CHEMTRAK INC/DE, 10-K, 1997-04-01

CHEMTRAK INC/DE
10-K, 1997-04-01
IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES

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<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934

FOR THE TRANSITION PERIOD FROM _______________ TO _______________

Commission file number 0-19749

CHEMTRAK INCORPORATED
(Exact name of Registrant as specified in its charter)

DELAWARE 77-0295388
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)

929 EAST ARQUES AVENUE, SUNNYVALE, CA 94086
(Address of principal executive offices) (zip code)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (408) 773-8156

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, $.001
PAR VALUE

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

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definite proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.

The approximate aggregate market value of the Common Stock held by
non-affiliates of the Registrant, based upon the closing bid price of the Common
Stock reported on the Nasdaq National Market was $16,000,000 as of February 28,
1997.

The number of shares of Common Stock outstanding as of February 28,
1997 was 11,880,938.

DOCUMENTS INCORPORATED BY REFERENCE

Part III - Portions of the Registrant's definitive Proxy Statement for
the Registrant's Annual Meeting of Stockholders, which will be filed with the
Securities and Exchange Commission, are incorporated by reference to the extent
stated herein. Page 1 of Exhibit Index at Page
<PAGE> 2

PART I

ITEM 1 - BUSINESS.

Except for the historical information contained herein, the following
discussion contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed here. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed in this section.

ChemTrak Incorporated ("ChemTrak" or the "Company") conceives,
develops, manufactures and markets leading edge and easy-to-use personal
medical diagnostic systems for worldwide point-of-care markets. The Company has
developed a patented, non-instrumented, hand-held diagnostic technology, the
AccuMeter(R) cassette system, an enabling technology applicable to a broad range
of general chemistry and immunoassay tests designed to screen and diagnose
health conditions with accuracy comparable to physician office and laboratory
instrumented tests. The Company has also developed the AWARE(R) home HIV test
service, a consumer-access reference laboratory which is designed to provide
test results and counseling for a variety of health conditions. The Company
markets its products to over-the-counter and professional markets worldwide,
directly and through strategic alliances with healthcare and consumer products
companies.

Currently, ChemTrak's CholesTrak(TM) Home Cholesterol Test, the first
United States Food and Drug Administration (the "FDA") approved product of its
kind, is available internationally and in most retail pharmacies and mass
merchandise outlets in the United States. ChemTrak has also received FDA
marketing clearance for its single-use, whole blood, physician's office test for
Helicobacter Pylori (H. pylori), the bacterium now recognized as a contributor
to duodenal and peptic ulcers in humans. ChemTrak recently announced the United
States retail market entry of ColoCARE(R), a home test to detect the early
warning signs of colorectal disease and has submitted an application to the FDA
for approval to market its AWARE(R) home HIV test service.

ChemTrak was founded in 1985 to bring health care closer to the patient
by dramatically changing the way many in vitro diagnostic tests are performed.
In vitro diagnostic testing is the process of analyzing constituents of blood,
urine and other specimens taken from the body. It is the standard diagnostic
methodology used to screen for, monitor and diagnose diseases and other medical
conditions. Currently, most diagnostic testing is performed in clinical
laboratories by skilled technicians, who must process the specimen, measure its
volume, add reagents and use sophisticated machines to read and calculate the
results. Typically, results are not received by the physician or the patient for
one to two days. In contrast, the Company's easy-to-use AccuMeter(R) cassette
system permits the physician or the patient to perform quantitative and
qualitative diagnostic tests at the physician's office or in the patient's home
and to obtain the results within minutes. The AWARE(R) home HIV test service is
designed to provide results from a mail-in specimen within days, affording the
convenience of at-home use, consumer access and telephone counseling.

ChemTrak began marketing the AccuMeter(R) Total Cholesterol Test to the
United States physician office market in May 1991, following receipt of
clearance from the FDA, and to the international consumer retail and physician
office markets in October 1991. In March 1993, the Company received clearance
from the FDA for the United States consumer retail market. In January 1994, the
Company began marketing the AccuMeter(R) Cholesterol Self-Test through United
States consumer catalogues and signed a license and supply agreement for the
Total Cholesterol Test with Advanced Care Products, now known as Direct Access
Diagnostics ("DAD"), a Johnson & Johnson company, for over-the-counter retail
outlets in North America. In December 1995, the Company regained the exclusive
rights to market its total cholesterol product in the United States retail
market and relaunched it in January 1996 under the trade name CholesTrak(TM).

In February 1995, the Company acquired Coonan Clinical Laboratories,
Inc. ("CCL") a company engaged in research and development of a home HIV test
service. The Company believed that the acquisition of CCL would accelerate the
time to market for a home HIV test service product. In 1995 ChemTrak filed a
pre-market approval application ("PMA") for the Company's AWARE(R) home HIV test
service with the FDA. Amendments were filed in March and August 1996. The test
is awaiting FDA approval, while two competitive mail-in home HIV test services
have gained approval and begun nationwide marketing in the United States. The
Company anticipates approval in 1997. There can be no assurance that the
Company will receive FDA marketing approval for the AWARE(R) home HIV test
service or that if approved, it will be able to compete with existing products.

ChemTrak was incorporated in California in 1985 [and reincorporated in
Delaware in 1992]. Its principal offices are located at 929 East Arques
Avenue, Sunnyvale, CA 94086 and its telephone number is 408.773.8156. The
Company also has a website at WWW.ChemTrak.COM.

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POINT-OF-CARE DIAGNOSTIC MARKETS

General

The diagnostic testing industry is experiencing rapid growth as health
care providers and payors recognize that regular diagnostic testing can result
in earlier detection of diseases, more accurate diagnoses and more effective
treatment, which in turn help reduce the overall cost of health care. As
innovative and cost-effective technology becomes available, diagnostic testing
is gradually migrating from high-volume clinical laboratories to point-of-care
sites, such as clinics, physician offices, homes and patient's bedsides and
emergency rooms. While clinical laboratories will continue to provide batch
testing, the Company believes that a new market is emerging for point-of-care
diagnostics which will result in more frequent testing. Point-of-care testing
eliminates the time and cost associated with utilizing remotely located
laboratories, including those associated with specimen collection, preservation,
transportation, processing and reporting of results. While the Company's
proposed AWARE(R) home HIV test service uses a laboratory at ChemTrak, the
Company believes that the privacy and convenience of the home test service will
outweigh the time and cost associated with utilizing this laboratory.

Consumer Retail Market

According to industry sources, the consumer retail market for home
health tests in the United States increased from $258 million in 1985 to over $1
billion in 1995, with a growth rate of 13.1% in 1995 alone. It is expected to
grow to nearly $3 billion by the year 2000. The North American market for home
tests (excluding glucose monitoring) was reported to be worth about $483 million
in 1996. Preventive health care is emerging as a primary focus of medical
intervention, and consumer self-testing is becoming an important part of health
care as individuals become more aware of and involved with their own health.
Several self-tests, including tests for blood glucose, pregnancy, ovulation,
fecal occult blood and various urine components, have gained prominence as
physicians and patients have begun to realize the potential of such tests for
promoting improved health care. None of these tests, however, gives accurate,
quantitative results without an instrument. The Company believes that the
ability to perform accurate, quantitative tests without an instrument will
create major new market opportunities for home health screening and monitoring.
The Company believes that new technologies, such as its AccuMeter(R) cassette
system, and new methodologies, such as its proposed AWARE(R) home HIV test
service, which make testing simpler and more convenient, may provide access to
this market.

ACCUMETER(R) CHOLESTEROL PRODUCTS

AccuMeter(R) Total Cholesterol Test

ChemTrak's first product, the CholesTrak(TM) home cholesterol test,
called the AccuMeter(R) Total Cholesterol Test in professional markets, is
designed for the consumer retail and physician office markets and is the first
commercially available cholesterol test that can be used in the home. The
AccuMeter(R) Total Cholesterol Test received FDA 510(k) clearance for
professional use in March 1991 and for consumer use in March 1993. This 1993
clearance allows the CholesTrak(TM) home cholesterol test to be performed by any
consumer and is the first such clearance issued by the FDA for a quantitative
cholesterol test in the retail market. In many foreign countries, including some
of those in which the Company is currently distributing its product, no
regulatory clearance is required for distribution of the CholesTrak(TM) home
cholesterol test to consumers.

The CholesTrak test was launched by ChemTrak's own sales and marketing
group to the United States retail market in early 1996. The test is now widely
distributed to pharmacy chains, mass merchandisers and wholesalers through a
broker network and is supported by national advertising and promotion. The
CholesTrak tests are intended for individuals who are already aware they have
high cholesterol and are working to lower it through diet and exercise. The
test is designed to give them the feedback required to remain motivated.

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HELICOBACTER PYLORI TEST

H. pylori is a bacteria that has been identified by a consensus panel
of the National Institutes of Health as the causative agent of a large
percentage of duodenal and gastric ulcers and is associated with a high
incidence of stomach cancer if left untreated. There are an estimated 40 million
new cases of H. pylori infection in the United States per year.

H. pylori, which afflicts an estimated 40% of the United States
population, is found in approximately 90% of patients with duodenal ulcers and
70% of patients with gastric ulcers. Research has shown that once H. pylori is
eliminated, the average one-year recurrence rate of ulcers is approximately 10%,
compared to a 50% to 70% recurrence rate for ulcers treated with traditional
histamine-2 receptor antagonists drugs ("H2RAs") alone.

Each year, there are over 40 million office visits for gastritis, one
of the symptoms of a possible ulcer, in the United States alone. Last year, the
worldwide market for medications containing H2RAs, which are used to treat
gastric ulcers, exceeded $7 billion.

Currently, H. pylori is often detected either through endoscopy
procedures performed by physicians, or by experimental breath tests using
special equipment. Clinical laboratories now perform a growing number of direct
immunoassays for the antibodies to H. pylori in serum samples. The ChemTrak test
is a one-step, whole blood test that will indicate the presence or absence of H.
pylori antibodies in minutes during a patient's visit to a physician's office.

In 1995, the Company announced it had signed a license and supply
agreement with Astra Merck, Inc. (AMI) for sales of ChemTrak's H. pylori test to
both professional markets and over-the-counter retail outlets in the United
States. The test was cleared by the FDA for professional use in 1996 and then
received further 510(k) clearance for improved accuracy claims in March of 1997.
The test named Hp Chek(TM) by Astra Merck, will be marketed by

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AMI's sales force alongside the prescription medicine, Prilosec(R), used for the
treatment of several acid-related disorders including active duodenal ulcers.

ColoCARE(R)

Colorectal cancer now accounts for over 55,000 American deaths each
year. It is the nation's second leading cancer killer with 131,000 Americans
diagnosed annually. According to the American Cancer Society and seven other
medical groups, this type of test can be as effective in detecting the early
warning signs of colorectal disease as mammograms are for breast cancer
detection. If used annually by persons over fifty, it is believed that screening
tests for the early warning signs of colorectal disease such as ColoCARE(R),
where positive results are followed up by a doctor's visit, could cut deaths by
one-third.

In February 1997, ChemTrak announced the introduction of ColoCARE(R),
a home test for the early warning signs of colorectal disease, which is
FDA-cleared, low-priced and clinically accurate. The ColoCARE(R) test is
non-invasive, sanitary and easy-to-use. The Company has signed a distribution
agreement with this test's developer, Helena Labs.

The ColoCARE(R) test is easy to use, sanitary and reliable. Used in the
privacy of the bathroom, the user simply removes the test pad from its envelope
and drops it into the toilet bowl following a bowel movement and before
flushing. Chemicals in the pad cause it to turn blue within 30 seconds if hidden
blood is present in detectable amounts. The presence of blood in the stool is a
recognized early warning sign of colorectal disease including cancer. The user
notes any color change, records the information and flushes the toilet. No
sample handling is required. Three consecutive tests are required. If during any
of the tests the pad turns blue, a physician should be consulted as soon as
possible. The test pad should not change color if blood is not detected.

The Company believes that the ColoCARE(R) test has broad market
potential. The American Cancer Society reports that early cancer detection is of
critical importance. The disease strikes men and women about equally, and those
over forty may be at increased risk. As reported in a national news
publication, "An easy take home test for colorectal cancer could lower the cost
and unpleasantness that deter many Americans from being examined for the
nation's second leading cancer killer."

FUTURE HIV TEST

An estimated 4% of adult Americans, or 7.3 million people, report they
have engaged in risk behaviors for HIV infection. Over 33 million HIV tests were
performed by clinical laboratories in the United States in 1994. Of the
estimated 1 million Americans living with HIV, only 30% to 60% have been tested,
and about one-half of those who test positive are tested long after infection,
when treatment is less successful. In 1995, the Company filed a PMA with the FDA
for the AWARE(R) home HIV test service.

The AWARE(R) home HIV test service requires the consumer to provide a
dried blood sample on a special collection card. The consumer then sends the
card with the sample to the Company's licensed laboratory; the card is
identified only by a code number to ensure the consumer's anonymity. To obtain
the result, the consumer then calls a special number set up by ChemTrak, using
only the code number for identification. Trained counselors employed by ChemTrak
will provide the results, and provide information and referrals for further
testing. While the Company is still awaiting FDA approval, two competitors
received approval for similar systems and have launched them nationwide. There
can be no assurance that the Company will receive FDA marketing approval for the
AWARE(R) home HIV test service, or that if approved, it will be able to compete
with existing products.

FUTURE ACCUMETER(R) PRODUCTS

The Company believes that its AccuMeter(R) cassette system is an
enabling technology and will be applicable to a broad range of general
chemistry and immunoassay tests, including the following:

Theophylline Test

Theophylline is a drug prescribed for use by people suffering from
asthma and other respiratory difficulties. Approximately six million patients
take theophylline to relieve or prevent symptoms of asthma. The drug is
effective only over a limited range: too little is ineffective, too much causes
side effects that include headache, nausea, vomiting, low blood pressure,
tachyccardia, arrhythmia, and convulsions. Also, the safe and effective range
for theophylline varies from patient to patient. Monitoring theophylline levels
helps clinicians establish and maintain safe and effective dosages in both
acute and chronic treatment, and over 20 million theophylline tests are
routinely performed in clinical laboratories in the United States every year,
with results sometimes not available for hours or even days. ChemTrak's
AccuMeter(R) Theophylline Test enables the physician to monitor theophylline
drug levels with ease -- during a single office visit. The test is simple
enough to be prescribed for home use to check night-time or early morning
concentrations of the drug, information which could improve patient management
critically. Theophylline levels must be monitored carefully during therapy, as
low levels are ineffective and high levels can be toxic. The Company believes
that approximately 25 million theophylline tests are performed annually in the
United States. Currently, most theophylline testing requires costly instruments
that are not suitable for use either in physician offices or homes. The Company
believes that the only existing non-instrumented test requires a complex
procedure and exact measurement of the blood sample.

ChemTrak's test for quantifying blood levels of theophylline for use in
professional settings has been reformulated and completed. The Company is in the
process of preparing an FDA 510(k) filing for its theophylline test.

Other Future AccuMeter(R) Products

Additional tests incorporating the AccuMeter(R) technology that the
Company has targeted for future research and development include tests for other
infectious diseases. The AccuMeter(R) technology may assist in detecting disease
by enabling the detection of low levels of proteins, which is a necessary step
in detecting infection. The Company has developed a whole blood , one-step HIV
1/2 test in the AccuMeter(R) format which has the same protocol as the H.pylori
test. The test is currently in pre-clinical studies.

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The World Health Organization estimates that currently 11 million
people are infected with HIV and that this number will reach 30 million by the
year 2000. The Company believes that the AccuMeter(R) technology will be
applicable to other infectious disease tests as well.

Other future products that the Company may develop include tests for
low density lipoprotein ("LDL"), or "bad cholesterol", and glycosylated
hemoglobin. Monitoring glycosylated hemoglobin provides information regarding
the well being of diabetics over a broader time period than can be achieved by
monitoring blood glucose levels alone. An LDL test could serve as a companion
product to the Company's total cholesterol tests. The Company has yet to develop
prototypes for these additional tests and all are in the early stage of
development.

There can be no assurance that the Company will develop or complete
development of any of its future products, that such products will receive
marketing approval by the FDA or foreign regulatory authorities or that any
current or future products will be manufactured in commercial quantities or
marketed successfully.

GOVERNMENTAL REGULATION

ChemTrak's products are regulated under the 1976 and 1990 device
amendments to the Food, Drug and Cosmetic Act (the "Amendments"), which, among
other things, classify devices into three categories (Class I, II and III) over
which the FDA maintains increasing levels of regulation. Although some of
ChemTrak's products may be classified as Class III, the majority of ChemTrak's
products are or are expected to be classified as Class I or II devices. Prior to
marketing any of these devices, the Company must obtain pre-clearance from the
FDA, either through the notification ("510(k) Notification") process or the
pre-market approval application ("PMA") process. If a product is a Class III
device, it requires a PMA. The PMA process is lengthy, usually taking
approximately 18 to 30 months. The Company believes that the majority of its
products can be pre-cleared using the 510(k) Notification process, which takes
approximately 90 to 180 days. There can be no assurance that a given product can
be pre-cleared using the 510(k) Notification process or that the process will be
completed within the usual time frame. The 510(k) Notification process for the
CholesTrak(TM) Home Cholesterol Test took 18 months.

Because all devices new to the marketplace after 1976 are automatically
classified as Class III devices (unless they have been reclassified) in any
510(k) Notification, the Company must, among other things, demonstrate that the
product to be marketed is "substantially equivalent" to another legally marketed
device in order to obtain reclassification. Test data from clinical trials may
be required to demonstrate "substantial equivalence." The Company may commence
marketing the product only after the FDA issues a written order finding either
that the PMA has been approved or that "substantial equivalence" has been
established, which latter event may take longer than the 90-day period estimated
for a 510(k) Notification review. By requesting additional data, the FDA can
further delay the Company's market introduction of its products. However, there
can be no assurance that the Company will obtain the required marketing
clearance for any of its development stage products on a timely basis, or at
all. Although the Company believes that there are significant markets for its
products independent of the United States physician office and over-the-counter
consumer retail market, failure to obtain such FDA clearance for its future
products could have a material adverse effect on the Company's business,
financial condition and results of operations, as well as its relationships with
its corporate partners.

The Amendments also require the Company to manufacture its products in
compliance with the FDA's current Good Manufacturing Practices ("cGMP")
regulations and to register its manufacturing facility and its products. The
Company has registered its facility and its products with the FDA. The Company
has also registered its manufacturing facility with the Department of Health
Services of the State of California, as required, and has passed federal and
state inspections confirming the Company's compliance with the cGMP regulatory
requirements for its products. However, there can be no assurance that the
Company's facility will continue to satisfy cGMP regulations. In addition, the
manufacture, sale or use of the Company's products are also subject to
regulation by other federal entities, such as the Occupational Safety and Health
Agency and the Environmental Protection Agency, and by various state agencies.
Federal and state regulations regarding the manufacture, sale or use of the
Company's products are subject to future change, which could have a material
adverse effect on the Company's business, financial condition and results of
operations.

Certain of ChemTrak's products, when used, may also be regulated under
the Clinical Laboratory Improvement Amendments Act of 1988 ("CLIA"). CLIA is
intended to insure the quality and reliability of all medical testing in
laboratories in the United States, regardless of where these laboratories are
located. Final regulations to

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implement CLIA were published in February 1992, effective September 1, 1992,
except for participation in proficiency testing which for previously unregulated
laboratories were not effective until January 1994. In January 1993, the
Department of Health and Human Services published certain revisions to these
regulations. The regulations establish requirements for laboratories in the
areas of administration, participation in proficiency testing, patient test
management, quality control, personnel, quality assurance and inspection. Under
these regulations, the specific requirements that a laboratory must meet depend
upon the complexity of the tests performed by the laboratory. Laboratory tests
are categorized as either waived tests, tests of moderate complexity or tests of
high complexity. Laboratories that perform waived tests are not governed by the
CLIA regulations, but must obtain a registration certificate with the Health
Care Financing Administration ("HCFA"). Laboratories that perform either
moderate or high complexity tests must meet the requirements in all areas and
are required to obtain either a registration certificate or certification of
accreditation from the HCFA. In March 1995, the Center for Disease Control
granted waived status for the CholesTrak Total Cholesterol Test, and informed
the Company that all tests cleared by the FDA for over-the-counter consumer use
are automatically waived.

SALES AND MARKETING

The Company's marketing strategy is to utilize targeted marketing of
its consumer CholesTrak(TM) Home Cholesterol Test, ColoCARE(R) home test for the
early warning signs of colorectal disease, its AWARE(R) home HIV test service
(pending FDA approval), and future consumer personal diagnostics tests to make
direct sales to the consumer as well as through chain drug, mass merchandisers
and natural/health food stores in the United States. ChemTrak has agreements
with a number of trade relation sales force groups which in turn sell through
broker organizations servicing the retail market. These organizations receive a
percentage of sales based upon performance. The Company advertises and promotes
its products to key population segments.

Professional markets in the United States are served through a number
of arrangements with pharmaceutical companies and medical product distributors.
See "Corporate Partners." Internationally, the Company has a number of
arrangements in place for the marketing and sales of its Total Cholesterol Test
to consumer retail markets in Europe, Africa and the Pacific Rim area.

CORPORATE MARKETING PARTNERS

Through its corporate partner alliances, ChemTrak expects to more
effectively reach the international consumer retail and United States physician
office markets. ChemTrak has non-material distribution arrangements with a
number of independent health care supply organizations domestically and
worldwide. ChemTrak has in effect material contractual relationships with the
following corporate partners:

<TABLE>
<CAPTION>
Corporate Partner Market Country Product
- -----------------------------------------------------------------------------------------

<S> <C> <C> <C>
Astra Merck Inc. Consumer retail United States H. pylori
Physician office Puerto Rico

The Boots Company PLC Consumer retail United Kingdom Cholesterol Test

Helena Laboratories, Inc. Consumer retail Canada Cholesterol Test

Jokoh, Inc. Physician office Japan Theophylline Test

Orion Diagnostica Physician office United States Cholesterol Test

Selfcare, Inc. Consumer retail All of Europe and AWARE(R) Home
Scandinavia HIV Test Service
</TABLE>

Termination of any of these arrangements with corporate partners could
have a material adverse effect on the Company's business, financial condition
and results of operations. In addition, there can be no assurance that these
corporate partners will meet their projected sales volumes, that the Company
will be successful in retaining these corporate alliances or that it will be
able to enter into additional alliances on acceptable terms if at all.

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Astra Merck Inc. (AMI). In March 1995, the Company entered into a
multi-year license and supply agreement with AMI to market the Company's H.
pylori test in the United States and Puerto Rico. The initial term expires
either six years from March 1, 1995 or four years after the first
over-the-counter sale, whichever is earlier. After the initial term, the
agreement provides for renewal on an annual basis. AMI has been granted
exclusive United States marketing rights to ChemTrak's H. pylori test for both
professional markets and for over-the-counter retail outlets. In return,
ChemTrak is entitled to receive separate cash payments from AMI upon realization
of certain milestones ultimately leading to the commercialization of the H.
pylori test. The Company will also receive a per unit price for each product it
manufactures and sells to AMI. The Agreement calls for AMI to purchase certain
minimum quantities during specified periods commencing on the first shipment to
the professional market. The agreement may be terminated by either party on
sixty days notice if the other party commits a material breach of the
agreement. The H. pylori test has received FDA clearance for sale to the
professional market with the first shipment expected in April 1997. The Company
expects to commence the process of seeking FDA approval for over-the-counter
retail sales later in 1997.

The Boots Company PLC. In December 1991, the Company entered into a
multi-year agreement with The Boots Company PLC ("Boots") for the sale of the
AccuMeter cholesterol test under Boots' brand name in the United Kingdom. Boots
is a diversified company and includes Boots The Chemists, a 1,069 store pharmacy
division of Boots.

Helena Laboratories, Ltd. In April 1996, ChemTrak signed an agreement
with Helena Laboratories Ltd. for distribution of the home cholesterol test in
Canada. Helena Laboratories (Canada) is part of an international clinical
diagnostic company currently operating in over 40 countries and its innovative
products have been available in Canada for more than 15 years. Helena
Laboratories (Canada) has been marketing ColoCARE(R), a unique and patented home
test for the early warning signs of colorectal disease, and in the process has
created a new category in Canadian pharmacies.

Jokoh Co., Ltd. Japan. In May 1996, ChemTrak completed a licensing
and distribution agreement with Jokoh Co., Ltd. Japan to introduce ChemTrak's
non-instrumented, quantitative, whole-blood test for the asthma drug
theophylline into the Japanese marketplace. The Company believes that its
AccuMeter(R) Theophylline Test will be, if approved by Japanese authorities, the
only non-instrumented, quantitative, whole-blood test for theophylline offered
in Japan. Jokoh specializes in clinical laboratory analytical product
manufacturing and marketing.

Orion Diagnostica. In March 1995, ChemTrak signed an agreement with
Orion Diagnostica Inc., the United States division of a Finland-based worldwide
manufacturer and marketer of diagnostic tests, granting them the right to market
the AccuMeter(R) cholesterol test to physicians offices, hospitals and
commercial laboratories through its direct sales force as well as a network of
medical surgical sales representatives throughout the United States.

Selfcare Inc. In January 1997, ChemTrak announced a pan-European
alliance with Selfcare Inc. of Waltham, Massachusetts to market the AWARE(R)
home HIV testing and counseling service. The agreement calls for licensing of
ChemTrak's AWARE(R) home HIV test service including product design and
manufacture, proprietary finger stick device, customized computer sample and
results tracking systems, laboratory protocols, professional counselor training
and certification programs to Selfcare. As part of the agreement Selfcare will
pay for the cost of regulatory submissions in each of the countries of Europe.
Selfcare in turn will augment its existing European

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operations with local reference laboratories and counseling centers to provide
efficient individualized home HIV testing services throughout Europe. Selfcare
does, however, have the option to terminate the agreement if the FDA does not
approve ChemTrak's AWARE(R) home HIV test service in 1997. Selfcare, with
facilities in Waltham, Massachusetts, Inverness, Scotland, Galway, Ireland and
Munich, Germany is engaged in the development, manufacture and marketing of
self-test diagnostic products for the diabetes, woman's health and infectious
disease markets. Their products are marketed in the United States under
Selfcare's own brands and private label brand names.

The Boots Company, PLC is permitted to market and distribute products
competitive with those of the Company; none of the Company's other corporate
partners are permitted to do so. There can be no assurance that the foregoing
corporate partner alliances, or any such future arrangements, will not be
terminated prematurely by the Company's corporate partners, or that the
Company's corporate partners will purchase products or that such corporate
partners will successfully market and sell the Company's products.

RESEARCH AND DEVELOPMENT

- - As of December 31, 1996, the Company employed 10 full time research,
development, clinical and regulatory affairs professionals, two of whom hold
Ph.D.s. The research and development group focuses on the development of new
technologies, application of these technologies to new products, manufacturing
process development and manufacturing scale-up. In addition, the research and
development group carries out clinical trials and prepares appropriate
regulatory filings.

PATENTS AND PROPRIETARY TECHNOLOGY

The Company has aggressively pursued a patent portfolio to protect its
technology. As of the date of this report, the Company had 15 United States
patents, with expiration dates between 2007 and 2010, and five patent
applications pending. As of December 31, 1996, the Company had received eight
foreign patents. The issued patents cover inventions relating to the basic
principles of the AccuMeter(R) technology, including blood separation and sample
metering, as well as the physical components of the AccuMeter(R) cassette
system. The pending patent applications cover additional technologies and
applications of the AccuMeter(R) system. The Company's policy is to file patent
applications to protect technology, inventions and improvements that are
important to the development of its business. The Company also relies upon trade
secrets, know-how, continuing technological innovation and licensing
opportunities to develop and maintain its competitive position.

The patent position of medical device manufacturers, including
ChemTrak, is uncertain and may involve complex legal and factual issues.
Consequently, the Company does not know whether any of its patent applications
will result in the issuance of any further patents, or whether issued patents
will provide significant proprietary protection or will not be circumvented or
invalidated. Since patent applications in the United States are maintained in
secrecy until patents issue, and since publications of discoveries in the
scientific or patent literature tend to lag behind actual discoveries by several
months, ChemTrak cannot be certain that it was the first creator of inventions
covered by pending patent applications or that it was the first to file patent
applications for such inventions. Moreover, the Company may have to participate
in interference proceedings declared by the U.S. Patent and Trademark Office to
determine the priority of inventions, which could result in substantial cost to
the Company as well as commitment of management resources. There can be no
assurance that the Company's patent applications will result in further issued
patents or that such issued patents will offer protection against competitors
with similar technology.

Because the Company's AWARE(R) home HIV test service utilizes existing
laboratory technology in analyzing blood samples, it lacks patent protection.
While there may be patent protection sought for the proprietary technology of
some of the test components, ChemTrak does not expect that this protection would
preclude others from marketing similar tests for HIV.

ChemTrak has royalty bearing, non-exclusive licenses from Miles
Laboratories and Boehringer Mannheim GmbH to practice the AccuMeter(R)
technology and is fulfilling its obligations under these licenses. These
licenses

9
<PAGE> 10
are terminable by ChemTrak with 60 and 90 days written notice, respectively.
The Company has also entered into a royalty bearing non-exclusive agreement
with AKZO Nobel to practice the sol particle immunoassay technology. The
licenses were entered into without any admission that these licenses are
required by ChemTrak.

ChemTrak requires its employees, consultants and advisors to execute
confidentiality agreements upon the commencement of an employment or consulting
relationship with the Company. Each agreement provides that all confidential
information developed or made known to the individual during the course of the
relationship will be kept confidential and not disclosed to third parties except
in specified circumstances. In the case of employees, the agreements provide
that all inventions conceived of by an individual shall be the exclusive
property of the Company, other than inventions unrelated to the Company's
business and developed entirely on the employee's own time. There can be no
assurance, however, that these agreements will provide meaningful protection for
or adequate remedies for misappropriation of the Company's trade secrets in the
event of unauthorized use or disclosure of such information.

COMPETITION

Currently, ChemTrak's competition in the physician office market
consists mainly of clinical laboratories and companies offering instrumented
tests. Several major diagnostic companies market instruments to physicians and
hospitals that are capable of testing for whole blood cholesterol with accuracy
similar to that of ChemTrak's CholesTrak(TM) Total Cholesterol Test. The Company
believes, however, that such instruments possess significant disadvantages in
that they are expensive to purchase, operate and maintain. In the consumer
retail market, the Company is not aware of any existing competing quantitative
instrument-free cholesterol tests.

The Company knows of a number of United States companies that are
developing products that may be used by the physician office or consumer retail
markets, some of which may be competitive with the Company's current and
proposed products. Specifically, the Company is aware of other United States
companies, such as Quidel Corp., Meridien and others that have developed tests
for H. pylori that have received FDA marketing clearance for the physician
office market. The Company is not aware of any companies that have received FDA
marketing clearance for a cholesterol test for the United States consumer retail
market other than its own. ChemTrak has knowledge of two other companies that
have received FDA approval on home HIV test products similar to the Company's
home HIV test service. At least one of these companies, Direct Access
Diagnostics, a Johnson & Johnson company, has significantly greater resources
than ChemTrak. Both of these companies have launched and advertised their
products nationwide. There can be no assurance that the Company's products will
be competitive with existing or future products, or that the Company will be
able to establish and maintain a profitable price structure for its products.

MANUFACTURING

ChemTrak currently utilizes an automated production line in its 58,000
square foot facility for the manufacture, assembly and packaging of its Total
Cholesterol Test, including approximately 36,000 square feet dedicated to
manufacturing. The Company believes that this facility will meet its production
requirements at least through 1997 and that suitable additional space will be
available when and as needed.

The manufacturing process employs chemical and packaging supplies that
are generally available from several suppliers. The Company has registered its
facility with the FDA and with the Department of Health Services of the State of
California and has passed federal and state inspections, confirming the
Company's compliance with the current Good Manufacturing Practices regulatory
requirements for its products. However, there can be no assurance that the
Company's facility will continue to satisfy cGMP regulations. In addition, the
manufacture, sale or use of the Company's products are also subject to
regulation by other federal entities, such as the Occupational Safety and
Health Agency and the Environmental Protection Agency, and by various state
agencies. Federal and state regulations regarding the manufacture, sale or use
of the Company's products are subject to future change, which could have a
material adverse effect on the Company's business, financial condition and
results of operations.

ENVIRONMENTAL REGULATION

Due to the nature of its current and proposed manufacturing processes,
the Company is subject to stringent federal, state and local laws, rules,
regulations and policies governing the use, generation, manufacture, storage,
air emission, effluent discharge, handling and disposal of certain materials and
wastes. Although the Company believes that it has complied with these laws and
regulations in all material respects and has not been required to take any
action to correct any noncompliance, there can be no assurance that the Company
will not be required to incur significant costs to comply with environmental and
health and safety regulations as it continues to increase production to
commercial levels. In addition, the landlord of the Company's facility in
Sunnyvale, California has advised the Company that the groundwater may be
affected by contaminants migrating from an off-site source.

10
<PAGE> 11
Although the Company has been indemnified by its landlord as to claims brought
by third parties with respect to this contamination and no claims have been
asserted, in the event remedial action is required, there can be no assurance
that the Company will not have to incur significant costs if the landlord is not
adequately funded.

REIMBURSEMENT

Third party payors can indirectly affect the pricing or the relative
attractiveness of the Company's products by regulating the maximum amount of
reimbursement they will provide for diagnostic testing services. For example,
the reimbursement of fees for diagnostic testing services for Medicare patients
in hospitals or in physician offices is included under Medicare's prospective
payment system diagnosis related group regulations. If the reimbursement amounts
for diagnostic testing services are decreased in the future, it may decrease the
amount that physicians are able to charge Medicare patients for such services
and consequently the price the Company can charge physicians for its products.
The Company cannot predict the reimbursement of fees for diagnostic testing
services for Medicare patients, or any other types of patients. Any decreases in
reimbursement fees could have a material adverse effect on the Company.

EMPLOYEES

As of December 31, 1996, the Company had 48 full-time employees with 12
employees devoted to research and development, 22 employees in manufacturing
operations, five employees devoted to sales and marketing, and nine devoted to
general and administration. None of the employees is covered by a collective
bargaining agreement, and management considers relations with its employees to
be good.

The Company is highly dependent upon a small group of management,
manufacturing, marketing and scientific executives, the loss of any of whose
services could have a material adverse effect on the Company. The Company has
obtained key man life insurance for $1,000,000 on the life of Dr. Prithipal
Singh, the Company's co-founder and Chief Technical Officer. Recruiting and
retaining qualified manufacturing, marketing and sales personnel and scientists
to perform research and development work in the future will also be critical to
the Company's success, although there can be no assurance that the Company will
be able to do so.

TECHNICAL AND BUSINESS ADVISORS

The Company periodically draws on the expertise of several advisors and
consultants in fields related to the Company's technology and business. The
Company's technical and business advisors consult with the Company on a frequent
basis.

As of January 1, 1997, the following persons were serving as technical
and business advisors to the Company:

Richard Bastiani, Ph.D., has served as an advisor to the Company since
August 1995. Dr. Bastiani is the President of Activated Cell Therapy, Inc. in
Mountain View, California. Prior to joining Activated Cell Therapy, Inc. Dr.
Bastiani was with Syva Co. for over 23 years where he held various management
positions as Vice President, Health Diagnostics Product Division, Vice
President, Worldwide Marketing and Sales, and also as President from 1991 to
1994.

Ronald Breslow, Ph.D., has served as an advisor to the Company since
May 1988. Dr. Breslow, a Professor of Chemistry at Columbia University, is a
winner of the Arthur C. Cope and the National Medal of Science awards. Dr.
Breslow's research focuses on organic chemistry and synthetic enzymology. Dr.
Breslow advises the Company on various aspects of diagnostic technology.

Allen D. Cooper, M.D., has served as an advisor to the Company since
June 1990. Dr. Cooper is the Director of the Palo Alto Medical Foundation
Research Institute and a Professor of Medicine at Stanford University. Dr.
Cooper is a specialist in internal medicine and lipid disorders. Dr. Cooper
advises the Company regarding patient treatment issues.

11
<PAGE> 12
Robert S. Galen, M.D., M.P.H., has served as an advisor to the Company
since April 1990. Dr. Galen is a member of the faculty at Case Western Reserve
and has served as the Chairman of the Biochemistry Department at the Cleveland
Clinic Foundation, Chairman of the American Society of Clinical Pathologists and
Chairman of the NCCLS Committee on General Laboratory Practices. Dr. Galen is on
the board of directors of a number of companies, including MetPath Investment
Company. Dr. Galen advises the Company regarding clinical chemistry issues.

John Kaiser has served as an advisor to the Company since 1991. Mr.
Kaiser is the President and Chief Executive Officer of Biocircuits Inc., a
public company ("Biocircuits"). Prior to joining Biocircuits, Mr. Kaiser was
employed by Boehringer Mannheim as President of the Physician's Laboratory
Products Division where his responsibilities included cholesterol screening
activities. Mr. Kaiser advises ChemTrak on strategic marketing issues.

Bertram Rowland, Ph.D., J.D., has served as an advisor to the Company
since 1987. Dr. Rowland was a patent attorney with the law firm of Flehr,
Hobach, Test, Albritton & Herbert. Dr. Rowland advises the Company on
intellectual property matters.

Ernest M. Tucker, III, M.D. has served as an advisor to the Company
since September 1992. Dr. Tucker is Chairman of the Department of Pathology for
the Scripps Clinic and Research Foundation in La Jolla, California. He advises
the company regarding technical and clinical issues.

In addition to serving as a member of the Board of Directors of
ChemTrak, Malcolm Jozoff has served as business advisor since December 1993.

EXECUTIVE OFFICERS

The executive officers of the Company and their ages as of January 1,
1997 are as follows:

PRITHIPAL SINGH, PH.D.... 57
Chairman of the Board and Chief Technical Officer

Dr. Singh is a founder of the Company and served as President, Chief
Executive Officer and Chairman of the Board of the Company from September 1988
to June 1993 and as Chief Executive Officer and Chairman of the Board from June
1993 to January 1997. He was appointed Chairman of the Board and Chief Technical
Officer of the Company in January 1997. From February 1985 to August 1988, Dr.
Singh was a Senior Vice President of Idetek, Inc., an animal health care
company. Dr. Singh is also a director of Abaxis, Inc., a biopharmaceutical
company.

EDWARD F. COVELL....52
President and Chief Executive Officer

Mr. Covell was appointed President and Chief Executive Officer of
ChemTrak in January 1997, after having served as President and Chief Operating
Officer from May 1996 when he joined the Company. He was elected a Director of
the Company in August 1996. Prior to joining ChemTrak, Mr. Covell was a
management consultant from 1994 to 1996, focusing on the OTC medical device
market. From 1992 to 1994 he was President and Chief Operating Officer of
Medchem Products, Inc., a manufacturer of medical devices serving customers
worldwide. Mr. Covell held a series of increasingly responsible positions with
Tambrands Inc. from 1980 through 1990, including Corporate Vice President and
General Manager of the Diagnostics Division. Tambrands is a consumer healthcare
products company. From 1968 to 1980, he served in domestic and international
management and product development positions with the Kendall Company, a
diversified manufacturing company with worldwide sales of $500 million.

12
<PAGE> 13
RODGER RICHEAL.... 51
Senior Vice President

Mr. Richeal joined ChemTrak in November 1995. He had been with Abaxis
as Vice President of Business Development from 1991 through 1995, having
previously been Vice President of Operations, Clinical and Regulatory Affairs.
He was employed as an Industry Consultant by Advanced Bioresearch Associates.
Prior to 1986, he was Vice President of Operations at Primary Diagnostic Systems
and Vice President of Technical Operations and Quality Assurance at Syva Co.,
(formerly a unit of Syntex Corp., now part of the Behring Diagnostics, Inc.,
unit of Hoechst AG), where he was employed for more than 11 years.

NIQUETTE HUNT....32
Vice President

Ms. Hunt jointed ChemTrak in December, 1996 to lead the Company's
domestic OTC marketing effort. Prior to joining ChemTrak, she served as a
Category Manager for Warner Lambert Company in its Upper Respiratory product
group which includes the Sudafed, Benadryl and Actifed franchises. Prior to
that she served as the Team Leader/Senior product Manager for the Lubriderm and
Benadryl brands. From 1987 to 1993 she was a brand manager for Procter and
Gamble in the Health and Beauty Care sector where she managed several leading
products including Pantene, Pert Plus, Head & Shoulders and Prell. Prior to
joining Procter and Gamble, Ms. Hunt began her career in banking, working for
J.P. Morgan.

RISK FACTORS

This section summarizes certain risks that should be considered by
stockholders and prospective investors in the Company. Many of these risks are
discussed in other sections of this report.

HISTORY OF LOSSES AND ACCUMULATED DEFICIT

The Company has incurred operating losses since its inception, largely
because of the limited number of revenue-generating products and the high cost
of developing and marketing consumer medical devices. At December 31, 1996,
ChemTrak had an accumulated deficit of $36.3 million. The Company currently has
only one product on the market and expects to launch its H. pylori test and its
ColoCare(R) products for public sale in 1997. The extent of revenues generated
by these new products is highly uncertain. There can be no assurance that the
Company will achieve profitability in 1997, or that profitability, if achieved,
can be sustained on an ongoing basis.

FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING

The development and marketing of consumer medical devices is capital
intensive. The Company has funded its operations to date through product sales
and public and private equity and debt financings. The Company will require
substantial additional funding in order to complete the development and
marketing activities in which it is currently engaging, and to launch these
products in the consumer marketplace. The Company intends to seek additional
funding through collaborative agreements with corporate partners or through
additional equity or debt financings. There can be no assurance that the
Company will be able to enter into such arrangements on acceptable terms, or at
all.

GOVERNMENT REGULATION

The Company's ongoing product development activities, and any future
production and marketing of products, are subject to extensive regulation by
government authorities in the United States and other countries. The regulatory
process can be lengthy and requires the expenditure of substantial resources.
There can be no assurances that any product developed by the Company will meet
all of the applicable regulatory requirements necessary to receive marketing
approval. Moreover, Food and Drug Administration ("FDA") policy may change and
additional government regulations may be established that could prevent or
delay regulatory approval of the Company's potential products. In addition, a
marketed product and its manufacturer are subject to continual review, and later
discovery of previously unknown problems with a product or manufacturer may
result in restrictions on such product or manufacturer, including withdrawal of
the product from the market.

In order to market its products abroad, the Company also must comply
with foreign regulatory requirements, implemented by foreign health
authorities, governing marketing approval. The foreign regulatory approval
process includes all of the risks associated with FDA approval set forth above,
and may introduce additional requirements or risks. There is no assurance that
a foreign regulatory body will accept the data developed by the Company for any
of its products and approved by the FDA does not ensure approval in other
countries.

RELIANCE ON SMALL PRODUCT LINE; UNCERTAINTY OF MARKET ACCEPTANCE

To date the Company has generated revenue only from sales of the
AccuMeter(R) Total Cholesterol Test, and, more recently, the ColoCare(R) test.
The Company has generated no sales revenue from its H. pylori test, which is
expected to be launched in 1997. Factors which will affect the Company's
success include ChemTrak's ability to obtain regulatory clearance for marketing
its products and its ability to develop, manufacture and market future products
on a timely basis. There can be no assurance that the Company's current product
development efforts will be successfully completed, or that products can be
manufactured in commercial quantities or marketed successfully. In addition,
there can be no assurance that any of the Company's products will gain
significant market acceptance among physicians or the general public. With its
small product line, development, regulatory or market failures for even a
single product are likely to have a material adverse effect on Company
operations.

RAPID TECHNOLOGICAL CHANGE; HIGHLY COMPETITIVE INDUSTRY

Rapid and substantial technological change are expected to continue in
the health care industry generally and the diagnostic device industry in
particular. There can be no assurance that the Company's products will not
become obsolete or that the Company will be able to keep pace with
technological developments. The consumer retail and physician office markets
are expected to attract a large number of competitors, many of whom have
substantially greater resources than ChemTrak. Numerous other companies are
developing alternative strategies for cholesterol management, HIV diagnostics,
and other areas in which the Company is marketing or intends to market
products. These alternative strategies could compete with the Company's
programs. There can be no assurance that the Company's competitors will not
develop more effective or more affordable products or achieve earlier or more
efficient product commercialization than the Company.

RELIANCE ON CORPORATE PARTNERS FOR PRODUCT DISTRIBUTION

ChemTrak has a broker sales force and also relies on a number of
collaborative arrangements with corporate partners for the distribution of its
products. Many of these arrangements are terminable by corporate partners at
the discretion of those partners. Termination of one or more of these
arrangements could have a material adverse effect on the Company's business and
financial condition and its results of operations. There can be no assurance
that the Company will be able to maintain these arrangements with its corporate
partners or, it such arrangements are terminated, that the Company would be
able to enter into arrangements with other corporate partners on satisfactory
terms, or at all. In addition, there can be no assurance that these corporate
partners will meet their projected sales volumes.

PATENTS AND PROPRIETARY TECHNOLOGY

The patent position of medical device manufacturers, including
ChemTrak, is uncertain and may involve complex legal and factual issues.
Consequently, the Company does not know whether any of its patent applications
will result in the issuance of any further patents, or whether issued patents
will provide significant proprietary protection or will not be circumvented or
invalidated. Since patent applications in the United States are maintained in
secrecy until patents issue, and since publications or discoveries in the
scientific or patent literature tend to lag behind actual discoveries by
several months, ChemTrak cannot be certain that it was the first creator of
inventions covered by pending patent applications or that it was the first to
file patent applications for such inventions. Moreover, the Company may have to
participate in interference proceedings declared by the U.S. Patent and
Trademark Office to determine the priority of inventions, which could result in
substantial cost to the Company as well as commitment of management resources.
There can be no assurance that the Company's patent applications will result in
further issued patents or that such patents will offer protection against
competitors with similar technology.

Because the Company's AWARE(R) home HIV test service utilizes existing
laboratory technology in analyzing blood samples, it lacks patent protection.
While there may be patent protection sought for the proprietary technology of
some of the test components. ChemTrak does not expect that this protection
would preclude others from marketing similar tests for HIV.

ENVIRONMENTAL REGULATION

Due to the nature of its current and proposed manufacturing processes,
the Company is subject to stringent federal, state and local laws, rules,
regulations and policies governing the use, generation, manufacture, storage,
air emission, effluent discharge, handling and disposal of certain materials
and wastes. Although the Company believes that it has compiled with these laws
and regulations in all material respects and has not been required to take any
action to correct any noncompliance, there can be no assurance that the Company
will not be required to incur significant costs to comply with environmental
and health and safety regulations as it continues to increase production to
commercial levels. In addition, the landlord of the Company's facility in
Sunnyvale, California has advised the Company that the groundwater may be
affected by contaminants migrating from an off-site source. Although the
Company has been indemnified by its landlord as to claims brought by third
parties with respect to this contamination and no claims have been asserted, in
the event remedial action is required, there can be no assurance that the
Company will not have to incur significant costs if the landlord is not
adequately funded.

DEPENDENCE ON KEY PERSONNEL

The Company is highly dependent upon a small group of management,
manufacturing, marketing and scientific executives, the loss of whose services,
could have a material adverse effect on the Company's business, financial
condition and results of operations. The Company has obtained key man life
insurance for $1,000,000 on the life of Prithipal Singh, the Company's
co-founder and chief technical officer. Recruiting and retaining qualified
manufacturing, marketing and sales personnel and scientists to perform research
and development work in the future will also be critical to the Company's
success, although there can be no assurance that the Company will be able to do
so.

POTENTIAL IMPACT OF REIMBURSEMENT POLICIES

Third party payors can indirectly affect the pricing or the relative
attractiveness of the Company's products by regulating the maximum amount of
reimbursement they will provide for diagnostic testing services. Fro example,
the reimbursement of fees for diagnostic testing services for Medicare patients
in hospitals or physician offices is include under Medicare's prospective
payment system diagnosis-related group regulations. If the reimbursement
amounts for diagnostic testing services are decreased in the future, it may
decrease the amount which hospitals or physicians are able to charge Medicare
patients for such services and consequently the price the Company can charge
physicians for its products. The Company cannot predict the reimbursement of
fees for diagnostic testing services for Medicare patients, or any other
patients. Any decreases in reimbursement fees could have a material adverse
effect on the Company's business, financial condition and results of
operations.

VOLATILITY OF STOCK PRICE

The market price of the shares of Common Stock, like that of other
medical technology companies, has been highly volatile. Factors such as
fluctuations in the Company's operating results, announcements of technological
innovations or new commercial products by the Company or its competitors,
changes in governmental regulation, including changes in the current structure
of the health care financing and reimbursement systems in the U.S. and abroad,
developments in or disputes regarding patent or other proprietary rights,
economic and other external factors and general market conditions may have a
significant effect on the market price of the Common Stock.

MANUFACTURING

The Company is required to manufacture its products in compliance with
the FDA's cGMP regulations and to register its manufacturing facility and its
products. The Company has registered its facility and its products with the
FDA. The Company has also registered its manufacturing facility with the
Department of Health Services of the State of California, as required, and has
passed federal and state inspections confirming the Company's compliance with
cGMP regulatory requirements for its products. However, there can be no
assurance that the Company's facility will continue to satisfy GMP
regulations. In addition, the manufacture, sale or use of the Company's
products are also subject to regulation by other federal entities, such as the
Occupational Safety and Health Agency and the Environmental Protection Agency,
and by various state agencies. Federal and state regulations regarding the
manufacture, sale or use of the Company's products are subject to future
change, which could have a material adverse effect on the Company's business,
financial condition and results of operation.

ITEM 2 - PROPERTIES.

The Company's corporate offices and principal laboratories are in an
approximately 58,000 square foot facility located in Sunnyvale, California. The
Company currently occupies the facility under a ten-year lease which commenced
in July 1992. The Company believes that its existing facilities will be adequate
to meet the Company's needs at least through 1997 and that suitable additional
space will be available when and as needed.

ITEM 3 - LEGAL PROCEEDINGS.

Not applicable.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not applicable.

13
<PAGE> 14
PART II

ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Since February 19, 1992, ChemTrak's Common Stock, par value $.001, has
been traded on the Nasdaq National Market under the symbol CMTR. The following
table sets forth the range of high and low closing sales prices for ChemTrak
Common Stock on the Nasdaq National Market for the periods indicated.

<TABLE>
<CAPTION>
High Low
-------- ---------
<S> <C> <C>
1996
First Quarter.................. $5.44 $1.25
Second Quarter................. $5.31 $3.94
Third Quarter.................. $4.38 $1.91
Fourth Quarter................. $2.56 $1.34

1995
First Quarter.................. $3.25 $1.81
Second Quarter................. $3.50 $2.13
Third Quarter.................. $2.50 $1.75
Fourth Quarter................. $2.13 $0.75
</TABLE>

The approximate number of record holders of the Company's Common Stock as of
February 15, 1997 was 600. ChemTrak has not paid any cash dividends since its
inception and does not anticipate paying cash dividends in the foreseeable
future.

On May 13, 1996, the Company sold $5,000,000 of convertible debentures
for cash to certain investment firms located outside the United States. The
debentures bear a coupon interest rate of 7.5% per annum, payable in cash or
shares of the Company's Common Stock, at the Company's option. The debentures
are convertible into Common Stock, at the debenture holder's option (subject to
certain volume limitations), at a conversion price equal to the lower of 110%
of the average daily closing bid price of the Common Stock on the Nasdaq
National Market for the ten trading days prior to May 13, 1996 or 82.5% of the
average daily closing bid price of the Common stock on the Nasdaq National
Market for the ten trading days prior to the conversion date. The Company paid
a fee of $300,000 to the Shemano Group, the placement agent. In addition, the
Company issued warrants to purchase 78,500 shares of the Company's Common Stock
to The Shemano Group, and warrants to purchase 5,000 shares of the Company's
Common Stock to Oxhead Advisory Group, Ltd., which assisted in the placement,
all exercisable at $5.00 per share. The offering was made in reliance on
Regulation S promulgated under the Securities Act of 1933, as amended. During
1996, approximately 1,800,000 shares of the Company's common stock were issued
to debenture holders in connection with the conversion of $3,082,000 face
amount of debentures, and approximately 100,000 shares of Common Stock were
issued to debenture holders in lieu of cash payments of interest on the
debentures. These transactions were made in reliance on Section 3(a)(9) of the
Securities Act of 1933, as amended.

14
<PAGE> 15
ITEM 6 - SELECTED FINANCIAL DATA.

The following selected financial data should be read in conjunction with the
financial statements and the notes thereto included elsewhere herein.

<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------------------------------
1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------------------
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues:
Product revenues .................... $ 2,463 $ 2,171 $ 7,780 $ 2,662 $ 4,559
Funded research and other revenues .. 598 4,725 2,540 2,048 1,390
------------------------------------------------------
Total revenues ................... $ 3,061 $ 6,896 $ 10,320 $ 4,710 $ 5,949
Operating loss ...................... (7,010) (3,529) (1,308) (9,820) (6,506)
Net loss ............................ (7,826) (3,269) (1,065) (9,240) (5,696)
Net loss per share .................. $ (.77) $ (.34) $ (.12) $ (1.01) $ (.65)
Shares used in computing net loss per
share ............................ 10,228 9,649 9,225 9,192 8,712
</TABLE>

<TABLE>
<CAPTION>
December 31,
-----------------------------------------------------------
1996 1995 1994 1993 1992
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and
short-term investments .. $ 4,692 $ 6,254 $ 7,773 $ 6,821 $ 13,646
Working capital .............. 4,656 5,944 7,816 7,990 15,276
Total assets ................. 8,841 10,383 13,308 13,304 22,322
Convertible Debentures........ 2,135 -- -- -- --
Accumulated deficit .......... (36,308) (28,482) (25,213) (24,148) (14,908)
Total stockholders' equity (1) 5,030 9,018 11,345 12,232 21,202
</TABLE>

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

(1) Since its inception the Company has not declared any cash dividends.

15
<PAGE> 16
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

OVERVIEW

ChemTrak began marketing the AccuMeter(R) Cholesterol Self-Test through
United States consumer catalogs in January 1994. In January 1994, the Company
signed a license and supply agreement with Direct Access Diagnostics ("DAD") to
market the Company's Total Cholesterol Test to over-the-counter retail outlets
in the United States, Canada, Mexico and Puerto Rico. In June 1994, DAD began
shipping the AccuMeter(R) Total Cholesterol Test to United States pharmacies
under the Johnson & Johnson Advanced Care(TM) Cholesterol Test brand name. In
December 1995 the Company concluded its relationship with DAD and regained the
North American retail marketing rights for its Total Cholesterol Test and
received a one-time payment of $3.6 million from DAD. The fiscal year 1996
completed the first full year in which the Company directly marketed and
distributed its cholesterol product in the United States.

The Company received, in July 1996, clearance from the FDA to market
its H. pylori test for use in the physician office laboratory. The first
shipment to Astra Merck, as part of the 1995 agreement, is expected to be
delivered in April 1997.

In 1995, the Company filed, with the FDA, its pre-market approval
application ("PMA") for the Company's AWARE(R) home HIV test service. The
Company acquired technology from Coonan Clinical Labs for a home HIV test
service. The Company expects that the AWARE(R) home HIV test service will add to
the Company's strategy to be a leader in the over-the-counter testing market.

As of December 31, 1996, ChemTrak had an accumulated deficit of
approximately $36,308,000. The ability of the Company to achieve profitability
is highly dependent upon numerous factors including, but not limited to, the
Company's ability to directly market and distribute its cholesterol product in
the United States, successful completion of the Company's regulatory approval
process to market in the United States products under development, principally
its AWARE(R) home HIV test service, and the Company's ability to provide product
in sufficient, cost effective quantities. Due to the uncertainty of these
factors, it is difficult to reliably predict when such profitability may occur,
if at all. Until such time as it achieves profitability, the Company is likely
to require additional capital to finance it operations.

The development and marketing of consumer medical devices is capital
intensive. The Company has funded its operations to date through product sales
and public and private equity and debt financings. The Company will require
substantial additional funding in order to complete the development and
marketing activities in which it is currently engaging, and to launch these
products in the consumer marketplace. The Company intends to seek additional
funding through collaborative agreements with corporate partners or through
additional equity or debt financings. There can be assurance that the Company
will be able to enter into such arrangements on acceptable terms, or at all.

The Company has historically experienced significant fluctuations in
its operating results and anticipates that these fluctuations may continue. The
market price of the shares of the Company's common stock, like that of other
emerging medical technology companies, has been highly volatile. Various factors
including, but not limited to, fluctuations in the Company's operating results,
technical and regulatory developments, and general market and economic factors,
may have a significant effect on the market price of the Company's common stock.

In March 1997, the Company has determined that its previously reported
operating results and balance sheet data for the three-month periods ended June
30, 1996 and September 30, 1996 require adjustment. Revisions to these quarters
have been made to reflect recent SEC guidance relating to debt that is
convertible to equity at a discount to market. As a result of the SEC's recent
position, the Company is adjusting it quarterly reports subsequent to the
completion of its May 1996 private placement of $5,000,000 of convertible
debentures that are convertible into common stock at the lower of 100% of the
common stock price at the time of closing or 82.5% of the common stock price at
certain defined conversion dates. The Company is adjusting its quarterly and
annual results of operations to reflect deemed non-cash interest expense of
$875,000 ($656,250 and $218,750 in the quarters ended June 30, 1996 and
September 30, 1996, respectively).

RESULTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

NET REVENUES

Net revenues were $3,061,000 in 1996, consisting of $2,463,000 from
product sales and $598,000 from funded research and other revenue, compared with
net revenues of $6,896,000 in 1995, consisting of $2,171,000 from product sales
and $4,725,000 from funded research and other revenue. The decrease in net
revenues in 1996

16
<PAGE> 17
from 1995 was due to a reduction in funded research and other revenue as a
result of the 1995 one time cancellation payment from DAD of $3,600,000.

Net revenues for 1994 were $10,320,000, consisting of $7,780,000 from
product sales and $2,540,000 from funded research and other revenue. The
decrease in net revenues in 1995 compared with 1994 was primarily due to reduced
product unit sales consisting of shipments of the Total Cholesterol Test to DAD
for sale in the U.S. over-the-counter retail market.

In December 1995, ChemTrak concluded its agreement with DAD and
ChemTrak regained the exclusive North American retail marketing rights for its
home cholesterol test. Under the terms of the agreement, ChemTrak received a
one-time payment of $3,600,000 and also regained the marketing rights to its
test for the High Density Lipoprotein (HDL) or "good cholesterol" which had been
cleared for professional use by the FDA. DAD ceased shipments in December 1995
and ChemTrak resumed shipment of its CholesTrak(TM) test to the same drug
chains, mass merchandisers and wholesalers in January 1996.

Cost of Product Sales

In 1996, the cost of product sales was $3,201,000 compared with
$3,191,000 in 1995 and $5,441,000 in 1994. The increase in the cost of product
sales in 1996 compared with 1995 was principally due to an increase in
production resulting from higher levels of product shipments. As a result of low
product sales in 1996 and 1995, the cost of product sales in those years
exceeded product sales due to fixed costs associated with the Company's
production facilities and equipment. The larger cost of product sales in 1994
compared to 1995 and 1996 was due primarily to significantly higher production
as a result of the launch of the Total Cholesterol Test in the United States by
DAD.

Research and Development

The Company incurred research and development expenses of $2,439,000 in
1996 and $4,293,000 in 1995, compared to $2,299,000 in 1994. The decrease in
research and development expenses in 1996 compared with 1995 was primarily due
to costs associated with the acquisition of Coonan Clinical Laboratories, Inc.
The Company recorded a $1,500,000 charge in 1995 for in-process research and
development effort associated with CCL's technology.

Marketing, General and Administrative

Marketing, general and administrative expenses increased to $4,431,000
in 1996, from $2,941,000 in 1995 and $3,888,000 in 1994. The increases in 1996
were primarily due to increased marketing activities to support the Company's
efforts to support its products on a direct to wholesaler basis. The decreases
in 1995 compared with 1994 were primarily the result of decreased personnel
costs.

Interest Expense

Interest expense in 1996 is the result of the Company's issuance of
convertible debentures that allow holders to convert their debentures into
common stock at a 17.5% discount to the then fair market value of the Company's
common stock. The Company has accounted for this non-cash charge in accordance
with recent SEC guidance.

Interest Income

Interest income was $59,000 in 1996 compared to $260,000 in 1995 and
$243,000 in 1994. The decrease in 1996 compared to 1995 and 1994 was primarily
due to lower effective interest rates and lower cash balances.

LIQUIDITY AND CAPITAL RESOURCES

From August 1985 through January 1992 ChemTrak was financed through
private placements of equity securities. In February 1992, the Company completed
an initial public offering of Common Stock, raising net proceeds of
approximately $23,536,000. In 1996, approximately $4.7 million in net proceeds
was obtained from the sale of convertible debentures.

As of December 31, 1996, including the receipt of approximately $4.7
million of proceeds from the debenture sales, the Company had cash, cash
equivalents and short-term investments of $4,692,000. During 1996, the Company
had a net decrease of $6.1 million of cash and cash equivalents associated with
its operations primarily as a result of the Company's operating loss during
1996.

The development and marketing of medical devices is capital intensive.
The Company currently has funded its operations to date through product sales
and public and private equity and debt financings. The Company will require
substantial additional funding in fiscal 1997 in order to complete development
and marketing activities in which its is currently engaging and to launch these
products in the consumer marketplace. The Company intends to seek additional
funding through collaborative agreements with corporate partners or through
additional equity or debt financing.

17
<PAGE> 18
The Company believes that its existing capital resources, together with
internally generated funds and funded research, will need to be augmented by
funds received through collaboration agreements or equity or debt financing to
meet its current budgeted operating needs as well as requirements for property,
plant and equipment until at least the end of 1997 (see "Risk Factors: Future
Capital Needs; Uncertainty of Additional Funding"). If such funding cannot be
obtained, the Company will implement cost cutting measures to ensure the
continuity of operations through at least the end of 1997. The Company's success
is dependent on its ability to achieve profitable operations, reduce
discretionary operating expenses and to obtain additional funds to support its
operations. There can be no assurance that the Company will achieve profitable
operations or successfully reduce discretionary expenses by a sufficient amount
on a timely basis or that additional funds will be available when and as
required by the Company on acceptable terms or at all.

The Company does not believe that inflation has had a material impact
on its business.

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The Company's Financial Statements and notes thereto appear on pages
F-1 to F-16 of this Form 10-K Annual Report.

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

Not applicable.

PART III

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS.

The information required by this item (with respect to Directors) is
incorporated by reference from the information under the caption "Election of
Directors" contained in the Company's Definitive Proxy Statement which will be
filed with the Securities and Exchange Commission in connection with the
solicitation of proxies for the Company's 1997 Annual Meeting of Stockholders
(the "Proxy Statement").

The required information concerning Executive Officers of the Company
is contained in Item 1, Part I of this Report.

ITEM 11 - EXECUTIVE COMPENSATION.

The information required by this item is incorporated by reference from
the information under the caption "Executive Compensation" contained in the
Proxy Statement.

18
<PAGE> 19
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The information required by this item is incorporated by reference from
the information under the caption "Security Ownership of Certain Beneficial
Owners and Management" contained in the Proxy Statement.

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information required by this item is incorporated by reference from
the information under the caption "Certain Transactions" contained in the Proxy
Statement.

PART IV

ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a) (1) Index to Financial Statements.

The Financial Statements required by this item are submitted in
a separate section beginning on page F-1 of this report.

Page

Report of Ernst & Young LLP F-1
Balance Sheets at December 31, 1996 and 1995 F-2
Statements of Operations --
Years ended December 31, 1996, 1995 and 1994 F-3
Statements of Stockholders' Equity --
Years ended December 31, 1996, 1995 and 1994 F-4
Statements of Cash Flows --
Years ended December 31, 1996, 1995 and 1994 F-5
Notes to Financial Statements F-6

(2) All other schedules are omitted because they are not applicable
or the required information is shown in the Financial
Statements or the notes thereto.

(3) Exhibits --

Number

2.1 Agreement and Plan of Reorganization among the Registrant,
ChemTrak Acquisition Subsidiary, Inc., Coonan Clinical
Laboratories, Inc. and Stephen J. Coonan, dated December 21,
1994, as amended January 20, 1995. (6)

3.1 Amended and Restated Certificate of Incorporation of the
Registrant. (1)

3.2 Bylaws of the Registrant. (1)

4.1 Reference is made to Exhibits 3.1 and 3.2.

10.1 Form of Indemnification Agreement entered into between the
Registrant and its directors and officers, with related
schedule. (1)

10.2+ 1988 Stock Option Plan, as amended. (2)

19
<PAGE> 20
10.3+ Form of Incentive Stock Option under the Option Plan, as amended. (1)

10.4+ Form of Non-Qualified Stock Option under the Option Plan, as amended.
(1)

10.5 Form of Notice of Exercise under the Option Plan, as amended. (1)

10.6 Investor Rights Agreement between the Registrant and the Series A
Purchasers, the Series C Purchasers, the Series D Purchasers,
Interhealth, and two of the Registrant's founders, dated June 4,
1991. (1)

10.10* Distribution Agreement between the Registrant and A. Menarini SRL,
dated as of July 1991. (1)

10.11* Letter from the Registrant to The Boots Company PLC, dated December
5, 1991, and letter from The Boots Company PLC to the Company, dated
October 24, 1991. (1)

10.15 Lease Agreement between the Registrant and PM-DE, dated as of January
23, 1992. (1) (7)

10.16+ 1991 Employee Stock Purchase Plan. (1)

10.17+ 1992 Non-Employee Directors' Stock Option Plan ("Directors' Plan").
(3)

10.18+ Form of Non-Statutory Option under the Directors' Plan. (3)

10.24* Agreement between the Registrant and Miles Inc., dated April 22,
1993. (4)

10.31 1993 Equity Incentive Plan. (5)

10.35* Distribution and Supply Agreement, dated as of March 1, 1995 between
the Registrant and Astra Merck Inc. (8)

20
<PAGE> 21
10.36** Distribution Agreement between ChemTrak and Helena
Laboratories (Canada) Ltd. dated April 25, 1996 (the "Helena
Agreement").

10.37** Agreement between ChemTrak and Organon Teknike B.V., dated
December 1, 1996 (the "Teknika Agreement").

10.38** Development and Distribution Agreement between ChemTrak and
Selfcare, Inc., dated December 31, 1996 (the "Selfcare
Agreement").

23.1 Consent of Ernst & Young LLP, Independent Auditors.

25.1 Power of Attorney. Reference is made to page 24. (3)

27.1 Financial Data Schedule

- ---------------
* Confidential treatment granted for portions of this document.

** Confidential treatment has been requested for portions of this
document.

+ Compensatory Plan.

(1) Incorporated by reference to the indicated exhibit in the
Registrant's Registration Statement on Form S-1 (File No.
33-44673), as amended.

(2) Incorporated by reference to the indicated exhibit in the
Registrant's Registration Statement on Form S-8 (File No.
33-55326).

(3) Incorporated by reference to the indicated exhibit in the
Registrant's Registration Statement on Form S-8 (File No.
33-55324).

(4) Incorporated by reference to the indicated exhibit in the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1993.

(5) Incorporated by reference to the indicated exhibit in the
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1992.

(6) Incorporated by reference to the indicated exhibit in the
Registrant's Registration Statement on Form S-3 (File No.
33-90324).

(7) Lease assigned to MP Arques, Inc. as part of the purchase of
the property from PM-DE.

(8) Incorporated by reference to the indicated exhibit in the
Registrant's Registration Statement on Form 10-K for the
fiscal year ended December 31, 1995.

21
<PAGE> 22
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report on Form 10-K to
be signed on its behalf by the undersigned, thereunto duly authorized on the
31st day of March 1997.

CHEMTRAK INCORPORATED

By: /s/ Prithipal Singh, Ph.D.
-------------------------------
Prithipal Singh, Ph.D.
Chairman of the Board

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Prithipal Singh, Ph.D. his
attorney-in-fact, with the power of substitution, for him in any and all
capacities, to sign any amendments to this Report, and to file the same, with
exhibits thereto and other documents in connections therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof.

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

<TABLE>
<CAPTION>
<S> <C> <C>
Signature Title Date
- ---------------------------------- ---------------------- --------------

/s/ Prithipal Singh, Ph.D. Chairman of the Board March 31, 1997
- ----------------------------------
Prithipal Singh, Ph.D.

/s/ Edward F. Covell President, Chief Executive Officer March 31, 1997
- ---------------------------------- and Chief Accounting Officer
Edward F. Covell (Principal executive officer and
principal financial and accounting officer)

/s/ Malcolm Jozoff Director March 31, 1997
- ----------------------------------
Malcolm Jozoff

/s/ Robert P. Kiley Director March 31, 1997
- ----------------------------------
Robert P. Kiley

/s/ David Rubinfien Director March 31, 1997
- ----------------------------------
David Rubinfien

/s/ Gordon Russell Director March 31, 1997
- ----------------------------------
Gordon Russell
</TABLE>

22
<PAGE> 23
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Stockholders
ChemTrak Incorporated

We have audited the accompanying balance sheets of ChemTrak Incorporated as of
December 31, 1996 and 1995, and the related statements of operations,
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ChemTrak Incorporated at
December 31, 1996 and 1995, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles.

ERNST & YOUNG LLP

Palo Alto, California
January 17, 1997

F-1

<PAGE> 24
CHEMTRAK INCORPORATED

BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31,
----------------------------
1996 1995
------------ ------------
<S> <C> <C>

Current assets:
Cash and cash equivalents $ 4,125,000 $ 4,251,000
Short-term investments 567,000 2,003,000
Accounts receivable, net of allowance for
doubtful accounts of $44,000 in 1996 and
$49,000 in 1995 485,000 136,000
Inventories 540,000 434,000
Prepaid expenses and other current assets 320,000 245,000
------------ ------------
Total current assets 6,037,000 7,069,000
Property and equipment, net 2,738,000 3,248,000
Other assets 66,000 66,000
------------ ------------
Total assets $ 8,841,000 $ 10,383,000
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 289,000 $ 632,000
Accrued payroll and benefits 199,000 121,000
Other accrued liabilities 788,000 258,000
Accrued royalties 105,000 114,000
------------ ------------
Total current liabilities 1,381,000 1,125,000

Accrued rent 295,000 240,000

Convertible debentures 2,135,000 --

Commitments and contingencies
Stockholders' equity:
Preferred stock, $.001 par value:
5,000,000 authorized; none issued
and outstanding -- --
Common stock, $.001 par value; 40,000,000
shares authorized, 11,707,051 and 9,724,343
shares issued and outstanding in 1996 and
1995, respectively 12,000 10,000
Additional paid-in capital 41,375,000 37,528,000
Deferred compensation (49,000) (38,000)
Accumulated deficit (36,308,000) (28,482,000)
------------ ------------
Total stockholders' equity 5,030,000 9,018,000
------------ ------------
Total liabilities and stockholders' equity $ 8,841,000 $ 10,383,000
============ ============
</TABLE>

See accompanying notes.

F-2
<PAGE> 25
CHEMTRAK INCORPORATED

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Net revenues:
Product sales $ 2,463,000 $ 2,171,000 $ 7,780,000
Funded research and other revenues 598,000 4,725,000 2,540,000
----------- ----------- -----------
Total net revenues 3,061,000 6,896,000 10,320,000
----------- ----------- -----------

Cost and expenses:
Cost of product sales 3,201,000 3,191,000 5,441,000
Research and development 2,439,000 4,293,000 2,299,000
Marketing, general and administrative 4,431,000 2,941,000 3,888,000
----------- ----------- -----------
Total costs and expenses 10,071,000 10,425,000 11,628,000
----------- ----------- -----------

Operating loss (7,010,000) (3,529,000) (1,308,000)
Interest income, net 59,000 260,000 243,000
Interest expense (875,000) -- --
----------- ----------- -----------
Net loss $(7,826,000) $(3,269,000) $(1,065,000)
=========== =========== ===========
Net loss per share $ (0.77) $ (0.34) $ (0.12)
=========== =========== ===========
Shares used in calculating
per share amounts 10,228,000 9,649,331 9,225,267
=========== =========== ===========
</TABLE>

See accompanying notes.

F-3

<PAGE> 26
CHEMTRAK INCORPORATED

STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
-------------------- PAID-IN DEFERRED ACCUMULATED SHAREHOLDERS'
SHARES AMOUNT CAPITAL COMPENSATION DEFICIT EQUITY
---------- ------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1994.................. 9,210,809 9,000 36,471,000 (100,000) (24,148,000) 12,232,000
Shares issued upon exercise of stock
purchase plan and stock options......... 31,259 128,000 128,000
Amortization of deferred compensation..... 50,000 50,000
Net loss.................................. (1,065,000) (1,065,000)
---------- ------- ----------- --------- ------------ -----------
Balance at December 31, 1994................ 9,242,068 9,000 36,599,000 (50,000) (25,213,000) 11,345,000

Shares issued in conjunction with the
acquisition of CCL...................... 449,986 1,000 900,000 901,000
Shares issued upon exercise of stock
purchase plan and stock options......... 32,289 63,000 63,000
Amortization of deferred compensation and
net issuances/cancellations of certain
stock options........................... (34,000) 12,000 (22,000)
Net loss.................................. (3,269,000) (3,269,000)
---------- ------- ----------- --------- ------------ -----------
Balance at December 31, 1995................ 9,724,343 10,000 37,528,000 (38,000) (28,482,000) 9,018,000

Shares issued upon conversion of
convertible debentures ................. 1,880,718 2,000 3,145,000 3,147,000
Additional paid in capital
related to discount conversion
feature on convertible debentures....... -- -- 539,000 -- -- 539,000
Shares issued upon exercise of stock
purchase plan and stock options......... 101,990 148,000 148,000
Amortization of deferred compensation
and net issuances/cancellations of
certain stock options................... 15,000 (11,000) 4,000
Net loss (7,826,000) (7,857,000)
---------- ------- ----------- --------- ------------ -----------
Balance at December 31, 1996................ 11,707,051 $12,000 $41,375,000 $(49,000) $(36,308,000) $5,030,000
========== ======= =========== ========= ============ ===========
</TABLE>

See accompanying notes.

F-4

<PAGE> 27
CHEMTRAK INCORPORATED

STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Operating activities:
Net loss .............................................. $(7,826,000) $(3,269,000) $(1,065,000)
Adjustments to reconcile net loss to net cash and
cash equivalents used in operating activities:
Interest expense and financing charges on
Debentures....................................... 1,121,000 -- --
Depreciation and amortization...................... 832,000 1,055,000 817,000
Loss on disposal of fixed assets................... -- 137,000 --
Accrued rent....................................... 55,000 54,000 78,000
Stock option compensation and other................ 4,000 (22,000) 50,000
Purchase of in-process research and development
for common stock................................. -- 901,000 --
Changes in operating assets and liabilities:
Accounts receivable................................ (349,000) 462,000 (316,000)
Inventories........................................ (106,000) 554,000 666,000
Prepaid expenses and other current assets.......... (75,000) (11,000) (37,000)
Other assets....................................... -- -- (9,000)
Accounts payable................................... (343,000) (186,000) 479,000
Accrued payroll and benefits....................... 78,000 (399,000) 210,000
Other accrued liabilities.......................... 521,000 (67,000) 224,000
Deferred revenue................................... -- -- (100,000)
----------- ----------- -----------
Net cash and cash equivalents provided
by (used in) operating activities................ (6,088,000) (791,000) 997,000
----------- ----------- -----------
Investing activities:
Purchase of available for sale securities.......... -- (506,000) (1,486,000)
Proceeds from available for sale securities........ 1,436,000 3,996,000 1,651,000
Acquisition of property and equipment, net......... (322,000) (791,000) (173,000)
----------- ----------- -----------
Net cash and cash equivalents provided
by (used in) investing activities................ 1,114,000 2,699,000 (8,000)
----------- ----------- -----------
Financing activities:
Proceeds from issuance of common stock, net........ 148,000 63,000 128,000
Proceeds from sale of convertible debentures, net.. 4,700,000 -- --
----------- ----------- -----------
4,848,000 63,000 128,000
----------- ----------- -----------

Net increase (decrease) in cash and cash equivalents... (126,000) 1,971,000 1,117,000
Cash and cash equivalents at beginning of period....... 4,251,000 2,280,000 1,163,000
----------- ----------- -----------
Cash and cash equivalents at end of period............. $ 4,125,000 $ 4,251,000 $ 2,280,000
=========== =========== ===========
Supplemental disclose of non-cash financing
activities:

Conversion of convertible debentures and accrued
interest to common stock........................... $ 3,686,000 $ -- $ --
=========== =========== ===========
</TABLE>

See accompanying notes.

F-5

<PAGE> 28
CHEMTRAK INCORPORATED

NOTES TO FINANCIAL STATEMENTS

December 31, 1996

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

ChemTrak operates in one industry segment and is engaged in the
development, manufacturing and marketing of easy-to-use diagnostic tests for the
worldwide point-of-care markets.

The Company has funded its operations to date through product sales and
public and private equity and debt financings. The Company will require
substantial additional funding during 1997 in order to meet its current budgeted
operating needs and to complete the development and marketing activities in
which it is currently engaging, and to launch these products in the consumer
marketplace. The Company intends to seek additional funding through
collaborative agreements with corporate partners or through additional equity or
debt financings. If the Company is not able to enter into such arrangements
management believes that certain discretionary spending cuts can be implemented
to ensure the continuity of operations through at least the end of 1997. There
can be no assurance that the Company will be able to enter into such
arrangements on acceptable terms, or at all or will be able to successfully
reduce discretionary spending by a sufficient amount on a timely basis.

REVENUES

Product revenues are generally recognized at the time of shipment to
customers or distributors. License revenues are recorded when earned. Funded
research and other revenues are recorded upon the completion of specific
milestones or when associated performance obligations are complete.

CASH AND CASH EQUIVALENTS

Cash equivalents are highly liquid investments consisting primarily of
investment grade commercial paper placed with high-quality financial
institutions with original maturities of less than 90 days at the date of
acquisition and insignificant interest rate risks.

SHORT-TERM INVESTMENTS

The Company invests cash in excess of current operating requirements
primarily in highly rated investments. Such investments have maturities of more
than 90 days and yield interest at prevailing interest rates at the time of
acquisition. The Company has classified its entire investment portfolio
including cash equivalents as available-for-sale. Although the Company may not
dispose of all of the securities in its investment portfolio within one year,
the Company's investment portfolio is available for current operations and,
therefore, has been classified as a current asset. Investments in the
available-for-sale category are carried at fair value. At December 31, 1996 and
1995, short-term investments consisted of U.S. government and
agency securities of $567,000 and $2,003,000, respectively.

The Company adopted Statement of Financial Accounting Standards
No. 115 (FAS 115), "Accounting for Certain Investments in Debt and Equity
Securities" for investments held as of or acquired after January 1, 1994. In
accordance with the Statement, prior period financial statements have not been
restated to reflect the change in accounting principle.

F-6
<PAGE> 29
CHEMTRAK INCORPORATED

NOTES TO FINANCIAL STATEMENTS (continued)

December 31, 1996

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

SHORT-TERM INVESTMENTS (CONTINUED)

Gross unrealized gains and losses and net realized gains and losses
were not significant at December 31, 1996 or 1995. The cost basis of investments
is adjusted for amortization of premiums and discounts to maturity, which is
included in interest income. The cost of securities sold is based on the
specific identification method.

The maturities of the Company's short-term investments at December 31,
1996 and 1995 are shown as follows:

<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Due in 1 year or less $ 567,000 $1,498,000
Due after 1 year through 3 years -- 505,000
---------- ----------
Total debt securities $ 567,000 $2,003,000
========== ==========
</TABLE>

INVENTORIES

Inventories are stated at the lower of standard cost (which
approximates actual cost on a first-in, first-out basis) or market.

DEPRECIATION AND AMORTIZATION

Property and equipment are depreciated using the straight-line method
over the estimated useful lives of the assets (principally five years).
Effective January 1, 1994, the Company changed the amortization period for
leasehold improvements from five years or life of the lease, whichever is
shorter, to 10 years or life of the lease, whichever is shorter. The impact of
the change in estimated useful lives for leasehold improvements results in
decreased annual amortization of $324,000 for periods ending in mid-1998.

NET LOSS PER SHARE

Net loss per share is based on the weighted average number of shares of
common stock outstanding. Stock options and warrants are not included in the
computation since their inclusion would be antidilutive.

STOCK BASED COMPENSATION

The Company grants stock options for a fixed number of shares to
employees. In most cases the exercise price is equal to the fair value of the
shares at the date of the grant. The Company accounts for stock option grants in
accordance with APB Opinion No. 25, Accounting for Stock Issued to Employees,
and generally recognizes no compensation expense for the stock option grants.

F-7
<PAGE> 30
CHEMTRAK INCORPORATED

NOTES TO FINANCIAL STATEMENTS (continued)

December 31, 1996

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

USE OF ESTIMATES

The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

2. ACQUISITION OF IN-PROCESS RESEARCH AND DEVELOPMENT

On February 3, 1995, the Company completed the acquisition of Coonan
Clinical Laboratories, Inc. ("CCL") through a merger of CCL into a wholly owned
subsidiary of ChemTrak, which was later dissolved by ChemTrak, in which all of
the outstanding shares of capital stock of CCL were exchanged for 449,986 newly
issued shares of ChemTrak common stock plus $400,000 in cash. The Company
recorded a $1,500,000 charge in 1995 for in-process research and development
which is included in research and development in the Company's statement of
operations. CCL's technology was comprised of efforts associated with a future
filing with the FDA for a home HIV test. CCL was a development stage company
with insignificant net assets and operations which consisted of approximately
$100,000 of research and development expense incurred during 1994 and until the
time of the acquisition.

3. INVENTORIES

Inventories consist of the following:

<TABLE>
<CAPTION>
December 31,
---------------------------
1996 1995
-------- --------
<S> <C> <C>
Raw materials $289,000 $145,000
Work-in-process 63,000 41,000
Finished goods 188,000 248,000
-------- --------
$540,000 $434,000
======== ========
</TABLE>

F-8
<PAGE> 31
CHEMTRAK INCORPORATED

NOTES TO FINANCIAL STATEMENTS (continued)

December 31, 1996

4. CUSTOMER INFORMATION

The Company has entered into distribution arrangements with certain
corporate partners. The Company granted certain corporate partners exclusive
distribution rights for select markets, including through December 15, 1995, the
U.S. consumer retail market for the Company's cholesterol products. The Company
has agreed to supply the corporate partners with their product requirements at
contracted selling prices. Under two such agreements the Company has received
funded research payments.

The Company had an arrangement with Direct Access Diagnostics, a
division of Johnson & Johnson, for distribution of the Total Cholesterol Test in
the domestic over-the-counter market in 1994 and most of 1995. This arrangement
was terminated in December of 1995 and the Company received a final payment of
$3.6 million from Direct Access Diagnostics which is included in funded research
and other revenues in the statements of operations. Net sales to Direct Access
Diagnostics represented 71% and 77% of total net sales for the years ended
December 31, 1995 and 1994, respectively. With this agreement terminated, the
Company has directly entered the U.S. retail market and relaunched its Total
Cholesterol Test under the trade name CholesTrak(TM).

Total export sales, primarily to European customers, were approximately
$360,000, $417,000 and $1,850,000 in 1996, 1995 and 1994 respectively.

The Company performs ongoing credit evaluations of its customers and
in some cases requires letters of credit for its export sales. Generally, no
collateral is required and credit losses have historically been within
managements' expectations. The Company recorded bad debt provisions of $4,000 in
1996, zero in 1995 and $63,000 in 1994.

F-9
<PAGE> 32
CHEMTRAK INCORPORATED

NOTES TO FINANCIAL STATEMENTS (continued)

December 31, 1996

5. PROPERTY AND EQUIPMENT

Property and equipment balances are stated at cost and comprise the following:

<TABLE>
<CAPTION>
December 31,
-------------------------------
1996 1995
----------- -----------
<S> <C> <C>
Machinery and equipment $ 3,830,000 $ 3,826,000
Furniture and fixtures 173,000 170,000
Leasehold improvements 2,798,000 2,799,000
Construction-in-progress 946,000 629,000
----------- -----------
7,747,000 7,424,000

Less accumulated depreciation and amortization (5,009,000) (4,176,000)
----------- -----------
$ 2,738,000 $ 3,248,000
=========== ===========
</TABLE>

6. COMMITMENTS AND CONTINGENCIES

LICENSES

The Company has entered into license agreements that allow the Company
to use certain technologies in its products. The agreements require the Company
to pay royalties based upon sales of the subject products with aggregate
royalties ranging from 5.5% to 6.0% of sales of the subject products. The
agreements expire upon the expiration of the related patents and are cancelable
by the Company upon six to twelve months written notice.

LITIGATION

The Company is a party to various legal actions (including patent
claims) that have occurred in the normal course of business. In the opinion of
management, the outcomes of these actions will not have a material effect on the
financial position, cash flows or results of operations of the Company.

F-10
<PAGE> 33
CHEMTRAK INCORPORATED

NOTES TO FINANCIAL STATEMENTS

December 31, 1996

6. COMMITMENTS AND CONTINGENCIES (CONTINUED)

LEASES

The Company leases facilities and equipment under noncancelable lease
agreements. The Company's facility lease expires in June 2002. Future minimum
lease payments at December 31, 1996, were as follows:

<TABLE>
<CAPTION>
Operating Lease
-------------------
<S> <C>
1997 $ 650,000
1998 683,000
1999 683,000
2000 789,000
2001 789,000
Thereafter 394,000
----------
Total minimum lease payments $3,988,000
==========
</TABLE>

In August 1996, the Company subleased a portion of its facilities to a third
party through September 1997. Sublease rental income was $64,000 for the year
ended December 31, 1996. Aggregate future minimum rentals to be received under
the noncancelable sublease total approximately $128,000 at December 31, 1996.
Rent expense was approximately $667,000, in each 1996 and 1995 and $634,000 for
the year ended December 31, 1994.

F-11
<PAGE> 34
CHEMTRAK INCORPORATED

NOTES TO FINANCIAL STATEMENTS (continued)

December 31, 1996

7. CONVERTIBLE DEBENTURES

In May 1996, the Company issued $5,000,000 of convertible debentures
resulting in net proceeds to the company of $4,700,000 after deducting selling
commissions. The debentures, which are due in May 1998, are convertible into
Common Stock at the lower of 110% of the average closing prices during the
ten-day trading period ending with the initial debenture funding date, or 82.5
percent of the similarly-defined average ten-day market price ending with the
conversion date. The Company has the option to convert the amount of periodic
interest due on the convertible debentures, computed at the rate of 7.5% per
annum, into common stock of the Company in lieu of cash payments. Through
December 31, 1996, all interest obligations on the debentures have been settled
by the issuance of common stock.

As of December 31, 1996, total principal of $3,082,000 had been
converted into approximately 1,800,000 shares of common stock and approximately
100,000 shares were issued to settle interest obligations. As part of its
compensation for the sale of the convertible debentures, the placement agent
received $300,000 and a warrant to purchase 83,500 shares of the Company's
common stock at $5.00 per share. The Company attributed a value of $67,000 to
the Warrant which has been recorded as additional interest paid in capital.

The Company has determined that its previously reported operating
results and balance sheet data for the three-month periods ended June 30, 1996
and September 30, 1996 require adjustment. Revisions to these quarters have
been made to reflect recent Securities and Exchange guidance relating to debt
that is convertible to equity at a discount to market. The accompanying
financial statements reflect deemed non-cash interest expense of $875,000
($656,250 and $218,750 in the quarters ended June 30, 1996 and September 30,
1996, respectively).

F-12
<PAGE> 35
CHEMTRAK INCORPORATED

NOTES TO FINANCIAL STATEMENTS (continued)

December 31, 1996

8. STOCKHOLDERS' EQUITY

STOCK OPTIONS

The 1988 Stock Plan authorizes the Board of Directors to grant options
for the purchase of the Company's common stock to directors, officers, employees
and consultants. The Company has authorized 983,333 shares of common stock for
grant under the plan. Options are generally granted at an exercise price of no
less than the fair market value per share on the date of grant. The options
generally become exercisable over a three-year period and have a maximum term of
ten years from date of grant.

In 1992, the Board of Directors, with the approval of the Shareholders
of ChemTrak Incorporated, adopted the 1992 Non-Employee Directors' Stock Option
Plan authorizing 50,000 shares of common stock for grant on a formula basis to
members of the Board of Directors. Options are granted at an exercise price that
is no less than the fair market value per share on the date of grant. The
options are exercisable ratably over a four-year period.

The 1993 Equity Incentive Plan approved 450,000 shares of common stock
for options, generally to be granted at no less than the fair market value per
share on the date of grant. The options will generally become exercisable over a
three year period commencing one year from the grant date and may remain
outstanding for a ten year period. The Company may also grant stock bonuses and
stock appreciation rights under the plan.

The options outstanding, as well as the options granted, exercised and
canceled, are summarized for each of the above plans in the table below. In
addition, the weighted average prices for options outstanding each year and the
option prices for shares granted, exercised and cancelled are shown.

<TABLE>
<CAPTION>
Shares
Available Number of Weighted Avg.
for Grant Shares Exercise Price
---------- --------- --------------
<S> <C> <C> <C>
Balance December 31, 1993 514,873 763,231 $4.70
Granted (263,500) 263,500 $5.07
Exercised -- (9,992) $2.20
Canceled 25,250 (25,250) $4.36
-----------------------------------------------------
Options at December 31, 1994 276,623 978,989 $4.84

Granted (821,600) 821,600 $1.83
Exercised -- (2,888) $2.08
Canceled 750,088 (750,088) $4.52
-----------------------------------------------------
Options at December 31, 1995 205,111 1,047,613 $2.71

Granted (450,941) 450,941 $2.99
Exercised -- (69,287) $1.35
Canceled 297,226 (297,226) $2.95
-----------------------------------------------------
Options at December 31, 1996 51,396 1,132,041 $2.84
=====================================================
</TABLE>

F-13
<PAGE> 36
CHEMTRAK INCORPORATED

NOTES TO FINANCIAL STATEMENTS (continued)

December 31, 1996

8. STOCKHOLDERS' EQUITY (CONTINUED)

STOCK OPTIONS (CONTINUED)

The range of exercise prices for options outstanding at December 31,
1996 was $0.75 to $9.75. The range of exercise prices for options is wide due
primarily to fluctuations in the price of the Company's stock over the period of
grants.

The following table summarizes information about stock options
outstanding at December 31, 1996:

Weighted
Average Weighted
Number Remaining Average
Range of Outstanding at Contractual Life Exercise Number Weighted
Exercise Prices 12/31/96 (Yrs) Price Exercisable Average
- --------------- -------------- ---------------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
$0.75 - $2.125 521,325 8.77 $1.47 301,485 $1.38
$2.25 - $4.75 564,716 7.82 $3.81 272,132 $3.83
$5.00 - $9.75 46,000 6.68 $6.69 25,713 $8.82
--------- ----- ------- -----
1,132,041 $2.84 599,330 $2.81
</TABLE>

STOCK-BASED COMPENSATION

As permitted under FASB Statement No. 123, "Accounting for Stock-Based
Compensation" (FASB 123), the Company has elected to follow Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
(APB 25) in accounting for stock-based awards to employees. Under APB 25, the
Company generally recognizes no compensation expense with respect to such
awards.

Pro forma information regarding net income and earnings per share is
required by FASB 123 for awards granted after December 31, 1994 as if the
Company had accounted for its stock-based awards to employees under the fair
value method of FASB 123. The fair value of the Company's stock-based awards to
employees was estimated using a Black-Scholes option pricing model. The
Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, the Black-Scholes model requires the input of highly
subjective assumptions including the expected price volatility. Because the
Company's stock-based awards to employees have characteristics significantly
different from those of traded options, and because changes in the subjective
assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its stock-based awards to employees. The fair
value of the Company's stock-based awards to employees was estimated assuming
no expected dividends and the following weighted-average assumptions:
<PAGE> 37
CHEMTRAK INCORPORATED

NOTES TO FINANCIAL STATEMENTS (continued)

December 31, 1996

8. STOCKHOLDERS' EQUITY (CONTINUED)

STOCK OPTIONS (CONTINUED)

Options ESPP
---------------- --------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Expected life (years) 5.0 5.0 0.5 0.5
Risk-free interest rate 6.5% 6.6% 5.6% 6.0%
Expected volatility 0.85 0.85 0.85 0.85
</TABLE>

For pro forma purposes, the estimated fair value of the Company's
stock-based awards to employees is amortized over the options' vesting period
(for options) and the six-month purchase period (for stock purchases under the
ESPP). The Company's pro forma information follows:

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Net loss As reported $7,826,000 $3,269,000
Pro forma 8,053,000 3,471,000
Primary loss per share As reported $(0.77) $(0.34)
Pro forma (0.79) (0.36)
</TABLE>

Because FASB 123 is applicable only to awards granted subsequent to
December 31, 1994, its pro forma effect will not be fully reflected until
approximately 1999.

The weighted-average fair value of options whose exercise price equals
the market price on the date of grant was $2.04 and $1.10 per share during 1996
and 1995, respectively. The weighted-average fair value of options whose
exercise price is less than the market price on the grant date was $3.40 and
$1.90 per share during 1996 and 1995, respectively.

EMPLOYEE STOCK PURCHASE PLAN

In December 1991, the Company adopted the 1991 Employee Stock Purchase
Plan (the "Purchase Plan") and 200,000 shares of common stock were reserved for
issuance under the Purchase Plan. The Purchase Plan is intended to qualify under
Section 423 of the Internal Revenue Code of 1986, as amended (the "Code").

F-15
<PAGE> 38
CHEMTRAK INCORPORATED

NOTES TO FINANCIAL STATEMENTS (continued)

December 31, 1996

8. STOCKHOLDERS' EQUITY (CONTINUED)

STOCK OPTIONS (CONTINUED)

The Purchase Plan is administered by the Board of Directors or a
committee appointed by the Board of Directors. The Purchase Plan permits
eligible employees to purchase common stock through payroll deductions not to
exceed 15% of an employee's compensation and at a price equal to 85% of the
lower of the fair market value of the common stock as of the first day or as of
the last day of each six-month offering period. Under the Purchase Plan, 32,703,
29,401, and 21,399 shares were issued in 1996, 1995 and 1994, respectively.

DEFERRED COMPENSATION

For certain options granted, the Company recognizes as compensation for
accounting purposes, the excess of the deemed value of the common stock issuable
upon exercise of such options over the aggregate exercise price of these
options. The deferred compensation is being amortized ratably over the vesting
period of such options. The amount charged to operations was $19,000, $61,000
and $50,000 in 1996, 1995 and 1994, respectively.

9. INCOME TAXES

The Company has no tax provision for the years ended December 31, 1996,
1995 and 1994. A reconciliation of the income tax provision at the U.S. federal
statutory rate (34%) to the income tax provision at the effective tax rate is as
follows:

<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------------------
1996 1995 1994
----------- ----------- ---------
<S> <C> <C> <C>
Income taxes computed at the
federal statutory rate $(2,661,000) $(1,111,000) $(880,000)
Operating losses not utilized 2,661,000 1,111,000 880,000
----------- ----------- ---------
$ -- $ -- $ --
=========== =========== =========
</TABLE>

As of December 31, 1996, the Company has federal and state net
operating loss carryforwards of approximately $31,000,000 and $9,000,000,
respectively. The federal net operating loss carryforwards will expire in the
years 2002 through 2011, and the state net operating loss carryforwards will
expire in the years 1997 through 2000. The Company has federal and state
research and experimentation credits of approximately $700,000 and $300,000,
respectively, that will expire in the years 2004 through 2011.

Utilization of the net operating losses and credits may be subject to a
substantial annual limitation due to the ownership change limitations provided
by the Internal Revenue Code of 1986 and similar state provisions. The annual
limitation may result in the expiration of net operating losses and credits
before utilization.

F-16
<PAGE> 39
CHEMTRAK INCORPORATED

NOTES TO FINANCIAL STATEMENTS (continued)

December 31, 1996

9. INCOME TAXES (CONTINUED)

Deferred taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred taxes consisted of the following at:

<TABLE>
<CAPTION>
December 31,
------------------------------------------------
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Deferred tax assets:
Net operating losses $ 11,093,000 $ 9,270,000 $ 7,910,000
Research credit carryforwards 991,000 1,022,000 837,000
Other individually immaterial items 2,193,000 1,559,000 2,077,000
------------ ------------ ------------
Total deferred tax assets 14,277,000 11,851,000 10,824,000
Valuation allowance (14,277,000) (11,851,000) (10,824,000)
------------ ------------ ------------
Total net deferred tax assets $ -- $ -- $ --
============ ============ ============
</TABLE>

F-17
<PAGE> 40
EXHIBIT INDEX

EXHIBIT
NUMBER

2.1 Agreement and Plan of Reorganization among the Registrant, ChemTrak
Acquisition Subsidiary, Inc., Coonan Clinical Laboratories, Inc. and
Stephen J. Coonan, dated December 21, 1994, as amended January 20,
1995. (6)

3.1 Amended and Restated Certificate of Incorporation of the Registrant.
(1)

3.2 Bylaws of the Registrant. (1)

4.1 Reference is made to Exhibits 3.1 and 3.2.

10.1 Form of Indemnification Agreement entered into between the Registrant
and its directors and officers, with related schedule. (1)

10.2+ 1988 Stock Option Plan, as amended. (2)

10.3+ Form of Incentive Stock Option under the Option Plan, as amended. (1)

10.4+ Form of Non-Qualified Stock Option under the Option Plan, as amended.
(1)

10.5 Form of Notice of Exercise under the Option Plan, as amended. (1)

10.10* Distribution Agreement between the Registrant and A. Menarini SRL,
dated as of July 1991. (1)

10.11* Letter from the Registrant to The Boots Company PLC, dated December
5, 1991, and letter from The Boots Company PLC to the Company, dated
October 24, 1991. (1)

10.15 Lease Agreement between the Registrant and PM-DE, dated as of January
23, 1992. (1) (7)

10.16+ 1991 Employee Stock Purchase Plan. (1)

10.17+ 1992 Non-Employee Directors' Stock Option Plan ("Directors' Plan").
(3)

10.18+ Form of Non-Statutory Option under the Directors' Plan. (3)

10.24* Agreement between the Registrant and Miles Inc., dated April 22,
1993. (4)
<PAGE> 41
10.31 1993 Equity Incentive Plan. (5)

10.35* Distribution and Supply Agreement, dated as of March 1, 1995 between
the Registrant and Astra Merck Inc. (8)

10.36** Distribution Agreement between ChemTrak and Helena laboratories
(Canada) Ltd. dated April 25, 1996 (the "Helena Agreement").

10.37** Agreement between ChemTrak and Organon Teknika B.V., dated
December 1, 1996 (the "Teknika Agreement").

10.38** Development and Distribution Agreement between ChemTrak and
Selfcare, Inc., dated December 31, 1996 (the "Selfcare Agreement").

23.1 Consent of Ernst & Young LLP, Independent Auditors.

25.1 Power of Attorney. Reference is made to page 24. (3)

27.1 Financial Data Schedule

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

* Confidential treatment granted for portions of this document.

** Confidential treatment has been requested for portions of this
document.

+ Compensatory Plan.

(1) Incorporated by reference to the indicated exhibit in the
Registrant's Registration Statement on Form S-1 (File
No. 33--44673), as amended.

(2) Incorporated by reference to the indicated exhibit in the
Registrant's Registration Statement on Form S-8 (File No. 33-55326).

(3) Incorporated by reference to the indicated exhibit in the
Registrant's Registration Statement on Form S-8 (File No. 33-55324).

(4) Incorporated by reference to the indicated exhibit in the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1993.

(5) Incorporated by reference to the indicated exhibit in the
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993.

(6) Incorporated by reference to the indicated exhibit in the
Registrant's Registration Statement on Form S-3 (File No. 33-90324).

(7) Lease assigned to MP Arques, Inc. as part of the purchase of the
property from PM-DE.

(8) Incorporated by reference to the indicated exhibit in the
Registrant's Registration Statement on Form 10-K for the fiscal
year ended December 31, 1995.

<PAGE> 1
Exhibit 10.36

DISTRIBUTION AGREEMENT

THIS DISTRIBUTION AGREEMENT (the "Agreement") is effective as of the
25th day of April, 1996, by and between HELENA LABORATORIES (CANADA) LTD.,
("Distributor"), with its principal place of business at Unit #2., 6725 Milcreek
Drive, Mississauga, Ontario, L5N 5V3 Canada, and CHEMTRAK INCORPORATED, a
Delaware corporation ("ChemTrak") with its principal place of business at 929 E.
Arques Avenue, Sunnyvale, California 94086, USA for the purpose of defining the
rights and duties of the parties in connection with the distribution by
Distributor of ChemTrak's CholesTrak Total Cholesterol Test.

NOW, THEREFORE, for good and valuable consideration, the parties hereby
agree as follows:

AGREEMENT

1. DEFINITIONS. Capitalized terms shall have the meanings set forth in
Exhibit A hereto.

2. APPOINTMENT AND ACCEPTANCE.

a. GRANT OF DISTRIBUTORSHIP RIGHTS.

(i) ChemTrak appoints Distributor, and Distributor
accepts such appointment, as the sole distributor for the Product in the
Exclusive Markets in the Territory. ChemTrak shall not appoint any other
distributor for the Product in the Exclusive Markets in the Territory and shall
not itself Sell the Product in the Exclusive Markets in the Territory.

(ii) ChemTrak agrees to refer all bona fide inquiries
regarding the Sale of the Product in the Exclusive Markets in the Territory
received by it to Distributor. Distributor shall refer to ChemTrak any inquiry
which Distributor may receive from outside of the Exclusive Markets or the
Territory for the purchase of Products or any other ChemTrak products.

b. SALE OF COMPETING PRODUCTS BY DISTRIBUTOR. In consideration for
the rights granted to Distributor pursuant to Section 2(a) above, Distributor
agrees that during the term of this Agreement, it will not develop or contract
to develop using ChemTrak's Proprietary Information (as defined in Section 8(b)
of this agreement), manufacture, sell, license, lease or otherwise distribute
any product that is directly competitive with the Product in the Exclusive
Markets in the Territory.

1.
<PAGE> 2
3. ORDERING, FORECASTS, DELIVERY AND ACCEPTANCE.

a. ORDERS. Within [*] the date of the signing of this
Agreement, Distributor will provide to ChemTrak a purchase order covering the
purchase of the Product [*]. Thereafter, beginning on [*] and on [*],
Distributor will provide ChemTrak with an order for the [*] (such that on [*] an
order is submitted for the [*], etc.). ChemTrak will accept or reject an order
from Distributor within 15 days after receipt of the order. Accepted orders will
be noncancellable. Once the order is accepted, Distributor will have the right
to request an up to [*] increase or decrease in the size of the order by
providing 30 days written notice to ChemTrak. Distributor may use its standard
purchase order form to order products; however, any such form shall reference
this Agreement and the terms and conditions of this Agreement will supersede any
different or additional terms on such order.

b. DELIVERY. ChemTrak will use its best efforts, consistent
with its obligations to other customers, to process and ship all orders in
accordance with requested delivery dates. ChemTrak guarantees that the Product
delivered to Distributor will have a minimum shelf life of [*]. All orders will
be shipped freight [*] (as defined in Incoterms, Publ. No. 350 of the
International Chamber of Commerce); risk of loss for the Product passes to [*].
If required, [*] will insure the shipments against damage to, or loss of,
Products. Such insurance shall be at [*] expense and shall be paid for by [*] at
the time of shipment. [*] shall make any claims for damage or loss in transit
through the carrier and any insurance proceeds payable in respect of any loss
incurred shall be paid to [*].

c. INSPECTION AND REJECTION. Distributor shall promptly upon
receipt visually inspect all Products for obvious defects and for any damage
done during shipment and may reject any Products which fail substantially to
meet the Product Specifications. If Distributor does not reject a shipment of
Products within 30 days of receipt, such shipment will be deemed to have been
accepted, except for latent defects which are not reasonably detectable at the
time of acceptance. Rejected shipments shall be returned freight collect to
ChemTrak via a carrier designated by ChemTrak within 15 days of rejection. As
promptly as possible after receipt by ChemTrak of properly rejected goods,
ChemTrak shall repair or replace the rejected goods at ChemTrak's expense.

d. MINIMUMS. In consideration for the appointment as
Distributor, Distributor will purchase the following minimum quantity of
Products in the following periods; provided, however, that any excess amount
purchased in a period may be applied to the required minimum amount in the next
subsequent period:

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2.
<PAGE> 3
<TABLE>
<CAPTION>
TERM PRODUCT QUANTITY
---- ----------------
<S> <C>
Date of Agreement to 12/31/96 [*]

12 months ending 12/31/97 [*]

12 months ending 12/31/98 [*]
</TABLE>

Failure by Distributor to present purchase orders equal to any required minimum
for the periods defined above shall be cause for termination by ChemTrak
pursuant to Section 10(b) hereof or, alternatively, ChemTrak, at its sole
option, may deem any such shortfall to have been ordered by Distributor.

e. FORECASTS; REPORTS. Distributor will provide [*] forecasts
of sales [*], or any shorter remaining period of the Agreement, and shall update
these forecasts on a [*] basis. Distributor will also provide quarterly reports
of actual sales within 20 days of the end of each quarter. Names of customers,
addresses, telephone numbers and purchase history, excluding individual retail
customers, will be provided to ChemTrak upon termination of this Agreement.

4. PRICES AND PAYMENT TERMS.

a. PRICE. Distributor agrees to pay ChemTrak [*] per Bulk
Unit and [*] per Bulk Unit for a bilingual Bulk Unit with Distributor supplied
artwork.

b. PAYMENT TERMS.

(i) For the first [*] from the effective date of
this Agreement, all payments for Product shall be [*].

(ii) After the expiration of the initial six-months
period, all payments for Product shall be [*]. ChemTrak shall notify Distributor
of the actual date of each shipment of Product at least 5 days in advance of
such shipment.

(iii) [*] will pay all non-U.S. export charges,
import duties, any and all sales, use, excise, value added or other taxes or
assessments imposed by any governmental authority upon or applicable to any sale
to Distributor under this Agreement, and all costs and charges for
transportation, brokerage, handling and insurance of the Products from the point
of shipment.

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3.
<PAGE> 4
5. MARKETING, REDISTRIBUTION.

a. PROMOTION AND MARKETING.

(i) Distributor agrees to use diligent efforts to
Sell the Product and to include in all related advertising materials all
reasonably applicable proprietary rights' notices and any other notices of
ChemTrak as they appear on or in the Product.

(ii) For the first [*] from the effective date of
this Agreement, ChemTrak will provide, at Distributor's expense, packaging for
the Product to be sold by Distributor in the Exclusive Markets in the Territory.
After the expiration of such period, Distributor will be responsible for
packaging the Product for resale in the Exclusive Markets in the Territory,
including, without limitation, designing and producing all packaging materials
and product inserts all in forms to be approved in writing by ChemTrak prior to
first use of such materials by Distributor. ChemTrak will furnish Distributor
with a reasonable supply of its sales literature, books, catalogues and the like
in English in order to aid Distributor in effectively carrying out its
activities under this Agreement. All such material so provided shall remain the
property of ChemTrak and, upon request, Distributor will return same to
ChemTrak. Distributor will translate all such materials used by Distributor to
market the Product in the Territory into the language or languages necessary for
proper marketing. Any such translations will be solely owned by ChemTrak and
Distributor will use such translations solely in connection with the Sale of the
Product in the Exclusive Markets in the Territory. Distributor will furnish a
copy of each such translation to ChemTrak.

(iii) Distributor will maintain an inventory of
Product sufficient to provide replacement Product to its customers for any
defective Product. Distributor will replace all defective Product returned to it
by its customers, and return all such defective Product to ChemTrak. If the
Product was returned by a customer because of some latent defect which was not
reasonably detectable at the time of acceptance of the Product by Distributor,
Distributor shall be entitled to the remedies provided in Section 3(c). In all
other cases, Distributor shall replace the Product at its own expense.

(iv) Distributor will comply with all health
registration laws, regulations and orders of any government within the Territory
and with all other governmental requirements applicable to its sales activities
in the Territory with respect to the Product. Distributor will provide ChemTrak
with all information it shall reasonably request, including copies of any
filings made in connection therewith and any available Territory clinical data,
in connection with Distributor's compliance with this paragraph. ChemTrak will,
[AT DISTRIBUTOR'S EXPENSE], furnish Distributor with such assistance and
cooperation as may reasonably be requested in connection with compliance with
such governmental requirements, including without limitation providing to
Distributor all available United States data for clinical trials performed by
ChemTrak in connection with the Product.

(v) All expenses incurred by Distributor in
connection with the performance of its obligations hereunder will be borne
solely by Distributor. Distributor will be

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4.
<PAGE> 5
responsible for appointing its own employees, agents and representatives, who
will be compensated by Distributor.

(vi) Distributor may provide promotional Products to
its customers free of charge.

b. TRADEMARKS. To the extent reasonably required by
Distributor to perform its obligations pursuant to this Agreement, ChemTrak
grants to Distributor a non-transferable, non-sublicensable, royalty-free
license to use during the term of this Agreement the trademarks and trade names
in listed in Exhibit D hereto (collectively the "ChemTrak Trademarks") with
respect to the Product, solely in connection with Distributor's marketing and
distribution of the Product in the Exclusive Markets in the Territory under this
Agreement. Distributor acknowledges the validity of the ChemTrak Trademarks and
ChemTrak's ownership thereof. Distributor may use its own brand name and logo on
the Products in addition to or instead of the ChemTrak Trademarks in any manner
approved by ChemTrak, such approval not to be unreasonably withheld.

6. PRODUCT WARRANTY.

a. ChemTrak warrants that the Product supplied by ChemTrak
under this Agreement will be of merchantable quality, free from defects in
materials and workmanship and will substantially conform to the Product
Specifications for a period of time from shipment of Product to Distributor as
is applicable to such Product Specifications. In no event shall ChemTrak be
liable under this Agreement for any failure of any Product to meet the Product
Specifications due to improper use, storage or shipment by Distributor or by
anyone receiving the Product directly or indirectly from Distributor.

b. EXCEPT AS SET FORTH IN SECTION 6(a) ABOVE, CHEMTRAK MAKES
NO WARRANTIES WITH RESPECT TO THE PRODUCT, EXPRESS OR IMPLIED, AND SPECIFICALLY,
WITHOUT LIMITATION, CHEMTRAK DISCLAIMS ANY IMPLIED WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE. EXCEPT AS SET FORTH ABOVE, CHEMTRAK NEITHER ASSUMES NOR
AUTHORIZES ANY PERSON TO ASSUME ANY LIABILITY OR WARRANTY IN CONNECTION WITH THE
PRODUCT. IN THE EVENT OF ANY BREACH BY CHEMTRAK OF THE WARRANTY SET FORTH IN
SECTION 6(a) ABOVE, DISTRIBUTOR'S SOLE REMEDY WILL BE [*]. IN THE EVENT ANY
LIABILITY IS IMPOSED ON CHEMTRAK [BY DISTRIBUTOR] FOR ANY REASON WHATSOEVER IN
CONNECTION WITH ITS SUPPLY OF PRODUCT HEREUNDER, THE AGGREGATE AMOUNTS PAYABLE
BY CHEMTRAK BY REASON THEREOF WILL NOT EXCEED [*].

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5.
<PAGE> 6
c. If Distributor makes any warranty or representation
inconsistent with or in addition to the warranties stated in this Section 6,
Distributor will, at its own expense, defend and hold ChemTrak harmless from any
claim to the extent it is based upon such inconsistent or additional warranty or
representation.

7. INDEMNITY.

Each party hereby agrees to indemnify, defend and hold the
other party harmless from any third party claim, lawsuit, legal proceeding,
settlement or judgement, including, without limitation, reasonable attorneys'
fees and costs incurred in the defense of the same, resulting from or arising
out of any death of or personal injury to any person due to the negligence,
recklessness, or wilful misconduct of the other party or such other party's
officers, employees or agents.

8. PROPRIETARY RIGHTS.

a. OWNERSHIP OF PROPRIETARY RIGHTS. ChemTrak will retain all
of its fights or title to and ownership of all copyrights, trademarks, trade
secrets, patents, and all other intellectual property embodied in the Product.
Except as otherwise expressly provided in this Agreement, Distributor will have
no right, rifle or interest in the intellectual property embodied in the
Product.

b. CONFIDENTIAL INFORMATION. Each party agrees that it will
treat accordingly all verbal and written communications from the other party
which are designated, or which should reasonably be regarded in the normal
commercial view, as constituting business secrets or proprietary information
("Proprietary Information"). Each party agrees to refrain from disclosing or
making available to any third party any of the other party's Proprietary
Information without the other party's written consent and to impose upon its
employees and agents the same obligations with respect to the other party's
proprietary information as it employs with respect to its own confidential
information. No such obligations of confidence will extend to information which
(a) is publicly available; (b) is independently developed by the receiving
party; (c) is already in the receiving party's possession; or (d) is rightfully
received from a third party. The provisions of this Section 8 will survive the
termination of this Agreement.

9. COMPLIANCE WITH LAWS.

a. EXPORT LAW COMPLIANCE. Distributor understands and
recognizes that the Product and other materials made available to it hereunder
may be subject to the export administration regulations of the United States
Department of Commerce and other United States government regulations, as
amended from time to time, related to the export of technical data and equipment
and products produced therefrom. Distributor agrees to comply with all such
regulations in connection with the distribution of the Product. Distributor
agrees to cooperate with ChemTrak and to provide ChemTrak with such reasonable
assistance, at no charge to ChemTrak, as is required in order to comply with the
export administration regulations of the United States.

6.
<PAGE> 7
b. FOREIGN CORRUPT PRACTICES ACT. Distributor hereby agrees
that it will comply with the requirements of the U.S. Foreign Corrupt Practices
Act, as amended from time to time, (the "Act") and will refrain from any
payments to third parties which would cause Distributor or ChemTrak to violate
the Act. Distributor hereby further agrees to indemnify and hold ChemTrak
harmless from any breach of this Section .

c. LICENSES AND PERMITS. Distributor and ChemTrak will take
all actions (including the preparation and filing of all requisite applications,
certificates and the like) required by law with respect to, and will use their
best efforts to obtain, any and all required non-U.S. governmental
authorizations, including without limitation any import licenses and foreign
exchange permits. Each party will provide reasonable evidence of compliance with
required non-U.S. governmental authorization, registrations and the like to the
other party upon request. As among the parties, ChemTrak will not be liable if
any authorization is delayed, denied, revoked, restricted or not renewed;
Distributor will bear all such risks and costs caused thereby.

10. TERM, TERMINATION, AND EFFECT OF TERMINATION.

a. TERM. Except as provided in Section 10(b), this Agreement
and the licenses and rights granted hereunder will be effective for a term of 3
years, and shall be automatically renewed thereafter for additional 1 year
periods provided that (i) Distributor has fulfilled its minimum purchase
obligation agreed upon with ChemTrak on or before September 30 of each year and
(ii) the parties mutually agree to minimums for each extension year.

b. EARLY TERMINATION BY EITHER PARTY. Either party may
terminate this Agreement upon written notice to the other party (i) if the other
party commits any material breach of this Agreement which the other party fails
to cure within 60 days following written notice from the non-breaching party
specifying such breach; (ii) (A) all or a substantial portion of the assets of
the other party are transferred to an assignee for the benefit of creditors or
to a receiver or to a trustee in bankruptcy, (B) a proceeding is commenced by or
against the other party for relief under bankruptcy or similar laws and such
proceeding is not dismissed within 60 days, or (C) the other party is adjudged
bankrupt; or (iii) the other party permanently ceases to conduct business.

c. EARLY TERMINATION BY DISTRIBUTOR. Distributor may terminate
this Agreement, upon 60 days written notice to ChemTrak, if ChemTrak
consistently fails to meet requested delivery dates as specified on accepted
purchase orders. Consistent failure to meet requested delivery dates shall be
defined for the purposes of this Agreement as [*] past the requested and
approved delivery date.

d. SURVIVING OBLIGATIONS. Termination or expiration of this
Agreement will not (i) affect any other rights of either party which may have
accrued up to the date of such termination or expiration, (ii) relieve either
party of its obligations under Section 8(b) (Confidential Information) or
Section 7 (Indemnity), (iii) relieve Distributor of its obligation to pay to
ChemTrak sums due prior to termination or expiration of this Agreement.

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7.
<PAGE> 8
e. EFFECT OF TERMINATION. Upon the effective date of
termination of this Agreement for whatever reason:

(i) the right of Distributor to act as a sales
representative and distributor of the Product in the Exclusive Markets and in
the Territory will cease and Distributor will immediately discontinue all use in
the Exclusive Markets and in the Territory of ChemTrak's trade names and
trademarks in connection with the Product. Distributor will return to ChemTrak
all price lists, catalogs, sales literature, operating and service manuals,
advertising literature and other materials relating to the Product originally
provided by ChemTrak to Distributor. However, for materials produced by
Distributor, Distributor will destroy such materials which relate solely to the
Product. Notwithstanding the foregoing, Distributor will have the right, for a
period not to exceed 180 days, to sell any Product remaining in inventory to the
extent the same are not repurchased by ChemTrak pursuant to clause (ii) below
or, in the event that this Agreement is terminated by Distributor pursuant to
Section 10(b) for an additional 270 days solely with respect to the fulfillment
of firm standing orders as proven by documentation presented to ChemTrak;

(ii) in the event the Agreement either terminates at
the end of 3 years (or any extension term) or is terminated by ChemTrak pursuant
to Section 10(b), if desired by ChemTrak, ChemTrak may repurchase from
Distributor all of the Product (to the extent that the same are in new and
original condition) then in Distributor's inventory, F.O.B. Distributor's
facilities, and ChemTrak will repay to Distributor the actual price paid by
Distributor to ChemTrak for such returned products less any and all amounts then
owing and uncontested, for whatever reason, from Distributor to ChemTrak;

(iii) except to the extent of selling its remaining
inventory of Product as permitted by clause (i) above, after termination
Distributor will not represent or hold itself out as being any authorized
distributor or sales representative for the Product in the Exclusive Markets or
in the Territory or engage in any practices which might make it appear that
Distributor is still such an authorized distributor or sales representative;

(iv) Distributor will promptly assign or cause to be
assigned to ChemTrak, or its designee, every health registration or permit
obtained pursuant to Section 5 (a)(iv). In the event such assignment is not
permitted by law, Distributor will cooperate in the cancellation of such
registrations and permits standing in its names and the reissuance of such
registrations and permits to ChemTrak or its nominee;

(v) Distributor will transfer to ChemTrak at
Distributor's cost any rights it may have to any trademarks or trade names of
ChemTrak; and

(vi) Distributor will provide to ChemTrak a copy of
its customer list for the Product including names, addresses, telephone numbers
and purchase history excluding individual retail customers.

8.
<PAGE> 9
f. ChemTrak will have no obligation to Distributor by reason
of the termination of this Agreement. Distributor hereby agrees not to assert
any claim by reason of such termination of this Agreement. Neither party, by
reason of the termination of this Agreement, will be liable to the other because
of any damages, expenditure, loss of profits, or prospective profits of any kind
or nature, sustained or arising out of such termination or for any investments
related to the performance of this Agreement or the goodwill created in the
course of the performance under this Agreement.

g. No termination of this Agreement will in any manner
whatsoever release, or be construed as releasing, any party from any liability
to the other arising out of or in connection with a party's breach of, or
failure to perform any covenant, agreement duty or obligation contained in this
Agreement. Neither party will be relieved from any obligations vested prior to
the date of termination of this Agreement.

11 GOVERNING LAW, DISPUTE RESOLUTION, VENUE AND OFFICIAL
LANGUAGE.

a. DISPUTE RESOLUTION. In the event of any dispute between the
parties arising under or related to this Agreement (a "Dispute"), the presidents
(or a direct assignee of each of the presidents reporting to the president) of
the parties hereto will negotiate in good faith in an effort to resolve such
Dispute for a period of [*] following written notification from the other party
describing in reasonable detail the matter in dispute. Upon the expiration of
the [*] period with the Dispute remaining unsolved, either party may proceed
under Subsection (b) below.

b. ARBITRATION. Any Dispute not resolved pursuant to Section
11(a) and which involves only ChemTrak and Distributor and no third party shall
be settled by [*] arbitration in the manner described in this Subsection. The
arbitration shall be conducted pursuant to Commercial Arbitration Rules of the
American Arbitration Association (the "ASSOCIATION"). Notwithstanding those
rules, the following provisions shall apply to any arbitration hereunder.

(i) ARBITRATOR. The arbitration shall be conducted by
a panel of three arbitrators (the "PANEL"). The Panel shall be selected from a
pool of retired independent U.S. federal judges to be presented to the parties
by the Association.

(ii) PROCEEDINGS. The parties (i) acknowledge that
the issues that may arise in any Dispute may involve a number of complex matters
and (ii) confirm their intention that each party will have the opportunity to
conduct complete discovery with respect to all material issues involved in a
Dispute. The Panel shall not award punitive damages to either party and the
parties shall be deemed to have waived any right to such damages. The Panel
shall, in rendering its decision, apply the substantive law of the State of
California, without regard to its conflict of laws provisions, except that the
interpretation of and enforcement of this Section 11 shall be governed by the
Federal Arbitration Act. The Panel shall apply the Federal Rules of Evidence to
the hearing. The proceeding shall take place in San Jose, California.

(iii) AWARD. The Panel is empowered to award any
remedy allowed by law, including money damages, multiple damages, prejudgment
interest and attorneys' fees, and to

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9.
<PAGE> 10
grant final, complete, interim, or interlocutory relief, including injunctive
relief but excluding punitive damages.

(iv) COSTS. Each party shall bear its own legal fees.
The Panel shall assess its costs, fees and expenses against the party losing the
arbitration unless it believes that neither party is the clear loser, in which
case the Panel shall divide its fees, costs and expenses according to its sole
discretion.

(v) SURVIVABILITY. Any duty to arbitrate under this
Agreement shall remain in effect and enforceable after termination of the
contract for any reason.

c. APPLICABLE LAW; ENGLISH LANGUAGE. This Agreement is made in
accordance with and shall be governed and construed under the laws of the State
of California, as applied to agreements executed and performed entirely in
California by California residents and in no event shall this Agreement be
governed by the United Nations Convention on Contracts for the International
Sale of Goods. The official text of this Agreement and any Exhibit or any notice
given or accounts or statements required by this Agreement shall be in English.
In the event of any dispute concerning the construction or meaning of this
Agreement, reference shall be made only to this Agreement as written in English
and no to any other translation into any other language.

12. LIMITATION OF LIABILITY. EACH PARTY WILL ONLY BE LIABLE TO THE
OTHER PARTY FOR DAMAGES THAT ARE DIRECTLY ATTRIBUTABLE TO ITS MATERIAL BREACH OF
THIS AGREEMENT, OR ITS GROSSLY NEGLIGENT OR INTENTIONAL ACT OR OMISSION.
NOTWITHSTANDING THE FOREGOING, NEITHER PARTY WILL BE LIABLE TO THE OTHER PARTY
FOR INDIRECT DAMAGES OF ANY KIND WHATSOEVER (INCLUDING WITHOUT LIMITATION LOST
PROFITS OR SPECIAL, CONSEQUENTIAL OR INCIDENTAL DAMAGES) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY GOODS SOLD OR DELIVERED TO DISTRIBUTOR.
NOTHING IN THIS AGREEMENT WILL CREATE ANY LIABILITY OF EITHER OR BOTH PARTIES TO
ANY THIRD PARTY OR PARTIES.

13. MISCELLANEOUS.

a. NO AGENCY, NO JOINT VENTURE - INDEPENDENT CONTRACTOR.
Distributor will act as independent contractor under the terms of this
Agreement. Distributor is not, and will not be deemed to be, employee, agent,
co-venturer or legal representative of ChemTrak for any purpose. Distributor
will not be entitled to enter into any contracts in the name of, or on behalf of
ChemTrak, nor will Distributor be entitled to pledge the credit of ChemTrak in
any way or hold itself out as having authority to do so.

b. ASSIGNMENT. Neither this Agreement nor any right or
obligation arising hereunder may be assigned, in whole or in part, by
Distributor without the prior written consent of ChemTrak; provided, however,
that Distributor may assign to an Affiliate without such consent but with
written notice to ChemTrak, and, additionally, ChemTrak's consent to an
assignment by

10.
<PAGE> 11
Distributor to any successor by merger or sale of substantially all of its
business units to which this Agreement relates shall not be unreasonably
withheld. Any assignment or purported assignment in contravention of this
Section 13(b) will be void and of no effect.

c. ENTIRE AGREEMENT; AMENDMENT. This Agreement and the
Exhibits hereto, set forth and constitute the final, complete and entire
agreement between the parties hereto with respect to the subject matter hereof,
supersede any and all prior agreements, understandings, promises and
representations made by either party to the other concerning the subject matter
hereof and the terms applicable hereto and are intended as a complete and
exclusive statement of the terms of the agreement between the parties. This
Agreement may not be released, discharged, amended or modified in any manner
except by an instrument in writing signed by duly authorized officers of both
parties.

d. SEVERABILITY. If any provision of this Agreement is or
becomes or is deemed invalid, illegal or unenforceable in any jurisdiction, such
provision will be construed or deemed amended to conform to applicable laws so
as to be valid, legal and enforceable and to conform to the maximum extent
possible to the intention of the parties including, without limitation, by
deleting such provision.

e. BENEFITS OF THIS AGREEMENT. Except as expressly provided
for herein, nothing in this Agreement will be construed to give to any person or
entity other than Distributor and ChemTrak any legal or equitable right, remedy
or claim under this Agreement. This Agreement will be for the sole and exclusive
benefit of Distributor and ChemTrak.

f. WAIVER. No waiver of any right under this Agreement will be
deemed effective unless contained in a writing signed by the party charged with
such waiver, and no waiver of any right arising from any breach or failure to
perform will be deemed to be a waiver of any future such right or of any other
right arising under this Agreement.

g. HEADINGS. Section headings contained in this Agreement are
included for convenience only and form no part of the agreement between the
parties.

h. NOTICES. Notices, consents and the like required or
permitted hereunder will be in writing and will be sent to the addresses set
forth below or to such other addresses as the parties may hereafter specify, and
will be deemed given on the earlier of:

(i) physical delivery to a party, including confirmed
delivery by facsimile or telex; or

(ii) upon delivery after sending by expedited
courier.

Copies of notices will be sent to the appropriate address as set forth
below:

11.
<PAGE> 12
To ChemTrak: ChemTrak Incorporated
929 E. Arques Avenue
Sunnyvale, CA U.S.A. 94086
Attention: President

With a copy to: Cooley Godward Castro Huddleson & Tatum
Five Palo Alto Square, Suite 400
Palo Alto, CA 94306 U.S.A.
Attention: Barbara Kosacz

To Distributor: Helena Laboratories (Canada) Ltd.
Unit #2
6725 Millcreek Drive
Mississauga, Ontario
L5N 5V3 Canada
Attention: Mark Thomson, President

i. FORCE MAJEURE. Each of the parties hereto will not be
liable for any failure or delay in performance hereunder where such failure or
delay is due, in whole or in pan, to any cause beyond its reasonable control,
including but not limited to Acts of God, fire, flood, warfare, labor disputes
or other similar catastrophic events.

j. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which will be an original and all of which will
constitute together but one and the same document.

k. AUTHORITY TO ENTER INTO AND EXECUTE AGREEMENT. Each party
represents and warrants to the other that they have the right and lawful
authority to enter into this Agreement for the purposes herein and that there
are no other outstanding agreements or obligations inconsistent with the terms
and provisions hereof.

l. PATENT MARKING. Distributor agrees to include on the
Products and on all packaging materials and Product labelling patent marking as
reasonably requested by ChemTrak.

IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above mentioned.

CHEMTRAK INCORPORATED HELENA LABORATORIES (CANADA) LTD.

By: /s/ Alene Holztman By: /s/ Mark Thomson
-------------------------- -------------------------------

Title: Vice President Title: President
-------------------------- -------------------------------

12.
<PAGE> 13
EXHIBIT A

DEFINITIONS

a. "Territory" shall mean Canada.

b. "Product" shall mean ChemTrak's CholesTrak Total Cholesterol Test as
described on Exhibit B.

c. "Product Specifications" shall mean the specifications pertaining to
the Product included in Exhibit B. ChemTrak may from time to time, by written
notice to Distributor, make modifications to the Product which do not materially
adversely affect the performance or functionality of the Product without
otherwise affecting the terms of this Agreement and without incurring any
responsibility or liability to Distributor.

d. "Sell", "Sale" or "Sold" shall mean to sell, lease, distribute,
market or otherwise dispose including giveaway, and to use in connection with
those activities.

e. "Exclusive Markets" shall mean, collectively, distribution of the
Product for sale to any and all brokers and wholesalers that serve chain drug
and mass merchandisers, and natural and health food stores. "Exclusive Markets"
expressly does not include sales to hospitals, physicians, catalogs, computer
software companies, pharmaceutical companies, and Canadian government or
military.

f. "Bulk Unit" shall mean one (1) Product cassette in a sealed foil
pouch with desiccant and one (1) conversion (result) card in mmols per cassette,
either in English only or in both English and French, as appropriate.

g. "Affiliate" shall mean any entity that directly or indirectly Owns,
is Owned by or is under common Ownership with, a party to this Agreement, where
"Own" or "Ownership" means direct or indirect possession of greater than fifty
(50%) of the outstanding voting securities of a corporation or a comparable
equity interest in any other type of entity.

13.
<PAGE> 14
EXHIBIT B

PRODUCT DESCRIPTION AND SPECIFICATIONS

"Product" referred to includes one CholesTrak test cassette for total
cholesterol (with result chart printed in English) in an individual foil pouch,
or:

One CholesTrak test cassette for total cholesterol in
bilingual package (with result chart printed bilingual).
Artwork for package and result chart to be supplied by buyer,
subject to Section 5(a)(ii).

The Product shall meet the description and be consistent with ChemTrak's
Premarket Notification 510(k)s received by the FDA on February 19, 1991 and
October 4, 1991, with the following performance characteristics, which will be
included in a ChemTrak Certificate of Analysis accompanying each lot of Bulk
Units supplied to Distributor:
<TABLE>
<CAPTION>
TEST SPECIFICATIONS RESULTS
- ---- -------------- -------
<S> <C> <C>
Conversion Chart

Assay Range [*]

Correlation with Reference Method
Slope [*]
Correlation Coefficient (r(2)) [*]

Whole Blood Accuracy and Precision Test

Accuracy (Estimated % Bias in mg/dL
based on NCCLS Document EP9-T)
at Low Level (190+/-15 mg/dL) within [*] bias
at Medium Level (250+/-15 mg/dL) within [*] bias
at High Level (350+/-15 mg/dL) within [*] bias

Precision
at Low Level (190+/-15 mg/dL) Not more than [*]
at Medium Level (250+/-15 mg/dL) Not more than [*]
at High Level (350+/-15 mg/dL) Not more than [*]

Reliability
(After 5 - 7 days at 37(degree)C/95%RH) [*]

</TABLE>

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14.
<PAGE> 15
<TABLE>
<CAPTION>
TEST SPECIFICATIONS RESULTS
- ---- -------------- -------
<S> <C> <C>
Microbial Wicking Buffer
shows no growth
after [*] .

Pull Force Not more than [*]

Functional Failures Not more than [*]
</TABLE>

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15.
<PAGE> 16
EXHIBIT C

ORDER FORECAST
(IN '000S OF UNITS)

Month 1 [*]
Month 2
Month 3
Month 4 [*]
Month 5
Month 6
Month 7 [*]
Month 8
Month 9
Month 10 [*]
Month 11
Month 12

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separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.

16.
<PAGE> 17
EXHIBIT D

CHEMTRAK TRADEMARKS

CholesTrak(TM)

17.

<PAGE> 1
EXHIBIT 10.37

AGREEMENT

This Agreement is entered into this 1st day of December 1996, by and between

ORGANON TECHNIKA BV (hereinafter referred to as "Teknika"), a corporation of
the Netherlands having its principal place of business at Boseind 15, 5281 RM
Boxtel, the Netherlands, represented by Dr. R. Salsmans,

and

CHEMTRAK (hereinafter referred to as "Licensee"), a corporation of the USA,
having its registered offices at 929 E. Arques Avenue, Sunnyvale, CA 94086-4520,
USA, represented by Dr. Prithipal Singh,

WHEREAS, Teknika is the equitable owner of all the right, title and interest in
and to certain interest in and to certain Sol Particle Immuno Assay Patent
Rights (as hereinafter defined) owned by its ultimate holding company Akzo Nobel
NV (a corporation organized under the laws of the Netherlands) including the
exclusive right to grant licenses under such PATENT RIGHTS.

WHEREAS, LICENSEE desires to obtain a license from Teknika under the Patent
Rights, for the purposes stated herein below.

NOW THEREFORE, the parties agree as follows:

1.0 Definitions

1.1. The term "SPIA" means gold sol particle immuno assay.

1.2 The term "SPIA Technology" means a technology employing the SPIA
principle, including, but not limited to, the information
contained in the patents and patent applications included in the
Patent Rights.

1.3 The term "Licensed Products" shall mean tests as specified in
Addendum A, the manufacture, use or sale of which would, in the
absence of the license granted hereunder infringe, contribute to
the infringement of, or induce the infringement of any claim of
the Patent Rights which has neither expired nor been declared
invalid by a court of competent jurisdiction from which no appeal
has been or may be taken.

1.4 The term "Patent Rights" shall mean the patents and patent
applications relating to SPIA Technology as are specified in
Addendum B.

1.5 The term "Net Sales" means [*]. Sales or other transfers of
Licensed Products to Affiliated Companies or between Affiliated
Companies and resold to third parties, shall [*]

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separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
<PAGE> 2

[*]

In the event that Licensed Products are sold as part of an
individualized kit consisting of up to two tests, lancets, swabs,
disinfectant and user instructions, the gross amount invoiced on
the sale of Licensed Products in such individualized kit format
shall be calculated either by [*], or by [*] whichever results
in the [*] Net Sales price.

1.6 The term "Territory" shall mean worldwide.

1.7 The term "Affiliated Company" means any company which, by means
of ownership of a majority of share or at lest 50% interest in
income or otherwise, directly or indirectly controls, is
controlled by or is under common control with either party.

2. Licensing of Patent Rights

2.1 Teknika hereby grants to LICENSEE a non-transferable,
non-exclusive license under the Patent Rights, without the right
to sublicense, for the sole purpose of manufacturing, using
and/or selling Licensed Products under its own label in the
Territory for the life of this Agreement.

2.2 Notwithstanding the foregoing, Teknika herewith specifically
agrees that LICENSEE will have the right, by way of exception, to
manufacture a specific Licensed Product in the form of an H.
Pylori test, under the trademark HpChek and under the label of the
third party defined in Addendum C hereto (OEM manufacture). Such
OEM manufacture shall be permitted only and exclusively for the
aforesaid H. Pylori test utilizing the trademark HpChek, for and
on behalf of the third party defined in Addendum C and for no
other party.

The Licensed Product so manufactured will be marketed and
distributed by the third party referred to in Appendix C.

2.3 LICENSEE hereby agrees to take and accept the aforesaid license
as embodied in this Agreement.

3.0 Royalties, Records and Accounting

3.1 In consideration of the rights granted and under Article 2.,
LICENSEE shall pay Teknika upon execution of this Agreement a
non-refundable, non deductible lump sum payment of [*]. to
be paid in two equal installments: [*] - upon signature,
and [*] - on the first anniversary of the signature date,
which payment shall not act as prepaid royalties creditable toward
any running royalties due under this Paragraph as and when such
royalties are due and payable.

3.2 Furthermore, LICENSEE shall pay Teknika as from the first day of
commercial sale, a running royalty as follows.

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been requested with respect to the omitted portions.
<PAGE> 3
(i) [*] of the Net sales of Licensed Products other than the
Licensed Product referred to in this Article under (ii) here
below;

(ii) [*] of Net Sales of Licensed Product referred to in
Article 2.2 above.

3.3 LICENSEE agrees to keep or cause to be kept accurate records and
books of account in accordance with good accounting practice,
showing the information required to permit calculation of Net
Sales and the royalties under this Article. These books and
records shall be preserved for at least four (4) years from the
date of the royalty payments to which they pertain.

3.4 On or before the 45th day of each calendar quarter during the
term hereof, LICENSEE shall prepare and send to Teknika royalty
reports for the previous quarter. Said Net Sales and reports
shall indicate total sales and Net Sales per country under this
Agreement for the previous calendar quarter, per Licensed
Product, and shall show the amount of royalty due with sufficient
information to enable confirmation by Teknika, and LICENSEE shall
include payment of the amount of royalties shown to be due with
such report.

3.5 Upon ten (10) days written notice and not more than once per
calendar year, LICENSEE agrees to permit one or more Certified
Public Accountant(s) appointed by Teknika (except one to whom
LICENSEE has a reasonable objection), to enter upon the premises
or LICENSEE during all usual business hours of LICENSEE at any
time following the 60th day of any calendar quarter in order to
inspect files records pertaining to Net Sales and royalties under
this Agreement, and to make on LICENSEE's premises and retain
copies of any and all parts of the records and accounts kept by
LICENSEE pursuant to this Article, including invoices which are
relevant to any report required to be rendered by LICENSEE.

Said copies shall be provided to the Certified Public
Accountant(s) at no expense to Teknika. Said Certified Public
Accountant(s) shall keep all information received from LICENSEE
confidential; however, it will provide Teknika with the Net
Sales, per country, for each type of Licensed Product, specifying
the sales and the application of the appropriate royalty rate so
that royalties due Teknika may be calculated. The information
obtained by the Certified Public Accountant(s) shall be retained
for a period of four (4) years from date of the royalty payment
to which it relates, or 2 years from the date of receipt by the
Certified Public Accountant(s), whichever is longer.

In the event any audit results in a change upward in any royalty
payment of as much a five percent (5%) for any annual period,
LICENSEE shall pay the costs of such audit for such annual
period, otherwise such audit shall be at Teknika's expenses.

3.6 Payment of all royalties hereunder shall be made in Dutch
Guilders at the mean rate of exchange existing on the last day of
the quarter to which the payment applies as published in the Wall
Street Journal (European Edition).

4. Duration

4.1 This Agreement shall become effective as of the date of signing
by both parties to this Agreement and shall remain in effect
until the last to expire of the Patent Rights.

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separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
<PAGE> 4
4.2 In the event either party breaches this Agreement, in addition to
all other rights and remedies which either party may have the
party not in default may terminate this Agreement by written
notice. Such termination shall become effective on the date set
forth in the notice of termination, but in no event shall it be
earlier than [*] from the date of mailing thereof and shall have
no effect if the breach has been cured within the said period of
notice.

4.3 The termination of this Agreement shall not relieve LICENSEE from
its obligation to pay Teknika all royalties that shall have
accrued up to the effective date of termination.

5. Assignment

Teknika shall have the right to assign this Agreement to, or
delegate its obligations hereunder to be performed by [*],
provided that [*]. This Agreement is [*] LICENSEE [*].

6. Entirety Clause

As of the date hereof, this agreement supersedes all previous
oral and written agreements between the parties, and constitutes
the only and entire understanding to exist between the parties
with respect to the subject matter of this Agreement, and no
amendment shall be implied or proven from or evidenced by
negotiations between the parties heretofore or hereinafter
conducted or agreements of the parties heretofore or hereafter
executed, unless in writing and signed by the parties hereto.

7. Warranty

7.1 Teknika represents and warrants to LICENSEE that it has the full
right and power to grant the license to LICENSEE to set forth in
this Agreement. Teknika further warrants and represents that
there are no other colloidal gold patents owned or controlled by
Teknika which cover the Licensed Products.

7.2 Except as specifically set forth in paragraph 7.1 herein, Teknika
makes no representations or warranties, either express or
implied, arising by law or otherwise, including, but not limited
to, implied warranties of merchantability or fitness for a
particular purpose. In no event will Teknika have any obligation
or liability arising from tort, or for loss of revenue or profit,
or for incidental or consequential damages.

In particular, with no limitation, nothing in this Agreement will
be construed as:

(i) A warranty or representation by Teknika [*].

(ii) A warranty or representation that anything made, used,
sold or otherwise disposed of under the license granted in this
Agreement [*];

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separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
<PAGE> 5

(iii) Conferring the right to use in advertising, publicity,
or otherwise any trademark, trade name, or any contraction,
abbreviation, simulation, or adaptation thereof, of Teknika; or

(iv) Conferring by implication, estoppel, or otherwise any
license or rights under any patents of Teknika other than the
Patent Rights, regardless of whether the patents are dominant or
subordinate to the Patent Rights.

7.3 In the event LICENSEE becomes aware of infringement of the
Licensed Patents by a third party, it will immediately notify
Teknika thereof. Teknika intends to use such reasonable efforts,
as it in its sole discretion determines, to pursue infringers and
enforce its rights under its Licensed Patents.

LICENSEE, at Teknika's request, shall render all reasonable
assistance and cooperation in that regard. Any reasonable out of
pocket expenses incurred at the request of Teknika with regard to
furnishing such assistance and cooperation (e.g., travel and
lodging expenses) shall be reimbursed by Teknika. Any recoveries
resulting from such action by Teknika shall be Teknika's
property.

8. Applicable Law: Severability

8.1 This Agreement shall be deemed to have been made in and shall be
construed in accordance with the laws of the Kingdom of the
Netherlands, for all matters other than scope and validity of the
PATENT RIGHTS, as to which the laws of the particular country
where the Patent Rights are in dispute shall apply.

8.2 All disputes arising in connection with the present Agreement
shall be finally settled at the competent court of
"s-Hertogenbosch, The Netherlands.

9 Miscellaneous Provisions

9.1 All notices which shall or may be given hereunder shall be in
writing in English and shall be prepared registered mail
addressed to the recipient at the addresses herein stated, or at
such other address as a party may from time to time designate:

Organon Teknika B.V.
c/o Organon Teknika N.V.
Veedijk 58
2300 Turnhout
Belgium
Attn: President

and

ChemTrak
929 E. Arques Avenue
Sunnyvale, CA 94086-4520
USA
Attn: President

<PAGE> 6
9.2 Payment of lump sum fees and royalties, due under this Agreement
are to be made to Organon Teknika B.V., Boxtel, the Netherlands,
to its account with [*].

9.3 Confidentiality

Each party to this Agreement agrees that any information obtained
by it form the other party pursuant to this Agreement shall be
kept in the strictest confidence and shall only be used for the
proper performance of this Agreement, except that this obligation
shall not apply to:

a) information which is in or becomes part of the public
domain otherwise than by breach of this Agreement, or

b) information which the recipient can show was in its
possession at the date of signing of this Agreement; or

c) information which was received by the recipient on a
nonconfidential basis from a third party having the legal right to
transmit the same.

The foregoing obligation shall cease five (5) years after
termination or expiration of this Agreement.

As agreed at Boxtel, As agreed at Sunnyvale,
ORGANON TEKNIKA, B.V. CHEMTRAK

Dr. R. Salsmans Dr. Prithipal Singh
President Chairman and CEO

A.J.F. Stap
Executive Vice President
Corporate Development &
Program Management

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been requested with respect to the omitted portions.
<PAGE> 8
ADDENDUM B
SPIA PATENT SERIES
<TABLE>
<CAPTION>
Country Patent No. Expiration Date
- ------- --------- ---------------
<S> <C> <C>
Australia [*] [*]
Austria [*] [*]
Belgium [*] [*]
Canada [*] [*]
Denmark [*] [*]
Finland [*] [*]
France [*] [*]
Germany [*] [*]
Greece [*] [*]
Hungary [*] [*]
Ireland [*] [*]
Israel [*] [*]
Italy [*] [*]
Luxembourg [*] [*]
Mexico [*] [*]
Philippines [*] [*]
Portugal [*] [*]
South Africa [*] [*]
Spain [*] [*]
Sweden [*] [*]
U.S.A. [*] [*]
Switzerland [*] [*]
The Netherlands [*] [*]
U.K. [*] [*]
</TABLE>

LICENSEE'S marketing partner in the United States for the H. Pylori test
("HpChek") is:

Astra Merck, Inc.
Wayne, PA

<PAGE> 1
Exhibit 10.38

DEVELOPMENT AND DISTRIBUTION AGREEMENT

between

CHEMTRAK INCORPORATED

and

SELFCARE, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE

<S> <C>
ARTICLE 1. DEFINITIONS ................................................ 1

1.1 "Affiliate" ................................................ 1
1.2 "ChemTrak Technology" ...................................... 1
1.3 "Commercialization Costs" .................................. 2
1.4 "Confidential Information" ................................. 2
1.5 "Counseling Service" ....................................... 2
1.6 "HIV Product" .............................................. 2
1.7 "Net Sales" ................................................ 3
1.8 "Purchase Price" ........................................... 3
1.9 "Royalty" .................................................. 3
1.10 "Sample Collection Kit" .................................... 3
1.11 "Software" ................................................. 3
1.12 "Standard Cost of Goods" ................................... 3
1.13 "Territory" ................................................ 3
1.14 "Testing Facility" ......................................... 3
1.15 "True Home HIV Test" ....................................... 3

ARTICLE 2. GRANT OF RIGHTS; EXCLUSIVITY ............................... 4

2.1 License Grants to Selfcare ................................. 4
2.2 Covenant Not to Sell Competitive Products .................. 5
2.3 Loss of Exclusivity ........................................ 5
2.4 Selfcare Affiliates ........................................ 6

ARTICLE 3. DEVELOPMENT OF THE HIV PRODUCT ............................. 7

3.1 General Responsibilities ................................... 7
3.2 Testing Facilities; Counseling Service ..................... 8
3.3 Clinical Trials Supply ..................................... 8
3.4 Plan; Reports .............................................. 9
3.5 Publications ............................................... 9

ARTICLE 4. SUPPLY OF SAMPLE COLLECTION KITS ........................... 9

4.1 Purchases of Sample Collection Kits ........................ 9
4.2 Orders ..................................................... 9
4.3 Purchase Price; Payment .................................... 10
4.4 Delivery ................................................... 10
4.5 Acceptance ................................................. 11

ARTICLE 5. MARKETING, SALE AND DISTRIBUTION OF HIV PRODUCTS ........... 11
</TABLE>

i.
<PAGE> 3
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE

<S> <C>
5.1 Marketing Efforts .......................................... 11
5.2 Sales and Advertising Activities ........................... 12
5.3 Pricing .................................................... 12
5.4 Packaging .................................................. 12
5.5 General Conduct ............................................ 12

ARTICLE 6. REPORTS; FORECASTS; MARKETING PLANS ........................ 13

6.1 Reports .................................................... 13
6.2 Forecasts .................................................. 13
6.3 Marketing Plans and Reports ................................ 13
6.4 Confidential Information ................................... 14

ARTICLE 7. PAYMENTS ................................................... 14

7.1 Expenses ................................................... 14
7.2 License Fee ................................................ 14
7.3 Sales Milestone Payments ................................... 14
7.4 Royalties .................................................. 14
7.5 Manner and Place of Payment ................................ 15
7.6 Records and Audit of Sales and Expenses .................... 15

ARTICLE 8. CONFIDENTIALITY ............................................ 16

8.1 Nondisclosure Obligations .................................. 16
8.2 Exceptions ................................................. 16
8.3 Authorized Disclosure ...................................... 16
8.4 Terms of this Agreement .................................... 17

ARTICLE 9. INTELLECTUAL PROPERTY ...................................... 17

9.1 Ownership of Intellectual Property ......................... 17
9.2 Defense of Intellectual Property Suits ..................... 17
9.3 Expenses and Remedies ...................................... 18
9.4 Disclaimer ................................................. 18
9.5 Prosecution of Intellectual Property Suits ................. 19

ARTICLE 10.TERM AND TERMINATION; CHANGE OF CONTROL .................... 19

10.1 Term ....................................................... 19
10.2 Change of Control .......................................... 19
10.3 Termination for Material Breach ............................ 20
10.4 Consequences of Termination ................................ 20
</TABLE>

ii.
<PAGE> 4
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE

<S> <C>
10.5 No Other Rights Upon Termination ........................... 22
10.6 Surviving Obligations ...................................... 22

ARTICLE 11. WARRANTIES; INDEMNIFICATION ................................ 22

11.1 Sample Collection Kit Warranty ............................. 22
11.3 Warranty Disclaimers and Limitations ....................... 23
11.4 Indemnification ............................................ 23
11.5 Insurance .................................................. 24

ARTICLE 12. REPRESENTATIONS AND WARRANTIES ............................. 24

12.1 Representation and Warranties of ChemTrak .................. 24
12.2 Representations and Warranties of Selfcare ................. 25

ARTICLE 13. MISCELLANEOUS .............................................. 25

13.1 Assignment ................................................. 25
13.2 Export Law Compliance ...................................... 25
13.3 Foreign Corrupt Practices Act .............................. 26
13.4 Benefits and Binding Nature of Agreement ................... 26
13.5 Entire Agreement; Amendments ............................... 26
13.6 No Other Terms and Conditions .............................. 26
13.7 Force Majeure .............................................. 26
13.8 Notice ..................................................... 26
13.9 English Language; Governing Law ............................ 27
13.10 Waiver ..................................................... 27
13.11 Severability ............................................... 27
13.12 Rights and Remedies Cumulative ............................. 28
13.13 Independent Contractors .................................... 28
13.14 Counterparts ............................................... 28
</TABLE>

iii.
<PAGE> 5
DEVELOPMENT AND DISTRIBUTION AGREEMENT

THIS DEVELOPMENT AND DISTRIBUTION AGREEMENT (the "Agreement") is made
as of December 31, 1996 (the "Effective Date") by and between CHEMTRAK
INCORPORATED, a Delaware corporation ("ChemTrak"), and SELFCARE, INC.
("Selfcare"), a Delaware corporation. ChemTrak and Selfcare are sometimes
referred to herein as a "Party" or the "Parties."

RECITALS

WHEREAS, ChemTrak has developed a mail-in HIV test (the "HIV PRODUCT,"
as further defined in Article 1 below) and has conducted certain trials directed
toward obtaining regulatory approval to commercially sell the HIV Product in the
United States shortly following the Effective Date; and

WHEREAS, Selfcare has substantial experience in the distribution,
marketing and sale of health care products in the Territory (as defined below)
and is willing to conduct activities necessary to obtain applicable regulatory
approvals for the HIV Product in the Territory and to establish one or more
central laboratory testing facilities and a counseling service in connection
with the HIV Product; and

WHEREAS, ChemTrak wishes to designate Selfcare, and Selfcare wishes to
be designated, as ChemTrak's exclusive distributor for the HIV Product in the
Territory, on the terms and conditions set forth in this Agreement.

NOW THEREFORE, in consideration of the foregoing premises and the
covenants set forth below, the Parties hereby agree as follows:

ARTICLE 1
DEFINITIONS

As used herein, the following terms shall have the following meanings:

1.1 "AFFILIATE" shall mean an entity that, directly or indirectly,
through one or more intermediaries, controls, is controlled by or is under
common control with ChemTrak or Selfcare.

1.2 "CHEMTRAK TECHNOLOGY" shall mean all inventions, patent
applications, patents, know-how, technology, trade secrets, processes, data,
methods or other information, the Software, and any physical, chemical or
biological material, in each case which ChemTrak owns, controls or has a license
to (with a right to sublicense) and which is useful in the use, sale or
distribution of the HIV Product in the Territory, as listed in Exhibit B.

1.
<PAGE> 6
1.3 "COMMERCIALIZATION COSTS" shall mean expenses identifiable to
marketing, promoting, selling and distributing the HIV Product in the Territory
and performing testing, reporting and counseling services incident to the sale
of HIV Products, specifically including expenses of advertising the HIV Product,
specialized training of the sales force with respect to the HIV Product in
particular, salaries and commissions of the sales force to the extent time is
dedicated to the HIV Product, costs of financing receivables and inventories of
the HIV Product, costs of shipping and insuring Sample Collection Kits from
ChemTrak to Selfcare, reasonable allocation of overhead identifiable to such
activities, all recurring and annual regulatory fees and expenses, costs of
pursuing and maintaining trademark protection in the Territory pursuant to
Section 9.1, and such other expenses as the Parties may agree in writing to
include as Commercialization Costs. All such costs shall be determined in
accordance with generally accepted accounting principles consistently applied.
"Commercialization Costs" shall specifically exclude expenses deducted from
gross invoices under the definition of "Net Sales," the Purchase Price paid to
ChemTrak for Sample Collection Kits, the license fee and milestone payments made
by Selfcare to ChemTrak under this Agreement, and costs of establishing
Regulatory Approvals for the HIV Product and the Testing Facilities and
Counseling Service in advance of commercial sales.

1.4 "CONFIDENTIAL INFORMATION" shall mean, subject to the exceptions
set forth in Section 8.2, any information or materials received by one Party
from the other Party. In particular, Confidential Information shall be deemed to
include, but not be limited to, the ChemTrak Technology, any know-how, data,
process, technique, formula or biological or physical material relating to the
HIV Product and any research project, work in process, future development,
scientific, engineering, manufacturing, marketing, business plan, financial or
personnel matter relating to either Party, its present or future products,
sales, suppliers, customers, employees, investors or business, whether in oral,
written, graphic or electronic form, to the extent provided by one Party to the
other.

1.5 "COUNSELING SERVICE" shall have the meaning assigned in Section
1.6.

1.6 "HIV PRODUCT" shall mean that Aware(TM) brand mail-in HIV test
which has been developed by ChemTrak, consisting of a blood sample home
preparation kit (the "SAMPLE COLLECTION KIT"), procedures for analysis of the
blood sample at a mail-in central laboratory (a "TESTING FACILITY," as further
described in Section 3.2) and reporting of results to customers, and a
counseling service (the "COUNSELING SERVICE," as further described in Section
3.2) for discussion of results with customers, as further described in
regulatory materials submitted by ChemTrak to the U.S. Food and Drug
Administration ("FDA") prior to the Effective Date. "HIV Product" shall also
include any future modification, line extension or improved version of such
product developed by ChemTrak during the term of this Agreement, but excluding
any mail-in HIV urine or saliva test, and any True Home HIV Test.

2.
<PAGE> 7
1.7 "NET SALES" shall mean the gross invoices delivered by Selfcare and its
Affiliates for the sale of HIV Products to independent third parties who are not
Affiliates of either Selfcare or any Selfcare Affiliate, less the following
deductions:

(1) Prompt payment or other trade or quantity
discounts actually allowed and taken in such amounts
as are customary in the trade; and

(2) Taxes, tariffs and duties levied on shipments or
sales of the HIV Product (other than franchise or
income taxes on the income of Selfcare and
withholding taxes, if any, on Royalty payments made
hereunder) actually paid or withheld.

1.8 "PURCHASE PRICE" shall have the meaning assigned in Section 4.4.

1.9 "ROYALTY" shall mean [*]: Net Sales, plus any other compensation
invoiced, earned or received in respect of the offer, sale or distribution of
HIV Products, [*].

1.10 "SAMPLE COLLECTION KIT" shall have the meaning assigned in Section
1.6.

1.11 "SOFTWARE" shall mean ChemTrak's proprietary software, in machine
executable object code form only, for tracking blood samples received from
customers, the results of all tests performed to determine the presence of HIV
and the disclosure of results to customers, as used in ChemTrak's studies
performed in pursuit of U.S.
regulatory approval for the HIV Product.

1.12 "STANDARD COST OF GOODS" shall mean the costs to produce the
Sample Collection Kit as set forth on Exhibit A. Such costs shall be consistent
with generally accepted accounting principles, as applied by ChemTrak in its
financial statements.

1.13 "TERRITORY" shall mean Europe, including all European countries,
all Scandinavian countries, all the countries of Eastern Europe and the
Commonwealth of Independent States (all previous USSR territories).

1.14 "TESTING FACILITY" shall have the meaning assigned in Section 1.6.

1.15 "TRUE HOME HIV TEST" shall mean any product which permits an end
user to prepare a bodily fluid sample and conduct a test to determine the
presence of HIV in such sample, in each case without the assistance of a
laboratory facility.

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separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.

3.
<PAGE> 8
ARTICLE 2
GRANT OF RIGHTS; EXCLUSIVITY

2.1 LICENSE GRANTS TO SELFCARE.

(a) Subject to the terms and conditions of this Agreement,
ChemTrak hereby grants to Selfcare a license under the ChemTrak Technology to
offer and sell the HIV Product in the Territory, including but not limited to
the right to perform HIV testing, and to use the Software solely for the purpose
of performing such testing, at a Testing Facility for purchasers of the HIV
Product, for the term of this Agreement. This license shall be exclusive except
as otherwise provided in Section 2.3 below. Selfcare may sublicense or otherwise
transfer such rights (without the right to grant further sublicenses or
otherwise transfer such rights) to third parties only with ChemTrak's prior
written consent, which shall not be unreasonably withheld. Selfcare will provide
ChemTrak with a complete copy of the proposed sublicense agreement at the time
Selfcare solicits ChemTrak's consent to the sublicense.

(b) As a condition of the license rights set forth in this
Agreement, Selfcare shall use the Software in connection with all HIV testing in
the Territory unless the parties mutually agree that a modified version of the
Software will be used. Selfcare shall not copy the Software in any manner,
except that Selfcare may make one working copy, and one copy for back-up
purposes, for each Testing Facility. Selfcare shall not distribute or provide
the Software or any copy thereof to any third party without the prior written
consent of ChemTrak. Further, Selfcare shall not modify the Software in any way,
including without limitation by making any localizations, without the prior
written consent of ChemTrak, which consent shall not be unreasonably withheld.
Selfcare shall not reverse engineer or reverse compile the Software and shall
not use the Software in any manner other than pursuant to the license granted
above in this Section 2.1(b). Immediately upon the expiration or any termination
of this Agreement or at a later time specified by ChemTrak, Selfcare shall
return all copies of the Software to ChemTrak and make no further use of the
Software.

(c) Subject to the terms and conditions of this Agreement,
ChemTrak hereby grants to Selfcare an exclusive license to use the mark
Aware(TM) in connection with the offer, sale and distribution of the HIV Product
in the Territory for the term of this Agreement. As a condition of the license
rights set forth in this Agreement, Selfcare agrees that the Aware(TM) mark
shall be used in connection with such activities and no other marks, including
the ChemTrak(R) mark, shall be used unless the parties mutually agree on such
use in advance. ChemTrak shall retain ownership of and all rights in the
Aware(TM) mark and shall own and retain all rights in any alternative or
additional brand name(s) which the parties may agree to use (collectively, the
"MARKS"). In order to assure the quality of goods marketed under the Marks,
ChemTrak shall have the right to

4.
<PAGE> 9
inspect Selfcare's facilities during normal business hours, after giving
reasonable notice of such intent. Selfcare shall conduct its business in a
manner which will enhance the reputation and goodwill attached to the Marks, and
all goodwill shall inure to the benefit of ChemTrak as owner of the Marks.

(d) Selfcare agrees to use the ChemTrak Technology and the
Marks only to offer, sell and distribute the HIV Product in the Territory for
the term of this Agreement and not for any other purpose.

2.2 COVENANT NOT TO SELL COMPETITIVE PRODUCTS. Selfcare hereby
covenants not to market, sell or distribute, directly or indirectly through one
or more third parties, any mail-in HIV blood test product other than the HIV
Product in any country in the Territory where Selfcare has an exclusive license
[*]; provided, however, that this covenant will not apply in the event that this
Agreement is terminated by Selfcare pursuant to Section 10.3 for ChemTrak's
material breach of this Agreement. The restriction on the sale of mail-in HIV
blood tests does not apply to mail-in urine or saliva tests. Selfcare hereby
acknowledges that the ChemTrak Technology, particularly ChemTrak's proprietary
Software and the data and regulatory strategy reflected in ChemTrak's filings
with the U.S. FDA regarding the HIV Product, has been maintained by ChemTrak as
highly confidential and constitutes ChemTrak's proprietary and extremely
valuable trade secret information. Selfcare further acknowledges that it has not
previously engaged in development or marketing of any mail-in HIV test product,
and the ChemTrak Technology confers upon Selfcare a substantial competitive
advantage in obtaining regulatory approval and market acceptance of a mail-in
HIV test product in the Territory. Accordingly, Selfcare and ChemTrak each
acknowledge and agree that the [*] is reasonable and necessary to protect the
commercial value of ChemTrak's proprietary trade secrets provided to Selfcare
under this Agreement.

2.3 LOSS OF EXCLUSIVITY. ChemTrak will have the option, upon ninety
(90) days advance written notice, to convert Selfcare's exclusive rights to
offer, sell and distribute the HIV Product in each country in the Territory into
non-exclusive rights in any of the following events:

(a) Selfcare fails to file for Regulatory Approval in such
country by a date determined as follows. Set forth on Exhibit C are projected
dates by which the parties expect Selfcare will file for regulatory approval to
commercially sell the HIV Product in the major European countries listed on
Exhibit C. If at any time Selfcare believes that it will likely not be able to
make such a filing by such date, then Selfcare shall immediately notify ChemTrak
and the parties shall meet and confer regarding the reasons for such delay and
available means to expedite such filings. The parties will seek to mutually

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agree on a plan and new timetable for making such filing. If the parties are
unable to agree on such a plan and timetable, then ChemTrak will have the option
to convert Selfcare's rights in such country to non-exclusive effective six (6)
months after the date set forth on Exhibit C if Selfcare has not made the
required regulatory filing by the end of such 6-month period.

(b) Selfcare fails to launch a commercially reasonable
marketing campaign designed to generate substantial demand for HIV Products and
commence commercial sales of the HIV Product in such country within six (6)
months after receiving Regulatory Approval in such country.

(c) Selfcare's market share for the HIV Product in such
country, as measured on the second and each subsequent anniversary of the date
of Selfcare's first commercial sale of an HIV Product in such country, is less
than [*] of the percentage of the market that each competitor would have if all
had equal market share. For example, if as of such anniversary there are three
competitors in the market, then ChemTrak may convert the license to
non-exclusive if Selfcare's market share is less than [*] as of such date [*]
For purposes of this paragraph, the relevant market shall consist of all mail-in
HIV blood tests, and each separate brand shall constitute one competitor in the
market. In order to enable ChemTrak to calculate market share, Selfcare shall
provide ChemTrak upon request with all relevant information available to
Selfcare.

2.4 SELFCARE AFFILIATES.

(a) All costs, expenses, revenues and proceeds incurred or
received by any Selfcare Affiliate shall be deemed to be incurred or received by
Selfcare for purposes of all financial calculations and obligations under this
Agreement. Notwithstanding any other terms of this Agreement, the Parties agree
that all payments due from Selfcare to ChemTrak hereunder shall be made by
Selfcare and not any Selfcare Affiliate.

(b) The Parties agree that the goals with respect to non-U.S.
income or withholding tax liability shall be to minimize the aggregate amount of
non-U.S. income and withholding tax liabilities incurred by the Parties
collectively with respect to commercialization of the HIV Product in the
Territory, and to allocate such tax burdens equally between the Parties as
provided herein. In that regard:

(i) If any non-U.S. income or withholding tax
liability is incurred by either Party with respect to operations conducted
pursuant to this Agreement (e.g., such Party could not avoid the tax liability
by applying current operating losses or net operating loss carryforwards
resulting from operations related to the sale of the HIV

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Product pursuant to the Agreement), then (A) when Selfcare incurs the non-U.S.
tax liability, the full amount of such liability shall be [*] and (B) when
ChemTrak incurs the non-U.S. tax liability, the full amount of such liability
shall be [*]. The Parties acknowledge that any tax credit related to the HIV
Product will [*] if the tax credit is used by Selfcare to avoid paying taxes in
any jurisdiction for operations related to the sale of HIV Products pursuant to
this Agreement.

(ii) The Parties also agree that each may either (A)
avoid potential non-U.S. income or withholding tax liability by applying current
operating losses and net operating loss carry forwards that result from its
operations with respect to the HIV Product, and/or (B) avoid paying non-U.S.
income or withholding taxes by applying tax credits resulting from operations
with respect to the HIV Product.

(iii) If either Party could apply any tax credits
arising in any jurisdication other than the United States related to the HIV
Product against income in any jurisdiction that is not related to the sale of
HIV Products pursuant to this Agreement, then it shall promptly notify the other
Party. The Parties agree to meet with each other along with their tax advisors
and to take all commercially reasonable steps to permit such credit to be used
by one Party and to permit the other Party to obtain [*] of such credit.

ARTICLE 3
DEVELOPMENT OF THE HIV PRODUCT

3.1 GENERAL RESPONSIBILITIES. Selfcare shall have sole responsibility
for diligently pursuing Regulatory Approval of the HIV Product throughout the
Territory as soon as practicable, and for bearing all costs associated
therewith. Selfcare shall prepare, file and pursue diligently all regulatory
applications necessary to obtain such Regulatory Approvals. ChemTrak will
provide Selfcare with a copy of all documentation required by the U.S. FDA in
connection with its review of the HIV Product, including a right to reference
all applications, registrations, and supporting documents submitted and received
by ChemTrak, and will provide assistance in connection with the pursuit of
Regulatory Approvals in the Territory according to a plan to be mutually agreed
upon. Such assistance will be provided without charge to Selfcare. Selfcare
shall have the right to use such information solely for the purpose of pursuing
Regulatory Approvals and commercializing HIV Products in the Territory during
the term of this Agreement; provided, however, that ChemTrak will provide
Selfcare access to this information after the termination or expiration of this
Agreement to permit Selfcare to comply with regulatory requirements applicable
to HIV Products sold by Selfcare during the term of this Agreement and to defend
against product liability and other suits pertaining to such

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HIV Products. Selfcare shall copy ChemTrak on all correspondence with regulatory
authorities in the Territory, and ChemTrak shall have an irrevocable right to
reference all applications, registrations and supporting documentation submitted
and received by Selfcare.

(a) U.S. REGULATORY APPROVAL. ChemTrak shall keep Selfcare
informed of the progress of efforts to obtain Regulatory Approval from the U.S.
FDA. ChemTrak will notify Selfcare promptly of any delays in obtaining approval
and consult with Selfcare on the resolution of any outstanding issues. At the
sole option of Selfcare, Selfcare may terminate the Agreement upon sixty (60)
days notice if ChemTrak fails to obtain Regulatory Approval in the United States
within [*] of the Effective Date.

3.2 TESTING FACILITIES; COUNSELING SERVICE. Prior to obtaining the
first Regulatory Approval in the Territory, Selfcare shall establish or contract
for a single central laboratory (or more as Selfcare determines is reasonable or
necessary) to conduct HIV testing in accordance with the protocols and
procedures described in ChemTrak's submissions to the U.S. FDA or amended, as
required by a country's regulatory authorities, (a "TESTING FACILITY"). ChemTrak
shall provide Selfcare with a copy of the Software for use at each such facility
for the processing of HIV Tests during the term of this Agreement. At such time
Selfcare shall also establish a counseling service to report results to
customers and provide appropriate counseling regarding the results, again as
provided in ChemTrak's submissions to FDA or amended, as required by a country's
regulatory authorities, (the "COUNSELING SERVICE"). Selfcare shall bear all
costs associated with establishing the Testing Facilities and the Counseling
Service, including any additional requirements of the countries in the
Territory. ChemTrak shall have the right to inspect the Testing Facilities and
Counseling Service during normal business hours (after giving reasonable notice)
in order to ensure that each is operating in the manner described in ChemTrak's
FDA documentation or amended, as required by a country's regulatory authorities,
and in accordance with all applicable regulatory standards.

3.3 CLINICAL TRIALS SUPPLY. Subject to the terms of this Agreement,
ChemTrak shall use diligent efforts to supply or cause to be supplied to
Selfcare, and Selfcare shall purchase from ChemTrak, Selfcare's requirements of
Sample Collection Kits for use in Territory Development activities, including
clinical studies. ChemTrak will provide such product units to Selfcare for a
purchase price equal to [*]; provided that such product units are made available
to study subjects for [*]. If the compensation paid exceeds such amount, the
Parties shall mutually determine an appropriate purchase price for such product
units.

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8.
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3.4 PLAN; REPORTS.

(a) Within 90 days following the Effective Date, Selfcare
shall prepare a detailed plan describing activities to be undertaken to pursue
Regulatory Approvals for the HIV Product in the Territory and to establish the
Testing Facilities and Counseling Service. ChemTrak shall have the right to
review and comment on such plan before Selfcare makes any contact with any
regulatory agency pertaining to the HIV Product in the Territory. Once agreed
between the parties, Selfcare shall conduct its regulatory activities regarding
the HIV Product as provided in the plan. However, Selfcare reserves the right to
modify the plan, as required by regulatory circumstances, following consultation
with ChemTrak.

(b) Selfcare shall report to ChemTrak at least once each
calendar quarter, but not later than thirty (30) days following the end of such
calendar quarter, on the progress of such activities. Selfcare will notify
ChemTrak as soon as practicable in the event of any substantial changes in the
development activities described in the plan and in the event any Regulatory
Approval is received for any country in the Territory.

3.5 PUBLICATIONS. Selfcare and ChemTrak shall cooperate in the
preparation and publication of papers in support of development and marketing
activities in the Territory. Neither Party shall present, publish or otherwise
disclose any information regarding the HIV Product in the Territory except with
the prior written consent of the other. Each party shall make available to the
other at no cost a copy of any publications or other marketing support materials
which such Party produces for its purposes.

ARTICLE 4
SUPPLY OF SAMPLE COLLECTION KITS

4.1 PURCHASES OF SAMPLE COLLECTION KITS. Subject to the terms of this
Agreement, ChemTrak shall use diligent efforts to supply Selfcare, and Selfcare
shall purchase from ChemTrak, Selfcare's requirements of Sample Collection Kits
in such quantities as Selfcare shall order pursuant to this Article 4. All
Sample Collection Kits supplied by ChemTrak shall conform to specifications to
be agreed upon by the parties in accordance with applicable Regulatory
Approvals. ChemTrak will provide the blood collection card and its proprietary
finger stick device for inclusion in each Sample Collection Kit; Selfcare shall
be responsible for including instruction leaflets and for final packaging and
labeling, including any text not in English.

4.2 ORDERS. Within thirty (30) days after the receipt of the first
Regulatory Approval for HIV Product in a country in the Territory, Selfcare
shall submit to ChemTrak an initial purchase order for a mutually agreed upon
number of Sample Collection Kits based on the predicted number necessary to
launch the product.

9.
<PAGE> 14
ChemTrak shall use diligent efforts to deliver such Sample Collection Kits as
soon as practicable thereafter, but in no event longer than 60 days after the
date of such purchase order. Beginning on the first day of each calendar quarter
thereafter, Selfcare shall provide ChemTrak with a firm purchase order
specifying the number of Sample Collection Kits desired, on a monthly basis, for
the following quarter and a proposed shipment date for such units of no less
than 60 days from the date of such purchase order (each, a "Purchase Order").
ChemTrak will accept any such Purchase Order from Selfcare within five (5) days
after receipt of such Purchase Order at its principal place of business.

4.3 PURCHASE PRICE; PAYMENT. Selfcare shall pay to ChemTrak a price
(the "PURCHASE PRICE") for purchase of Sample Collection Kits equal to [*].
ChemTrak shall invoice Selfcare for such amount as of the date of shipment. All
payments for Sample Collection Kits shall be due within forty-five (45) days
after the date of Selfcare's receipt of a confirmed faxed copy of ChemTrak's
invoice and confirmed shipment for such Sample Collection Kits.

4.4 DELIVERY.

(a) ChemTrak shall use diligent efforts, consistent with its
other shipment obligations and manufacturing capacity, to ship all Sample
Collection Kits ordered by Selfcare on or before the requested shipment date, to
the extent such date is at least fifteen (15) days after the date ChemTrak
accepts the Purchase Order for such shipment. The shipping and packaging method
used will be at the discretion of ChemTrak, subject to written approval of
Selfcare. Deliveries shall be made F.O.B. ChemTrak's facility (ICC Incoterms
1990) and shall be shipped to Selfcare's address as set forth in this Agreement,
or as otherwise directed by Selfcare in writing. All Sample Collection Kits will
be shipped by ChemTrak freight collect, or if prepaid, such freight will be
subsequently billed to Selfcare. If requested by Selfcare, ChemTrak will insure
the shipments against damage to or loss of Sample Collection Kits and will
subsequently bill Selfcare for such shipping insurance. Selfcare will reimburse
ChemTrak for shipping and insurance expenses, if any, within forty-five (45)
days after the date of such invoices. ChemTrak reserves the right to deliver in
advance of estimated delivery dates. Selfcare shall make any claims for damage
or loss in transit through the carrier and any insurance proceeds payable in
respect of any loss incurred shall be paid to Selfcare.

(b) If at any time ChemTrak is unable to supply total
worldwide demand for Sample Collection Kits, ChemTrak shall allocate available
Sample Collection Kits (or components thereof) to the Territory pro rata with
other markets outside the Territory based upon relative market share, as
measured by the most recent quarterly or annual sales figures for which data is
reasonably available.

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(c) In the event that ChemTrak, whether by reason of Force
Majeure or otherwise, either (1) fails in any quarter to deliver to Selfcare at
least fifty percent (50%) of the amount of Sample Collection Kits ordered by
Selfcare or (2) fails in each of two consecutive quarters to deliver to Selfcare
at least eighty percent (80%) of the amounts ordered by Selfcare for each of
such quarters, notwithstanding the obligation of Selfcare to purchase from
ChemTrak all Sample Collection Kits, Selfcare shall be entitled for the duration
of the term of this Agreement to seek alternate sources of supply for the Sample
Collection Kits (or components thereof) to be used, sold or otherwise
distributed in the Territory pursuant to the license granted herein, and such
license shall be deemed to include such right. In particular, if Selfcare seeks
alternate sources for ChemTrak's proprietary finger stick device, Selfcare will
have a non-exclusive, worldwide license to make such devices or have them made
by a third party. In the event that Selfcare exercises its right to use
alternate sources of supply, the cost of securing Sample Collection Kits (or
components thereof) from alternate sources of supply shall be deemed to be a
Commercialization Cost.

4.5 ACCEPTANCE. Selfcare shall inspect all Sample Collection Kit
shipments received from ChemTrak for visible damage promptly upon receipt
thereof at the shipping destination and may reject any Sample Collection Kit
Units which are damaged or fail to comply with the specification agreed by the
parties. Sample Collection Kits not rejected by written notification to ChemTrak
within sixty (60) days after receipt by Selfcare shall be deemed to have been
accepted. Rejected goods shall be returned freight prepaid to ChemTrak within
fifteen (15) days after rejection. As promptly as possible after receipt by
ChemTrak of properly rejected goods, ChemTrak shall, at ChemTrak's option, (i)
replace the rejected goods at ChemTrak's expense, or (ii) grant Selfcare a
credit for such rejected goods equal to the price paid therefor. Such
replacement or credit shall be ChemTrak's sole responsibility and obligation to
Selfcare for nonconforming Sample Collection Kits. The party shipping the goods
pursuant to this section shall bear the entire risk of loss for goods during
shipment. Any insurance proceeds payable in respect of any loss incurred shall
be paid to the party bearing the risk of loss for such goods to the extent of
the loss incurred. For properly rejected goods, ChemTrak will prepay
transportation charges back to Selfcare and shall reimburse Selfcare for any
reasonable costs of transportation for returning such goods; for all other
goods, Selfcare shall pay transportation charges in both directions.

ARTICLE 5
MARKETING, SALE AND DISTRIBUTION OF HIV PRODUCTS

5.1 MARKETING EFFORTS. Selfcare agrees to use diligent efforts to
promote the sale, marketing and distribution of the HIV Products in the
Territory, including undertaking a commercially reasonable advertising campaign
in connection with the launch and sale of HIV Products. Selfcare shall provide
ChemTrak with a copy of its

11.
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marketing plan as provided in Section 6.3 for
ChemTrak's review and comment. Selfcare agrees to consider in good faith
ChemTrak's comments regarding advertising, marketing promotion and sales
efforts.

5.2 SALES AND ADVERTISING ACTIVITIES. Selfcare shall provide ChemTrak
with written copies of all advertising claims which Selfcare intends to make in
connection with HIV Products prior to making any such claim to any third party.
The parties shall mutually agree upon all claims, and either party shall have
the right to prohibit the making of any particular claim for regulatory, ethical
or marketing reasons. Selfcare agrees that no claims prohibited by applicable
law or regulation will be made in connection with HIV Products.

5.3 PRICING. Selfcare shall notify ChemTrak of the price(s) it intends
to charge third parties for HIV Product at least ninety (90) days prior to
commencing commercial sales in any country. To the extent required under
applicable European Union regulations, Selfcare shall charge the same price for
HIV Product in countries in the Territory that are members of the European
Union. The parties shall discuss optimal pricing strategies and Selfcare shall
consider any comments ChemTrak may have in good faith, provided that Selfcare
shall remain ultimately responsible for determining the price.

5.4 PACKAGING. Selfcare will be responsible for packaging Sample
Collection Kits for resale under this Agreement, including, without limitation,
designing and producing all packaging materials and product inserts, all in
forms to be approved in writing by ChemTrak prior to first use by Selfcare, such
approval not to be unreasonably withheld. Copyright and other proprietary rights
related to amended packaging, labeling, and inserts shall remain the exclusive
property of Selfcare and may not be used by ChemTrak without the express written
consent of Selfcare; provided, however, that ChemTrak shall own the brand name
under which the product is sold, as provided in Section 2.1(c). Notwithstanding
the foregoing, ChemTrak shall provide Selfcare with copies of all packaging
materials and product inserts which ChemTrak uses in connection with the HIV
Product outside the Territory.

5.5 GENERAL CONDUCT. Selfcare covenants that it shall not solicit sale
of HIV Products, or advertise or keep a stock of HIV Products, outside of the
Territory. Selfcare shall not, directly or indirectly, without the prior written
authorization of ChemTrak, (i) contact any of ChemTrak's suppliers or vendors of
HIV Product components, or (ii) initiate any contact with any federal, state or
local regulatory agency or entity outside the Territory about the HIV Product.
Selfcare shall conduct its efforts under this Agreement in compliance with all
regulatory requirements applicable to the offer, distribution and sale of HIV
Product. Selfcare shall comply with all health registration laws, regulations
and orders of any government entity within the Territory and with all other
governmental requirements relating to the promotion, marketing and sale of the
HIV Product in the

12.
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Territory. The parties agree to cooperate in all respects, including providing
all information and documents in each party's possession, to assure compliance
with adverse event reporting requirements and similar regulations applicable to
the HIV Product, on a worldwide basis, including but not limited post-approval
requirements imposed by the U.S. FDA by PMA approval order or regulation
pursuant to 21 CFR Part 814, Subpart E, and medical device reporting obligations
under 21 CFR Part 803. Each party shall notify the other within 20 days of
becoming aware of any reportable adverse events or device malfunctions
associated with the HIV Products, or sooner to the extent applicable regulatory
requirements require reporting to government officials in a time less than 20
days. In addition, each party will assist the other in investigating any such
reportable events, as reasonably requested, in order to comply with the
applicable regulatory requirements.

ARTICLE 6
REPORTS; FORECASTS; MARKETING PLANS

6.1 REPORTS. Each party shall keep the other fully informed of all
governmental activities and plans which potentially or actually affect the sale
of the HIV Products in the Territory. Selfcare shall provide to ChemTrak from
time to time, but no less than annually, written reports of any known third
party activities relating to the manufacture, sale or distribution of products
that are competitive with HIV Products in the Territory, including all available
information relating to pricing, new products and product promotions. At a
minimum, such reports shall be submitted to ChemTrak by confirmed facsimile
within thirty (30) days after the end of each calendar year.

6.2 FORECASTS. Beginning thirty (30) days after receipt of the first
Regulatory Approval for HIV Products in the Territory, and on the first day of
each calendar quarter thereafter, Selfcare shall furnish to ChemTrak a
nonbinding rolling twelve (12)-month forecast of its anticipated purchases of
Sample Collection Kits and sales of HIV Products for each country in the
Territory.

6.3 MARKETING PLANS AND REPORTS. Prior to First Commercial Sale and at
the beginning of each calendar year thereafter, Selfcare shall submit to
ChemTrak in writing whatever annual marketing plan detailing Selfcare's proposed
marketing and pricing strategy and tactics for the HIV Product during the
following year has been developed by Selfcare for its internal use. In addition,
Selfcare shall submit to ChemTrak (a) quarterly sales reports detailing
Selfcare's sales of the HIV Product in the preceding quarter, which reports
shall be submitted to ChemTrak within thirty (30) days after the end of each
quarter; and (b) copies of any market research reports relating to HIV Product
sales and HIV Product competition which Selfcare commissions or otherwise
obtains, which reports shall be submitted to ChemTrak promptly after receipt
thereof by Selfcare.

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6.4 CONFIDENTIAL INFORMATION. All reports, forecasts and plans
generated by or for Selfcare with respect to the HIV Product and provided to
ChemTrak under this Article 6 (collectively, the "Marketing Data") shall
constitute Confidential Information of Selfcare, as defined under Article 8
hereof. Such Marketing Data shall be kept confidential in accordance with
Article 8 but may be used by ChemTrak, only with express written consent from
Selfcare, not to be unreasonably withheld, in connection with the
commercialization of HIV Products.

ARTICLE 7
PAYMENTS

7.1 EXPENSES. All expenses incurred by Selfcare in connection with its
obligations under this Agreement will be borne solely by Selfcare, subject to
recovery of certain expenses out of Net Sales of HIV Product as provided in
Section 7.4. Selfcare will be responsible for appointing its own employees,
agents and representatives, who will be compensated by Selfcare. ChemTrak shall
only be obliged to incur expenses under Section 3.1 (Regulatory Assistance),
Section 3.3, Article 4 (Supply of Sample Collection Kits) and Article 9
(Intellectual Property), subject to reimbursement of certain expenses by
Selfcare as provided in such sections.

7.2 LICENSE FEE. Selfcare shall pay to ChemTrak a license fee of
[*] upon execution of this Agreement. This license fee shall be non-refundable
and shall not be creditable against any future payments due to ChemTrak.

7.3 SALES MILESTONE PAYMENTS. In addition to the Royalty payments
provided for in Section 7.4, Selfcare shall, upon the achievement of the events
set forth below, make the following payments to ChemTrak:

(a) [*] upon obtaining Regulatory Approval in the first of
the U.K., Germany or France; and

(b) [*] upon achieving the first [*] in Net Sales from the
sale of HIV Products in the Territory.

Payments made pursuant to this Section 7.3 shall be non-refundable and
shall not be creditable against any future payments.

7.4 ROYALTIES. Within thirty (30) days after the end of each calendar
quarter, Selfcare shall deliver a report to ChemTrak detailing Selfcare's Net
Sales made in such quarter and all other compensation invoiced, earned or
received in respect of the offer, sale or distribution of HIV Products in such
quarter, and [*] with line items for each of the deductions described in the
definition of

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"Net Sales" and for each of the categories of [*]. For purposes of calculating
quarterly Royalty payments, all receipts and deductions included in Net Sales
shall be recognized as of the date of invoice and [*]. Together with Selfcare's
report due 30 days after the end of each quarter, Selfcare shall pay the Royalty
for such quarter to ChemTrak. If [*] shall be carried forward to the next
quarter and set off against future Royalty payments.

7.5 MANNER AND PLACE OF PAYMENT. Any payments to ChemTrak shall be made in U.S.
Dollars by wire transfer at such bank in the United States as ChemTrak shall
specify from time to time. Payments shall be made for the amount of U.S. Dollars
reported by ChemTrak (in the case of expense reimbursement) or agreed by the
Parties (in the case of a Purchase Price). Exchange conversion of foreign
currencies will be the responsibility of Selfcare; provided that for purposes of
calculating U.S. Dollar payments to be made by Selfcare to ChemTrak hereunder
all revenues received and costs paid in foreign currencies shall be deemed
converted to U.S. Dollars at the exchange rate for each currency that is the
average of the daily spot rate reported by the U.S. edition of the Wall Street
Journal for each trading day during the reporting period.

7.6 RECORDS AND AUDIT OF SALES AND EXPENSES. Each Party will maintain
complete and accurate records regarding sales, costs, expenses and payments
applicable to HIV Products, in sufficient detail to enable the other Party to
confirm the accuracy of payments due under this Agreement. In particular,
Selfcare shall keep separate records of each of the categories of costs
specifically referenced in the definition of Commercialization Costs. Such
records shall be open, during reasonable business hours for a period of three
(3) years from creation of the record, for examination at the other Party's
expense and not more often than once each year by a certified public accountant
from a major recognized accounting firm selected by the other Party for the sole
purpose of verifying the correctness of calculations made under this Agreement.
The accounting expense shall be paid by the Party requesting the audit. If
material discrepancies (in excess of 5%) are identified in such audit, the
audited Party shall bear the accounting expense. Any records or accounting
information received from the other Party shall be Confidential Information. The
terms of this section shall survive any termination or expiration of this
Agreement for a period of three (3) years.

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ARTICLE 8
CONFIDENTIALITY

8.1 NONDISCLOSURE OBLIGATIONS. During the term of this Agreement, and
for a period of three (3) years after termination hereof, each Party will
maintain all Confidential Information in trust and confidence and will not
disclose any Confidential Information to any third party or use any Confidential
Information for any unauthorized purpose. Each Party may use such Confidential
Information only to the extent required to accomplish the purposes of this
Agreement. Confidential Information shall not be used for any purpose or in any
manner that would constitute a violation of any laws or regulations, including
without limitation the export control laws of the United States. Confidential
Information shall not be reproduced in any form except as required to accomplish
the intent of this Agreement. No Confidential Information shall be disclosed to
any employee, agent, consultant, sublicensee or supplier who does not have a
need for such information. To the extent that disclosure is authorized by this
Agreement, the disclosing Party will obtain prior agreement from its employees,
agents, consultants, sublicensees or suppliers to whom disclosure is to be made
to hold in confidence and not make use of such information for any purpose other
than those permitted by this Agreement. Each Party will promptly notify the
other upon discovery of any unauthorized use or disclosure of the Confidential
Information.

8.2 EXCEPTIONS. Confidential Information shall not include any
information which:

(a) is now, or hereafter becomes, through no act or failure to
act on the part of the receiving Party, generally known or available;

(b) is known by the receiving Party at the time of receiving
such information, as evidenced by its written records;

(c) is hereafter furnished to the receiving Party by a third
party, as a matter of right and without restriction on disclosure; or

(d) is the subject of a written permission to disclose
provided by the disclosing Party.

8.3 AUTHORIZED DISCLOSURE. Notwithstanding any other provision of this
Agreement, each Party may disclose Confidential Information if such disclosure:

(a) is in response to a valid order of a court or other
governmental body of the United States or any political subdivision thereof;
provided, however, that the responding Party shall first have given notice to
the other Party hereto and shall have

16.
<PAGE> 21
made a reasonable effort to obtain a protective order requiring that the
Confidential Information so disclosed be used only for the purposes for which
the order was issued;

(b) is otherwise required by law, provided that the Disclosing
Party take all available steps to designate the information as confidential and
to prevent further disclosure by the recipient; or

(c) is otherwise necessary to file or prosecute patent
applications, prosecute or defend litigation or comply with applicable
governmental regulations or otherwise establish rights or enforce obligations
under this Agreement, but only to the extent that any such disclosure is
necessary, provided that the Disclosing Party take all available steps to
designate the information as confidential and to prevent further disclosure by
the recipient.

8.4 TERMS OF THIS AGREEMENT. The Parties agree that the material
financial terms of this Agreement will be considered Confidential Information of
both Parties. However, each Party shall have the right to disclose the material
financial terms of this Agreement to any potential acquirer, merger partner, or
other bona fide potential financial or strategic partner, subject to a
requirement of best efforts to secure confidential treatment of such
information.

ARTICLE 9
INTELLECTUAL PROPERTY

9.1 OWNERSHIP OF INTELLECTUAL PROPERTY. ChemTrak shall retain all of
its rights, title and interest in and to all ChemTrak Technology, including but
not limited to the Software, and all modifications and improvements to the
foregoing. ChemTrak shall also own all right, title and interest in all
copyrights, trademarks, including but not limited to the Aware(TM) trademark,
and trade names and all other industrial and intellectual property embodied in
or related to the HIV Product, except as otherwise expressly provided in this
Agreement. ChemTrak shall file for and pursue trademark protection for the
Aware(TM) mark in countries in the Territory where HIV Products are sold, at
Selfcare's expense, subject to recovery as a Commercialization Cost. ChemTrak
shall also file for and pursue patent protection for the finger stick device in
countries in the Territory where the Parties agree patent protection would be
advantageous. Selfcare shall bear the initial costs of obtaining and maintaining
such patent prosecution, and such costs shall be Commercialization Costs.

9.2 DEFENSE OF INTELLECTUAL PROPERTY SUITS. If a third party asserts
that a patent, trademark or other proprietary right owned by it is infringed or
otherwise violated by the offer, distribution or sale of the HIV Product in the
Territory, the Party against whom such a claim was asserted shall immediately
provide the other Party notice of such

17.
<PAGE> 22
claim and the related facts in reasonable detail. ChemTrak shall have the first
right, but not the obligation, to act to resolve the issue through negotiation
and to control the defense of any legal proceeding. If ChemTrak assumes the
defense, Selfcare shall cooperate with ChemTrak and shall have the right to be
represented separately by counsel of its own choice. If ChemTrak fails to notify
Selfcare, within thirty (30) days after receiving notice that a complaint has
been filed with a court of competent jurisdiction (but in any event reasonably
in advance of any deadline for responding to the complaint), that ChemTrak will
assume control of the defense, then Selfcare shall have the right, but not the
obligation, to so control the defense by counsel of its own choice. If Selfcare
assumes the defense, ChemTrak shall cooperate with Selfcare and shall have the
right to be represented separately by counsel of its own choice.

9.3 EXPENSES AND REMEDIES. ChemTrak shall bear [*] expenses incurred
by ChemTrak or Selfcare in the defense of suits described in Section 9.2,
including but not limited to attorneys' fees and expenses. If Selfcare assumes
the defense pursuant to Section 9.2, Selfcare shall not enter into any
settlement that may adversely affect the HIV Product outside the Territory, or
require ChemTrak to make any payment to a third party or Selfcare, without the
prior written consent of ChemTrak. If ChemTrak assumes the defense, ChemTrak may
settle any such suit at any time in any manner that does not materially
adversely affect Selfcare. ChemTrak shall notify Selfcare in writing in the
event it proposes to resolve the matter in any other manner, and the Parties
shall discuss available options in good faith and each shall use all
commercially reasonable efforts to reach a mutually agreed upon resolution
within forty five (45) days after the date of ChemTrak's notice. Such actions
may include (i) procuring the right from such third party to sell or use the HIV
Product, with any running royalty obligations to be subject to approval by both
Parties (not to be unreasonably withheld) and, if approved, to be included in
Commercialization Costs, (ii) replacing the HIV Product with a functionally
equivalent product that does not violate the third party's rights, or (iii)
modifying the HIV Product to make it functionally equivalent and not violate
such rights. If the Parties are unable to reach agreement on how to resolve such
matter after the above discussion period, and either Party reasonably determines
that continued sale of the HIV Product in the Territory would infringe or
violate the third party's rights, then such Party may cease performance under
this Agreement immediately upon written notice to the other Party and this
Agreement shall terminate thirty (30) days after the date of such notice.

9.4 DISCLAIMER. THE FOREGOING PROVISIONS OF THIS ARTICLE 9 STATE THE
ENTIRE LIABILITY AND EXCLUSIVE REMEDY OF THE PARTIES AND THEIR CUSTOMERS WITH
RESPECT TO ANY ALLEGED INFRINGEMENT OF PATENTS, COPYRIGHTS, TRADEMARKS OR OTHER
INTELLECTUAL PROPERTY RIGHTS BY THE HIV PRODUCTS OR ANY PART THEREOF.

- -------
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.

18.
<PAGE> 23
9.5 PROSECUTION OF INTELLECTUAL PROPERTY SUITS. If either party
believes that a third Party is infringing any patent, copyright, trademark or
other intellectual property right belonging to the parties and applicable to the
HIV Product in the Territory, it shall promptly notify the other Party. The
Parties shall meet and discuss whether to take action to abate the infringement
and, if so, what actions to take, which Party will take such actions and how
related expenses will be borne between the Parties. If either Party elects to
initiate such a suit, the other Party shall cooperate in the action and have the
right but not the obligation to bear up to one-half the expenses of the suit,
provided that such Party undertakes in writing within ninety (90) days after the
suit is initiated to bear a stated percentage of such costs. Any recovery or
settlement obtained in such an action shall be used first to reimburse each
Party pro rata for litigation expenses. Any remaining recovery will be allocated
between the parties in proportion to the share of litigation expenses they bore.

ARTICLE 10
TERM AND TERMINATION; CHANGE OF CONTROL

10.1 TERM. This Agreement shall become effective on the Effective Date
and shall remain in effect for a period of five (5) years from the date of
Selfcare's first commercial sale of HIV Product in any country listed on Exhibit
C (the "Fifth Anniversary"), unless it is renewed by agreement of the parties or
automatically as provided below. The Agreement will automatically renew for a
period of two (2) years if, as of the date sixty (60) days prior to the Fifth
Anniversary, Selfcare's market share for the HIV Product throughout the five (5)
countries listed on Exhibit C, in the aggregate, is at least equal to [*],
determined by dividing Selfcare's net sales (as reported for financial purposes)
of HIV Products in such countries over the previous twelve (12) month period by
the total net sales (as reported for financial purposes) of all sellers of
mail-in HIV blood tests in such countries. The same test will be applied as of
the date sixty (60) days before the two-year renewal term expires. If the test
is met, the Agreement will renew for subsequent two-year terms in the same
manner.

10.2 CHANGE OF CONTROL.

(a) If Selfcare undergoes an Acquisition Transaction (as
defined below), ChemTrak shall have the right to terminate this Agreement upon
six (6) months prior written notice to Selfcare.

(b) If ChemTrak undergoes an Acquisition Transaction, ChemTrak
(or the surviving entity in the Acquisition Transaction) shall have the right to
assume from Selfcare all rights licensed to Selfcare under this Agreement, as
follows. If ChemTrak elects to assume such role, it shall so notify Selfcare in
writing within six (6) months of the closing of ChemTrak's Acquisition
Transaction. Promptly following delivery of such

- -------
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.

19.
<PAGE> 24
notice, the parties shall meet to mutually select a recognized investment
banking firm with substantial relevant industry expertise to (i) select three
(3) reasonable methods of determining the value of this Agreement to Selfcare as
of the date of ChemTrak's election notice to Selfcare and (ii) to calculate such
valuation using each of the three (3) methods and provide a report to each
Party. For the purposes of this valuation, Selfcare is deemed to have met the
requirements for maintaining an exclusive license in each country in the
Territory, without regard to whether Selfcare has actually sought Regulatory
Approval or marketed a product in each country in the Territory. ChemTrak shall
have the option to terminate this Agreement and obtain all licenses, rights,
information, materials, contract rights and assistance from Selfcare as may be
necessary or useful to enable ChemTrak to take over Selfcare's position of
exclusive distributor and seller of HIV Products in the Territory (to "Assume
the Business"), at the average of the three (3) valuations calculated by the
investment banker. If ChemTrak is interested in exercising such option, it shall
so notify Selfcare within thirty (30) days of receiving the three valuation
figures from the investment banker. Promptly following delivery of such a
notice, the parties shall negotiate in good faith the details of a transaction
for ChemTrak to assume the business at such a valuation. If the parties are
unable or unwilling to close such a transaction within ninety (90) days of
ChemTrak's notice, then ChemTrak may submit the matter to binding mediation to
resolve the terms of such transaction.

(c) An "ACQUISITION TRANSACTION" shall mean a merger or
consolidation of a Party with or into any other entity, including a reverse
triangular merger involving such Party, a sale of all or substantially all of
the assets or business of such Party, or a similar transaction, or a sale of the
business unit to which this Agreement relates, whereby the controlling
shareholders of a Party before the transaction own less than 50% of the shares
of the Party after the transaction.

10.3 TERMINATION FOR MATERIAL BREACH. If either Party is in material
breach of this Agreement, the non-breaching Party may give written notice to the
breaching Party of its intention to terminate this Agreement, and this Agreement
shall terminate sixty (60) days after the giving of such notice unless during
the 60-day period the breach has been cured. If the allegedly breaching Party
files a court action or initiates an arbitration proceeding denying the breach,
then both Parties shall continue to perform this Agreement pending resolution of
such action.

10.4 CONSEQUENCES OF TERMINATION. Upon the effective date of expiration
or early termination of this Agreement, the following shall occur:

(a) TERMINATION OF LICENSES. The licenses set forth in Section
2.1 shall terminate and Selfcare shall immediately discontinue all marketing,
sales and distribution of the HIV Product in the Territory. Selfcare shall
discontinue all use in the Territory of ChemTrak's trade name and trademarks,
and the ChemTrak Technology, including the

20.
<PAGE> 25
Software. Selfcare shall return all copies of the Software in any form to
ChemTrak. Notwithstanding the foregoing, Selfcare shall have the right, for a
period not to exceed ninety (90) days, to sell any HIV Products remaining in
inventory to the extent the same are not repurchased by ChemTrak pursuant to
Section 10.3(c) below. Selfcare shall also have the obligation to complete
testing, report results and provide counseling services for any customers to
whom Selfcare has sold Sample Collection Kits. Except to the extent of selling
its remaining inventory as permitted by Section 10.3(c) below, after termination
Selfcare shall not represent or hold itself out as being an authorized
distributor or sales representative for the HIV Product in the Territory or
engage in any practices which might make it appear that Selfcare is such an
authorized distributor or sales representative.

(b) ACCRUED RIGHTS AND OBLIGATIONS. The rights of either party
which may have accrued up to the date of such termination shall not be affected,
and Selfcare shall not be relieved of (i) any obligation for any sums due to
ChemTrak for HIV Products covered by Purchase Orders accepted prior to
expiration or termination and due to be delivered within the ninety (90) day
period following the effective date of such expiration or termination (including
any amount due but not yet paid, with all such amounts being nonrefundable and
not subject to any setoff or similar right) or (ii) any confidentiality
obligation under Article 8 hereof. The due date of all outstanding invoices to
Selfcare for HIV Products shall automatically be accelerated to become due and
payable by immediate wire transfer on the effective date of termination, even if
longer terms have been previously agreed to. ChemTrak may, at its sole option,
(i) cancel all orders or portions thereof remaining unshipped as of the
effective date of termination and (ii) repurchase Selfcare's remaining inventory
of HIV Products in accordance with Section 10.4(c) below.

(c) REPURCHASE OF INVENTORY. ChemTrak shall have the right,
but not the obligation, to repurchase from Selfcare all of the HIV Product (to
the extent that the same are in new and original condition) then in Selfcare's
inventory, F.O.B. Selfcare's facilities, whereupon ChemTrak shall repay to
Selfcare the actual price paid by Selfcare to ChemTrak for such returned HIV
Products less any and all amounts owing and uncontested, for whatever reason,
from Selfcare to ChemTrak.

(d) CONFIDENTIAL INFORMATION. Each party shall return to the
other or destroy, at the other party's instruction, all Confidential Information
of the other party, with the exception of records required to be maintained to
be in compliance with U.S. FDA regulations and other regulations applicable to
the Territory, including advertising matter; provided, however, that in the
event of early termination for any reason other than material breach by
ChemTrak, ChemTrak shall have the right to retain copies of, and use for its own
internal marketing purposes, any Marketing Data (as defined under Section 6.3),
provided Selfcare has given prior written consent.

21.
<PAGE> 26
(e) INSPECTION RIGHT. Each party shall make available for
copying and inspection by a third party auditor all books and records of such
party required to be kept pursuant to Section 7.6 for a period of one (1) year
following the effective date of termination.

10.5 NO OTHER RIGHTS UPON TERMINATION. Neither party hereto shall be
responsible to the other for compensation, damages, or otherwise by reason of
termination of this Agreement, except for termination due to material breach
pursuant to Section 10.3, at any time, except as provided herein. Selfcare
understands and acknowledges that any contracts or other arrangements it enters
into with any third parties with respect to the HIV Products will be subject and
subordinate to the rights of termination set forth in this Agreement.

10.6 SURVIVING OBLIGATIONS. Termination or expiration of this Agreement
shall not relieve either party of its obligations under Sections 2.2, 7.6, 10.4,
10.5, 10.6 and Articles 8, 11 and 13 hereof.

ARTICLE 11
WARRANTIES; INDEMNIFICATION

11.1 SAMPLE COLLECTION KIT WARRANTY. ChemTrak warrants that the Sample
Collection Kits supplied by ChemTrak under this Agreement will be of
merchantable quality and will strictly conform to the Sample Collection Kit
specifications mutually agreed to by the parties. In no event shall ChemTrak be
liable under this Agreement for any failure of any Sample Collection Kit to meet
the specifications due to improper use, storage or shipment by Selfcare or
anyone receiving the Sample Collection Kit directly or indirectly from Selfcare.

(a) INTELLECTUAL PROPERTY WARRANTY. ChemTrak warrants that it
has the authority and right to grant the rights licensed to Selfcare, with
respect to any of the intellectual property defined in Section 9.1.

11.2 SELFCARE WARRANTIES. Selfcare warrants that all testing of blood
samples conducted under this Agreement will be carried out strictly in
accordance with the procedures described in the PMA submitted by ChemTrak to the
U.S. FDA for the HIV Product (or amended, as required by a country's regulatory
authorities) and in accordance with all applicable requirements of regulatory
authorities in the Territory. Selfcare further warrants that all reporting of
results to customers and counseling services provided under this Agreement will
be carried out in a professional manner in accordance with applicable regulatory
requirements and professional standards prevalent in the Territory, including
all requirements and standards concerning confidentiality of results.

22.
<PAGE> 27
11.3 WARRANTY DISCLAIMERS AND LIMITATIONS. EXCEPT AS SET FORTH IN
SECTION 11.1 ABOVE, CHEMTRAK MAKES NO WARRANTIES WITH RESPECT TO THE HIV
PRODUCT, EXPRESS OR IMPLIED, AND SPECIFICALLY WITHOUT LIMITATION, CHEMTRAK
DISCLAIMS ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OR FREEDOM
FROM INFRINGEMENT OF THIRD PARTY INTELLECTUAL PROPERTY RIGHTS. EXCEPT AS SET
FORTH ABOVE, CHEMTRAK NEITHER ASSUMES NOR AUTHORIZES ANY PERSON TO ASSUME ANY
LIABILITY OR WARRANTY IN CONNECTION WITH THE HIV PRODUCTS. IN THE EVENT OF A
BREACH BY CHEMTRAK OF THE WARRANTY SET FORTH IN THE FIRST PARAGRAPH OF SECTION
11.1 ABOVE, SELFCARE'S SOLE REMEDY WILL BE TO RETURN THE AFFECTED HIV PRODUCTS
FOR REPAIR, REPLACEMENT OR CREDIT OF THE PURCHASE PRICE, AT CHEMTRAK'S OPTION.

11.4 INDEMNIFICATION.

(a) ChemTrak hereby agrees to defend, indemnify and hold
Selfcare and its agents and employees harmless from and against any and all
liabilities, expenses and/or loss, including reasonable attorneys' fees
("Losses") resulting directly or indirectly from third party suits, claims,
actions or demands, to the extent such suits, claims actions or demands result
from (i) the failure of Sample Collection Kits supplied by ChemTrak to meet the
warranty set forth in the first paragraph of Section 11.1, (ii) breach of the
intellectual property warranty set forth in Section 11.1(a), except to the
extent that Sections 9.2 and 9.3 apply to any such third party action, (iii) the
application of HIV Product testing procedures carried out as described in the
PMA submitted by ChemTrak to the U.S. FDA for the HIV Product, or (iv) the
recklessness, gross negligence, or willful misconduct of ChemTrak or its
officers, employees or agents, and in each case do not result from the
recklessness, negligence or wrongdoing of Selfcare or its officers, employees or
agents.

(b) Selfcare hereby agrees to defend, indemnify and hold
ChemTrak and its agents and employees harmless from and against any and all
liabilities, expenses and/or loss, including reasonable attorneys' fees
("Losses") resulting directly or indirectly from third party suits, claims,
actions or demands, to the extent such suits, claims actions or demands result
from (i) the sale or distribution of HIV Products by Selfcare (other than losses
provided for in Section 9.3) or use by any purchasers, including any improper
sales by Selfcare to customers who are located in any territory outside the
Territory, (ii) the breach of any representation made or warranty given by
Selfcare with respect to the HIV Product to customers (other than the labeling
for the HIV Product as approved by applicable regulatory authorities in the
Territory) or to ChemTrak under this Agreement, including the warranties made in
Section 11.2, (iii) services rendered by Selfcare in connection with the HIV
Product, including but not limited to counseling services, or (iv)

23.
<PAGE> 28
the recklessness, gross negligence, or willful misconduct of Selfcare or its
officers, employees or agents, and do not result from matters subject to
indemnification by ChemTrak under Section 11.4(a) above.

(c) If a Party intends to seek indemnification under this
Section 11.4, it shall so notify the other Party. The Party seeking
indemnification under this Article 11 (the "Indemnified Party") shall (i) give
the other Party (the "Indemnifying Party") notice of the relevant claim, (ii)
cooperate with the Indemnifying Party, at the Indemnifying Party's expense, in
the defense of such claim, and (iii) give the Indemnifying Party the
right to control the defense and settlement of any such claim, except that the
Indemnifying Party shall not enter into any settlement that adversely affects
the Indemnified Party's rights or interest without the Indemnified Party's prior
written approval. The Indemnified Party shall have no authority to settle any
claim on behalf of the Indemnifying Party.

11.5 INSURANCE. Prior to any distribution of HIV Products, Selfcare
shall obtain and maintain in effect insurance policies providing general
liability, product liability and contractual liability coverage. Each such
insurance policy shall provide coverage sufficient to cover all claims with
respect to any HIV Products sold under this Agreement and to cover Selfcare's
indemnification obligation under this Agreement and shall name ChemTrak, its
directors, officers, employees and agents as additional insureds. At the request
of ChemTrak, Selfcare will provide ChemTrak with complete copies of such
policies in order for ChemTrak to confirm that such policies provide sufficient
coverage. Selfcare shall notify ChemTrak at least thirty (30) days prior to any
expiration or termination of any such policy.

ARTICLE 12
REPRESENTATIONS AND WARRANTIES

12.1 REPRESENTATION AND WARRANTIES OF CHEMTRAK. ChemTrak hereby
represents and warrants as follows:

(a) CORPORATE POWER. ChemTrak is duly organized and validly
existing under the laws of the state of Delaware and has full corporate power
and authority to enter into this Agreement and to carry out the provisions
hereof.

(b) DUE AUTHORIZATION. ChemTrak is duly authorized to execute
and deliver this Agreement and to perform its obligations hereunder.

(c) BINDING AGREEMENT. This Agreement is a legal and valid
obligation binding upon ChemTrak and is enforceable in accordance with its
terms. The execution, delivery and performance of this Agreement by ChemTrak
does not conflict with any agreement, instrument or understanding, oral or
written, to which it is a Party or by which

24.
<PAGE> 29
it may be bound, nor violate any law or regulation of any court, governmental
body or administrative or other agency having authority over it.

12.2 REPRESENTATIONS AND WARRANTIES OF SELFCARE. Selfcare hereby
represents and warrants as follows:

(a) CORPORATE POWER. Selfcare is duly organized and validly
existing under the laws of Delaware and has full corporate power and authority
to enter into this Agreement and to carry out the provisions hereof.

(b) DUE AUTHORIZATION. Selfcare is duly authorized to execute
and deliver this Agreement and to perform its obligations hereunder.

(c) BINDING AGREEMENT. This Agreement is a legal and valid
obligation binding upon Selfcare and is enforceable in accordance with its
terms. The execution, delivery and performance of this Agreement by Selfcare
does not conflict with any agreement, instrument or understanding, oral or
written, to which it is a Party or by which it may be bound, nor violate any law
or regulation of any court, governmental body or administrative or other agency
having authority over it.

ARTICLE 13
MISCELLANEOUS

13.1 ASSIGNMENT. Neither Party shall assign any of its rights or
delegate any of its duties under this Agreement without the prior written
consent of the other, except that either Party may assign this Agreement without
such consent to any Affiliate or successor by merger or sale of substantially
all of its business unit to which this Agreement relates. Section 10.2 sets
forth additional provisions regarding a change of control of either party. Any
attempted assignment or delegation in contravention of this Article shall be
void and of no effect.

13.2 EXPORT LAW COMPLIANCE. Selfcare understands and recognizes that
the HIV Products and other materials made available to it hereunder may be
subject to the export administration regulations of the United States Department
of Commerce and other United States government regulations related to the export
of medical HIV Products. Selfcare represents that it is familiar with and agrees
to comply with all such regulations, including any future modifications thereof,
in connection with the distribution of the HIV Product. Selfcare agrees that it
will not sell or distribute the HIV Product or clinical data relating to the HIV
Product without complying with all applicable regulations. Selfcare hereby
agrees to indemnify and hold ChemTrak harmless from any breach of this Section
13.2.

25.
<PAGE> 30
13.3 FOREIGN CORRUPT PRACTICES ACT. Selfcare hereby agrees that it
shall comply with the requirements of the United States Foreign Corrupt
Practices Act and shall refrain from any payments to third parties which would
cause ChemTrak or Selfcare to violate such Act. Selfcare hereby agrees to
indemnify and hold harmless ChemTrak from any breach of this Section 13.3.

13.4 BENEFITS AND BINDING NATURE OF AGREEMENT. This Agreement shall be
binding upon, and inure to the benefit of, the successors, executors, heirs,
representatives, administrators and permitted assigns of the Parties hereto.

13.5 ENTIRE AGREEMENT; AMENDMENTS. This Agreement, together with all
exhibits attached and referenced herein, embodies the final, complete and
exclusive understanding between the Parties, and replaces and supersedes all
previous agreements, understandings or arrangements between the Parties with
respect to its subject matter, including but not limited to the Confidentiality
Agreement between the parties dated June 26, 1996 and the non-binding Letter of
Intent between the parties dated as of August 28, 1996, as amended. All
information exchanged by the parties prior to the Effective Date pursuant to the
Confidentiality Agreement shall be deemed to be Confidential Information subject
to the terms of this Agreement, including but not limited to Article 8. No
modification or waiver of any terms or conditions hereof, nor any
representations or warranties shall be of any force or effect unless such
modification or waiver is in writing and signed by an authorized officer of each
Party hereto.

13.6 NO OTHER TERMS AND CONDITIONS. The Parties intend that this
Agreement set forth all of the terms and conditions applicable to the sale of
the HIV Product and accordingly agree that all provisions, terms and conditions
of any purchase order, sales or order acknowledgment, invoice or other business
form or document (a "Form"), unless an amendment to this Agreement in accordance
with Section 13.5 hereof, shall be superseded hereby and therefore shall be
disregarded and have no force and effect. If a Form purports to be conditioned
in any manner on agreement to and/or acceptance of any provisions, terms and
conditions other than those set forth herein, then such condition is hereby
waived. In no event shall either Party be bound by any provisions, terms or
conditions relating to the subject matter of this Agreement not set out herein.

13.7 FORCE MAJEURE. Neither Party shall be liable to the other for its
failure to perform any of its obligations under this Agreement, except for
payment obligations, during any period in which such performance is delayed
because of, or rendered impracticable or impossible due to, unforeseen
circumstances beyond its reasonable control, including without limitation, acts
of God, fire, flood, war or labor unrest.

13.8 NOTICE. All notices concerning this Agreement shall be written in
the English language and shall be deemed to have been received (a) two (2) days
after being

26.
<PAGE> 31
properly sent by commercial overnight courier, or (b) one (1) day after being
transmitted by confirmed facsimile, in each case addressed to the address below:

If to ChemTrak:

ChemTrak Incorporated
929 E. Arques Avenue
Sunnyvale, California 94086-4520
Attention: President
Telephone: (408) 773-8156
Facsimile: (408) 524-9464

If to Selfcare:

Selfcare, Inc.
200 Prospect Street
Waltham, Massachusetts 02154
Attention: President
Telephone: (617) 647-3900
Facsimile: (617) 647-3939

13.9 ENGLISH LANGUAGE; GOVERNING LAW. This Agreement has been prepared
in the English language and the English language shall control its
interpretation. All information to be provided by the parties to each other
shall be in English, and Selfcare shall be responsible for all necessary
translation. This Agreement shall be governed by the laws of the State of
California as applied to agreements executed and performed entirely in
California by California residents.

13.10 WAIVER. Any waiver (express or implied) by either Party of any
default or breach of this Agreement shall not constitute a waiver of any other
or subsequent default or breach.

13.11 SEVERABILITY. Each Party hereby agrees and acknowledges that this
Agreement fairly sets forth the business understanding of the Parties. In the
event that any provision of this Agreement shall be unenforceable or invalid
under any applicable law or be so held by applicable court decision, the Parties
shall change such provision or this Agreement so as to best accomplish the
overall allocation of economic and other benefits between the Parties reflected
in this Agreement, within the limits of applicable law or applicable court
decisions.

27.
<PAGE> 32
13.12 RIGHTS AND REMEDIES CUMULATIVE. Except as expressly provided
herein, the rights and remedies provided in this Agreement shall be cumulative
and not exclusive of any other rights and remedies provided by law or otherwise.

13.13 INDEPENDENT CONTRACTORS. Each Party shall act as an independent
contractor under the terms of this Agreement. Neither Party is, nor shall it be
deemed to be, an employee, agent, co-venturer, franchisee or legal
representative of the other for any purpose. Neither Party shall be entitled to
enter into any contracts in the name of, or on behalf of the other, nor shall
either Party be entitled to pledge the credit of the other in any way or hold
itself out as having authority to do so.

13.14 COUNTERPARTS. This Agreement may be executed in counterparts with
the same force and effect as if each of the signatories had executed the same
instrument.

IN WITNESS WHEREOF, the Parties have each caused this Agreement to be
signed and delivered by their duly authorized representatives as of the date
first written above.

CHEMTRAK INCORPORATED SELFCARE, INC.

By: /s/ Edward F. Covell By: /s/ Anthony H. Hall
----------------------------- ------------------------------

Name: Edward F. Covell Name: Anthony H. Hall
----------------------------- ------------------------------

Title: President Title: Chief Financial Officer
----------------------------- ------------------------------

28.
<PAGE> 33
EXHIBIT A

STANDARD COST OF GOODS

Standard Cost of Goods:

a. Direct and Indirect Materials
b. Direct and Indirect Labor
c. Payments made to Third Parties
d. Overhead (Indirect Production Costs) - expenses incurred in
support of the manufacturing operation as well as those caused by
the process of converting raw materials into HIV Product units.

Items to be included in overhead shall be consistent with Generally
Accepted Accounting Principles consistently applied, and shall include but
not be limited to:

Operations administration, purchasing, engineering, maintenance,
utilities, building and grounds, quality assurance (including
samples), receiving and stores department expenses, shipping
department expenses, freight, depreciation (building and
equipment). Also included are some labor related overhead expenses
such as: Retirement Plan Costs, Payroll Taxes, Vacation Pay, Sick
Leave, Holiday Pay, Separation Pay, Shift Premium (incentive for
other than the day shift work), Overtime Premium (i.e. -
incremental portion over straight time pay).
<PAGE> 34
EXHIBIT B

CHEMTRAK TECHNOLOGY

[*]

the "Software," as defined in the Agreement

PMA # BP950003, together with three supplements filed to date with FDA

Physical Elements of the complete Sample Collection Kit:
Finger Stick Device
Blood Collection Card, with bar code
Directions for Use
Information About AIDS insert
Tyvek Bag for Collection Card
Return package

REGULATORY FORECASTS

France: [*]

Germany: [*]

Italy: [*]

Spain: [*]

United Kingdom: [*]

- -------
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.

<PAGE> 1

EXHIBIT 23.1

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration Statements of
ChemTrak, Inc. (Forms S-8, File Numbers 33-55326, 33-45912, 33-55324, 33-82784)
of our report dated January 17, 1997, with respect to the financial statements
of ChemTrak, Inc. included in the Annual Report (Form 10-K) for the year ended
December 31, 1996.

Palo Alto, California
March 28, 1997

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements in the Annual Report on Form 10-K of ChemTrak Incorporated
from the year ended December 31, 1996 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 4,125,000
<SECURITIES> 567,000
<RECEIVABLES> 485,000
<ALLOWANCES> 0
<INVENTORY> 540,000
<CURRENT-ASSETS> 320,000
<PP&E> 2,738,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 8,841,000
<CURRENT-LIABILITIES> 1,381,000
<BONDS> 0
0
0
<COMMON> 12,000
<OTHER-SE> 5,018
<TOTAL-LIABILITY-AND-EQUITY> 8,841,000
<SALES> 2,463,000
<TOTAL-REVENUES> 598,000
<CGS> 3,201,000
<TOTAL-COSTS> 3,201,000
<OTHER-EXPENSES> 6,870,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 875,000
<INCOME-PRETAX> (7,826,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,826,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,826,000)
<EPS-PRIMARY> (0.77)
<EPS-DILUTED> (0.77)

</TABLE>