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

_________________

FORM 10-K

_________________

þANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December
31, 2012

or

oTRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from:
_____________ to _____________

_________________

Arrayit Corporation

(Exact name of registrant as specified
in its charter)

_________________

|Nevada                            | 001-16381    | 76-0600966         
|--------------------------------- | ------------ | -------------------
|(State or Other Jurisdiction      | (Commission  | (I.R.S. Employer   
|of Incorporation or Organization) | File Number) | Identification No.)

524 East Weddell Drive, Sunnyvale,
CA 94089
(Address of Principal Executive Offices) (Zip Code)

408-744-1331
(Registrant’s telephone number, including area code)

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

None

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

Common Stock, $0.001 par value per share
OTCQB

_________________

Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.     YesoNoþ

Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.     YesoNoþ

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the 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.     YesþNoo

Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     YesþNoo

Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     YesoNoþ

Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company.

|Large accelerated filer  o | Accelerated filer  o | Non-accelerated filer  o | Smaller reporting company  þ
|-------------------------- | -------------------- | ------------------------ | ----------------------------

Indicate by
check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     YesoNoþ

The
issuer’s revenues for the most recent fiscal year ended December 31, 2012 were $2,491,834.

The
aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at
which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of
the registrant’s most recently completed second fiscal quarter was $6,116,788.

As
of April 15, 2013, there were 28,287,939 shares of common stock outstanding.











DOCUMENTS
INCORPORATED BY REFERENCE

List
hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into
which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3)
Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described
for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980).







|
|
|

PART
I

|Item
    1.  | Business                                                | 
|------------ | ------------------------------------------------------- | 
|Item
    1A. | Risk
    Factors                                        | 
|Item
    1B. | Unresolved
    Staff Comments                           | 
|Item
    2.  | Properties                                              | 
|Item
    3.  | Legal
    Proceedings                                   | 
|Item
    4.  | Submission
    of Matters to a Vote of Security Holders | 

PART
II

|Item
    5.     | Market
    for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 
|--------------- | ---------------------------------------------------------------------------------------------------------------- | 
|Item
    6.     | Selected
    Financial Data                                                                                      | 
|Item
    7.     | Management’s
    Discussion and Analysis of Financial Condition and Results of Operations                        | 
|Item
    7A.    | Quantitative
    and Qualitative Disclosures About Market Risk                                                   | 
|Item
    8.     | Financial
    Statements and Supplementary Data                                                                  | 
|Item
    9.     | Changes
    in and Disagreements With Accountants on Accounting and Financial Disclosure                         | 
|Item
    9A.    | Controls
    and Procedures                                                                                      | 
|Item
    9A(T). | Controls
    and Procedures                                                                                      | 
|Item
    9B.    | Other
    Information                                                                                            | 

PART
III

|Item
    10. | Directors,
    Executive Officers and Corporate Governance                                         | 
|------------ | -------------------------------------------------------------------------------------------------- | 
|Item
    11. | Executive
    Compensation                                                                         | 
|Item
    12. | Security
    Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 
|Item
    13. | Certain
    Relationships and Related Transactions, and Director Independence                      | 
|Item
    14. | Principal
    Accounting Fees and Services                                                         | 



|Audit
    Fees         | 
|---------------------- | 
|Audit-Related
    Fees | 
|Tax
    Fees           | 
|All
    Other Fees     | 

PART
IV

|Item
    15. | Exhibits,
    Financial Statement Schedules | 
|------------ | ------------------------------------------- | 



|
|
|











PART
I

ITEM
1. BUSINESS

CERTAIN
STATEMENTS IN THIS ANNUAL REPORT ON FORM 10-K CONSTITUTE "FORWARD LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION
27A OF THE SECURITIES ACT OF 1934, AS AMENDED, AND THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 (COLLECTIVELY, THE "REFORM
ACT"). CERTAIN, BUT NOT NECESSARILY ALL, OF SUCH FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING
TERMINOLOGY SUCH AS "BELIEVES", "EXPECTS", "MAY", "SHOULD", OR "ANTICIPATES",
OR THE NEGATIVE THEREOF OR OTHER VARIATIONS THEREON OR COMPARABLE TERMINOLOGY, OR BY DISCUSSIONS OF STRATEGY THAT INVOLVE RISKS
AND UNCERTAINTIES. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY
CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF ARRAYIT CORPORATION (THE "COMPANY", , “ARRAYIT”,
“TELECHEM”, “AVANT DIAGNOSTICS”, “ARRAYIT MARKETING”, “ARRAYIT SCIENTIFIC SOLUTIONS”,
"WE", "US" OR "OUR") TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS
EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. REFERENCES IN THIS FORM 10-K. UNLESS ANOTHER DATE IS STATED, ARE TO DECEMBER
31, 2012.

Portions
of this Form 10-K contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended
(the “Securities Act”), Section 21E of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”),
and the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements are subject to risks and
uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from
the results, performance or achievements expressed or implied by the forward-looking statements. You should not unduly rely on
these statements. Forward-looking statements involve assumptions and describe our plans, strategies, and expectations. You can
generally identify a forward-looking statement by words such as may, will, should, expect, anticipate, estimate, believe, intend,
contemplate or project. Factors, risks, and uncertainties that could cause actual results to differ materially from those in the
forward-looking statements include, among others,



|- | our
    ability to raise capital,                                                  
|- | -----------------------------------------------------------------------------------
|- | our ability
    to provide our products and services at competitive rates,         
|- | our ability
    to execute our business strategy in a very competitive environment,
|- | our degree
    of financial  leverage,                                             
|- | risks associated
    with our acquiring and integrating companies into our own,    
|- | risks related
    to market acceptance and demand for our services,                
|- | the impact
    of competitive services, and                                        
|- | other risks
    referenced from time to time in our SEC filings.                   



With
respect to any forward-looking statement that includes a statement of its underlying assumptions or bases, we caution that, while
we believe such assumptions or bases to be reasonable and have formed them in good faith, assumed facts or bases may vary from
actual results, and the differences between assumed facts or bases and actual results can be material depending on the circumstances.
When, in any forward-looking statement, we or our management express an expectation or belief as to future results, that expectation
or belief is expressed in good faith and is believed to have a reasonable basis, but there can be no assurance that the stated
expectation or belief will result or be achieved or accomplished. All subsequent written and oral forward-looking statements attributable
to us, or anyone acting on our behalf, are expressly qualified in their entirety by the cautionary statements. Except as required
by applicable law, including the securities laws of the United States and/or if the existing disclosure fundamentally or materially
changes, we do not undertake any obligations to publicly release any revisions to any forward-looking statements to reflect events
or circumstances after the date of this report or to reflect unanticipated events that may occur.



1







INDUSTRY
DATA

In
this Form 10-K, we may rely on and refer to information regarding the biotech industry from market research reports, analyst reports
and other publicly available information.  Although we believe that this information is reliable, we cannot guarantee
the accuracy and completeness of this information, and we have not independently verified it.

Overview:

Arrayit
Corporation is a leading life sciences technology company providing innovative products and services that empower scientists and
clinicians tostudy all living things, from humans, animals, and
plants, to viruses and bacteria. This research is being performed in thousands of government, university, pharmaceutical, biotechnology,
and agrigenomics laboratories around the world, where scientists seek to expand our knowledge of the biological functions essential
for life. Beginning at the genetic level, where our tools are used to elucidate the correlation between gene sequence and biological
processes, life science research expands to include the study of the cells, tissues, organs, systems, and other components that
make up living organisms. Novel insights into the function of genes and proteins, early stage disease
diagnostics, better and safer medicines, and safer and more nutritional crop plants are some of the many aspects of human health
empowered by Arrayit technology. Arrayit has secured its position in the industry by leveraging the company’s widely used
patented microarray manufacturing platform and revolutionary VIPTM genotyping technology.Since 1999, Arrayit has
built a powerful portfolio of patents, trade secrets, and more than 650 life sciences products. The company was featured on the
television series NOVA in 2001, received successive appointments to the Inc. 500 list of fastest growing private companies in
2002 and 2003, and has received numerous local awards including the Rising Star award from the City of Sunnyvale and the Silicon
Valley Top 50 award in 2003.

Arrayit
has proven expertise in three key areas:  the development and support of microarray tools and components, custom printing
and analysis of microarrays for research, and the development of diagnostic microarrays and tools for early detection of treatable
disease states.  The Company’s patented tools and trade secrets provide the performance, throughput, cost effectiveness
and flexibility necessary to perform the billions of genetic tests needed to extract valuable medical information. The Company
believes this information will enable researchers to correlate genetic variation and biological function, which will enhance drug
discovery, drug development and clinical research, allowing diseases to be detected earlier and permitting better choices of drugs
for individual patients.

Effective
Thursday, March 19, 2009, Arrayit Corporation’s common stock began trading on the OTC Bulletin Boards as “ARYC”.
The authorized common shares of the Company are 480,000,000 and the authorized preferred shares of the Company are 20,000,000.

Arrayit
has a December 31 year end.

Arrayit’s
principal office is located at 524 East Weddell Drive in Sunnyvale, California. Arrayit presently has nine employees.



2







General
Business Description, Operations and Changes in Control

Overview
of the Business

Arrayit
strives to increase shareholder equity by inventing, developing, manufacturing and selling sophisticated life sciences products
and services to an extensive customer base spanning 50 countries.Our
corporate philosophy is put into action by a highly skilled, multidisciplinary team of scientists, business professionals, engineers,
investors, executive and support staff, all of whom place shareholder value, product quality, customer service and price competitiveness
as our highest priorities. Arrayit technology empowers decisive strategic advantage and return on investment in the basic research,
pharmaceutical, diagnostic, and health care markets. We presently conduct operations through two wholly owned subsidiaries, one
majority owned subsidiary, and one minority owned subsidiary as outlined below:

TeleChem
International, Inc., a wholly owned subsidiary

Arrayit
Marketing, Inc., a wholly owned subsidiary

Arrayit
Scientific Solutions, Inc., 98% majority owned subsidiary

Avant
Diagnostics, Inc., 47% minority owned subsidiary



Arrayit
Products and Services

Since
1999, Arrayit has focused on developing microarray laboratory instruments, glass substrate slides, kits and reagents using an
open platform strategy, in contrast to the closed platform formats of its largest competitors. Arrayit’s patented printing
technology has become an industry standard for microarray manufacturing, allowing customers to manufacture microarrays of all
types including DNA, protein, patient DNA, antibody, antigen, peptide, carbohydrate, and many others. This flexibility differentiates
Arrayit’s microarray technology from competitors, who are generally limited to DNA microarrays. Arrayit sells both small-scale
microarray manufacturing robots (SpotBot®) and high throughput versions (NanoPrintTM). The SpotBot® and NanoPrint
product lines have been further enhanced to accommodate more stringent requirements for manufacturing protein microarrays. Arrayit
also offers personal microarray scanners (SpotLightTM) as well as high-end scanning instruments (InnoScan®). As the industry
continues to grow, Arrayit is providing more fully integrated platforms such as the company’s Platinum, Gold, Silver and
Bronze Variation Identification PlatformTM (VIP) genotyping systems, including cleanroom and laboratory versions. Arrayit
is expanding its pre-printed microarray content to complement its flagship H25K Whole Human Genome Microarray, which is a premium
product for biomarker discovery and drug compatibility testing. Arrayit is expanding its Microarray Services capabilities in connection
with increased demand for microarrays of all kinds, and a trend toward outsourcing high end technical manufacturing. With the
investment proposed in its business plan, Arrayit will create a variety of microarray based diagnostic tests using Arrayit’s
patented VIP Healthcare technology and related proprietary approaches. As microarrays move into clinical diagnostics and genetic
screening applications, the Company expects to earn license and royalty fees in these areas. A full microarray product list with
descriptions, scientific publications, protocols and pricing is available at http://arrayit.com.



The
Microarray Industry

Arrayit’s
core business is in the life sciences research market, with customers in laboratories at universities, medical research centers
and government institutions, as well as biotechnology and pharmaceutical companies. Researchers at these institutions use Arrayit
products and services in a broad spectrum of scientific activities such as genotyping and gene expression, basic research into
the function of genes in plants and animals, research on the human genome, development of diagnostics for personalized medicine,
and diagnostic screening tools for drug development programs that identify toxicity patterns in patient populations. Arrayit products
are cited in more than 4,700 scientific publications to date.



3







Health
Care Industry Segment

Arrayit
Corporation believes that the analysis of genetic variation and function will play an increasingly important role in molecular
biology, and that by empowering genomic and proteomic analysis, our tools and trade secrets will advance disease research, drug
development, and the creation of molecular diagnostic tests. In addition to developing all types of microarray-based solutions
for life science, applied science, and consumer markets, Arrayit is facilitating the transition to the clinic, by supporting and
carrying out clinical trials to gather data for regulatory submissions in the US and globally, and establishing infrastructure
to offer products designed and manufactured in compliance with global quality standards for medical devices.

As
personalized medicine progresses, it has become apparent that millions of people will need to be tested for various diseases or
traits in order to identify whether or not a disease is present, or to determine compatibility with specific drug treatments.
However, testing millions of patient samples, one at a time, would overwhelm laboratory testing facilities and be cost prohibitive.
To solve this problem, Dr. Mark Schena developed and patented a method to place up to 100,000 individual patient samples on a
single microarray substrate slide. That slide is then immersed in a solution that contains the known markers for a specific disease,
such as congenital hearing loss, Parkinson’s Disease, Alzheimer’s Disease, etc. The results are as easy as reading
a traffic signal. Should any one of those 100,000 patient samples contain the marker for the disease being tested, a red spot
appears, and if not, a green spot appears. This procedure can also identify carriers as yellow spots. Because of the sophistication
of this patented invention, one lab could test hundreds of thousands of patient samples a day after receiving a sample of DNA
from each patient. It is the only method available to the industry that can accomplish this. Dr. Schena’s multi-patient
genotyping procedure is protected by the following patents:

US
Patent 6,913,879

Australia
2002218740

Europe
1343911

Korea
10-0756015

New
Zealand 523560

Singapore
94899

Taiwan
I280282

Israel
153848

Other
worldwide patents pending

Strategic
Relationships and Licensing Arrangements

Arrayit
Corporation and Wayne State University completed Task 2 of a sponsored research agreement to study ovarian cancer, producing three
new proteomic markers that may provide additional sensitivity and specificity for the OvaDx® test. Continuing analysis of
these markers, coupled with other technical improvements we have made, suggests that we may achieve our OvaDx® clinical trials
goals of 90% sensitivity and specificity approaching 100% for this multi-purpose screening test. Recent advances in Arrayit Blood
Card technology indicates that OvaDx® is deployable using both intravenous draws, as well as just 4-5 drops of human blood,
a capacity the company believes will greatly simplify testing by facilitating the procurement, handling and storage of large numbers
of OvaDx® patient samples.

Arrayit
Corporation will manufacture and process the OvaDx® tests, and Avant Diagnostics, Inc. (“AD”) will market and
sell the OvaDx® test upon FDA approval. As of December 31, 2012, Arrayit Corporation owns 19.5 million of approximately 41.5
million issued shares in Avant Diagnostics, Inc. Arrayit Corporation and AD are exploring strategic partnership opportunities
with corporations that have a large customer base, and a significant sales and marketing presence in the diagnostics industry
worldwide. AD’s OvaDx® Pre-Symptomatic Ovarian Cancer Screening Test is expected to be the first product on the market
to allow detection of all stages and histologies of ovarian cancer including stage IA disease, which has excellent treatment options
and prognosis.

Arrayit
has an ongoing collaboration with the Parkinson’s Institute to test known Parkinson’s Disease (PD) patients’
blood to identify biomarkers for Parkinson’s Disease. Arrayit is also using the H25K Whole Human Genome Microarray to examine
PD samples and has identified the world’s first functional mRNA biomarkers for Parkinson’s Disease. An expanded patient
study will be used to further validate the PD biomarkers.

Arrayit
provides a variety of customized solutions for its life science and pharmaceutical customers. We are the sole provider of custom
microarray glass manufacturing services to a major life sciences tools company on an OEM basis. Our microarray manufacturing technology
and substrates are being used to create the first allergy microarrays approved for the Taiwanese and Chinese markets. Arrayit
is also providing OEM microarray manufacturing services for a breast cancer test, and CE approval is expected in 2013.

4







Product
and Services Categories

Arrayit’s
revenues are generated through the following major product lines:

|Patented
    Printing Technology |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                 | Arrayit manufactures
    the world’s most widely used microarray printing technology consisting of Professional, 946, Stealth and ChipMaker®
    pins and printheads. Arrayit’s patented printing technology allows the high-speed manufacture of DNA, protein, antibody,
    lipid, carbohydrate and other types of microarrays for research and diagnostic applications including gene expression, genotyping,
    protein profiling and many more.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Instrumentation                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                 | Automated
        microarray manufacturing instruments including NanoPrintTM, SpotBot Titan, SpotBot Extreme, and SpotBot® Protein
        and Personal microarrayers. NanoPrintTM allows high-end, high throughput manufacturing, whereas SpotBot® systems
        are the only personal microarrayers in the industry that enable affordable benchtop use.
        Other
        instruments include SpotLightTM CCD fluorescence scanners, SpotWare® colorimetric scanners, InnoScan® laser
        scanners, TrayMixTM Hybridization Stations, ArrayMix Hybridization Stations, high speed centrifuges, air jets, and
        vacuum products. Laboratory tools and bioinformatics computers complete the instrumentation line which are all designed
        to facilitate the quality and speed of microarray research.                                                                                                                                                                         
|Consumables                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                 | Arrayit
        manufactures and provides the microarray industry with variety of laboratory consumables, including glass substrates and
        slides, reagents, solutions, kits and clean room supplies.
        Arrayit
        Super Microarray Substrates have been adopted by major Life Science companies and are used industry wide. They are polished
        atomically flat glass surfaces with proprietary coupling chemistry that afford high signal intensities and low background
        noise for premium quality microarray experimentation.
        Arrayit
        buffers and solutions are optimized to increase the quality of microarray manufacturing, processing, and use. Purification
        kits provide both a high yield and superior purity. Applications include: DNA microarrays, fluorescent microarray purification,
        sequencing and others. Arrayit kits utilize proprietary binding membranes and purification chemistries for optimal performance.
|Healthcare
    Platforms         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                 | Arrayit’s
    patented Healthcare technology, the Variation Identification Platform (VIP), allows diagnostic tests to be performed by depositing
    as many as 100,000 patient samples onto a single microarray. VIP platforms enable the manufacture of extremely high-quality
    microarrays with superior precision and accuracy.  These microarrays containing 100,000 individual features allow
    the simultaneous genotyping of 100,000 different patients in a single test, which dramatically reduces the cost of manufacturing
    and processing such genotyping tests by more traditional means.                                                                                                                                                                                                                                                                                                                                                                                   



Arrayit
Opportunity in Diagnostics and Personalized Medicine

With
the completion of the human genome sequencing project, genetic researchers have focused on identifying the variations in the DNA
of specific genes in the genome. These DNA variations are partly what define individual characteristics, including disease states
or a statistical propensity for disease as well as compatibility with specific pharmaceutical compounds. In addition to DNA analysis,
it is now possible to identify messenger RNA (mRNA) and protein markers or biomarkers in the blood stream that provide definitive
early warning signs for diseases such as Parkinson’s Disease and ovarian cancer. Arrayit technology uniquely allows the
analysis and identification of all of the major classes of molecules in the human body (DNA, mRNA and protein) using a single
patented and proprietary microarray technology platform. The implications of this capability are far-reaching and impact not only
the research community, but will also impact individual patients and medical and insurance providers in the near future. Diagnostic
tests that detect diseases very early in their progression provide options for earlier treatments that may improve patient quality
of life and prognosis by delaying or preventing disease progression or even death. The health care enterprise will incur major
cost savings by avoiding costly late stage disease treatments.

We
intend to pursue opportunities to license diagnostic markers that were developed using our platform and to acquire businesses
that increase our disease diagnostic capability and expand our geographic reach. We also intend to acquire manufacturers of other
highly engineered and customized ancillary or complementary products that will further our penetration into the life sciences,
diagnostics and health care markets and our customer base served by these sectors. We favor academic and commercial candidates
that have core competencies and business characteristics similar to our own, and those that we expect will benefit from some of
the major positive trends occurring in our industry.



5







Competition
within the Microarray Research and Development Industry

Arrayit
competes with large and small, public and private companies. The industry has been historically dominated by Affymetrix which
achieved strong market penetration by being the first public company to commercialize and promote microarray applications. Over
the past few years, Illumina has taken significant market share from Affymetrix. However, both competitors face mid to long term
scientific and technological challenges because they are limited by what they can deposit onto a microarray--DNA. Arrayit’s
patented printing technology can deposit any kind of molecule into a microarray, including DNA, proteins, antibodies, diagnostic
elements and other compounds. These next generation microarrays represent the largest growth opportunity in the industry. Arrayit
has a long-term advantage in its unique line of personal and high throughput microarray printers, highest sensitivity microarray
scanners, top quality consumables, patented diagnostic methods, collaborative corporate culture, and competitive pricing. Arrayit’s
main competitors are:



|Name
    and Location                                                                                                                                                                                                                                                                                                                              | Trading
    Symbol | Price
    per Common Share | Market
    Capitalization
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------ | -------------------------- | -------------------------
|Agilent
    Technologies, Inc., Santa Clara, California                                                                                                                                                                                                                                                                                            | NYSE:
    A        | $41.93                     | $14.55B                  
|Agilent
    provides bio-analytical and electronic solutions to the communications, electronics, life sciences and chemical analysis industries.  The
    microarray division is a small portion of their total business.  Agilent’s process places spots in a microarray
    by means of an ink jet technology and is limited to DNA microarrays.
|                                                                                                                                                                                                                                                                                                                                                  
|Affymetrix,
    Inc., Santa Clara, California                                                                                                                                                                                                                                                                                                      | NasdaqGS:
    AFFX | $4.15                      | 293.22M                  
|Affymetrix
    provides consumables and systems for genetic analysis in life sciences.  Their process creates a microarray by means
    of photolithography and is limited to DNA microarrays.                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                                                                  
|Illumina,
    Inc., San Diego, California                                                                                                                                                                                                                                                                                                          | NasdaqGS:
    ILMN | $52.22                     | $6.48B                   
|Illumina
    provides a line of products and services to serve the sequencing, genotyping and gene expression markets.  Their
    process places chemically reacted beads into a microarray format, and is limited to DNA microarrays.                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                   |                    |                            |                          
|                                                                                                                                                                                                                                                                                                                                                   |                    |                            |                          



(1)
Share price and market cap values as of March 1, 2013.



Advertising,
Marketing and Sales

Arrayit
has become a recognized brand through major broadcast television news media, full page advertisements in top scientific journals,
trade shows and workshops, vendor fairs, direct mail campaigns, feature articles in major trade publications and via e-mail newsletters.
All advertising and marketing efforts drive traffic to the Arrayit.com website and web based store resulting in sales. The Arrayit.com
web site regularly receives more than 750 unique visitors per day and 22,000 visitors per month and over 700,000 hits per month.
Because of the wealth of scientific information and protocols on the site, many consider it be the scientific portal of the microarray
industry.

The
Company’s sales strategy relies on providing exceptional customer service and technical support. Arrayit has developed a
network of more than 50 international distributors in Eastern and Western Europe, Asia, the Middle East, South Africa, India and
other locations world-wide. These global distributors purchase directly from Arrayit for resale on net 30 day terms, and represent
approximately 46% of the Company’s 2012 revenues. These foreign receivables are insured through Atradius Trade Credit Insurance,
Inc.









Facilities

Arrayit’s
corporate offices and research facilities are located at 524 East Weddell Drive, Sunnyvale, California 94089. The corporate headquarters
covers 8,280 square feet which in addition to the executive offices, shipping and receiving, include a microarray manufacturing
cleanroom demonstration facility, two (2) microarray manufacturing clean rooms, a substrate manufacturing clean room, preparation
and packing facilities, and quality control and quality assurance work stations. The base rent is $10,350 per month plus a monthly
operating expense charge of $1,987.20. The lease expires on November 30, 2013.

Avant
Diagnostics, Inc operates from corporate offices located at 8561 East Anderson Drive, Suite 104, Scottsdale, AZ 95255.

Our
internet website address is http://www.arrayit.com

Our
annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports
are available free of charge on the SEC’s website, www.sec.gov.

Management
believes these facilities are suitable and adequate for its current operations.



Regulatory
Matters

We
and our customers are subject to various government regulations, and we may incur significant expenses to comply with, and experience
delays in our product commercialization as a result of, these regulations.

The
FDA must approve certain in-vitro diagnostic products before they can be marketed in the United States. Certain in-vitro diagnostic
products must also be approved by the regulatory agencies of foreign governments or jurisdictions before the product can be sold
outside the United States. Commercialization of our and our collaborative partners’ in-vitro diagnostic products outside
of the research environment may depend upon successful completion of clinical trials. Clinical development is a long, expensive
and uncertain process and we do not know whether we, or any of our collaborative partners, will be permitted to undertake clinical
trials of any potential in-vitro diagnostic products. It may take us or our collaborative partners many years to complete any
such testing, and failure can occur at any stage. Delays or rejections of potential products may be encountered based on changes
in regulatory policy for product approval during the period of product development and regulatory agency review. Moreover, if
and when our projects reach clinical trials, we or our collaborative partners may decide to discontinue development of any or
all of these projects at any time for commercial, scientific or other reasons. Any of the foregoing matters could have a material
adverse effect on our business, financial condition and results of operations.

Many
of our products are labeled for research only. Even when a product is exempted from FDA clearance or approval, the FDA may impose
restrictions as to the types of customers to which we can market and sell our products. Such restrictions may materially and adversely
affect our business, financial condition and results of operations.

The
FDA, the U.S. Department of Health and Human Services and foreign government regulators are increasingly focused on genetic analysis
tools, including the use of microarrays that are labeled for research use only by cytogenetics labs, including labs certified
under the Clinical Laboratory Improvement Amendments (“CLIA”). We cannot predict the extent of the FDA’s future
efforts in regulation and policies with respect to the sale and use of microarrays for the development of assays by CLIA laboratories,
which are referred to as laboratory developed tests (“LDTs”). If new regulations restrict our customers’ development
of LDTs using our products labeled for research use only, or if we otherwise are required to obtain FDA premarket clearance or
approval prior to commercializing these products, our ability to generate revenue from the sale of our products may be delayed
or otherwise adversely affected. Moreover, our failure to comply with governmental rules and regulations related to our products
could cause us to incur significant adverse publicity, or subject us to investigations and notices of non-compliance or lead to
fines or restrictions upon our ability to sell our products.

Medical
device laws and regulations are also in effect in many countries, ranging from comprehensive device approval requirements to requests
for product data or certifications. The number and scope of these requirements are increasing. We may not be able to obtain regulatory
approvals in such countries or may incur significant costs in obtaining or maintaining our foreign regulatory approvals. In addition,
the export by us of certain of our products which have not yet been cleared for domestic commercial distribution may be subject
to FDA or other export restrictions.

We
have agreements relating to the sale of our products to government entities and, as a result, we are subject to various statutes
and regulations that apply to companies doing business with the government. A failure to comply with these regulations might result
in suspension of these contracts or administrative penalties, and could have a material adverse effect on our ability to compete
for future government grants, contracts and programs.



Healthcare
reform and restrictions on reimbursements

We
are currently collaborating with our partners to develop diagnostic and therapeutic products. The ability of our collaborators
to commercialize such products may depend, in part, on the extent to which reimbursement for the cost of these products will be
available under U.S. and foreign regulations that govern reimbursement for clinical testing services by government authorities,
private health insurers and other organizations. In the U.S., third-party payer price resistance, the trend towards managed health
care and legislative proposals to reform health care or reduce government insurance programs could reduce prices for health care
products and services adversely affect the profits of our customers and collaborative partners and reduce our future royalties.













Handling
of hazardous materials and other regulations governing environmental safety.

Our
operations are subject to complex and stringent environmental, health, safety and other governmental laws and regulations that
both public officials and private individuals may seek to enforce. Our activities that are subject to these regulations include,
among other things, our use of hazardous materials and the generation, transportation and storage of waste. We could discover
that we or an acquired business is not in material compliance. Existing laws and regulations may also be revised or reinterpreted,
or new laws and regulations may become applicable to us, whether retroactively or prospectively, that may have a negative effect
on our business and results of operations. It is also impossible to eliminate completely the risk of accidental environmental
contamination or injury to individuals. In such an event, we could be liable for any damages that result, which could adversely
affect our business.



Employees

As
of April 1, 2013, we had 9 full time employees. We had no part-time employees. None of our employees are covered by a collective
bargaining agreement with a union. We consider our relationship with our employees to be good.



Comment
Letters Issued by the SEC

On
December 7, 2012, the SEC issued a comment letter relating to Arrayit Diagnostics, Inc’s Form S-1 filed on November 13,
2012. Pursuant to Rule 477 promulgated under the Securities Act of 1933, as amended, Arrayit Diagnostics, Inc. (now Avant Diagnostics,
Inc.) requested that the Securities and Exchange Commission consent to the withdrawal of the Registration Statement on Form S-1
(File No. 333-184899) filed on November 13, 2012. The withdrawal of the Form S-1 was requested in order to complete a private
placement prior to filing a Registration Statement on Form S-1.



ITEM
1A. RISK FACTORS

Our
business faces many risks. The risks described below may not be the only risks we face. Additional risks that we do not yet know
of, or that we currently think are immaterial, may also negatively impact our business operations or financial results. If any
of the events or circumstances described in this section occur, our business, financial condition or results of operations could
be negatively affected to a significant extent. Our securities are highly speculative and should only be purchased by persons
who can afford to lose their entire investment in our Company. The Company's business is subject to many risk factors, including
the following:

Risks
Related to the Growth of Our Business

We
must continually develop and commercialize new or enhanced products and services to spur growth.

Our
success depends in large part on our continual, timely development and commercialization of new or enhanced products and services
that address evolving market requirements and are attractive to customers. The life sciences tools market is characterized by
rapid and significant technological changes, frequent new product introductions and enhancements, evolving industry standards
and changing customer needs. Standardization of tools and systems for genomic and proteomic research is ongoing. Other companies
may introduce new technologies, techniques, products or services that render our products or services obsolete or less economical.
If we do not appropriately innovate and invest in new technologies, then our technologies may become dated and our customers could
move to new technologies offered by our competitors.

As
a result, we are continually looking to develop, license or acquire new or enhanced technologies, products and services to further
broaden and deepen our offerings. Some of the factors affecting market acceptance of our products and services include:

| | - | availability,
    quality and price as compared to competitive products and services;                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | - | the functionality
    of new and existing products and services;                                                                                                        
| | - | the timing
    of introduction of our products and services as compared to competitive products and services;                                                           
| | - | the existence
    of product defects;                                                                                                                                   
| | - | scientists’
    and customers’ opinions of the utility of our products and services and our ability to incorporate their feedback into
    future products and services;
| | - | citation of
    our products in published research; and                                                                                                                 
| | - | general trends
    in life science research and life science informatics software development.                                                                          



Our
new or enhanced technologies, products or services may or may not be accepted by customers in our target markets. For example,
once we have developed or obtained a new technology, we may fail to successfully commercialize new products and services based
on that technology, particularly to the extent that our new products and services compete with established technologies or the
products and services of more established competitors. Risks relating to product adoptions include the inability to accurately
forecast demand and difficulties in managing different sales and support requirements due to the type or complexity of the new
products.



8







Our
growth depends in part on our ability to acquire new technologies, products and services, which may absorb significant resources
and may or may not be successful.

As
part of our strategy to develop and identify new technologies, products and services, we have made and may continue to make acquisitions.
Our integration of the operations of acquired businesses requires significant efforts, including the coordination of information
technologies, research and development, sales and marketing, operations, manufacturing and finance. These efforts result in additional
expenses and divert significant amounts of management’s time from other projects. Our failure to manage successfully and
coordinate the growth of the combined company could also have an adverse impact on our business. In addition, there is no guarantee
that some of the businesses we acquire will become profitable or remain so. If our acquisitions do not meet our initial expectations,
we may record impairment charges.

Factors
that affect the success of our acquisitions include:



| | - | our
    ability to retain key employees of the acquired company;                                                                                                                                                                                                                                                              
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | - | the performance
    of the acquired business, technology, product or service;                                                                                                                                                                                                                                                 
| | - | our ability
    to integrate operations, financial and other systems;                                                                                                                                                                                                                                                         
| | - | the ability
    of the combined company to achieve synergies among its constituent companies, such as increasing sales of the combined company’s
    products and services, achieving expected cost savings and effectively combining technologies to develop new products and
    services;                                  
| | - | any disruption
    in order fulfillment due to integration processes and therefore loss of sales;                                                                                                                                                                                                                             
| | - | the presence
    or absence of adequate internal controls and/or significant fraud in the financial systems of acquired companies;                                                                                                                                                                                            
| | - | any decrease
    in customer and distributor loyalty and product orders caused by dissatisfaction with the combined companies’ product
    lines and sales and marketing practices, including price increases; and                                                                                                            
| | - | Our assumption
    of known contingent liabilities that are realized, known liabilities that prove greater than anticipated, or unknown liabilities
    that come to light, to the extent that the realization of any of these liabilities increases our expenses or adversely affects
    our business or financial position.



Emerging
market opportunities in molecular diagnostics may or may not develop as quickly as we expect.

Molecular
diagnostics is the fastest growing segment of the diagnostics market. At present, this growth is largely driven by infectious
disease testing, but molecular diagnostics is rapidly expanding into new areas such as reproductive health and cancer management,
which are focus areas for our diagnostics business. The increasing efficacy of molecular diagnostics is driven by the continuing
discovery of genomic and proteomic markers with proven clinical utility, the increasing adoption of genomic and proteomic based
diagnostic tests, and the expansion of reimbursement programs to include a greater number of approved tests. We believe that our
microarray technology, instruments and consumables are foundational and will provide for continuing growth in this market. However,
we cannot be certain that molecular diagnostic markets will develop as quickly as we expect. At this time, there can be no certainty
of the technical or commercial success our technologies will achieve in such markets.

Patent
disputes can be costly to prosecute and defend, and adverse judgments could result in damage awards, increased royalties and other
similar payments and decreased sales.

Patent
positions can be highly uncertain and patent disputes in the medical industry are not unusual. An adverse result in a patent dispute
involving our patents, or the patents of our collaborators, may lead to a determination by a court that the patent is not infringed,
is invalid, and/or is unenforceable. Such an adverse determination could lead to our loss of market exclusivity. An adverse result
in a patent dispute alleging that we have infringed patents held by a third party may lead to a determination by a court that
the patent is infringed, valid, and enforceable. Such an adverse determination may preclude the commercialization of our products
and/or may lead to significant financial damages for past and ongoing infringement. Due to the uncertainty surrounding patent
litigation, parties may settle patent disputes by obtaining a license under mutually agreeable terms in order to decrease risk
of an interruption in manufacturing and/or marketing of its products.

The
potential for litigation regarding our intellectual property rights always exists and litigation may be initiated by third parties
attempting to abridge our rights. Even if we are ultimately successful in a particular dispute, we may incur substantial costs
in defending its patents and other intellectual property rights.



9









Risks
Related to Our Sales

We
face significant competition, and our failure to compete effectively could adversely affect our sales and results of operations.

We
compete with companies that develop, manufacture and market genetic analysis tools for the life science and clinical healthcare
markets. We face significant competition as our competitors develop new, improved or more economical products and services and
as new companies enter the market with new and innovative technologies.

The
market for molecular diagnostics products and services is highly competitive, has high barriers to entry, and has several other
large companies with significant market share. For example, companies such as Affymetrix, Illumina, Agilent Technologies and Life
Technologies have products for genetic analysis that are directly competitive with certain of our products. We also face competition
from established diagnostic companies such as Beckman Coulter, Becton Dickinson, bioMérieux, Celera Diagnostics, Johnson
& Johnson and Roche Diagnostics, which have made strategic commitments to diagnostics, have financial and other resources
to invest in new technologies, and have substantial intellectual property portfolios. They also have substantial experience in
new product development, regulatory expertise,

Many
of our current and potential competitors have significantly greater financial, technical, marketing and other resources than we
do. In addition, many current and potential competitors have greater name recognition, more extensive customer bases and access
to proprietary genetic content.

Consolidation
trends in both our market and that of our customers have increased competition.

There
has been a trend toward industry consolidation in our markets for the past several years. We expect this trend toward industry
consolidation to continue as companies attempt to strengthen or hold their market positions in an evolving industry and as companies
are acquired or are unable to continue operations. We believe that industry consolidation may result in stronger competitors that
are better able to compete as sole-source vendors for customers. This could lead to more variability in operating results and
could harm our business.

Additionally,
there has been a trend toward consolidation in many of the customer markets we sell to, in particular the pharmaceutical industry.
Consolidation in our customer markets results in increased competition for important market segments and fewer available accounts,
and larger consolidated customers may be able to exert increased pricing pressure on companies in our market.

Reduction
or delay in research and development budgets and government funding may adversely impact our sales.

We
expect that our revenues in the foreseeable future will be derived primarily from products and services provided to a relatively
small number of academic, governmental and other research institutions, as well as pharmaceutical and biotechnology companies.
Our operating results may fluctuate substantially due to reductions and delays in research and development expenditures by these
customers.

Factors
that could affect the spending levels of our customers include:

| | - | weakness
    in the global economy and changing market conditions that affect our customers;
| | - | --------------------------------------------------------------------------------------------



| | - | changes
    in the extent to which the pharmaceutical industry may use genetic information and genetic testing as a methodology for drug
    discovery and development;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | - | changes in
    government programs that provide funding to companies and research institutions;                                                                        
| | - | changes in
    the regulatory environment affecting life science companies and life science research;                                                                  
| | - | impact of
    consolidation within the pharmaceutical industry; and                                                                                                    
| | - | cost reduction
    initiatives of customers.                                                                                                                           



Government
funding of research and development is subject to the political process, which is inherently unpredictable. Any shift away from
the funding of life science research and development or delays surrounding the approval of government budget proposals may cause
our customers to delay or forego purchases of our products and services. Moreover, in the short term, our customers may delay
or reduce their purchases of our products as they wait to learn whether, and to what extent, they will receive grant funding.
Additionally, if our customers are unable to obtain funding they may reduce their research and development budgets, resulting
in a decrease in demand for our products. A reduction or delay in demand will reduce our revenues and adversely affect our profitability.

If
we are unable to maintain our relationships with collaborative partners, we may have difficulty developing and selling our products
and services.

We
believe that our success in penetrating our target markets depends in part on our ability to develop and maintain collaborative
relationships with key companies as well as with key academic researchers. Relying on our collaborative relationships is risky
to our future success because:

| | - | our
    partners may develop technologies or components competitive with our products and services;                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------
| | - | our existing
    collaborations may preclude us from entering into additional future arrangements;                                
| | - | our partners
    may not obtain regulatory approvals necessary to continue the collaborations in a timely manner;                 
| | - | some of our
    agreements may terminate prematurely due to disagreements between us and our partners;                            
| | - | our partners
    may not devote sufficient resources to the development and sale of our products and services;                    
| | - | our partners
    may be unable to provide the resources required for us to progress in the collaboration on a timely basis;       
| | - | our collaborations
    may be unsuccessful; or                                                                                    
| | - | some of our
    agreements have expired and we may not be able to negotiate future collaborative arrangements on acceptable terms.











The
size and structure of our current sales, marketing and technical support organizations may limit our ability to sell our products
and services.

Although
we have invested significant resources to expand our direct sales force and our technical and support staff, we may not be able
to support a global sales, marketing or technical support organization that is sufficient to sell, market or support our products
globally. To assist our sales and support activities, we have entered into distribution agreements through certain distributors,
principally in markets outside of North America and Europe. These and other third parties on whom we rely for sales, marketing
and technical support may decide to develop and sell competitive products or otherwise become our competitors, which could harm
our business.



Risks
Related to the Manufacturing of Our Products

We
rely on third parties whose operations are outside our control.

We
rely on arrangements with third-party shippers and carriers such as independent shipping companies for timely delivery of our
products to our customers. As a result, we may be subject to carrier disruptions and increased costs due to factors that are beyond
our control, including labor strikes, inclement weather, natural disasters and rapidly increasing fuel costs. If the services
of any of these third parties become unsatisfactory, we may experience delays in meeting our customers’ product demands
and we may not be able to find a suitable replacement on a timely basis or on commercially reasonable terms. Any failure to deliver
products to our customers in a timely and accurate manner may damage our reputation and could cause us to lose customers.

We
also utilize third party distributors to sell, install and service certain of our products. While we are selective in whom we
choose to represent us, it is difficult for us to ensure that our distributors and manufacturer’s representatives consistently
act in accordance with the standards we set for them. To the extent any of our end-customers have negative experiences with any
of our distributors; it could reflect poorly on us and damage our reputation, thereby negatively impacting our financial results.

We
may need to adjust our manufacturing capacity based on business requirements or improvements made to our technological capabilities
and there are risks associated with such adjustment.

If
demand for our products is reduced or if we implement technologies that increase the density or yields of our microarrays, our
manufacturing capacity could be under-utilized and some of our long-lived assets, including facilities and equipment, may be impaired,
which would increase our expenses. In addition, factory planning decisions may shorten the useful lives of long-lived assets including
facilities and equipment, and cause us to accelerate depreciation. These changes in demand for our products, and changes in our
customers’ product needs, could have a variety of negative effects on our competitive position and our financial results,
and, in certain cases, may reduce our revenue, increase our costs, lower our gross margin percentage or require us to recognize
impairments of our assets. In addition, if demand for our products is reduced or we fail to accurately forecast demand, we could
be required to write down inventory since certain of our products have a limited shelf life, which would have a negative impact
on our gross margin.

We
may lose customers or sales if we are unable to meet customer demand for our products on a timely and cost-effective basis, or
if we are unable to ensure the proper performance and quality of our products.

We
produce our products in an innovative and complicated manufacturing process which has the potential for significant variability
in manufacturing yields. We have encountered and may in the future encounter difficulties in manufacturing our products and, due
to the complexity of our products and our manufacturing process, we may experience delays in the manufacture of our products or
fail to ensure their proper performance or quality. As we develop new and enhanced products, we must be able to resolve in a timely,
cost-effective manner manufacturing issues that may arise from time to time.

We
rely on internal quality control procedures to verify our manufacturing processes. Due to the complexity of our products and manufacturing
process, however, it is possible that products that do not meet all of our performance specifications may not be identified before
they are shipped. If our products do not consistently meet our customers’ performance expectations, demand for our products
may decline. In addition, we maintain minimal backup manufacturing capabilities for the production of our products. Any interruption
in our ability to continue operations at our existing manufacturing facilities could delay our ability to develop or sell our
products, which could result in lost revenue and seriously harm our business, financial condition and results of operations.











Risks
Related to Our Operations

We
have had significant operating losses expect to continue to incur net losses for the near term.

Although
we have been operating for twenty years, we have been unable to consistently operate profitably. As of December 31, 2012, we had
an accumulated deficit of approximately $24,315,589. We have reported net losses of approximately $576,470 and $248,618 for the
fiscal years ended December 31, 2012 and 2011, respectively. Unless our sales increase substantially in the near future, we anticipate
that we will continue to incur net losses in the near term, and we may never be able to achieve profitability. In order to achieve
profitable operations we need to significantly increase our revenues from the sales of product and licensing fees. We cannot be
certain that our business will ever be successful or that we will generate significant revenues and become profitable.

We
may have substantial future cash requirements but no assured financing source to meet such requirements.

If
we are able to generate funds from financing actitivies, we will have sufficient cash and cash equivalents, to support our projected
operating needs for the next fiscal year. However, with limited revenues from sales of our products and services, our business
plan that calls for us to continue to improve our products, create new products, and more aggressively market our existing products
will require us to obtain additional working capital. Our future capital requirements depend on many factors, including continued
progress in product enhancements and new product development programs, the magnitude of these programs, the time and costs involved
in completion of technological, manufacturing and market requirements, and the cost of finalizing licensing agreements to produce
licensing revenues. We do not know whether additional financing will be available when needed, or on terms favorable to us or
our stockholders – particularly in light of current economic conditions which have significantly adversely affected the
availability of credit, and other sources of capital. We may raise necessary funds through public or private equity offerings,
debt financings or additional corporate collaboration and licensing arrangements. To the extent we raise additional capital by
issuing equity securities; our stockholders will experience further dilution. If we raise funds through debt financings, we may
become subject to restrictive covenants. To the extent that we raise additional funds through collaboration and licensing arrangements,
we may be required to relinquish some rights to our technologies or products, or grant licenses on terms that are not favorable
to us.

Our
operating results may vary significantly from quarter to quarter.

Our
quarterly results may be materially and adversely affected by:

| | · | the
                                                                                                                                 timing
                                                                                                                                 and
                                                                                                                                 volume
                                                                                                                                 of
                                                                                                                                 work
                                                                                                                                 under
                                                                                                                                 new
                                                                                                                                 agreements;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | general
                                                                                                                                 economic
                                                                                                                                 conditions;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                                                                                                                 spending
                                                                                                                                 patterns
                                                                                                                                 of
                                                                                                                                 customers;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | customer
                                                                                                                                 orders
                                                                                                                                 received;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | losses
                                                                                                                                 experienced
                                                                                                                                 in
                                                                                                                                 our
                                                                                                                                 operations
                                                                                                                                 not
                                                                                                                                 otherwise
                                                                                                                                 covered
                                                                                                                                 by
                                                                                                                                 insurance;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | a
                                                                                                                                 change
                                                                                                                                 in
                                                                                                                                 the
                                                                                                                                 demand
                                                                                                                                 or
                                                                                                                                 production
                                                                                                                                 of
                                                                                                                                 our
                                                                                                                                 products
                                                                                                                                 caused
                                                                                                                                 by
                                                                                                                                 severe
                                                                                                                                 weather
                                                                                                                                 conditions;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | convertible
                                                                                                                                 debt
                                                                                                                                 and
                                                                                                                                 warrant
                                                                                                                                 grants
                                                                                                                                 categorized
                                                                                                                                 as
                                                                                                                                 derivative
                                                                                                                                 financial
                                                                                                                                 instruments
                                                                                                                                 require
                                                                                                                                 changes
                                                                                                                                 in
                                                                                                                                 fair
                                                                                                                                 value
                                                                                                                                 be
                                                                                                                                 recorded
                                                                                                                                 in
                                                                                                                                 the
                                                                                                                                 consolidated
                                                                                                                                 statement
                                                                                                                                 of
                                                                                                                                 operations;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | a
                                                                                                                                 change
                                                                                                                                 in
                                                                                                                                 the
                                                                                                                                 mix
                                                                                                                                 of
                                                                                                                                 our
                                                                                                                                 customers,
                                                                                                                                 contracts
                                                                                                                                 and
                                                                                                                                 business;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | increases
                                                                                                                                 in
                                                                                                                                 design
                                                                                                                                 and
                                                                                                                                 manufacturing
                                                                                                                                 costs;
                                                                                                                                 and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                                                                                                                 ability
                                                                                                                                 of
                                                                                                                                 customers
                                                                                                                                 to
                                                                                                                                 pay
                                                                                                                                 their
                                                                                                                                 invoices
                                                                                                                                 owed
                                                                                                                                 to
                                                                                                                                 us
                                                                                                                                 and
                                                                                                                                 disagreements
                                                                                                                                 with
                                                                                                                                 customers
                                                                                                                                 related
                                                                                                                                 to
                                                                                                                                 product
                                                                                                                                 performance
                                                                                                                                 on
                                                                                                                                 delivery.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Accordingly,
our operating results in any particular quarter may not be indicative of the results that you can expect for any other quarter
or for an entire year.

We
plan to engage in acquisitions and joint ventures, and may encounter unexpected difficulties identifying, pricing or integrating
those businesses.

We
seek to grow, in part, through strategic acquisitions that are intended to complement or expand our business, and expect to continue
to do so in the future. The success of this strategy will depend on our ability to identify, price, finance and complete these
transactions or arrangements. Success will also depend on our ability to integrate the businesses acquired in these transactions.
We may encounter unexpected difficulties in completing and integrating acquisitions with our existing operations, and in managing
strategic investments. Furthermore, we may not realize the degree, or timing, of benefits we anticipated when we first entered
into a transaction. Any of the foregoing could adversely affect our business and results of operations.

We
may be unsuccessful at generating internal growth.

Our
ability to generate internal growth will be affected by, among other factors, our ability to attract new customers, increase the
number or size of orders received by existing customers, hire and retain employees and increase volume utilizing our existing
facilities. In addition, our customers may reduce the number or size of their orders. Many of the factors affecting our ability
to generate internal growth may be beyond our control, and we cannot be certain that our strategies will be successful or that
we will be able to generate cash flow sufficient to fund our operations and to support internal growth. If we are unsuccessful,
we may not be able to achieve internal growth, expand our operations or grow our business.

The
departure of key personnel could disrupt our business.

We
depend on the continued efforts of Dr. Mark Schena, our president, and other senior management. We cannot be certain that any
individual will continue in such capacity for any particular period of time. The loss of key personnel, or the inability to hire
and retain qualified employees, could negatively impact our ability to manage our business.

Our
business requires skilled labor, and we may be unable to attract and retain qualified employees.

Our
ability to maintain our productivity and profitability will be limited by our ability to employ, train and retain skilled personnel
necessary to meet our requirements. We may experience shortages of qualified personnel. We cannot be certain that we will be able
to maintain an adequate skilled labor force necessary to operate efficiently and to support our growth strategy or that our labor
expenses will not increase as a result of a shortage in the supply of skilled personnel. Labor shortages or increased labor costs
could impair our ability to maintain our business or grow our revenues, and may adversely impact our profitability.











We
carry insurance against many potential liabilities, and our risk management program may leave us exposed to unidentified or unanticipated
risks.

Although
we maintain insurance policies with respect to our related exposures, these policies contain deductibles and limits of coverage.
We estimate our liabilities for known claims and unpaid claims and expenses based on information available as well as projections
for claims incurred but not reported. However, insurance liabilities are difficult to estimate due to various factors. If any
of our insurance policies or programs are not effective in mitigating our risks, we may incur losses that are not covered by our
insurance policies or that exceed our accruals or that exceed our coverage limits and could adversely impact our consolidated
results of operations, cash flows and financial position.

Future
litigation could impact our financial results and condition.

Our
business, results of operations and financial condition could be affected by significant future litigation or claims adverse to
us. Types of potential litigation cases include: product liability, contract, employment-related, labor relations, personal injury
or property damage, intellectual property, stockholder claims and claims arising from any injury or damage to persons, property
or the environment from hazardous substances used, generated or disposed of in the conduct of our business.

An
adverse ruling by the U.S. Internal Revenue Service could create significant liability.

Several
of the persons, including consultants and executive officers, who provide services to us are treated as independent contractors
or receive below market loans instead of salaries or wages. If the I.R.S examines our prior years’ tax returns and determines
that one or more of such persons were employees, the resulting liability for withholding and payroll taxes could be significant.

Market
disruptions caused by the worldwide financial crisis could affect our ability to meet our liquidity needs at reasonable cost and
our ability to meet long-term commitments, which could adversely affect our financial condition and results of operations.

We
rely on our credit facility with our primary lender, amongst other avenues, to satisfy our liquidity needs. Further disruptions
in the credit markets or further deterioration of the world economy may discourage or prevent our primary lender and other lenders
from meeting their existing lending commitments, extending the terms of such commitments or agreeing to new commitments. Market
disruptions may also limit our ability to issue debt securities in the capital markets. We can provide no assurances that our
primary lender or any other lenders we may have will meet their existing commitments or that we will be able to access the credit
markets in the future on terms acceptable to us or at all.

Longer
term disruptions in the capital and credit markets as a result of uncertainty, reduced financing alternatives or failures of significant
financial institutions could adversely affect our access to the liquidity needed for our business. Any disruption could require
us to take measures to conserve cash until the market stabilizes or until alternative financing can be arranged. Such measures
could include deferring capital expenditures and reducing other discretionary expenditures.

Continued
market disruptions could cause a broad economic downturn that may lead to increased incidence of customers’ failure to pay
for services delivered, which could adversely affect our financial condition, results of operations and cash flow.

Continued
capital market disruptions could result in increased costs related to variable rate debt. As a result, continuation of market
disruptions could increase our interest expense and adversely impact our results of operations.

Restrictive
loan covenants may impact our ability to operate our business and to pursue our business strategies, and our failure to comply
with these covenants could result in an acceleration of our indebtedness.

Our
credit facility with our primary lender contains certain restrictive covenants. The majority of the liquidity derived from our
credit facility is based on availability determined by a borrowing base. Specifically, the availability of credit is dependent
upon our eligible receivables, inventory and certain liens. We may not be able to maintain adequate levels of eligible assets
to support our required liquidity.

Due
to the international nature of our business, political or economic changes or other factors could harm our business.

A
significant amount of our revenue is currently generated from sales outside the United States. Although such transactions are
primarily denominated in U.S. dollars, our future revenue, gross margin, expenses and financial condition are still affected by
such factors as changes in foreign currency exchange rates; unexpected changes in, or impositions of, legislative or regulatory
requirements, including export and trade barriers and taxes; longer payment cycles and greater difficulty in accounts receivable
collection.

We
also are subject to general geopolitical risks in connection with international operations, such as political, social and economic
instability, potential hostilities, epidemics and changes in diplomatic and trade relationships. We cannot assure investors that
one or more of the foregoing factors will not have a material adverse effect on our business, financial condition and operating
results or require us to modify our current business practices.



13







Our
effective tax rate may vary significantly.

Our
operations are subject to income and transaction taxes in the United States and in multiple foreign jurisdictions. Estimates and
judgments are required in determining our worldwide provision for income taxes. Some of these estimates are based on interpretations
of existing tax laws or regulations. The ultimate amount of tax liability may be uncertain as a result.

Changes
in overall levels and the geographic mix of pretax earnings may adversely impact our effective tax rate. Certain jurisdictions
have lower tax rates, and the amount of earnings in these jurisdictions may fluctuate. If we do not have profitable operations
in these jurisdictions, our effective tax rate could be adversely impacted. Changes in tax laws and regulatory requirements in
the countries in which we operate could have a material impact on our tax provision. To the extent that we are unable to continue
to reinvest a substantial portion of our profits in our foreign operations, we may be subject to effective income tax rate increases
in the future. Tax authorities may challenge the allocation of profits between our subsidiaries and we may not prevail in any
such challenge. If we were not to prevail, we could be subject to higher tax rates or double tax.

Estimates
are required in determining any valuation allowance to be recorded against our net deferred tax assets. Changes in the amount
of valuation allowance required may significantly impact our financial results of operations.



Risks
Related to Government Regulation and Litigation

We
and our customers are subject to various government regulations, and we may incur significant expenses to comply with, and experience
delays in our product commercialization as a result of, these regulations.

The
FDA must approve certain in-vitro diagnostic products before they can be marketed in the United States. Certain in-vitro diagnostic
products must also be approved by the regulatory agencies of foreign governments or jurisdictions before the product can be sold
outside the United States. Commercialization of our and our collaborative partners’ in-vitro diagnostic products outside
of the research environment may depend upon successful completion of clinical trials. Clinical development is a long, expensive
and uncertain process and we do not know whether we, or any of our collaborative partners, will be permitted to undertake clinical
trials of any potential in-vitro diagnostic products. It may take us or our collaborative partners many years to complete any
such testing, and failure can occur at any stage. Delays or rejections of potential products may be encountered based on changes
in regulatory policy for product approval during the period of product development and regulatory agency review. Moreover, if
and when our projects reach clinical trials, we, or our collaborative partners, may decide to discontinue development of any or
all of these projects at any time for commercial, scientific or other reasons. Any of the foregoing matters could have a material
adverse effect on our business, financial condition and results of operations.

Many
of our products are labeled for research only. Even when a product is exempted from FDA clearance or approval, the FDA may impose
restrictions as to the types of customers to which we can market and sell our products. Such restrictions may materially and adversely
affect our business, financial condition and results of operations.

The
FDA, the U.S. Department of Health and Human Services and foreign government regulators are increasingly focused on genetic analysis
tools, including the use of arrays that are labeled for research use only by cytogenetics labs, including labs certified under
the Clinical Laboratory Improvement Amendments (“CLIA”). We cannot predict the extent of the FDA’s future efforts
in regulation and policies with respect to the sale and use of arrays for the development of assays by CLIA laboratories, which
are referred to as laboratory developed tests (“LDTs”). If new regulations restrict our customers’ development
of LDTs using our products labeled for research use only, or if we otherwise are required to obtain FDA premarket clearance or
approval prior to commercializing these products, our ability to generate revenue from the sale of our products may be delayed
or otherwise adversely affected. Moreover, our failure to comply with governmental rules and regulations related to our products
could cause us to incur significant adverse publicity, subject us to investigations and notices of non-compliance or lead to fines
or restrictions upon our ability to sell our products.

Medical
device laws and regulations are also in effect in many countries, ranging from comprehensive device approval requirements to requests
for product data or certifications. The number and scope of these requirements are increasing. We may not be able to obtain regulatory
approvals in such countries or may incur significant costs in obtaining or maintaining our foreign regulatory approvals. In addition,
the export by us of certain of our products which have not yet been cleared for domestic commercial distribution may be subject
to FDA or other export restrictions.

We
have agreements relating to the sale of our products to government entities and, as a result, we are subject to various statutes
and regulations that apply to companies doing business with the government. A failure to comply with these regulations might result
in suspension of these contracts or administrative penalties, and could have a material adverse effect on our ability to compete
for future government grants, contracts and programs.

Healthcare
reform and restrictions on reimbursements may limit our returns on molecular diagnostic products that we may develop with our
collaborators.

We
are currently collaborating with our partners to develop diagnostic and therapeutic products. The ability of our collaborators
to commercialize such products may depend, in part, on the extent to which reimbursement for the cost of these products will be
available under U.S. and foreign regulations that govern reimbursement for clinical testing services by government authorities,
private health insurers and other organizations. In the United States, third-party payer price resistance, the trend towards managed
health care and legislative proposals to reform health care or government insurance programs could reduce prices for health care
products and services, adversely affecting the profits of our customers and collaborative partners and reduce our future royalties.











Risks
related to handling of hazardous materials and other regulations governing environmental safety.

Our
operations are subject to complex and stringent environmental, health, safety and other governmental laws and regulations that
both public officials and private individuals may seek to enforce. Our activities that are subject to these regulations include,
among other things, our use of hazardous and materials and the generation, transportation and storage of waste. We could discover
that we or an acquired business is not in material compliance. Existing laws and regulations may also be revised or reinterpreted,
or new laws and regulations may become applicable to us, whether retroactively or prospectively, that may have a negative effect
on our business and results of operations. It is also impossible to eliminate completely the risk of accidental environmental
contamination or injury to individuals. In such an event, we could be liable for any damages that result, which could adversely
affect our business.

We
may be exposed to liability due to product defects.

The
risk of product liability claims is inherent in the testing, manufacturing, marketing and sale of human diagnostic and therapeutic
products and we may be subjected to such claims. We may seek to acquire additional insurance for clinical or product liability
risks. We may not be able to obtain such insurance or general product liability insurance on acceptable terms or in sufficient
amounts. A product liability claim or recall could have a serious adverse effect on our business, financial condition and results
of operations.

Ethical,
legal and social concerns surrounding the use of genetic information could reduce demand for our products.

Genetic
testing has raised ethical issues regarding privacy and the appropriate uses of the resulting information. For these reasons,
governmental authorities may call for limits on or regulation of the use of genetic testing or prohibit testing for genetic predisposition
to certain conditions, particularly for those that have no known cure. Similarly, such concerns may lead individuals to refuse
to use genetics tests even if permissible. Any of these scenarios could reduce the potential markets for our molecular diagnostic
products, which could have a material adverse effect on our business, financial condition and results of operations.



Risks
Related to Our Intellectual Property

We
may be unable to effectively protect or enforce our intellectual property, which could harm our competitive position.

Maintaining
a strong patent position is critical to our business. Patent law relating to the scope of claims in the technology fields in which
we operate is uncertain, so we cannot be assured the patent rights we have or may obtain will be valuable. Others have filed,
and in the future are likely to file, patent applications that are similar or identical to ours or those of our licensors. To
determine the priority of inventions, we may have to participate in interference proceedings declared by the United States Patent
and Trademark Office that could result in substantial costs in legal fees and could substantially affect the scope of our patent
protection. We cannot be assured our patent applications will have priority over those filed by others. Also, our intellectual
property may be subject to significant administrative and litigation proceedings such as opposition proceedings against our patents
in Europe, Asia and other jurisdictions.

Legal
actions to enforce our patent rights can be expensive and may involve the diversion of significant management time. In addition,
these legal actions could be unsuccessful and could also result in the invalidation of our patents or a finding that they are
unenforceable. We may or may not choose to pursue litigation or interferences against those that have infringed on our patents,
or used them without authorization, due to the associated expense and time commitment of monitoring these activities. If we fail
to protect or to enforce our intellectual property rights successfully, our competitive position could suffer, which could harm
our results of operations.

In
addition to patent protection, we also rely upon copyright and trade secret protection, as well as non-disclosure agreements with
our employees, consultants and third-parties, to protect our confidential and proprietary information. Such measures may not provide
adequate protection for our proprietary information.

Litigation
or other proceedings or third party claims of intellectual property infringement could require us to spend significant time and
money and could prevent us from selling our products or services or impact our stock price.

As
we enter new markets, we expect that competitors will claim that our products infringe their intellectual property rights as part
of business strategies designed to impede our successful entry into those markets. In addition, third parties may have obtained,
and may in the future obtain, patents allowing them to claim that the use of our technologies infringes these patents. We could
incur substantial costs and divert the attention of our management and technical personnel in defending ourselves against any
of these claims. Any adverse ruling or perception of an adverse ruling in defending ourselves against these claims could have
a material adverse impact on our stock price, which may be disproportionate to the actual import of the ruling itself. Furthermore,
parties making claims against us may be able to obtain injunctive or other relief, which could block our ability to develop, commercialize
and sell products, and could result in the award of substantial damages against us. In the event of a successful claim of infringement
against us, we may be required to pay damages and obtain one or more licenses from third parties, or be prohibited from selling
certain products. In addition, we may be unable to obtain these licenses at a reasonable cost, if at all. We could therefore incur
substantial costs related to royalty payments for licenses obtained from third parties, which could negatively affect our gross
margins. In addition, we could encounter delays in product introductions while we attempt to develop alternative methods or products.
Defense of any lawsuit or failure to obtain any of these licenses on favorable terms could prevent us from commercializing products,
and the prohibition of sale of any of our products could materially affect our ability to grow and maintain profitability.



Risks
Relating to Our Organization

Our
certificate of incorporation authorizes our board to create new series of preferred stock without further approval by our stockholders,
which could adversely affect the rights of the holders of our common stock.

Our
board of directors has the authority to fix and determine the relative rights and preferences of preferred stock. Our board of
directors also has the authority to issue preferred stock without further stockholder approval. As a result, our board of directors
could authorize the issuance of a series of preferred stock that would grant to holders the preferred right to our assets upon
liquidation, the right to receive dividend payments before dividends are distributed to the holders of common stock and the right
to the redemption of the shares, together with a premium, prior to the redemption of our common stock. In addition, our board
of directors could authorize the issuance of a series of preferred stock that has greater voting power than our common stock or
that is convertible into our common stock, which could decrease the relative voting power of our common stock or result in dilution
to our existing stockholders.

15







Your
ability to influence corporate decisions is limited because our executive officers and directors own a controlling percentage
of our common stock.



A
majority of our voting securities are owned by senior officers and directors who are all members of the same family. Therefore,
they, with influence from other members of the family, control all matters submitted to our stockholders for approval, including
the election of directors and approval of any merger, consolidation or sale of all or substantially all of our assets. This concentration
of voting power could delay or prevent an acquisition of our company on terms that other stockholders may desire. In addition,
as the interests of the controlling family and our minority stockholders may not always be the same, this large concentration
of voting power may lead to stockholder votes that are inconsistent with your best interests or the best interest of us as a whole.

Limitations
of Liability; Indemnification

Our
Articles of Incorporation and Bylaws contain provisions that limit the liability of directors for monetary damages and provides
for indemnification of officers and directors under certain circumstances. Such provisions may discourage stockholders from bringing
a lawsuit against directors for breaches of fiduciary duty and may also have the effect of reducing the likelihood of derivative
litigation against directors and officers even though such action, if successful, might otherwise have benefited our stockholders.
In addition, a stockholder’s investment in the company may be adversely affected to the extent that costs of settlement
and damage awards against our officers or directors are paid by the company pursuant to such provisions.

If
we fail to develop and maintain an effective system of internal controls, we may not be able to accurately report our financial
results or prevent fraud. As a result, our current and potential stockholders could lose confidence in our financial reports,
which could harm our business and the trading price of our common stock.

Effective
internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. Section 404 of the
Sarbanes-Oxley Act of 2002 requires us to evaluate and report on our internal controls over financial reporting and may in the
future require our independent registered public accounting firm to annually attest to our evaluation, as well as issue their
own opinion on our internal controls over financial reporting. The process of implementing and maintaining proper internal controls
and complying with Section 404 is expensive and time consuming. We cannot be certain that we can attract and retain a sufficient
number of independent directors that includes independent members of our audit committee and accomplish the other measures that
ensure we will maintain adequate controls over our financial processes and reporting in the future. Furthermore, if we are able
to rapidly grow our business, the internal controls that we will need will become more complex, and significantly more resources
and independent officers and directors will be required to ensure our internal controls remain effective. Failure to implement
required controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to
meet our reporting obligations. If we or our auditors discover a material weakness in our internal controls, the disclosure of
that fact, even if the weakness is quickly remedied, could diminish investors’ confidence in our financial statements and
harm our stock price. In addition, non-compliance with Section 404 could subject us to a variety of administrative sanctions,
including the suspension of trading, ineligibility for future listing on NYSE Amex or another national securities exchange, and
the inability of registered broker-dealers to make a market in our common stock, which may reduce our stock price.

Because
we became public through a reverse merger, we may not be able to attract the attention of major brokerage firms.

There
may be risks associated with us becoming public through a reverse merger. Securities analysts of major brokerage firms may not
provide coverage of us since there is no incentive to brokerage firms to recommend the purchase of our common stock. No assurance
can be given that brokerage firms will, in the future, want to conduct any public or private offerings on our behalf.



Our
Growth Will Place Significant Strains On Our Resources.

The
Company's growth, if any, is expected to place a significant strain on the Company's managerial, operational and financial resources.
Furthermore, assuming the Company receives additional contracts, and obtains additional partners, it will be required to manage
multiple relationships with other third parties. These requirements will be exacerbated in the event of further growth of the
Company or in the number of its contracts, partnerships and employees. There can be no assurance that the Company's systems, procedures
or controls will be adequate to support the Company's operations or that the Company will be able to achieve the rapid execution
necessary to successfully offer its services and continue its business plan. The Company's future operating results, if any, will
also depend on its ability to add additional personnel commensurate with the growth of its business, if any. If the Company is
unable to manage growth effectively, the Company's business, results of operations and financial condition will be adversely affected.

Risks
Related to Our Common Stock

The
market price of our common stock is likely to be highly volatile and could fluctuate widely in response to various factors, many
of which are beyond our control, including the following:

technological
innovations or new products and services by us or our competitors;

additions
or departures of key personnel;

limited
availability of freely-tradable “unrestricted” shares of our common stock to satisfy purchase orders and demand;

our
ability to execute our business plan;

operating
results that fall below expectations;

loss
of any strategic relationship;

industry
developments;

we
have issued warrants and options that may have a dilutive effect for our stockholders;

economic
and other external factors; and

period-to-period
fluctuations in our financial results.

In
addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated
to the operating performance of particular companies. These market fluctuations may also significantly affect the market price
of our common stock.

16







There
may be a limited market for our securities and we may fail to qualify for a NASDAQ, NYSE or other listing.

Although
we plan on applying for listing of our common stock on the NASDAQ, NYSE or a different national exchange once we meet the qualifications,
there can be no assurance that our initial listing application will be granted, when the required listing criteria will be met
or when, or if, our application will be granted. Thereafter, there can be no assurance that trading of our common stock on such
market will be sustained or desirable. At the present time, we do not qualify for certain of the initial listing requirements
of the NASDAQ, NYSE or other national exchanges. In the event that our common stock fails to qualify for initial or continued
inclusion, our common stock could thereafter only be quoted on the OTC Bulletin Board or in what are commonly referred to as the
“pink sheets.” Under such circumstances, you may find it more difficult to dispose of, or to obtain accurate quotations,
for our common stock, and our common stock would become substantially less attractive to certain purchasers, such as financial
institutions, hedge funds, and large investors.

Offers
or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.

If
our stockholders sell substantial amounts of our common stock in the public market, including shares covered by this Private Placement
Memorandum forms a part, upon the expiration of any regulatory holding period, under Rule 144, or issued upon the exercise of
outstanding options or warrants, could create a circumstance commonly referred to as an “overhang” and in anticipation
of which the market price of our common stock could fall. The existence of an overhang, whether or not sales have occurred or
are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity-related
securities in the future at a time and price that we deem reasonable or appropriate.

We
do not expect to pay dividends in the future. As a result, any return on investment may be limited to the value of our common
stock.

We
do not anticipate paying cash dividends on our common stock in the foreseeable future. The payment of dividends on our common
stock will depend on our earnings, financial condition and other business and economic factors as our board of directors may consider
relevant. If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur
if our stock price appreciates.

Our
quarterly results have historically fluctuated significantly and may continue to do so. Failure to meet financial expectations
may disappoint securities analysts or investors and result in a decline in our stock price.

Our
revenues and operating results may fluctuate significantly due in part to factors that are beyond our control and which we cannot
predict. The timing of our customers’ orders may fluctuate from quarter to quarter. Historically, we have experienced customer
ordering patterns for instrumentation and consumables where the majority of the shipments occur in the last month of the quarter.
These ordering patterns may limit management’s ability to accurately forecast our future revenues or product mix. Additionally,
license revenue may also be unpredictable and may fluctuate due to the timing of payments of non-recurring licensing fees. Because
our expenses are largely fixed in the short to medium term, any material shortfall in revenues may cause us to experience material
losses.

Because
of this difficulty in predicting future performance, our operating results may fall below our own expectations and the expectations
of securities analysts or investors in some future quarter or quarters. Our failure in the past to meet these expectations has
adversely affected the market price of our common stock and may continue to do so.

In
addition to factors that affect the spending levels of our customers described above, additional factors could cause our operating
results to fluctuate, including:

| | - | competition;                                                                                
| | - | --------------------------------------------------------------------------------------------
| | - | our inability
    to produce products in sufficient quantities and with appropriate quality;



| | - | the
    frequency of experiments conducted by our customers;                     
| | - | ---------------------------------------------------------------------------------
| | - | our customers’
    inventory of products;                                        
| | - | the receipt
    of relatively large orders with short lead times; and            
| | - | our customers’
    expectations as to how long it takes us to fill future orders.



17







We
Have A Limited Operating History As A Public Company Upon Which You Can Assess Our Prospects And We Are Subject To The Risks Associated
With Any New Public Company.

As
a result of our short history of operations as a public company, there is little historical information regarding our operations
upon which you can base your investment decision. In addition, we are subject to all of the business risks and uncertainties associated
with any newly public business enterprise. Additionally, our management has limited experience operating a public company. As
such, our Company may not be able to continue to meet its continued filing requirements and may be late in its periodic filings,
which late filings may cause the Company to be delisted from the Over-The-Counter Bulletin Board. If this were to happen, any
investment in the Company could become devalued or worthless.



We
Incur Significant Costs As A Result Of Operating As A Fully Reporting Company In Connection With Section 404 Of The Sarbanes Oxley
Act, And Our Management Is Required To Devote Substantial Time To Compliance Initiatives.

We
anticipate incurring significant legal, accounting and other expenses in connection with our status as a fully reporting public
company. The Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") and new rules subsequently implemented by the SEC
have imposed various new requirements on public companies, including requiring changes in corporate governance practices. As such,
our management and other personnel will need to devote a substantial amount of time to these new compliance initiatives. Moreover,
these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming
and costly. In addition, the Sarbanes-Oxley Act may require, among other things, that we maintain effective internal controls
for financial reporting and disclosure of controls and procedures. Our testing may reveal deficiencies in our internal controls
over financial reporting that are deemed to be material weaknesses. Our compliance with Section 404 may require that we incur
substantial accounting expense and expend significant management efforts. We currently do not have an internal audit group, and
we may need to hire additional accounting and financial staff with appropriate public company experience and technical accounting
knowledge. Moreover, if we are not able to comply with the requirements of Section 404 in a timely manner, the market price of
our stock could decline, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which
would require additional financial and management resources.

There
Is Currently Only A Limited Market For Our Common Stock, And The Market For Our Common Stock May Continue To Be Illiquid, Sporadic
And Volatile.

There
is currently only a limited market for our common stock, and as such, we anticipate that such market will be illiquid, sporadic
and subject to wide fluctuations in response to several factors moving forward, including, but not limited to:

|(1) | actual
    or anticipated variations in our results of operations;
|--- | ------------------------------------------------------------------
|(2) | our ability
    or inability to generate new revenues;            
|(3) | the number
    of shares in our public float;                     
|(4) | increased
    competition;                                        
|(5) | conditions
    and trends in the market for biotech developers    



Furthermore,
because our common stock is traded on the Over-The-Counter Bulletin Board, our stock price may be impacted by factors that are
unrelated or disproportionate to our operating performance. These market fluctuations, as well as general economic, political
and market conditions, such as recessions, interest rates or international currency fluctuations may adversely affect the market
price of our common stock. Additionally, at present, we have a limited number of shares in our public float, and as a result,
there could be extreme fluctuations in the price of our common stock. Further, due to the limited volume of our shares which trade
and our limited public float, we believe that our stock prices (bid, ask and closing prices) are entirely arbitrary, are not related
to the actual value of the Company, and do not reflect the actual value of our common stock. Shareholders and potential investors
in our common stock should exercise caution before making an investment in the Company, and should not rely on the publicly quoted
or traded stock prices in determining our common stock value, but should instead determine the value of our common stock based
on the information contained in the Company's public reports, industry information, and those business valuation methods commonly
used to value private companies.



18







Investors
May Face Significant Restrictions On The Resale Of Our Common Stock Due To Federal Regulations Of Penny Stocks.

Our
common stock will be subject to the requirements of Rule 15(g) 9, promulgated under the Securities Exchange Act as long as the
price of our common stock is below $5.00 per share. Under such rule, broker-dealers who recommend low-priced securities to persons
other than established customers and accredited investors must satisfy special sales practice requirements, including a requirement
that they make an individualized written suitability determination for the purchaser and receive the purchaser's consent prior
to the transaction. The Securities Enforcement Remedies and Penny Stock Reform Act of 1990, also requires additional disclosure
in connection with any trades involving a stock defined as a penny stock.

Generally,
the Commission defines a penny stock as any equity security not traded on an exchange or quoted on NASDAQ that has a market price
of less than $5.00 per share. The required penny stock disclosures include the delivery, prior to any transaction, of a disclosure
schedule explaining the penny stock market and the risks associated with it. Such requirements could severely limit the market
liquidity of the securities and the ability of purchasers to sell their securities in the secondary market.

In
addition, various state securities laws impose restrictions on transferring "penny stocks" and as a result, investors
in the common stock may have their ability to sell their shares of the common stock impaired.



Item
1B. UNRESOLVED STAFF COMMENTS

None.



ITEM
2. PROPERTIES

Arrayit’s
corporate offices and research facilities are located at 524 East Weddell Drive, Sunnyvale, California 94089. The corporate headquarters
covers 8,280 square feet which in addition to the executive offices, shipping and receiving, include a microarray manufacturing
cleanroom demonstration facility, two (2) microarray manufacturing clean rooms, a substrate manufacturing clean room, preparation
and packing facilities, and quality control and quality assurance work stations. The base rent is $10,350 per month plus a monthly
operating expense charge of $1987.20. The lease expires on November 30, 2013.

Avant
Diagnostics, Inc. operates from offices located at 8561 East Anderson Drive, Suite 104, Scottsdale, AZ 85255.



ITEM
3. LEGAL PROCEEDINGS

Except
for matters related to collection of past due invoices, there are no other material legal proceedings, although we may, from time
to time, be party to certain legal proceedings and other various claims and lawsuits in the normal course of our business, which,
in the opinion of management, are not material to our business or financial condition.

We
are not aware, of any governmental authority contemplating any proceeding to which we are a party or to which any of our properties
is subject.



ITEM
4. RESERVED



19









PART
II

ITEM
5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market
Information and Holders

Transfer
Agent

Our
transfer agent and warrant agent is Standard Registrar and Transfer Co., Inc., 12528 South 1840 East Street, Draper, Utah 84020

Price
Range of Common Stock

Our
common stock now trades publicly on the OTC Bulletin Board under the symbol "ARYC". The OTCBB is a regulated quotation
service that displays real-time quotes, last-sale prices and volume information in over-the-counter equity securities. The OTCBB
securities are traded by a community of market makers that enter quotes and trade reports. This market is extremely limited and
any prices quoted are not a reliable indication of the value of our common stock.

The
following table sets forth the quarterly high and low bid prices per share of our common stock by the OTCBB during the last two
fiscal years. The quotes represent inter-dealer quotations, without adjustment for retail mark-up, markdown or commission and
may not represent actual transactions. The trading volume of our securities fluctuates and may be limited during certain periods.
As a result of these volume fluctuations, the liquidity of an investment in our securities may be adversely affected.

|QUARTER
    ENDED                   |  | HIGH |      |  | LOW |  
|----------------------------------- |  | ---- | ---- |  | --- | -
|                                    |  |      |      |  |     |  
|January
    1, 2013 – March 1, 2013 |  | $    | 0.20 |  |     | $
|                                    |  |      |      |  |     |  
|December 31,
    2012               |  | $    | 0.23 |  |     | $
|September
    30, 2012              |  | $    | 0.33 |  |     | $
|June 30, 2012                       |  | $    | 0.31 |  |     | $
|March 31,
    2012                  |  | $    | 0.47 |  |     | $
|                                    |  |      |      |  |     |  
|                                    |  |      |      |  |     |  
|December 31,
    2011               |  | $    | 0.17 |  |     | $
|September
    30, 2011              |  | $    | 0.27 |  |     | $
|June 30, 2011                       |  | $    | 0.27 |  |     | $
|March 31,
    2011                  |  | $    | 0.35 |  |     | $



As
of December 31, 2012, we had 28,179,096 shares of common stock issued and outstanding held by approximately 362 shareholders of
record based on information provided by our transfer agent. The foregoing number of record holders does not include any persons
who hold their stock in “street name.” In addition we had 22,034 shares of Series A Convertible Preferred Stock issued
and outstanding and 88,888 shares of Series C Convertible Preferred Stock issued and outstanding.

Dividends

We
have never declared or paid any cash dividends on our common stock, and we do not anticipate paying any cash dividends in the
foreseeable future. We intend to devote any earnings to fund the operations and the development of our business.



20







Common
Stock

Holders
of shares of common stock are entitled to one vote per share on each matter submitted to a vote of shareholders. In the event
of liquidation, holders of common stock are entitled to share pro rata in the distribution of assets remaining after payment of
liabilities, if any. Holders of common stock have no cumulative voting rights, and, accordingly, the holders of a majority of
the outstanding shares have the ability to elect all of the directors. Holders of common stock have no pre-emptive or other rights
to subscribe for shares. Holders of common stock are entitled to such dividends as may be declared by the Board out of funds legally
available therefore. The outstanding shares of common stock are validly issued, fully paid and non-assessable.



RECENT
SALES OF UNREGISTERED SECURITIES

|On |  | January
                                                                                                                                            5,
                                                                                                                                            2011,
                                                                                                                                            we
                                                                                                                                            issued
                                                                                                                                            27,000
                                                                                                                                            unregistered
                                                                                                                                            common
                                                                                                                                            shares
                                                                                                                                            for
                                                                                                                                            services
                                                                                                                                            rendered.
                                                                                                                                            The
                                                                                                                                            Company
                                                                                                                                            relied
                                                                                                                                            upon
                                                                                                                                            the
                                                                                                                                            exemption
                                                                                                                                            under
                                                                                                                                            Section
                                                                                                                                            4(2)
                                                                                                                                            of
                                                                                                                                            the
                                                                                                                                            Securities
                                                                                                                                            Act.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|On |  | January
                                                                                                                                            11,
                                                                                                                                            2011,
                                                                                                                                            we
                                                                                                                                            issued
                                                                                                                                            110,005
                                                                                                                                            unregistered
                                                                                                                                            common
                                                                                                                                            shares
                                                                                                                                            upon
                                                                                                                                            conversion
                                                                                                                                            of
                                                                                                                                            314
                                                                                                                                            Preferred
                                                                                                                                            Class
                                                                                                                                            C
                                                                                                                                            shares.
                                                                                                                                            The
                                                                                                                                            Company
                                                                                                                                            relied
                                                                                                                                            upon
                                                                                                                                            the
                                                                                                                                            exemption
                                                                                                                                            under
                                                                                                                                            Section
                                                                                                                                            4(2)
                                                                                                                                            of
                                                                                                                                            the
                                                                                                                                            Securities
                                                                                                                                            Act.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|On |  | January
                                                                                                                                            24,
                                                                                                                                            2011,
                                                                                                                                            we
                                                                                                                                            issued
                                                                                                                                            18,000
                                                                                                                                            unregistered
                                                                                                                                            common
                                                                                                                                            shares
                                                                                                                                            for
                                                                                                                                            a
                                                                                                                                            consideration
                                                                                                                                            for
                                                                                                                                            consulting
                                                                                                                                            services.
                                                                                                                                            The
                                                                                                                                            Company
                                                                                                                                            relied
                                                                                                                                            upon
                                                                                                                                            the
                                                                                                                                            exemption
                                                                                                                                            under
                                                                                                                                            Section
                                                                                                                                            4(2)
                                                                                                                                            of
                                                                                                                                            the
                                                                                                                                            Securities
                                                                                                                                            Act.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|On |  | February
                                                                                                                                            18,
                                                                                                                                            2011,
                                                                                                                                            we
                                                                                                                                            issued
                                                                                                                                            18,000
                                                                                                                                            unregistered
                                                                                                                                            common
                                                                                                                                            shares
                                                                                                                                            for
                                                                                                                                            a
                                                                                                                                            consideration
                                                                                                                                            for
                                                                                                                                            consulting
                                                                                                                                            services.
                                                                                                                                            The
                                                                                                                                            Company
                                                                                                                                            relied
                                                                                                                                            upon
                                                                                                                                            the
                                                                                                                                            exemption
                                                                                                                                            under
                                                                                                                                            Section
                                                                                                                                            4(2)
                                                                                                                                            of
                                                                                                                                            the
                                                                                                                                            Securities
                                                                                                                                            Act.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|On |  | March
                                                                                                                                            22,
                                                                                                                                            2011,
                                                                                                                                            we
                                                                                                                                            issued
                                                                                                                                            18,000
                                                                                                                                            unregistered
                                                                                                                                            common
                                                                                                                                            shares
                                                                                                                                            for
                                                                                                                                            a
                                                                                                                                            consideration
                                                                                                                                            for
                                                                                                                                            consulting
                                                                                                                                            services.
                                                                                                                                            The
                                                                                                                                            Company
                                                                                                                                            relied
                                                                                                                                            upon
                                                                                                                                            the
                                                                                                                                            exemption
                                                                                                                                            under
                                                                                                                                            Section
                                                                                                                                            4(2)
                                                                                                                                            of
                                                                                                                                            the
                                                                                                                                            Securities
                                                                                                                                            Act.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|On |  | April
                                                                                                                                            1,
                                                                                                                                            2011,
                                                                                                                                            we
                                                                                                                                            issued
                                                                                                                                            40,000
                                                                                                                                            unregistered
                                                                                                                                            common
                                                                                                                                            shares
                                                                                                                                            for
                                                                                                                                            services
                                                                                                                                            rendered.
                                                                                                                                             The
                                                                                                                                            Company
                                                                                                                                            relied
                                                                                                                                            upon
                                                                                                                                            the
                                                                                                                                            exemption
                                                                                                                                            under
                                                                                                                                            Section
                                                                                                                                            4(2)
                                                                                                                                            of
                                                                                                                                            the
                                                                                                                                            Securities
                                                                                                                                            Act.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|On |  | April
                                                                                                                                            8,
                                                                                                                                            2011,
                                                                                                                                            we
                                                                                                                                            issued
                                                                                                                                            110,005
                                                                                                                                            unregistered
                                                                                                                                            common
                                                                                                                                            shares
                                                                                                                                            upon
                                                                                                                                            conversion
                                                                                                                                            of
                                                                                                                                            314
                                                                                                                                            Preferred
                                                                                                                                            Class
                                                                                                                                            C
                                                                                                                                            shares.
                                                                                                                                            The
                                                                                                                                            Company
                                                                                                                                            relied
                                                                                                                                            upon
                                                                                                                                            the
                                                                                                                                            exemption
                                                                                                                                            under
                                                                                                                                            Section
                                                                                                                                            4(2)
                                                                                                                                            of
                                                                                                                                            the
                                                                                                                                            Securities
                                                                                                                                            Act.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|On |  | May
                                                                                                                                            10,
                                                                                                                                            2011,
                                                                                                                                            we
                                                                                                                                            issued
                                                                                                                                            100,000
                                                                                                                                            unregistered
                                                                                                                                            common
                                                                                                                                            shares
                                                                                                                                            for
                                                                                                                                            services
                                                                                                                                            rendered.
                                                                                                                                             The
                                                                                                                                            Company
                                                                                                                                            relied
                                                                                                                                            upon
                                                                                                                                            the
                                                                                                                                            exemption
                                                                                                                                            under
                                                                                                                                            Section
                                                                                                                                            4(2)
                                                                                                                                            of
                                                                                                                                            the
                                                                                                                                            Securities
                                                                                                                                            Act.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|On |  | August
                                                                                                                                            29,
                                                                                                                                            2011,
                                                                                                                                            we
                                                                                                                                            issued
                                                                                                                                            425,000
                                                                                                                                            unregistered
                                                                                                                                            common
                                                                                                                                            shares
                                                                                                                                            for
                                                                                                                                            services
                                                                                                                                            rendered.
                                                                                                                                             The
                                                                                                                                            Company
                                                                                                                                            relied
                                                                                                                                            upon
                                                                                                                                            the
                                                                                                                                            exemption
                                                                                                                                            under
                                                                                                                                            Section
                                                                                                                                            4(2)
                                                                                                                                            of
                                                                                                                                            the
                                                                                                                                            Securities
                                                                                                                                            Act.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|On |  | September
                                                                                                                                            16,
                                                                                                                                            2011,
                                                                                                                                            we
                                                                                                                                            issued
                                                                                                                                            10,000
                                                                                                                                            unregistered
                                                                                                                                            common
                                                                                                                                            shares
                                                                                                                                            for
                                                                                                                                            services
                                                                                                                                            rendered.
                                                                                                                                            The
                                                                                                                                            Company
                                                                                                                                            relied
                                                                                                                                            upon
                                                                                                                                            the
                                                                                                                                            exemption
                                                                                                                                            under
                                                                                                                                            Section
                                                                                                                                            4(2)
                                                                                                                                            of
                                                                                                                                            the
                                                                                                                                            Securities
                                                                                                                                            Act.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|On |  | December
                                                                                                                                            19,
                                                                                                                                            2011,
                                                                                                                                            we
                                                                                                                                            issued
                                                                                                                                            110,005
                                                                                                                                            unregistered
                                                                                                                                            common
                                                                                                                                            shares
                                                                                                                                            upon
                                                                                                                                            conversion
                                                                                                                                            of
                                                                                                                                            314
                                                                                                                                            Preferred
                                                                                                                                            Class
                                                                                                                                            C
                                                                                                                                            shares.
                                                                                                                                            The
                                                                                                                                            Company
                                                                                                                                            relied
                                                                                                                                            upon
                                                                                                                                            the
                                                                                                                                            exemption
                                                                                                                                            under
                                                                                                                                            Section
                                                                                                                                            4(2)
                                                                                                                                            of
                                                                                                                                            the
                                                                                                                                            Securities
                                                                                                                                            Act.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|On |  | February
                                                                                                                                            1,
                                                                                                                                            2012,
                                                                                                                                            we
                                                                                                                                            issued
                                                                                                                                            110,005
                                                                                                                                            unregistered
                                                                                                                                            common
                                                                                                                                            shares
                                                                                                                                            upon
                                                                                                                                            conversion
                                                                                                                                            of
                                                                                                                                            314
                                                                                                                                            Preferred
                                                                                                                                            Class
                                                                                                                                            C
                                                                                                                                            shares.
                                                                                                                                            The
                                                                                                                                            Company
                                                                                                                                            relied
                                                                                                                                            upon
                                                                                                                                            the
                                                                                                                                            exemption
                                                                                                                                            under
                                                                                                                                            Section
                                                                                                                                            4(2)
                                                                                                                                            of
                                                                                                                                            the
                                                                                                                                            Securities
                                                                                                                                            Act.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|On |  | February
                                                                                                                                            6,
                                                                                                                                            2012,
                                                                                                                                            we
                                                                                                                                            issued
                                                                                                                                            31,325
                                                                                                                                            unregistered
                                                                                                                                            common
                                                                                                                                            shares
                                                                                                                                            in
                                                                                                                                            exchange
                                                                                                                                            for
                                                                                                                                            engineering
                                                                                                                                            consulting
                                                                                                                                            services.
                                                                                                                                            The
                                                                                                                                            Company
                                                                                                                                            relied
                                                                                                                                            upon
                                                                                                                                            the
                                                                                                                                            exemption
                                                                                                                                            under
                                                                                                                                            Section
                                                                                                                                            4(2)
                                                                                                                                            of
                                                                                                                                            the
                                                                                                                                            Securities
                                                                                                                                            Act.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|On |  | February
                                                                                                                                            7,
                                                                                                                                            2012,
                                                                                                                                            we
                                                                                                                                            issued
                                                                                                                                            75,000
                                                                                                                                            unregistered
                                                                                                                                            common
                                                                                                                                            shares
                                                                                                                                            in
                                                                                                                                            exchange
                                                                                                                                            for
                                                                                                                                            business
                                                                                                                                            development
                                                                                                                                            consulting
                                                                                                                                            services.
                                                                                                                                            The
                                                                                                                                            Company
                                                                                                                                            relied
                                                                                                                                            upon
                                                                                                                                            the
                                                                                                                                            exemption
                                                                                                                                            under
                                                                                                                                            Section
                                                                                                                                            4(2)
                                                                                                                                            of
                                                                                                                                            the
                                                                                                                                            Securities
                                                                                                                                            Act.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|On |  | April
                                                                                                                                            3,
                                                                                                                                            2012,
                                                                                                                                            we
                                                                                                                                            issued
                                                                                                                                            110,005
                                                                                                                                            unregistered
                                                                                                                                            common
                                                                                                                                            shares
                                                                                                                                            upon
                                                                                                                                            conversion
                                                                                                                                            of
                                                                                                                                            314
                                                                                                                                            Preferred
                                                                                                                                            Class
                                                                                                                                            C
                                                                                                                                            shares.
                                                                                                                                            The
                                                                                                                                            Company
                                                                                                                                            relied
                                                                                                                                            upon
                                                                                                                                            the
                                                                                                                                            exemption
                                                                                                                                            under
                                                                                                                                            Section
                                                                                                                                            4(2)
                                                                                                                                            of
                                                                                                                                            the
                                                                                                                                            Securities
                                                                                                                                            Act.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|On |  | May
                                                                                                                                            30,
                                                                                                                                            2012,
                                                                                                                                            we
                                                                                                                                            issued
                                                                                                                                            500,010
                                                                                                                                            unregistered
                                                                                                                                            common
                                                                                                                                            shares
                                                                                                                                            upon
                                                                                                                                            converstion
                                                                                                                                            of
                                                                                                                                            1,429
                                                                                                                                            Preferred
                                                                                                                                            Class
                                                                                                                                            C
                                                                                                                                            shares.
                                                                                                                                            The
                                                                                                                                            Company
                                                                                                                                            relied
                                                                                                                                            upon
                                                                                                                                            the
                                                                                                                                            exemption
                                                                                                                                            under
                                                                                                                                            Section
                                                                                                                                            4(2)
                                                                                                                                            of
                                                                                                                                            the
                                                                                                                                            Securities
                                                                                                                                            Act.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|On |  | October
                                                                                                                                            23,
                                                                                                                                            2012,
                                                                                                                                            we
                                                                                                                                            issued
                                                                                                                                            149,250
                                                                                                                                            unregistered
                                                                                                                                            common
                                                                                                                                            shares
                                                                                                                                            in
                                                                                                                                            exchange
                                                                                                                                            for
                                                                                                                                            engineering
                                                                                                                                            consulting
                                                                                                                                            services.
                                                                                                                                            The
                                                                                                                                            Company
                                                                                                                                            relied
                                                                                                                                            upon
                                                                                                                                            the
                                                                                                                                            exemption
                                                                                                                                            under
                                                                                                                                            Section
                                                                                                                                            4(2)
                                                                                                                                            of
                                                                                                                                            the
                                                                                                                                            Securities
                                                                                                                                            Act.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|On |  | October
                                                                                                                                            23,
                                                                                                                                            2012,
                                                                                                                                            we
                                                                                                                                            issued
                                                                                                                                            75,000
                                                                                                                                            unregistered
                                                                                                                                            common
                                                                                                                                            shares
                                                                                                                                            in
                                                                                                                                            exchange
                                                                                                                                            for
                                                                                                                                            business
                                                                                                                                            development
                                                                                                                                            consulting
                                                                                                                                            services.
                                                                                                                                            The
                                                                                                                                            Company
                                                                                                                                            relied
                                                                                                                                            upon
                                                                                                                                            the
                                                                                                                                            exemption
                                                                                                                                            under
                                                                                                                                            Section
                                                                                                                                            4(2)
                                                                                                                                            of
                                                                                                                                            the
                                                                                                                                            Securities
                                                                                                                                            Act.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|On |  | December
                                                                                                                                            5,
                                                                                                                                            2012,
                                                                                                                                            we
                                                                                                                                            issued
                                                                                                                                            25,000
                                                                                                                                            unregistered
                                                                                                                                            common
                                                                                                                                            shares
                                                                                                                                            in
                                                                                                                                            exchange
                                                                                                                                            for
                                                                                                                                            public
                                                                                                                                            relations,
                                                                                                                                            communications,
                                                                                                                                            consulting
                                                                                                                                            and
                                                                                                                                            advisory
                                                                                                                                            services.
                                                                                                                                            The
                                                                                                                                            Company
                                                                                                                                            relied
                                                                                                                                            upon
                                                                                                                                            the
                                                                                                                                            exemption
                                                                                                                                            under
                                                                                                                                            Section
                                                                                                                                            4(2)
                                                                                                                                            of
                                                                                                                                            the
                                                                                                                                            Securities
                                                                                                                                            Act.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|On |  | December
                                                                                                                                            5,
                                                                                                                                            2012,
                                                                                                                                            we
                                                                                                                                            issued
                                                                                                                                            125,000
                                                                                                                                            unregistered
                                                                                                                                            common
                                                                                                                                            shares
                                                                                                                                            in
                                                                                                                                            exchange
                                                                                                                                            for
                                                                                                                                            public
                                                                                                                                            relations,
                                                                                                                                            communications,
                                                                                                                                            consulting
                                                                                                                                            and
                                                                                                                                            advisory
                                                                                                                                            services.
                                                                                                                                            The
                                                                                                                                            Company
                                                                                                                                            relied
                                                                                                                                            upon
                                                                                                                                            the
                                                                                                                                            exemption
                                                                                                                                            under
                                                                                                                                            Section
                                                                                                                                            4(2)
                                                                                                                                            of
                                                                                                                                            hte
                                                                                                                                            Securities
                                                                                                                                            Act.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



ITEM
6. SELECTED FINANCIAL DATA

Not
required.



21







ITEM
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINACIAL CONDITION AND RESULTS OF OPERATIONS

Critical
Accounting Policies

The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires the Company to make estimates and assumptions that affect amounts reported in the accompanying consolidated financial
statements and related footnotes. These estimates and assumptions are evaluated on an on-going basis based on historical developments,
market conditions, industry trends and other information the Company believes to be reasonable under the circumstances. There
can be no assurance that actual results will conform to the Company’s estimates and assumptions, and that reported results
of operations will not be materially adversely affected by the need to make accounting adjustments to reflect changes in these
estimates and assumptions from time to time. The following policies are those the Company believes to be the most sensitive to
estimates and judgments. The Company’s significant accounting policies are more fully described in Note 2 to our consolidated
financial statements.

Use
of Estimates



The
Company’s significant estimates include an allowance for doubtful accounts and accrued expenses. These estimates and assumptions
affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. While the Company believes that such estimates are fair when considered in conjunction
with the financial statements taken as a whole, the actual amounts of such estimates, when known, will vary from these estimates.
If actual results significantly differ from the Company’s estimates, the Company’s financial condition and results
of operations could be materially impacted.

Revenue
recognition:

| |  | Overview
| |  | --------

The
Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable,
and collectability is reasonably assured. In instances where final acceptance of the product or system is required, revenue is
deferred until all the acceptance criteria have been met.

|Product |  | Sales
|------- |  | -----

Product
sales include sales of microarrays, reagents and related instrumentation. Microarray, reagent and instrumentation revenues are
recognized when earned, which is generally upon shipment and transfer of title to the customer and fulfillment of any significant
post-delivery obligations. Accruals are provided for anticipated warranty expenses at the time the associated revenue is recognized.

| |  | Services
| |  | --------

Services
revenue is comprised of equipment service revenue; revenue from custom microarray design fees; and scientific services revenue,
which includes associated consumables.

|Diagnostic |  | Revenue
|---------- |  | -------

Revenue
from medical testing and scientific services is recognized upon shipment of the reported results.

|Other |  | Income
|----- |  | ------

We
recognize interest income as earned.



Patent
Costs

Costs
incurred with registering and defending patent technology are charged to expense as incurred.



Non-controlling
Interest:

We
account for the non-controlling interest in our subsidiary under ASC 810-10-45-16, Non-controlling Interest in a Subsidiary. This
standard defines a non-controlling interest, previously called a minority interest, as the portion of equity in a subsidiary not
attributable, directly or indirectly, to a parent. The standard requires, among other items, that a non-controlling interest be
included in the consolidated statement of financial position within equity separate from the parent's equity; consolidated net
income to be reported at amounts inclusive of both the parent's and non-controlling interest’s shares and, separately, the
amounts of consolidated net income attributable to the parent and non-controlling interest all on the consolidated statement of
operations; and if a subsidiary is deconsolidated, any retained non-controlling equity investment in the former subsidiary be
measured at fair value and a gain or loss be recognized in net income based on such fair value. Additionally, the standard defines
a non-controlling interest as a financial instrument issued by a subsidiary that is classified as equity in the subsidiary's financial
statements. A financial instrument issued by a subsidiary that is classified as a liability in the subsidiary's financial statements
based on the guidance in other standards is not a controlling interest because it is not an ownership interest.

Royalty
interests that entitle the holder to participate in future earnings and are not repayable are classified as non-controlling interests.











Deferred
Offering Costs:

The
Company may incur legal and accounting fees, as well as due diligence fees related to the preparation of our pending financing.  Such
costs are initially deferred until the offering is completed, at which time they are recorded as a reduction of gross proceeds
from the offering, or expensed to operations if the offering is unsuccessful.



Nature
and Classification of the Non-Controlling Interest in the Consolidated Financial Statements:

Arrayit
Corporation is the controlling interest of the affiliated group, since it maintains an investment in each of the operating entities.   As
of December 31, 2012, Arrayit Corporation has a 47% ownership investment in Avant Diagnostics, Inc., and 100% ownership investment
in TeleChem International, Inc., Arrayit Scientific Solutions, Inc., and Arrayit Marketing, Inc.  As of December 31, 2012,
Avant Diagnostics was deconsolidated from Arrayit Corporation due to Arrayit Corporation’s ownership investment changing
to 47%.

Effective
December 12, 2011, Arrayit Corporation signed an Agreement and Plan of Distribution with its subsidiary, Avant Diagnostics, Inc.,
whereby 19,350,000 shares of common stock of Avant Diagnostics owned by Arrayit Corporation will be distributed ratably to the
shareholders of Arrayit Corporation on the record date which will be upon successful completion of the filing of a Form S-1 registration
statement by Avant Diagnostics, Inc.  The shares of Arrayit Corporation entitled to participate in the “spin-off”
shares will include shareholders of Arrayit Corporation issuable on the record date upon conversion of outstanding securities
and exercise of outstanding warrants and options.

A
non-controlling interest is the portion of the equity in a subsidiary not attributable, directly or indirectly, to a parent.  A
non-controlling interest is the ownership held by owners other than the consolidating parent.   The non-controlling
interest is reported in the consolidated statement of financial position separately from the parent's equity, within the equity
section of the balance sheet.  The minority interest in the current year’s income (loss) is segregated from the
earnings (loss) attributable to the controlling parent.  Minority ownership equity interest in the consolidating subsidiaries
is increased by equity contributions and proportionate share of the subsidiaries earnings and is reduced by dividends, distributions
and proportionate share of the subsidiaries incurred losses.



Recent
Accounting Pronouncements

The
Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption
of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.



PLAN
OF OPERATIONS FOR THE NEXT TWELVE MONTHS

During
fiscal 2013, we plan to continue investing to support our long-term growth initiatives. We plan to partner with other alliances,
enter new markets and further expand our presence in existing markets. Should we not be successful in raising funds, we will curtail
the development of our diagnostics business and concentrate our efforts on the sale of our tools and consumables.



DEBT
OBLIGATIONS

At
December 31, 2012, the Company had $929,269 of debt (2011 - $1,145,892). The debt is comprised of advances from creditors of $45,749
(2011 - $34,509); a past due loan from minority shareholders of $275,000 (2011 - $250,000); and $608,520 (2011 - $741,372) is
due to shareholders, Arrayit Officers and Directors, and their families. To date, the Company has been able to meet the servicing
of debts from cash flow generated by operations. The 2011 amount also included $120,011 of obligations of the Company’s
then majority owned subsidiary, Avant Diagnostics, Inc. as of December 31, 2012.



23







COMPARISON
OF OPERATING RESULTS

RESULTS
OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2012 COMPARED TO THE YEAR ENDED DECEMBER 31, 2011

Gross
revenues for the twelve months ended December 31, 2012 and 2011 were $2,491,834 and $3,811,578, respectively, representing a 35%
decrease from the prior period.

The
cost of sales for the twelve months ended December 31, 2012 and 2011 were $1,273,744 and $2,310,008, respectively, resulting in
a gross profit for the twelve months ended December 31, 2012 and 2011 of $ 1,218,090 and $1,501,570, respectively. The Company’s
cost of sales and gross profit are dependent upon product mix.

Selling,
general and administrative expenses for the twelve months ended December 31, 2012 and 2011 were $3,112,800 and $1,313,065, respectively.
The majority of the increase of $1,799,735 for the year ended December 31, 2012 is attributable to adding staff in Avant Diagnostics,
Inc. (formerly Arrayit Diagnostics, Inc.) and issuances of stock for services.

Net
income from operations was $229,134 for year ended December 31, 2012, compared with a net loss from operations of $198,740 for
the year ended December 31, 2011. The increase in net income is primarily attributable to other income associated with the deconsolidation
of Avant Diagnostics and offset by a reduction in sales, increase in general and administrative expenses, and the cost of issuing
shares in exchange for services.

Legal
expenses associated with patents and preparing the S-1 registration statement for Arrayit Diagnostics, Inc. accounted for most
of the legal expense of $85,295 for the year ended December 31, 2012, and legal expenses associated with the Pediatrix case and
plans of corporate restructuring, including the planned spin-off of Arrayit Diagnostics, Inc., accounted for most of the legal
expense of $88,006 for the year ended December 31, 2011.

Interest
expense was $267,083 and $309,568 for the years ended December 31, 2012 and 2011, respectively. The interest costs for 2012 and
2011 include the amortized cost of debt arrangement fees and warrants issued in connection with financing. The decrease in total
interest costs was the result of negotiating a lower interest rate on debt and decreased amortization.



Net
loss attributable to the non-controlling interest in our Arrayit Diagnostics, Inc. subsidiary amounted to $805,604 for the year
ended December 31, 2012 and $49,878 for the year ended December 31, 2011.

The
Company had net income attributable to common shareholders of $229,134 compared to net loss of $198,740 for the year ended December
31, 2011, an increase in net income of $427,874.



LIQUIDITY
AND CAPITAL RESOURCES

We
had total assets of $565,683 and total liabilities of $8,207,828 as of December 31, 2012. We had total negative working capital
of $7,642,145 as of December 31, 2012.

We
had total assets of $496,036 and total liabilities of $8,504,417 as of December 31, 2011. We had total negative working capital
of $8,043,056 as of December 31, 2011.

We
had accounts payable and accrued liabilities of $6,567,136 at December 31, 2012 compared to $6,564,585 at December 31, 2011.

For
the years ended December 31, 2012 and 2011, we had net cash provided by operating activities of $30,023 and $199,437, respectively.

For
the years ended December 31, 2012 and 2011, we had net cash used in financing activities of ($30,928) and ($205,461), respectively.

We
relied on our officers and directors and our shareholders to supplement our operations or provide us with financing. If we are
unable to increase revenues from operations, to raise additional capital from conventional sources and/or additional sales of
stock in the future, we may be forced to curtail or cease our operations. In the future, we may be required to seek additional
capital by selling debt or equity securities. The sale of additional equity or debt securities, if accomplished, may result in
dilution to our then shareholders. We provide no assurance that financing will be available in amounts or on terms acceptable
to us, or at all.

In
the long term, the Company will need significant amounts of net cash to fund its research and development, to provide working
capital and to repay its debt. Failure to raise new capital will severely impact the Company’s ability to complete its business
plan as more fully described above.



24







ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



ARRAYIT
CORPORATION



CONSOLIDATED
FINANCIAL STATEMENTS



For
the Years Ended December 31, 2012 and 2011













ARRAYIT
CORPORATION



INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS



|                                                                          |  | PAGE |   
|------------------------------------------------------------------------- |  | ---- | --
|Report
    of independent registered certified public accounting firm     |  |      | 41
|Consolidated
    balance sheets                                           |  |      | 42
|Consolidated
    statements of operations                                 |  |      | 45
|Consolidated
    statements of  changes in stockholders’ equity (deficit) |  |      | 47
|Consolidated
    statements of cash flows                                 |  |      | 49
|Notes
    to financial statements                                         |  |      | 52
|                                                                          |  |      |   





25







REPORT
OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM

To
the Board of Directors and Stockholders of

Arrayit
Corporation

Sunnyvale,
California

We
have audited the accompanying consolidated balance sheets of Arrayit Corporation and subsidiaries as of December 31, 2012 and
2011, and the related consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows for
the years then ended. Arrayit Corporation’s management is responsible for these consolidated financial statements. Our responsibility
is to express an opinion on these consolidated financial statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit
also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements,
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 consolidated financial statements referred to above present fairly, in all material respects, the financial position
of Arrayit Corporation and subsidiaries as of December 31, 2012 and 2011, and the results of their operations and their cash flows
for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The
accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.
As discussed in Note 3 to the consolidated financial statements, the Company has suffered recurring losses and has working capital
and stockholder deficits which raise substantial doubt about its ability to continue as a going concern. Management’s plans
regarding these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.

/s/
Moss, Krusick and Associates, LLC

Winter
Park, Florida

April
16, 2013

26







ARRAYIT
CORPORATION

CONSOLIDATED
BALANCE SHEETS

As
of December 31, 2012 and 2011

|                                                                                                                    |  |      |                                                                                                                                                                                                 |     
|------------------------------------------------------------------------------------------------------------------- |  | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----
|                                                                                                                    |  | 2012 |                                                                                                                                                                                                 | 2011
|                                                                                                                    |  |      |                                                                                                                                                                                                 |     
|ASSETS                                                                                                              |  |      |                                                                                                                                                                                                 |     
|Current
    Assets:                                                                                                 |  |      |                                                                                                                                                                                                 |     
|Cash                                                                                                                |  | $    | 518                                                                                                                                                                                             |     
|Accounts
    receivable                                                                                             |  |      | 227,743
                                                                                                                                                                                    [1] |     
|Inventory                                                                                                           |  |      | 316,807                                                                                                                                                                                         |     
|Prepaid
    expenses                                                                                                |  |      | 2,250                                                                                                                                                                                           |     
|Total
    current assets {sum}                                                                                      |  |      | 547,318                                                                                                                                                                                         |     
|                                                                                                                    |  |      |                                                                                                                                                                                                 |     
|Property
    and equipment, net                                                                                     |  |      | 0                                                                                                                                                                                               |     
|Deposits                                                                                                            |  |      | 18,365                                                                                                                                                                                          |     
|Total
    assets {sum}                                                                                              |  | $    | 565,683                                                                                                                                                                                         |     
|                                                                                                                    |  |      |                                                                                                                                                                                                 |     
|Liabilities
    and Stockholders' Deficit                                                                           |  |      |                                                                                                                                                                                                 |     
|Current
    liabilities:                                                                                            |  |      |                                                                                                                                                                                                 |     
|Accounts
    payable and accrued liabilities                                                                        |  | $    | 6,567,136                                                                                                                                                                                       |     
|Bank
    overdraft                                                                                                  |  |      | 129,495                                                                                                                                                                                         |     
|Due
    to related parties                                                                                          |  |      | 577,033                                                                                                                                                                                         |     
|Customer
    deposits                                                                                               |  |      | 4,895                                                                                                                                                                                           |     
|Notes
    payables, current portion including related parties                                                       |  |      | 929,269                                                                                                                                                                                         |     
|Total
    current liabilities {sum}                                                                                 |  |      | 8,207,828                                                                                                                                                                                       |     
|Notes
    payable, long term                                                                                        |  |      | 0                                                                                                                                                                                               |     
|Total
    liabilities {sum}                                                                                         |  |      | 8,207,828                                                                                                                                                                                       |     
|                                                                                                                    |  |      |                                                                                                                                                                                                 |     
|Commitments
    and contingencies                                                                                   |  |      | 0                                                                                                                                                                                               |     
|                                                                                                                    |  |      |                                                                                                                                                                                                 |     
|Stockholders'
    Deficit                                                                                           |  |      |                                                                                                                                                                                                 |     
|Preferred
    stock,  $0.001 par value; 20,000,000 shares authorized;                                               |  |      |                                                                                                                                                                                                 |     
|Preferred
    stock, Series A, 22,034 shares outstanding                                                            |  |      | 22                                                                                                                                                                                              |     
|Preferred
    stock, Series C,$0.001 par value; 88,888 and 90,945 shares outstanding                                |  |      | 92                                                                                                                                                                                              |     
|Common
    stock, $0.001 par value; 480,000,000 shares authorized, 28,179,096 and 26,978,501 issued and outstanding |  |      | 27,988                                                                                                                                                                                          |     
|Additional
    paid-in capital                                                                                      |  |      | 16,645,342                                                                                                                                                                                      |     
|Accumulated
    deficit                                                                                             |  |      | (24,315,589                                                                                                                                                                                     | )   
|Total
    Arrayit Corp’s Stockholders’ Equity (Deficit) {sum}                                                       |  |      | (7,642,145                                                                                                                                                                                      | )   
|                                                                                                                    |  |      |                                                                                                                                                                                                 |     
|Non-controlling
    interest:                                                                                       |  |      |                                                                                                                                                                                                 |     
|Royalty
    interests                                                                                               |  |      | 0                                                                                                                                                                                               |     
|Less:
    Subscriptions receivable                                                                                  |  |      | 0                                                                                                                                                                                               |     
|Interest
    in subsidiaries earnings                                                                               |  |      | 0                                                                                                                                                                                               |     
|Total
    Non-controlling interests  {sum}                                                                          |  |      | 0                                                                                                                                                                                               |     
|Total
    stockholders' deficit  {sum}                                                                              |  |      | (7,642,145                                                                                                                                                                                      | )   
|Total
    liabilities and stockholders' deficit  {sum}                                                              |  | $    | 565,683                                                                                                                                                                                         |     
|[1]
    Accounts receivable, net of allowance for doubtful accounts of $133,000                                     |  |     
|[2]
    Accounts receivable, net of allowance for doubtful accounts of $133,000                                     |  |     

The
accompanying notes are an integral part of these consolidated financial statements

27











ARRAYIT
CORPORATION

CONSOLIDATED
STATEMENTS OF OPERATIONS

For
the years ended December 31, 2012 and 2011





|                                                                |  |   |            |  
|--------------------------------------------------------------- |  | - | ---------- | -
|                                                                |  |  
|                                                                |  |   |            |  
|                                                                |  |   | 2012       |  
|Statement
    of Operations                                     |  |   |            |  
|Total
    Revenues                                              |  | $ | 2,491,834  |  
|Cost
    of Sales                                               |  |   | 1,273,744  |  
|Gross
    Margin {sum}                                          |  |   | 1,218,090  |  
|                                                                |  |   |            |  
|Selling,
    General and Administrative                         |  |   | 3,112,800  |  
|Research
    and Development                                    |  |   | 67,884     |  
|Legal
    Expense                                               |  |   | 85,295     |  
|Income
    (Loss) from operations {sum}                         |  |   | (2,047,889 | )
|                                                                |  |   |            |  
|Interest
    expense                                            |  |   | (267,083   | )
|Gain
    on deconsolidation of subsidiary, net                  |  |   | 1,738,502  |  
|                                                                |  |   |            |  
|Net
    loss                                                    |  |   | (576,470   | )
|                                                                |  |   |            |  
|Less:
    Net loss attributable to the non-controlling interest |  |   | (805,604   | )
|Net
    Income (loss) attributable to common stockholders {sum} |  | $ | 229,134    |  
|                                                                |  |   |            |  
|Profit
    (Loss) per share - basic                             |  | $ | 0.01       |  
|Profit
    (Loss) per share – diluted                           |  | $ | 0.00       |  
|                                                                |  |   |            |  
|Basic
    weighted average number of common shares              |  |   | 27,581,235 |  
|Diluted
    weighted average number of common shares            |  |   | 59,920,675 |  
|                                                                |  |   |            |  

The
accompanying notes are an integral part of these consolidated financial statements



28







ARRAYIT
CORPORATION

CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

For
the years ended December 31, 2012 and 2011





|ARRAYIT CORPORATION                                          
|-------------------------------------------------------------
|CONSOLIDATED STATEMENTS
    OF STOCKHOLDERS’ EQUITY (DEFICIT)
|For the years ended December
    31, 2012 and 2011           
|                                                             
|                                                             
|                                                             
|                                                             
|Description                                                  
|                                                             
|Balance, December 31, 2010                                   
|                                                             
|Convert Preferred C to Common                                
|                                                             
|Issuance of shares for services                              
|                                                             
|Net Loss for the year ended                                  
|December 31, 2011                                            
|Balance, December 31, 2011                                   
|                                                             
|Convert Preferred C to Common                                
|                                                             
|Issuance of shares for services                              
|                                                             
|Increase in non-controlling interest                         
|                                                             
|Gain on deconsolidation of subsidiary                        
|                                                             
|Net Loss for the year ended                                  
|December 31, 2012                                            
|Balance, December 31, 2012                                   







The
accompanying notes are an integral part of these consolidated financial statements



29





ARRAYIT
CORPORATION

CONSOLIDATED
STATEMENTS OF CASH FLOWS

For
the Years Ended December 31, 2012 and 2011





|                                                                                        |  |   |            |  
|--------------------------------------------------------------------------------------- |  | - | ---------- | -
|                                                                                        |  |   | 2012       |  
|Statement
    of Cash Flows                                                             |  |   |            |  
|Cash
    flows from operating activities:                                               |  |   |            |  
|Net
    loss                                                                            |  | $ | (576,470   | )
|Adjustments
    to reconcile net loss to net cash provided by operating activities:     |  |   |            |  
|Depreciation                                                                            |  |   | 16,310     |  
|Provision
    for bad debts                                                             |  |   | 43,047     |  
|Increase
    in non-controlling interest                                                |  |   | 1,460,870  |  
|Gain
    on deconsolidation of subsidiary                                               |  |   | (1,738,502 | )
|Stock
    paid for services                                                             |  |   | 100,450    |  
|Changes
    in operating assets and liabilities                                         |  |   |            |  
|Inc/dec
    in accounts receivable                                                      |  |   | 6,164      |  
|Inc/dec
    in inventory                                                                |  |   | (136,169   | )
|Inc/dec
    in prepaids                                                                 |  |   | 0          |  
|Inc/dec
    in deposits                                                                 |  |   | 0          |  
|Inc/dec
    in accounts payable and accrued liabilities                                 |  |   | 853,863    |  
|Inc/dec
    in bank overdraft                                                           |  |   | (43,767    | )
|Inc/dec
    in due to related parties                                                   |  |   | (38,750    | )
|Inc/dec
    in accrued interest                                                         |  |   | 82,977     |  
|Inc/dec
    in customer deposits                                                        |  |   | 0          |  
|                                                                                        |  |   |            |  
|Net
    cash provided by operating activities                                           |  |   | 30,023     |  
|Cash
    flows from investing activities:                                               |  |   |            |  
|Cash
    paid for purchase of fixed assets                                              |  |   | 0          |  
|Cash
    of deconsolidated subsidiary                                                   |  |   | (96        | )
|Net
    cash used in investing activities                                               |  |   | (96        | )
|                                                                                        |  |   |            |  
|                                                                                        |  |   |            |  
|Cash
    flows from financing activities:                                               |  |   |            |  
|Proceeds
    from loans, net                                                            |  |   | 163,447    |  
|Repayment
    of notes payable                                                          |  |   | (194,375   | )
|Net
    cash used in financing activities                                               |  |   | (30,928    | )
|                                                                                        |  |   |            |  
|                                                                                        |  |   |            |  
|Net
    decrease in cash                                                                |  |   | (1,001     | )
|                                                                                        |  |   |            |  
|Cash,
    beginning of period (start)                                                   |  |   | 1,519      |  
|                                                                                        |  |   |            |  
|Cash,
    end of period (end)                                                           |  |   | 518        |  
|                                                                                        |  |   |            |  
|Supplemental
    cash flow information:                                                 |  |   |            |  
|                                                                                        |  |   |            |  
|Cash
    paid for interest                                                              |  | $ | 125,654    |  
|                                                                                        |  |   |            |  
|Cash
    paid for income taxes                                                          |  | $ | 0          |  
|                                                                                        |  |   |            |  
|                                                                                        |  |   |            |  
|Noncash
    Transaction:                                                                |  |   |            |  
|                                                                                        |  |   |            |  
|Payment
    of bank note by related party in exchange for note payable with the company |  | $ | 0          |  
|                                                                                        |  |   |            |  
|Conversion
    of accrued interest to notes payable                                     |  | $ | 82,977     |  
|                                                                                        |  |   |            |  
|Conversion
    of preferred stock                                                       |  | $ | 720        |  
|                                                                                        |  |   |            |  
|                                                                                        |  |   |            |  
|                                                                                        |  |   |            |  
|                                                                                        |  |   |            |  
|                                                                                        |  |   |            |  

The
accompanying notes are an integral part of these consolidated financial statements

30







ARRAYIT
CORPORATION

NOTES
TO CONSOLIDATED AUDITED FINANCIAL STATEMENTS

December
31, 2012



NOTE
1 – ORGANIZATION AND BUSINESS OPERATIONS

Arrayit
Corporation (the “Company” or “Arrayit”) is a Nevada Corporation that entered into the life science industry
in 1996. Arrayit is a leading edge developer, manufacturer and marketer of next-generation life science tools and integrated systems
for the large scale analysis of genetic variation, biological function and diagnostics. Using Arrayit’s proprietary technologies,
the Company provides a comprehensive line of products and services that currently serve the sequencing, genotyping, gene expression
and protein analysis markets, and the Company expects to enter the market for molecular diagnostics.

Arrayit
has earned respect as a leader in the health care and life sciences industries with its proven expertise in three key areas: the
development and support of microarray tools and components, custom printing and analysis of microarrays for research, and the
identification and development of diagnostic microarrays and tools for early detection of treatable disease states. As a result,
Arrayit has provided tools and services to thousands of the leading genomic research centers, pharmaceutical companies, academic
institutions, clinical research organizations, government agencies and biotechnology companies worldwide.

The
Company’s patented tools and trade secrets provide researchers around the world with the performance, throughput, cost effectiveness
and flexibility necessary to perform the billions of genetic tests needed to extract valuable medical information. The Company
believes this information will enable researchers to correlate genetic variation and biological function, which will enhance drug
discovery, drug development and clinical research, allowing diseases to be detected earlier and permitting better choices of drugs
for individual patients.

Effective
Thursday, March 19, 2009, the final steps of the business combination with Integrated Media Holdings, Inc (IMHI) were completed
and the Company’s common stock began trading on the OTC Bulletin Boards as “ARYC”. In addition, the Company
changed its name to “Arrayit Corporation”, was reincorporated to Nevada from Delaware, and reverse-split its common
stock and Series A Convertible Preferred stock in the ratio of one for thirty shares.  The reverse split was only applicable
to the Company’s Class “A” Preferred shares and its Common Shares. The Class “C” Preferred Shares
were not affected by the reverse split. The reverse split had no effect upon the convertible debt which fixed the amount of shares
to be issued at 12,478,357 both pre and post split.  As the March 19, 2009, Directors Resolution did not change the
authorized share capital of the Company, the authorized number of Common Shares was reduced from 100,000,000 to 3,333,333. The
Directors approved the reverse split to create a more orderly market for the trading of its Common Shares on the OTC BB.

On
August 31, 2009, a majority of the stockholders provided written consent in lieu of a meeting to approve an increase in the authorized
common shares of the Company from 3,333,333 to 480,000,000 and an increase in the authorized preferred shares of the Company from
166,667 to 20,000,000. A Certificate of Amendment to the Restated Certificate of Incorporation of the Company was filed on December
18, 2009. The forgoing was published in form DEF 14-C on November 18, 2009.

The
effects of the Reverse Stock Split have been reflected retroactively in the accompanying consolidated financial statements and
notes thereto for all periods presented.

Arrayit
has a December 31 year end.



Arrayit’s
principal office is in Sunnyvale, California. Arrayit presently has nine employees.



NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GOING CONCERN

Basis
of Presentation

On
December 31, 2012, the accompanying Consolidated Financial Statements include the following majority owned subsidiaries:



|Subsidiary                             |  | Date of Incorporation |                                                                                                                                       | Business of Entity |  | Ownership                                          
|-------------------------------------- |  | --------------------- | ------------------------------------------------------------------------------------------------------------------------------------- | ------------------ |  | ---------------------------------------------------
|                                       |  |                       |                                                                                                                                       |                    |  |                                                    
|TeleChem
    International, Inc.       |  |                       | November
                                                                                                                     1, 1993 |                    |  | Import
    and distribution of industrial chemicals
|                                       |  |                       |                                                                                                                                       |                    |  |                                                    
|Arrayit
    Marketing, Inc.            |  |                       | September
                                                                                                          3, 2008           |                    |  | No
    current operations                          
|                                       |  |                       |                                                                                                                                       |                    |  |                                                    
|Arrayit
    Scientific Solutions, Inc. |  |                       | October
                                                                                                          15, 2009            |                    |  | Marketing
    a test for Parkinson’s Disease       
|                                       |  |                       |                                                                                                                                       |                    |  |                                                    



The
Company had previously consolidated the financial statements of Avant Diagnostics, Inc. (formerly Arrayit Diagnostics, Inc.) as
a majority owned subsidiary. On December 31, 2012, Avant Diagnostics, Inc. issued additional shares of its common stock which
reduced the Company’s ownership interest in Avant Diagnostics, Inc. so that the Company no longer had a controlling financial
interest. In accordance with FASB ASC 810-10-40, “Deconsolidation of a Subsidiary or Derecognition of a Group of Assets”,
as of December 31, 2012, the Company deconsolidated its majority ownership interest and recognized a non-cash, net gain of $1,738,502
on the transaction. The retained non-controlling interest was originally valued at $290,250 pursuant to the equity method of accounting
and then immediately written off as it was deemed to be impaired. The gain on deconsolidation was reduced for the impairment charge
and also reduced by $505,537 which represented amounts due to the Company from Avant Diagnostics, Inc. and considered uncollectible.
Net assets deconsolidated at December 31, 2012 included cash of $96, total liabilities of $1,625,521 and the carrying value of
the non-controlling interest of $618,614. During 2012, the noncontrolling interest was increased by $1,460,870 for share issuances
by Avant Diagnostics, Inc. for cash of $145,870 and services valued at $1,315,000.





31





On
December 12, 2011, Arrayit Corporation signed an Agreement and Plan of Distribution with its subsidiary, Avant Diagnostics, Inc.,
whereby 19,350,000 shares of common stock of Avant Diagnostics owned by Arrayit Corporation (currently 47% of total shares) will
be distributed ratably to the shareholders of Arrayit Corporation on the record date which will be upon successful completion
of the Form S-1 registration statement by Avant Diagnostics, Inc.



Summary
of Significant Accounting Policies

Financial
Reporting:

The
Company prepares its financial statements in conformity with accounting principles generally accepted in the United States of
America. Revenues and expenses are reported on the accrual basis, which means that income is recognized as it is earned and expenses
are recognized as they are incurred.

Management
further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system
of internal accounting control and preventing and detecting fraud. The Company's system of internal accounting control is designed
to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions
are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition,
results of operations and cash flows of the Company for the respective periods being presented.

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 at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those estimates.

Cash
and Cash Equivalents

Cash
includes all cash and highly liquid investments with original maturities of three months or less. The Company maintains cash in
bank deposit accounts which, at times, exceed federally insured limits. The Company has not experienced any losses on these accounts.

Property
and Equipment

Property
and equipment are recorded at cost less accumulated depreciation. Depreciation and amortization on property and equipment are
determined using the straight-line method over the three to five year estimated useful lives of the assets.

Impairment
of Long-Lived Assets

Arrayit
reviews its long-lived assets for impairment when events or changes in circumstances indicate that the book value of an asset
may not be recoverable. Arrayit evaluates, at each balance sheet date, whether events and circumstances have occurred which indicate
possible impairment. The Company uses an estimate of future undiscounted net cash flows of the related asset or group of assets
over the estimated remaining life in measuring whether the assets are recoverable. If it is determined that an impairment loss
has occurred based on expected cash flows, such loss is recognized in the statement of operations.

Inventory

Inventories
are stated at the lower of cost or market, cost determined on the basis of FIFO.

Revenue
recognition:

| | Overview
| | --------



The
Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable,
and collectability is reasonably assured. In instances where final acceptance of the product or system is required, revenue is
deferred until all the acceptance criteria have been met.

| | Product
    Sales
| | -----------------



Product
sales include sales of microarrays, reagents and related instrumentation. Microarray, reagent and instrumentation revenues are
recognized when earned, which is generally upon shipment and transfer of title to the customer and fulfillment of any significant
post-delivery obligations. Accruals are provided for anticipated warranty expenses at the time the associated revenue is recognized.

| | Services
| | --------



Services
revenue is comprised of equipment service revenue; revenue from custom microarray design and manufacturing fees; and scientific
services revenue, which includes associated consumables.

| | Diagnostic
    Revenue
| | ----------------------



Revenue
from medical testing and scientific services is recognized upon shipment of the reported results.

| | Other Income
| | ------------



32







The
Company recognizes interest income as earned.

Shipping
and Handling Costs

Shipping
and handling costs billed to customers are recorded as revenue. Shipping and handling costs paid to vendors are recorded as cost
of sales.

Fair
Value of Financial Instruments

The
Company follows accounting guidance relating to fair value measurements. This guidance establishes a fair value hierarchy that
prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

Level
1 – quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to
access as of the measurement date.

Level
2 – inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly
observable through corroboration with observable market data.

Level
3 – unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset
or liability at the measurement date.

The
asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input
that is significant to the fair measurement. Valuation techniques used need to maximize the use of observable inputs and minimize
the unobservable inputs.

The
fair value of the Company’s notes payable approximates stated value. The notes payable fair value was based on Level 2 inputs.
See notes 8 and 9.

Sale
of Accounts Receivable to Factoring Company

The
Company accounts for its sales of Accounts Receivable to the Factoring Company in accordance with the provisions of ASC 860-10-40.
In order for a transfer of financial assets to be considered a sale, the assets transferred by the Company must have been isolated
from the seller, even in bankruptcy or other receivership, and the purchaser must have the right to pledge or exchange the assets
transferred. In addition, the sale accounting rules of ASC 860-10-40-5 require the Company to relinquish effective control over
the loans sold as of the sale date.

Allowance
for Doubtful Accounts

The
Company records an allowance for estimated losses on customer accounts. The allowance is increased by a provision for bad debts,
which is charged to expense, and reduced by charge-offs, net of recoveries.

Patent
Costs

Costs
incurred with registering and defending patent technology are charged to expense as incurred.

Income
Taxes

Upon
completion of the March 19, 2009 transaction with IMHI as more fully described in Note 1, Arrayit Corporation became a Nevada
“C” Corporation.

Deferred
taxes are computed using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities
are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes
the enactment date. Deferred tax assets are not recognized unless it is more likely than not that the asset will be realized in
future years.

Legal
Proceedings

The
costs of prosecuting and defending legal actions are expensed as incurred.

Accounting
for Uncertainty in Income Taxes

The
Financial Accounting Standards Board has issued guidance on Accounting for Uncertainty in Income Taxes, FASB ASC 740, Income Taxes
which prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of
tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more
likely than not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount
of benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Management has concluded that the
Company has taken no uncertain tax positions that require adjustment to the financial statements to comply with the provisions
of this guidance. When applicable, the Company will include interest and penalties related to uncertain tax positions in income
tax expense.



33





Earnings
(Loss) per Common Share

The
computation of basic earnings per common share is computed using the weighted average number of common shares outstanding during
the period. The computation of diluted earnings per common share is based on the weighted average number of shares outstanding
during the period plus common stock equivalents which would arise from the exercise of options and warrants outstanding using
the treasury stock method and the average market price per share during the year. Options, warrants, convertible debt and convertible
preferred stock which are common stock equivalents are not included in the diluted earnings per share calculations when their
effect is anti-dilutive.

Stock-Based
Compensation

The
Company accounts for stock issued to employees, officers and directors in accordance with accounting standards for share-based
payments which requires all new share-based payments to employees, including grants of employee stock options, to be recognized
in the financial statements based on their fair values.

Non-Controlling
Interest

The
Company accounts for the non-controlling interest in its subsidiaries under ASC 810-10-45-16, Non-controlling Interest in a Subsidiary.
This standard defines a non-controlling interest, previously called a minority interest, as the portion of equity in a subsidiary
not attributable, directly or indirectly, to a parent. The standard requires, among other items, that a non-controlling interest
be included in the consolidated statement of financial position within equity separate from the parent's equity; consolidated
net income to be reported at amounts inclusive of both the parent's and non-controlling interest’s shares and, separately,
the amounts of consolidated net income attributable to the parent and non-controlling interest all on the consolidated statement
of operations; and if a subsidiary is deconsolidated, any retained non-controlling equity investment in the former subsidiary
be measured at fair value and a gain or loss be recognized in net income based on such fair value. Additionally, the standard
defines a non-controlling interest as a financial instrument issued by a subsidiary that is classified as equity in the subsidiary's
financial statements. A financial instrument issued by a subsidiary that is classified as a liability in the subsidiary's financial
statements based on the guidance in other standards is not a controlling interest because it is not an ownership interest.

Royalty
interests that entitle the holder to participate in future earnings and are not repayable were classified as non-controlling interests.

Deferred
Offering Costs:

The
Company may incur legal and accounting fees, as well as due diligence fees related to the preparation of our pending financing.
Such costs are initially deferred until the offering is completed, at which time they are recorded as a reduction of gross proceeds
from the offering, or expensed to operations if the offering is unsuccessful.

Nature
and Classification of the Non-Controlling Interest in the Consolidated Financial Statements:

Arrayit
Corporation is the controlling interest of the affiliated group, since it maintains an investment in each of the operating entities.
As of December 31, 2012, Arrayit Corporation has a 100% ownership interest in TeleChem International, Inc., Arrayit Marketing
Inc., and a 98% ownership interest in Arrayit Scientific Solutions, Inc.



The
Company had previously consolidated the financial statements of Avant Diagnostics, Inc. (formerly Arrayit Diagnostics, Inc.) as
a majority owned subsidiary. On December 31, 2012, Avant Diagnostics, Inc. issued additional shares of its common stock which
reduced the Company’s ownership interest in Avant Diagnostics, Inc. so that the Company no longer had a controlling financial
interest. In accordance with FASB ASC 810-10-40, “Deconsolidation of a Subsidiary or Derecognition of a Group of Assets”,
as of December 31, 2012, the Company deconsolidated its majority ownership interest and recognized a non-cash, net gain of $1,738,502
on the transaction. The retained non-controlling interest was originally valued at $290,250 pursuant to the equity method of accounting
and then immediately written off as it was deemed to be impaired. The gain on deconsolidation was reduced for the impairment charge
and also reduced by $505,537 which represented amounts due to the Company from Avant Diagnostics, Inc. and considered uncollectible.
Net assets deconsolidated at December 31, 2012 included cash of $96, total liabilities of $1,625,521 and the carrying value of
the non-controlling interest of $618,614. During 2012, the noncontrolling interest was increased by $1,460,870 for share issuances
by Avant Diagnostics, Inc, for cash of $145,870 and services valued at $1,315,000.



34







Effective
December 12, 2011 Arrayit Corporation signed an Agreement and Plan of Distribution with its subsidiary, Avant Diagnostics, Inc.,
whereby 19,350,000 shares of common stock of Avant Diagnostics then owned by Arrayit Corporation (currently 47% of total shares)
would be distributed ratably to the shareholders of Arrayit Corporation on the record date which will be upon successful completion
of the filing of a Form S-1 registration statement by Avant Diagnostics, Inc. The shares of Arrayit Corporation entitled to participate
in the “spin-off” shares will include shares of Arrayit Corporation issuable on the record date upon conversion of
outstanding securities and exercise of outstanding warrants and options.

A
non-controlling interest is the portion of the equity in a subsidiary not attributable, directly or indirectly, to a parent. A
non-controlling interest is the ownership held by owners other than the consolidating parent. The non-controlling interest is
reported in the consolidated statement of financial position separately from the parent's equity, within the equity section of
the balance sheet. The minority interest in the current year’s income (loss) is segregated from the earnings (loss) attributable
to the controlling parent. Minority ownership equity interest in the consolidating subsidiaries is increased by equity contributions
and proportionate share of the subsidiaries earnings and is reduced by dividends, distributions and proportionate share of the
subsidiaries incurred losses.

Equity
Method Investments

Investments
where the Company has the ability to exercise significant influence, but does not control, are accounted for under the equity
method of accounting in the balance sheet. Significant influence typically exists if the Company has a 20% to 50% ownership interest
in the investee. Under this method of accounting, the Company’s share of the net earnings or losses of the investee is included
in other income (expense) in the statements of operations. The Company evaluates equity method investments for impairment whenever
events or changes in circumstances indicate that the carrying amounts of such investments may be impaired. If a decline in the
value of an equity method investment is determined to be other than temporary, a loss is recorded in earnings in the current period.
As of December 31, 2012 and 2011, equity method investments totaled zero and the Company’s share of net earnings related
to these investments was zero in 2012 and2011. During 2012, the Company recorded an impairment charge of $290,250 to reduce the
carrying value of an equity investment to zero. The impairment charge was applied against gain on deconsolidation of subsidiary
in the statements of operations.

Recent
Accounting Pronouncements

The
Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption
of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.





NOTE
3 – GOING CONCERN



The
accompanying consolidated financial statements of the Company were prepared on a going concern basis, which contemplates the realization
of assets and the satisfaction of liabilities in the normal course of business. The Company has large working capital deficits
and accumulated deficits. At December 31, 2012, Arrayit had a working capital deficit of $7,660,510, and an accumulated deficit
of $24,315,589.  The Company currently devotes a significant amount of its resources on developing clinical protein
biomarker diagnostic products and services, and it does not expect to generate substantial revenue until certain diagnostic tests
are cleared by the United States Food and Drug Administration and commercialized. Management believes that current available resources
will not be sufficient to fund the Company’s planned expenditures over the next 12 months. The Company’s ability to
continue to meet its obligations and to achieve its business objectives is dependent upon, among other things, raising additional
capital or generating sufficient revenue in excess of costs. At such time as the Company requires additional funding, the Company
will seek to raise such additional funding from various possible sources, including its parent company, the public equity market,
private financings, sales of assets, collaborative arrangements and debt. If the Company raises additional capital through the
issuance of equity securities or securities convertible into equity, stockholders will experience dilution, and such securities
may have rights, preferences or privileges senior to those of the holders of common stock or convertible senior notes. If the
Company raises additional funds by issuing debt, the Company may be subject to limitations on its operations, through debt covenants
or other restrictions. If the Company obtains additional funds through arrangements with collaborators or strategic partners,
the Company may be required to relinquish its rights to certain technologies or products that it might otherwise seek to retain.
There can be no assurance that the Company will be able to raise additional funds, or raise them on acceptable terms. If the Company
is unable to obtain financing on acceptable terms, it may be unable to execute its business plan, the Company could be required
to delay or reduce the scope of its operations, and the Company may not be able to pay off its obligations, if and when they come
due.

These
factors create substantial doubt about Arrayit’s ability to continue as a going concern. These consolidated financial statements
do not include any adjustments relating to the recoverability or classification of recorded assets and liabilities or other adjustments
that may be necessary should the Company not be able to continue as a going concern.

The
ability of Arrayit to continue as a going concern is dependent on Arrayit generating cash from the sale of its common stock or
obtaining debt financing and attaining future profitable operations. Management's plans include selling its equity securities
and obtaining debt financing to fund its capital requirement and ongoing operations; however, there can be no assurance Arrayit
will be successful in these efforts.



35







NOTE
4 – ACCOUNTS RECEIVABLE

Accounts
receivable are shown net of an Allowance for Doubtful Accounts. As more fully explained in Note 5 below, accounts receivable are
also shown net of Accounts Receivable loans sold with recourse.

|                                                              |  | December
    31, 2012 |         | December
    31, 2011
|------------------------------------------------------------- |  | --------------------- | ------- | ---------------------
|Gross
    accounts receivable                                 |  | $                     | 590,449 |                      
|Less                                                          |  |                       |         |                      
|Allowance
    for doubtful accounts                           |  | ($                    | 133,000 | )                    
|Loan
    value of receivables sold with recourse (see Note 5) |  | ($                    | 229,706 | )                    
|Total                                                         |  | $                     | 227,743 |                      





NOTE
5 – ACCOUNTS RECEIVABLE SOLD WITH RECOURSE

Pursuant
to an agreement dated July 5, 2007, the Company has sold some of its Accounts Receivable to a financial institution with full
recourse. The financial institution retains a 15% portion of the proceeds from the receivable sales as reserves, which are released
to the Company as the Receivables are collected. The maximum commitment under this facility is $450,000, and is limited to receivables
that are less than 31 days outstanding. The facility bears interest at 16% at December 31, 2012, and is secured by an unconditional
guarantee of the Company and a first charge against the Accounts Receivable. At December 31, 2012, the balance outstanding under
the recourse contracts was $229,706 net of a hold back reserve of $86,984 (December 31, 2011, $242,550 net of a hold back reserve
of $59,405). Because of the Company’s credit policies, repossession losses and refunds in the event of default have not
been significant and losses under the present recourse obligations are not expected to be significant, it is at least reasonably
possible that the Company’s estimate will change within the near term.





NOTE
6 – FIXED ASSETS

Property
and equipment consisted of the following:



|                             |  | December
    31, 2012 |         | December
    31, 2011
|---------------------------- |  | --------------------- | ------- | ---------------------
|Fixed
    Assets – Cost      |  | $                     | 311,157 |                      
|Less                         |  |                       |         |                      
|Accumulated
    Depreciation |  | ($                    | 311,157 | )                    
|Total                        |  | $                     | 0       |                      





Depreciation
expense totaled $16,310 and $27,092, respectively, for the years ended December 31, 2012 and 2011.





NOTE
7 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts
payable and accrued liabilities, consisted of the following:

|                               |  |                  |           |                      
|------------------------------ |  | ---------------- | --------- | ---------------------
|                               |  |                  |           |                      
|                               |  | December31, 2012 |           | December
    31, 2011
|                               |  |                  |           |                      
|ACCOUNTS
    PAYABLE           |  |                  |           |                      
|                               |  |                  |           |                      
|Trade
    Vendors              |  | $                | 1,488,622 |                      
|Professional
    Advisors      |  | $                | 3,059,594 |                      
|                               |  |                  |           |                      
|Total
    Accounts Payable     |  | $                | 4,548,216 |                      
|                               |  |                  |           |                      
|                               |  |                  |           |                      
|ACCRUED
    LIABILITIES        |  |                  |           |                      
|                               |  |                  |           |                      
|Accrued
    salaries and wages |  | $                | 1,127,089 |                      
|Judgment
    interest          |  | $                | 482,404   |                      
|Other                          |  | $                | 409,427   |                      
|                               |  |                  |           |                      
|Total
    Accrued Liabilities  |  | $                | 2,018,920 |                      
|                               |  |                  |           |                      
|TOTAL                          |  | $                | 6,567,136 |                      







36









NOTE
8 – DEBT



|Notes
    Payable – Avant Diagnostics, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  | December
    31, 2012 |         | December
    31, 2011
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------- | ------- | ---------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |                       |         |                      
|Note
    payable, interest at 10%, due January 22, 2011 and now past due, secured by 1 million shares of the Company’s common
    stock, pledged to the private lender without compensation by the Company’s Chairman.  The terms also call
    for the issuance of 300,000 warrants issuable for shares of the Company’s common stock at $0.22 per share.  The
    annual effective interest rate for this loan is estimated to be 243.8%                                                                                                                                  |  |                       | —       |                      
|Note
    payable, interest at 10%, due August 10, 2010 and now past due, secured by 200,000 shares of the Company’s common stock,
    pledged to the private lender without compensation as follows: 100,000 common shares provided by the Companys former Chief
    Financial Officer, 50,000 common shares provided by a minority shareholder in Avant Diagnostics, Inc. and a call option to
    acquire an additional 50,000 common shares currently held by a minority shareholder in Avant Diagnostics, Inc.                                                          |  |                       | —       |                      
|Note
    payable, interest at 10%, due on demand                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |                       | —       |                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |                       |         |                      
|Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                       | —       |                      
|Notes
    Payable – Arrayit Corporation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |                       |         |                      
|Notes
    payable, interest at 10%, which was due August 10, 2010 and is now past due, secured by 1,000,000 shares out of the Company's
    common stock, pledged to the private lender without compensation by the Company's Chairman.  Interest is being
    accrued at 25% default rate. The terms also called for the lender to withhold proceeds of $20,000 as a debt origination fee
    and the issuance of 200,000 warrants issuable for shares of common stock at $1.00 per share.  The annual effective interest
    rate for this loan is estimated to be 239.2% |  | $                     | 275,000 |                      
|Note
    payable, 0% interest, due on demand, together with 75,000 shares of common stock in the form of common stock warrants                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |                       | 15,000  |                      
|Notes
    payable, interest at 8%, unsecured due on demand from Arrayit creditors                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                       | 30,749  |                      
|Notes
    payable, interest at rates varying from 8% to 10%, unsecured due on demand from Officers and Directors, their families and
    other shareholders                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                       | 608,520 |                      
|Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | $                     | 929,269 |                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |                       |         |                      
|Total
    notes payable, including related parties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  | $                     | 929,269 |                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |                       |         |                      
|Long
    term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                       | 0       |                      
|Short
    term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | $                     | 929,269 |                      



NOTE
9 – WARRANTS AND OPTIONS





Warrants



On
January 19, 2008, the Company issued 1,250,000 warrants, expiring on January 19, 2013, exercisable at $0.01.



On
April 25, 2010, the Company issued 150,000 share purchase warrants, expiring on April 25, 2012, exercisable at $1.00 for consulting
services.



On
May 12, 2010 the Company issued 200,000 share purchase warrants, expiring on May 12, 2012 exercisable at $1.00 in connection with
a debt financing.



On
September 30, 2010 the Company issued 200,000 share purchase warrants expiring on October 1, 2014 exercisable at $0.20 to the
President of Arrayit Diagnostics.



On
October 14, 2010 the Company issued 300,000 share purchase warrants expiring on February 15, 2013 exercisable at $0.22 in connection
with a debt financing.



37







During
2010, 200,000 warrants were cancelled.

During
2012, 75,000 warrants were issued and 350,000 warrants expired.

Options

On
October 1, 2009, the Company granted 450,000 options to the President of Avant Diagnostics, Inc. at an exercise price of $0.32.
 The $189,000 intrinsic value of these options was recorded as an expense on that date.

On
June 30, 2010, 160,000 share purchase options were exercised upon payment of $51,200.

The
following table summarizes options and warrants outstandingat December
31, 2012:





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | Number
    of Options and Warrants |  | Weighted
    Average Exercise Price Per Share
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------- |  | ---------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                    |  |                                              
| | Outstanding
                                                                                                                                                                                         at
                                                                                                                                                                                         December
                                                                                                                                                                                         31,
                                                                                                                                                                                         2010 |                                    |  |                                              
| | Granted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                    |  |                                              
| | Cancelled/forfeited                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                    |  |                                              
| | Expired                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                    |  |                                              
| | Exercised                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                    |  |                                              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                    |  |                                              
| | Outstanding
                                                                                                                                                                              at
                                                                                                                                                                              December
                                                                                                                                                                              31,
                                                                                                                                                                              2011                                             |                                    |  |                                              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                    |  |                                              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                    |  |                                              
| | Granted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                    |  |                                              
| | Cancelled/forfeited                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                    |  |                                              
| | Expired                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                    |  |                                              
| | Exercised                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                    |  |                                              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                    |  |                                              
| | Outstanding
                                                                                                                                                                              at
                                                                                                                                                                              December
                                                                                                                                                                              31,
                                                                                                                                                                              2012                                             |                                    |  |                                              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                    |  |                                              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                    |  |                                              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                    |  |                                              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                    |  |                                              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                    |  |                                              



NOTE
10 – ROYALTY OBLIGATIONS

|(a) |  | Advisory
                                                                                                                                             Agreement
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

Under
paragraph 2 (b) of an advisory agreement dated August 11, 2009 between Avant Diagnostics, Inc. (formerly Arrayit Diagnostics,
Inc.) and a limited liability partnership, controlled by parties that are also shareholders in Arrayit Corporation, there was
a contractual obligation to pay a Royalty of Twenty percent (20%) of the net sales of Avant Diagnostics, Inc., and its subsidiaries,
which includes the Company. “Net Sales” means the gross selling price by the Company and sub-licensees for the sale
of any product or products, less trade discounts allowed, credits for claims or allowances, commissions, refunds, returns and
recalls.

The
term of the advisory agreement was five years. The royalties and ownership provisions were in perpetuity.

The
entitlement to royalties under the advisory agreement was decreased by obligation to pay royalties to other advisors and investors.
With respect to the revenue generated by Avant Diagnostics, Inc. as described in (b) below the Company was obligated to pay a
0.3% royalty to purchasers of royalty interests, thereby reducing the Company’s obligation to the advisor by a similar amount,
resulting in a net royalty obligation to the advisor of 19.7% on revenue generated by our Ovarian subsidiary.

During
the periods ended December 31, 2012 and 2011, there were no revenues earned and hence no obligation to pay any royalties.

On
March 5, 2012, the 20% royalty interest was exchanged for 385,000 shares of Avant Diagnostics, Inc.

|(b) |  | Royalty
                                                                                                                                             Interests
                                                                                                                                             –
                                                                                                                                             AVANT
                                                                                                                                             DIAGNOSTICS,
                                                                                                                                             INC.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Third
party investors purchased royalty interests in the amount of $285,000 in Arrayit Diagnostics (Ovarian), Inc., in return for a
zero decimal three percent (0.3%) royalty on net sales of the Ovarian test. Amounts received with respect to these royalty interests
were shown as Non-Controlling Interests on the Balance Sheet, as there are no terms of repayment of the royalty interests.  On
May 23, 2011, Avant Diagnostics, Inc. acquired the outstanding 20% non-controlling interest in Ovarian, recognizing no gain or
loss on the transaction.  Ovarian was then collapsed into Diagnostics, which continues to be a 47% owned subsidiary of the
company.  The 0.3% royalty interests on net sales of the Ovarian test owned by third party investors were not affected and
remained in place.

During
the periods ended December 31, 2012 and 2011, there were no revenues earned and hence no obligation to pay any royalties.

38







On
March 5, 2012, a 0.3% royalty interest was exchanged for 200,000 shares of Avant Diagnostics, Inc.

|(c) |  | Wayne
                                                                                                                                             State
                                                                                                                                             University
                                                                                                                                             –
                                                                                                                                             AVANT
                                                                                                                                             DIAGNOSTICS,
                                                                                                                                             INC.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Under
terms of a biomarker license agreement between Wayne State University and Avant Diagnostics, Inc., effective December 7, 2009,
Avant Diagnostics, Inc. is obligated to pay the University royalties of 5% of net sales.  In addition the license agreement
provides for lump sum payments to be made as milestone events are achieved.



There
were no revenues generated during the fiscal period ended December 31, 2012 and 2011, and hence no obligation to pay any royalties
to Wayne State University.

|(d) |  | The
                                                                                                                                             Parkinson’s
                                                                                                                                             Institute
                                                                                                                                             –
                                                                                                                                             ARRAYIT
                                                                                                                                             SCIENTIFIC
                                                                                                                                             SOLUTIONS,
                                                                                                                                             INC.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Pursuant
to an agreement dated February 9, 2009 between the Company, and The Parkinson's Institute, a California Corporation, Arrayit Scientific
Solutions, Inc. is obligated to make payments of 5% of gross earnings generated from research derived from the biological specimens
from Parkinson's disease patients and control patients provided by the Parkinson's Institute.

There
were no revenues generated during the fiscal periods ended December 31, 2012 and 2011 and hence no obligation to pay any royalties
to the Parkinson’s Institute.



NOTE
11 – STOCK-BASED COMPENSATION

Operations
for the years ended December 31, 2012 and 2011 include $100,450 and $149,200 of stock-based compensation, arising from the granting
of 480,575 and 656,000 unregistered common shares, respectively.



NOTE
12 – CONVERTIBLE PREFERRED STOCK

Convertible
Preferred Stock

The
Series A Preferred Stock has no stated dividend rate and has a liquidation preference of $.001 per share. The Series A Preferred
Stock also has voting rights that entitle the preferred shareholders to vote with the common shareholders as if the preferred
stock had converted to common. Both the conversion ratio of the preferred into common and the number of shares outstanding is
subject to revision upon reverse stock dividends or splits that reduce the total shares outstanding.

The
Series C Preferred Stock has no stated dividend rate.  The Series C Preferred Stock also has voting rights that entitle
the preferred shareholders to vote with the common shareholders as if the preferred stock had converted to common. The conversion
ratio of the preferred into common is not subject to revision upon reverse stock dividends or splits that reduce the total shares
outstanding.

The
103,143 Series C Preferred Stock was issued on February 21, 2008 as part of the merger with IMHI.   These Series
C Preferred shares are convertible into 36,100,000 common shares at the rate of 350:1.

On
August 15, 2008 the articles of designation for the Series C Preferred Stock were amended to limit the conversion to common shares
to 10% of the holders’ original holdings in any quarter.

During
the years ended December 31, 2012 and 2011, 2,057 and 942 Series C Preferred Stock shares were converted into 720,020 and 330,015
shares of common stock, respectively.



NOTE
13 – INCOME TAXES

At
December 31, 2012 and December 31, 2011, the Company had net operating loss (NOL) carry-forwards available to offset future taxable
income of approximately $24.3 and $25.4 million, respectively, including approximately $17.5 million from IMHI at date of the
merger. The utilization of the NOL carry-forwards is dependent upon the tax laws in effect at the time the NOL carry-forwards
can be utilized. It is also likely that utilization of the NOL carry-forwards are limited based on changes in control from the
merger. A valuation allowance of approximately $9.5 million has been recorded against the deferred tax asset as of December 31,
2012 and December 31, 2011 due to the uncertainty surrounding its realization caused by the Company’s recurring losses.
The NOL carry-forwards will fully expire in 2032.



NOTE
14 – DUE TO RELATED PARTY

Pursuant
to a previous consulting agreement with Dr. Mark Schena, Director, which ended December 31, 2010, the Company was obligated to
pay a royalty of 5% of gross sales to him as a royalty for unfettered use of his patents and knowledge. Amounts outstanding at
December 31, 2012 and 2011 of $577,033 and $615,783, respectively, are unsecured, non-interest bearing and due on demand.



39







NOTE
15 - COMMITMENTS AND CONTINGENCIES

Disclosure
regarding lawsuits

The
Company accrues interest each quarter on outstanding judgments. The Company records interest expense equal to the court indicated
interest rate applied to the outstanding judgment and records an increase in judgment interest payable, which corresponds to the
interest expense recognized during the year.

Legal
Firm Amount Payable Description

At
Dec 31, 2012

|Baker
    Hughes               | $143,111   | Baker
    Hughes, Inc. vs TeleChem International, Inc., Case #106-CV-075502  Baker Hughes, a chemical manufacturer, sued TeleChem
    for breach of contract regarding payment for chemicals supplied, resulting in a judgment against TeleChem plus interest, costs
    and attorneys fees.                                                               
|------------------------------ | ---------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Hogan,
    Holmes & Usoz LLP   | $61,197    | Hogan
    Holmes and Usoz LLP vs TeleChem International, Inc., Case #1-09-CV-156111.  Hogan Holmes and Usoz LLP, a law firm,
    sued TeleChem for breach of contract regarding payment for services rendered.  The parties agreed to a payment schedule
    and reached a settlement.  The payment schedule is current.                                   
|Morrison
    & Foerster LLP    | $1,354,133 | Morrison
    & Foerster LLP vs TeleChem International, Inc., Case # CGC-07-469964 Morrison & Foerster LLP, a law firm, sued TeleChem
    for breach of contract regarding payment for services rendered, resulting in a judgment against TeleChem plus interest, costs
    and attorneys fees.                                                             
|Townsend
    & Townsend & Crew | $139,704   | Townsend
    & Townsend & Crew, a law firm, represented TeleChem International, Inc. in Oxford Gene Technology Ltd. Vs TeleChem
    International, Inc. Case# 04-013 KAJ.  Oxford Gene Technology, a biotech company, sued TeleChem for patent infringement.  The
    lawsuit was settled in 2005.  Accounts payable to Townsend are for services rendered.
|Reed
    Smith LLP             | $1,757,541 | Reed
    Smith LLP, a law firm, represented TeleChem International, Inc. in Pediatrix Screening, Inc. vs TeleChem International, Inc.,
    Case #01-2226.  The case was settled on October 27, 2011.  Accounts payable to Reed Smith LLP are for
    services rendered.                                                                                    



Long
Term Lease Commitments

The
Company leases its office facility in Sunnyvale, California under operating leases that expire November 30, 2013.

Future
minimum lease payments as of December 31, 2012 are $135,709.

Rent
expense was approximately $182,657 and $180,338 for the years ended December 31, 2012 and 2011, respectively.



Note
16 - Stockholders' Equity (Deficit)

Conversion
of Debt to Common Stock

During
2012 and 2011, trade creditors converted no accounts payable into shares of common stock.

Common
Shares Issued for Service

During
2012, the Company issued 480,575 common shares to consultants under consulting agreements. The associated expense was $100,450.

During
2011, the Company issued 656,000 common shares to consultants under consulting agreements. The associated expense was $149,200.

Common
Shares Issued for Compensation

No
shares were issued as compensation during 2012 and 2011.

Common
Shares Issued for Cash

No
shares were issued for cash during 2012 and 2011.



Common
Shares Issued on Exercise of Options

No
shares were issued for options during 2012 and 2011.

Issuance
of Warrants for Services and as Part of Debt

No
warrants were issued for services or debt during 2012 or 2011, except for 75,000 warrants issued for debt in 2012.

Series
“A” Convertible Preferred Stock

The
Series “A” Preferred Stock, $0.001 par value, has no stated dividend rate and has a liquidation preference of $.001
per share. The Series “A” Preferred Stock also has voting rights that entitle the preferred shareholders to vote with
the common shareholders as if the preferred stock had converted to common. There are 166,667 authorized and 22,034 (2011 –
22,034) issued and outstanding shares.

40







Series
“C” Convertible Preferred Stock

The
Series “C” Preferred Stock, $0.001, has no stated dividend rate. There are 103,143 authorized shares. The Series “C”
Preferred Stock also has voting rights that entitle the preferred shareholders to vote with the common shareholders as if the
preferred stock had converted to common. The conversion ratio of the preferred into common is not subject to revision upon reverse
stock dividends or splits that reduce the total shares outstanding.

The
103,143 Series “C” Preferred Stock was issued on February 21, 2008 as part of the merger with TeleChem, and at December
31, 2012 there were 88,888 (2011 – 90,945) issued and outstanding shares.. These Series “C” Preferred shares
are convertible into 36,100,000 common shares at the rate of 350:1.

On
August 15, 2008 the articles of designation for the Series C Preferred Stock were amended to limit the conversion to common to
shares to 10% of the holders’ original holdings in any quarter.

Options
and warrants

|The following table summarizes information about outstanding
    warrants and options for common stock at December 31, 2012:
|----------------------------------------------------------------------------------------------------------------------------
|                                                                                                                            
|                                                                                                                            
|$                                                                                                                           
|$                                                                                                                           
|$                                                                                                                           
|$                                                                                                                           
|$                                                                                                                           
|                                                                                                                            



NOTE
17 – INCOME TAXES

At
December 31, 2012, the Company had net operating loss (NOL) carry-forwards available to offset future taxable income of approximately
$24 million including approximately $17.5 million from IMHI at date of the merger. The utilization of the NOL carry-forwards is
dependent upon the tax laws in effect at the time the NOL carry-forwards can be utilized. It is also likely that utilization of
the NOL carry-forwards are limited based on changes in control from the merger. A valuation allowance of $9,500,000 has been recorded
against the deferred tax asset due to the uncertainty surrounding its realization caused by the Company’s recurring losses.
The NOL carryforwards will expire in 2032.



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

None.



ITEM
9A(T). CONTROLS AND PROCEDURES

Management’s
Annual Report on Internal Control over Financial Reporting

Our
management, including our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining
adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act, as amended.
Our management, including our Chief Executive Officer and Chief Financial Officer assessed the effectiveness of our internal control
over financial reporting as of December 31, 2012. In making this assessment, our management used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that
there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not
be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting
as of December 31, 2012, our management including our Chief Executive Officer and Chief Financial Officer determined that there
were control deficiencies that constituted material weaknesses, as described below.

As
of the end of the period covered by this report, our management including our Chief Executive Officer and Chief Financial Officer,
also carried out an evaluation of our disclosure controls and procedures as defined in Rule 13a-15(e) of the Exchange Act. Based
on that evaluation, management including our Chief Executive Officer and Chief Financial Officer determined that our disclosure
controls and procedures are ineffective in enabling the Company to record, process, summarize and report, in a timely manner,
the information that the Company is required to disclose in its Exchange Act reports. Control deficiencies that constituted material
weaknesses, are described below.

Material
Weaknesses

Lack
of Effective Corporate Governance Policies and Procedures.We do not have effective policies regarding the independence of
or directors and do not have independent directors. The lack of independent directors means that there is no effective review,
authorization, or oversight of management or management’s actions by persons that were not involved in approving or executing
those actions. This has resulted in inconsistent practices. Further, the Board of Directors does not currently have any independent
members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-B. Since
these entity level programs have a pervasive effect across the organization, management has determined that these circumstances
constitute a material weakness.

We
have no conflicts of interest policies and there is no provision for the review and approval of transactions between the Company
and interested members of management.

41







Lack
of Effective Policies Regarding the General Accounting System.We do not have any documented processes for the input, accumulation,
or testing of financial data that would provide assurance that all transactions are accurately and timely recorded or that the
financial reports will be prepared on a periodic basis.

Lack
of Effective Control over Financial Statement Disclosure.We do not maintain effective controls over financial statement disclosure.
Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our
financial statements. Accordingly, management has determined that this control deficiency constitutes a material weakness.

Because
of these material weaknesses, management has concluded that the Company did not maintain effective internal control over financial
reporting as of December 31, 2012, based on the criteria established in "Internal Control-Integrated Framework" issued
by the COSO.

Management,
including our Chief Executive Officer and Chief Financial Officer, has determined that the Company does not have the financial
resources or personnel to address any of the material weaknesses identified or to conduct a more robust evaluation of its controls.
As resources become available, management will develop and implement remedial actions to address the material weaknesses it has
identified.

This
annual report does not include an attestation report of our registered public accounting firm regarding internal control over
financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant
to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this
annual report.



Changes
in internal control over financial reporting

There
were no changes in our internal control over financial reporting during our most recent fiscal quarter that materially affected,
or were reasonably likely to materially affect, our internal control over financial reporting.



Limitations
on the Effectiveness of Controls

Our
management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our Disclosure Controls and
internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide
only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system
must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities
that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally,
controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management or board
override of the control.



The
design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there
can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time,
controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur
and not be detected.



ITEM
9B. OTHER INFORMATION

None.





42





PART
III



ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The
following sets forth our officers and Directors as of the date of this filing:

|Name                  | Position                                                        | Year
    of Appointment
|--------------------- | --------------------------------------------------------------- | -----------------------
|Rene
    Schena       | Chairman,
    Director, CEO and CFO                             | 2007                   
|Todd
    J Martinsky  | Vice
    President and Director                                 | 2007                   
|Mark
    Schena, Ph.D | President,
    Chief Technology Officer, Secretary and Treasury | 2007                   



Rene
Schena – Chairman, Chief Executive Officer and Chief Financial Officer

Arrayit
Corporation was formed from the Biotech Division of TeleChem International Inc., a company Rene co-founded in 1993. Arrayit has
emerged as a world leader in microarray technology under Rene’s leadership, being distinguished by Inc. Magazine
in 2002 and 2003 as one of the nation’s Top 500 Fastest Growing privately-held companies; and in 2005 was recognized by
the Silicon Valley Business Journal as the 11th largest woman-owned business in Silicon Valley.

Rene
holds a degree in Language Studies from the University of California, Santa Cruz. She has earned 25 years experience in international
business, including translation, contract documentation and commodities trading. She worked in commodities trading with a subsidiary
of ConAgra (1985-1988) and as a chemical import and distribution specialist, department manager, and later President of NuSource
Chemical Corporation (1988-1993). Rene co-founded TeleChem International, Inc., which focused on traditional chemical distribution
before expanding into the government and biotech sectors. At Arrayit, Rene manages all corporate financial, tax, legal, regulatory
and human resource activities.



Mark
Schena, Ph.D. – President, Chief Science Officer and Director

Dr.
Schena graduated first in his class with a PhD in Biochemistry in 1990 from the University of California at San Francisco. In
1995, as a postdoctoral fellow at Stanford University, he publishedthe first paper on microarrays in the premier scientific
journal Science, introducing microarrays to the world as a new scientific technology. His work rapidly led to a new field
of discovery that uses microarrays to investigate both genes and proteins in research and diagnostics. Today, microarrays are
used in more than 100,000 laboratories in 50 countries to help address complicated questions in biology, chemistry, agriculture
and medicine. The microarray field to date has produced 550,000 scientific publications. Moreover, the commercial expansion of
microarray technologies has created a multi-billion dollar industry with over 200 companies producing ancillary products and services.
Acknowledged by his peers for the importance of these accomplishments, in 2003 Dr. Schena was proclaimed the “Father of
Microarray Technology” by The Scientist, a broadly read scientific journal. In 2009, Dr. Schena was proclaimed the
"Father of Microarrays" by Drug Discovery News, further reinforcing his leadership position in the field.



Dr.
Schena has authored five foundational books on the subject of microarrays, including the best selling text, “Microarray
Analysis” (J. Wiley and Sons); and has published more than 30 important papers in scientific journals. Dr. Schena has organized
symposia and course work, chaired societal meetings and promoted the expansion of microarray technology - accruing over one million
travel miles worldwide to speak to audiences of PhDs, MDs and life science professionals. Dr. Schena holds the key microarray
diagnostics patent (issued in 2005) that provides for 100,000 patients to be screened for a health condition in a single, simple
laboratory test. In 2001, this discovery was featured in the NOVA television documentary “Cracking the Code of Life,”,
wherein Dr. Schena introduced the use of microarrays as a diagnostic tool for the first time, and presented his vision for preventative,
personalized medicine through pre-symptomatic testing. Mark’s innovation, product development ideas, world-respected credentials
and scientific celebrity extend the ultimate scientific credibility to the Arrayit companies and their leading-edge products and
services.



43







Todd
Martinsky – Senior Vice President and Director

Todd
received a Bachelor of Arts degree from San Jose State University, after which he served as Director of Education and Consulting
at the Codd and Date Consulting Group, whose founder was famous for creating the relational database. Todd co-founded TeleChem
International, Inc. in 1993, and oversaw the Arrayit biotech division beginning in 1996. His computer science consulting experience
had measurable impact on the evolution of Arrayit’s business, as he led the design, development and implementation of the
Company’s online presence and related e-commerce platform – the first of its kind in the biotech sector.

Todd
is recognized as a leader in the microarray field. He has guided and consulted with microarray professionals since the advent
of commercial microarrays. He has presented as a Keynote Speaker for key microarray workshops and scientific meetings and has
served on various microarray manufacturing panels. Over the past decade, Todd has served as a guest speaker at events sponsored
by the Centers for Disease Control (CDC), The United States Department of Agriculture (USDA), and a number of major universities.
Serving as an advisor to the U.S. Pharmacopeia (USP), he authored a chapter for a compendium on nucleic acid test methods for
which he received Doctoral-level recognition. In addition, Todd has authored chapters on microarray manufacturing methods for
five books, including the new 2009 “Microarray Methods and Protocols” (CRC Press). On the web, he authors and manages
a popular microarray blog and is a respected member of the email-based microarray Gene-Arrays List Serve.  Todd has been
recognized as the “number one most-quoted microarray executive” through Arrayit’s educational outreach program,
appearing in numerous feature articles and scientific publications. During his tenure at Arrayit, he has established numerous
successful and mission critical business alliances that continue today.



Independence
of Directors

We
are not required to have independent members of our Board of Directors, and do not anticipate having independent Directors until
such time as we are required to do so.



Corporate
Governance

We
are a small reporting company, not subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange Act respecting
any director. Each of our directors has attended all meetings either in person or via telephone conference. We have no standing
committees regarding audit, compensation or other nominating committees.



We
strive to promote accountability for adherence to honest and ethical conduct; endeavor to provide full, fair, accurate, timely
and understandable disclosure in the reports and documents that we file with the SEC and in other public communications made by
us; and we strive to be compliant with applicable governmental laws, rule4s and regulations.

We
have adopted a written code of business conduct and ethics.

Our
entire Board of Directors is responsible for reviewing and making recommendations concerning the selection of outside auditors,
reviewing the scope, results and effectiveness of the annual audit of our financial statements and other services provided by
the Company’s independent public accountants. The Board of Directors reviews the Company's internal accounting controls,
practices and policies. Our Board of Directors has determined that no director qualifies as an audit committee financial expert
as defined in Item 407(d) (5) (ii) of Regulation S-K.



Audit
Committee and Financial Expert

The
Company is not required to have an audit committee and as such, does not have one.



Code
of Ethics for the CEO and CFO

On
Feb 21, 2008, the Board of Directors of the Company adopted a Code of Ethics for the Company’s senior officers. The Board
of Directors believes that these individuals must set an exemplary standard of conduct, particularly in the areas of accounting,
internal accounting control, auditing and finance. This code sets forth ethical standards to which the designated officers must
adhere and other aspects of accounting, auditing and financial compliance.

A
copy of our Code of Ethics, will be provided without fee, upon written request to our Corporate offices.



SECTION
16 (A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section
16(a) of the securities Exchange Act of 1934, as amended, requires our directors, executive officers and persons who own more
than 10% of a class of our equity securities which are registered under the Exchange Act of 1324, as amended, to file with the
Securities and Exchange Commission initial reports of ownership and reports of changes of ownership of such registered securities.
Such executive officers, directors and greater than 10% beneficial owners are required by Commission regulation to furnish us
with copies of all Section 16(a) forms filed by such reporting persons.



44







ITEM
11. EXECUTIVE COMPENSATION

SUMMARY
COMPENSATION TABLE

|Name and Principal Position                                                  |  | Year |      | Salary |  | Bonus |     | Stock Awards |  | Options Awards |     | All Other |  | Total
|---------------------------------------------------------------------------- |  | ---- | ---- | ------ |  | ----- | --- | ------------ |  | -------------- | --- | --------- |  | -----
|Compensation                                                                 |  |      |      |        |  |       |     |              |  |                |     |           |  |      
|                                                                             |  |      |      |        |  |       | ($) |              |  |                | ($) |           |  |      
|                                                                             |  |      |      |        |  |       |     |              |  |                |     |           |  |      
|Rene
    A Schena                                                            |  |      | 2012 |        |  | $     | 0   |              |  |                | 0   |           |  |      
|Chairman, Director
    and CEO                                               |  |      | 2011 |        |  |       | 0   |              |  |                | 0   |           |  |      
|                                                                             |  |      |      |        |  |       |     |              |  |                |     |           |  |      
|Todd J Martinsky                                                             |  |      | 2012 |        |  |       | 0   |              |  |                | 0   |           |  |      
|Vice President and
    Director                                              |  |      | 2011 |        |  |       | 0   |              |  |                | 0   |           |  |      
|                                                                             |  |      |      |        |  |       |     |              |  |                |     |           |  |      
|Mark Schena, Ph.D                                                            |  |      | 2012 |        |  |       | 0   |              |  |                | 0   |           |  |      
|President, Chief
    Technology Officer, Secretary & Treasurer, and Director |  |      | 2011 |        |  |       | 0   |              |  |                | 0   |           |  |      
|                                                                             |  |      |      |        |  |       |     |              |  |                |     |           |  |      



Fair
value of stock awards was computed in accordance with FASB ASC Topic 718 (column (e)).

Our
compensation and benefits programs are administered by our Board of Directors and intended to retain and motivate individuals
with the necessary experience to accomplish our overall business objectives within the limits of our available resources. Consequently,
the guiding principles of our compensation programs are:

| | - | simplicity,
    clarity, and fairness to both the employee and the Company;
| | - | ---------------------------------------------------------------------------
| | - | preservation
    of Company resources, including available cash; and       
| | - | opportunity
    to receive fair compensation if the Company is successful. 



Each
element of our compensation program contributes to these overall goals in a different way.

| | - | Base
    Salary and Benefits are designed to provide a minimum threshold to attract and retain employees identified as necessary for
    our success.                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | - | Cash Bonuses
    and equity awards are designed to provide supplemental compensation when the Company achieves financial or operational goals
    within the limits of our available resources.



All
compensation payable to the Chief Executive Officer and the other named executive officers is reviewed annually by the Board of
Directors and changes or awards are approval by the Board of Directors.



Board
Compensation

The
following table sets forth summary information concerning the compensation we paid to directors during the year ended December
31, 2012 and 2011:



|Name            |  | Fees
                                                                                                               Earned or Paid
                                                                                                               in Cash
        ($) |   |  | Stock
                                                                                                               Awards
        ($) |  |   | Option
                                                                                                               Awards
        ($) |  |  | All
                                                                                                               Other Compensation
        ($) |  |  | Total
        ($) |  
|--------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - |  | --------------------------------------------------------------------------------------------------------------------------------------- |  | - | ---------------------------------------------------------------------------------------------------------------------------------------- |  |  | ------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ----------------- | -
|                |  |                                                                                                                                                                                                                                                                       |   |  |                                                                                                                                         |  |   |                                                                                                                                          |  |  |                                                                                                                                                   |  |  |                   |  
|Rene
    Schena |  |                                                                                                                                                                                                                                                                       | - |  |                                                                                                                                         |  | - |                                                                                                                                          |  |  | -                                                                                                                                                 |  |  |                   | -
|Mark Schena     |  |                                                                                                                                                                                                                                                                       | - |  |                                                                                                                                         |  | - |                                                                                                                                          |  |  | -                                                                                                                                                 |  |  |                   | -
|Todd Martinsky  |  |                                                                                                                                                                                                                                                                       | - |  |                                                                                                                                         |  | - |                                                                                                                                          |  |  | -                                                                                                                                                 |  |  |                   | -



(1)
None of the Board members received any additional consideration for their services to the Board of Directors other than what they
were paid as officers of the Company, as provided above, and as such, they have not been included in the table above.











INDEMNIFICATION
OF DIRECTORS AND OFFICERS.

Pursuant
to Section 78.7502 of the Nevada Revised Statutes, the Registrant has the power to indemnify any person made a party to any lawsuit
by reason of being a director or officer of the Registrant, or serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action,
suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was
unlawful. Our By-laws provide that the Registrant shall indemnify its directors and officers to the fullest extent permitted by
Nevada law.

With
regard to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Securities Act of 1933, as amended, and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid
by a director, officer or controlling person of the Corporation in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in
the opinion of our counsel the matter has been settled by a controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by us is against public policy as expressed in the Securities Act of 1933, as amended,
and will be governed by the final adjudication of such case.



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

Beneficial
ownership of the common stock is determined in accordance with the rules of the Securities and Exchange Commission and includes
any shares of common stock over which a person exercises sole or shared voting or investment powers, or of which a person has
a right to acquire ownership at any time within 60 days of April 15, 2012. Except as otherwise indicated, and subject to applicable
community property laws, the persons named in this table have sole voting and investment power with respect to all shares of common
stock held by them. Applicable percentage ownership in the following table is based on 58,816,302 shares of common stock equivalents
outstanding.

At
December 31, 2012 the total Common Share Equivalents was determined as follows:

|Share Class |  | Outstanding |        | Conversion Factor |  | Common Share Equivalents
|----------- |  | ----------- | ------ | ----------------- |  | ------------------------
|            |  |             |        |                   |  |                         
|Class
    A |  |             | 22,034 |                   |  |                         
|Class C     |  |             | 88,888 |                   |  |                         
|Common      |  |             |        |                   |  |                         



The
following table sets forth a description of any substantial interest, direct or indirect of each person who has been a director
or executive officer of the registrant at any time since the beginning of the last fiscal year. The address of each person, unless
otherwise noted, is 524 East Weddell Drive, Sunnyvale, California 94089. Additionally we have included information about persons
more than 5% of the total voting rights.



|                                                                                          |  |  | Common
                                                                                               Stock |  |  |  | Series
                                                                                                      C Preferred Stock |  |  |  | Series
                                                                                                      C Preferred Stock Common
                                                                                                      Share Equivalents |  |  |  | Total
                                                                                                      Voting Shares Based on All
                                                                                                      Voting Shares Outstanding |  |  |  | Total
                                                                                                      % |  
|----------------------------------------------------------------------------------------- |  |  | ----------------------------------------------------------------------------------------------------------- |  |  |  | ------------------------------------------------------------------------------------------------------------------------------ |  |  |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | ------------------------------------------------------------------------------------------------------------- | -
|Officers and Directors                                                                    |  |  |                                                                                                             |  |  |  |                                                                                                                                |  |  |  |                                                                                                                                                                                                                                                               |  |  |  |                                                                                                                                                                                                                                                                        |  |  |  |                                                                                                               |  
|Rene
    A Schena, Chief Executive Officer Chief Financial Officer, Chairman and Director |  |  | 2,000,000                                                                                                   |  |  |  | 38,571                                                                                                                         |  |  |  | 13,499,955                                                                                                                                                                                                                                                    |  |  |  | 15,499,955                                                                                                                                                                                                                                                             |  |  |  | 26.4                                                                                                          | %
|Mark Schena, President
    and Director                                                   |  |  | 1,000,000                                                                                                   |  |  |  | 12,857                                                                                                                         |  |  |  | 4,500,090                                                                                                                                                                                                                                                     |  |  |  | 5,500,090                                                                                                                                                                                                                                                              |  |  |  | 9.4                                                                                                           | %
|Todd Martinsky, Executive
    Vice President and Director                                 |  |  | 1,500,000                                                                                                   |  |  |  | 25,714                                                                                                                         |  |  |  | 8,999,865                                                                                                                                                                                                                                                     |  |  |  | 10,499,865                                                                                                                                                                                                                                                             |  |  |  | 17.9                                                                                                          | %
|Paul K. Haje, Vice
    President of Marketing, Consultant                                 |  |  |                                                                                                             |  |  |  | 12,857                                                                                                                         |  |  |  | 4,500,090                                                                                                                                                                                                                                                     |  |  |  | 4,500,090                                                                                                                                                                                                                                                              |  |  |  | 7.7                                                                                                           | %
|John Howell, Former
    President of Arrayit Diagnostics, Inc., Consultant                |  |  | 916,000                                                                                                     |  |  |  |                                                                                                                                |  |  |  |                                                                                                                                                                                                                                                               |  |  |  | 916,000                                                                                                                                                                                                                                                                |  |  |  | 1.6                                                                                                           | %
|William L. Sklar,
    former Chief Financial Officer and Former Director                  |  |  | 775,000                                                                                                     |  |  |  |                                                                                                                                |  |  |  |                                                                                                                                                                                                                                                               |  |  |  | 775,000                                                                                                                                                                                                                                                                |  |  |  | 1.3                                                                                                           | %
|                                                                                          |  |  |                                                                                                             |  |  |  |                                                                                                                                |  |  |  |                                                                                                                                                                                                                                                               |  |  |  |                                                                                                                                                                                                                                                                        | 
|Greater Than 5% Shareholders                                                              |  |  |                                                                                                             |  |  |  |                                                                                                                                |  |  |  |                                                                                                                                                                                                                                                               |  |  |  |                                                                                                                                                                                                                                                                        | 
|None                                                                                      |  |  |                                                                                                             |  |  |  |                                                                                                                                |  |  |  |                                                                                                                                                                                                                                                               |  |  |  |                                                                                                                                                                                                                                                                        |  |  |  |                                                                                                               |  
|                                                                                          |  |  |                                                                                                             |  |  |  |                                                                                                                                |  |  |  |                                                                                                                                                                                                                                                               |  |  |  |                                                                                                                                                                                                                                                                        |  |  |  |                                                                                                               |  
|                                                                                          |  |  |                                                                                                             |  |  |  |                                                                                                                                |  |  |  |                                                                                                                                                                                                                                                               |  |  |  |                                                                                                                                                                                                                                                                        |  |  |  |                                                                                                               |  
|All
    of the Officers and Directors as a Group (6 Persons)                              |  |  | 6,191,000                                                                                                   |  |  |  | 90,000                                                                                                                         |  |  |  | 31,500,000                                                                                                                                                                                                                                                    |  |  |  | 37,691,000                                                                                                                                                                                                                                                             |  |  |  | 64.1                                                                                                          | %





46







ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Pursuant
to a previous consulting agreement with Dr. Mark Schena ended December 31, 2010, the Company was obligated to pay a royalty of
5% of gross sales to him as a royalty for unfettered use of his patents and knowledge. Amounts outstanding at December 31, 2012
and December 31, 2011 of $577,033 and $615,783 respectively are unsecured, non-interest bearing and due on demand.



ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit
Fees

The
aggregate fees billed for each of the fiscal years ended December 31, 2012 and December 31, 2011 for professional services rendered
by the principal accountants for the audit of the Company's annual financial statements and the review of the Company's quarterly
financial statements were $50,441 and $67,555, respectively.

Audit
Related Fees

None

Tax
Fees

None

All
Other Fees

None

We
do not have an audit committee and as a result our entire board of directors performs the duties of an audit committee. Our board
of directors evaluates the scope and cost of the engagement of an auditor before the auditor renders audit and non-audit services.

ITEM
15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)
Exhibits

The
following exhibits are either attached hereto or incorporated herein by reference as indicated.

|Exhibit
    Number |       | Description |  | Previously Filed as Exhibit                                                                                             |  | File Number                                                            |  | Previously Date Filed
|------------------ | ----- | ----------- |  | ----------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------- |  | ---------------------
|                   |       |             |  |                                                                                                                         |  |                                                                        |  |                      
|                   | 2.1   |             |  | Agreement and Plan of Merger                                                                                            |  | Exhibit 10.1 to the Registrant's
    Current Report on Form 8-K        |  | 001-16381            
|                   | 2.2   |             |  | Amendment and Restated Agreement and Plan
    of Merger                                                                 |  | Exhibit A to the Registrant’s Preliminary
    Schedule 14C             |  | 001-16381            
|                   |       |             |  |                                                                                                                         |  |                                                                        |  |                      
|                   | 3.1   |             |  | Amended and Restated Bylaws                                                                                             |  | Exhibit 3iii to the Registrant's Report
    on Form 10K                |  | 0001-059016          
|                   | 3.2   |             |  | Amendment of Articles of Incorporation                                                                                  |  | Exhibit 3 to the Registrant's Report on
    Form 10K                   |  | 0001-059016          
|                   | 3.3   |             |  | Certificate of Designation of the Series
    “C” Convertible Preferred Stock                                            |  | Exhibit 10.3 to the Registrant's Current
    Report on Form 8-K        |  | 001-16381            
|                   | 3.4   |             |  | Certificate of Correction for the Certificate
    of Designation of the Series C Convertible Preferred Stock            |  | Exhibit 10.4 to the Registrant's Current
    Report on Form 8-K        |  | 001-16381            
|                   | 3.5   |             |  | State if Delaware Certificate if Amendment
    of Certificate of Designation of Series “A” Convertible Preferred Shares |  | Exhibit 3.1 to the Registrant's Current
    Report on Form 8-K         |  | 0001-059016          
|                   | 3.6   |             |  | Code of Ethics                                                                                                          |  | Exhibit 14 to the Registrant's Report
    on Form 10K                  |  | 0001-059016          
|                   | 4.1   |             |  | Form of Warrant                                                                                                         |  | Exhibit 4.2 to Registrant's Current Report
    on Form 8-K             |  | 001-16381            
|                   |       |             |  |                                                                                                                         |  |                                                                        |  |                      
|                   | 4.2   |             |  | Form of Additional Investment Right "A"                                                                                 |  | Exhibit 10.2 to Registrant's Current Report
    on Form 8-K            |  | 001-16381            
|                   | 4.3   |             |  | Form of Additional Investment Right "B"                                                                                 |  | Exhibit 10.3 to Registrant's Current Report
    on Form 8-K            |  | 001-16381            
|                   | 10.1  |             |  | 2004 Directors, Officers and Consultants
    Stock Option, Stock Warrant and Stock Award Plan                           |  | Exhibit 4.1 to the Registrant's Registration
    Statement on Form S-8 |  | 333-119586           
|                   | 10.2  |             |  | 2002 Directors, Officers and Consultants
    Stock Option, Stock Warrant and Stock Award Plan                           |  | Exhibit 4.1 to the Registrant's Registration
    Statement on Form S-8 |  | 333-99371            
|                   | 10.3  |             |  | Option to Purchase Common Stock between
    Registrant and John Howell                                                  |  | Exhibit 99.1 to the Registrant's Current
    Report on Form 8-K/A      |  | 0001-059016          
|                   | 10.4  |             |  | Form of Securities Purchase Agreement
    for 8.0% Senior Secured Convertible Notes                                     |  | Exhibit
    10.1 to Registrant's Current Report on Form 8-K            |  | 001-16381            
|                   | 10.5  |             |  | Form of Security Agreement                                                                                              |  | Exhibit 10.4 to Registrant's Current Report
    on Form 8-K            |  | 001-16381            
|                   | 10.6  |             |  | SovCap Equity Partners, Ltd., Notes                                                                                     |  | Exhibit 10.3 to the Registrant's Report
    on Form 10K/A              |  | 0001-059016          
|                   | 10.7  |             |  | Common Stock Purchase Warrant                                                                                           |  | Exhibit 10.1 to the Registrant's Current
    Report on Form 8-K        |  | 0001-059016          
|                   | 10.8  |             |  | License Agreement Between Arrayit Diagnostics,
    Inc. and Wayne State University                                      |  | Exhibit 10.1 to the Registrant's Current
    Report on Form 8-K        |  | 0001-059016          
|                   | 10.9  |             |  | Sponsored Research Agreement Between Arrayit
    Diagnostics, Inc. and Wayne State University                           |  | Exhibit 10.1 to the Registrant's Current
    Report on Form 8-K        |  | 0001-059016          
|                   | 10.10 |             |  | Consulting Agreement dated November 1,
    2009 between the Registrant and William L. Sklar                             |  | Exhibit 10.1 to the Registrant's Current
    Report on Form 8-K        |  | 0001-059016          
|                   | 10.11 |             |  | Consulting Agreement dated January 2,
    2010 between the Registrant and Mark Schena, Inc,                             |  | Exhibit 99.1 to the Registrant's Current
    Report on Form 8-K        |  | 0001-059016          
|                   | 16.1  |             |  | Letter From Berman, Hopkins & Laham,
    CPAs And Associates, LLP                                                       |  | Exhibit 16.1 to the Registrant's Current
    Report on Form 8-K        |  | 0001-059016          
|                   | 21.1  | *           |  | Subsidiaries                                                                                                            |  | Attached hereto                                                        |  |                      
|                   | 31.1  | *           |  | Certificate of the Chief Executive Officer pursuant
    to Section 302 of the Sarbanes-Oxley Act of 2002                |  | Attached hereto                                                        |  |                      
|                   | 31.2  | *           |  | Certificate of the Chief Accounting Officer pursuant
    to Section 302 of the Sarbanes-Oxley Act of 2002               |  | Attached hereto                                                        |  |                      
|                   | 32.1  | *           |  | Certificate of the Chief Executive Officer pursuant
    to Section 906 of the Sarbanes-Oxley Act of 2002                |  | Attached hereto                                                        |  |                      



(1)
The Company made and delivered to SovCap Equity Partners, Ltd. 13 separate demand promissory notes from August 21, 2003 through
September 8, 2004. Each of these demand notes used the form attached. Only the principal amounts varied. These demand notes are
discussed in greater detail under Item 12. Certain Relationships and Related Transactions - Other Relationships and Related Transactions.

(b)
We did not file any Current Reports on Form 8-K during the period covered by this Annual Report.

*
Filed herein.

47







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.



|Date:  April
    17, 2013 | Arrayit Corporation                    
|------------------------- | ---------------------------------------
|                          | By: /s/ Rene Schena                    
|                          | Rene Schena
    Chief Executive Officer

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.



|Signature              |  | Title                                                                    |  | Date              
|---------------------- |  | ------------------------------------------------------------------------ |  | ------------------
|/s/
    Rene Schena    |  | Chairman,
    Director, Chief Executive Officer, Chief Financial Officer |  | April
    16, 2013
|/s/
    Mark Schena    |  | Director,
    President                                                  |  | April
    16, 2013
|/s/
    Todd Martinsky |  | Director,
    Executive Vice President                                   |  | April
    16, 2013





48