AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 27, 2002

REGISTRATION NO. 333-
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

MOLECULAR DIAGNOSTICS, INC.
(Exact name of registrant as specified in its charter)

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DELAWARE 36-4296006
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
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414 NORTH ORLEANS STREET, SUITE 510
CHICAGO, ILLINOIS 60610
(312) 222-9550
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)

PETER P. GOMBRICH
CHIEF EXECUTIVE OFFICER
MOLECULAR DIAGNOSTICS, INC.
414 NORTH ORLEANS STREET, SUITE 510
CHICAGO, ILLINOIS 60610
(312) 222-9550
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)

Copy to:

ROBERT J. MINKUS, ESQ.
SCHIFF HARDIN & WAITE
6600 SEARS TOWER
CHICAGO, ILLINOIS 60606-6473
(312) 258-5500

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: from time
to time after the effective date of this Registration Statement.

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]

If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1)
of this form, check the following box. [X]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]

CALCULATION OF REGISTRATION FEE

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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED(1) PER SHARE(2) PRICE(2) REGISTRATION FEE
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Common Stock, par value $0.001 per
share............................ 5,945,000 $0.40 $2,378,000 $219
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(1) The registrant is also registering an undetermined number of shares of
common stock as may be issued pursuant to antidilution adjustments.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) of the Securities Act based on the average of the
bid and ask prices for our common stock as reported on the Over-the-Counter
Bulletin Board on September 25, 2002.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

PURSUANT TO RULE 429 OF THE SECURITIES ACT, THE PROSPECTUS INCLUDED IN THIS
REGISTRATION STATEMENT ALSO COVERS 41,297,458 SHARES OF COMMON STOCK FROM A
PREVIOUS REGISTRATION STATEMENT (FILE NO. 333-83578) AS TO WHICH A REGISTRATION
FEE OF $1,502 WAS PAID.
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THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THE SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE
REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THIS PRELIMINARY PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES
AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE
OFFER OR SALE IS NOT PERMITTED.

Subject to Completion Dated September 27, 2002

PRELIMINARY PROSPECTUS

46,766,537 Shares

MOLECULAR DIAGNOSTICS, INC.

COMMON STOCK

The selling stockholders listed in this prospectus are offering from time
to time:

- 5,493,766 shares of our common stock;

- 6,104,803 shares of our common stock that are issuable upon the
conversion of our Series B convertible preferred stock;

- 6,962,824 shares of our common stock that are issuable upon the
conversion of our Series C convertible preferred stock;

- 1,895,753 shares of our common stock that are issuable upon the
conversion of our Series D convertible preferred stock;

- 289,286 shares of our common stock that are issuable upon conversion of
stock appreciation rights;

- 8,865,700 shares of our common stock that are issuable upon conversion of
convertible promissory notes; and

- 17,154,405 shares of our common stock that are issuable upon exercise of
common stock purchase warrants.

We will not receive any of the proceeds from the sale of the common stock.
We will, however, receive the exercise price of the common stock purchase
warrants if and when they are exercised. We issued the common stock, Series B
convertible preferred stock, Series C convertible preferred stock, Series D
convertible preferred stock, stock appreciation rights, convertible promissory
notes and common stock purchase warrants to the selling stockholders in
transactions exempt from registration under the Securities Act.

The selling stockholders may offer and sell the common stock from time to
time in transactions in the over-the-counter market or in negotiated
transactions. The selling stockholders directly, or through agents or dealers
designated from time to time, may sell the common stock at fixed prices, which
may change, at prevailing market prices at the time of sale, at varying prices
determined at the time of sale or at negotiated prices.

Our common stock is traded on the Over-the-Counter Bulletin Board under the
symbol MCDG. On September 25, 2002, the last reported sale price of our common
stock on the Over-the-Counter Bulletin Board was $0.39 per share.

INVESTING IN OUR COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 1.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.

The date of this prospectus is September [ ], 2002.

TABLE OF CONTENTS

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PAGE
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About this Prospectus....................................... i
Risk Factors................................................ 1
Forward-Looking Statements.................................. 3
Molecular Diagnostics, Inc.................................. 5
Recent Developments......................................... 11
Use of Proceeds............................................. 11
Selling Stockholders........................................ 12
Plan of Distribution........................................ 27
Description of Capital Stock................................ 29
Legal Matters............................................... 43
Experts..................................................... 43
Where You Can Find More Information About Us................ 43
Documents Delivered with this Prospectus.................... 44
Commission Position on Indemnification for Securities Act
Liability................................................. 44
</Table>

In this prospectus, "we," "us," "our," and "Molecular Diagnostics" refer to
Molecular Diagnostics, Inc, its subsidiaries and predecessors.
---------------------

You should rely only on information contained in or incorporated by
reference in this prospectus. Neither we nor the selling stockholders have
authorized anyone to provide you with different information. The selling
stockholders are not offering these securities in any state where the offer is
not permitted. You should not assume that the information provided by this
prospectus is accurate as of any date other than the date on the front of this
prospectus.

ABOUT THIS PROSPECTUS

This prospectus is part of two registration statements that we filed with
the Securities and Exchange Commission to register 46,766,537 shares of our
common stock which the selling stockholders named in this prospectus may sell
from time to time. Accordingly you should refer to these registration statements
and their exhibits for further information about us and our common stock.
Statements contained in this prospectus concerning documents we filed with the
SEC are not intended to be comprehensive, and in each instance we refer you to
the copy of the actual document filed as an exhibit to the registration
statements or otherwise filed with the SEC. You should read this prospectus
together with the additional information described under the heading "Where You
Can Find More Information About Us."

RISK FACTORS

You should carefully consider the risks described below before making an
investment decision. The risks described below are not the only ones we are
facing. Additional risks not presently known to us or that we currently deem
immaterial may also impair our business operations.

Our business, financial condition or results of operations could be
materially adversely affected by any of these risks. The trading price of our
common stock could decline due to any of these risks, and you may lose all or
part of your investment.

THERE IS A LIMITED MARKET FOR PENNY STOCKS SUCH AS OUR COMMON STOCK.

Our common stock is considered a "penny stock" because, among other things,
its price is below $5 per share, it trades on the Over-the-Counter Bulletin
Board and we have net tangible assets of less than $2,000,000. As a result,
there may be less coverage by security analysts, the trading price may be lower,
and it may be more difficult for our stockholders to dispose of, or to obtain
accurate quotations as to the market value of, their common stock. Being a penny
stock could limit the liquidity of our common stock.

THE HISTORICALLY VOLATILE MARKET PRICE OF OUR COMMON STOCK MAY AFFECT THE VALUE
OF OUR STOCKHOLDERS' INVESTMENT AND OUR ABILITY TO RAISE ADDITIONAL CAPITAL.

The market price of our common stock, like that of many other medical
products and biotechnology companies, has in the past been highly volatile. This
volatility is likely to continue for the foreseeable future. Factors affecting
the volatility of our common stock include:

- general economic and other external market factors;

- announcements of mergers, acquisitions, licenses and strategic
agreements;

- announcements of private or public sales of securities;

- announcements of new products or technology by us or our competitors;

- ability to finance our operations;

- fluctuations in operating results; and

- announcements of the Food and Drug Administration ("FDA") relating to
products.

OUR COMMON STOCK IS UNLIKELY TO PRODUCE DIVIDEND INCOME FOR THE FORESEEABLE
FUTURE.

We have never paid a cash dividend on our common stock and we do not
anticipate paying cash dividends for the foreseeable future. We intend to
reinvest any funds that might otherwise be available for the payment of
dividends in the further development of our business.

OUR COMMON STOCK IS SUBJECT TO DILUTION, AND AN INVESTOR'S OWNERSHIP INTEREST
AND RELATED VALUE MAY DECLINE.

We are authorized to issue up to 10,000,000 shares of preferred stock. We
have approximately 118,093 shares of Series A convertible preferred stock
outstanding which convert into 51,580 shares of our common stock and 1,324,856
shares of Series B convertible preferred stock outstanding which convert into
6,104,803 shares of our common stock. We also have 1,285,499 shares of Series C
convertible preferred stock outstanding which convert into 6,962,824 shares of
our common stock, 175,000 shares of Series D convertible preferred stock
outstanding which convert into 1,895,753 shares of our common stock, and
434,387.52 shares of Series E convertible preferred stock outstanding, which
will be convertible into 12,701,670 shares of our common stock on December 1,
2002. Our Certificate of Incorporation gives our Board of Directors authority to
issue the remaining undesignated shares of preferred stock with such voting
rights, designations, rights, preferences and limitations as they may determine.

We have outstanding warrants to purchase 17,154,405 shares of our common
stock, outstanding options to purchase approximately 3,429,330 shares of our
common stock, 450,000 stock appreciation rights which are convertible into
289,286 shares of common stock, and $3,659,439 in principal amount of
convertible promissory notes outstanding which are convertible into 8,865,700
shares of common stock.

Exercise or conversion by the holders of these securities would result in
substantial dilution to our shareholders.

WE HAVE A LIMITED OPERATING HISTORY AND THERE ARE DOUBTS AS TO OUR BEING A GOING
CONCERN.

We have a limited operating history. Our revenues, since our inception in
March 1998, have been derived nearly entirely from sales by Samba Technologies,
SARL, our wholly-owned subsidiary. We have not introduced or sold any of our
InPath System products to date.

We will continue to devote substantial resources to product development. We
anticipate that we will continue to incur significant losses unless and until
some or all of our products have been successfully introduced, if ever, into the
market place.

We have incurred substantial losses and have limited financial resources.
Consequently, our independent accountants have noted that these conditions raise
substantial doubt as to our ability to continue as a going concern. Our
financial statements do not include any adjustments relating to the
recoverability and classification of asset carrying amounts or the amount and
classification of liabilities that may result from the outcome of this
uncertainty. The going concern explanatory paragraph may make additional
financing more difficult or costly.

WE MAY NOT BE ABLE TO MEET OUR SHORT-TERM CAPITAL REQUIREMENTS.

We believe that our existing capital resources are not sufficient to meet
the short-term requirements of our company. These short-term requirements
include a significant amount of liabilities and promissory notes that are in
arrears. In addition, we have unpaid tax liabilities. Therefore, we need to
raise additional capital to meet these obligations and support our operations.
We do not have any current commitments for additional funds, and our management
cannot be certain that we will be able to raise such funds.

It is unlikely that we will be able to meet our short-term funding
requirements through the issuance of notes or other debt instruments. We
anticipate that these short-term funding needs including the payment on
defaulted promissory notes will require the sale or issuance of additional
shares of common stock or instruments convertible into common stock. Such sales,
or issuances, if any, may have a dilutive effect on the value of our common
stock. We cannot be certain what level of dilution, if any, may occur or if we
will be able to complete any such sales of common stock in the future.

Our operating business plan for 2002 anticipated that we would need to
raise new equity during the early part of the year, which we did in a bridge
financing completed in June 2002.

The failure to raise sufficient additional funds would adversely affect our
ability to meet our short-term capital requirements, continue our clinical
tests, meet our product timelines and/or to continue as a going concern. We have
retained Fortis Advisors, LLC as our financial advisors to seek other sources of
new debt or equity financing, including strategic alliances, which may involve
equity investments.

WE MAY NOT BE ABLE TO MEET OUR LONG-TERM CAPITAL REQUIREMENTS.

We do not know if we will be able to sustain our long term operations
through future revenues. Whether we will need to raise additional funds to
support our long-term operations is influenced by many factors, including the
costs, timing and success of efforts to develop products and market acceptance
of our products.

OUR PRODUCTS ARE SUBJECT TO GOVERNMENT REGULATION AND MAY NOT RECEIVE NECESSARY
GOVERNMENT APPROVALS.

The sale and use of our products in the United States is regulated by the
FDA. We must meet significant FDA requirements before we receive clearance to
market our products. Included in these FDA requirements
2

is the conduct of lengthy and expensive clinical trials to prove the safety and
efficacy of the products. Until we complete such clinical trials our products
may be used only for research purposes or to provide supplemental diagnostic
information in the United States. We have received FDA approval for one of our
products, the e(2) Collector. We have started clinical trials for one other
product and expect to begin additional trials in 2003. We cannot be certain that
our product development plans will allow these additional trials to commence or
be completed according to plan or that the results of these trials, or any
future trials, when submitted to the FDA along with other information, will
result in FDA clearance to market our products in the United States.

Sales of medical devices and diagnostic tests outside the United States are
subject to foreign regulatory requirements that vary from country to country.
The time required to obtain regulatory clearance in a foreign country may be
longer or shorter than that required for FDA marketing clearance. Export sales
of certain devices that have not received FDA marketing clearance may be subject
to regulations and permits, which may restrict our ability to export the
products to foreign markets. If we are unable to obtain FDA clearance for our
products, we may need to seek foreign manufacturing agreements to be able to
produce and deliver our products to foreign markets. We cannot be certain that
we will be able to secure such foreign manufacturing agreements.

WE MAY NOT BE ABLE TO COMPETE WITH COMPANIES THAT ARE LARGER AND HAVE MORE
RESOURCES.

We compete in the medical device and diagnostics marketplace with companies
that are much larger and have greater financial resources than we do. We cannot
be certain that our products will be able to be successfully marketed in this
competitive environment.

WE MAY NOT BE ABLE TO MARKET OUR PRODUCTS.

We do not intend to maintain a direct sales force to market our products.
Therefore, in order to successfully market our products, we must be able to
negotiate profitable sales and marketing agreements with organizations that have
direct sales forces calling on domestic and foreign markets that may use the
products. If we are not able to successfully negotiate such agreements, we may
be forced to market our products through our own sales force. We cannot be
certain that we will be successful in developing and training such a sales
force, should one be required, or that we will have the financial resources to
carry out such development and training.

WE MAY NOT BE ABLE TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY.

We hold a variety of patents and trademarks and have applied for a
significant number of additional patents and trademarks with the United States
Patent and Trademark Office and several foreign patent authorities. We intend to
file additional patent and trademark applications as dictated by our research
and development projects and business interests. We cannot be certain that any
of the currently pending patent or trademark applications, or any of those which
may be filed in the future, will be granted.

We protect much of our core technology as trade secrets because our
management believes that patent protection would not be possible or would be
less effective than maintaining secrecy. We cannot be certain that we will be
able to maintain secrecy or that a third party will not be able to develop
technology independently.

The cost of litigation to uphold the validity of a patent or patent
application, prevent infringement or protect trade secrets could be substantial,
even if we are successful. Furthermore, we cannot be certain that others will
not develop similar technology independently or design around the patent aspects
of our products.

FORWARD-LOOKING STATEMENTS

This prospectus contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. These statements are
subject to risks and uncertainties and are based on the beliefs and assumptions
of our management, which are, in turn, based on information currently available
to

our management. When we use words such as "believes," "expects," "anticipates,"
"intends," "plans," "estimates," "should," "likely" or similar expressions, we
are making forward-looking statements.

Forward-looking statements involve risks, uncertainties and assumptions.
Our future results and stockholder values may differ materially from those
expressed in the forward-looking statements. Many of the factors that will
determine these results and values are beyond our ability to control or predict.
You are cautioned not to put undue reliance on any forward-looking statements.

For a discussion of some of the factors that may cause actual results to
differ materially from those suggested by the forward-looking statements, please
read carefully the information under "Risk Factors" beginning on page 1. In
addition to the Risk Factors and other important factors discussed elsewhere in
this prospectus, and in our Annual Report on Form 10-K, as amended, which
accompanies this document, you should understand that other risks and
uncertainties and our public announcements and SEC filings could affect our
future results and could cause results to differ materially from those suggested
by the forward-looking statements.

Except for special circumstances in which a duty to update arises when
prior disclosure becomes materially misleading in light of subsequent events, we
do not intend to update any of these forward-looking statements to reflect
events or circumstances after the date of this prospectus or to reflect the
occurrence of unanticipated events.

MOLECULAR DIAGNOSTICS, INC.

GENERAL

We were incorporated in Delaware in December 1998 as the successor to Bell
National Corporation ("Bell National"), which was incorporated in California in
1958. In December 1998, Bell National, which was then a shell corporation
without any business activity, acquired InPath, LLC, ("InPath") a development
stage company engaged in the design and development of products used in
screening for cervical and other types of cancer. For accounting purposes, the
acquisition was treated as if InPath had acquired Bell National. However, Bell
National continued as the legal entity and the registrant for SEC filing
purposes. Bell National merged into Ampersand Medical Corporation, its
wholly-owned subsidiary, in May 1999 in order to change the state of
incorporation of the company to Delaware. In January 1999, we purchased all of
the assets of Samba Technologies, SARL, ("Samba") based in France, from Unilog
Regions, S.A. In September 2001, we acquired AccuMed International, Inc.,
("AccuMed") by means of a merger of AccuMed into our wholly-owned subsidiary.
Shortly after the AccuMed merger, Ampersand Medical Corporation changed its
corporate name to Molecular Diagnostics, Inc. The name change was effected by
the merger of our wholly-owned subsidiary, Molecular Diagnostics, Inc., with and
into Ampersand Medical Corporation. In October 2001, we became a minority
shareholder in Cell Solutions, LLC, a Virginia limited liability company.

We are focused on the design, development and marketing of the InPath
System. The component products of the InPath System are intended to detect, at
the earliest possible stage, cancer and cancer-related diseases and may be used
in a laboratory, clinic, or doctor's office. We also design and manufacture the
AcCell computer aided-automated microscopy instrument and the AcCell Savant, an
instrument that includes an AcCell and software, which collects quantitative
cellular information used in support of a diagnostic process. These instruments
are sold to laboratories and medical diagnostic companies for use in the
customers' proprietary applications. The instruments, in certain instances, are
also placed in customer facilities on a fee-for-use basis. Samba designs,
develops and markets web-enabled software based systems for image analysis,
image capture, and image transmission and management for clinical and industrial
applications. Samba is also developing the software used in the InPath System.
Nearly all of our reported revenue to date has been from the sale of Samba
products and services.

The science of medical diagnostics has advanced significantly during the
past decade. Much of this advance has come as a result of new knowledge of the
human genome and related proteins, which form the foundation of cell biology and
the human body. Our goal is to utilize this research as a base to develop
screening and diagnostic testing products for cancer and cancer-related
diseases. We believe that the success of these products will improve patient
care through more accurate test performance, wider availability and more
cost-effective service delivery. We are developing an initial series of products
to address these criteria including sample collection devices, chemical and
biological tests, and analytic instruments and related software.

Our strategy is to develop products through internal development processes,
strategic partnerships, licenses and acquisitions of companies. This strategy
has required and will continue to require additional capital. As a result, we
will incur substantial operating losses until we are able to successfully market
some, or all, of our products.

PRODUCTS

The InPath System

We are currently developing and testing a family of products for use in
cancer screening and diagnosis. We call this family of products the InPath
System. The core of the InPath System is a combination of protein
antibodies -- the Cocktail-CVX -- that allows the InPath System to detect and
highlight abnormal cervical cells in a rapid and objective fashion. We intend to
use different antibody combinations to detect and diagnose different types of
cancer and other cancer-related diseases.

The initial application of the InPath System is designed to enhance the
current cervical cancer screening process performed in laboratories, commonly
referred to as the PAP test. Our ultimate goal is to perform this
5

screening test in a matter of minutes at the point of service, whether in a
laboratory, doctor's office, clinic or mobile medical vehicle. The InPath System
includes the following components:

- A unique sample collection device consisting of a small disposable
balloon, shaped to fit the cervix. The device is intended to replace the
spatula and brush currently used to collect patient cytology samples.

- A biochemical assay, fully-automated, is applied to a sample to identify
abnormal cells.

- In the laboratory version of the InPath System slide based test, this
biochemical assay is applied to sample cells released from a collection
device and deposited on a glass slide.

- In the point of service version of the InPath System, this biochemical
assay is applied directly to the cellular sample and analyzed either in
solution or while still on the collection device.

- An instrument which performs an automated analysis of a sample by means
of an optical scan that detects the presence of multiple wavelengths of
fluorescent light. This light is produced by fluorescent reporter tags,
which are attached to certain components used in the biochemical assay.

- In the laboratory version of the InPath System, the AcCell computer aided
automated microscopy instrument uses a camera to read the various
wavelengths of light from the collector.

- In the point of service version of the InPath System, the proprietary
instrument uses custom designed optical devices and lasers to capture the
various wavelengths of light.

- Custom designed software that controls the automated instruments and
processes the analysis of the captured light detected.

IN-CELL HPV TEST

In June 2000, we obtained a world-wide exclusive license from Invirion and
Bruce Patterson, M.D., its principal, for a proprietary medical technology to
detect the presence of E6 and E7 genes of the human papillomavirus ("HPV"), a
sexually transmitted disease. These viral oncogenes signify that the virus has
assimilated into the patient's cellular DNA, and presence of E6/E7 genes is much
more closely associated with a woman's risk of developing cervical cancer than
currently marketed HPV tests. We intend to use this technology as part of the
InPath System to allow physicians to manage patient care. The combination of the
two tests will give the healthcare provider a better picture of the level of any
disease present and whether a patient may be at an increased risk to develop
certain diseases in the future. Based on these results, the health care provider
may prescribe a more thorough course of treatment. We began to offer this
product for sale as an Analyte Specific Reagent ("ASR") for use by laboratories
qualified to perform high complexity tests in "home-brew" applications at the
end of 2001, received initial orders in the first quarter of 2002, and made
initial shipments during second quarter of 2002.

SAMBA SOFTWARE PRODUCTS AND SERVICES

Samba designs, develops and markets web-enabled software based systems for
image analysis, image capture, and image transmission and management in clinical
and industrial applications. Samba also designs the imaging and analysis
software used in the laboratory version of the InPath System. Samba is currently
working on control and analysis software for other instruments in the InPath
System. Nearly all of our reported revenue to date is derived from the sale of
Samba's products and services to other researchers, other instrument
manufacturers, and pharmaceutical companies.

Samba software suites, a group of programs that may be used alone or in
combination for a particular application, allow the user to capture and share
digital images and related data. Examples of applications are radiology,
pathology, and real-time coordination between a pathologist and a physician
during surgical procedures. Samba software can create a single data folder,
where patient information, physician case notes and diagnostic images from
various sources are maintained or annotated. The software can be employed in
local or wide area networks, or through an Internet browser using
security-encrypted files. All of Samba's software, developed using Visual Basic,
C/C++ and Java, can be used on a wide variety of image capture

instruments or devices and can employ static, historical, or dynamic (live)
images. Samba also provides software customization, installation, interface,
network, and Internet consulting services to the users of its products.

AUTOMATED MICROSCOPY INSTRUMENTS

AcCell

In November 2001, Ventana Medical Systems, Inc. ("Ventana") agreed to
purchase and distribute, on a non-exclusive basis, AcCell with their image
analysis software, a computer aided automated microscopy instrument, designed to
help medical specialists examine and diagnose specimens of human cells. AcCell
may be delivered with a variety of features including:

- Robotic slide-feeding systems to load and unload slides from the
microscope;

- Bar code readers to ensure proper identification of samples being
analyzed;

- Electro-mechanical scanning stages to facilitate accurate slide
screening;

- Automated cellular focusing on slides; and

- Data management software to facilitate primary or secondary review of
samples and report results into record-keeping systems.

The current AcCell instrument is a key tool of our research process,
clinical trials, and the InPath System laboratory based test. During the fourth
quarter of 2001, we initiated development of the next generation of the AcCell
instrument, AcCell 2500, utilizing strategic design and manufacturing partners.
During that same quarter, we also signed contracts with customers to deliver
both the current version and the AcCell 2500 version of the instrument. Delivery
of AcCell 2500 prototype units commenced in the second quarter of 2002. Delivery
of production units is presently scheduled to begin in the first quarter of
2003. We are continuing to sell and market the instrument to other potential
customers, OEM laboratories and into the diagnostics marketplace.

AcCell Savant

The AcCell Savant includes an AcCell base instrument as well as an
electronic imaging system and image analysis software. This instrument is
designed for use as a quantitative microscopy platform. We currently have
instruments in use in a customer's laboratory or clinical facility for research
purposes under a fee-per-use contract, which we extended through 2003. As a part
of the contract extension, we agreed to provide additional instruments to handle
the customer's laboratory or clinical facility for research purposes and
increased test volumes. The customer has also agreed to be a beta test site for
a new and updated version of the proprietary image analysis software used in the
application. Variations of this platform may also be used with image analysis
software developed by Samba.

MARKETS

According to several industry reports, there are approximately 60,000,000
PAP tests performed annually in the United States. The U.S. market for cervical
screening today amounts to approximately $1,000,000,000, based on current
average costs to perform the existing test. Our initial strategy is to market
the laboratory version of the InPath System to major laboratory organizations in
the United States. Once the InPath System has been successfully established in
the laboratory market, our strategy is to form alliances with these laboratories
and other medical products distribution companies and utilize their sales forces
to broaden sales of the InPath System to hospitals, clinics, managed care
organizations and office-based physician groups.

The cost of the PAP test outside of the United States, where approximately
100,000,000 tests are performed annually, varies widely from country to country.
Outside the United States, most healthcare services are provided by governmental
organizations. Healthcare in many of these countries is managed by governmental
agencies, often at the local level, making the precise number of tests performed
difficult to

validate. In developing countries where healthcare, especially cancer screening,
may be minimal, non-profit organizations often supplement government health
programs. We estimate the total of the non-U.S. market today at between
$500,000,000 and $600,000,000.

We intend to distribute the InPath System into both markets pursuant to our
statutory regulatory approvals. We also anticipate that because our products are
more cost-effective and designed to increase access to cervical screening, the
potential combined market could be expanded to a level in excess of
$3,000,000,000.

The AcCell is a key proprietary component of the laboratory version of the
InPath System. In addition, we are marketing the AcCell instrument platform,
including the version nearing its market introduction, to medical diagnostic
companies as a means to automate specific diagnostic testing processes. We will
attempt to expand our existing customer base and to supply the AcCell platform
to additional customers who are interested in automating their proprietary
diagnostic testing processes. We market the AcCell as the most versatile and
cost-effective automated microscopy platform currently available. We are
expanding our existing customer base for the AcCell Savant and will continue to
market this product to customers interested in image analysis and quantitative
microscopy.

Samba currently sells its products and services through direct sales and
representatives in Europe and through a distribution arrangement in Central and
South America. Prior to 1999, Samba had a distribution arrangement in North
America. Since our acquisition of Samba, we have marketed Samba products in the
United States. Samba is adding to its distribution agreements to cover specific
countries or market segments in Europe, Asia, the Middle East and North Africa.
During 2000, we added a full time marketing person to introduce the Samba
products to a broad range of potential customers and distribution partners in
the United States. This potential market includes large laboratories, integrated
healthcare delivery networks, web-based medical information providers, and
laboratory and hospital information system vendors. We have licensed Samba
software to a large medical diagnostics company in the United States and have
several pilot-study installations currently in place or planned for 2002 and
2003 in the United States.

GOVERNMENT REGULATION, CLINICAL STUDIES AND REGULATORY STRATEGY

The development, manufacture, sale, and distribution of some of our
products is regulated by the FDA and comparable authorities in certain states
and foreign countries. In the United States, the Food, Drug and Cosmetic Act
(the "FD&C Act") and related regulations apply to some of our products. These
products cannot be shipped in interstate commerce without prior authorization
from the FDA.

Medical devices may be authorized by the FDA for marketing in the United
States either pursuant to a pre-market notification under Section 510(k) of the
FD&C Act, commonly referred to as a 510(k) notification, or a pre-market
approval application (a "PMA"). The process of obtaining FDA marketing clearance
and approval from other applicable regulatory authorities is costly and there
can be no guarantee that the process will be successful. The 510(k)
notifications and PMA applications typically require preliminary internal
studies, field studies, and/or clinical trials, in addition to submission of
other design documentation. We manage the regulatory process through the use of
consultants, Clinical Research Organizations, ("CROs") and members of our
Medical Advisory Board.

A 510(k) notification, among other things, requires an applicant to show
that its products are "substantially equivalent" in terms of safety and
effectiveness to an existing FDA-cleared predicate product. An applicant may
only market a product submitted through a 510(k) notification after the FDA has
issued a written notification determining the product has been found to be
substantially equivalent.

To obtain PMA approval for a device, an applicant must demonstrate,
independent of other similar devices, that the device in question is safe and
effective for its intended uses. A PMA must be supported by extensive data,
including pre-clinical and clinical trial data, as well as extensive literature
and design documentation to prove the safety and effectiveness of the device.
The PMA process is substantially longer than a 510(k) notification process.
During the review period, the FDA may conduct extensive reviews of our clinical
trial center documentation and our manufacturing facilities and processes or
those of our strategic

partners. In addition, the FDA may request additional information and
clarifications and convene a physician advisory panel to assist in its
determination.

The FD&C Act generally bars advertising, promoting, or other marketing of
medical devices that the FDA has not approved or cleared. Moreover, FDA
enforcement policy strictly prohibits the promotion of known or approved medical
devices for non-approved or "off-label" uses. In addition, the FDA may withdraw
product clearances or approvals for failure to comply with regulatory standards.

Our current and prospective foreign operations are also subject to
government regulation, which varies from country to country. Many countries,
directly or indirectly through reimbursement limitations, control the price of
most healthcare products. Developing countries put restrictions on the
importation of finished products, which may delay such importation. European
Directives establish the requirements for medical devices in the European Union.
The specific directives are the Medical Device Directive (MDD 93/42/EEC) and the
In-Vitro Diagnostics Device Directive (IVDD/98/79/EEC). The International
Organization for Standardization ("ISO") establishes standards for compliance
with these directives, particularly for quality system requirements.

The FDA has adopted regulations governing the design and manufacture of
medical devices that are, for the most part, harmonized with the ISO's quality
system standards for medical devices. The FDA's adoption of the ISO's approach
to regulation and other changes to the manner in which the FDA regulates medical
devices will increase the cost of compliance with those regulations.

We will be subject to certain registration, record-keeping and medical
device reporting requirements of the FDA. Our manufacturing facilities, or those
of our strategic partners, will be obligated to follow the FDA's Quality System
Regulation and be subject to periodic FDA inspections. Any failure to comply
with the FDA's Quality System Regulation or any other FDA or other government
regulations would have a material adverse effect on our future operations.

The InPath System will need to be cleared for marketing by the FDA, as
described above, prior to its sale and use in the U.S. clinical market. We
cannot be sure whether or when the FDA will clear the InPath System.
Internationally, the InPath System may be subject to various government
regulations, which may delay the introduction of new products and services and
adversely affect our business.

The InPath System may be subject to regulation in the United States under
the Clinical Laboratory Improvement Act ("CLIA"). CLIA establishes quality
standards for laboratories conducting testing to ensure the accuracy,
reliability and timeliness of patient test results, regardless of where the test
is performed. The requirements for laboratories vary based on the complexity of
the tests performed. Thus, the more complicated the test, the more stringent the
requirement. Tests are categorized as high complexity, moderate complexity
(including the category of provider performed microscopy) and waived tests. CLIA
specifies quality standards for laboratory proficiency testing, patient test
management, quality control, personnel qualifications and quality assurance, as
applicable.

The FDA is responsible for categorization of commercially marketed
laboratory tests. The Centers for Disease Control ("CDC") is responsible for
categorization of laboratory procedures such as provider-performed microscopy.
For commercially-marketed tests, the FDA now determines the appropriate
complexity category as it reviews pre-market submissions for clinical laboratory
devices. Manufacturers are asked to include an extra copy of the package insert
identified as "FOR CLIA CLASSIFICATION" in the submission for product
commercialization (i.e., 510(k) or PMA). Manufacturers are notified of the
assigned complexity through routine FDA correspondence (that is, as an enclosure
with a clearance or approval letter or as a separate letter in response to other
submissions). Categorization is effective as of the date of the written
notification to the manufacturer.

We are developing the InPath System to be user-friendly, require minimal
operator training, and have safety and operating checks built into the
functionality of the instruments. We believe that our efforts will result in the
FDA and/or the CDC assigning the lowest possible classification of the InPath
System. If, however, these products are classified into a higher category, it
may have a significant impact on our ability to market the product in the United
States.
9

We continue to conduct clinical studies and trials on our InPath System
during its development. These studies and trials vary in terms of number of
patient samples, individual product components, specific processes and
conditions, purpose, and other factors which may affect the results.

We are using the data from our completed and ongoing clinical trials and
studies to offer our InPath System for sale as an ASR in countries such as the
United States, Mexico, Peru, Chile, India, China and other developing nations.
We are not permitted to market non-ASR products in certain countries, including
the United States, with clinical or diagnostic claims until we have received
clearance from the appropriate regulatory agency. ASR tests make no medical
claims but may be used by laboratories, who are qualified to perform high
complexity tests, and physicians as components of "home-brew" procedures. We
received our first U.S. ASR orders in early 2002.

We are pursuing regulatory approval of the InPath System products through a
series of submissions and in some cases, using data from a single clinical
study. This tiered approach is designed to accelerate revenue opportunities for
the InPath System in the short term and to drive adoption of our innovative
products over the long term, while minimizing the expense and time involved in
undertaking the appropriate study.

The first stage of the overall strategy involved the submission of our e(2)
Collector for approval as a substantially equivalent device to the brush and
spatula method of gathering samples used in the current PAP tests. We filed the
510(k) notification in late September 2001 and received FDA approval in the
second quarter of 2002.

The second stage of our overall strategy involves a continuing study of the
InPath System and Cocktail-CVX. This submission will cover the InPath System as
a means to eliminate true negative samples from further testing. We presently
anticipate completion of this portion of the study and submission of the data to
the FDA during the fourth quarter of 2002. We will also submit the data to
foreign regulatory authorities that have jurisdiction over these products.
Subsequently, we will be collecting and submitting data for the InPath System
point of service test.

We anticipate that we will begin launching our clinical trials of the
InPath In-Cell HPV test during the first quarter of 2003 and expect completion
of the trial and submission of the data to the FDA during the second quarter of
2003, depending on our ability to raise necessary capital.

If the submissions for the various InPath System products are cleared by
the FDA for sale in the U.S. market or approved for sale by foreign regulatory
agencies, we intend to sell the cleared products in the respective clinical
markets.

INPATH SYSTEM PROJECTED PRODUCT INTRODUCTION TIMELINES

<Table>
<Caption>
PRODUCT PROCESS TIMELINE
- ------- ------- --------

e2 Collector Clinical trials Completed
Regulatory submission & review Filed September 28, 2001
Regulatory clearance Approved May 31, 2002
US sales 3rd Quarter 2002
International sales 1st Quarter 2003
Cocktail-CVX Clinical trials Current through 4th Quarter 2002
Regulatory submission & review 4th Quarter 2002
Regulatory clearance projected 4th Quarter 2003
US sales (ASR) 1st Quarter 2003
US sales 1st Quarter 2004
International sales (CE Mark) 1st Quarter 2003
In-Cell HPV test Regulatory submission & review 2nd Quarter 2003
Regulatory clearance anticipated 2nd Quarter 2004
US sales (ASR) 2nd Quarter 2003
International sales (CE Mark) 2nd Quarter 2003
International sales 4th Quarter 2001
</Table>

We currently distribute AcCell, AcCell Savant and Samba software products
into commercial markets that do not require regulatory clearance. In order to
distribute these products for use in certain clinical
10

applications, however, we will be required to conduct clinical trials and to
make submissions to applicable regulatory agencies for clearance. We do not have
any current plans to make any submissions to the FDA or other foreign regulatory
agencies covering these products. In the future, some of our customers may
include these products in submissions to the FDA or other foreign regulatory
agencies covering their use in a customer's proprietary diagnostic or clinical
process.

RECENT DEVELOPMENTS

In June 2002, we completed a bridge financing in which we issued 105 units,
each consisting of a $25,000 convertible promissory note at 7% due July 30, 2002
and a common stock purchase warrant entitling the holder to the right to
purchase 25,000 shares of our common stock for $0.65 per share. Each unit sold
for $25,000 and we received $2,625,000. In August 2002, the bridge notes were
amended to extend the maturity date to December 31, 2002 and to eliminate the
$0.50 per share floor conversion price. The bridge warrants were also amended to
reduce the exercise price to $0.25 per share. Bathgate McColley Capital Group,
LLC served as our placement agent.

In July 2002, we entered into a contract for investment banking services
with Fortis Advisors, LLC. We issued 60,182 shares of common stock to Fortis
Advisors as an inducement to reach this agreement.

On August 30, 2002, we issued a promissory note to Round Valley Capital,
LLC in exchange for $650,000 cash. The note bears interest at the annual rate of
36%, and is due on June 1, 2003. The promissory note is senior to all other
borrowings and trade payables. The transaction included fees of $131,118 that
were netted out of the note proceeds. Additionally, as an inducement to enter
into the agreement, we issued to Round Valley Capital 711,364 shares of common
stock and a warrant to purchase 681,818 shares of common stock for $0.20 per
share. The warrant was exercisable when the loan was funded, and expires
September 2003. In lieu of additional cash fees requested by Round Valley
Capital, the exercise price of the warrant is discounted from the current market
price of our stock. We also issued 5,750,000 shares of common stock to Round
Valley Capital to be held as collateral for the transaction.

USE OF PROCEEDS

All of the shares of common stock offered pursuant to this prospectus are
being offered by the stockholders listed under Selling Stockholders. We will not
receive any of the proceeds from the sales of the shares of common stock. We
will receive the exercise price of the common stock purchase warrants if and
when they are exercised, up to an aggregate of approximately $17,777,268 if all
common stock purchase warrants are exercised. We intend to use any proceeds from
the exercise of the common stock purchase warrants for working capital and
general corporate purposes.

SELLING STOCKHOLDERS

The following table sets forth with respect to the selling stockholders (i)
the number and percentage of shares of common stock beneficially owned as of
August 31, 2002, (ii) the maximum number of shares of common stock which may be
sold pursuant to this prospectus and (iii) the number and percentage of shares
of common stock which will be beneficially owned after sales pursuant to this
prospectus, assuming the sale of all shares of common stock set forth in (ii)
above:

<Table>
<Caption>
NUMBER OF PERCENT OF
SHARES OF SHARES OF
NUMBER OF PERCENT OF COMMON COMMON
SHARES OF SHARES OF NUMBER OF STOCK STOCK
COMMON COMMON SHARES OF BENEFICIALLY BENEFICIALLY
STOCK STOCK COMMON OWNED OWNED
BENEFICIALLY BENEFICIALLY STOCK AFTER THE AFTER THE
NAME OF SELLING STOCKHOLDER OWNED OWNED OFFERED OFFERING+ OFFERING+
- --------------------------- ------------ ------------ ---------- ------------ ------------

Peter P. Gombrich, Chairman of the Board, Chief
Executive Officer, and director(1).............. 870,666 3.4% 674,000 196,666 *
414 N. Orleans #510
Chicago, IL 60610
John Abeles, M.D., director(3).................... 388,199 1.5% 0 219,000 *
414 N. Orleans #510
Chicago, IL 60610
Alexander M. Milley, director(2).................. 3,916,167 13.3% 0 219,000 *
414 N. Orleans #510
Chicago, IL 60610
Cadmus Corporation(4)............................. 822,167 3.1% 539,286 282,881 1.1%
3600 Rio Vista Avenue
Orlando, FL 32805
Azumith Corporation(60)........................... 2,875,000 10.1% 2,875,000 0 *
3600 Rio Vista Avenue
Orlando, FL 32805
Denis O'Donnell, director(7)...................... 1,003,901 3.8% 784,901 219,000 *
c/o Molecular Diagnostics
414 North Orleans, Suite 510
Chicago, IL 60610
Robert C. Shaw, director(6)....................... 719,417 2.8% 500,417 219,000 *
414 N. Orleans #510
Chicago, IL 60610
William J. Ritger(8).............................. 4,274,063 16.4% 270,823 4,003,240 15.4%
623 Ocean Avenue
Sea Girt, NJ 08750
Leonard R. Prange(5).............................. 1,091,017 4.2% 108,329 982,688 3.8%
641 W. Willow #142
Chicago, IL 60614
Eric Gombrich(9).................................. 448,406 1.7% 25,000 423,406 1.6%
c/o 414 N. Orleans, #510
Chicago, IL 60610
Robert M. Adrian(11).............................. 75,758 * 75,758 0 *
6211 Highland Drive
Chevy Chase, MD 20815
Airlie Group LP(10)............................... 453,176 1.8% 453,176 0 *
201 Main Street, #3300
Fort Worth, TX 76102
Ameripath, Inc.(64)............................... 112,481 * 112,481 0 *
8100 Chancellor Dr, Suite 200
Orlando, FL 32809-7645
Bathgate McColley Capital Group, LLC(13).......... 825,250 3.1% 825,250 0 *
5350 South Roslyn St., #380
Englewood, CO 80111
Margaret M. Bathgate(65).......................... 822 * 822 0 *
6376 E. Tufts Ave.
Englewood, CO 80111
Bentell AS(12).................................... 50,000 * 50,000 0 *
Askervelen 61
N-1373 Asker
NORWAY
</Table>

Frank Blatz(12)................................... 25,000 * 25,000 0 *
970 Nepawin Lane
Scotch Plains, NJ 07076
Kevin G. Boyle(47)................................ 7,781 * 7,781 0 *
127 Hawksbill Way
Jupiter, FL 33458
Kevin G. Boyle Securities, Inc.(27)............... 50,000 * 50,000 0 *
365 Stewart Ave., Apt B10
Garden City, NY 11530
Brady Retirement Fund, L.P.(48)................... 228,939 * 228,939 0 *
44 Montgomery St., #2110
San Francisco, CA 94104
John H. Burlingame(12)............................ 15,000 * 15,000 0 *
P.O. Box 948
South Orleans, MA 02662
Christopher Patrick Casaburo(53).................. 106,699 * 106,699 0 *
405 Mayfair Lane
Louisville, KY 40207
David Cathcart(12)................................ 15,000 * 15,000 0 *
207 Fox Horn Lane
Charlottesville, VA 22902
Cat Invest I, AS(15).............................. 238,239 * 238,239 0 *
v/Adv. Oystein Eskeland
Postboks 1484 Vika
0116 Oslo
NORWAY
Cell Solutions, L.L.C.(41)........................ 172,120 * 172,120 0 *
95 Big Tree Street
Livonia, NY 14487
Michael Chiero(31)................................ 10,000 * 10,000 0 *
715 Walnut Dr.
Darien, IL 60561
Commonwealth Associates(16)....................... 1,023,302 3.8% 1,023,302 0 *
830 Third Ave., 4th Floor
New York, NY 10022
Neil Costa(14).................................... 89,371 * 89,371 0 *
714 Broadway
New York, NY 10003
J Thomas Cox(43).................................. 50,000 * 50,000 0 *
1063 Sandpiper Lane
Santa Barbara, CA 93110
Thomas F. Curnin(12).............................. 35,000 * 35,000 0 *
40 Ocean Avenue
Larchmont, NY 10538
Bruce H. Davis, M.D.(53).......................... 106,699 * 106,699 0 *
Box 6357
Scarborough, ME 04070-6357
Bruce De Schryver(12)............................. 20,000 * 20,000 0 *
10 Woodbury Way
Fairport, NY 14450
Richard D. Doermer(17)............................ 15,000 * 15,000 0 *
415 N. LaSalle, #500
Chicago, IL 60610
Richard Domanik(69)............................... 51,483 * 51,483 0 *
30908 Leslie Court
Libertyville, IL 60048
Fred and Susan Duboc(65).......................... 53,630 * 53,630 0 *
5500 South Pemberton
Littleton, CO 80121
Susan M. Duncan(53)............................... 106,699 * 106,699 0 *
2651 S. Wadsworth Circle
Lakewood, CO 80227
</Table>

Susan M. Duncan Irrev Gift Trust(53).............. 106,699 * 106,699 0 *
2651 S. Wadsworth Circle
Lakewood, CO 80227
James E. Duncan(53)............................... 106,699 * 106,699 0 *
2651 S. Wadsworth Circle
Lakewood, CO 80227
Gary C. Evans(18)................................. 404,541 1.6% 404,541 0 *
13215 Glad Acres
Farmers Branch, TX 75234
David A. Fishman(43).............................. 50,000 * 50,000 0 *
333 Superior Street, #420
Chicago, IL 60611
Bruce J. Fogel(15)................................ 115,370 * 115,370 0 *
359 Eagle Drive
Jupiter, FL 33477
Fortis Advisors, LLC(70).......................... 60,182 * 60,182 0 *
6909 E. Main Street
Suite 101
Scottsdale, AZ 85251
Four Corners Investment, Corp.(49)................ 623,766 2.4% 623,766 0 *
c/o Mr. Laurence Gibson, President
330 S. Decatur Blvd., Suite 1000
Las Vegas, NV 89107
FISERV C/FBO Greg Fulton SDIRA(53)................ 106,699 * 106,699 0 *
c/o Mr. Greg Fulton
5520 S. Newport St.
Greenwood Village, CO 80111
Charles B. Ganz(27)............................... 50,000 * 50,000 0 *
c/o Mellon Private Asset Management
1801 N. Military Trail
Boca Raton, FL 33431
Geary Partners, L.P.(24).......................... 1,151,961 4.3% 1,151,961 0 *
c/o Mr. William J. Brady
44 Montgomery St., Suite 2110
San Francisco, CA 94104
Drew S. Giles & Laurette K. Giles(27)............. 7,500 * 7,500 0 *
S. Pine Hill Trail West
Tequerta, FL 33469
George Gorodeski(66 )............................. 15,000 * 15,000 0 *
25154 Bridgeton
Beachwood, OH 44122
George I. Gorodeski & Shafrira S. Gorodeski(19)... 76,000 * 76,000 0 *
25154 Bridgeton
Beachwood, OH 44122
Robert Habig(43).................................. 25,000 * 25,000 0 *
c/o 414 N. Orleans #510
Chicago, IL 60610
John P. Harkrader(12)............................. 15,000 * 15,000 0 *
P.O. Box 465
Farmingdale, NJ 07727
Ben W. Hasten and Susan L. Hasten, JTWROS(53)..... 106,699 * 106,699 0 *
366 Elm Street
Denver, CO 80220
Arthur F. Hebard(12).............................. 30,000 * 30,000 0 *
6408 N W 45th Place
Gainesville, FL 32653
Hess Investments(12).............................. 33,333 * 33,333 0 *
4311 Down Point Ln
Windermere, FL 34786
</Table>

Holleb and Coff(21)............................... 250,000 * 250,000 0 *
55 East Monroe
Suite 4100
Chicago, IL 60603
Richard T. Huebner(65)............................ 411 * 411 0 *
Bathgate Capital Partners, LLC
5350 S Roslyn St., Suite 400
Greenwood Village, CO 80111
Fred R. Huettig(12)............................... 20,000 * 20,000 0 *
28 Corey Lane
Mendham, NJ 07945
Shirley Hughes(59)................................ 11,499 * 10,000 1,499 *
506 2nd Street
Griswold, IA 51535
John P. Ike(12)................................... 35,000 * 35,000 0 *
Box 31
Pottersville, NJ 07979
John C. Iverson(50)............................... 657,799 2.5% 640,196 0 *
476 Mariner Dr.
Jupiter, FL 33477
John C. Iverson Family Limited Partnership(68).... 17,603 * 17,603 0 *
476 Mariner Dr.
Jupiter, FL 33477
Susan Keesee(43).................................. 25,000 * 25,000 0 *
c/o 414 N. Orleans #510
Chicago, IL 60610
David Kenkel & Stefanie Kenkel(14)................ 54,164 * 54,164 0 *
JTTEN
1845 4 Wheel Drive
Whitefish, MT 59937
Brian S Kinsman(58)............................... 29,641 * 29,641 0 *
4987 Bradshaw Ct
San Diego, CA 92130
Theodore L. Koenig(31)............................ 30,000 * 30,000 0 *
One Northbrook Place
5 Revere Drive, Suite 206
Northbrook, IL 60062
Thad T. Konopnicki & Audrey E. Vaughn(11)......... 45,000 * 45,000 0 *
3512 N. Dinwiddle
Arlington, VA 22207
Jonathan B. Kruljac & Teri E. Kruljac
JTWROS(23)...................................... 806,202 3.0% 476,202 0 *
8873 E. Bayou Gulch Rd.
Parker, CO 80134
John A. Lamb -- IRA Rollover(25).................. 45,461 * 45,461 0 *
CIBC World Markets Corp., Cust
206 Shady Hills Court
Simi Valley, CA 93065
William A. Lamb -- IRA(26)........................ 90,922 * 90,922 0 *
7010 North 13th Place
Phoenix, AZ 85020
Lucas Capital Management(12)...................... 20,000 * 20,000 0 *
328 Newman Springs Rd
Red Bank, NJ 07701
George B. Lucas, Jr. as Trustee of George B. Lucas
Trust dated 8/31/88(14)......................... 54,164 * 54,164 0 *
249 Hilldale Rd.
Villanova, PA 19085
George B. Lucas, Jr. as Trustee of Muriel B.
Crowell Rev. Trust dated 4/26/91(14)............ 108,329 * 108,329 0 *
1004 Vicars Woods
Apt. S-315
Ponte Vedra Beach, FL 32082
</Table>

George B. Lucas, Jr. as Trustee of Robert L.
Crowell Rev. Trust dated 4/26/91(14)............ 135,410 * 135,410 0 *
1004 Vicars Woods
Apt. S-315
Ponte Vedra Beach, FL 32082
Wayne Maggio & Maria Maggio JTWROS(11)............ 75,758 * 75,758 0 *
JT TEN
22 A Grove Street
Winchester, MA 01890
James J. Maguire(12).............................. 20,000 * 20,000 0 *
P.O. Box 180
Pottersville, NJ 07979
Robert L. Malatesta(12)........................... 15,000 * 15,000 0 *
52 Mitchel Place
Little Silver, NJ 07739
Frank Mancuso(43)................................. 5,000 * 5,000 0 *
111 W. Maple Street, Apt 2410
Chicago, Il 60610
Thomas J. McCabe(12).............................. 16,667 * 16,667 0 *
P.O. Box 3480
Warrenton, VA 20188
Thomas J. McCabe(47).............................. 91,235 * 91,235 0 *
1 Whitehall St., Apt 1825
New York, NY 10004-2131
Eugene McColley(65)............................... 32,260 * 32,260 0 *
5350 South Reslyn Street, Suite 380
Englewood, CO 80111
Robert McCullough, Jr.(57)........................ 271,125 1.0% 271,125 0 *
P.O. Box 151
Kentfield, CA 94914
Silas McKinley, Jr.(58)........................... 200,000 * 200,000 0 *
P.O. Box 50264
Clayton, MO 63105
Monarch Consulting(27)............................ 330,000 1.3% 330,000 0 *
8873 E. Bayou Gulch Road
Parker, CO 80134
Monsun AS(29)..................................... 1,610,709 5.9% 1,610,709 0 *
Torvejen 12 C
1383 Aske
NORWAY
W. Douglas Moreland(28)........................... 630,057 2.4% 630,057 0 *
1655 E. Layton Drive
Englewood, CO 80110
David R. Morgan(14)............................... 92,080 * 92,080 0 *
P.O. Box 470
Meadow Vista, CA 95722
Steven J. Morris(15).............................. 115,370 * 115,370 0 *
66 Navesink Ave.
Rumson, NJ 07760
Osprey Partners(30)............................... 53,331 * 53,331 0 *
c/o Michael A. Mulshine
868 Riverview Drive
Brielle, NJ 08730
Gerald Mustapick(31).............................. 50,000 * 50,000 0 *
14041 U.S. Highway One, Suite A
Juno Beach, FL 33408
Scott J. Mustapick(31)............................ 5,000 * 5,000 0 *
Robin R. Mustapick, JTWROS
14041 U.S. Highway One, Suite A
Juno Beach, FL 33408
</Table>

Nasha, A California Limited Partnership(53)....... 106,699 * 106,699 0 *
c/o Mr. Peter M. Radin, Jr.
601 California St., Suite 1300
San Francisco, CA 94108
Christopher Neary(12)............................. 33,333 * 33,333 0 *
11768 Willard Avenue
Tustin, CA 92782
NeoMed Innovations III LP(32)..................... 6,426,702 20.0% 6,426,702 0 *
c/o Mr. Eric Amble
8 Queensway House
Queen Street
St Helier
Hersey JE2 4WD
Channel Islands
Newell Investment Company Profit Plan(55)......... 320,098 1.2% 320,098 0 *
c/o Minton Newell
100 Baywood Ave.
Hillsborough, CA 94010
Northlea Partners, Ltd.(33)....................... 169,199 * 169,199 0 *
c/o Dr. John Abeles
2365 NW 41st St
Boca Raton, FL 33431
OFF Sands Point, LTD(62).......................... 192,059 * 192,059 0 *
c/o Mr. John P. Nichols
280 Park Avenue
39th Floor
New York, NY 10017
Barry Ollman(14).................................. 27,082 * 27,082 0 *
9555 Poundstone Place
Greenwood Village, CO 80111
Paul E. Orrson(52)................................ 853,594 3.2% 853,594 0 *
7920 Sherwood Ave.
Towson, MD 21204
The Paisley Fund, L.P.(14)........................ 649,973 2.5% 649,973 0 *
388 Market Street
Suite 1700
San Francisco, CA 94111
Hedge Fund -- Paisley Pacific, LP(51)............. 2,133,987 7.7% 2,133,987 0 *
c/o Mr. John Wallace
RS Investment
388 Market Street, Suite 1700
San Francisco, CA 94111
Invirion(34)...................................... 300,000 1.2% 300,000 0 *
c/o Bruce K. Patterson
2300 Childrens Plaza, No 51
Chicago, IL 60614
Fred H. Pearson(67)............................... 35,000 * 35,000 0 *
140 S Dearborn St., Suite 900
Chicago, IL 60603
Fred H. Pearson(35)............................... 186,616 * 186,616 0 *
TR UA 07-01-97
Fred H. Pearson S Trust
140 S Dearborn St., Suite 900
Chicago, IL 60603
Robert John Peterson Trust(58).................... 24,383 * 24,383 0 *
32 Aquinas Dr
San Rafael, CA 94903
B. Michael Pisani(36)............................. 407,484 1.6% 407,484 0 *
44 Lake Road
Short Hills, NJ 07078
</Table>

Jeffery L Pratt(58)............................... 26,786 * 26,786 0 *
530 Poplar Grove
Vandalia, OH 45377
P.L. Thomas Group(37)............................. 39,834 * 39,834 0 *
300 W. Washington St.
Chicago, IL 60606
Presidio Partners, L.P.(63)....................... 1,993,491 7.2% 1,993,491 0 *
c/o Mr. William J. Brady
44 Montgomery St., Suite 2110
San Francisco, CA 94104
Robert L. Priddy(38).............................. 103,428 * 16,380 87,048 *
3435 Kingsborough
Atlanta, GA 30326
Prospektiva SA(39)................................ 388,608 1.5% 388,608 0 *
via Funicolare 2
6900 Lugano
SWITZERLAND
Jeff Purcell(11).................................. 57,315 * 57,315 0 *
5 Oakbrook Ct.
Oak Brook, IL 60521
RS Diversified Growth Fund(14).................... 3,954,000 13.3% 3,954,000 0 *
388 Market Street
Suite 1700
San Francisco, CA 94111
Peter M. Radin, Jr.(56)........................... 213,399 * 213,399 0 *
601 California St.
Suite 1300
San Francisco, CA 94108
George Resta(22).................................. 87,497 * 87,497 0 *
854 St. Edmonds Pl.
Annapolis, MD 21401
Ralph Richart(43)................................. 50,000 * 50,000 0 *
350 Shore Drive
Oakdale, NY 11769
Cal and Amanda Mae Rickel, JTWROS(53)............. 106,699 * 106,699 0 *
P.O. Box 1076
Cortez, CO 81321-1076
Bernard B. Rinella(11)............................ 250,000 * 250,000 0 *
One N. LaSalle, #3400
Chicago, IL 60610
Round Valley Capital, LLC(71)..................... 1,393,182 5.3% 1,393,182 0 *
1819 E. Southern Ave.
Suite D10
Mesa, AZ 85207
John Rutzel(12)................................... 15,000 * 15,000 0 *
14 Hathaway Drive
Princeton Junction, NJ 08550-1632
Sands Point Partners, LP(61)...................... 234,739 * 234,739 0 *
c/o Mr. Stuart Z. Feldman
280 Park Avenue, 39th Floor
New York, NY 10017
Louis Scher(12)................................... 15,000 * 15,000 0 *
9 Parkside Avenue
Asheville, NC 28804
Lee E. Schlessman(56)............................. 213,399 * 213,399 0 *
1301 Pennsylvania Street, Suite 800
Denver, CO 80203
Virginia Schmidt(12).............................. 30,000 * 30,000 0 *
55 Linden Avenue
Verona, NJ 07044
</Table>

Schwartz, Cooper, Greenberger & Krauss(31)........ 750,000 2.8% 750,000 0 *
180 N LaSalle Street, Suite 2700
Chicago, IL 60601
Andrew Schwartz(53)............................... 106,699 * 106,699 0 *
350 E. 79th Street
Apartment 26-C
New York, NY 10021
Margret Selig(12)................................. 20,000 * 20,000 0 *
Amsandberg 34
60599 Frankfurt
GERMANY
Arthur A. Sharples(12)............................ 100,000 * 100,000 0 *
P.O. Box 570
New Vernon, NJ 07976
Janis Smythe(12).................................. 15,000 * 15,000 0 *
P.O. Box 206
Hillsdale, NY 12529
Michael Song(11).................................. 50,000 * 50,000 0 *
333 E. Ontario, #608B
Chicago, IL 60611
Dennis J. Stack(15)............................... 28,842 * 28,842 0 *
256 Cardinal Lane
Jupiter, FL 33458
Georgie W. Stanley(14)............................ 89,371 * 89,371 0 *
P.O. Box 180
Pottersville, NJ 07979
Michael C. Stanley(42)............................ 318,113 1.2% 50,000 0 *
13 Robin Road
Warren, NJ 07059
Michael C. Stanley Trustee for the Georgie Stanley
II Trust(14).................................... 89,371 * 89,371 0 *
P.O. Box 180
Pottersville, NJ 07979
Michael C. Stanley Trustee for the Benjamin A.
Stanley Trust(14)............................... 89,371 * 89,371 0 *
P.O. Box 180
Pottersville, NJ 07979
Michael C. Stanley Trustee for the Michael Bredt
Stanley Trust(14)............................... 89,371 * 89,371 0 *
P.O. Box 180
Pottersville, NJ 07979
Michael Studer(15)................................ 57,630 * 57,630 0 *
1110 Cottonwoodlane, #210
Irving, TX 75038
Jeremy Taylor(12)................................. 35,000 * 35,000 0 *
P.O. Box 147
Metamora, IN 47030
James R. Tobin(12)................................ 15,000 * 15,000 0 *
50 Bridge Avenue
Bay Head, NJ 08742
Transamerica Business Credit Corp.(44)............ 26,839 * 26,839 0 *
790 E. Colorado Blvd
Pasadena, CA 91101
Trinity Capital, AS(15)........................... 132,737 * 132,737 0 *
P.O. Box 1767 Vika
0122 Oslo
NORWAY
Tucker Anthony Incorporated(40)................... 150,000 * 150,000 0 *
200 Liberty Street, 3rd Floor
New York, NY 10281
</Table>

Tuller Enterprises Inc. Money Purchase Pension
Plan(55)........................................ 320,098 1.2% 320,098 0 *
c/o Mr. Robert M. Tuller
2651 Pierce St
San Francisco, CA 94123
Frank Gerardi Trustee, Univest Management E P S
P(45)........................................... 540,502 2.1% 284,854 255,648 *
149 W. Village Way
Jupiter, FL 33458
James A. Urner(12)................................ 15,000 * 15,000 0 *
42 Mount St
Bay Head, NJ 08742
Ventana(46)....................................... 3,645,753 12.4% 3,645,753 0 *
3865 N Business Center Drive
Tucson, AZ 85705
Violina AS(15).................................... 238,239 * 238,239 0 *
Postboks 1484 Vika
0116 Oslo Norway
Fred Vogel and Jill Vogel(55)..................... 320,098 1.2% 320,098 0 *
Sunflower Ranch Co.
P.O. Box 666
Patterson, CA 95363-0666
Hunter Vogel(53).................................. 106,699 * 106,699 0 *
2959 Laguna
San Francisco, CA 94123
Anita Von Dreusche(12)............................ 30,000 * 30,000 0 *
110 Norman Drive
Ramsey, NJ 07446
Karen A. Von Dreusche & Richard J. Berr(12)....... 30,000 * 30,000 0 *
JTTEN
52 Sunrise Court
Medford, NJ 08055
Trond E. Wennberg(15)............................. 66,425 * 66,425 0 *
Jonsok Veien 7
1182 Oslo
NORWAY
David Craig Wright(20)............................ 263,667 1.0% 263,667 0 *
14740 Maine Cove Terrace
Gaithersburg, MD 20878
Xillix Technologies Corp.(54)..................... 13,406 * 13,406 0 *
300-13775 Commerce Parkway
Richmond, BC V6V 2V4
Canada
Richard Yetman(12)................................ 20,000 * 20,000 0 *
6 Ocean Blvd
Island Heights, NJ 08732
Peter J. Zeganelli & Carol A. Zeganelli(31)....... 10,000 * 10,000 0 *
11 Rafenberg Rd
Sleepy Hollow, NY 10591
Robert Zelinka(47)................................ 308 * 308 0 *
15919 Laurel Creek Drive
Delray Beach, FL 33446
Rona Zelinka(47).................................. 308 * 308 0 *
15919 Laurel Creek Drive
Delray Beach, FL 33446
Bud Zuckerman(14)................................. 54,164 * 54,164 0 *
6587 Lakeview Drive
Boulder, CO 80303
---------- ---------- ---------
Totals............................................ 58,357,695 46,766,537 7,109,076
========== ========== =========
</Table>

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

+ With respect to shares and percent of shares beneficially owned after the
offering, we assumed that the selling stockholders will sell all of the
shares of common stock offered by the prospectus. We cannot assure you that
the selling stockholders will sell all or any of their shares.

* Represents less than 1% of the outstanding shares of common stock.

(1) Includes: (i) 674,000 shares issued as a result of the merger of InPath and
Bell National in December 1998; and (ii) 196,666 shares underlying options
exercisable by Mr. Gombrich within sixty days. Excludes: (i) 2,894,787
shares underlying 105,265 shares of Series E convertible preferred stock
owned by Mr. Gombrich; and (ii) 922,277 shares underlying 33,537.36 shares
of Series E convertible preferred stock owned by Suzanne Musikantow
Gombrich, all of which become convertible December 1, 2002.

(2) Includes: (i) 282,881 shares owned by Cadmus Corporation ("Cadmus"), of
which Mr. Milley is a director and executive officer, and 250,000 shares
issuable to Cadmus under a currently exercisable warrant; (ii) 219,000
shares subject to options exercisable by Mr. Milley within sixty days;
(iii) 289,286 shares underlying stock appreciation rights currently
exercisable by Cadmus, and (iv) 2,875,000 shares issuable to Azimuth
Corporation ("Azimuth") under a currently exercisable warrant. Excludes:
(i) 678,134 shares underlying 24,659.44 shares of Series E convertible
preferred stock owned by Mr. Milley; (ii) 553,666 shares underlying
20,133.32 shares of Series E convertible preferred stock owned by Milley
Management, Inc. of which Mr. Milley is the sole director and executive
officer; (iii) 1,327,464 shares underlying 48,271.44 shares of Series E
convertible preferred stock owned by Cadmus (iv); 556,875 shares underlying
20,250 shares of Series E convertible preferred stock owned by Azimuth of
which Mr. Milley is a director and executive officer; and (v) 163,520
shares underlying 5,946.20 shares of Series E convertible preferred stock
owned by Winchester National, Inc. of which Mr. Milley is a director, all
of which become convertible December 1, 2002.

(3) Includes (i) 219,000 shares underlying stock options exercisable by Dr.
Abeles within sixty days; (ii) 65,359 shares underlying a convertible
promissory note issued in 2002 issuable to Northlea Partners, Ltd.
("Northlea Partners"); (iii) 87,500 shares underlying currently exercisable
warrants issuable to Northlea Partners; and (iv) 16,340 shares underlying
warrants issuable upon conversion of the promissory note issuable to
Northlea Partners. Excludes 210,778 shares underlying 7,664.64 shares of
Series E convertible preferred stock held by Northlea Partners, which
become convertible December 31, 2002. Dr. Abeles disclaims beneficial
ownership of all shares owned by Northlea Partners except shares
attributable to his 1% interest in Northlea Partners as a general partner.

(4) Includes: (i) 282,881 shares of common stock; (ii) 250,000 shares
underlying a warrant exercisable within sixty days and (iii) 289,286 shares
underlying currently exercisable stock appreciation rights. Excludes
1,327,465 shares underlying 48,271.44 shares of Series E convertible
preferred stock, which become convertible December 1, 2002.

(5) Includes: (i) 300,000 shares received as the result of the merger of InPath
and Bell National in December 1998; (ii) 321,688 shares received as the
result of the conversion during 2000 of the principal and accrued interest
related to a 6% convertible promissory note purchased in a private offering
in May 1999; (iii) 361,000 shares received upon exercise of employee stock
options; and (iv) 108,329 shares underlying 20,000 shares of Series C
convertible preferred stock purchased in a private offering in November
2001.

(6) Includes: (i) 463,333 shares received in a Claims Settlement Agreement in
December 1998; (ii) 37,084 shares acquired in a private transaction in
1989; and (iii) 219,000 shares underlying stock options, which are
exercisable within sixty days.

(7) Includes: (i) 784,901 shares underlying warrants issued for services
performed in 2000 and 2001; and (ii) 219,000 shares underlying options
exercisable within sixty days.

(8) Includes: (i) 198,240 shares purchased in a private offering during 2000
and 2001; (ii) 70,000 shares owned by The Research Works, which is
controlled by Mr. Ritger; (iii) 3,735,000 shares owned by Seaside Partners,
L.P. ("Seaside Partners"), in which Mr. Ritger holds a majority voting
interest through Seaside Advisors, L.L.C., the general partner of Seaside
Partners; and (iv) 270,823 shares

underlying Series C Convertible Preferred Stock. Excludes 1,980,000 shares
underlying 72,000 shares of Series E convertible preferred stock, which
become convertible December 1, 2002.

(9) Includes: 25,000 share stock award, 15,073 shares purchased through the
Employee Stock Purchase Plan, and 408,333 shares subject to options
exercisable within 60 days.

(10) Represents shares received as a result of the merger of InPath and Bell
National in December 1998.

(11) Represents shares purchased in a private offering during 1999.

(12) Represents shares purchased in a private offering during 2000.

(13) Represents 825,250 shares underlying warrants issued to Bathgate and
Bathgate designees as compensation for services during 2001.

(14) Represents shares underlying Series C convertible preferred stock.

(15) Represents shares underlying Series B convertible preferred stock purchased
in a private offering during 2001.

(16) Represents warrants issued by AccuMed in connection with various
financings.

(17) Represents 15,000 shares underlying warrants exercisable within sixty days
received as compensation for services performed during 1999.

(18) Includes: (i) 75,758 shares purchased in a private offering during 1999;
(ii) 33,333 shares purchased in a private offering during 2000; (iii)
114,904 shares underlying 25,000 shares of Series B convertible preferred
stock purchased in a private offering during 2001; and (iv) 180,546 shares
underlying Series C convertible preferred stock.

(19) Represents 76,000 shares received as the result of the exercise of a
warrant received for services performed during 1999.

(20) Represents shares received as a result of the conversion of the principal
and accrued interest related to 6% convertible promissory notes purchased
in a private offering during 1999.

(21) Represents 250,000 shares underlying a warrant received as compensation for
services during 1999 and exercisable within sixty days.

(22) Includes: (i) 33,333 shares purchased in a private offering in 2000; and
(ii) 54,164 shares underlying Series C convertible preferred stock.

(23) Includes: (i) 47,775 shares received upon conversion of a promissory note
in 2000; (ii) 330,000 shares underlying warrants issued to Monarch
Consulting, which is controlled by Mr. Kruljac, for services performed in
2001 and 2002; (iii) 108,329 shares underlying Series C convertible
preferred stock; (iv) 196,078 shares underlying convertible promissory
notes issued in 2002; (v) 75,000 shares underlying currently exercisable
warrants; and (vi) 49,020 shares underlying warrants issuable upon
conversion of the promissory notes.

(24) Includes: (i) 761,441 shares underlying Series B convertible preferred
stock; (ii) 239,216 shares underlying a convertible promissory note issued
in 2002; (ii) 91,500 shares underlying currently exercisable warrants; and
(iii) 59,804 shares underlying warrants issuable upon conversion of the
promissory note.

(25) Includes: (i) 16,666 shares purchased in a private offering during 2000;
and (ii) 28,795 shares underlying 6,250 shares of Series B convertible
preferred stock purchased in a private offering during 2001.

(26) Includes: (i) 33,333 shares purchased in a private offering during 2000;
and (ii) 57,589 shares underlying 12,500 shares of Series B convertible
preferred stock purchased in a private offering during 2001.

(27) Represents shares underlying warrants issued for services performed during
2001.

(28) Includes: (i) 216,658 shares underlying Series C convertible preferred
stock; (ii) 130,719 shares underlying a convertible promissory note; (iii)
250,000 shares underlying currently exercisable warrants; and (iv) 32,680
shares underlying warrants issuable upon conversion of the promissory note.

(29) Includes: 525,504 shares underlying a convertible promissory note and
accrued interest issued during 2000; (ii) 585,205 shares underlying 125,000
shares of Series B convertible preferred stock purchased in a private
offering during 2001; and (iii) 500,000 shares underlying currently
exercisable warrants.

(30) Represents shares underlying a warrant issued for services performed in
2000 and 2001.

(31) Represents shares underlying warrants currently exercisable.

(32) Includes: (i) 1,902,650 shares underlying Series B convertible preferred
stock purchased in a private offering during 2001; (ii) 1,464,052 shares
underlying a convertible promissory note issued in 2001; (iii) 1,307,190
shares underlying a convertible promissory note issued in 2002; (iv)
1,060,000 shares underlying currently exercisable warrants; and (v) 692,810
shares underlying warrants issuable upon conversion of the promissory
notes.

(33) Includes: (i) 65,359 shares underlying a convertible promissory note issued
in 2002; (ii) 87,500 shares underlying currently exercisable warrants; and
(iii) 16,340 shares underlying warrants issuable upon conversion of the
promissory note.

(34) Represents shares underlying warrants issued or issuable as license fees
under a License and Technology Agreement entered into during 2000.

(35) Represents 186,616 shares received as the result of the merger of InPath
and Bell National in December 1998.

(36) Includes: (i) 50,000 shares purchased in a private offering in 1999; and
(ii) 357,484 shares underlying Series C convertible preferred stock.

(37) Represents warrants issued in the AccuMed merger in exchange for warrants
issued by AccuMed as compensation for services.

(38) Includes: (i) 78,311 shares converted from AccuMed common stock; (ii) 8,737
shares underlying options exercisable in 60 days; and (iii) 16,380 shares
underlying warrants.

(39) Includes: (i) 48,333 shares received as compensation for services during
2000; (ii) 48,333 shares underlying a warrant issued for services performed
during 2000; and (iii) 291,942 shares underlying warrants issued for
services performed during 2001.

(40) Represents shares underlying warrants issued as compensation for services
performed in 2001.

(41) Represents shares underlying warrants issued as compensation for
achievement of specified goals.

(42) Includes: (i) 50,000 shares purchased in a private offering during 2000;
(ii) 89,371 shares underlying Series C convertible preferred stock owned by
The Georgie Stanley II Trust, 89,371 shares underlying Series C convertible
preferred stock owned by The Benjamin A. Stanley Trust, and 89,371 shares
underlying Series C convertible preferred stock owned by The Michael Bredt
Stanley Trust for each of which Mr. Stanley serves as Trustee.

(43) Represents shares issued as stock grants.

(44) Represents warrants issued in the AccuMed merger in exchange for warrants
issued by AccuMed as additional consideration for a long term credit
facility.

(45) Includes: (i) 175,148 shares received as the result of the conversion of
the principal and accrued interest related to a 6% convertible promissory
note purchased in a private offering during 1999; (ii) 227,169 shares
underlying a warrant issued for services performed during 2000 and 2001;
(iii) 57,685 shares underlying shares of Series B convertible preferred
stock purchased in a private offering during 2001; and (iv) 80,500 shares
received as compensation for services performed during 2001.

(46) Includes: (i) 1,895,753 shares underlying Series D convertible preferred
stock; and (ii) 1,750,000 shares underlying currently exercisable warrants.

(47) Represents shares received upon conversion of Series B convertible
preferred stock.

(48) Includes: (i) 149,981 shares underlying Series B convertible preferred
stock; (ii) 48,366 shares underlying a convertible promissory note issued
in 2002; (ii) 18,500 shares underlying currently exercisable warrants; and
(iii) 12,092 shares underlying warrants issuable upon conversion of the
promissory note.

(49) Includes: (i) 90,270 shares underlying Series C convertible preferred
stock; (ii) 326,797 shares underlying convertible promissory notes issued
in 2002; (iii) 125,000 shares underlying currently exercisable warrants;
and (iv) 81,699 shares underlying warrants issuable upon conversion of the
promissory notes.

(50) Includes: (i) 392,156 shares underlying convertible promissory notes issued
in 2002; (ii) 150,000 shares underlying currently exercisable warrants;
(iii) 98,040 shares underlying warrants issuable upon conversion of the
promissory notes and (iv) 17,603 shares owned by John C. Iverson Family
Limited Partnership.

(51) Includes: (i) 1,307,190 shares underlying a convertible promissory note
issued in 2002; (ii) 500,000 shares underlying currently exercisable
warrants; and (iii) 326,797 shares underlying warrants issuable upon
conversion of the promissory note.

(52) Includes: (i) 522,876 shares underlying convertible promissory notes issued
in 2002; (ii) 200,000 shares underlying currently exercisable warrants; and
(iii) 130,718 shares underlying warrants issuable upon conversion of the
promissory notes.

(53) Includes: (i) 65,359 shares underlying a convertible promissory note issued
in 2002; (ii) 25,000 shares underlying currently exercisable warrants; and
(iii) 16,340 shares underlying warrants issuable upon conversion of the
promissory note.

(54) Represents 13,406 shares underlying a convertible promissory note acquired
in the AccuMed merger.

(55) Includes: (i) 196,078 shares underlying a convertible promissory note
issued in 2002; (ii) 75,000 shares underlying currently exercisable
warrants; and (iii) 49,020 shares underlying warrants issuable upon
conversion of the promissory note.

(56) Includes: (i) 130,719 shares underlying a convertible promissory note
issued in 2002; (ii) 50,000 shares underlying currently exercisable
warrants; and (iii) 32,680 shares underlying warrants issuable upon
conversion of the promissory note.

(57) Includes: (i) 57,726 shares underlying Series B convertible preferred
stock; (ii) 130,719 shares underlying a convertible promissory note issued
in 2002; (ii) 50,000 shares underlying currently exercisable warrants; and
(iii) 32,680 shares underlying warrants issuable upon conversion of the
promissory note.

(58) Represents shares issued as the result of the merger of InPath and Bell
National in December 1998.

(59) Includes: (i) 10,000 shares issued as stock grants; and (ii) 1,499 shares
obtained through the Employee Stock Purchase Plan.

(60) Represents 2,875,000 shares underlying currently exercisable warrants.
Excludes 556,875 shares underlying 20,250 shares of Series E convertible
preferred stock.

(61) Includes: (i) 143,791 shares underlying a convertible promissory note
issued in 2002; (ii) 55,000 shares underlying currently exercisable
warrants; and (iii) 35,948 shares underlying warrants issuable upon
conversion of the promissory note.

(62) Includes: (i) 117,647 shares underlying a convertible promissory note
issued in 2002; (ii) 45,000 shares underlying currently exercisable
warrants; and (iii) 29,412 shares underlying warrants issuable upon
conversion of the promissory note.

(63) Includes: (i) 1,395,975 shares underlying Series B convertible preferred
stock; (ii) 366,013 shares underlying a convertible promissory note issued
in 2002; (ii) 140,000 shares underlying currently exercisable warrants; and
(iii) 91,503 shares underlying warrants issuable upon conversion of the
promissory note.

(64) Represents shares issued as compensation for services to be performed in
the future.

(65) Represents shares received upon conversion of Series C convertible
preferred stock.

(66) Represents 15,000 shares purchased in a private offering during 2000.

(67) Represents 35,000 shares purchased in a private offering during 1999.

(68) Represents 17,603 shares issued in exchange for accrued dividends on
250,000 shares of Series B convertible preferred stock that had been
converted into common stock.

(69) Represents 51,483 shares underlying currently exercisable warrants issued
for services performed in 2001.

(70) Represents 60,182 shares issued for services performed in 2002.

(71) Includes (i) 681,818 shares underlying currently exercisable warrants for
services performed in 2002 and (ii) 711,364 shares issued for services
performed in 2002.

For purposes of this table, a person is deemed to have beneficial ownership of
any shares of common stock which such person may acquire within 60 days after
the date of this prospectus. For purposes of computing the percentage of
outstanding shares of common stock held by each person named above, any security
which such person has the right to acquire from us within 60 days after the date
of this prospectus is deemed to be outstanding, but is not deemed to be
outstanding for the purpose of computing the percentage ownership of any other
person.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

On May 24, 2000, we granted Dr. Denis O'Donnell a warrant to purchase
784,901 shares of common stock exercisable at $0.01 per share, as compensation
as a finder in a private placement of common stock that occurred in 2000 and
2001. The warrant expires three years from the date of its grant. Dr. O'Donnell,
a director, is a member and manager of Seaside Advisers, L.L.C., a firm which
provides investment management services to Seaside Partners.

On December 4, 2000, we issued a promissory note to Azimuth in exchange for
$200,000 in cash. The note bore interest at the rate of 12% per year and was due
December 31, 2000. As additional consideration for the note, we issued Azimuth a
five-year warrant to purchase 50,000 shares of common stock at a price of $0.937
per share, the approximate market price of common stock at the time. The note
was repaid on February 20, 2001. In that the note was not repaid when due, we
were obligated by the terms of the note to pay a 3% increase in the rate of
interest from January 1, 2001 until the date of payment. We were also obligated
to issue Azimuth two warrants, each to purchase 12,500 shares of our common
stock, at an exercise price of $0.01 per share, representing a two month late
payment penalty. We determined the value of these warrants to be $1,184 and
charged the amount to interest expense during 2001. The proceeds of the note
were used for general working capital and to pay license fees.

On December 11, 2000, we issued a promissory note to Azimuth in exchange
for $100,000 in cash. The note bore interest at the rate of 12% per year and was
due 180 days from date of issue. As additional consideration for the note, we
issued Azimuth a five-year warrant to purchase 1,000,000 shares of common stock
at a price of $1.25 per share, an approximate 15% premium over the market price
of common stock on the date the warrant was issued. The proceeds of this note
were used to repay a convertible promissory note to AccuMed due on March 29,
2001. The prepayment was made in conjunction with ongoing negotiations to
acquire AccuMed. We repaid the note and accrued interest on February 20, 2001.

On February 1, 2001 and February 7, 2001, we received $495,000 in cash from
Azimuth in exchange for two promissory notes that bore interest at 15% per year.
Of the cash received, $470,000 was used to partially fund a loan to AccuMed made
on February 7, 2001, in connection with a definitive agreement to acquire
AccuMed. As additional compensation for these loans, we issued Azimuth a
five-year warrant to purchase 1,000,000 shares of common stock at an exercise
price of $0.25 per share, an approximate 83% discount from the $1.50 market
price of our common stock on the date the warrant was issued. We determined the
value of the warrant to be $12,000, using the difference between the fair market
interest rate and the stated interest rate, and recorded the value as additional
paid in capital and also charged the entire value to interest expense during
February 2001. On February 20, 2001, we used $809,000 of the proceeds from a
private placement of Series B convertible preferred stock to repay these notes,
two additional notes issued to Azimuth in December 2000, and all of their
related accrued interest.

On July 26, 2001, we issued a promissory note to Cadmus in exchange for
$100,000 in cash. On August 6, 2001, we issued a promissory note to Azimuth in
exchange for $100,000 in cash. Mr. Milley, director and a significant
stockholder, is also considered a control person of both Cadmus and Azimuth. The
notes, which were due on September 22, 2001 and subsequently extended until
November 15, 2001, bore interest at the rate of 15% per annum. As additional
consideration for the notes, we issued five-year warrants to Cadmus and Azimuth
entitling the holders to each purchase 250,000 shares of common stock at an
exercise price of $1 per share. The closing market prices of common stock on the
respective issue dates of the warrants, which entitle each holder to purchase
250,000 shares of common stock, were $0.73 per share. We determined the fair
value of these warrants to be $1,400 using the fair value interest rate method.
This value was charged to interest expense during the third quarter. The notes
were repaid in November 2001.

On August 17, 2001, we agreed to issue a five-year warrant to Azimuth
entitling the holder to purchase 500,000 shares of common stock at an exercise
price of $1 per share. In conjunction with the issuance of this warrant, Azimuth
agreed to relinquish the conversion rights granted to it under the terms of the
September 2000 convertible promissory note. The closing market price of common
stock on the issue date of the warrant was $.73 per share. We determined the
fair value of the warrant to be approximately $25,000 based on the value of the
unamortized debt discount at the date the warrant was issued and the conversion
right under the note was waived. This value was charged to interest expense
during the third quarter of 2001.

On August 6, 2001, we issued a promissory note to Northlea Partners in
exchange for $25,000 in cash. Dr. Abeles, a director, is the general partner of
Northlea Partners. The terms of the note are the same as the notes issued to
Cadmus and Azimuth. As additional consideration for this note, we issued a
five-year warrant to Northlea Partners entitling the holder to purchase 62,500
shares of common stock at an exercise price of $1 per share. The closing market
price of the common stock on the issue date of this warrant was $0.73 per share.
We determined the fair value of the warrant to be $1,400 using the fair value
interest rate method. This value was charged to interest expense during the
third quarter. The note is in default.

On September 20, 2001, we issued a promissory note to Northlea Partners in
exchange for $15,000 in cash. The note was due on December 20, 2001 and bears
interest at the rate of 9% per annum. The note is currently in arrears. Also on
September 20, 2001, we issued a promissory note to Mr. Shaw, a director, in
exchange for $25,000 in cash. The note was due December 20, 2001 and bore
interest at the rate of 9% per annum. The note remains outstanding as of the
date of this report and is in arrears.

In October 2001, Mr. Prange, our former President and COO/CFO, purchased
20,000 shares of Series C convertible preferred stock at a purchase price of
$3.00 per share. The purchase was made in conjunction with a private placement
of Series C convertible preferred stock and was made under the same terms and
conditions as other investors in the offering. The Series C convertible
preferred stock has a dividend of 10% and is convertible into common stock at a
conversion price of $0.60 per share.

In December 2001, Mr. Gombrich, our CEO and Chairman of the Board, tendered
2,631,625 shares of common stock, pursuant to an exchange offer open to all
holders of common stock, in exchange for 105,265 shares of Series E convertible
preferred stock. Mr. Milley, a director, tendered 616,486 shares of common stock
in exchange for 24,659 shares of Series E convertible preferred stock.

In May 2002, we received cash of $25,000 from Northlea Partners and issued
a convertible promissory note and 25,000 warrants. The convertible promissory
bears interest at 7% per annum and matures on December 31, 2002. The convertible
promissory note is convertible at any time at the option of the holder or
automatically when we receive an equity infusion of at least $7,000,000 at a
conversion price equal to a 25% discount to the market price of the common stock
at the date of conversion, but not greater than $1 per share. Each of the
warrants is exercisable for one share of common stock at an exercise price of
$0.25 per share for a period of five years. Upon conversion of the convertible
promissory note, Northlea Partners will be entitled to receive an additional
number of warrants equal to 25% of the number of common shares issued in
conversion of the convertible promissory note. Each of these warrants will be
exercisable into one share of our common stock at a price equal to 150% of the
conversion price of the convertible promissory note.

PLAN OF DISTRIBUTION

We are registering the common stock on behalf of the selling stockholders.
The common stock may be offered and sold by the selling stockholders, or by
purchasers, transferees, donees, pledgees or other successors in interest,
directly or through brokers, dealers, agents or underwriters who may receive
compensation in the form of discounts, commissions or similar selling expenses
paid by the selling stockholders or by a purchaser of the common stock on whose
behalf such broker-dealer may act as agent. Sales and transfers of the common
stock may be effected from time to time in one or more transactions, in private
or public transactions, in the over-the-counter market, in negotiated
transactions or otherwise, at a fixed price or prices that may be changed, at
market prices prevailing at the time of sale, at negotiated prices, without
consideration or by any other legally available means. The selling stockholders
may sell any or all of the common stock from time to time in one or more of the
following methods:

- ordinary brokers transactions, which may include long or short sales;

- transactions involving cross or block trades or otherwise on the
Over-the-Counter Bulletin Board;

- purchases by brokers, dealers or underwriters as principal and resales by
such purchasers for their own accounts under this prospectus;

- "at the market" offerings to or through market makers or into an existing
market for the common stock;

- in other ways not involving market makers or established trading markets,
including direct sales to purchasers or sales effected through agents;

- through transactions in options, swaps or other derivatives (whether
exchange listed or otherwise); or

- any combination of the above.

In addition, the selling stockholders or successors in interest may enter
into hedging transactions with broker-dealers who may engage in short sales of
common stock in the course of hedging the positions they assume with the selling
stockholders. The selling stockholders or successors in interest may also enter
into option or other transactions with broker-dealers that require delivery by
such broker-dealers of the common stock, which common stock may be resold
thereafter under this prospectus.

Brokers, dealers, underwriters or agents participating in the distribution
of the common stock may receive compensation in the form of discounts,
concessions or commissions from the selling stockholders and/or the purchasers
of common stock for whom such broker-dealers may act as agent or to whom they
may sell as principal, or both (which compensation as to a particular
broker-dealer may be in excess of customary commissions).

The selling stockholders and any broker-dealers acting in connection with
the sale of the common stock by this prospectus may be deemed to be underwriters
within the meaning of Section 2(11) of the Securities Act, and any commissions
received by them and any profit realized by them on the resale of common stock
as principals may be underwriting compensation under the Securities Act. Neither
we nor the selling stockholders can presently estimate the amount of such
compensation. We do not know of any existing arrangements between the selling
stockholders and any other stockholder, broker, dealer, underwriter or agent
relating to the sale or distribution of the common stock.

The selling stockholders and any other persons participating in a
distribution of securities will be subject to applicable provisions of the
Securities Exchange Act and the rules and regulations thereunder, including,
without limitation, Regulation M, which may restrict certain activities of, and
limit the timing of purchases and sales of securities by, the selling
stockholders and other persons participating in a distribution of securities.
Furthermore, under Regulation M, persons engaged in a distribution of securities
are prohibited from simultaneously engaging in market making and certain other
activities with respect to such securities for a specified period of time prior
to the commencement of such distributions subject to specified exceptions or
exemptions.

Any securities covered by this prospectus that qualify for sale under Rule
144 under the Securities Act may be sold under that rule rather than under this
prospectus.

We cannot assure you that the selling stockholders will sell any or all of
the shares of common stock offered by this prospectus.

In order to comply with the securities laws of certain states, if
applicable, the selling stockholders will sell the common stock in jurisdictions
only through registered or licensed brokers or dealers. In addition, in certain
states, the selling stockholders may not sell the common stock unless the shares
of common stock have been registered or qualified for sale in the applicable
state or an exemption from the registration or qualification requirement is
available and obtained.

We will not receive any proceeds from the sale of the common stock covered
by this prospectus. We have agreed to pay all of the expenses incident to the
registration of the common stock, other than discounts and selling concessions
or commissions, if any, and fees and expenses of counsel for the selling
stockholders, if any.

DESCRIPTION OF CAPITAL STOCK

GENERAL

We have set forth in this section a description of certain rights and
preferences of our convertible preferred stock as well as our other outstanding
securities and contractual obligations because we believe they are materially
relevant to an investor's understanding of an investment in our shares of common
stock.

Our authorized capital stock consists of 110,000,000 shares, consisting of
100,000,000 shares of common stock, par value $0.001 per share, and 10,000,000
shares of preferred stock, par value $0.001 per share. On August 31, 2002 we
had:

- 27,136,031 shares of common stock issued and outstanding;

- 590,197 shares of Series A convertible preferred stock of which 118,093
were issued and outstanding;

- 1,500,000 shares of Series B convertible preferred stock of which
1,324,856 were issued and outstanding;

- 1,666,666 shares of Series C convertible preferred stock of which
1,285,499 were issued and outstanding;

- 300,000 shares of Series D convertible preferred stock of which 175,000
were issued and outstanding;

- 800,000 shares of Series E convertible preferred stock of which 434,388
were issued and outstanding;

- warrants that entitle the holders to purchase 17,154,405 shares of common
stock at prices ranging from $0.01 to $23.75;

- 450,000 stock appreciation rights which are convertible into 289,286
shares of common stock;

- $3,659,439 aggregate principal amount convertible promissory notes that
entitle the holders to purchase 8,865,700 shares of common stock; and

- options that entitle the holders to purchase 3,429,330 shares of common
stock at prices ranging from $0.39 to $36.08.

COMMON STOCK

Each share of our common stock has the same relative rights and is
identical in all respects with each other share of common stock.

Subject to any prior rights of the holders of any preferred stock then
outstanding, holders of our common stock are entitled to receive such dividends
as are declared by our Board of Directors out of funds legally available
therefore. Full voting rights are vested in the holders of common stock, each
share being entitled to one vote, subject to the rights of the holders of any
preferred stock then outstanding. Our Board of Directors may issue authorized
shares of common stock without stockholder approval. Subject to any prior rights
of the holders of any preferred stock then outstanding, in the event of our
liquidation, dissolution or winding up, holders of shares of our common stock
are entitled to receive, pro rata, any assets distributable to stockholders with
respect to shares held by them. Holders of shares of common stock do not have
any preemptive rights to subscribe for any additional securities which may be
issued by us or any cumulative voting rights. The outstanding shares of our
common stock are fully paid and non-assessable.

PREFERRED STOCK

Our preferred stock may be issued in one or more series at such time or
times and for such consideration as our Board of Directors may determine. Our
Board of Directors is expressly authorized at any time, and from time to time,
to provide for the issuance of preferred stock with such voting rights and other
powers, preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions, as shall be stated in
the resolution authorizing the particular series of preferred stock. Our Board

of Directors is authorized to designate the series and the number of shares
comprising such series, the dividend rate, the redemption rights, if any, any
purchase, retirement or sinking fund provisions, any conversion rights and any
special voting rights with respect to the shares of such series. The ability of
our Board of Directors to issue preferred stock without stockholder approval
could make an acquisition by an unwanted suitor of a controlling interest in us
more difficult, time-consuming or costly, or otherwise discourage an attempt to
acquire control of us. Shares of preferred stock redeemed or acquired by us may
return to the status of authorized but unissued shares, without designation as
to series, and may be reissued by our Board of Directors.

SERIES A CONVERTIBLE PREFERRED STOCK

We are authorized to issue 590,197 shares of Series A convertible preferred
stock, of which 118,093 shares were issued and outstanding as of August 31,
2002. Each share of Series A convertible preferred stock has a stated value of
$4.50 and a conversion price of $10.3034, subject to antidilution adjustment.
The Series A convertible preferred stock ranks senior to our common stock and on
parity with our other issued and outstanding preferred stock. We may issue other
series of preferred stock at any time and from time to time without the consent
of the holders of the Series A convertible preferred stock.

DIVIDENDS

Shares of the Series A convertible preferred stock pay no dividends.

VOTING RIGHTS

The holders of the Series A convertible preferred stock have no right to
vote on any matter except as required by Delaware law. If the Series A
convertible preferred stock is entitled to vote with the holders of common stock
as one class, each share of Series A convertible preferred stock shall entitle
the holder to the number of votes that equals the number of shares of common
stock into which each share of Series A convertible preferred stock is
convertible. Without first obtaining the approval of a majority of the shares of
Series A convertible preferred stock then outstanding, we may not repeal, amend
or change the Series A convertible preferred stock Certificate of Designations
or our Certificate of Incorporation to alter or change the powers, preferences
or rights of the Series A convertible preferred stock so as to affect them
adversely.

LIQUIDATION

The liquidation preference of the Series A convertible preferred stock is
$4.50 per share. Upon liquidation, dissolution or winding up of Molecular
Diagnostics, each holder of the Series A convertible preferred stock is entitled
to be paid in cash out of our assets available for distribution to shareholders
an amount equal to the liquidation preference of the Series A convertible
preferred stock before any amounts may be paid to any class or series of capital
stock ranking junior to the Series A convertible preferred stock.

If the assets available for distribution to the holders of Series A
convertible preferred stock and any other security ranking on parity with the
preferred stock are insufficient to pay in full all amounts payable to the
holders of the Series A convertible preferred stock and all other parity
securities, then all of the assets available for distribution to the holders of
the Series A convertible preferred stock and parity securities will be
distributed among the holders ratably in proportion to the amounts that would be
payable if there were sufficient assets to permit payment in full. After payment
in full, the holders of the Series A convertible preferred stock will not be
entitled to any further distribution of assets. A merger or consolidation will
be considered a liquidation event in certain circumstances.

RESERVATION OF SHARES

We have authorized, reserved and will keep available a sufficient number of
shares of our common stock as will be issuable upon the conversion of all
outstanding shares of Series A convertible preferred stock and dividends payable
thereon. These shares of our common stock, when issued, will be duly and validly
issued, fully paid and non-assessable, and free of liens.
30

REDEMPTION

Shares of the Series A convertible preferred stock are not redeemable.

SINKING FUND

There is no sinking fund for the Series A convertible preferred stock.

CONVERSION

Shares of Series A convertible preferred stock are convertible, at any
time, at the option of the holder into shares of common stock. Each share of the
Series A convertible preferred stock is convertible into such number of shares
of our common stock as is determined by dividing the $4.50 stated value by the
then effective conversion price (currently $10.3034), which is referred to as
the conversion rate. The conversion rate is currently 0.4368.

If during the three year period beginning March 1, 2001, the market price
of our common stock equals or exceeds $13.50 per share for any 20 consecutive
trading days commencing 45 business days before the date in question, we may
elect to convert all the then outstanding shares of Series A convertible
preferred stock into common stock at the then effective conversion rate.

ADJUSTMENTS TO CONVERSION PRICE

The conversion price and the number of shares of common stock issuable upon
conversion of the Series A convertible preferred stock are subject to adjustment
from time to time upon the occurrence of any of the following events at any
time:

- If we (A) issue common stock as a dividend or a distribution with respect
to any class or series of our capital stock, (B) split or otherwise
subdivide our common stock , (C) combine our outstanding shares of common
stock into a greater or smaller number of shares, or (D) issue any shares
of capital stock in a reclassification;

- If there occurs a merger, consolidation, recapitalization or conveyance
of all or substantially all of our assets.

FRACTIONAL SHARES

We will not issue any fractional shares of common stock upon the conversion
of the Series A convertible preferred stock but rather will pay cash based on
the then current market price per share of our common stock.

SERIES B CONVERTIBLE PREFERRED STOCK

We are authorized to issue 1,500,000 shares of Series B convertible
preferred stock, of which 1,324,856 shares were outstanding as of August 31,
2002. Each share of Series B convertible preferred stock has a stated value of
$4 and a conversion price of $1, subject to antidilution adjustment. The Series
B convertible preferred stock ranks senior to our common stock and on parity
with our other issued and outstanding preferred stock. We may issue other series
of preferred stock at any time and from time to time without the consent of the
holders of the Series B convertible preferred stock.

DIVIDENDS

Shares of the Series B convertible preferred stock accrue dividends on a
quarterly basis at an annual rate of 10% per share payable on the last day of
March, June, September and December, commencing March 31, 2001, out of any
assets or funds legally available for payment of dividends. Dividends are
cumulative and accrue, whether or not declared by our Board of Directors, but
can only be declared or paid and set apart for payment if full cumulative
dividends for all prior quarterly dividend periods then outstanding shall have
been or shall be concurrently paid or declared and set apart for payment.

We may not pay any dividends or any distribution on any class or series of
capital stock ranking junior to the Series B convertible preferred stock except
dividends payable in shares of our stock of any class junior to the preferred
stock, and we may not repurchase or redeem any junior stock, if any dividends on
the Series B convertible preferred stock are then in arrears.

VOTING RIGHTS

The holders of the Series B convertible preferred stock have no right to
vote on any matter except as required by Delaware law. If the Series B
convertible preferred stock is entitled to vote with the holders of common stock
as one class, each share of Series B convertible preferred stock shall entitle
the holder to the number of votes that equals the number of shares of common
stock into which each share of Series B convertible preferred stock is
convertible. Without first obtaining the approval of a majority of the shares of
Series B convertible preferred stock then outstanding, we may not repeal, amend
or change the Series B convertible preferred stock Certificate of Designations
or our Certificate of Incorporation to alter or change the powers, preferences
or rights of the Series B convertible preferred stock so as to affect them
adversely.

LIQUIDATION

The liquidation preference of the Series B convertible preferred stock is
$4 per share plus all accrued but unpaid dividends. Upon liquidation,
dissolution or winding up of Molecular Diagnostics, each holder of the Series B
convertible preferred stock is entitled to be paid in cash out of our assets
available for distribution to shareholders an amount equal to the liquidation
preference of the Series B convertible preferred stock before any amounts may be
paid to any class or series of capital stock ranking junior to the Series B
convertible preferred stock.

If the assets available for distribution to the holders of Series B
convertible preferred stock and any other security ranking on parity with the
preferred stock are insufficient to pay in full all amounts payable to the
holders of the Series B convertible preferred stock and all other parity
securities, then all of the assets available for distribution to the holders of
the Series B convertible preferred stock and parity securities will be
distributed among the holders ratably in proportion to the amounts that would be
payable if there were sufficient assets to permit payment in full. After payment
in full, the holders of the Series B convertible preferred stock will not be
entitled to any further distribution of assets. A merger or consolidation will
be considered a liquidation event in certain circumstances.

RESERVATION OF SHARES

We have authorized, reserved and will keep available a sufficient number of
shares of our common stock as will be issuable upon the conversion of all
outstanding shares of Series B convertible preferred stock and dividends payable
thereon. These shares of our common stock, when issued, will be duly and validly
issued, fully paid and non-assessable, and free of liens.

REDEMPTION

Shares of the Series B convertible preferred stock are not redeemable.

SINKING FUND

There is no sinking fund for the Series B convertible preferred stock.

CONVERSION

Shares of Series B convertible preferred stock are convertible, at any
time, at the option of the holder, into shares of common stock. Each share of
the Series B convertible preferred stock is convertible into such number of
shares of our common stock as is determined by dividing the $4 stated value per
share plus all accrued but unpaid dividends by the then effective conversion
price (currently $1), which is referred to as the conversion rate.

If the market price of our common stock equals or exceeds $4 per share for
any 40 consecutive trading days, we may elect to convert all outstanding shares
of Series B convertible preferred stock into common stock at the then effective
conversion rate. If for any reason we do not pay any portion of the accrued
dividends on the Series B convertible preferred stock being converted, we may
pay that portion of unpaid dividends in shares of common stock.

ADJUSTMENTS TO CONVERSION PRICE

The conversion price and the number of shares of common stock issuable upon
conversion of the Series B convertible preferred stock are subject to adjustment
from time to time upon the occurrence of any of the following events at any
time:

- If we (A) issue common stock as a dividend or a distribution with respect
to any class or series of our capital stock, (B) split or otherwise
subdivide our common stock, (C) combine our outstanding shares of common
stock into a greater or smaller number of shares, or (D) issue any shares
of capital stock in a reclassification;

- If there occurs a merger, consolidation, recapitalization or conveyance
of all or substantially all of our assets.

FRACTIONAL SHARES

We will not issue any fractional shares of common stock upon the conversion
of the Series B convertible preferred stock but rather will pay cash based on
the then current market price per share of our common stock.

SERIES C CONVERTIBLE PREFERRED STOCK

We are authorized to issue 1,666,666 shares of Series C convertible
preferred stock, of which 1,285,499 were issued and outstanding as of August 31,
2002. Each share of Series C convertible preferred stock has a stated value of
$3 and a conversion price of $0.60, subject to antidilution adjustment. The
Series C convertible preferred stock ranks senior to our common stock and on
parity with our other issued and outstanding preferred stock. We may issue other
series of preferred stock at any time and from time to time without the consent
of the holders of the Series C convertible preferred stock.

DIVIDENDS

Shares of the Series C convertible preferred stock accrue dividends on a
semi-annual basis at an annual rate of 10% per share payable on the last day of
March and September, commencing March 31, 2002, out of any assets or funds
legally available for payment of dividends. Dividends are cumulative and accrue,
whether or not declared by our Board of Directors, but can only be declared or
paid and set apart for payment if full cumulative dividends for all prior
dividend periods then outstanding shall have been or shall be concurrently paid
or declared and set apart for payment. Dividends are payable in cash provided
that we may pay the dividends for the first two years in cash or in shares of
our common stock.

We may not pay any dividends or any distribution on any class or series of
capital stock ranking junior to the Series C convertible preferred stock except
dividends payable in shares of our stock of any class junior to the preferred
stock, and we may not repurchase or redeem any junior stock, if any dividends on
the Series C convertible preferred stock are then in arrears.

VOTING RIGHTS

The holders of the Series C convertible preferred stock have no right to
vote on any matter except as required by Delaware law. If the Series C
convertible preferred stock is entitled to vote with the holders of common stock
as one class, each share of Series C convertible preferred stock shall entitle
the holder to the number of votes that equals the number of shares of common
stock into which each share of Series C convertible preferred stock is
convertible. Without first obtaining the approval of a majority of the shares of
Series C convertible preferred stock then outstanding, we may not repeal, amend
or change the Series C
33

convertible preferred stock Certificate of Designations or our Certificate of
Incorporation to alter or change the powers, preferences or rights of the Series
C convertible preferred stock so as to affect them adversely.

LIQUIDATION

The liquidation preference of the Series C convertible preferred stock is
$3 per share plus all accrued but unpaid dividends. Upon liquidation,
dissolution or winding up of Molecular Diagnostics, each holder of the Series C
convertible preferred stock is entitled to be paid in cash out of our assets
available for distribution to shareholders an amount equal to the liquidation
preference of the Series C convertible preferred stock before any amounts may be
paid to any class or series of capital stock ranking junior to the Series C
convertible preferred stock.

If the assets available for distribution to the holders of Series C
convertible preferred stock and any other security ranking on parity with the
preferred stock are insufficient to pay in full all amounts payable to the
holders of the Series C convertible preferred stock and all other parity
securities, then all of the assets available for distribution to the holders of
the Series C convertible preferred stock and parity securities will be
distributed among the holders ratably in proportion to the amounts that would be
payable if there were sufficient assets to permit payment in full. After payment
in full, the holders of the Series C convertible preferred stock will not be
entitled to any further distribution of assets. A merger or consolidation will
be considered a liquidation event in certain circumstances.

RESERVATION OF SHARES

We have authorized, reserved and will keep available a sufficient number of
shares of our common stock as will be issuable upon the conversion of all
outstanding shares of Series C convertible preferred stock and dividends payable
thereon. These shares of our common stock, when issued, will be duly and validly
issued, fully paid and non-assessable, and free of liens.

REDEMPTION

Shares of the Series C convertible preferred stock are not redeemable.

SINKING FUND

There is no sinking fund for the Series C convertible preferred stock.

CONVERSION

Shares of Series C convertible preferred stock are convertible, at any time
at the option of the holder, into shares of common stock. Each share of the
Series C convertible preferred stock is convertible into such number of shares
of our common stock as is determined by dividing the $3 stated value per share
plus all accrued but unpaid dividends by the then effective conversion price,
which is referred to as the conversion rate.

ADJUSTMENTS TO CONVERSION PRICE

The conversion price and the number of shares of common stock issuable upon
conversion of the Series C convertible preferred stock are subject to adjustment
from time to time upon the occurrence of any of the following events at any
time:

- If we (A) issue common stock as a dividend or a distribution with respect
to any class or series of our capital stock, (B) split or otherwise
subdivide our common stock, (C) combine our outstanding shares of common
stock into a greater or smaller number of shares, or (D) issue any shares
of capital stock in a reclassification;

- If there occurs a merger, consolidation, recapitalization or conveyance
of all or substantially all of our assets.

FRACTIONAL SHARES

We will not issue any fractional shares of common stock upon the conversion
of the Series C convertible preferred stock but rather will pay cash based on
the then current market price per share of our common stock.

SERIES D CONVERTIBLE PREFERRED STOCK

We are authorized to issue 300,000 shares of Series D convertible preferred
stock, of which 175,000 were issued and outstanding as of August 31, 2002. Each
share of Series D convertible preferred stock has a stated value of $10 and a
conversion price of $1, subject to antidilution adjustment. The Series D
convertible preferred stock ranks senior to our common stock and on parity with
our other outstanding preferred stock. We may issue other series of preferred
stock at any time and from time to time without the consent of the holders of
the Series D convertible preferred stock.

DIVIDENDS

Shares of the Series D convertible preferred stock accrue dividends on a
semi-annual basis at an annual rate of 10% per share payable on the last day of
April and October, commencing April 30, 2002, out of any assets or funds legally
available for payment of dividends. Dividends are cumulative and accrue, whether
or not declared by our Board of Directors, but can only be declared or paid and
set apart for payment if full cumulative dividends for all prior dividend
periods then outstanding shall have been or shall be concurrently paid or
declared and set apart for payment. Dividends are payable in cash provided that
we may pay the dividends for the first two years in cash or in shares of our
common stock.

We may not pay any dividends or any distribution on any class or series of
capital stock ranking junior to the Series D convertible preferred stock except
dividends payable in shares of our stock of any class junior to the preferred
stock, and we may not repurchase or redeem any junior stock, if any dividends on
the Series D convertible preferred stock are then in arrears.

VOTING RIGHTS

The holders of the Series D convertible preferred stock have no right to
vote on any matter except as required by Delaware law. If the Series D
convertible preferred stock is entitled to vote with the holders of common stock
as one class, each share of Series D convertible preferred stock shall entitle
the holder to the number of votes that equals the number of shares of common
stock into which each share of Series D convertible preferred stock is
convertible. Without first obtaining the approval of a majority of the shares of
Series D convertible preferred stock then outstanding, we may not repeal, amend
or change the Series D convertible preferred stock Certificate of Designations
or our Certificate of Incorporation to alter or change the powers, preferences
or rights of the Series D convertible preferred stock so as to affect them
adversely.

LIQUIDATION

The liquidation preference of the Series D convertible preferred stock is
$10 per share plus all accrued but unpaid dividends. Upon liquidation,
dissolution or winding up of Molecular Diagnostics, each holder of the Series D
convertible preferred stock is entitled to be paid in cash out of our assets
available for distribution to shareholders an amount equal to the liquidation
preference of the Series D convertible preferred stock before any amounts may be
paid to any class or series of capital stock ranking junior to the Series D
convertible preferred stock.

If the assets available for distribution to the holders of Series D
convertible preferred stock and any other security ranking on parity with the
preferred stock are insufficient to pay in full all amounts payable to the
holders of the Series D convertible preferred stock and all other parity
securities, then all of the assets available for distribution to the holders of
the Series D convertible preferred stock and parity securities will be
distributed among the holders ratably in proportion to the amounts that would be
payable if there were sufficient assets to permit payment in full. After payment
in full, the holders of the Series D convertible

preferred stock will not be entitled to any further distribution of assets. A
merger or consolidation will be considered a liquidation event in certain
circumstances.

RESERVATION OF SHARES

We have authorized, reserved and will keep available a sufficient number of
shares of our common stock as will be issuable upon the conversion of all
outstanding shares of Series D convertible preferred stock and dividends payable
thereon. These shares of our common stock, when issued, will be duly and validly
issued, fully paid and non-assessable, and free of liens.

REDEMPTION

Shares of the Series D convertible preferred stock are not redeemable.

SINKING FUND

There is no sinking fund for the Series D convertible preferred stock.

CONVERSION

Shares of Series D convertible preferred stock are convertible, at any
time, at the option of the holder, into shares of common stock. Each share of
the Series D convertible preferred stock is convertible into such number of
shares of our common stock as is determined by dividing the $10 stated value per
share plus all accrued but unpaid dividends by the then effective conversion
price, which is referred to as the conversion rate.

If the market price of our common stock equals or exceeds $5 per share for
any 20 consecutive trading days, we may elect to convert all outstanding shares
of Series D convertible preferred stock into common stock at the then effective
conversion rate. If for any reason we do not pay any portion of the accrued
dividends on the Series D convertible preferred stock being converted, we may
pay that portion of unpaid dividends in shares of common stock.

ADJUSTMENTS TO CONVERSION PRICE

The conversion price and the number of shares of common stock issuable upon
conversion of the Series D convertible preferred stock are subject to adjustment
from time to time upon the occurrence of any of the following events at any
time:

- If we (A) issue common stock as a dividend or a distribution with respect
to any class or series of our capital stock, (B) split or otherwise
subdivide our common stock, (C) combine our outstanding shares of common
stock into a greater or smaller number of shares, or (D) issue any shares
of capital stock in a reclassification;

- If there occurs a merger, consolidation, recapitalization or conveyance
of all or substantially all of our assets.

FRACTIONAL SHARES

We will not issue any fractional shares of common stock upon the conversion
of the Series D convertible preferred stock but rather will pay cash based on
the then current market price per share of our common stock.

SERIES E CONVERTIBLE PREFERRED STOCK

We are authorized to issue 800,000 shares of Series E convertible preferred
stock, of which 434,387.52 were issued and outstanding as of August 31, 2002.
Each share of Series E convertible preferred stock has a stated value of $22 and
a conversion price of $0.80, subject to antidilution adjustment. The Series E
convertible preferred stock ranks senior to our common stock and on parity with
our other outstanding preferred stock. We may issue other series of preferred
stock at any time and from time to time without the consent of the holders of
the Series E convertible preferred stock.
36

DIVIDENDS

Shares of the Series E convertible preferred stock accrue dividends on a
semi-annual basis at an annual rate of 10% per share payable on the last day of
May and November, commencing May 31, 2002, out of any assets or funds legally
available for payment of dividends. Dividends are cumulative and accrue, whether
or not declared by our Board of Directors, but can only be declared or paid and
set apart for payment if full cumulative dividends for all prior dividend
periods then outstanding shall have been or shall be concurrently paid or
declared and set apart for payment. Dividends are payable in cash provided that
we may pay the dividends for the first two years in cash or in shares of our
common stock. The dividend rate increases to 20% per share if after December 1,
2002 we have not reserved sufficient shares of common stock to allow for the
conversion of all shares of Series E convertible preferred stock.

We may not pay any dividends or any distribution on any class or series of
capital stock ranking junior to the Series E convertible preferred stock except
dividends payable in shares of our stock of any class junior to the preferred
stock, and we may not repurchase or redeem any junior stock, if any dividends on
the Series E convertible preferred stock are then in arrears.

VOTING RIGHTS

The holders of the Series E convertible preferred stock shall be entitled
to vote on any matter on which the holders of common stock are entitled to vote.
If the Series E convertible preferred stock is entitled to vote with the holders
of common stock as one class, each share of Series E convertible preferred stock
shall entitle the holder to the number of votes that equals the number of shares
of common stock into which each share of Series E convertible preferred stock is
convertible. Without first obtaining the approval of a majority of the shares of
Series E convertible preferred stock then outstanding, we may not repeal, amend
or change the Series E convertible preferred stock Certificate of Designations
or our Certificate of Incorporation to alter or change the powers, preferences
or rights of the Series E convertible preferred stock so as to affect them
adversely.

LIQUIDATION

The liquidation preference of the Series E convertible preferred stock is
$22 per share plus all accrued but unpaid dividends. Upon liquidation,
dissolution or winding up of Molecular Diagnostics, each holder of the Series E
convertible preferred stock is entitled to be paid in cash out of our assets
available for distribution to shareholders an amount equal to the liquidation
preference of the Series E convertible preferred stock before any amounts may be
paid to any class or series of capital stock ranking junior to the Series E
convertible preferred stock.

If the assets available for distribution to the holders of Series E
convertible preferred stock and any other security ranking on parity with the
preferred stock are insufficient to pay in full all amounts payable to the
holders of the Series E convertible preferred stock and all other parity
securities, then all of the assets available for distribution to the holders of
the Series E convertible preferred stock and parity securities will be
distributed among the holders ratably in proportion to the amounts that would be
payable if there were sufficient assets to permit payment in full. After payment
in full, the holders of the Series E convertible preferred stock will not be
entitled to any further distribution of assets. A merger or consolidation will
be considered a liquidation event in certain circumstances.

RESERVATION OF SHARES

We have authorized, reserved and will keep available a sufficient number of
shares of our common stock as will be issuable upon the conversion of all
outstanding shares of Series E convertible preferred stock and dividends payable
thereon. These shares of our common stock, when issued, will be duly and validly
issued, fully paid and non-assessable, and free of liens.

REDEMPTION

Shares of the Series E convertible preferred stock are not redeemable.

SINKING FUND

There is no sinking fund for the Series E convertible preferred stock.

CONVERSION

Shares of Series E convertible preferred stock are convertible, at any time
after December 1, 2002, at the option of the holder, into shares of common
stock. Each share of the Series E convertible preferred stock is convertible
into such number of shares of our common stock as is determined by dividing the
$22 stated value per share plus all accrued but unpaid dividends by the then
effective conversion price, which is referred to as the conversion rate.

If the market price of our common stock equals or exceeds $22 per share for
any 20 consecutive trading days, we may elect to convert all outstanding shares
of Series E convertible preferred stock into common stock at the then effective
conversion rate. If for any reason we do not pay any portion of the accrued
dividends on the Series E convertible preferred stock being converted, we may
pay that portion of unpaid dividends in shares of common stock.

ADJUSTMENTS TO CONVERSION PRICE

The conversion price and the number of shares of common stock issuable upon
conversion of the Series E convertible preferred stock are subject to adjustment
from time to time upon the occurrence of any of the following events at any
time:

- If we (A) issue common stock as a dividend or a distribution with respect
to any class or series of our capital stock, (B) split or otherwise
subdivide our common stock, (C) combine our outstanding shares of common
stock into a greater or smaller number of shares, or (D) issue any shares
of capital stock in a reclassification;

- If there occurs a merger, consolidation, recapitalization or conveyance
of all or substantially all of our assets.

FRACTIONAL SHARES

We will not issue any fractional shares of common stock upon the conversion
of the Series E convertible preferred stock but rather will pay cash based on
the then current market price per share of our common stock.

COMMON STOCK PURCHASE WARRANTS

As of August 31, 2002, we have outstanding common stock purchase warrants
that entitle the holders to the right to purchase 17,154,405 shares of our
common stock. These common stock purchase warrants have exercise prices ranging
from $0.01 to $23.75. Common stock purchase warrants not exercised by their
respective expiration dates will expire.

ADJUSTMENTS TO EXERCISE PRICE

The exercise price and the number of shares of common stock issuable upon
the exercise of the common stock purchase warrants are subject to adjustment
from time to time if we (A) subdivide shares of our common stock, (B) declare a
dividend upon our common stock payable solely in shares of our common stock, (C)
reclassify or change our common stock into different securities, or (D) make a
distribution on our capital stock other than regular cash dividends.

RESERVATION OF SHARES

We have authorized, reserved and will keep available a sufficient number of
shares of our common stock as will be issuable upon exercise of all outstanding
common stock purchase warrants. Upon issuance, these shares of common stock will
be duly and validly issued, fully paid and non-assessable, free of all
preemptive rights and taxes.

VOTING

The holders of the common stock purchase warrants have no right to vote on
matters submitted to shareholders and have no right to receive dividends.

LISTING

There is no public trading market for the common stock purchase warrants.

FRACTIONAL SHARES

We will not issue fractional shares of common stock upon exercise of the
common stock purchase warrants but rather will pay the holder an amount in cash
equal to the fair market value of any fractional interest.

REGISTRATION RIGHTS

We are obligated to register the resale of the common stock into which the
common stock purchase warrants are exercisable provided more than one year has
elapsed from the issuance of the relevant common stock purchase warrant. If we
fail to make a filing with the SEC to register the underlying common stock
within 30 days of the holder's request, the holder is entitled to receive from
us in cash the difference between the exercise price and the average closing
price of our common stock during the 30 calendar days immediately following the
holder's request to register the common stock purchase warrants.

In addition to the common stock purchase warrants described above, we have
issued warrants for services rendered and in connection with financings. These
warrants have the same characteristics as the common stock purchase warrants
described above with respect to reservation of shares, voting, listing and
fractional shares. The particular additional terms of these warrants are as
follows:

AZIMUTH/CADMUS/NORTHLEA/VENTANA/CELL SOLUTIONS COMMON STOCK PURCHASE WARRANTS

On February 7, 2001, we issued a warrant to Azimuth entitling Azimuth to
purchase 1,000,000 shares of our common stock at an exercise price of $0.25 per
share, subject to the antidilution adjustments described below. The Azimuth
warrant expires February 7, 2006.

On August 6, 2001, we issued warrants to Azimuth, Cadmus and Northlea
Partners entitling the holders to purchase 250,000, 250,000 and 62,500 shares,
respectively, of our common stock at an exercise price of $1.00 per share
subject to the antidilution adjustments described below. These warrants expire
August 6, 2006.

On November 2, 2001 we issued a warrant to Ventana to purchase 1,750,000
shares of our common stock at an exercise price of $1.15 per share, subject to
the antidilution adjustments described below. The Ventana warrant expires
November 2, 2004.

On October 11, 2001 we issued a warrant to Cell Solutions, LLC to purchase
172,120 shares of our common stock at an exercise price of $0.82 per share,
subject to the antidilution adjustments described below. The Cell Solutions
warrant expires October 11, 2006.

ADJUSTMENTS TO EXERCISE PRICE

The exercise price and the number of shares of common stock issuable upon
the exercise of these warrants are subject to adjustment from time to time upon
the occurrence of any of the following events:

- If we (A) pay a dividend or make a distribution of common stock or (B)
subdivide or combine outstanding shares of our common stock;

- If we issue or sell any shares of our common stock at a price per share
less than the exercise price;

- If we dividend or otherwise issue or sell any securities convertible into
our common stock;

- If we (A) merge or consolidate with another entity, (B) sell, lease or
otherwise transfer all or substantially all of our property or assets or
(C) effect a capital reorganization or recapitalization of our common
stock.

BATHGATE WARRANTS

On February 28, 2001, we issued warrants pursuant to a warrant agreement
with Bathgate entitling the holders of those warrants to purchase an aggregate
of 227,500 shares of our common stock at an exercise price of $1.20 per share
subject to the antidilution adjustments described below. The Bathgate warrants
expire February 28, 2006.

ADJUSTMENTS TO EXERCISE PRICE

The exercise price and the number of shares of common stock issuable upon
the exercise of the Bathgate warrants are subject to adjustment from time to
time upon the occurrence of any of the following events:

- If we (A) pay a dividend or make a distribution to holders of our common
stock, (B) subdivide or combine our outstanding shares of our common
stock, or (C) issue by classification of our common stock other
securities;

- If we issue rights, options, warrants or convertible securities to all or
substantially all holders of our common stock, without charge, entitling
them to purchase common stock below the then current market value per
share of common stock on the date of issuance;

- If we distribute to holders of common stock all or substantially all
evidences of indebtedness of assets or rights, options, warrants or
convertible securities containing the right to purchase our common stock;

- If we (A) consolidate or merge with another entity, or (B) sell or convey
all or substantially all of our property or assets of the business. We
may not merge or consolidate with another entity unless we make these
adjustments.

No adjustment to the Bathgate warrants will be made due to any dividends or
distributions out of earnings or grants or exercises of currently authorized or
outstanding options or issuance of shares under our benefit plans.

HOLLEB WARRANT

On July 15, 1999, we issued a warrant to Holleb & Coff entitling Holleb to
purchase 250,000 shares of our common stock at an exercise price of $0.33 per
share. The Holleb warrant expires July 14, 2009.

TUCKER ANTHONY WARRANT

On July 10, 2001, we issued a warrant to Tucker Anthony Incorporated
entitling Tucker Anthony to purchase 150,000 shares of our common stock at an
exercise price of $1.20 subject to the antidilution adjustments described below.
The Tucker Anthony warrant expires July 10, 2006.

ADJUSTMENTS TO EXERCISE PRICE

The exercise price and the number of shares of common stock issuable upon
the exercise of the Tucker Anthony warrant are subject to adjustment from time
to time if we (A) declare a dividend on our outstanding common stock payable in
shares of our capital stock; (B) subdivide or combine outstanding shares of our
common stock into a greater or smaller number of shares; or (C) issue any shares
of our capital stock by way of reclassification, including a merger or
consolidation.

SCHWARTZ, COOPER, GREENBERGER & KRAUSS

On February 13, 2002, we issued a warrant to Schwartz, Cooper, Greenberger
& Krauss entitling Schwartz Cooper to purchase 750,000 shares of our common
stock at an exercise price of $0.01 per share, anytime after February 13, 2003
subject to the antidilution adjustments described below. The Schwartz Cooper
warrant expires February 12, 2012.

ADJUSTMENTS TO EXERCISE PRICE

The exercise price and the number of shares of common stock issuable upon
the exercise of the Schwartz Cooper warrant is subject to adjustment from time
to time if we (A) declare a dividend on our outstanding common stock payable in
shares of our capital stock; (B) subdivide or combine outstanding shares of our
common stock into a greater or smaller number of shares; (C) effect a stock
split; (D) reclassify or recapitalize shares of our common stock; (E)
consolidate or merge with another entity; or (F) sell or lease all or
substantially all of our properties and assets.

REGISTRATION RIGHTS

We are obligated to register the resale of the common stock into which the
Schwartz Cooper warrant is exercisable at any time after February 13, 2002 upon
the demand of the holder or if we undertake to register any common stock for our
own account or any other person.

BRIDGE FINANCING

From March 2002 through June 2002, we raised $2,625,000 in bridge financing
in which we issued 105 units, each consisting of a $25,000 convertible
promissory note at 7% due December 31, 2002 and a common stock purchase warrant
entitling the holder to the right to purchase 25,000 shares of our common stock
for $0.25 per share. Each unit sold for $25,000. We also issued 22.4 units to
NeoMed Innovations III LP based on an outstanding convertible promissory note
dated May 15, 2000.

BRIDGE WARRANT

Each bridge warrant is exercisable into one share of our common stock at
$0.25 per share for a period of five years.

ADJUSTMENTS TO EXERCISE PRICE

The exercise price and the number of shares of common stock issuable upon
the exercise of the bridge warrants are subject to adjustment from time to time
upon the occurrence of any of the following events:

- If we (A) pay a dividend or make a distribution to our shareholders, (B)
subdivide our common stock, (C) combine our common stock into a smaller
number of shares, or (D) issue by classification of our common stock
other securities;

- If we issue any securities at a price per share less than the exercise
price of the bridge warrants;

- If we distribute evidences of our indebtedness or assets to all or
substantially all of the holders of common stock;

- If we consolidate or merge with another entity or sell or convey all or
substantially all of our business or assets or property.

BRIDGE PROMISSORY NOTE

The bridge promissory notes, as amended, due December 31, 2002 bear
interest at 7% per year and are convertible at any time at the option of the
holder and automatically when we raise at least $7,000,000 in equity financing
(including the conversion of the bridge promissory notes). The bridge promissory
notes convert into one share of our common stock at a 25% discount to the price
at which our common stock is trading at the time of conversion but not more than
$1. In addition, for each four shares of common stock the bridge promissory
notes are converted into, the holder receives one common stock purchase warrant
which is exercisable for one share of our common stock at 150% of the conversion
price of the bridge promissory notes.

CONVERTIBLE PROMISSORY NOTE

We have issued a convertible promissory note to Monsun AS due July 31,
2002. The note is in default, but there are no default remedies in the note
agreement. The promissory note is for the principal amount of $500,000. We also
issued a warrant for 100,000 shares of our common stock with an exercise price
of $0.60 per share and a warrant for 200,000 shares of our common stock with an
exercise price of $.30 per share to Monsun in consideration of Monsun initially
extending the due date of their note, and a second warrant for 200,000 shares
with an exercise price of $0.70 per share in consideration of Monsun extending
the note to July 31. If we prepay the promissory note, the holder, at its
option, may elect to convert the promissory note, plus accrued interest, into
shares of our common stock at the conversion rate of $1 per share. In addition,
the number of shares of common stock the promissory note is convertible into is
subject to adjustment from time to time if we (A) subdivide, combine or
reclassify our common stock, or (B) exchange our common stock for securities or
property of another company.

RICHARD DOMANIK WARRANT

On May 30, 2002, we issued a warrant to Richard Domanik entitling him to
purchase 51,483 shares of our common stock at an exercise price of $0.01 per
share, any time after May 31, 2002. The Richard Domanik warrant expires May 31,
2007.

REGISTRATION RIGHTS

We are obligated to register the resale of the common stock into which the
Richard Domanik warrant is exercisable upon the demand of the holder or if we
undertake to register any common stock for our own account or any other person.

ROUND VALLEY CAPITAL, LLC WARRANT

On September 4, 2002, we issued a warrant to Round Valley Capital, LLC
entitling Round Valley Capital to purchase 681,818 shares of our common stock at
an exercise price of $0.20 per share, any time after September 4, 2002. The
Round Valley Capital warrant expires September 3, 2003. In lieu of additional
cash fees requested by Round Valley Capital, the exercise price of the warrant
is discounted from the current market price of our stock.

REGISTRATION RIGHTS

We are obligated to register the resale of the common stock into which the
Round Valley Capital warrant is exercisable 30 days from the exercise date.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar of our common stock is LaSalle Bank
National Association, Chicago, Illinois.

LEGAL MATTERS

The validity of the shares offered by this prospectus has been passed upon
for us by Schiff Hardin & Waite, Chicago, Illinois.

EXPERTS

The consolidated financial statements of Molecular Diagnostics, Inc.
appearing in our Form 10-K, as amended, for the year ended December 31, 2001,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon (which contains an explanatory paragraph describing
conditions that raise substantial doubt about Molecular Diagnostics' ability to
continue as a going concern as described in Note 1 to the consolidated financial
statements) included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION ABOUT US

We file annual, quarterly and special reports and other information with
the SEC. You may read and copy any document we file with the SEC in Washington,
D.C. or at its regional offices located at:

<Table>

Public Reference Room Midwest Regional Office
450 Fifth Street, N.W. Citicorp Center
Room 1024 500 West Madison Street
Washington, D.C. 20549 Suite 1400
Chicago, Illinois 60661
</Table>

You may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330.

The SEC also maintains a web site that contains reports, proxy statements
and other information about issuers, like us, who file electronically. The
address of that site is: http://www.sec.gov.

Our common stock is listed on the Over-the-Counter Bulletin Board and
reports and proxy statements and other information about us can be inspected at
the offices of The Nasdaq-Amex Stock Market, Inc., 1735 K Street, N.W.,
Washington, DC 20006-1500.

We filed two registration statements on Form S-2 under the Securities Act
with the SEC that registers the shares of our common stock offered by this
prospectus. This prospectus constitutes a part of those registration statements
but does not contain all the information presented in the registration
statements and their exhibits. For more information we refer you to the
registration statements, including the exhibits.

The SEC allows us to "incorporate by reference" information we file with
the SEC, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is an important part of this prospectus. This
prospectus incorporates by reference:

- Annual Report on Form 10-K, as amended, for the year ended December 31,
2001;

- Quarterly Report on Form 10-Q for the quarter ended March 31, 2002;

- Quarterly Report on Form 10-Q for the quarter ended June 30, 2002;

- Current Report on Form 8-K dated January 22, 2002; and

- Current Report on Form 8-K dated June 10, 2002.

To receive at no cost a copy of the documents incorporated by reference in
this prospectus, you may write or telephone us at the following:

Molecular Diagnostics, Inc.
414 North Orleans Street
Suite 510
Chicago, Illinois 60610
(312) 222-9550
Attention: Peter P. Gombrich

We will not provide exhibits to documents unless they are specifically
incorporated by reference. If you request any incorporated documents from us, we
will mail them to you by first class mail, or another equally prompt means,
within one business day after we receive your request.

DOCUMENTS DELIVERED WITH THIS PROSPECTUS

We are delivering a copy of our Annual Report on Form 10-K, as amended, for
the fiscal year ended December 31, 2001 and our Quarterly Report on Form 10-Q
for the quarter ended June 30, 2002 with this prospectus.

COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITY

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to our directors, officers and controlling persons pursuant to
our charter, bylaws or otherwise, we have been advised that in the opinion of
the SEC, such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim of
indemnification against such liabilities (other than the payment by us of
expenses incurred or paid by one of our directors, officers or controlling
persons in the successful defense of any action, suit or proceeding) is asserted
by one of our directors, officers or controlling persons in connection with the
securities being registered, we will, unless in the opinion of our counsel the
matter has been settled by 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 and will be governed by
the final adjudication of such issue.

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

46,766,537 Shares

MOLECULAR DIAGNOSTICS, INC.

COMMON STOCK

PROSPECTUS

September , 2002

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

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by Molecular Diagnostics, Inc.
in connection with the sale of the common stock being registered. All amounts
are estimates except the registration fees.

<Table>
<Caption>
AMOUNT TO BE
PAID
------------

SEC Registration Fee................................... $ 219
Printing............................................... 10,000
Legal Fees and Expenses................................ 10,000
Accounting Fees and Expenses........................... 5,000
Blue Sky Fees and Expenses............................. 0
Transfer Agent and Registrar Fees...................... 0
Miscellaneous.......................................... 281
-------
Total........................................ $25,500
=======
</Table>

ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS

Section 145 of the Delaware General Corporation Law authorizes
indemnification of directors, officers, employees and agents of Molecular
Diagnostics; allows the advancement of costs of defending against litigation;
and permits companies incorporated in Delaware to purchase insurance on behalf
of directors, officers, employees and agents against liabilities whether or not
in the circumstances such companies would have the power to indemnify against
such liabilities under the provisions of the statute.

Molecular Diagnostics' Certificate of Incorporation, copies of which are
incorporated hereto as Exhibits 3.1, 3.3, 3.5-3.7, 3.9-3.13 and its By-Laws,
which are incorporated hereto as Exhibits 3.2, 3.4 and 3.8 provide for
indemnification of its officers and directors to the fullest extent permitted by
Section 145 of the Delaware General Corporation Law.

Molecular Diagnostics' Certificate of Incorporation eliminates, to the
fullest extent permitted by Delaware law, liability of a director to Molecular
Diagnostics or its stockholders for monetary damages for a breach of such
director's fiduciary duty of care except for liability where a director (a)
breaches his or her duty of loyalty to Molecular Diagnostics or its
stockholders, (b) fails to act in good faith or engages in intentional
misconduct or knowing violation of law, (c) authorizes payment of an illegal
dividend or a stock repurchase or (d) obtains an improper personal benefit.
While liability for monetary damages has been eliminated, equitable remedies
such as injunctive relief or rescission remain available. In addition, a
director is not relieved of his responsibilities under any other law, including
the federal securities laws.

Molecular Diagnostics has obtained an insurance policy in the amount of
$3,000,000 which (i) provides for the payment by the insurer of all amounts
which Molecular Diagnostics may legally pay to officers and directors as
indemnification, excluding certain fines and penalties which are legally
uninsurable, and (ii) insures Molecular Diagnostics' officers and directors
against certain claims which are not indemnified by Molecular Diagnostics.

Insofar as indemnification by Molecular Diagnostics for liabilities arising
under the Securities Act may be permitted to directors, officers and controlling
persons of Molecular Diagnostics pursuant to the foregoing provisions, Molecular
Diagnostics has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.

II-1

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) EXHIBITS

<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------

2.1 Bell National Corporation Plan of Reorganization (Annex I).
(Incorporated herein by reference to Item 1 of the Bell
National Corporation Annual Report on Form 10-K for the
period from August 20, 1985 to December 31, 1985 and for the
years ended December 31, 1986 and 1987.)*
2.2 Exchange Agreement dated December 4, 1998 among the Company,
InPath, and the InPath Members. (Incorporated herein by
reference to Appendix A to the Bell National Corporation
Definitive Proxy Statement on Schedule 14A, filed on April
30, 1999.)*
2.3 Agreement and Plan of Merger of Bell National Corporation
and the Company. (Incorporated herein by reference to
Appendix C to the Bell National Corporation Definitive Proxy
Statement on Schedule 14A, filed on April 30, 1999.)*
2.4 Agreement and Plan of Merger by and among AccuMed
International, Inc., AccuMed Acquisition Corp. and Ampersand
Medical Corporation, dated as of February 7, 2001.
(Incorporated herein by reference to Appendix I to
Registration Statement No. 333-61666.)
2.5 Amendment No. 1, dated May 14, 2001 to the Agreement and
Plan of Merger by and among AccuMed International, Inc.,
AccuMed Acquisition Corp. and Ampersand Medical Corporation,
dated February 7, 2001. (Incorporated herein by reference to
Appendix I to Registration Statement No. 333-61666.)
3.1 Restated Articles of Incorporation. (Incorporated herein by
reference to Exhibit 3.1 of the Bell National Corporation
Annual Report on Form 10-K for the fiscal year ended
December 31, 1988.)*
3.2 Bylaws of Bell National Corporation. (Incorporated herein by
reference to Exhibit 3.2 of the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1989.)*
3.3 Certificate of Incorporation of the Company as amended.
(Incorporated herein by reference to Appendix D to the Bell
National Corporation Definitive Proxy Statement on Schedule
14A, filed on April 30, 1999.)*
3.4 By-laws of the Company. (Incorporated herein by reference to
Appendix E to the Bell National Corporation Definitive Proxy
Statement on Schedule 14A, filed on April 30, 1999.)*
3.5 Certificate of Designation, Preferences and Rights of Series
A Convertible Preferred Stock of Ampersand Medical
Corporation. (Incorporated herein by reference to Exhibit
3.5 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2000.)
3.6 Certificate of Designation, Preferences and Rights of Series
B Convertible Preferred Stock of Ampersand Medical
Corporation. (Incorporated herein by reference to Exhibit
3.6 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2000.)
3.7 Certificate of Incorporation of Molecular Diagnostics, Inc.,
as amended. (Incorporated herein by reference to the
Company's Current Report on Form 8-K dated September 26,
2001.)
3.8 Section 6 of Article VII of the By-laws of the Company as
amended. (Incorporated herein by reference to Exhibit 3.3 to
the Company's S-4 Registration Statement, File No.
333-61666, filed August 24, 2001.)
3.9 Certificate of Designation, Preferences and Rights of Series
C Convertible Preferred Stock of Molecular Diagnostics, Inc.
(Incorporated herein by reference to Exhibit 3.4 to the
Company's S-2 Registration Statement, File No. 333083578
filed February 28, 2002)
3.10 Certificate of Amendment of Certificate of Designation,
Preferences and Rights of Series C Convertible Preferred
Stock. (Incorporated herein by reference to Exhibit 3.5 to
the Company's S-2 Registration Statement, File No. 333083578
filed February 28, 2002)
3.11 Certificate of Amendment of Amended Certificate of
Designation, Preferences and Rights of Series C Convertible
Preferred Stock. (Incorporated herein by reference to
Exhibit 3.6 to the Company's S-2 Registration Statement,
File No. 333083578 filed February 28, 2002)
3.12 Certificate of Designation, Preferences and Rights of Series
D Convertible Preferred Stock. (Incorporated herein by
reference to Exhibit 3.7 to the Company's S-2 Registration
Statement, File No. 333083578 filed February 28, 2002)
</Table>

II-2

<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------

3.13 Certificate of Designation, Preferences and Rights of Series
E Convertible Preferred Stock. (Incorporated herein by
reference to Exhibit 3.8 to the Company's S-2 Registration
Statement, File No. 333083578 filed February 28, 2002)
4.1 Form of Common Stock Purchase Warrant, as executed by Bell
National Corporation on December 4, 1998 with respect to
each of Mr. Gombrich, Theodore L. Koenig, William J. Ritger,
Fred H. Pearson, Walter Herbst, AccuMed International, Inc.,
Northlea Partners Ltd., and Monroe Investments, Inc.
(collectively, the "InPath Members"). (Incorporated herein
by reference to Exhibit 3 of the Schedule 13D filed jointly
by the InPath Members on December 14, 1998.)*
4.2 Stockholders Agreement dated December 4, 1998 among the
Company, Winchester National, Inc., the InPath Members, and
Mr. Milley, Mr. Shaw, Cadmus, and MMI (collectively, the
"Claimants"). (Incorporated herein by reference to Exhibit 2
to the Schedule 13D filed jointly by the InPath Members on
December 14, 1998.)*
4.3 Form of Common Stock Purchase Warrant issued to Holleb &
Coff on July 4, 1999 representing the right to purchase
250,000 shares of Common Stock of the Company in connection
with legal services rendered. (Incorporated herein by
reference to Exhibit 4.3 of the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1999.)*
4.4 Form of Common Stock Purchase Warrant issued to The Research
Works on October 11, 1999 representing the right to purchase
70,000 shares of Common Stock of the Company in connection
with the preparation of an investment research report.
(Incorporated herein by reference to Exhibit 4.4 of the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1999.)*
4.5 Form of Common Stock Purchase Warrant issued to Azimuth
Corporation on December 10, 1999 representing the right to
purchase 50,000 shares of Common Stock of the Company as
additional consideration for a 12% Convertible Promissory
Note issued on the same date. (Incorporated herein by
reference to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1999.)*
4.6 Form of Common Stock Purchase Warrant issued to Richard
Doermer on January 3, 2000 representing the right to
purchase 96,250 shares of Common Stock of the Company in
connection with financial advisory services rendered.
(Incorporated by reference to Exhibit 4.6 to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 2000.)*
4.7 Form of Common Stock Purchase Warrant issued to Richard
Doermer on January 3, 2000 representing the right to
purchase 75,759 shares of Common Stock of the Company in
connection with financial advisory services rendered.
(Incorporated by reference to Exhibit 4.7 to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 2000.)*
4.8 Form of Common Stock Purchase Warrant issued to Richard
Doermer on January 3, 2000 representing the right to
purchase 121,313 shares of Common Stock of the Company in
connection with financial advisory services rendered.
(Incorporated by reference to Exhibit 4.8 to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 2000.)*
4.9 Form of Common Stock Purchase Warrant issued to Richard
Doermer on January 3, 2000 representing the right to
purchase 94,697 shares of Common Stock of the Company in
connection with financial advisory services rendered.
(Incorporated by reference to Exhibit 4.9 to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 2000.)*
4.10 Form of Common Stock Purchase Warrant issued to William J.
Ritger on May 24, 2000 representing the right to purchase
531,614 shares of Common Stock of the Company in connection
with financial advisory services rendered. (Incorporated by
reference to Exhibit 4.10 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2000.)*
4.11 Form of Common Stock Purchase Warrant issued to Denis M.
O'Donnell on May 24, 2000 representing the right to purchase
784,901 shares of Common Stock of the Company in connection
with financial advisory services rendered. (Incorporated by
reference to Exhibit 4.11 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2000.)*
4.12 Form of Common Stock Purchase Warrant issued to Prospektiva,
SA on May 23, 2000 representing the right to purchase 48,333
shares of Common Stock of the Company in connection with
financial advisory services rendered. (Incorporated by
reference to Exhibit 4.12 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2000.)*
</Table>

II-3

<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------

4.13 Form of Common Stock Purchase Warrant issued to Dr. Bruce
Patterson, on September 12, 2000 representing the right to
purchase 150,000 shares of Common Stock of the Company as
additional consideration for the achievement of product
development milestones under a License and Development
Agreement for Specific Medical Technology for the Detection
of Oncogenic HPV Virus. (Incorporated by reference to
Exhibit 4.13 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2000.)*
4.14 Form of Common Stock Purchase Warrant issued to Dr. Bruce
Patterson, on September 12, 2000 representing the right to
purchase 100,000 shares of Common Stock of the Company as
consideration for an Addendum to a License and Development
Agreement for Specific Medical Technology for the Detection
of Oncogenic HPV Virus. (Incorporated by reference to
Exhibit 4.14 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2000.)*
4.15 Form of Common Stock Purchase Warrant issued to Osprey
Partners, on November 22, 2000 representing the right to
purchase 100,000 shares of Common Stock of the Company in
connection with financial advisory services to be rendered
over twelve months. (Incorporated by reference to Exhibit
4.15 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2000.)*
4.16 Form of Common Stock Purchase Warrant issued to Univest
Management, Inc. on November 22, 2000 representing the right
to purchase 100,000 shares of Common Stock of the Company in
connection with financial advisory services to be rendered
over twelve months. (Incorporated by reference to Exhibit
4.16 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2000.)*
4.17 Form of Common Stock Purchase Warrant issued to Azimuth
Corporation on December 1, 2000 representing the right to
purchase 50,000 shares of Common Stock of the Company as
additional consideration for a 12% Promissory Note issued on
December 4, 2000. (Incorporated by reference to Exhibit 4.17
to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2000.)*
4.18 Form of Common Stock Purchase Warrant issued to Azimuth
Corporation on December 8, 2000 representing the right to
purchase 1,000,000 shares of Common Stock of the Company as
additional consideration for a 15% Promissory Note issued on
December 11, 2000 in connection with the proposed
acquisition of AccuMed International, Inc. by the Company.
(Incorporated by reference to Exhibit 4.18 to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 2000.)*
4.19 Form of Common Stock Purchase Warrant issued to Azimuth
Corporation on February 7, 2001 representing the right to
purchase 1,000,000 shares of Common Stock of the Company as
additional consideration for two 15% Promissory notes issued
on February 1, 2001 and February 7, 2001 in connection with
the proposed acquisition of AccuMed International, Inc. by
the Company. (Incorporated by reference to Exhibit 4.19 to
the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000.)*
4.20 Common Stock Purchase Warrant issued to Azimuth Corporation
on August 6, 2001 representing the right to purchase 250,000
shares of common stock of the Company as additional
consideration for a 15% promissory note. (Incorporated by
reference to Exhibit 4.24 to the Company's S-4 Registration
Statement File No. 333-61666 filed August 24, 2001.)
4.21 Common Stock Purchase Warrant issued to Cadmus Corporation
on August 6, 2001 representing the right to purchase 250,000
shares of common stock of the Company as additional
consideration for a 15% promissory note. (Incorporated by
reference to Exhibit 4.23 to the Company's S-4 Registration
Statement File No. 333-61666 filed August 24, 2001.)
4.22 Common Stock Purchase Warrant issued to Northlea Partners,
Ltd. on August 6, 2001 representing the right to purchase
62,500 shares of common stock of the Company as additional
consideration for a 15% promissory note. (Incorporated by
reference to Exhibit 4.27 to the Company's S-4 Registration
Statement File No. 333-61666 filed August 24, 2001.)
</Table>

II-4

<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------

4.23 Common Stock Purchase Warrant issued to Azimuth Corporation
on July 26, 2001 representing the right to purchase 500,000
shares of common stock of the Company as consideration of
Azimuth's waiver of the conversion feature of its $500,000
convertible promissory note issued September 22, 2000.
(Incorporated by reference to Exhibit 4.25 to the Company's
S-4 Registration Statement File No. 333-61666 filed August
24, 2001.)
4.24 Common Stock Purchase Warrant issued to Azimuth Corporation
on August 17, 2001 representing the right to purchase 25,000
shares of common stock of the Company. (Incorporated by
reference to Exhibit 4.26 to the Company's S-4 Registration
Statement File No. 333-61666, filed August 24, 2001.)
4.25 Common Stock Purchase Warrant issued to Tucker Anthony
Incorporated on July 10, 2001 representing the right to
purchase 150,000 shares of common stock of the Company.
(Incorporated by reference to Exhibit 4.28 to the Company's
S-2 Registration Statement, File No. 333-83578 filed
February 28, 2002).
4.26 Common Stock Purchase Warrant issued to Ventana Medical
Systems, Inc. on November 2, 2001 representing the right to
purchase 1,750,000 shares of common stock of the Company.
(Incorporated by reference to Exhibit 4.29 to the Company's
S-2 Registration Statement, File No. 333-83578 filed
February 28, 2002).
4.27 Form of Confidential $5,000,000 Common Stock Private
Offering Memorandum dated January 2000. (Incorporated by
reference to Exhibit 4.20 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2000.)*
4.28 Form of Confidential $5,000,000 Series B Convertible
Preferred Stock Private Offering memorandum dated November
2000 and amended January 30, 2001. (Incorporated by
reference to Exhibit 4.21 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2000.)*
4.29 Amendment No. 1 to Stockholders Agreement dated July 25,
2000 among the Company, the InPath Members, Mr. Milley, Mr.
Shaw, MMI, Cadmus Corporation, and Winchester National, Inc.
(Incorporated by reference to Exhibit 4.22 to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 2000.)*
4.30 Common Stock Purchase Warrant issued to Schwartz, Cooper,
Greenberger & Krauss, Chartered on February 13, 2002
representing the right to purchase 750,000 shares of common
stock. (Incorporated by reference to Exhibit 4.30 to the
Company's S-2 Registration Statement, File No. 333-83578
filed June 27, 2002).
4.31 Common Stock Purchase Warrant issued to Monsun AS on April
1, 2002 representing the right to purchase 200,000 shares of
common stock. (Incorporated by reference to Exhibit 4.31 to
the Company's S-2 Registration Statement, File No. 333-83578
filed June 27, 2002).
4.32 Form of Common Stock Purchase Warrant issued to Cell
Solutions, LLC on October 11, 2001 representing the right to
purchase 172,120 shares of common stock. (Incorporated by
reference to Exhibit 4.32 to the Company's S-2 Registration
Statement, File No. 333-83578 filed June 27, 2002).
4.33 Form of Common Stock Purchase Warrant issued in connection
with certain bridge financing in June 2002. (Incorporated by
reference to Exhibit 4.33 to the Company's S-2 Registration
Statement, File No. 333-83578 filed June 27, 2002).
4.34 Common Stock Purchase Warrant issued to Richard Domanik on
May 30, 2002 representing the right to purchase 51,483
shares of common stock.
4.35 Common Stock Purchase Warrant issued to Round Valley
Capital, LLC on September 4, 2002 representing the right to
purchase 681,818 shares of common stock.
5.1 Opinion of Schiff Hardin & Waite.
10.1 Stock Appreciation Rights Agreement dated as of November 20,
1989 between the Company and Raymond O'S. Kelly.
(Incorporated herein by reference to Exhibit 10.5 of the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1989.)*
10.2 Stock Appreciation Rights Agreement dated as of November 20,
1989 between the Company and Nicholas E. Toussaint.
(Incorporated herein by reference to Exhibit 10.7 of the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1989.)*
</Table>

II-5

<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------

10.3 Stock Appreciation Rights Agreement dated as of November 20,
1989 between the Company and Nicholas E. Toussaint.
(Incorporated herein by reference to Exhibit 10.7 of the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1989.)*
10.4 SAR Agreement Extension dated November 15, 1995 between the
Company and Raymond O'S. Kelly. (Incorporated herein by
reference to Exhibit 10.20 of the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995.)*
10.5 SAR Agreement Extension dated November 15, 1995 between the
Company and Nicholas E. Toussaint. (Incorporated herein by
reference to Exhibit 10.21 of the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995.)*
10.6 Employment Agreement dated May 1, 1998 between Mr. Gombrich
and InPath, LLC, as amended on December 4, 1998.
(Incorporated herein by reference to Exhibit 10.6 of the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998.)*
10.7 Claims Agreement dated December 4, 1998 among the Company,
the Claimants, and Liberty Associates Limited Partnership.
(Incorporated herein by reference to Exhibit 4 to the
Schedule 13D filed jointly by the InPath Members on December
14, 1998.)*
10.8 Ampersand Medical Corporation Equity Incentive Plan
established as of June 1, 1999. (Incorporated herein by
reference to Appendix F to the Bell National Corporation
Definitive Proxy Statement on Schedule 14A, as filed on
April 30, 1999.)*
10.9 Ampersand Medical Corporation Employee Stock Purchase Plan.
(Incorporated herein by reference to Appendix G to the Bell
National Corporation Definitive Proxy statement on Schedule
14A, as filed on April 30, 1999.)*
10.10 Form of Promissory Note issued in connection with the Bridge
Financing in June 2002. (Incorporated by reference to
Exhibit 10.10 to the Company's S-2 Registration Statement,
File No. 333-83578 filed June 27, 2002).
10.11 Lease Agreement between the Company and O.P., L.L.C. dated
September 1, 1999 pertaining to the premises located at
suite 305, 414 N. Orleans, Chicago, IL 60610. (Incorporated
herein by reference to Exhibit 10.12 of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31,
1999.)*
10.12 Amendment to Lease Agreement between the Company and O.P.,
L.L.C. dated November 1, 1999 pertaining to the premises at
suite 300, 414 N. Orleans, Chicago, IL 60610. (Incorporated
herein by reference to Exhibit 10.13 of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31,
1999.)*
10.13 Form of Note purchase agreements dated between March 1, 1999
and June 29, 1999 between the Company and several
purchasers. (Incorporated herein by reference to Exhibit
10.14 of the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1999.)*
10.14 Form of 6% Convertible Subordinated Note Due 2000, dated
between March 1, 1999 and June 29, 1999 issued by the
Company to several purchasers. (Incorporated herein by
reference to Exhibit 10.15 of the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1999.)*
10.15 Schedule of purchasers of 6% Convertible Notes Due 2000,
including dates and amount purchased. (Incorporated herein
by reference to Exhibit 10.16 of the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1999.)*
10.16 Form of Senior Convertible Promissory Note issued to Azimuth
Corporation on December 10, 1999. (Incorporated herein by
reference to Exhibit 10.17 of the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1999.)*
10.17 Form of Restricted Stock Award of 50,000 shares of Common
Stock issued to David A. Fishman, M.D., on August 10, 1999
as additional compensation under a 36 month Consulting
Agreement dated June 1, 1999. (Incorporated herein by
reference to Exhibit 10.18 of the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1999.)
10.18 Form of Restricted Stock award of 50,000 shares of Common
Stock issued to Arthur L. Herbst, M.D., on August 10, 1999
as additional compensation under a 36 month Consulting
Agreement dated July 1, 1999. (Incorporated herein by
reference to Exhibit 10.19 of the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1999.)*
</Table>

II-6

<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------

10.19 Form of $2,000,000 note received from Seaside Partners, L.P.
on April 28, 2000. (Incorporated by reference to Exhibit
10.20 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2000.)*
10.20 Form of $300,000 note received from AccuMed International,
Inc. on September 22, 2000 in conjunction with the proposed
acquisition of AccuMed by the Company. (Incorporated by
reference to Exhibit 10.21 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2000.)*
10.21 Form of $500,000 Convertible Promissory Note issued to
Azimuth Corporation on September 22, 2000 in connection with
the proposed acquisition of AccuMed International, Inc. by
the Company. (Incorporated by reference to Exhibit 10.22 to
the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000.)*
10.22 Form of $500,000 Convertible Promissory Note issued to
Monsun, AS on November 1, 2000. (Incorporated by reference
to Exhibit 10.23 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 2000.)*
10.23 Form of $200,000 Promissory Note issued to Azimuth
Corporation on December 4, 2000. (Incorporated by reference
to Exhibit 10.24 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 2000.)*
10.24 Form of $100,000 Promissory Note issued to Azimuth
Corporation on December 11, 2000 in conjunction with the
proposed acquisition of AccuMed International, Inc. by the
Company. (Incorporated by reference to Exhibit 10.25 to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000.)*
10.25 Amendment to Patent and Technology License Agreement dated
June 9, 2000 by and between Ampersand Medical Corporation,
AccuMed International, Inc. and InPath, L.L.C. (Incorporated
by reference to Exhibit 10.26 to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 2000.)*
10.26 License and Development Agreement for Specific Medical
Technology for the Detection of Oncogenic HPV Virus dated
June 23, 2000, by and between Invirion, Dr. Bruce Patterson,
and Ampersand Medical Corporation. (Incorporated by
reference to Exhibit 10.27 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2000.)*
10.27 First Addendum to License and Development Agreement for
Specific Medical Technology for the Detection of Oncogenic
HPV Virus dated September 12, 2000, by and between Invirion,
Dr. Bruce Patterson and Ampersand Medical Corporation.
(Incorporated by reference to Exhibit 10.28 to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 2000.)*
10.28 Second Addendum to License and Development Agreement for
Specific Medical Technology for the Detection of Oncogenic
HPV Virus dated January 12, 2001, by and between Invirion,
Dr. Bruce Patterson and Ampersand Medical Corporation.
(Incorporated by reference to Exhibit 10.29 to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 2000.)*
10.29 Form of $25,000 Promissory Note issued to Azimuth
Corporation on February 1, 2001 in conjunction with the
proposed acquisition of AccuMed International, Inc. by the
Company. (Incorporated by reference to Exhibit 10.30 to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000.)*
10.30 Form of $470,000 Promissory Note issued to Azimuth
Corporation on February 7, 2001 in conjunction with the
proposed acquisition of AccuMed International, Inc. by the
Company. (Incorporated by reference to Exhibit 10.31 to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000.)*
10.31 Lease Agreement between the Company and O.P., L.L.C date May
18, 2000, pertaining to premises located at 414 N. Orleans,
Suite 510, Chicago, Illinois 60610. (Incorporated by
reference to Exhibit 10.32 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2000.)*
</Table>

II-7

<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------

10.32 First Amendment to Lease Agreement between the Company and
O.P., L.L.C. dated February 13, 2001, pertaining to
additional premises at 414 N. Orleans, Suite 503, Chicago,
Illinois 60610 and extending the term of the original lease
until February 28, 2006. (Incorporated by reference to
Exhibit 10.33 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 2000.)*
10.33 Form of Restricted Stock Award of 25,000 shares of Common
Stock issued to Eric A Gombrich on May 1, 2000 as additional
compensation under a 36 month Employment Agreement dated
April 1, 2000. (Incorporated by reference to Exhibit 10.34
to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2000.)*
10.34 Form of Restricted Stock Award of 50,000 shares of Common
Stock issued to Ralph M. Richart, M.D., on July 24, 2000 as
additional compensation under a 36 month Consulting
Agreement dated June 1, 2000. (Incorporated by reference to
Exhibit 10.35 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 2000.)*
10.35 Form of Restricted Stock Award of 50,000 shares of Common
Stock issued to J. Thomas Cox, M.D., on October 20, 2000 as
additional compensation under a 36 month Consulting
Agreement dated October 15, 2000. (Incorporated by reference
to Exhibit 10.36 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 2000.)
10.36 Form of Voting Agreement between the Company and each of the
officers and directors of AccuMed International, Inc.
(Exhibit A to the Agreement and Plan of Merger included in
Appendix I to the proxy statement-prospectus.)
10.37 $100,000 Promissory Note issued to Cadmus Corporation on
July 26, 2001. (Incorporated by reference to Exhibit 10.39
to the Company's S-4 Registration Statement, File No.
333-61666, filed August 24, 2001.)
10.38 $100,000 Promissory Note issued to Azimuth Corporation on
August 6, 2001. (Incorporated by reference to Exhibit 10.40
to the Company's S-4 Registration Statement, File No.
333-61666, filed August 24, 2001.)
10.39 $25,000 Promissory Note issued to Northlea Partners, Ltd. on
August 6, 2001. (Incorporated by reference to Exhibit 10.41
to the Company's S-4 Registration Statement, File No.
333-61666, filed August 24, 2001.)
10.40 $118,500 Promissory Note issued to Schwartz, Cooper,
Greenberger & Krauss on February 13, 2002. (Incorporated by
reference to Exhibit 10.40 to the Company's S-2 Registration
Statement, File No. 333-83578 filed June 27, 2002).
10.41 $650,000 Promissory Note issued to Round Valley Capital on
August 30, 2002.
23.1 Consent of Ernst & Young.
23.2 Consent of Schiff Hardin & Waite (Included in Exhibit 5.1.)
24.1 Power of Attorney by directors and officers of the Company.
24.2 Certified copy of a resolution by the Board of Directors of
the Company authorizing execution of the Registration
Statement on behalf of the Company by an attorney-in-fact.
</Table>

- ---------------
* SEC File No. 0-935

(b) Financial Statement Schedules

The information required to be set forth herein is incorporated by
reference to Molecular Diagnostics' Annual Report on Form 10-K, as amended, for
the year ended December 31, 2001.

II-8

ITEM 17. UNDERTAKINGS

A. The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.

(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

C. The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report, to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.

D. Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the Certificate of Incorporation, as amended (the "Certificate of
Incorporation"), and the bylaws, as amended (the "Bylaws"), of the registrant,
the Delaware General Corporation Law or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant 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, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

II-9

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-2 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Chicago, State of Illinois, on September 27, 2002.

MOLECULAR DIAGNOSTICS, INC.

By: /s/ PETER P. GOMBRICH
----------------------------------
Peter P. Gombrich,
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated.

<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----

/s/ PETER P. GOMBRICH Director and Chairman of the Board September 26, 2002
- --------------------------------------------------- of Directors, Chief Executive
Peter P. Gombrich Officer and acting Secretary
(principal executive officer)

/s/ STEPHEN G. WASKO President and Chief Operating September 27, 2002
- --------------------------------------------------- Officer
Stephen G. Wasko

/s/ MICHAEL A. BRODEUR Interim Chief Financial Officer September 26, 2002
- --------------------------------------------------- (principal financial officer and
Michael A. Brodeur principal accounting officer)

* Director September 19, 2002
- ---------------------------------------------------
Alexander M. Milley

* Director September 19, 2002
- ---------------------------------------------------
Robert C. Shaw

* Director September 19, 2002
- ---------------------------------------------------
John H. Abeles

* Director September 19, 2002
- ---------------------------------------------------
Denis M. O'Donnell

/s/ PETER P. GOMBRICH Individually and as September 26, 2002
- --------------------------------------------------- Attorney-in-fact
Peter P. Gombrich
</Table>

II-10