, the Company recognized $48,318 in stock based compensation costs related
to the issuance of options to employees under SFAS 123R. For the year ended July
31, 2007, the total recognized stock based compensation costs related to the
extension of currently existing, fully vested options was $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, 2007: no dividend yield; risk free interest rate between 2.8 and
5.0%; expected life between 3 and 10 years; and expected volatility between 51
and 64% The weighted average fair value of options granted in fiscal 2007 was
$2.08. The weighted average remaining contractual life of options outstanding at
July 31, 2007 was 4.44 years. The expected forfeiture rate used was 37%.

                                      F-16
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>

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

Options outstanding, July 31, 2005         970,000       1.45 -  3.20             $2.06
----------------------------------- --------------- ------------------ ---------------------
Options granted                             57,500       2.70 -  3.20             $2.80
----------------------------------- --------------- ------------------ ---------------------
Options exercised                          (10,000)      1.5
----------------------------------- --------------- ------------------ ---------------------
Options expired                            (72,500)      2.25 -  3.20             $2.38
----------------------------------- --------------- ------------------ ---------------------

----------------------------------- --------------- ------------------ ---------------------
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)       .00 -   .00
----------------------------------- --------------- ------------------ ---------------------
Options expired                           (115,000)      2.00 -  2.70             $2.20
----------------------------------- --------------- ------------------ ---------------------

----------------------------------- --------------- ------------------ ---------------------
Options outstanding, July 31, 2007         897,500      $1.45 - $3.20             $2.06
----------------------------------- --------------- ------------------ ---------------------

As of July 31, 2007 and 2006, 798,750 and 821,250 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, 2007:

---------------- -------------------------------------------- ----------------------------
                                        Outstanding                         Exercisable
---------------- -------------- -------------- -------------- -------------- -------------

                                 Weighted
                                 Average          Weighted                     Weighted
                                 Remaining        Average                      Average
Range of                         Contractual      Exercise                     Exercise
Exercise Prices      Number      Life (Years)     Price           Number       Price
---------------- -------------- -------------- -------------- -------------- -------------

$1.45 - $1.50         375,000         3.4           $1.47          375,000       $1.47
---------------- -------------- -------------- -------------- -------------- -------------
$2.00 - $2.36         170,000         1.7           $2.20          152,500       $2.21
---------------- -------------- -------------- -------------- -------------- -------------


$2.57 - $2.90         335,000         7.2           $2.59          260,000       $2.60
---------------- -------------- -------------- -------------- -------------- -------------
$3.00 - $3.20          17,500         2.0           $3.06           11,250       $3.07
---------------- -------------- -------------- -------------- -------------- -------------

---------------- -------------- -------------- -------------- -------------- -------------
$1.45 - $3.20         897,500         4.4           $2.06          798,750       $2.00
---------------- -------------- -------------- -------------- -------------- -------------

                                      F-17
</TABLE>
<PAGE>

NOTE 9 INCOME TAXES

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

                                          2007           2006
                                      -----------    -----------
Deferred tax assets:
Net operating loss                    $ 3,540,000    $ 2,830,000
Deferred revenue and gains                (91,286)             0
Depreciation and amortization             (92,000)       (75,000)
Stock options issued to consultants        45,000         45,000
General business credit                   266,000        220,000
Contribution and timing differences         4,700          4,000
                                      -----------    -----------
Total                                   3,763,700      3,024,000
Less valuation allowance               (3,763,700)    (3,024,000)
                                      -----------    -----------
Net deferred tax asset                $         0    $         0
                                      ===========    ===========

As of July 31, 2007, a valuation allowance increase of $739,700 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.

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, 2007 and 2006 as follows:

                                                     2007       2006
                                                     ----       ----
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 2007 through
2024.

                                      F-18
<PAGE>

NOTE 10 MAJOR CUSTOMERS AND FOREIGN REVENUE

For the years ending July 31, 2007 and 2006, revenues were $183,130 and $212,701
respectively. Of the total OptiChem(R) slide revenues, revenues from one
customer were $83,464 (45.6%) in the year ended July 31, 2007 and $121,353
(57.1%) for the year ended July 31, 2006.

In fiscal 2007 the consulting revenues of $22,000 were all from one customer.

Foreign Revenues were as follows:

     Foreign Revenues                     2007       2006
                                        --------   --------
     OptiChem(R) Revenues               $108,280   $155,701
     License Fees                         50,000        -0-
     Option Fees                           2,850        -0-

     Consulting Fees                      22,000     57,000
                                        --------   --------
                      Total             $183,130   $212,701
                                        ========   ========

NOTE 11 SALE OF SOFTWARE MIGRATION TOOLS

On July 30, 2004, the Company entered into an asset sale agreement and closed
the transaction selling substantially all of the business assets of the software
business for an aggregate purchase price of $500,000; payable $100,000, at the
time of closing and a promissory note with principal payable in three equal
annual installments of $133,333 beginning July 15, 2005. During fiscal year end
July 31, 2006, the final note payment in the amount of $266,666 was paid on
August 31, 2005.






                                      F-19
<PAGE>

NOTE 12 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, 2007 and 2006, the Company contributed
$75,000 to the plan which was accrued but unpaid by the Company at year end. On
October 26, 2007, $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, 2007 and 2006. 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).

                                                2007         2006
                                            ----------   ----------
           Cost basis                       $  971,280   $  879,994
           Unrealized holding gain (loss)       56,270       (8,579)
                                            ----------   ----------
                     Aggregate fair value   $1,027,550   $  871,415
                                            ==========   ==========

Deferred compensation related to the Rabbi Trust was $952,550 and $946,415 as of
July 31, 2007 and 2006, 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, 2007 and 2006 which was accrued but unpaid by
the Company at year end. On October 26, 2007, $75,000 was paid to the deferred
compensation plan.

Operating Leases

The Company has renegotiated a two-year lease for its office and laboratory
space with a term of October 1, 2007 through September 30, 2009. Total rent
expense was approximately $55,124 and $57,791 in fiscal 2007 and 2006,
respectively. Future minimum lease payments on the office and laboratory lease
are as follows:

                       Year Ending               Premises
                         July 31,                  Rent
                         --------                --------
                           2008                  $ 59,334
                           2009                    60,937
                                                 --------
                                                 $120,271
                                                 ========

                                      F-20
<PAGE>

Employment Agreement

Effective December 1, 2002, an employment agreement with Thomas V. Geimer, CEO
and CFO, 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, 2007. 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, 2007 would be $175,000.
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 13 DEFERRED REVENUE

Deferred revenue was $58,346 at year end July 31, 2007. Deferred revenue
consists of prepaid royalty fees from SCHOTT in the amounts of $58,346. 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 2007.

NOTE 14 SUBSEQUENT EVENTS

License Agreement - On October 5, 2007 the Company signed a License Agreement
with NanoString Technologies, Inc. ("NanoString"). With this agreement,
NanoString exercised its right to a worldwide, non-exclusive royalty-bearing
license to make, use, sell, offer to sell, import and export the licensed
product as per the Agreement for an initial term of 7 years. Exercise of this
license agreement requires a non-refundable payment by NanoString of $50,000 to
Accelr8 for the license and $50,000 as non-refundable prepaid royalties.






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