NOTE 2 -

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

a)	Basis of Presentation:

The following (a) condensed balance sheet as of December 31, 2011, which has been derived from audited financial statements, and (b) the unaudited interim condensed financial statements as of March 31, 2012 and for the three-month periods ended March 31, 2012 and 2011 have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Certain information and footnote disclosures, which are normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures made are adequate to provide for fair presentation. The interim financial information should be read in conjunction with the Financial Statements and the notes thereto, included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2011, previously filed with the SEC.

In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement of the Company's condensed consolidated financial position as of March 31, 2012, its condensed consolidated results of operations for the three-month periods ended March 31, 2012 and 2011 and its cash flows for the three-month periods ended March 31, 2012 and 2011, as applicable, have been made. The interim results of operations are not necessarily indicative of the operating results for the full fiscal year or any future periods.

b)	Revenue Recognition:

The Company recognizes revenue for product sales in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 104, "Revenue Recognition" ("SAB 104"). Under SAB 104, revenue is recognized when there is persuasive evidence of an arrangement, delivery has occurred or services have been rendered, the sales price is determinable, and collectability is reasonably assured. Revenue typically is recognized at time of shipment. Sales are recorded net of discounts, rebates and returns.

For certain contracts, the Company recognizes revenue from non-milestone contracts and grant revenues when earned. Grants are invoiced after expenses are incurred. Revenues from projects or grants funded in advance are deferred until earned. As of March 31, 2012 and December 31, 2011, all advanced revenues were earned.

The Company follows Financial Accounting Standards Board ("FASB") authoritative guidance ("guidance") prospectively for the recognition of revenue under the milestone method. The Company applies the milestone method of revenue recognition for certain collaborative research projects defining milestones at the inception of the agreement.

c)	Inventories:

Inventories consist of the following at:

	March 31, 2012		December 31, 2011
Raw materials	$	1,405,229	$	1,340,177
Work in process		545,245		390,162
Finished goods		756,202		569,947
	$	2,706,676	$	2,300,286

d)	Earnings Per Share:

Basic earnings per share is computed by dividing net income or loss by the weighted-average number of common shares outstanding for the period. Diluted income or (loss) per share reflects the potential dilution from the exercise or conversion of other securities into common stock, but only if dilutive. The following securities, presented on a common share equivalent basis for the three-month periods ended March 31, 2012 and 2011, have been included in the diluted per share computations:

	For the three months ended
	March 31, 2012	March 31, 2011
Basic	63,474,580	62,284,772

Diluted	68,098,858	62,284,772

The following securities, presented on a common share equivalent basis for the three-month periods ended March 31, 2012 and 2011, have been included in the diluted per share computations as these securities exercise prices were less than the stock price as of March 31, 2012 and 2011, respectively:

	For the three months ended
	March 31, 2012		March 31, 2011

1999 and 2008 Plan Stock Options		4,624,278		-
		4,624,278		-

There were 1,399,916 and 5,491,003 options and warrants outstanding as of March 31, 2012 and 2011, respectively, that were not included in the calculation of diluted per common share equivalent for the three months ended March 31, 2012 and 2011, respectively, because the effect would have been anti-dilutive as of March 31, 2012 and 2011, respectively.

e)	Employee Stock Option Plan:

The Company had a 1999 Stock Option Plan ("SOP"). The number of options available under the SOP was 3,000,000 shares of Common Stock. As of March 31, 2012, there were 1,275,500 outstanding options under this SOP. No additional options may be issued under the SOP because it is more than 10 years after its adoption.

Effective June 3, 2008, the Company's stockholders voted to approve the 2008 Stock Incentive Plan ("SIP"), initially with 5,000,000 shares of Common Stock available to be issued. At the Annual Stockholder meeting on September 22, 2011, the Company's stockholders voted to approve an increase to the shares of Common Stock issuable under the SIP by 1,000,000 to 6,000,000. Under the terms of the SIP, the Compensation Committee of the Company's Board has the discretion to select the persons to whom awards are to be granted and the number of shares of common stock to covered by each grant. Awards can be incentive stock options, restricted stock and/or restricted stock units. The awards become vested at such times and under such conditions as determined by the Compensation Committee. As of March 31, 2012, there were 134,997 options exercised, 4,754,693 options outstanding and 1,110,310 options or shares still available to be issued under the SIP.

The weighted average estimated fair value, at their respective dates of grant, of stock options granted in the three-month periods ended March 31, 2012 and 2011 was $.40 and none per share, respectively. The fair value of options at the date of grant was estimated using the Black-Scholes option pricing model. The expected volatility is based upon the historical volatility of our stock. The expected term is determined using the simplified method as permitted by SAB 107, as the Company has limited history of employee exercise of options to date.

The assumptions made in calculating the fair values of options are as follows:

	For the three months ended
	March 31, 2012			March 31, 2011
Expected term (in years)		5			n/a
Expected volatility		115.77	%		n/a
Expected dividend yield		n/a			n/a
Risk-free interest rate		0.36	%		n/a

The Company's results for the three-month periods ended March 31, 2012 and 2011 include share-based compensation expense totaling $133,000 and $28,000, respectively. Such amounts have been included in the Condensed Consolidated Statements of Operations within cost of goods sold ($15,000 and $4,000, respectively), research and development ($48,000 and $12,000, respectively) and selling, general and administrative expenses ($70,000 and $12,000, respectively). The income tax benefit has been recognized in the statement of operations for share-based compensation arrangements.

Stock option compensation expense for the three -month periods ended March 31, 2012 and 2011 represents the estimated fair value of options outstanding which is being amortized on a straight-line basis over the requisite service period for each vesting portion of the award, except for those that vested immediately and for which the estimated fair value was expensed immediately.

The following table provides stock option activity for the three months ended March 31, 2012:

Stock Options	Number of Shares		Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at December 31, 2011	6,127,068		$	0.21	2.61 years	$	1,339,693

Granted	203,125
Exercised	(300,000	)
Forfeited/expired/cancelled	(36,000	)
Outstanding at March 31, 2012	5,994,193		$	0.22	2.57 years	$	1,666,687

Exercisable at March 31, 2012	3,517,520		$	0.17	2.2 years	$	1,086,928

As of March 31, 2012, there was $236,000 of net unrecognized compensation cost related to stock options that have not vested, which is expected to be recognized over a weighted average period of approximately 1.1 years. The total fair value of stock options vested during the three-month periods ended March 31, 2012 and 2011, was approximately $104,000 and none, respectively.

f)	Geographic Information:

U.S. GAAP establishes standards for the manner in which business enterprises report information about operating segments in financial statements and requires that those enterprises report selected information. It also establishes standards for related disclosures about products and services, geographic areas, and major customers.

The Company produces only one group of similar products known collectively as "rapid medical tests". Management believes that it operates in a single business segment. Net product sales by geographic area are as follows:

	For the three months ended
	March 31, 2012		March 31, 2011
Africa	$	1,077,736	$	553,383
Asia		12,478		28,955
Europe		25,578		38,060
Middle East		-		7,163
North America		2,720,760		2,333,600
South America		2,526,600		53,902
	$	6,363,152	$	3,015,063

g)	Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consist of:

	March 31, 2012		December 31, 2011
Accounts payable - suppliers	$	1,842,618	$	1,258,465
Accrued commissions		238,368		205,588
Accrued royalties / license fees		308,313		480,297
Accrued payroll		134,298		174,398
Accrued vacation		197,330		156,884
Accrued bonuses		144,500		284,375
Accrued expenses - other		216,267		229,493
TOTAL	$	3,081,694	$	2,789,500

During the first quarter of 2012, the Company received an invoice related to ongoing clinical trials which included the costs associated with certain patients that were seen in 2011. This resulted in an additional $191,000 research and development charge in the current quarter that should have been recorded in the quarter ended December 31, 2011, had the Company been aware of the services rendered. In accordance with the Securities and Exchange Commission Staff Accounting Bulletin No. 108 (SAB 108), the Company has determined this error to be immaterial, from both a quantitative and qualitative perspective, and has therefore chosen to record this charge in the first quarter of 2012 and not restate the applicable previously filed financial statements.