

       PROSPECTUS PURSUANT TO RULE 424(b)(3) OF THE SECURITIES ACT OF 1933
                             DATED OCTOBER 28, 2004


                                 ASPENBIO, INC.

12,820,486 Shares of Common Stock to be issued to and offered by Selling
Shareholders

     An aggregate of 12,820,486 shares (the "Shares") of no par value Common
Stock (the "Common Stock") of AspenBio Inc. ("us," " we," "AspenBio" or the
"Company") may be offered by certain shareholders (the "Selling Shareholders")
from time to time in the public market. The shares of Common Stock offered
hereby include the resale of: (i) 6,601,681 shares of Common Stock issuable upon
exercise of outstanding warrants and options; and (ii) 6,218,805 shares of
Common Stock outstanding.

     The Common Stock is traded on the Over-The-Counter Bulletin Board under the
symbol "APNB.OB. " On October 15, 2004, the closing bid price of the Common
Stock as reported on the Over-The-Counter Bulletin Board was $.605.

     The Shares will be offered by the Selling Shareholders through dealers or
brokers on the OTC Bulletin Board. The Shares may also be sold in privately
negotiated transactions. Sales through dealers or brokers are expected to be
made with customary commissions being paid by the Selling Shareholders. Payments
to persons assisting the Selling Shareholders with respect to privately
negotiated transactions will be negotiated on a transaction-by-transaction
basis. The Selling Shareholders have advised the Company that prior to the date
of this Prospectus they have made no agreements or arrangements with any
underwriters, brokers or dealers regarding the sale of the Shares. See "Plan of
Distribution." Any commissions and/or discounts on the sale of Shares offered by
the Selling Shareholders will be paid by the Selling Shareholders, and all other
expenses related to the filing of the registration statement to which this
offering relates are being paid by the Company. Other expenses to be paid by the
Company may include the SEC filing fees and costs, printing costs, legal fees
and accounting fees.

     THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

     These securities are speculative and involve a high degree of risk and
immediate substantial dilution to investors. Potential purchasers should not
invest in these securities unless they can afford the risk of losing their
entire investment. See "Risk Factors" on page 4 of this prospectus.



                        Prospectus dated October 28, 2004







<PAGE>


                                TABLE OF CONTENTS



                                                                            Page
                                                                            ----

Forward-Looking Statements....................................................1

Prospectus Summary............................................................1

Risk Factors..................................................................4

Use Of Proceeds...............................................................9

Selling Shareholders..........................................................9

Plan of Distribution.........................................................12

Legal Proceedings............................................................14

Dividend Policy..............................................................15

Management...................................................................15

Security Ownership of Certain Beneficial Owners and Management...............20

Description of Securities....................................................21

Certain Relationships and Related Transactions...............................22

Description of Business......................................................23

Management's Discussion and Analysis of Financial Condition and
Results of Operations........................................................34

Description of Property......................................................42

Market for the Registrant's Common Stock and Related Stockholder Matters.....42

Executive Compensation.......................................................43

Legal Matters................................................................45

Experts......................................................................45

Changes in Accountants.......................................................46

Additional Information.......................................................47

Index to Financial Statements ..............................................F-1








                                       ii
<PAGE>



                           FORWARD LOOKING STATEMENTS


     Statements made in this Prospectus, including statements contained in
information incorporated by reference, that are not historical or current facts
are "forward-looking statements." Reliance should not be placed on
forward-looking statements because they involve known and unknown risks,
uncertainties, and other factors, which may cause actual results, performance,
or achievements to differ materially from those expressed or implied. Any
forward-looking statement speaks only as of the date made. We undertake no
obligation to update any forward-looking statements to reflect events or
circumstances after the date on which they are made.

     Statements concerning the establishments of reserves and adjustments for
dated and obsolete products, expected financial performance, on-going business
strategies and possible future action which we intend to pursue to achieve
strategic objectives constitute forward-looking information. The sufficiency of
such changes, implementation of strategies and the achievement of financial
performance are each subject to numerous conditions, uncertainties, and risk
factors. Factors which could cause actual performance to differ materially from
these forward-looking statements, include, without limitation, management's
analysis of our assets, liabilities, and operations, the failure to sell
date-sensitive inventory prior to its expiration, competition, new product
development by competitors which could render particular products obsolete, the
inability to develop or acquire and successfully introduce new products or
improvements of existing products, problems in collecting receivables, testing
or other delays or problems in introducing our bovine pregnancy test, and
difficulties in obtaining financing on an as-needed basis. These factors are
discussed in this Prospectus under the heading "Risk Factors" and in the
"Management's Discussion and Analysis" section.

                               PROSPECTUS SUMMARY

     The following summary is qualified in its entirety by the detailed
information appearing elsewhere in this Prospectus and the documents
incorporated by reference herein.

The Company
-----------

     AspenBio, Inc. is an emerging biotechnology company engaged in the
discovery, development, manufacture, and marketing of industry-leading products
for animal and human healthcare. Founded in August 2000, the Company was
initially created for the purpose of acquiring the antigen business of Vitro
Diagnostics, Inc. and then leveraging that proprietary knowledge and technology
to develop products with substantial market potential. As a significant supplier
of human antigens, AspenBio manufactures human antigens that are used primarily
as controls to determine whether diagnostic test kits are functioning properly.
The Company currently markets more than 30 products to diagnostic test kit
manufacturers and research facilities. While generating revenues from its core
business, AspenBio is actively developing a broad range of healthcare products
predominantly in the area of animal healthcare.




                                       1
<PAGE>


     By applying its proprietary platform technology to veterinary medicine,
AspenBio gains several competitive advantages. First, since the FDA approval
process for animal products is often less costly and time-consuming than that
for human products, the Company's research and development costs are
substantially reduced and the timeline to product launch is shortened. Secondly,
veterinary medicine represents an area of significant market potential with
relatively limited market competition.

     Two key products currently under development, SurBred 15TM and StayBredTM,
are designed to create more effective breeding programs for artificially
inseminated dairy cows. Since pregnancy is necessary for milk production, more
effective breeding programs not only produce more calves but also increase milk
production per cow and thus the profitability of the dairies. SurBred 15 is an
early detection pregnancy test that is designed to determine pregnancy status
sooner than traditional methods and before the end of the cow's 21-day estrous
cycle, thereby enabling herd managers to artificially inseminate cows twice, not
just once, during the same cycle if the cow is not pregnant. This not only saves
time in helping to achieve pregnancy, but also eliminates duplicate drug and
veterinary costs. The antigen-based blood test is not subject to FDA regulation.
Merial Limited, a joint venture of Merck and Aventis, has the exclusive right to
market and distribute SurBred 15 worldwide, once the product is fully developed.
StayBred, a complementary technology, is a recombinant form of luteinizing
hormone (LH) that we believe will reduce the rate of pregnancy loss. Currently
up to 70% of artificially inseminated pregnant cows absorb or abort. FDA
approval is required prior to the sale of StayBred unless it is sold thru
compounding pharmacies after an ANDA has been filed. Other proprietary products
in the pipeline include a recombinant form of equine gonadotropins for equine
infertility; recombinant forms of bovine and equine FSH for embryo transfer; and
a diagnostic test for appendicitis in humans.

     AspenBio's strategy is to pursue technologies under in-licensing agreements
with universities, research scientists, and doctors; conduct research on the
technologies through various stages of preclinical and clinical development; and
then either out-license or sell the technologies, enter into marketing and
distribution agreements with major pharmaceutical companies, or proceed directly
to product launch.

     More information on these and other product offerings is described under
Business of the Company, below.

     Our principal office is located at 1585 South Perry Street, Castle Rock,
Colorado 80104, telephone number 303-794-2000. Our website is
www.aspenbioinc.com.

The Offering
------------

     Pursuant to this Prospectus, the Selling Shareholders may from time to time
offer all or any portion of an aggregate of 12,820,486 Shares of Common Stock on
the OTC Bulletin Board through underwriters, dealers or brokers or in
independently negotiated transactions. See "Selling Shareholders" and "Plan of
Distribution." Except to the extent of the cash exercise price paid to the
Company upon exercise of warrants for Shares registered under this Prospectus,
the Company will not receive any proceeds from the sale of Shares offered by the
Selling Shareholders. Included in this Prospectus is a total of 6,218,805 shares
of Common Stock outstanding and 6,601,681 shares of Common Stock issuable upon
the exercise of outstanding options and warrants being registered for public
sale.



                                        2
<PAGE>



     As of October 15, 2004, there were 11,713,144 shares of Common Stock
outstanding. The Company's Common Stock is traded on the OTC-Bulletin Board
under the symbol "APNB.OB."



Risk Factors
------------

     The securities offered are speculative and involve a high degree of risk.
Factors which may affect the Company's business and the securities offered
hereby include uncertain financial condition, lack of profitability, dependence
on a few major customers, possible need for additional capital, dependence on
management, substantial debt and the likely adverse effect of this Offering on
the market price of the Company's Common Stock. All of the Shares may be resold
in the public market by the Selling Shareholders. Sales of any of these
previously restricted Shares into the public market could impact the market
adversely so long as this Offering continues. See "Risk Factors" beginning on
page 4.

Use of Proceeds
---------------

     The Company will not receive any proceeds from sales of Shares by the
Selling Shareholders, except to the extent of the cash exercise price paid upon
the exercise of options and warrants for Shares registered under this
Prospectus. All proceeds received from the sale of the Shares offered by the
Selling Shareholders will accrue to the benefit of the Selling Shareholders and
not to the Company.






                                       3
<PAGE>


                                  RISK FACTORS

     The securities offered in this prospectus are highly speculative and
involve a high degree of risk, including among other items the risk factors
described below. If any of the following risks actually occur, our business,
financial condition, results of operations and prospects for growth would likely
suffer. As a result, the trading price of our common stock could decline and you
could lose all or part of your investment. You should carefully consider the
following risk factors and other information in this prospectus before deciding
to invest in the shares.

Risks Related to Our Business
-----------------------------

Our success depends on our ability to develop and commercialize new products.

     Our success depends on our ability to successfully develop new products.
Although we are engaged in human diagnostic antigen manufacturing operations and
all of our revenues are derived from this business, we believe our ability to
substantially increase our revenues and generate net income is contingent on
successfully developing one or more of our pipeline products. Our ability to
develop any of the pipeline products is dependent on a number of factors,
including funding availability to complete development efforts, to adequately
test and refine products, and to commercialize our products, thereby generating
revenues once development efforts prove successful. We have encountered in the
past and may again encounter in the future problems in the testing phase for
different pipeline products, sometimes resulting in substantial setbacks in the
development process. There can be no assurance that we will not encounter
similar setbacks with the products in our pipeline, or that funding from outside
sources and our revenues will be sufficient to bring any or all of our pipeline
products to the point of commercialization.

Our Distribution Agreement with Merial could be terminated.

     Our Agreement with Merial Limited ("Merial") for SurBred15(TM) contemplated
a product launch date of October 1, 2003. The sales goals under the Agreement
state that the goals will be prorated by calendar quarter since the product
launch did not occur by October 1, 2003. We are actively engaged in research and
development on this product, but do not yet have a satisfactory working
prototype. Consequently, progress payments from Merial have been delayed, and
until we reach certain milestones, continued delays in developing a prototype
could result in substantial modifications to the Merial Agreement, and/or
possibly cancellation. As a result of sensitivity issues encountered in making
the test into a commercially acceptable rapid diagnostic test we have recently
engaged a specialist with extensive experience in whole blood rapid diagnostic
tests to assist us in the development of this product. Although Merial has
expressed its desire to continue working with us, if we are unable to satisfy
Merial and/or successfully develop a prototype, Merial may discontinue its
support of this product and cancel the Agreement and, in the event of canceling,
may request a refund of 50% ($100,000) of the advance development fees they have
paid to date. The inability to successfully develop a prototype and/or
cancellation of the Agreement could have a material adverse effect on our
business plan and projected growth.




                                        4
<PAGE>


Our success will depend in part on establishing effective strategic partnerships
and business relationships.

     A key aspect of our business strategy is to establish strategic
partnerships. We currently have license arrangements with the University of
Idaho, the University of Wyoming and Washington University (St. Louis, MO).
Under a separate agreement with Washington University, in late 2003 the Company
agreed to fund $46,550 payable over a six-month period for consulting and
research assistance on one of the Company's products in development. It is
likely that we will seek other strategic alliances. We also intend to rely
heavily on companies with greater capital resources and marketing expertise to
market some of our products, such as our agreement with Merial. While we have
identified certain candidates for other potential products, we may not reach
definitive agreements with any of them. Even if we enter into these
arrangements, we may not be able to maintain these collaborations or establish
new collaborations in the future on acceptable terms. Furthermore, these
arrangements may require us to grant certain rights to third parties, including
exclusive marketing rights to one or more products, or may have other terms that
are burdensome to us, and may involve the acquisition of our securities. Our
partners may decide to develop alternative technologies either on their own or
in collaboration with others. If any of our partners terminate their
relationship with us or fail to perform their obligations in a timely manner, or
if we fail to perform our obligations in a timely manner, the development or
commercialization of our technology in potential products may be affected or
delayed.


We have limited manufacturing experience, and we may experience manufacturing
problems that limit the growth of our revenue.

     We purify human and animal antigens and tumor markers. In 2003, our
revenues from these sales were approximately $651,000. We intend to introduce
new products with substantially greater revenue potential. We may seek to
manufacture these products in-house or through contractual arrangements with
third parties. In either event, we may not be able to produce sufficient
quantities at an acceptable cost. In addition, we may encounter difficulties in
production due to, among other things, quality control, quality assurance and
component supply. These difficulties could reduce sales of our products,
increase our costs, or cause production delays, all of which could damage our
reputation and hurt our profitability. To the extent that we enter into
manufacturing arrangements with third parties, we will depend on them to perform
their obligations in a timely manner and in accordance with applicable
government regulations.

Our success depends upon our ability to protect our intellectual property
rights.

     Our success will partially depend on our ability to obtain and enforce
patents relating to our technology and to protect our trade secrets. We may not
receive any patents. In addition, third parties may challenge, narrow,
invalidate or circumvent our patents. The patent position of biotechnology
companies is generally highly uncertain, involves complex legal and factual
questions and has recently been the subject of much litigation. Neither the U.S.
Patent Office nor the courts have a consistent policy regarding breadth of
claims allowed or the degree of protection afforded under many biotechnology
patents.



                                      5
<PAGE>


     In an effort to protect our unpatented proprietary technology, processes
and know-how, we require our employees and consultants to execute
confidentiality agreements. However, these agreements may not provide us with
adequate protection against improper use or disclosure of confidential
information. These agreements may be breached, and we may not have adequate
remedies for any such breach. In addition, in some situations, these agreements
may conflict, or be subject to, the rights of third parties with whom our
employees or consultants have previous employment or consulting relationships.
Also, others may independently develop substantial proprietary information and
techniques or otherwise gain access to our trade secrets. We intend to market
our products in many different countries some of which we will not have patents
in or applied for. Different countries have different patent rules and we may
sell in countries that do not honor patents and in which the risk that our
products could be copied and we would not be protected would be greater.

We may be unable to retain key employees or recruit additional qualified
personnel.

     Because of the specialized scientific nature of our business, we are highly
dependent upon qualified scientific, technical, and managerial personnel. There
is intense competition for qualified personnel in our business. Therefore, we
may not be able to attract and retain the qualified personnel necessary for the
development of our business. A loss of the services of existing personnel, as
well as the failure to recruit additional key scientific, technical and
managerial personnel in a timely manner would harm our development programs and
our business.

     Roger Hurst has been our President and our largest shareholder since our
inception. On August 30, 2004, we entered into an employment agreement with Mr.
Hurst, and the agreement provides for exclusive use of his services to the
Company for a minimum of one year.

Our competitors may have greater resources or research and development
capabilities than we have, and we may not have the resources necessary to
successfully compete with them.

     Our business strategy has been to create a niche in the protein
purification area, which is from where all of our current revenues are
generated. We are aware of only one competitor commercially selling products in
this area, Dr. Albert Parlow, a UCLA professor. The biotechnology business is
highly competitive, and we may face increasing competition. We expect that many
of our competitors will have greater financial and human resources, more
experience in research and development, and more established sales, marketing
and distribution capabilities than we have. In addition, the healthcare industry
is characterized by rapid technological change. New product introductions or
other technological advancements could make some or all of our products
obsolete.

We do not currently have insurance that covers product liability.




                                      6
<PAGE>


     Our insurance policies do not currently cover claims and liability arising
out of defective products. As a result, if a claim were brought against us, we
would not have any insurance that would apply and would have to pay any costs
directly. Because our products have only been used as part of diagnostic test
kits, we did not believe that this insurance would be necessary. However, as we
expand into other products, the risk of claims will increase and we will need to
evaluate the need to obtain insurance.

If we fail to obtain FDA approval, we cannot market certain products in the
United States.

     Therapeutic products to be used by humans must be approved by the FDA prior
to marketing and sale. This would apply to our plan to potentially market the
appendicitis test. In order to obtain approval, we must complete extensive
clinical trials and comply with numerous standards; this process can take
substantial amounts of time to complete. Even if we complete the trials, FDA
approval is not guaranteed. FDA approval can be suspended or revoked, or we
could be fined, based on a failure to continue to comply with those standards.

     FDA approval is also required prior to marketing and sale for therapeutic
products that will be used on animals, and can also require considerable time to
complete. New drugs for companion animals must receive New Animal Drug
Application approval. This type of approval would be required for the use of our
therapeutic equine and bovine protein products. The requirements for obtaining
FDA approval are similar to those for human drugs described above and may
require similar clinical testing. Approval is not assured and, once FDA approval
is obtained, we would still be subject to fines and suspension or revocation of
approval if we fail to comply with ongoing FDA requirements. The Company is
considering selling some of its products thru compounding pharmacies, thereby,
circumventing for a period of time, the need for FDA approval prior to making
sales of product so long as an ANDA has been filed. There are certain risks
associated with this approach.

If we fail to obtain regulatory approval in foreign jurisdictions, then we
cannot market our products in those jurisdictions.

     We plan to market some of our products in foreign jurisdictions.
Specifically, we expect that the bovine pregnancy test will be aggressively
marketed in foreign jurisdictions. We may market our therapeutic products in
foreign jurisdictions, as well. We may need to obtain regulatory approval from
the European Union or other jurisdictions to do so and obtaining approval in one
jurisdiction does not necessarily guarantee approval in another. We may be
required to conduct additional testing or provide additional information,
resulting in additional expenses, to obtain necessary approvals.


Risks Related to Our Securities
-------------------------------

We may require additional capital in the future and we cannot assure you that
capital will be available on reasonable terms, if at all, or on terms that would
not cause substantial dilution to your stock holdings.

     We have historically needed to raise capital to fund our operating losses.
We expect to continue to incur operating losses through the 2004 calendar year
and possibly longer. If capital requirements vary materially from those
currently planned, we may require additional capital sooner than expected. There
can be no assurance that such capital will be available in sufficient amounts or
on terms acceptable to us, if at all. Any sale of a substantial number of
additional shares may cause dilution to your investment and could also cause the
market price of our Common Stock to decline. Due to our continued losses and
limited capital our accountants may issue an opinion that questions our going
concern status at year end that could negatively affect our ability to raise
capital.




                                      7
<PAGE>



We do not anticipate paying any dividends in the foreseeable future.

     The Company does not intend to declare any dividends in the foreseeable
future. Investors who require income from dividends should not purchase these
Shares.

Our common stock is classified as a "penny stock" under SEC rules and the market
price of our common stock is highly unstable.

     A limited trading market exists for our common stock on the OTC Bulletin
Board. Since inception of trading in January 2003, our common stock has not
traded at $5 or more per share. Because our stock is not traded on a stock
exchange or on the Nasdaq National Market or the Nasdaq Small Cap Market, if the
market price of the common stock is less than $5 per share, the common stock is
classified as a "penny stock." SEC Rule 15g-9 under the Exchange Act imposes
additional sales practice requirements on broker-dealers that recommend the
purchase or sale of penny stocks to persons other than those who qualify as an
"established customer" or an "accredited investor." This includes the
requirement that a broker-dealer must make a determination that investments in
penny stocks are suitable for the customer and must make special disclosures to
the customers concerning the risk of penny stocks. Many broker-dealers decline
to participate in penny stock transactions because of the extra requirements
imposed on penny stock transactions. Application of the penny stock rules to our
common stock reduces the market liquidity of our shares, which in turn affects
the ability of holders of our common stock to resell the shares they purchase,
and they may not be able to resell at prices at or above the prices they paid.
Furthermore, at present there is relatively limited trading in our stock which
could cause our price to fall if shares are sold into the market.


We have a large number of outstanding options and warrants, and we may issue
additional shares, options and warrants during and subsequent to the Offering.

        As of October 15, 2004, 11,713,144 shares of our common stock and an
aggregate of 7,475,948 options and warrants were outstanding and another 65,000
shares reserved for issuance under our 2002 Stock Incentive Plan but not yet
granted. We may issue additional shares upon exercise of warrants or options, or
in connection with certain business development or license agreements. We may
issue additional shares and warrants in order to raise additional capital on an
as-needed basis. The issuance of additional shares, options or warrants may
cause dilution of your investment.


We issued securities in 2002 which may not qualify for the Private Offering
Exemption.



                                      8
<PAGE>


     In July, 2002, we issued certain securities in reliance on the private
offering exemption from registration to sophisticated, experienced investors who
were our shareholders prior to these transactions and who are knowledgeable
about the business, financial condition and the risks of investing in the
securities. These transactions were made during the pendency of the processing
of a registration statement. Under certain circumstances, the SEC has determined
that separate offerings should be integrated which has the effect of destroying
the private offering exemption. We do not believe that these transactions should
be integrated with the sale of our shares by selling shareholders pursuant to
the prospectus, which was part of the registration statement. Nonetheless, the
SEC may take the position that the offering should be integrated and could
challenge the availability of the private offering exemption to us. In that
event, we could be subject to enforcement proceedings brought by the SEC and
subject to injunctive or other relief, and could be subject to possible civil
action by the two purchasers of these securities. It is also possible that the
SEC could require us to make a rescission offer through a registration statement
to the purchasers of the securities. Any such developments could be expensive
and could harm our reputation and result in an adverse impact on our business
and financial condition.

Because one of our shareholders exercises voting power of more than 17% of our
common stock, he may be able to significantly influence the outcome of all
matters submitted to our shareholders for approval, regardless of the
preferences of the minority shareholders.

     Roger D. Hurst currently owns 17.1% of our outstanding common stock.
Accordingly, he may have the ability to control matters affecting us, including
the composition of our board of directors, any determinations with respect to
mergers, or other business combinations, our acquisition or disposition of
assets and our financings. In addition, Mr. Hurst may be able to prevent or
cause a change in control of our company and may be able to amend our articles
of incorporation and bylaws without the approval of any other shareholder,
depending on the number of votes cast on any proposal. His interests may
conflict with the interests of our other shareholders.


                                 USE OF PROCEEDS

     Except for the cash exercise price paid to the Company upon exercise of
warrants to purchase Shares registered under this Prospectus, the Company will
not receive any proceeds from sales of Shares by the Selling Shareholders. All
proceeds received from the sale of the Shares offered by the Selling
Shareholders will accrue to the benefit of the Selling Shareholders and not to
the Company.


                             SELLING SHAREHOLDERS


     The following table sets forth information known to the Company regarding
the beneficial ownership of Shares of the Company's Common Stock as adjusted to
reflect the sale of the shares offered hereby by each Selling Shareholder. The
information set forth below is based upon information concerning beneficial
ownership provided to the Company by each Selling Shareholder. Except as
otherwise indicated below, each of the persons named in the table has sole
voting and investment power with respect to the shares set forth opposite such
person's name.



                                      9
<PAGE>

<TABLE>
<CAPTION>

                                        Number of Shares     Number of       Number of Shares
                                         Owned Prior to       Shares           Owned After
          Name                            Offering (1)    Offered Hereby (1)   Offering (1)
          ----                            -------------  -------------------  ------------
<C>                                       <C>                     <C>          <C>
Aaron Elkin                                    50,000         50,000                --
Adam Larson                                    25,000         25,000                --
Alexander T. Topping Jr                        91,429         91,429                --
Anders Brag                                   571,429        571,429                --
Austin Lewis                                  200,000        200,000                --
Berry-Shino Securities, Inc. (2)              376,665        376,665                --
Brian Elliot Peierls                          109,590         80,000            29,590
Bruce Deal                                    125,000        100,000            25,000
Brunner Brothers Land Partnership (3)          25,000         25,000                --
Cambridge Holdings, Ltd. (4)                  970,846        970,846
Cheri L. Kraft                                 10,000         10,000
Christopher Pusey                              15,065         15,065                --
Daniel Luskind                                 82,480         82,480                --
David Stretmater                              180,000        180,000                --
Deborah Gold                                  100,000        100,000                --
Deborah Salerno                               200,000        200,000                --
Deborah Ziwot                                  66,116         66,116                --
E. Jeffrey Peierls                            169,543        120,000            49,543
Earnco MPPP (5)                                23,590         23,590                --
Ernest D. Bianchi, Jr                             600            600                --
Fellowship of Christian Cowboys (6)            25,000         25,000                --
Gail Schoettler (7)                           115,000        115,000                --
Gerald C. Dohm, Jr                             20,000         20,000                --
Gisele Ann Denton                               8,000          8,000                --
Greg Stiegmann                                 50,000         50,000                --
Gregory Pusey (4)                             472,160        372,160           100,000
Gregory Pusey - IRA                            15,901         15,901                --
Living Trust of Harold Richard Grisham        137,143        137,143                --
Harvey, Michael & Lyn                          40,000         40,000                --
Henry S. Krauss                                82,480         82,480                --
Herbert Weisberger                             20,000         20,000                --
Howard Lieber (8)                             207,797        207,797                --
Hugh S. or Martha S. McCampbell                10,000         10,000                --
Insiders Trend Fund (9)                       200,000        200,000                --
Jason Kraft                                     5,000          5,000                --
Jeffrey McGonegal (10)                        417,643        117,643           300,000
Jeremy Newman                                  22,250         12,250            10,000
Jerry Wyatt                                     4,000          4,000                --
Jill Pusey                                     40,000         40,000                --
Jill Pusey - IRA Account                       16,509         16,509                --
Jill Pusey CDN\ Jacquline Pusey                13,540         13,540                --
Joel Gold                                      50,000         50,000                --
John Altshuler - Estate                        10,000         10,000                --
John P. O'Shea (11)                           401,608        401,608                --
Jonathan B. Dangar                              8,076          8,076                --


                                       10
<PAGE>


Joseph Militello                               12,500         12,500                --
JW Roth                                       153,000          3,000           150,000
Kathleen Lieber                                20,000         20,000                --
Kevin M. Cox                                  150,000        150,000                --
Kilyn Roth                                    415,142         57,142           358,000
Lucas Larson                                   25,000         25,000                --
Mathis Family Partners, Ltd. (5)               30,000         30,000                --
Meadowbrook Opp. Fund LLC (12)              1,228,571      1,228,571                --
Michael G. Baker                               66,116         66,116                --
Michael Jarvis                                 20,000         20,000                --
Michael R. Ullrich                              2,750          2,750                --
Michael Smith (13)                            746,903        713,281            33,622
Michal R. Ullrich                               2,750          2,750                --
Paul and Linda Marrs                           30,000         30,000                --
Peter Melhado                                 338,570        228,570           110,000
Polaris Partners LP (14)                      685,714        685,714                --
Richard Huttner                                12,500         12,500                --
Richard Louise                                 47,728         47,728                --
Robert Bearman                                 22,000         10,000            12,000
Robert Hudak                                   30,000         30,000                --
Robert Welsh                                   40,000         40,000                --
Rodney Nuss                                    12,500         12,500                --
Roger Hurst (15)                            2,005,143          5,143         2,000,000
Roger W. Miller                               228,572        228,572                --
Ronald Gordon                                  50,000         50,000                --
Scott C. Bowman                                 5,876          5,876                --
Scott Menefee                                  13,500         13,500                --
Steven K. Gear                                  7,200          7,200                --
Steven Perry                                   50,000         50,000                --
Strategic Growth International, Inc(16)       800,000        800,000                --
Talon Opportunity Partners L.P. (17)        2,285,712      2,285,712                --
The Chase Family Trust                         11,748         11,748                --
The Vintox Fund Ltd. (18)                     274,286        274,286                --
Theodore L. Stortz                             25,000         25,000                --
Thomas Andrijeski                              12,500         12,500                --
Timpas Creek Finance Co., LLC (19)             50,000         50,000                --
Warren Ehrlich                                275,000         30,000           245,000
Weinberger-Vermut Living Trust                210,000        210,000                --
William Lanting, MD                            12,500         12,500                --
William. E. Harnish                            50,000         50,000                --
                                           ----------     ----------         ---------
                                           16,243,241     12,820,486         3,422,755
                                           ==========     ==========         =========

</TABLE>


-----------------
(1)  Beneficial ownership is calculated in accordance with Rule 13d-3 (d) of the
     Securities Exchange Act of 1934, as amended. Under Rule 13d-3 (d), shares
     not outstanding that are subject to options, warrants, rights or conversion
     privileges exercisable within 60 days are deemed outstanding for the
     purpose of calculating the number and percentage owned by such person of
     the class, but not deemed outstanding for the purpose of calculating the
     percentage owned of the class by any other person. Assumes that all Shares
     registered hereunder are sold by the Selling Shareholders.


                                       11
<PAGE>

Relationships and Transactions with Certain Selling Shareholders
----------------------------------------------------------------

     (2)  Berry-Shino Securities, Inc. acted as placement agent for our note
          offering which closed in September/October of 2003, and for our
          offering of common stock which closed in December 2003. Control
          Persons are R. Matthew Shino, Robert L. Berry and Leslie Griffith.
     (3)  Control Person is Bruce Brunner.
     (4)  Gregory Pusey is Chairman of the Board and Secretary of the Company.
          He is also President, director and shareholder of Cambridge Holdings,
          Ltd.
     (5)  Control Person is Earnest Mathis.
     (6)  Control Person is Jerry Wyatt.
     (7)  Gail Schoettler is a Director of the Company.
     (8)  Howard Lieber acted as a finder for certain investors in our common
          stock offering which closed in December 2003.
     (9)  Control Person is Anthony Marchese.
     (10) Jeffrey McGonegal is the Chief Financial Officer of the Company.
     (11) John O'Shea is a principal of Westminster Securities Corporation, the
          placement agent for the unit offering we closed in July and August
          2004.
     (12) Control Person is Michael Ragins.
     (13) Michael Smith previously loaned money to the Company under a
          convertible note payable. A portion of the note and accrued interest
          were converted into common stock of the Company and the balance of the
          note was repaid.
     (14) Peter Melhado is a principal of Polaris Partners LP. Mr. Melhado and
          Polaris Partners LP previously loaned money to the Company on a
          short-term basis, all of which has been repaid.
     (15) Strategic Growth International provides consulting services to the
          Company. Control Person is Richard E. Cooper.
     (16) Control Person is Terry Diamond.
     (17) Control Person is Robert Topping.
     (18) Control Persons are Adam Larson and William Larson.




Strategic Growth International provides consulting services to the Company under
a 12-month Consulting Agreement dated January 2004.


                              PLAN OF DISTRIBUTION

Sale of Securities by Selling Shareholders
------------------------------------------

     The Selling Shareholders have advised the Company that prior to the date of
this Prospectus they have not made any agreements or arrangements with any
underwriters, brokers or dealers regarding the resale of the Shares. The Company
has been advised by the Selling Shareholders that the Shares may at any time or
from time to time be offered for sale either directly by the Selling
Shareholders or by their transferees or other successors in interest. Such sales
may be made in the over-the-counter market or in privately negotiated
transactions.




                                     12
<PAGE>



     The Selling Shareholders have exercised their right to require the Company
to register the Shares which the Selling Shareholders purchased from the Company
in private transactions. The Selling Shareholders were granted certain
registration rights pursuant to which the Company has agreed to maintain a
current registration statement to permit public sale of the Shares. The Company
will pay all of the expenses incident to the offering and sale of the Shares to
the public by the Selling Shareholders other than commissions and discounts of
underwriters, dealers or agents, if any. Expenses to be paid by the Company
include legal and accounting fees in connection with the preparation of the
Registration Statement of which this Prospectus is a part, legal fees in
connection with the qualification of the sale of the Shares under the laws of
certain states, registration and filing fees, printing expenses, and other
expenses. The Company will not receive any proceeds from the sale of the Shares
by the Selling Shareholders, except to the extent of any cash exercise price
paid to the Company upon exercise of warrants.

     The Company anticipates that the Selling Shareholders from time to time
will offer the Shares through: (i) dealers or agents or in ordinary brokerage
transactions; (ii) direct sales to purchasers or sales effected through an
agent; (iii) privately negotiated transactions; or (iv) combinations of any such
methods. The Shares would be sold at market prices prevailing at the time of
sale or at negotiated prices. Dealers and brokers involved in the offer and sale
of the Shares may receive compensation in the form of discounts and commissions.
Such compensation, which may be in excess of ordinary brokerage commissions, may
be paid by the Selling Shareholders and/or the purchasers of Shares for whom
such underwriters, dealers or agents may act. The Selling Shareholders and any
dealers or agents which participate in the distribution of the Shares may be
deemed to be "underwriters" as defined in the 1933 Act and any profit on the
sale of the Shares and any discounts, commissions or concessions received by any
dealers or agents might be deemed by the NASD to constitute underwriting
compensation.

     If the Company is notified by the Selling Shareholders that any material
arrangement has been entered into with an underwriter for the sale of Shares, a
supplemental prospectus will be filed to disclose such of the following
information as the Company believes appropriate: (i) the name of the
participating underwriter; (ii) the number of Shares involved; (iii) the price
at which such Shares are sold; (iv) the commissions paid or discounts or
concessions allowed to such underwriter; and (v) other facts material to the
transaction.

     Sales of Shares on the OTC Bulletin Board may be by means of one or more of
the following: (i) a block trade in which a broker or dealer will attempt to
sell the Shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction; (ii) purchases by a dealer as principal
and resale by such dealer for its account pursuant to this Prospectus; and (iii)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers. In effecting sales, brokers or dealers engaged by the Selling
Shareholders may arrange for other brokers or dealers to participate.

     The Company is unable to predict the effect which sales of the Shares by
the Selling Shareholders might have upon the market price of the Company's
Common Stock or the Company's ability to raise further capital. See "Risk
Factors."


                                       13
<PAGE>

Private Sale of Common Stock by the Company
-------------------------------------------

     The Company issued shares of "restricted" common stock to the Selling
Shareholders in private transactions, and the Company will issue shares of
"restricted" common stock to the Selling Shareholders upon their exercise of
warrants which they received from the Company in private transactions. The
Company anticipates that Shares already received and Shares to be issued upon
exercise of the warrants will all be sold by the Selling Shareholders as
described above.

Indemnification
---------------

     The Company's Articles of Incorporation provide that the Company shall
indemnify any officer, employee, agent or director against liabilities
(including the obligation to pay a judgment, settlement, penalty, fine or
expense), incurred in a proceeding (including any civil, criminal or
investigative proceeding) to which the person was a party by reason of such
status. Such indemnity may be provided if the person's actions resulting in the
liabilities: (i) were taken in good faith; (ii) were reasonably believed to have
been in the Company's best interest with respect to actions taken in the
person's official capacity; (iii) were reasonably believed not to be opposed to
the Company's best interest with respect to other actions; and (iv) with respect
to any criminal action, the director had no reasonable grounds to believe the
actions were unlawful. Unless the person is successful upon the merits in such
an action, indemnification may generally be awarded only after a determination
of independent members of the Board of Directors or a committee thereof, by
independent legal counsel or by vote of the shareholders that the applicable
standard of conduct was met by the director to be indemnified.

     A director, employee, agent, or officer who is wholly successful, on the
merits or otherwise, in defense of any proceeding to which he or she was a
party, is entitled to receive indemnification against reasonable expenses,
including attorneys' fees, incurred in connection with the proceeding. In
addition, a corporation may indemnify or advance expenses to an officer,
employee or agent who is not a director to a greater extent than permitted for
indemnification of directors, if consistent with law and if provided for by its
articles of incorporation, bylaws, resolution of its shareholders or directors
or in a contract.

     In connection with this Offering the Company and certain of the Selling
Shareholders have agreed to indemnify each other against certain civil
liabilities, including liabilities under the 1933 Act. Insofar as
indemnification for liabilities arising under the 1933 Act may be permitted to
directors, officers and controlling persons of the issuer pursuant to the
foregoing provisions, or otherwise, the small business issuer has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the 1933 Act, and is,
therefore, unenforceable.

                                LEGAL PROCEEDINGS

     Neither the Company nor any of its officers and directors is currently a
party to any material legal proceeding.



                                       14
<PAGE>


                                 DIVIDEND POLICY

     During 2002, the Company paid a dividend of approximately $49,000 relating
to its previous tax status as an S Corporation. The Company anticipates that for
the foreseeable future all earnings will be retained for use in the Company's
business and no cash dividends will be paid to stockholders. Any payment of cash
dividends in the future on the Common Stock will be dependent upon the Company's
financial condition, results of operations, current and anticipated cash
requirements, plans for expansion, as well as other factors that the Board of
Directors deems relevant.

                                   MANAGEMENT

     Executive officers of the Company are elected by the Board of Directors,
and serve for a term of one year and until their successors have been elected
and qualified or until their earlier resignation or removal by the Board of
Directors. There are no family relationships among any of the directors and
executive officers of the Company.

     The following table sets forth names and ages of all executive officers and
directors of the Company:


------------------------ ------- -----------------------------------------------
Name                     Age     Position
------------------------ ------- -----------------------------------------------
Roger D. Hurst           54      President, Chief Executive Officer and Director
------------------------ ------- -----------------------------------------------
Gregory Pusey            52      Chairman, Secretary and Director
------------------------ ------- -----------------------------------------------
Gail S. Schoettler       60      Director
------------------------ ------- -----------------------------------------------
Douglas I.  Hepler       57      Director
------------------------ ------- -----------------------------------------------
David E. Welch           57      Director
------------------------ ------- -----------------------------------------------
Jeffrey G. McGonegal     53      Chief Financial Officer
------------------------ ------- -----------------------------------------------


     Roger D. Hurst, the founder of AspenBio, has served as President and as a
director, since our formation in July 2000. From 1988 to the July 2000 sale of
the antigen business from Vitro Diagnostics, Inc. to AspenBio, Mr. Hurst served
as the President and Chief Executive Officer of the Vitro Diagnostics. Mr. Hurst
holds a bachelor's degree from Nebraska Wesleyan University.

     Gregory Pusey became a director of AspenBio in February 2002, and Chairman
in May 2003. Mr. Pusey is the President of Advanced Nutraceuticals, Inc., a
publicly held company engaged in manufacturing and marketing of vitamins and
nutritional supplements. Mr. Pusey has been associated with Advanced
Nutraceuticals, Inc. and its predecessors since 1997. Since 1988, Mr. Pusey has
been the President and a director of Cambridge Holdings, Ltd., a publicly held
real estate development firm. Mr. Pusey is also a director of A4S Technologies,
Inc., a provider of hardware and software security related products, and has
served as President of Livingston Capital, Ltd. since 1987, a venture capital
firm. Mr. Pusey holds a B.S. degree in finance from Boston College.


                                       15
<PAGE>

     Gail S. Schoettler served as a U.S. Ambassador from 1999 to 2000, Colorado
Lt. Governor from 1995 to 1999, and Colorado State Treasurer from 1987 to 1995.
She was a trustee of the Public Employees Retirement Association, Colorado's $27
billion pension fund, for eight years. Ambassador Schoettler was a founder and
director of two banks and currently helps manage her family's ranching, vineyard
and real estate businesses. She speaks internationally on politics and business
and writes a column for The Denver Post. She is a trustee of several non-profit
organizations and the recipient of the French Chevalier of the Legion of Honor,
France's highest civilian award. Ambassador Schoettler is also a director of
CancerVax Corporation, AirGate PCS, Inc., and is the chairperson of the board of
Fischer Imaging Corp. She earned her BA with honors in economics from Stanford
University and her MA and PhD in history from the University of California at
Santa Barbara. Ambassador Schoettler became a director of AspenBio in August
2001.

     Douglas I. Hepler, Ph.D., joined the Company's Board of Directors in March
of 2004. Dr. Hepler is currently Vice President of Research and Development for
IDEXX Pharmaceuticals, Inc., a wholly owned subsidiary of IDEXX Laboratories,
Inc. Dr. Hepler is responsible for the overall technical leadership of the
Pharmaceutical Division of IDEXX Pharmaceuticals, Inc. Dr. Hepler was also the
Co-founder and Executive Vice President of Blue Ridge Pharmaceuticals, Inc.
before its sale to IDEXX Laboratories, Inc. in 1998. While at Blue Ridge
Pharmaceuticals Dr. Hepler was instrumental in the development and FDA
registration of Acarexx, Iverhart Plus, PZI Vet, Facilitator, Navigator,
Pyrantel and CyFly. Prior to Blue Ridge Pharmaceuticals, Dr. Hepler was
instrumental in the development and FDA registration of Interceptor, Program and
Sentenial while at Novartis Animal Health. Dr. Hepler received a B.S. degree
from Lock Haven University in biology, a M.S. from Colorado State University in
microbiology and a Ph.D. from Colorado State University in immunology.

     David E. Welch, became a director of AspenBio as of October 1, 2004. Mr.
Welch has served as Vice President and Chief Financial Officer of American
Millennium Corporation, Inc., a public company located in Golden, Colorado,
since April 2004. He also is a self-employed financial consultant. From July
1999 to June 2002 Mr. Welch served as Chief Financial Officer, Secretary and
Treasurer of Active Link Communications, Inc., another publicly traded company.
During 1998 he served as Chief Information Officer for Language Management
International, Inc., a multinational translation firm located in Denver,
Colorado. From 1996 to 1997, he was Director of Information Systems for
Mircromedex, Inc., an electronic publishing firm, located in Denver, Colorado.
Mr. Welch also serves on the Boards of Directors of Advanced Nutraceuticals,
Inc., and Communication Intelligence Corporation, both publicly traded
companies. He received a B.S. degree in accounting from the University of
Colorado.

      Jeffrey G. McGonegal became Chief Financial Officer of the Company in June
2003. Mr. McGonegal also serves as Senior Vice President - Finance of Advanced
Nutraceuticals, Inc., a publicly held company engaged in manufacturing and
marketing of vitamins and nutritional supplements. Since 1997, Mr. McGonegal has
served as Managing Director of McGonegal and Co., a company engaged in providing
accounting and business consulting services. From 1974 to 1997, Mr. McGonegal
was an accountant with BDO Seidman LLP. While at BDO Seidman LLP, Mr. McGonegal
served as managing partner of the Denver, Colorado office. Mr. McGonegal is a
member of the board of directors of The Rockies Venture Club, Inc. He received a
B.A. degree in accounting from Florida State University.



                                       16
<PAGE>

Meetings of the Board and Committees
------------------------------------

     The Company's Board of Directors held six meetings during the Company's
year ended December 31, 2003, and five additional meetings through August 31,
2004. Such meetings consisted of consent Directors' minutes signed by all
Directors and actual meetings at which all of the Directors were present in
person or by telephone. The Company does not have a formal policy with regard to
board members' attendance at annual meetings, but encourages them to attend
shareholder meetings. A majority of our directors then serving attended our last
annual meeting of shareholders on May 10, 2004.

     There is no arrangement or understanding between any Director and any other
person pursuant to which any person was selected as a Director.

     Directors of the Company are not paid cash for their services. They do
typically receive a stock option upon joining and additional options over time.
Greg Pusey receives a salary of $40,000 annually for his active role as Chairman
which commenced in September 2003. The directors are reimbursed for all expenses
incurred by them in attending board meetings.

Committees
----------

     Audit Committee: The Company has a separately designated standing audit
committee established in accordance with Section 3(a)(58)(A) of the Exchange
Act. The following persons serve on our audit committee: David Welch (who serves
as Chair of the Committee), Gregory Pusey and Gail Schoettler. Mr. Pusey is not
independent, although Ms. Schoettler and Mr. Welch are independent. The Company
defines "independent" as that term is defined in Rule 4200(a)(15) of the Nasdaq
listing standards.

     The audit committee was formed on December 22, 2003, and therefore held no
formal meetings during the year ended December 31, 2003, and one meeting
subsequently through August 31, 2004. Mr. Pusey and Ms. Schoettler both attended
the meeting in person or by telephone. Mr. Welch did not attend because he did
not become a member of the audit committee until October 1, 2004. The Board of
Directors has adopted a written charter for the audit committee. The audit
committee has not yet designated its audit committee financial expert. The audit
committee charter is available on our website at www.aspenbioinc.com.

   Compensation Committee: The Company's entire Board of Directors fulfills
the duties of the compensation committee, which include reviewing and making
recommendations regarding compensation of executive officers. While the Company
hopes to establish a separate compensation committee consisting of independent
directors once the number of directors is expanded, the current size of the
Company's Board of Directors does not facilitate the establishment of a separate
committee. Our Compensation Committee charter was adopted by the board of
directors on March 17, 2004.



                                     17
<PAGE>


     Nominating Committee: The entire Board of Directors fulfills the duties of
our Nominating Committee ("Nominating Committee"), which include overseeing the
process by which individuals may be nominated to our board of directors. While
the Company hopes to establish a separate nominating committee consisting of
independent directors once the number of directors is expanded, the current size
of the Company's Board of Directors does not facilitate the establishment of a
separate committee. Our Nominating Committee's charter was adopted by the board
of directors on March 17, 2004, and is available on our web site at
www.aspenbioinc.com.

     The functions performed by the Nominating Committee include identifying
potential directors and making recommendations as to the size, functions and
composition of the Board and its committees. In making nominations, our
Nominating Committee is required to submit candidates who have the highest
personal and professional integrity, who have demonstrated exceptional ability
and judgment and who shall be most effective, in conjunction with the other
nominees to the board, in collectively serving the long-term interests of the
shareholders.

     The Nominating Committee considers nominees proposed by our shareholders.
To recommend a prospective nominee for the Nominating Committee's consideration,
you may submit the candidate's name by delivering notice in writing to AspenBio,
Inc. c/o Nominating Committee Chair, Gail Schoettler, via email at
gailschoettler@msn.com or via first class U.S. mail, at AspenBio, Inc., 1585 S.
Perry Street, Castle Rock, CO 80104.

     A shareholder nomination submitted to the nomination committee must include
at least the following information (and can include such other information the
person submitting the recommendation desires to include), and must be submitted
to the Company by the date mentioned in the most recent proxy statement under
the heading "Proposal From Shareholders" as such date may be amended in cases
where the annual meeting has been changed as contemplated in SEC Rule 14a-8(e),
Question 5:

(i).    The name, address, telephone number, fax number and e-mail
        address of the person submitting the recommendation;
(ii).   The number of shares and description of the Company voting
        securities held by the person submitting the nomination and
        whether such person is holding the shares through a brokerage
        account (and if so, the name of the broker-dealer) or directly;
(iii).  The name, address, telephone number, fax number and e-mail
        address of the person being recommended to the nominating
        committee to stand for election at the next annual meeting (the
        "proposed nominee") together with information regarding such
        person's education (including degrees obtained and dates),
        business experience during the past ten years, professional
        affiliations during the past ten years, and other relevant
        information.
(iv).   Information regarding any family relationships of the proposed
        nominee as required by Item 401(d) of SEC Regulation S-K. (v)
(v).    Information whether the proposed nominee or the person submitting
        the recommendation has (within the ten years prior to the
        recommendation) been involved in legal proceedings of the type
        described in Item 401(f) of SEC Regulation S-K (and if so,
        provide the information regarding those legal proceedings
        required by Item 401(f) of Regulation S-K).


                                       18
<PAGE>

(vi).   Information regarding the share ownership of the proposed nominee
        required by Item 403 of Regulation S-K.
(vii).  Information regarding certain relationships and related party
        transactions of the proposed nominee as required by Item 404 of
        Regulation S-K.
(viii). The signed consent of the proposed nominee in which he or she
        a.   consents to being nominated as a director of the Company if
             selected by the nominating committee,
        b.   states his or her willingness to serve as a director if elected
             for compensation not greater than that described in the most
             recent proxy statement;
        c.   states whether the proposed nominee is "independent" as defined
             by Nasdaq Marketplace Rule 4200(a)(15); and d.
        d.   attests to the accuracy of the information submitted pursuant to
             paragraphs (i), (ii), (iii), (iv), (v), (vi), and (vii), above.

     Although the information may be submitted by fax, e-mail, mail, or courier,
the nominating committee must receive the proposed nominee's signed consent, in
original form, within ten days of making the nomination.

     When the information required above has been received, the nominating
committee will evaluate the proposed nominee based on the criteria described
below, with the principal criteria being the needs of the Company and the
qualifications of such proposed nominee to fulfill those needs.

     The process for evaluating a director nominee is the same whether a nominee
is recommended by a shareholder or by an existing officer or director. The
Nominating Committee will:

     1.   Establish criteria for selection of potential directors, taking into
          consideration the following attributes which are desirable for a
          member of our Board of Directors: leadership; independence;
          interpersonal skills; financial acumen; business experiences; industry
          knowledge; and diversity of viewpoints. The Nominating Committee will
          periodically assess the criteria to ensure it is consistent with best
          practices and the goals of the Company.
     2.   Identify individuals who satisfy the criteria for selection to the
          Board and, after consultation with the Chairman of the Board, make
          recommendations to the Board on new candidates for Board membership.

     3.   Receive and evaluate nominations for Board membership which are
          recommended by existing directors, corporate officers, or shareholders
          in accordance with policies set by the Nominating Committee and
          applicable laws.

     The Nominating Committee has held one formal meeting and taken action by
unanimous written consent one time through September 30, 2004. On March 19, 2004
by unanimous consent the Nominating Committee nominated all four directors
currently serving on our board of directors to stand for reelection, and on
October 1, 2004 the Nominating Committee nominated David Welch as a new Board
Member.

     The Company has not engaged the services of or paid a fee to any third
party or parties to identify or evaluate or assist in identifying or evaluating
potential nominees.


                                       19
<PAGE>

Shareholder Communication with the Board of Directors

     The Company values the views of its shareholders (current and future
shareholders, employees and others). Accordingly, the Board of Directors
established a system through its Audit Committee to receive, track and respond
to communications from shareholders addressed to the Company's Board of
Directors or to its Non-Management Directors. Any shareholder who wishes to
communicate with the Board of Directors or the Non-Management Directors may
write to:

David Welch
Chair, Audit Committee
c/o AspenBio, Inc.
1585 S. Perry Street
Castle Rock, CO 80104
email address: dfwelch@msn.com

     The chair of the Audit Committee is the Board Communications Designee. He
will review all communications and report on the communications to the chair of
the Nominating Committee, the full Board or the Non-Management Directors as
appropriate. The Board Communications Designee will take additional action or
respond to letters in accordance with instructions from the relevant Board
source.

Code of Ethics

     On December 22, 2003, the Board of Directors adopted a code of ethics that
applies to all of our officers and employees, including our principal executive
officer, principal financial officer, principal accounting officer and
controller. Our Code of Ethics establishes standards and guidelines to assist
the directors, officers, and employees in complying with both the Company's
corporate policies and with the law and is posted at our website
www.aspenbioinc.com.


                          SECURITY OWNERSHIP OF CERTAIN
                        BENEFICIAL OWNERS AND MANAGEMENT


     The number of shares outstanding of the Company's common stock at October
15, 2004, was 11,713,144. The following tables sets forth the beneficial
ownership of the Company's Common Stock as of October 15, 2004 by each Director
and each Executive Officer of the Company, by all Directors and Executive
Officers as a group, and sets forth the number of shares of Common Stock owned
by each person who owned of record, or was known to own beneficially, more than
5% of the outstanding shares of Common Stock. To the knowledge of the Directors
and Executive Officers of the Company, as of October 15, 2004, there are no
persons and/or companies who or which beneficially own, directly or indirectly,
shares carrying more than 5% of the voting rights attached to all outstanding
shares of the Company, other than as set forth below.


                                       20

<PAGE>

<TABLE>
<CAPTION>
------------------------------------------------------------- ---------------- ----------
         Name and Address                                     Number of Shares   Percent
------------------------------------------------------------- ---------------- ----------
<S>                                                               <C>             <C>
Roger D. Hurst                                                    2,005,143       17.1%
1585 South Perry Street
Castle Rock, CO  80104
------------------------------------------------------------- ---------------- ----------
Gregory Pusey (1)                                                 1,544,821       12.8%
106 S. University, No. 14
Denver, CO  80209
------------------------------------------------------------- ---------------- ----------
Gail S. Schoettler (2)                                              215,000        1.8%
11855 East Daley Circle
Parker, CO  80134
------------------------------------------------------------- ---------------- ----------
Douglas I. Hepler (3)                                               270,000        2.3%
815 Cliff Dr.
McLeansville, NC 27301
------------------------------------------------------------- ---------------- ----------
David E. Welch (4)                                                  100,000        0.8%
1585 S. Perry Street
Castle Rock, CO  80104
------------------------------------------------------------- ---------------- ----------
Jeffrey G. McGonegal (5)                                            417,643        3.4%
1585 S. Perry Street
Castle Rock, CO  80104
------------------------------------------------------------- ---------------- ----------
Talon Opportunity Partners, L. P.                                 2,285,714       17.8%
One North Franklin, Suite 900
Chicago, IL 60606 (6)
------------------------------------------------------------- ---------------- ----------
All Officers and Directors as a Group (6 persons)(7)              4,552,607       34.4%
------------------------------------------------------------- ---------------- ----------
</TABLE>


(1)  Includes 85,114 shares held by his wife, his wife's IRA account and their
     children. Mr. Pusey disclaims beneficial ownership of these shares. Also
     includes the following holdings of Mr. Pusey: (i) 15,901 shares held in Mr.
     Pusey's IRA account, (ii) warrants to purchase 130,000 shares, (iii)
     warrants to purchase 100,000 shares and (iv) 532,275 shares and warrants to
     purchase 438,571 shares held by Cambridge Holdings Ltd. Mr. Pusey is
     President, a director and principal shareholder of Cambridge.
(2)  Includes options to purchase 200,000 shares.
(3)  Includes options to purchase 100,000 shares. Also includes 120,000 shares
     and options to purchase 50,000 shares of common stock held by his wife. Dr.
     Hepler disclaims any beneficial ownership of these shares and options.
(4)  Includes options to purchase 100,000 shares
(5)  Includes options and warrants to purchase 400,000 shares.
(6)  Includes warrants to purchase 1,142,857 shares.
(7)  Includes footnotes 1 through 5.





                                       21
<PAGE>

                            DESCRIPTION OF SECURITIES

     The following summary description of the Company's securities is not
complete and is qualified in its entirety by reference to the Company's Articles
of Incorporation and Bylaws.

     The authorized capital stock of the Company consists solely of 30,000,000
shares of no par value common stock (previously defined as "Common Stock"). As
of October 15, 2004 there were 11,713,144 shares of Common Stock issued and
outstanding that are held of record by approximately 1,001 shareholders.


Common Stock

     Each holder of record of shares of the Company's Common Stock is entitled
to one vote for each share held on all matters properly submitted to the
shareholders for their vote. Cumulative voting in the election of directors is
not authorized by the Articles of Incorporation.

     Holders of outstanding shares of Common Stock are entitled to those
dividends declared by the Board of Directors out of legally available funds,
and, in the event of liquidation, dissolution or winding up of the affairs of
the Company, holders are entitled to receive ratably the net assets of the
Company available to the shareholders. Holders of outstanding Common Stock have
no preemptive, conversion or redemption rights. All of the issued and
outstanding shares of Common Stock are, and all unissued shares of Common Stock,
when offered and sold will be, duly authorized, validly issued, fully paid and
nonassessable. To the extent that additional shares of Common Stock of the
Company may be issued in the future, the relative interests of the then existing
shareholders may be diluted.

Dividends

See the discussion under the heading "Dividend Policy" above in this prospectus.


                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     We were organized in July 2000 to purchase the antigen business from Vitro
Diagnostics, Inc. The initial capital to complete this purchase and for the
startup for our operations was provided primarily by our President and principal
shareholder, Roger D. Hurst. Mr. Hurst received 4,861,737 shares of our common
stock in consideration of a cash contribution of $470,000. Mr. Hurst received a
promissory note for the $400,000 loaned by him to us. On April 1, 2002, we made
an Amended and Restated Promissory Note to Mr. Hurst in the amount of $267,501,
payable with interest of 8% per annum, in installments, with all amounts due on
April 30, 2005. On June 12, 2003, we made a consolidated promissory note
maturing on June 12, 2008, of all amounts due to Mr. Hurst totaling $958,651, at
that time. This note was subsequently amended to provide for a repayment
schedule if certain minimum fund raising efforts were achieved. Such funds were
raised in August 2004 and we made a $200,000 payment on this note and this will
be followed by thirty-six monthly payments of $10,000, at which time the then
remaining balance will be due. Included in the amended agreements, among other
items, was the termination of a previous voting agreement and the contribution
of 1,896,757 shares of AspenBio, held by Mr. Hurst, back to the Company for no
consideration. Mr. Hurst is the holder of approximately 13% of the outstanding
common stock of Vitro Diagnostics, but has no involvement in the management of
Vitro Diagnostics.



                                       22
<PAGE>

     Prior to August 1, 2001, we operated as an S Corporation and our
shareholders were taxed on their proportionate share of our taxable income. We
made a distribution in connection with our S Corporation status to all of our
shareholders. We agreed with Roger Hurst not to pay Mr. Hurst his $29,755
distribution and we made a promissory note to him on April 1, 2002 in that
amount which was payable, with interest at 8% per annum, on April 30, 2005. This
obligation was consolidated with the June 12, 2003 note.

     To accommodate our growth, we purchased land in Castle Rock, Colorado, in
2002 and constructed our new facility which opened in 2003. In order to
facilitate the purchase, Mr. Hurst has loaned to us $625,000 and we have made a
promissory note to Mr. Hurst in that amount which was payable, with interest at
8% per annum on May 5, 2004. This obligation was consolidated with the June 12,
2003 note.

     In connection with our land purchase and facility construction, we borrowed
$3,250,000 from a bank under a construction loan which also required that we
obtain an additional $350,000 to be pledged to the bank and a guarantee of
$200,000 (the "Guarantee") of the loan amount. Cambridge Holdings, Ltd.
("Cambridge") provided the Guarantee and we issued a note in that amount to
Cambridge and a three-year warrant to purchase 100,000 shares of our common
stock at $1.50 per share. We agreed to register these shares for Cambridge at
Cambridge's request between September 30, 2002 and June 30, 2005. The
construction loan was re-financed into a permanent mortgage in June 2003, and
the Guarantee terminated.

     In November 2000 we leased laboratory equipment and issued a note to a
leasing company for $280,000. The note required monthly payments of $9,053. Mr.
Hurst personally guaranteed the note. During the year ended December 31, 2003,
the remaining principal balance on this note was paid off. We have a line of
credit of up to $150,000, which is also guaranteed by Mr. Hurst. At September 9,
2004, the balance outstanding was $0.

     In July 2004, Roger Hurst contributed 1,896,757 shares of common stock back
to the Company for no consideration pursuant to an agreement executed in April
2004, relating to the Company raising a minimum of $1,000,000 in equity
financing, which it achieved.

     Other than as a result of the exercise a significant portion of the
outstanding stock options and warrants, there are no arrangements or agreements
which could in the future result in a change of control of the Company.


                             DESCRIPTION OF BUSINESS

Overview

     We were founded to acquire the antigen business from Vitro Diagnostics,
Inc. in August 2000, and to leverage that base of operations and technology to
develop new products with substantial market potential. Our management team had
been conducting the antigen business at Vitro Diagnostics since 1990. Many new
products have been developed since the acquisition.


                                       23
<PAGE>

     Our human diagnostic antigen division has been our core business and,
taking into account the operations while this division was part of Vitro
Diagnostics, this part of our business has been in operation since 1990. We have
continued to expand our product offerings since it became part of AspenBio. We
manufacture over thirty products. Our products are used as standards and
controls in diagnostic test kits, antibody purification and in research
projects.

     Our strategy is to search for opportunities where we can use our
purification abilities to create a superior product. We are focusing on
expanding our business into other uses of purified proteins, principally for
diagnosis and treatment of humans and animals. An important factor in the
diagnostics business is the vastly reduced times required from product
conception to saleable product as compared to therapeutic products which often
require many years to market, due to significantly more stringent FDA
requirements for those types of products. With this in mind we have started a
diagnostic test division developing rapid diagnostic tests for use initially in
the lab and research and development sectors. To date we have developed nine
tests with an additional approximately dozen tests currently in the early stages
of development. The Company is in discussions with a number of potential
marketers of these types of products. We are hopeful that we will enter into
agreements with the best-suited marketers/distributors for each individual test.
Furthermore many of these tests may have multiple markets as their availability
and ease of use and time saving features become known.

     We are engaged in the discovery, development, manufacturing and marketing
of industry-leading products for human and animal healthcare. We leverage our
expertise as a high quality manufacturer of antigens for diagnostic kit
manufacturers to target and validate potential products of significant economic
value while focusing our resources on areas of animal and human healthcare where
we believe there are clearly unmet needs. We apply our advanced understanding of
the purification processes of antigens to develop products off a broadly
applicable technological platform. Our product pipeline consists of product
candidates in various stages of clinical and pre-clinical development. One of
our business strategies is to pursue and develop products and technologies which
we believe have a relatively short time line to revenue, i.e., 18-24 months in
addition to others where the time to market maybe substantially greater. We
pursue technologies under "in-licensing" agreements with universities,
researchers or doctors; complete research and development on the technologies
through proof of concept, and then either "out-license" to "Big Pharma"
companies and \ or go to product introduction and launch.

     Our first out licensed product was the Early Detection Bovine Pregnancy
Test. On March 31, 2003, we announced a Global Development and Distribution
Agreement covering the Early Detection Bovine Pregnancy Test with Merial Limited
("Merial"), the world's leading animal health company. Merial (preliminary
Merial web site for the AspenBio pregnancy test is -
http://us.merial.com/bovinetest) is a joint venture between Merck & Co., Inc.
(MRK: NYSE) and Aventis SA (AVE: NYSE). The total potential market size for the
Early Detection Bovine Pregnancy Test is 58 million dairy cows, each of which is
potentially checked twice annually. Of the 58 million dairy cows 25 million are
readily accessible thru sophisticated existing channels of distribution. Under
the terms of the Agreement, following successful completion of the test, Merial
must achieve sales goals of 1.5 million units in 2004, 4.0 million units in 2005
and 5.0 million units in each calendar year thereafter during the full term of
the Agreement. In addition to product development fees totaling $1.9 million, we
will also receive 33% of all gross sales of the product under the terms of the
Agreement subject to a minimum of $1.75/ test. To date we have not successfully
completed the clinical trial required to resolve an issue relating to the test's
sensitivity in order to be able to go to commercialization of this product.
Accordingly, the product has not been released for distribution to date and we
are continuing to work on improving the sensitivity of the test. Due to delays
encountered with the Early Detection Bovine Pregnancy Test development, Merial
may attempt to renegotiate certain aspects of the contract, when and if the
product is successfully completed.


                                       24
<PAGE>

Products and Status of Products

Human Antigens - We currently manufacture more than thirty human antigens and
tumor markers. These are proteins that we manufacture from human tissues and
fluids, using our proprietary purification processes, so that they are in an
especially pure form. These proteins are used as part of diagnostic test kits
manufactured and sold by others. The test kits diagnose tumor marker levels
within the blood or hormone imbalances by measuring the presence and/or levels
of certain proteins. The proteins supplied by us are typically used to determine
whether the test is functioning correctly, more commonly know as controls. We
have manufactured human antigen products since 1990 and can produce additional
proteins through our proprietary purification process. Our human diagnostic
antigen product division has represented our base revenue stream to date. Our
products are used as standards and controls in diagnostic test kits, antibody
purification and in research projects. The approximate $.7 million annual
revenues derived from this division provides a consistent revenue stream to help
support the Company and its ongoing research and development activities.
Recently we have begun work on a number of new antigen products in response to
expanding customer requests. Some of these antigen products are in the research
and development phase, which typically should be finished and available for
customer testing approximately 90-120 days after we commence our work.

     In order to distribute our human antigen products, we manufacture the
purified proteins at our facility, and then lyophilize (freeze dry) the
ingredients contained in a glass vial. We then send the products out to
customers in vials with tops that allow the use of a syringe to reconstitute the
product enabling the end user to remove and use the products from the vial.

Ungulate Pregnancy Test - The ungulate pregnancy test is designed to determine
the pregnancy status of cows within approximately 18 days after artificial
insemination prior to the end of the cow's cycle. Pregnancy is necessary for
milk production and the dairy industry relies on artificial insemination to
impregnate the cows to assure genetics and reduce the breakdown of cows thru the
natural reproductive process. The traditional way of determining pregnancy is
via palpation, a physical examination by a veterinarian. Ultrasound is also
being used on a limited basis. The test kit we intend to produce would permit
pregnancy status to be determined sooner than the traditional methods, which, in
turn, would permit a herd manager to repeat the artificial insemination process
at an earlier date on cows, determined not to be pregnant. Also, our test does
not include any physical manipulation of the cow, which manipulation can result
in higher risk to the calf. We believe pregnancy in other hoofed animals may be
able to be determined using the same antigen. The pig, elk, bison, and sheep
industries also utilize artificial insemination, and we plan to develop these
pregnancy test kits where economically feasible.

     The planned bovine pregnancy test consists of a plastic cartridge
containing a membrane, which has been sprayed with an antibody. The antibody was
created from rabbits that were exposed to a specific purified antigen
manufactured at our facility. Once a blood sample from a cow is exposed to the
antibody on the membrane it will cause the strip to change color indicating the
presence of a certain antigen which is only present in the blood of a pregnant
cow. This reaction occurs approximately at day 18, following artificial
insemination to enable the determination of pregnancy. The test strip will be
sealed in a foil package along with a pipette. Within the kit there will be a
needle for drawing the blood sample, a blood collection tube, a holder for the
needle, and a bottle containing a buffer reagent. The exact configuration of the
kit is not complete as we are continuing development on the test.


                                       25
<PAGE>

     Once the development work is complete we anticipate that in order to create
commercial quantities of test kits, we will produce the active ingredients and
send them to a company that specializes in large-scale manufacturing of test
strips. This company would place the active ingredients onto the test strips and
then ship the sealed and packaged pregnancy test kits to our warehouse or to our
customers for distribution.

     We entered into licensing agreements with the University of Idaho and the
University of Wyoming in fall, 2001, to obtain the exclusive rights to
manufacture the protein used in the bovine pregnancy test kit. We have filed two
provisional patent applications, as well as a trademark application for
"Surbred," the name of the bovine pregnancy test kit.

     On March 29, 2003 we entered into a distribution agreement described above,
with Merial. Merial is a joint venture between Merck and Aventis. We have
granted Merial exclusive rights to market and distribute the bovine pregnancy
test worldwide. Based on findings of an expanded field trial we concluded that
improvements need to be made to the test before marketing can begin. We have
recently contracted with a recognized industry expert in this field to assist
our internal efforts in development of the test. The test was not launched by
October 2003, as previously anticipated, and the receipt of the second
development payment of $700,000 from Merial has been delayed. Development
efforts are ongoing with the goal being to try and have product ready to
introduce at the World Dairy Expo that occurs in the fall. As a result of the
delays we are experiencing in the introduction of the test, Merial may reduce
the second development payment, or eliminate it if we are not able to deliver
the test or terminate the agreement. Should Merial elect to terminate the
agreement, they may also request a refund of 50% ($100,000) of the development
payment received to date. To date they have been supportive of our efforts to
resolve the sensitivity issues surrounding the pregnancy test.

Bovine LH/ Staybred- A complementary technology to the early detection bovine
pregnancy test is our Bovine LH drug. This product was developed, under the
trade name "StayBred" in collaboration with Dr. Kevin McSweeny, DVM. Initially
the product utilized hCG injected into dairy cows intended to play the role of
LH to reduce the rate of pregnancy loss. Currently up to 70% of dairy cows
absorb or abort causing significant financial loss to the dairy. We are on track
to perform expanded field tests on the recombinant form of StayBred (rBovine LH)
by the end of the year 2004. If this testing is successful we plan to begin to
market and test the product in the field on a very limited basis via veterinary
prescription unless a licensing arrangement is entered into with a partner that
wants to delay introduction until the product can secure FDA approval and then
be sold with a major advertising rollout. We will also file with the FDA an
Abbreviated New Drug Application ("ANDA") and begin the registration process as
soon as practical after a successful large-scale clinical is completed using
recombinant LH. The Company, upon launching the project, filed a Provisional
Patent Application to protect the concept and methods of product use. Further,
the Company has been amending the Provisional Patent Application with clinical
and field results. We plan to continue and expand the protection of our product
and findings, as results become known. Furthermore, the recombinant form of the
product anticipated to be used to market, we believe will be covered under the
patent estate licensed by AspenBio from Washington University.


                                       26
<PAGE>

     It is estimated that there are approximately 58,000,000 artificially
inseminated dairy cows worldwide. The product StayBred would be an applicable
and beneficial application to dairy cows at the average rate of 1.75 times per
year as a therapeutic to maintain pregnancy. We do not currently have an
estimate of our, or a potential marketing partner's ability to penetrate the
total market, should the product continue to provide the results experienced to
date in the native form. We plan to begin discussions and negotiations with
major pharmaceutical companies who have shown an interest in
licensing/distributing/purchasing the StayBred product. We are in various stages
of preliminary discussions with interested parties regarding the LH technology.
We anticipate that as we proceed to a large clinical trial of a recombinant form
of LH we will have additional discussions and determine what course of action is
best.

     Although the product is still in its development stage and must still be
tested for effectiveness (and although we can provide no assurance that such
development and testing efforts will be successful), we anticipate the "value"
of the StayBred product to the dairy cow industry may be summarized as follows:

     o    Percentage of cows maintaining pregnancy may significantly increase by
          approximately 30-45%.
     o    Saves the additional cost and manipulation to the animal of repeated
          reproduction treatments.
     o    Reduces average days a cow is "open" (un-bred), thereby improving milk
          and calf production.
     o    Anticipated cost per application is easily cost justified to the
          dairy.
     o    The product is easy to administer.
     o    Technology is Patent Pending.

During May 2004, AspenBio entered into an exclusive license agreement for an
extensive portfolio of patents and patents pending, developed and enhanced over
the last fifteen years by Washington University (St. Louis, MO). AspenBio
believes this license represents the premiere reproduction patent portfolio in
animal health reproduction that can potentially be applied to reproduction in
all mammals. The patent estate consists of approximately 83 active and inactive
patents and patents pending. The term of the agreement is tied to the life of
the last patent to expire, which, given the fact that there are a number of
patents pending, we expect to be approximately 20 years.

The portfolio consists of technology associated with mammalian reproduction and
the creation of recombinant drugs to enhance conception and pregnancy rates.
Until now, commercialization of these biologicals has only been pursued in human
medicine. AspenBio acquired this technology to provide these products to
veterinary medicine. We believe that the technologies developed in the patent
estate have the potential to be developed into an array of products to enhance
fertility in all mammals. Initial development efforts and field trials are
currently focused on the bovine Staybred and equine products in dairy cattle and
horses.

Rapid Diagnostic Test Kits -AspenBio has created a Rapid Diagnostic Division for
the development and manufacturing of immunochromatographic rapid test devices.
The devices determine the presence or absence of minute quantities of target
analyte in unknown samples within a few minutes. Typically, these devices are
used by the human and animal healthcare industries as clinical diagnostic tools.
The most commonly known test of this nature is the home pregnancy test. We have
found additional applications for the rapid diagnostic device in the
biotechnology and laboratory field. Since these devices are sensitive and yield
results quickly, they are ideal for research and development projects that
include protein expression and/or purification. This device can save up to 12
hours of laboratory time by replacing immunoblotting in some cases. AspenBio has
developed nine different tests thus far. We are currently investigating a number
of partners to team up with to market and distribute these time and money saving
devices to laboratories, universities and a broad range of other applications.


                                     27
<PAGE>
Equine Proteins - The purified equine protein products we are developing would
have both diagnostic and therapeutic uses for horses. We began purifying equine
pituitary-derived antigens in 2001, and are currently working on development of
diagnostic test kits and recombinant antigens. The diagnostic test kits can be
used to measure hormone levels affecting fertility, thyroid, growth and
lactation. Uses of the recombinant antigens include inducing fertility,
improving healing of wounds, and inducing lactation. The purification processes
we use for the human antigens can be used in manufacturing equine proteins. The
therapeutic use of the equine proteins is currently in limited testing on horse
farms. The results to date based on discussions with the doctors in the field
have been encouraging. AspenBio's preliminary products appear to solve some of
the therapeutic problems related to breeding problems in horses as well as an
anti-aging drug for horses over eighteen years old. AspenBio is also actively
developing a recombinant form of equine LH and FSH (technology which was
obtained when we entered into a license agreement with Washington University)
which we believe will enhance fertility in horses and deal with a number of
other issues


Human Appendicitis Test - Appendicitis is a common acute surgical problem
affecting patients of a wide age range. There are approximately 700,000 cases
annually in the United States and approximately 2,000,000 cases that seek
diagnosis. An accurate diagnosis at a sufficiently early stage is a significant
factor in achieving a successful outcome. An accurate and early diagnosis,
however, is difficult because there is considerable overlap of genuine
appendicitis with other clinical conditions. Furthermore, to date there appears
to be no individual sign, symptom, test, or procedure capable of providing a
reliable indication of appendicitis. Misdiagnosis of appendicitis can lead not
only to unnecessary surgery but also to delay of proper therapy for the actual
underlying condition. A dilemma for surgeons is minimizing the negative
appendectomy rate without increasing the incidence of perforation among patients
referred for suspected appendicitis. AspenBio aims to address this problem by
identifying novel diagnostic markers through genomic and proteomic screening
approaches in collaboration with Dr. John Bealer, a pediatric surgeon with
extensive experience in the area. AspenBio has filed a patent application
entitled "METHODS RELATING TO DIAGNOSIS OF APPENDICITIS". The project is in
Research and Development phase as serum and tissue samples are now being
harvested and banked. Testing is ongoing for a marker that could be used to
assist in or determine the diagnosis of the condition.


Raw Materials

     The human antigens are purified from human tissue or fluids.




                                     28
<PAGE>


     We have recombinant sources for the protein for the bovine pregnancy test.
We have also cultured cell lines and recombinant material for both human and
animal proteins, which can be used for therapeutic applications, when produced
in a GMP facility. Ultimately, we expect that this type of production will
replace the need for tissue or fluids as a source material, thereby reducing the
chance of contamination from possible impurities.

     We generally have several sources available for the materials needed, some
of which are from international sources. Accordingly, certain of the materials
purchased require longer lead times to be received for processing and
production.


Intellectual Property

     We have not filed patents for our human diagnostic antigens, although we
treat our protein purification process as proprietary. Much of the purification
work is considered an art form and the processes are trade secrets. We have
filed for a patent or provisional patent on a number of our technologies. The
total number of provisional patent applications, patents pending or licensed or
pending patents is in excess of 25.

With respect to the ungulate pregnancy test, we entered into exclusive licensing
agreements with the University of Idaho and the University of Wyoming in fall,
2001, for the manufacture, use, sale and distribution of the pregnancy proteins
used in the test. We have titled the pregnancy test "Surbred 15"and titled the
LH product "Staybred" and have applied for trademark protection. We have also
filed provisional patent applications for the bovine pregnancy test as well as
the LH product, among a number of others.

Under the exclusive license agreement with Washington University (St. Louis,
MO), AspenBio obtained the property rights to their patent estate consisting of
approximately 83 active and inactive patents and patents pending. The term of
the agreement is tied to the life of the last patent to expire, which, given the
fact that there are a number of patents pending, we expect to be approximately
20 years. We are currently developing and testing products using the Washington
University patents rights in the bovine and equine areas.


Marketing/Competitive Conditions

Product Markets

Human diagnostic antigens - The total market for human antigens and tumor
markers is estimated at approximately $2 million, annually. We believe we
currently are the largest supplier in our market, and all of our revenues to
date have come from sales of these products. We expect to continue adding
products to our diagnostic protein line. Our primary competitor for supply of
human pituitary antigens is Dr. Albert Parlow, a professor at UCLA. We believe
that we have displaced Dr. Parlow as the largest supplier.

Rapid Diagnostic Test Kits -- Since these test devices are sensitive and yield
results quickly, they are ideally suited for research and development projects
that include protein expression and/or purification. AspenBio is currently
seeking potential marketing partners to begin national marketing of its
products. As product availability, ease of use, and time saving features become
known, many of the diagnostic tests may have multiple markets. Given that this
product line has just recently been created by AspenBio, the market potential is
currently unknown.



                                     29
<PAGE>

Ungulate Pregnancy Test - SurBred 15 and StayBred - The success of a modern
dairy cow operation is dependent upon a number of critical factors. Several of
these factors are outside the control of the dairyman, such as milk prices and
costs for feed, nutrients, and medicines. Other factors, however, are within the
dairyman's control such as size of the operation (number of head milked), labor
costs, and access to high quality bulk feed. The amount of revenue derived from
milk sales is a function of the quantity of milk produced and the level of milk
fat contained in the milk. These factors correspond directly to the amount of
time that a cow is pregnant. The more days during a year that a cow remains
un-bred ("open"), the lower the annual milk production from that cow, hence the
lower the revenue received.

The worldwide population of dairy cows exceeds 100 million, of which
approximately 58 million cows are located in North America, Europe and the
former Soviet Union. It has been estimated that approximately 70% of cows in the
North American and European dairy industry are artificially inseminated.
Although there are no known published reports regarding timed or synchronized
cow breeding programs, management believes, based on discussions with industry
sources, that there are an estimated 25 million artificially inseminated cows in
timed breeding programs which would represent the primary target market for
SurBred 15. Management is also assessing the potential markets for an additional
bovine pregnancy test to be used 35 days or more after insemination for use in
the beef industry and for pregnancy tests for other ungulates.

Over the last decade, the average number of days per year that a cow remains
open has steadily increased from 130 to 175 days, which has had a negative
impact on the average milk revenue per head. A significant percentage of dairy
cows, when artificially inseminated, do not become pregnant. Moreover,
approximately 70% of artificially inseminated cows that do become pregnant abort
or absorb. The rate of success for breeding cows after the first attempt has
decreased over the past decade from 50% to less than 35%. On average, 65% to 70%
of artificially inseminated cows require a second insemination, and
approximately 40% of these cows will require a third attempt before typically
being culled from the herd.

In recent decades, several products have been introduced that are designed to
create more effective breeding programs for artificially inseminated cows.
Whereas these products are administered before artificial insemination ("AI"),
SurBred 15 and StayBred are administered after AI.

The bovine pregnancy test methods currently being used - palpitation and
ultrasound - cannot determine pregnancy status until at least 30 days after
artificial insemination, which is several days after the cow's estrous cycle is
over. Additionally, these methods may be harmful to a pregnant cow or risk
aborting the calf. Because the first attempt at AI is often unsuccessful, cows
in the same "heat" cycle can be inseminated again if the pregnancy status is
determined quickly enough. SurBred 15 can determine pregnancy 18 days after
artificial insemination, in time for operators to breed open cows a second time
during each 21-day estrous cycle.

The total cost of artificially inseminating a cow, including the semen, breeder
time, and the administration of Gonadorellin ("GnRH", sold by Merial) and
prostaglandin ("PGF", also known at Lutelyze, sold by Pfizer) to promote
ovulation is estimated to be in the range of $30 to $65 per head per treatment
before the cost of ultrasound for determining pregnancy status. The majority of
this cost is incurred again with each subsequent artificial insemination,
averaging at least two treatments per year to achieve successful pregnancy.



                                     30
<PAGE>


The following chart describes the ovulation synchronization protocol for dairy
cows using traditional synchronization protocol and AspenBio's StayBred and
SurBred15 products that are in development. The Company is currently refining
its approach to the reproduction problem and further studies are ongoing. This
chart shows the potential cost differences to the dairy by using StayBred at Day
4 and SurBred15 at Day 18 post-AI, as compared to current costs.

<TABLE>
<CAPTION>

                                         OVULATION SYNCHRONIZATION
                                         CURRENT PROTOCOL AND COST

-------------------- --------------- ------------- ------------ ------------------ ---------------- -------------
<S>                      <C>            <C>           <C>          <C>    <C>        <C>    <C>       <C>   <C>
Day                       -10             -3           -1               0                32              45
-------------------- --------------- ------------- ------------ ------------------ ---------------- -------------
Drug/                     GnRH           PGF          GnRH             AI            Ultrasound      Palpation
Procedure
-------------------- --------------- ------------- ------------ ------------------ ---------------- -------------
Approximate Cost         $3.00          $3.30         $3.00        $15 to $25        $10 to $30       $1 to $2
per Dose/Procedure
-------------------- --------------- ------------- ------------ ------------------ ---------------- -------------
</TABLE>


<TABLE>
<CAPTION>
                                         OVULATION SYNCHRONIZATION PROTOCOL
                                        USING STAYBRED(TM) AND SURBRED15(TM)

----------------------------- -------------- ------------ ---------------- ----------------- -------------- ----------------
<S>                                 <C>           <C>            <C>              <C>              <C>            <C>
Day                                -10           -3             -1                0                4              18
----------------------------- -------------- ------------ ---------------- ----------------- -------------- ----------------
Drug/                             GnRH           PGF           GnRH               AI           StayBred(TM)   SurBred15(TM)
Procedure
----------------------------- -------------- ------------ ---------------- ----------------- -------------- ----------------
Approximate Cost                  $3.00         $3.30          $3.00          $15 to $25       Projected $8    Projected
per Dose/Procedure                                                                               to $10        $5 to $7
----------------------------- -------------- ------------ ---------------- ----------------- -------------- ----------------
</TABLE>


Management believes that the use of StayBred will result in a higher number of
cows maintaining pregnancy (an increase from approximately 30% to 45% in the
initial field tests using native LH and hCG), thus decreasing the overall costs
of reproduction. This means that the annual costs associated with GnRH, PGF, and
artificial insemination would drop and, because the dairy's cows would retain
approximately 20% more calves from the first round of artificial insemination,
the need to re-incur the artificial insemination costs may be reduced. When
SurBred 15 is used to determine if a cow is open at day 18 after artificial
insemination, the operator is in a position to re-inseminate open cows within
the same estrous cycle, thereby reducing duplicate drug costs. Feed and
maintenance costs may also be lowered through better herd management.

    Merial Limited has the exclusive rights to market and distribute SurBred 15
worldwide, once the product is fully developed. If AspenBio is able to
successfully complete product development, Merial will market and distribute the
product exclusively so long as target sales and other conditions are satisfied.
As long as there is no competing technology, Merial must sell at minimum
(subject to adjustment and pro ration depending upon timing of test development)
1.5 million units in 2004, 4 million units in 2005 and 5 million units in each
calendar year thereafter during the term of the agreement. AspenBio would
receive 33% of gross sales revenues, subject to a minimum price of $1.75 per
test. If Merial does not satisfy the sales targets, then Merial will lose its
exclusive distribution rights. Due to delays encountered with the Early
Detection Bovine Pregnancy Test development, Merial may attempt to renegotiate
certain aspects of the contract, when and if the product is successfully
completed. With respect to each market in which Merial markets the product, the
term of the agreement will be the greater of five years or the term of the
patent in the country. AspenBio has also granted to Merial a right of first
negotiation during the first two years of the agreement to distribute future
animal health products developed by the Company independent of other
collaborations.



                                     31
<PAGE>


AspenBio is on track to complete the initial proof of concept for StayBred using
a recombinant form of LH during late 2004. Once the final formulation has been
successfully tested and a mass production process has been decided upon,
management plans to begin to market and test the product in the field on a
limited basis via veterinary prescription. Additionally, the Company will also
file an ANDA with the FDA and begin the registration process. Management
believes that StayBred can be sold by a pharmacy with a veterinarian's
prescription as soon as the product is available and the ANDA has been filed
with the FDA, although there are no assurances that this will be the case. It is
worth noting that if AspenBio involves a major pharmaceutical company in the
marketing of this product its partner may not want to go to market with a
product until final FDA approval has been obtained. As such, its partner may
want to fully gear up production and concentrate on developing a significant
market roll out.


Equine Proteins - Equine diagnostic kits and hormones for therapeutic use are
not currently commercially available, so we do not expect to encounter
competition in this market. However, we can offer no assurance that competitors
will not enter the market. Based on information developed by Dr. Clara Singular,
an independent consultant and doctor of veterinary medicine, we estimate a $10
million annual market for therapeutic use of proteins to induce fertility in
horses. Preliminary studies indicate that one of these equine hormones might be
used as an anti-aging treatment for horses over eighteen years old.


Customers/Marketing

Human Antigens Division - The customers for our human antigen products are the
manufacturers of the diagnostic test kits and research facilities and brokers
who sell to these same end users. Two of our larger customers are brokers,
Monobind and Golden West Biologics, which accounted for approximately eleven
percent (11%) and thirteen percent (13%) of our business, respectively, in 2001.
One of our customers, BioRad, accounted for approximately fifty-four percent
(54%) of our business in 2003. In 2002, BioRad accounted for 48% of our sales.
The loss of this customer would have a material adverse effect on this division
of our business.

Rapid Diagnostic Test Kits - We are in negotiations with several potential
marketing partners to market and distribute these time and money saving devices
to laboratories, universities and a broad range of other applications.

Ungulate Pregnancy Test -Merial will be responsible for the marketing of this
product. We expect that the customers for our bovine pregnancy test will be
primarily the artificial insemination (AI) providers. The AI providers include
three general categories of business: (1) pharmaceutical companies selling
prostaglandins, which are used to induce estrus in cows to be artificially
inseminated; (2) pharmaceutical companies selling cattle semen and providing the
actual AI services; and (3) AI equipment manufacturers and suppliers. There are
a limited number of these AI providers who service the dairy industry. We would
expect the AI providers to market the products as well. We also expect that
industry trade associations would market the bovine pregnancy test, by endorsing
the product and then receiving compensation based on the value realized from
such endorsements.



                                     32
<PAGE>


Recombinant Bovine LH- We anticipate that the initial customers for this drug
will be commercial dairy operations using timed (synchronized) breeding
programs. It may also have further applications in all artificially inseminated
cows. An injection given shortly after insemination should increase the
retention of a healthy fetus by a measurable percentage over cows not receiving
an injection. We anticipate that marketing on a large scale will be developed by
a significant partner, which will be determined as we complete our clinical
trials on the recombinant form of LH now being developed.

Equine Proteins - We anticipate that the ultimate customers for the equine
protein products would be veterinarians and horse owners. If we are successful
in the development of these products we anticipate entering into agreements with
a pharmaceutical company for marketing and distribution.


General Operations

Backlog and inventory - Our business is not seasonal in nature, so we expect
demand to remain relatively steady. Because we produce proteins on demand, we do
not maintain a backlog of orders. We believe we have reliable sources of raw
materials, do not require significant amounts of raw materials, and can
manufacture all of our protein. As a result, we do not expend large amounts of
capital to maintain inventory.

Payment terms - Because we currently act as a supplier to manufacturers of test
kits and research facilities, we do not provide extended payment terms.

Revenues - The vast majority of our revenues come from domestic customers. Less
than 2% of our revenues come from foreign customers.

Employees - We currently have seven full-time employees and one part time
employee. We will hire additional personnel, as needed depending upon the
implementation and success of our new product lines.

Research and Development

     We spent $273,000 on research and development in the six months ended June
30, 2004 and $323,000 in the six months ended June 30, 2003. We spent $540,000
on research and development in fiscal 2003 and $622,000 in fiscal 2002. We
expect to spend significantly more over the next few years to develop our new
products, primarily on the recombinant form of bovine and equine proteins and
ungulate pregnancy tests. We will also continue research and development to
improve and add antigens to the bovine pregnancy test, in order to improve
accuracy and eliminate competition.

Compliance



                                     33
<PAGE>


FDA

     The Food and Drug Administration (FDA) has regulatory authority over
certain of our planned products. Our existing products require no approvals at
our level.

Human Patients - FDA approval is required for therapeutic uses of products. For
use on human patients, FDA extensively regulates the testing, manufacturing,
labeling, advertising, promotion, export and marketing of therapeutic products.
A therapeutic product administered to human patients is regulated as a drug or a
biologic drug and requires regulatory approval before it may be commercialized.
This would be applicable to AspenBio if we become involved in the manufacture of
the potential diagnostic for the treatment of Appendicitis.

     Product approvals are granted after extensive clinical trials. Any product
approvals that are granted remain subject to continual FDA review, and newly
discovered or developed safety or efficacy data may result in withdrawal of
products from marketing. Moreover, if and when such approval is obtained, the
manufacture and marketing of such products remain subject to extensive
regulatory requirements administered by the FDA and other regulatory bodies,
including compliance with current Good Manufacturing Practices, adverse event
reporting requirements and the FDA's general prohibitions against promoting
products for unapproved or "off-label" uses. Manufacturers are subject to
inspection and market surveillance by the FDA for compliance with these
regulatory requirements. Failure to comply with the requirements can, among
other things, result in warning letters, product seizures, recalls, fines,
injunctions, suspensions or withdrawals of regulatory approvals, operating
restrictions and criminal prosecutions. Any such enforcement action could have a
material adverse effect on our business. Unanticipated changes in existing
regulatory requirements or the adoption of new requirements could also have a
material adverse effect on our business.

Ungulate Pregnancy Test - Because the ungulate pregnancy test will be a
diagnostic use only, it will not be subject to FDA regulation. However, we will
make a notification filing with the FDA, which advises the FDA of the expected
uses and labeling of the product.

Recombinant LH Pregnancy Enhancing Drug - It is anticipated that an ANDA will be
required to be filed with the FDA before mass distribution can occur. During the
initial distribution phase management believes the Company will be able to sell
the drug through compounding pharmacies for distribution to diaries, with a
veterinarian's prescription.

Recombinant Equine Proteins - As the equine proteins would have a therapeutic
use, they would require regulatory approval similar to that required for other
animal drugs. During the initial distribution phase management believes the
company will be able to sell the drug through compounding pharmacies to
equestrian centers, ranches and horse owners with a veterinarian's prescription.


Environmental Protection

     We are subject to various environmental laws pertaining to the disposal of
hazardous medical waste. We contract for disposal of our hazardous waste with a
licensed disposal facility. We do not expect to incur liabilities related to
compliance with environmental laws; however, we cannot make a definitive
prediction.




                                     34
<PAGE>


Other Laws

     We are also subject to other federal, state and local laws, pertaining to
matters such as safe working conditions and fire hazard control.



                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Comparative Results for the Six-Month Periods Ended June 30, 2004 and 2003

Sales for the six months ended June 30, 2004 totaled $337,000, which is a
$50,000 or 13% decrease from the 2003 period. The change in sales is primarily
attributable to the timing of existing customers' order placement. It is not
unusual for the orders from our customers to vary by quarter depending upon the
customers' sales and production needs.

Cost of sales for the six months ended June 30, 2004 totaled $176,000; a $41,000
decrease as compared to the 2003 period. The change in cost of sales resulted
from lower sales levels for the period offset by increased overhead expenses we
are incurring as a result of moving into our new facility. Gross profit
percentage was 48% in the 2004 period as compared to 44% in the 2003 period. The
change is generally attributable to increased overhead expenses in our facility,
which were higher in the 2003 period when the new facility was setup and came on
line.

Selling, general and administrative expenses in the six months ended June 30,
2004, totaled $711,000, which is a $326,000 or 84% increase as compared to the
2003 period. The increase relates primarily to higher costs incurred during the
2004 period for legal expenses incurred for work on various contract matters and
for expenses associated with being a public company, including the amortization
expense of the consulting contract we signed in January 2004.

Research and development expenses in the 2004 period totaled $273,000, which is
a $50,000 or 15% decrease as compared to the 2003 period. The change is due
generally to the timing of development costs being incurred to develop an
expanded line of technologies as compared to the prior year.

Interest expense for the six months ended June 30, 2004, increased to $183,000
or $57,000 more as compared to the 2003 period. The increase was primarily due
to higher debt levels to fund the new facility and working capital needs.


Comparison of the year ended December 31, 2003 to 2002

Sales for the year ended December 31, 2003 totaled $651,000, which is a
$(95,000) or (13)% decrease from the year ended December 31, 2002. The decrease
in sales is primarily attributable to reduced shipment levels to a number of
existing customers, except for the Company's largest customer, to which sales
were virtually unchanged. It is not unusual for the orders from our customers to
vary by quarter and by year depending upon the customer's sales and production
needs. We cannot predict future sales volumes that could be expected from
existing or other customers.


                                       35
<PAGE>

Costs of sales for the year ended December 31, 2003 totaled $518,000, a $144,000
or 22% decrease as compared to the 2002 period. The change in cost of sales
resulted from a combination of factors, no one of which was significant. Gross
profit percentage increased to 20% in the year ended December 31, 2003, as
compared to 11% in the 2002 period. The change is generally attributable to more
efficient production out of our new facility, net of the increased operating
costs associated with the new facility.

Selling, general and administrative expenses in the year ended December 31,
2003, totaled $878,000, which is a $490,000 or 127% increase as compared to the
2002 period. The increase is primarily attributable to a combination of
additional personnel on staff, higher operating expenses in our new facility and
the costs of now being a public reporting entity.

Research and development expenses in the year ended December 31, 2003 totaled
$540,000, which is an $82,000 or 13% decrease as compared to the 2002 period.
The decrease is due to the timing of when significant costs associated with the
acquisition and development of technologies, are incurred. During 2002
additional external costs were being incurred to acquire and develop the line of
technologies as compared to 2003 year. Current technologies being developed
include the bovine pregnancy tests and bovine pregnancy enhancement products and
several other technologies. Depending upon available cash, we expect research
and development expenses to increase at least back to the 2002 level for the
year ending December 31, 2004.

Interest expense for the year ended December 31, 2003, increased to $353,000 or
$219,000 more as compared to the $134,000 for the 2002 year. The increase was
primarily due to higher debt levels to fund the new facility and working capital
needs. We also recorded an $81,500 expense during the 2003 period for the
estimated non-cash cost associated with the revision in terms of a convertible
loan that was completed during 2003.

No income tax benefit was recorded on the loss for the year ended December 31,
2003, as management of the Company was unable to determine that it was more
likely than not that such benefit would be realized. At December 31, 2003, the
Company had a net operating loss for income tax purposes of approximately
$2,974,000, expiring through 2023.


LIQUIDITY AND CAPITAL RESOURCES

The Company reported a net loss of $1,006,000 during the six months ended June
30, 2004. At June 30, 2004, the Company had a working capital deficit of
$708,000. The Company reported a net loss of $1,717,000 during the year ended
December 31, 2003. At December 31, 2003, the Company had a working capital
deficit of $202,000. Management believes that in order to continue with the
technology development activities and support the current level of operations,
the Company will need to continue to pursue its capital raising activities.
Management's plans also include continuing to fulfill the requirements under the
global development and distribution agreement signed in March 2003, to
accomplish the milestones and successful completion of the bovine pregnancy test
to receive additional development payments of up to $1,700,000. The completion
of this test has been delayed from the timeline originally agreed to under the
distribution agreement and the Company is attempting to achieve its requirements
in the next few months under the agreement. The Company is also focused on
generating increased product sales, and raising additional capital.


                                       36
<PAGE>

Capital expenditures, primarily for production, laboratory and facility
improvement costs for the remainder of the fiscal year ending December 31, 2004,
are anticipated to total approximately $50,000. Funding for the capital
additions is contingent on the Company's ability to obtain additional financing
and available working capital.

AspenBio anticipates that spending for research and development for the fiscal
year ending December 31, 2004, will continue at a similar to slightly
accelerated pace to those for the six months ended June 30, 2004. The primary
expenditures will be to continue to file patents on the Company's technologies
as well to fund development costs in support of the current pipeline products.
The principal products consist of the bovine pregnancy tests and bovine
pregnancy enhancement products as well as the products, including equine
products, being derived from the patent license agreement signed in April 2004.
The Company may also consider acquisitions of development technologies or
products, should opportunities arise that the Company believes fit the Company's
business strategy and would be appropriate from a capital standpoint.

The Company has a $150,000 line of credit agreement with a bank, which matures
April 30, 2005. The facility bears interest at the prime rate plus 1% (with an
interest rate floor of 6.5%). The line of credit is collateralized by the assets
of the Company and guaranteed by the president of the Company. The line modifies
a prior $250,000 line that matured June 30, 2004. As of June 30, 2004, there was
$250,000 outstanding on the line that was subsequently paid down to zero
providing the Company with availability of $150,000 as of the date of this
report.

During June 2003, the Company closed on a $3,250,000 permanent mortgage facility
on its land and building. The mortgage is held by a commercial bank and includes
a portion guaranteed by the U. S. Small Business Administration. The loan is
collateralized by the real property and is also personally guaranteed by the
Company's president. The average approximate interest rate is 6.5% and the loan
requires monthly payments of approximately $23,700.

During June 2003, the Company's president agreed to consolidate the Company's
notes payable to him in the aggregate principal amount of $958,651, into one new
note with an interest rate of 6% per annum and the maturity date extended to
June 2008. An advance principal payment of $200,000, was made to him in August
2004, under previously agreed to terms and monthly payments of $10,000, will be
made to him beginning in September 2004 and continuing for thirty six months at
which time the then remaining balance will be due.

On July 21, 2004 The Company closed on $2,535,000 ($1,247,500 on July 21, 2004
and $1,287,500 on August 19, 2004) under a Private Placement of unregistered
Units (consisting of 20,000 common shares and 20,000 warrants exercisable for
three years at $1.50/ share for $17,500 per Unit) through its placement agent.
The purpose of the private placement is to raise funds for working capital, new
product development and general corporate purposes. As a result of that funding,
under an agreement previously entered into with Roger Hurst, the Company's
President and principal shareholder, he contributed 1,896,757 common shares Mr.
Hurst owned of the Company, back to the Company for no consideration, which
reduced the outstanding shares by that amount.



                                     37
<PAGE>


In the third quarter of 2003 Cambridge Holdings, Ltd., a stockholder of the
Company, loaned a total of $40,000 under two notes to the Company. The proceeds
of the notes were used for working capital, with the notes due on demand bearing
interest at 10%. During December 2003 the notes plus accrued interest were
repaid to the stockholder.

During the fourth quarter of 2003 we completed the sale of 1,083,750 shares of
the Company's common stock, generating net proceeds to the Company of $923,000
after deducting offering expenses. Proceeds from this offering were used for
debt repayment, operating and development expenses and working capital.

During October 2003, the Company completed a $350,000 offering of convertible
debt. The unsecured notes bear interest at 8% and were due at the earlier of May
2004 or at the time $1,000,000 is raised in an equity offering. The debt
offering consisted of a note for $1.00 and one share of common stock for each
$1.00 invested in the notes. To reduce the amount of the dilution as a result of
the debt offering, the Company's president contributed 350,000 shares of common
stock to the Company that were used in the offering. The proceeds of the
offering have been allocated between the estimated value of the notes, the stock
and the warrant, based upon their respective estimated fair values. The amount
allocated to the non-debt elements will be accreted back to the debt as
additional interest expense over the life of the notes. The Placement Agent
selling the notes received fees and expenses of 13% of the proceeds raised plus
a warrant to acquire 150,000 shares of common stock at $1.50 per share
exercisable through June 2006. During December 2003 an equity offering exceeding
$1,000,000 was closed and accordingly, the bridge loans matured. Out of the
total $350,000, $205,000 was converted into common stock of the Company at $1.00
per share and $145,000 was repaid, with $45,000 of the amount outstanding at
December 31, 2003 and repaid in January 2004.

During August 2004 we completed an offering generating net proceeds to the
Company of approximately $2,220,000 after deducting offering expenses. The
offering was done under a private placement of unregistered securities ("Units")
totaling an aggregate of $2,535,000, with $1,247,500, having closed on July 21,
2004 and $1,287,500, having closed on August 19, 2004. Each Unit sold consisted
of 20,000 common shares and 20,000 warrants exercisable for three years at
$1.50/ share, at a total price of $17,500 per Unit. Proceeds from this offering
were used for debt repayment, operating and development expenses and working
capital.

Operating Activities

Net cash consumed by operating activities was $323,000 during the six months
ended June 30, 2004. Cash was consumed by the loss of $1,006,000, less non-cash
expenses of $318,000 for depreciation and amortization, including $204,000
associated with the amortization of the consulting agreement signed in January
2004. Higher operating expenses generally accounted for the majority of the loss
increase. An increase in accounts payable and accruals of $388,000 during the
period funded a portion of the loss.



                                     38
<PAGE>


Net cash consumed by operating activities was $161,000 during the six months
ended June 30, 2003. During March 2003, cash of $200,000 was received upon the
execution of the global development and distribution agreement, which has been
recorded as deferred revenue until the Company has completed the contingencies
under the agreement. Cash was consumed by the loss of $664,000, and cash
expended of $28,000 to increase inventories offset by $140,000 in depreciation
and a $146,000 increase in accounts payable.

Net cash consumed by operating activities was $396,000 during the year ended
December 31, 2003. Cash was consumed by the loss of $1,717,000, less non-cash
expenses of $278,000 for depreciation and amortization and $150,000 associated
with additional non-cash items. Decreases of $73,000 in accounts receivable and
$251,000 in inventories, arising from lower sales levels in 2003 and $350,000 in
restricted cash, from the release of the restrictions, provided funding for a
portion of the loss. A net increase in accounts payable and accruals of $27,000
during the period also funded a portion of the loss. During March 2003, cash of
$200,000 was received upon the execution of the global development and
distribution agreement, which has been recorded as deferred revenue until the
Company has completed the contingencies under the agreement.

Net cash outflows from operating activities consumed $765,000 during the year
ended December 31, 2002. Cash was consumed by the loss of $1,224,000, offset by
$121,000 in total depreciation and amortization expenses and $50,000 associated
with non-cash items. Operating cash flow benefited from a $135,000 reduction in
accounts receivable and a $120,000 reduction in inventories during 2002 due to
lower sales levels. Accounts payable and accrued expenses increased by $250,000
benefiting operating cash flow. The Company also used cash of $350,000 to fund a
restricted cash account. Expenditures associated with the development of the
bovine pregnancy test also increased the rate of cash outflow.

Investing Activities

Net cash outflows from investing activities consumed $131,000 during the six
months ended June 30, 2004. The outflow was primarily attributable to purchases
of property and equipment and intangibles.

Net cash outflows from investing activities consumed $103,000 during the 2003
period. The outflow was attributable to purchases of property and equipment and
payments for intangibles.


Net cash outflows from investing activities consumed $228,000 during the year
ended December 31, 2003. The outflow was primarily attributable to purchases of
property and equipment and intangibles.

Net cash outflows from investing activities consumed $607,000 during the 2002
period. The outflow was attributable to purchases of property and equipment and
payments for intangibles.

Financing Activities

Net cash inflows from financing activities generated $319,000 during the six
months ended June 30, 2004. The Company received net proceeds of $348,000 from
the sale of common stock during the period. During the period, the Company
received $51,000 from the proceeds of debt and repaid $81,000 under its debt
agreements.


                                       39
<PAGE>
Net cash inflows from financing activities generated $148,000 during the six
months ended June 30, 2003. The Company drew $226,000 under its line of credit.
The construction loan was increased by $653,000, advanced directly to finalize
the construction of our new facility. The loan was converted into a permanent
mortgage in June 2003.

Net cash inflows from financing activities generated $640,000 during the year
ended December 31, 2003. The Company drew $249,000 under the new line of credit.
The construction loan was increased by $653,000, advanced directly to finalize
the construction of our new facility. This loan was converted into a $3,250,000
permanent mortgage in June 2003, and loan closing costs of $57,000 incurred.
During the year we received $79,000 in new loan proceeds above the amounts that
we repaid during the period. We also received net proceeds from the sale of
common stock totaling $718,000, exclusive of debt conversions, and repurchased
and retired $100,000 of common stock during the year.

Net cash inflows from financing activities generated $1,080,000 during 2002. The
Company received $300,000 in connection with the completion of sale of
securities and we received $1,191,000 from the issuance of notes payable. During
2002 $362,000 was used to reduce debt and $49,000 was paid out in dividends.

Critical Accounting Policies

The Company's financial position, results of operations and cash flows are
impacted by the accounting policies the Company has adopted. In order to get a
full understanding of the Company's financial statements, one must have a clear
understanding of the accounting policies employed. A summary of the Company's
critical accounting policies follows:

Accounts Receivable: Accounts receivable balances are stated net of allowances
for doubtful accounts. The Company records allowances for doubtful accounts when
it is probable that the accounts receivable balance will not be collected. When
estimating the allowances for doubtful accounts, the Company takes into
consideration such factors as its day-to-day knowledge of the financial position
of specific clients, the industry and size of its clients. A financial decline
of any one of the Company's large clients could have an adverse and material
effect on the collectibility of receivables and thus the adequacy of the
allowance for doubtful accounts. Increases in the allowance for doubtful
accounts are recorded as charges to bad debt expense and are reflected in other
operating expenses in the Company's statements of operations. Write-offs of
uncollectible accounts are charged against the allowance for doubtful accounts.

Inventories: The Company's inventory is a significant component of current
assets and is stated at the lower of cost or market. The Company regularly
reviews inventory quantities on hand and records provisions for excess or
obsolete inventory based primarily on its estimated forecast of product demand,
market conditions, production requirements and technological developments.
Significant or unanticipated changes to the Company's forecasts of these items,
either adverse or positive, could impact the amount and timing of any additional
provisions for excess or obsolete inventory that may be required.



                                       40
<PAGE>


Long-Lived Assets: The Company records property and equipment at cost.
Depreciation of the assets is recorded on the straight-line basis over the
estimated useful lives of the assets. Dispositions of property and equipment are
recorded in the period of disposition and any resulting gains or losses are
charged to income or expense when the disposal occurs. The carrying value of the
Company's long-lived assets is periodically reviewed to determine that such
carrying amounts are not in excess of estimated market value. Goodwill is
reviewed annually for impairment by comparing the carrying value to the present
value of its expected cash flows. For the years ended December 31, 2003 and
2002, the required annual testing resulted in no impairment charge.

Revenue recognition: The Company's revenues are recognized when products are
shipped or delivered to unaffiliated customers. The Securities and Exchange
Commission's Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition"
provides guidance on the application of generally accepted accounting principles
to select revenue recognition issues. The Company has concluded that its revenue
recognition policy is appropriate and in accordance with SAB No. 101. Revenue is
recognized under development and distribution agreements only after the
following criteria are met: (i) there exists adequate evidence of the
transactions; (ii) delivery of goods has occurred or services have been
rendered; and (iii) the price is not contingent on future activity and
collectibility is reasonably assured.


Recent Accounting Policies


Stock-Based Compensation - In December 2002, the FASB issued FASB No. 148 (SFAS
148), Accounting for Stock-Based Compensation - Transition and Disclosure. This
Statement amends FASB Statement No. 123, Accounting for Stock-Based
Compensation, to provide alternative methods of transition for a voluntary
change to the fair value based method of accounting for stock-based employee
compensation. It also amends disclosure requirements to require prominent
disclosures in both annual and interim financial statements about the method and
the effect of the method used for stock based compensation on reported results.
The statement is effective for fiscal years ending after December 15, 2002.
Adoption of SFAS 148 did not have a material effect on the Company's financial
statements.

Variable Interest Entities - In January 2003, the FASB issued FASB
Interpretation No. 46 (FIN 46), Consolidation of Variable Interest Entities. FIN
46 clarifies the application of Accounting Research Bulletin No. 51,
Consolidated Financial Statements, for certain entities which do not have
sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties or in which equity
investors do not have the characteristics of a controlling financial interest
("variable interest entities"). Variable interest entities will be required to
be consolidated by their primary beneficiary. The primary beneficiary of a
variable interest entity is determined to be the party that absorbs a majority
of the entity's expected losses, receives a majority of its expected returns, or
both, as a result of holding variable interests, which are ownership,
contractual, or other pecuniary interests in an entity. In December 2003, the
FASB approved a partial deferral of FIN 46 along with various other amendments.
The effective date for this interpretation has been extended until the first
fiscal period ending after December 15, 2004. However, prior to the required
application of this interpretation, a public company that is a small business
issuer shall apply this interpretation to those entities that are considered to
be special purpose entities no later than the end of the first fiscal reporting
period after December 15, 2003. The Company does not have any variable interest
entities, and therefore, the adoption of the provisions of FIN 46 will not have
a material effect on the financial condition or results of operations of the
Company.

                                     41
<PAGE>


Revenue Arrangements - In November 2002, the Emerging Issues Task Force ("EITF")
reached a consensus on Issue 00-21, Accounting for Revenue Arrangements with
Multiple-Deliverables (EITF 00-21). EITF 00-21 addresses how to account for
arrangements that may involve the delivery or performance of multiple products,
services and/or rights to use assets. The consensus mandates how to identify
whether goods or services or both which are to be delivered separately in a
bundled sales arrangement should be accounted for separately because they are
"separate units of accounting." The guidance can affect the timing of revenue
recognition for such arrangements, even though it does not change rules
governing the timing or pattern of revenue recognition of individual items
accounted for separately. The final consensus will be applicable to agreements
entered into in fiscal years beginning after June 15, 2003 with early adoption
permitted. Additionally, companies will be permitted to apply the consensus
guidance to all existing arrangements as the cumulative effect of a change in
accounting principle in accordance with APB Opinion No. 20, Accounting Changes.
The Company does not believe the adoption of EITF 00-21 had a material impact on
its financial position or results of operations.

Financial Instruments - In May 2003 the FASB issued Statement of Financial
Accounting Standards No. 150 ("SFAS 150"), Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. This statement
establishes standards for how an issuer classifies and measures in its balance
sheet certain financial instruments with characteristics of both liabilities and
equity. In accordance with this standard, financial instruments that embody
obligations of the issuer are required to be classified as liabilities. SFAS No.
150 is effective for all financial instruments entered into or modified after
May 31, 2003, except for those provisions relating to mandatorily redeemable
non-controlling interests, which have been deferred. For existing financial
instruments, SFAS No. 150 is effective at the beginning of the fiscal quarter
commencing July 1, 2003. The adoption of SFAS No. 150 did not have an effect on
the Company's financial position, results of operations or cash flows. If the
deferred provisions of SFAS No. 150 are finalized in their current form,
management does not expect adoption to have a material impact on the financial
position, results of operations or cash flows.


                             DESCRIPTION OF PROPERTY

     We maintain our administrative office, laboratory and production operations
in a 40,000 square foot building in Castle Rock, Colorado, which was constructed
for us. We moved into our new facility in early 2003 and do not presently plan
any renovation, improvements, or development of this property.

     AspenBio owns the property subject to a mortgage with an outstanding
balance of $3,263,287 at December 31, 2003, payable in monthly installments of
approximately $23,700 and bearing interest at an approximate average rate of
6.5%. The Company maintains adequate insurance coverage on the property.


                    MARKET FOR THE REGISTRANT'S COMMON STOCK

                                     42
<PAGE>
                         AND RELATED STOCKHOLDER MATTERS

Market Information
------------------

     Our common stock is traded on the over-the-counter bulletin board system
operated by NASDAQ under the symbol "APNB.OB". Our common stock did not trade
publicly during 2002. Trading commenced in February 2003 and high and low prices
are summarized as:

                  Quarter ended                    High                  Low
                  -------------                    ----                  ---

                  March 31, 2004                   $1.70                 $1.07
                  June 30, 2004                    $1.60                 $1.20

                  March 31, 2003                   $4.30                 $3.50
                  June 30, 2003                    $3.70                 $1.20
                  September 30, 2003               $1.60                 $1.25
                  December 31, 2003                $1.45                 $1.07

As of October 15, 2004 we had approximately 1,001 holders of record (excluding
an indeterminable number of shareholders whose shares are held in street or
"nominee" name) of our common stock.

     We have never paid a dividend on our common stock (other than in 2002 in
connection with our previous Subchapter S status), and we do not intend to pay
cash dividends for the foreseeable future. Instead, we currently plan to retain
earnings, if any, for use in the operation of our business and to fund future
growth. In addition, the Company is prohibited from paying dividends on its
Common Stock while certain long-term indebtedness remains outstanding.

     The closing bid price of the Common Stock on October 15, 2004 was $.605 per
share.



                             EXECUTIVE COMPENSATION

Compensation and other Benefits of Executive Officers
-----------------------------------------------------

     The following table sets out the compensation received for the fiscal years
ended December 31, 2003, 2002 and 2001 in respect to each of the individuals who
were the Company's chief executive officer at any time during the last fiscal
year and the Company's four most highly compensated executive officers whose
total salary and bonus exceeded $100,000 (the "Named Executive Officers").



                                       43
<PAGE>


<TABLE>
<CAPTION>

                                               SUMMARY COMPENSATION TABLE

            FISCAL YEAR COMPENSATION                                              LONG TERM COMPENSATION

                                                                         Awards                     Payouts
                                                                                        Restricted
                                                                                          Shares
                                                                                            or                 All other
                                                                    Securities under    Restricted   LTIP       Compen-
     Name and                 Salary     Bonus     Other Annual       Option/SARs          Share     Payouts    sation
Principal Position    Year       ($)       ($)     Compensation         Granted            Units       ($)        ($)
------------------    ----       ---       ---     ------------         -------            -----     -------    -------
<S>                   <C>      <C>          <C>         <C>                <C>               <C>        <C>        <C>

Roger  D.  Hurst,     2003     64,500       0           0                  0                 0          0          0
Chief  Executive
Officer, Secretary
and Director
                      2002     72,000       0           0                  0                 0          0          0
                      2001     64,800       0           0                  0                 0          0          0
</TABLE>


Agreements with Management
--------------------------

     We do not have contracts with our management except on August 30, 2004, we
entered into an employment agreement with Roger Hurst. The agreement provides
for exclusive use of his services to the Company for a minimum of one year at an
annual salary of $100,000 and automatically renews at the end of each year
unless terminated by either party. The Company is limited in its right to cancel
the Agreement, so long as indebtedness owed by the Company and guaranteed by Mr.
Hurst remains outstanding. The Agreement contains standard provisions for
non-competition, confidentiality, indemnification and termination.

Option Grants To Officers
-------------------------
Fiscal Year End Option Values
-----------------------------

     No stock option grant table or year-end option table is included in this
report because none of our named executive officers holds any options to
purchase our common stock.

Aggregated Option/SAR Exercised in Last Financial Year and Fiscal Year-End
--------------------------------------------------------------------------
Option/SAR Values.
------------------

     None.

Compensation of Directors.
--------------------------

     Other than Gregory Pusey, our directors do not currently receive any cash
compensation from us for their services as members of the Board of Directors.
Mr. Pusey, the Company's active Chairman of the Board is paid $40,000 per year
for his services, which commenced September of 2003. In August 2001, we issued
options to each of Bruce F. Deal, a former director of the Company, and Gail S.
Schoettler, to purchase 100,000 shares of our common stock at $1.00 per share
during a five-year period. In January of 2004, we issued options to Gregory
Pusey to purchase 100,000 shares at $1.21 per share with a ten-year term. In
March of 2004, we made a grant of options to Douglas I. Hepler to be issued upon
his acceptance of his Board appointment to purchase 100,000 shares at $1.50 per
share with a ten-year term. In May 2004, we made a grant of options to Gail
Schoettler to purchase 100,000 shares at $1.47 per share with a ten-year term.
On October 1, 2001, we made a grant of options to David Welch to purchase
100,000 shares at $0.76 per share with a ten-year term, subject to vesting over
the next three years.



Benefit Plans.
--------------

2002 Stock Incentive Plan

                                       44
<PAGE>


     In April 2002, we adopted our 2002 Stock Incentive Plan. The purpose of the
plan is to promote our interests and the interests of our shareholders by
providing participants a significant stake in our performance and providing an
opportunity for the participants to increase their holdings of our common stock.
The plan is administered by the Option Committee, which consists of the Board or
a committee of the Board, as the Board may from time to time designate, composed
of not less than two members of the Board, each of who shall be a director who
is not employed by us. The Option Committee has the authority to select
employees and consultants (which may include directors) to receive awards, to
determine the number of shares of common stock covered by awards and to set the
terms and conditions of awards. The plan, as amended authorizes the grant of
options to purchase up to 1,500,000 shares of our common stock. We currently
have outstanding options to purchase 1,435,000 shares. The options are
exercisable in annual installments of one third each at prices ranging from $.75
to $1.50 per share for a term of ten years. In addition to stock options, we may
also offer a participant a right to purchase shares of common stock subject to
such restrictions and conditions as the Option Committee may determine at the
time of grant. Such conditions may include continued services to us or the
achievement of specified performance goals or objectives. No common stock has
been issued pursuant to the plan.


                                 LEGAL MATTERS

     Legal matters in connection with the shares of common stock being offered
for resale hereby have been passed on for the Company by the law firm of Burns,
Figa & Will, P.C., Englewood, Colorado.


                                     EXPERTS

     The audited financial statements as of and for the years ended December 31,
2003 and 2002 of AspenBio, Inc. included herein and elsewhere in this Prospectus
and Registration Statement have been audited by Gelfond Hochstadt Pangburn,
P.C., independent registered public accounting firm, to the extent set forth in
their report appearing herein and elsewhere in the Registration Statement. Such
financial statements have been so included in reliance upon the report of such
firm given upon their authority as experts in auditing and accounting.




                                     45
<PAGE>



                             CHANGES IN ACCOUNTANTS

     The Audit Committee selected the independent accounting firm of Gelfond
Hochstadt Pangburn, P.C. ("GHP") with respect to the audit of our financial
statements for the year ended December 31, 2003.

     On December 20, 2002, the Company dismissed Larry O'Donnell, CPA, P.C.
("O'Donnell") as the Company's principal accountant. The decision to change
accountants was approved by the Board of Directors of the Company.

     The reports of O'Donnell on the financial statements of the Company for
either of the two years ended December 31, 2001 and 2000 did not contain an
adverse opinion or disclaimer of opinion, and were not qualified or modified as
to uncertainty, audit scope or accounting principles. The Company does not
believe there were disagreements with O'Donnell on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of O'Donnell
would have caused O'Donnell to make reference to the subject matter of the
disagreements in connection with the Company's disclosure of its change in
accountants.

     On December 20, 2002 the Company engaged GHP as the Company's certifying
accountants to audit the financial statements of the Company for its year ended
December 31, 2002. During the years ended December 31, 2001 and 2000, and the
interim period prior to its agreement to engage GHP as the company's principal
accountants, neither the Company nor anyone on its behalf had consulted GHP on:
(i) the application of any accounting principles to any transaction (completed
or proposed); or (ii) the type of audit report that might be rendered on the
Company's financial statements; or (iii) any matter that was either the subject
of a disagreement or reportable event as such terms are defined in Item 304 of
Regulation S-B of the Securities Act.

     The Company delivered a copy of its disclosure on the change in accountants
to O'Donnell and GHP and requested O'Donnell and GHP to furnish letters to the
Company stating whether O'Donnell and GHP, respectively, agreed with the
disclosure. Both O'Donnell and GHP provided letters to the Company stating their
agreement with the statements disclosed by the Company.




                                     46
<PAGE>


                             ADDITIONAL INFORMATION

     The Company has filed with the Commission, a registration statement
(together with all amendments thereto, the "Registration Statement") under the
1933 Act with respect to the securities offered hereby. This prospectus, filed
as part of the Registration Statement, omits certain information contained in
the Registration Statement in accordance with the rules and regulations of the
Commission. For further information, reference is made to the Registration
Statement and to the exhibits filed therewith, which may be inspected without
charge at the principal office of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and copies of the material contained therein may be
obtained from the Commission upon payment of applicable copying charges.
Statements contained in this prospectus as to the contents of any contract or
other document referred to herein are not necessarily complete, and in each
instance reference is made to the copy of the contract or other document filed
as an exhibit to the Registration Statement.

     The Company is subject to the reporting and other informational
requirements of the 1934 Act and, in accordance therewith, files reports and
other information with the Commission. Such reports, proxy statements and other
information, once filed by the Company, can be inspected and copied at the
public reference facilities maintained by the Commission at the offices of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's regional offices at Northwest Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and 233
Broadway, New York, New York 10279. Information on the operations of the Public
Reference Room may be obtained by calling the Commission at 1-800-SEC-0330. The
Commission also maintains a Web site on the Internet that contains reports,
proxy and information statements and other information regarding issuers that
file electronically with the Commission. The address of such site is
http:/www.sec.gov.


     The Company intends to furnish annual reports to stockholders containing
audited financial statements and will also make available quarterly reports and
such other periodic reports as it may determine to be appropriate or as may be
required by law.






                                     47
<PAGE>



                                 AspenBio, Inc.



                          INDEX TO FINANCIAL STATEMENTS


Report of Independent Registered Public Accounting Firm                    F-2

Balance Sheets as of December 31, 2003 and June 30, 2004 (unaudited)       F-3

Statements of Operations for the years ended December 31, 2003 and 2002
   and for the six months ended June 30 2004 and 2003 (unaudited)          F-4

Statements of Stockholders' Equity (Deficit) for the years ended
   December 31, 2003 and 2002 and for the six months ended
   June 30 2004 (unaudited)                                                F-5

Statements of Cash Flows for the years ended December 31, 2003 and 2002
   and for the six months ended June 30 2004 and 2003 (unaudited)          F-6

Notes to Financial Statements                                              F-8
















                                      F-1


<PAGE>



             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Board of Directors and Stockholders
AspenBio, Inc.


     We have audited the accompanying balance sheet of AspenBio, Inc. (a
Colorado corporation) (the "Company") as of December 31, 2003, and the related
statements of operations, stockholders' equity (deficit), and cash flows for
each of the two years in the period then ended. 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 the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
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 AspenBio, Inc. as of
December 31, 2003, and the results of its operations and its cash flows for each
of the two years in the period then ended in conformity with accounting
principles generally accepted in the United States of America.


GELFOND HOCHSTADT PANGBURN, P.C.


/s/ Gelfond Hochstadt Pangburn, P.C.
------------------------------------

Denver, Colorado
March 17, 2004








                                       F-2

<TABLE>
<CAPTION>



                                 AspenBio, Inc.
                                 Balance Sheets
                                                                    June 30,     December 31,
                                                                      2004          2003
                                                                      ----          ----
                                     ASSETS                        (Unaudited)
<S>                                                               <C>            <C>
Current assets:
    Cash                                                          $    12,363    $   148,132
    Accounts receivable, net (Note 6)                                  68,045         21,349
    Inventories (Notes 3 and 6)                                       255,573        259,972
    Prepaid expenses                                                       --         18,718
                                                                  -----------    -----------

      Total current assets                                            335,981        448,171
                                                                  -----------    -----------

Property and equipment (Notes 4, 6 and 8)                           3,675,347      3,764,008
                                                                  -----------    -----------

Other assets:
    Goodwill                                                          387,239        387,239
    Other intangibles (Note 5)                                        714,341        242,735
                                                                  -----------    -----------
      Total other assets                                            1,105,580        629,974
                                                                  -----------    -----------

Total assets                                                      $ 5,112,908    $ 4,842,153
                                                                  ===========    ===========

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
    Accounts payable                                              $   349,246    $    72,074
    Accrued expenses                                                  293,610        182,417
    Lines of credit (Note 6)                                          276,319        277,480
    Notes payable:
       Note payable, related party (Note 7)                            51,360         45,000
       Mortgage note - current portion (Note 8)                        73,026         73,026
                                                                  -----------    -----------

      Total current liabilities                                     1,043,561        649,997

Mortgage note payable, less current portion (Note 8)                3,155,684      3,190,262
Note payable, related party (Note 7)                                  958,651        958,651
Deferred revenue (Note 2)                                             200,000        200,000
                                                                  -----------    -----------

      Total liabilities                                             5,357,896      4,998,910
                                                                  -----------    -----------

Commitments and contingencies (Note 12)                                    --             --

Stockholders' equity (deficit) (Notes 9, 10 and 13):
    Common stock, no par value, 30,000,000 shares
      authorized; 10,692,472 (unaudited) and 10,102,031 shares
      issued and outstanding                                        3,629,410      2,712,035
    Accumulated deficit                                            (3,874,398)    (2,868,792)
                                                                  -----------    -----------

      Total stockholders' equity (deficit)                           (244,988)      (156,757)
                                                                  -----------    -----------

Total liabilities and stockholders' equity (deficit)              $ 5,112,908    $ 4,842,153
                                                                  ===========    ===========
</TABLE>


                 See Accompanying Notes to Financial Statements.


                                       F-3
<PAGE>
<TABLE>
<CAPTION>
                                 AspenBio, Inc.
                            Statements of Operations


                                       Six months ended June 30,        Year ended December 31,
                                       -------------------------        -----------------------
                                         2004             2003            2003           2002
                                         ----             ----            ----           ----
                                              (Unaudited)
<S>                                  <C>             <C>             <C>             <C>
Sales (Note 12)                      $    336,919    $    386,665    $    650,575    $    745,427

Cost of sales                             175,501         216,173         518,493         662,817
                                     ------------    ------------    ------------    ------------

    Gross profit (loss)                   161,418         170,492         132,082          82,610
                                     ------------    ------------    ------------    ------------

Operating expenses:
  Selling, general and
      administrative                      711,359         385,813         877,562         387,202
  Research and development                272,840         322,562         540,292         622,460
                                     ------------    ------------    ------------    ------------

    Total operating expenses              984,199         708,375       1,417,854       1,009,662
                                     ------------    ------------    ------------    ------------

    Operating loss                       (822,781)       (537,883)     (1,285,772)       (927,052)

Other income (expense):
   Interest expense                      (182,825)       (125,970)       (353,342)       (134,411)
   Debt conversion inducement
     expense (Note 7)                          --              --         (81,500)             --
   Interest income                             --              --           3,437           7,522
   Expense incurred with
     registration statement                    --              --              --        (175,608)
                                     ------------    ------------    ------------    ------------

    Total other income (expense)         (182,825)       (125,970)       (431,405)       (302,497)
                                     ------------    ------------    ------------    ------------

Net loss before income tax benefit       (182,825)       (663,853)     (1,717,177)     (1,229,549)

Income tax benefit (Note 11)                   --              --              --           5,298
                                     ------------    ------------    ------------    ------------

Net loss                             $ (1,005,606)   $   (663,853)   $ (1,717,177)   $ (1,224,251)
                                     ============    ============    ============    ============

Basic and diluted net loss
   per share                         $       (.10)   $       (.07)   $       (.19)   $       (.13)
                                     ============    ============    ============    ============

Basic and diluted weighted
   average shares outstanding          10,490,128       9,300,000       9,239,909       9,204,110
                                     ============    ============    ============    ============
</TABLE>



                 See Accompanying Notes to Financial Statements.


                                       F-4
<PAGE>
<TABLE>
<CAPTION>
                                 AspenBio, Inc.
                   Statements of Stockholders Equity (Deficit)
                   Years ended December 31, 2003 and 2002 and
                   six months ended June 30, 2004 (unaudited)

                                                                                                     Retained
                                                                 Common Stock           Deferred     earnings
                                                                 ------------          consulting  (accumulated
                                                             Shares         Amount        cost        deficit)         Total
                                                             ------         ------     ----------   -----------    -----------
<S>                                                        <C>          <C>            <C>          <C>            <C>
Balance, January 1, 2002                                   8,800,000    $ 1,261,769    $ (32,880)   $    72,636    $ 1,301,525

      Issuance of common stock for cash                      500,000        300,000           --             --        300,000
      Dividends                                                   --        (48,999)          --             --        (48,999)
      Warrants issued in connection with notes payable            --         43,000           --             --         43,000
      Amortization of deferred consulting cost                    --             --       32,880             --         32,880
      Net loss for the year                                       --             --           --     (1,224,251)    (1,224,251)
                                                         -----------    -----------    ---------    -----------    -----------

Balance, December 31, 2002                                 9,300,000      1,555,770           --     (1,151,615)       404,155

      Debt converted into common stock                       188,821        272,365           --             --        272,365
      Common stock and warrants
         issued with debt offering                           350,000        188,510           --             --        188,510
      Common stock contributed by stockholder
         for debt offering                                  (350,000)      (161,490)          --             --       (161,490)
      Common stock issued for cash, net of
         offering expenses of $160,770                     1,083,750        922,980           --             --        922,980
      Common stock repurchased for cash                     (500,000)      (100,000)          --             --       (100,000)
      Common stock issued for services                        30,000         33,900           --             --         33,900
      Net loss for the year                                       --             --           --     (1,717,177)    (1,717,177)
                                                         -----------    -----------    ---------    -----------    -----------

Balance, December 31, 2003                                10,102,031      2,712,035           --     (2,868,792)      (156,757)

      Stock options issued for
         consulting agreement (unaudited)                         --        445,000           --             --        445,000
      Common stock surrendered upon
         agreement termination (unaudited)                    (5,000)        (5,650)          --             --         (5,650)
      Common stock issued for cash, net of
         offering expenses of $51,975 (unaudited)            457,143        348,025           --             --        348,025
      Common stock issued for services and
         and rights (unaudited)                              138,298        130,000           --             --        130,000
      Net loss for the period (unaudited)                         --             --           --     (1,005,606)    (1,005,606)
                                                         -----------    -----------    ---------    -----------    -----------

Balance, June 30, 2004 (unaudited)                        10,692,472    $ 3,629,410    $      --    $(3,874,398)   $  (244,988)
                                                         ===========    ===========    =========    ===========    ===========
</TABLE>



                 See Accompanying Notes to Financial Statements.



                                       F-5

<PAGE>
<TABLE>
<CAPTION>

                                 AspenBio, Inc.
                            Statements of Cash Flows


                                                        Six months ended June 30,      Year ended December 31,
                                                        -------------------------      -----------------------
                                                        2004                 2003      2003               2002
                                                        ----                 ----      ----               ----
Cash flows from operating activities:                           (unaudited)
<S>                                                    <C>            <C>            <C>            <C>
     Net loss                                          $(1,005,606)   $  (663,853)   $(1,717,177)   $(1,224,251)
     Adjustments to reconcile net loss to net cash
    (used in) operating activities:
            Depreciation and amortization                  317,577        139,528        277,735        121,413
            Stock issued for services                           --             --        133,705             --
            Amortization of:
              Deferred consulting cost                          --             --             --         32,880
              Discount of note payable                          --         16,000         16,000         16,000
            Change in provision for doubtful accounts           --             --             --          1,600
        (Increase) decrease in:
            Restricted cash                                     --             --        350,000       (350,000)
            Accounts receivable                            (46,696)        29,178         73,088        135,392
            Inventories                                      4,399        (27,711)       251,487        120,302
            Prepaid expenses                                18,718             --         (7,418)       108,902
            Other assets                                        --             --             --         22,500
        Increase (decrease) in:
            Accounts payable                               277,172         80,861       (177,130)       227,880
            Accrued expenses                               111,193         65,116        204,107         22,098
            Deferred revenue                                    --        200,000        200,000             --
                                                       -----------    -----------    -----------    -----------

     Net cash used in operating activities                (323,243)      (160,881)      (395,603)      (765,284)
                                                       -----------    -----------    -----------    -----------
Cash flows from investing activities:
     Purchases of property and equipment                   (27,754)       (64,986)      (176,435)      (487,439)
     Purchases of intangibles and other                   (103,418)       (38,402)       (60,467)      (119,091)
     Reductions in other assets                                 --             --          8,925             --
                                                       -----------    -----------    -----------    -----------

     Net cash used in investing activities                (131,172)      (103,388)      (227,977)      (606,530)
                                                       -----------    -----------    -----------    -----------
Cash flows from financing activities:
     Proceeds from issuance of notes payable                51,360        225,700        745,464      1,191,442
     Repayment of notes payable                            (80,739)       (77,952)      (666,427)      (362,614)
     Payment of mortgage loan costs                             --             --        (57,085)            --
     Increase in restricted cash                                --        (75,000)            --             --
     Proceeds from stock subscriptions                          --         75,000             --             --
     Proceeds from issuance of common stock                348,025             --        717,980        300,000
     Repurchase of common stock                                 --             --       (100,000)            --
     Payment of dividends                                       --             --             --        (48,999)
                                                       -----------    -----------    -----------    -----------

     Net cash provided by financing activities             318,646        147,748        639,932      1,079,829
                                                       -----------    -----------    -----------    -----------

     Net increase (decrease) in cash                      (135,769)      (116,521)        16,352       (291,985)
     Cash, at beginning of period                          148,132        131,780        131,780        423,765
                                                       -----------    -----------    -----------    -----------

     Cash, at end of period                            $    12,363    $    15,529    $   148,132    $   131,750
                                                       ===========    ===========    ===========    ===========
</TABLE>

                                   Continued

                                       F-6


<PAGE>
<TABLE>
<CAPTION>
                                 AspenBio, Inc.
                            Statements of Cash Flows
                                   (Continued)
                                                             Six months ended June 30,     Year ended December 31,
                                                             -------------------------     -----------------------
                                                             2004                 2003     2003               2002
                                                             ----                 ----     ----               ----
                                                                    (unaudited)
Supplemental disclosure of cash flow information:
    Cash paid during the period for:
<S>                                                          <C>           <C>           <C>           <C>
            Interest                                         $   147,100   $    36,300   $   222,551   $    97,299
            Income tax benefit                               $        --   $        --   $        --   $    (5,298)

Schedule of non-cash investing and financing transactions:
      Stock options issued for consulting
         services (Note 12)                                  $   445,000   $        --   $        --   $        --
      Common stock issued for patent
         rights (Note 9)                                     $   130,000   $        --   $        --   $        --
      Common stock issued for debt conversion
         and services                                        $        --   $        --   $   427,181   $        --
      Value of 350,000 common shares
         contributed by shareholder (Note 7)                 $        --   $        --   $   161,490   $        --
      Warrants issued in connection with
         note payable                                        $        --   $        --   $    29,603   $    11,000
      Building and improvements financed
         by construction loan (Note 8)                       $        --   $   653,252   $   653,252   $ 2,596,748
      Construction loan refinanced
         into permanent mortgage (Note 8)                    $        --   $ 3,250,000   $ 3,250,000   $        --

</TABLE>



                 See Accompanying Notes to Financial Statements.








                                      F-7


<PAGE>



                                 AspenBio, Inc.
                          Notes to Financial Statements

         (Information as of June 30, 2004 and for the six-month periods
                   ended June 30, 2004 and 2003 is unaudited)

Note 1 Organization and Summary of Significant Accounting Policies:

     Nature of operations - AspenBio, Inc. (the "Company" or "AspenBio") was
     organized on July 24, 2000, as a Colorado corporation. AspenBio is a
     biotechnology company that is a purifier of human and animal antigens, and
     manufactures over 30 products. The antigens are used as standards and
     controls in diagnostic test kits, antibody purification and in research
     projects. The research and development activities of the Company are
     primarily performed internally on new product technology.


     Products being developed are currently projected for use in the diagnosis
     and treatment of animals. A new product, which is in advanced stages of
     development, is an antigen pregnancy test for dairy cows.

     Interim financial information - Financial information as of June 30, 2004,
     and for the six-month periods ended June 30, 2004 and 2003, is unaudited.
     In the opinion of management, all adjustments necessary for a fair
     presentation of the results for such periods have been included; all
     adjustments are of a normal and recurring nature. Interim results are not
     necessarily indicative of the results for a full fiscal year.

     Revenue recognition and accounts receivable - The Company recognizes
     revenue when product is delivered. The Company extends credit to customers
     generally without requiring collateral. The Company monitors its exposure
     for credit losses and maintains allowances for anticipated losses. The
     Company sells primarily throughout North America.

     Revenues from product distribution and licensing agreements are deferred
     until conditions and contingencies regarding the contract are met, and then
     the revenue will generally be recognized over the term of the agreement.

     Accounts receivable are stated net of an allowance for doubtful accounts of
     $1,600.

     Inventories - Inventories are stated at the lower of cost or market. Cost
     is determined on the first-in, first-out (FIFO) method. The elements of
     cost in inventories include materials, labor and overhead. The Company
     purchases substantially all of its raw materials used in the antigen
     product business, from one supplier.

     Property and equipment - Property and equipment is stated at cost and is
     depreciated using the straight-line method over the estimated useful lives
     of the assets, generally twenty-five years for the building, ten years for
     land improvements and five years for equipment.

     Goodwill and other intangible assets - Goodwill arising from the initial
     formation of the Company represents the purchase price paid and liabilities
     assumed in excess of the fair market value of tangible assets acquired. In
     June 2001, the Financial Accounting Standards Board ("FASB") issued
     Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and
     Other Intangible Assets. Effective January 1, 2002, SFAS No. 142 no longer
     allows the amortization of goodwill and intangible assets with indefinite
     useful lives. SFAS No. 142 requires that these assets be reviewed for
     impairment at least annually, or whenever there is an indication of
     impairment. Intangible assets with finite lives will continue to be
     amortized over their estimated useful lives and reviewed for impairment in
     accordance with SFAS No. 144, Accounting for the Impairment or Disposal of
     Long-Lived Assets.


                                       F-8

<PAGE>

                                 AspenBio, Inc.
                          Notes to Financial Statements

         (Information as of June 30, 2004 and for the six-month periods
                   ended June 30, 2004 and 2003 is unaudited)


     SFAS No. 142 requires companies to allocate goodwill to identifiable
     reporting units, which are then tested for impairment using a two-step
     process detailed in the statement. The first step requires comparing the
     fair value of each reporting unit with its carrying amount, including
     goodwill. If the fair value exceeds the carrying amount, goodwill of the
     reporting unit is considered not impaired, and the second step of the
     impairment test is not necessary. If the fair value of the reporting unit
     does not exceed the carrying amount, the second step of the goodwill
     impairment test must be performed to measure the amount of impairment loss,
     if any. This step requires the allocation of the fair value of the
     reporting unit to the reporting unit's assets and liabilities (including
     any unrecognized intangible assets) as if the reporting unit had been
     acquired in a business combination and the fair value of the reporting unit
     was the price paid to acquire the reporting unit. The excess of the fair
     value of the reporting unit over its re-evaluated net assets would be the
     new basis for the reporting unit's goodwill, and any necessary goodwill
     write down to this new value would be recognized as an impairment expense.

     The Company adopted SFAS No. 142 on January 1, 2002 and completed the first
     step of the transitional goodwill impairment test as required under the
     statement. It was determined that the Company has one reporting unit. The
     fair value of the reporting unit exceeded the carrying value of the
     reporting unit and accordingly, as of that date, there was no goodwill
     impairment. The Company has also performed a goodwill impairment test in
     the fourth quarter of each year and determined that there has been no
     goodwill impairment. A goodwill impairment test is performed annually in
     the fourth quarter or upon significant changes in the Company's business
     environment. 1. Impairment of long-lived assets - In August 2001, the FASB
     issued SFAS No. 144, Accounting for the Impairment or Disposal of
     Long-Lived Assets, which addresses financial accounting and reporting for
     the impairment or disposal of long-lived assets. While SFAS No. 144
     supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets
     and for Long-Lived Assets to Be Disposed Of, it retains many of the
     fundamental provisions of that Statement. The Company adopted SFAS No. 144
     on January 1, 2002 with no material impact to its financial statements.

     Deferred offering costs - Costs incurred in connection with the company's
     public offering or placement of debt or equity offerings are deferred. If
     such offerings are successful, the costs are netted against such proceeds.
     If such offerings are not successful or the offering does not raise any
     funds for the Company, such costs are charged to operations.

     Shipping and handling fees and costs - The Company records shipping and
     handling fees billed to customers as revenue, and shipping and handling
     costs incurred by the Company in cost of sales.

     Advertising expenses - Advertising costs are expensed as incurred. Total
     advertising expenses to date, have not been significant.

     Research and development - Research and development costs are charged to
     expense as incurred.

     Use of estimates - The preparation of financial statements in conformity
     with accounting principles generally accepted in the United States of
     America requires management to make estimates and



                                       F-9
<PAGE>


                                 AspenBio, Inc.
                          Notes to Financial Statements

         (Information as of June 30, 2004 and for the six-month periods
                   ended June 30, 2004 and 2003 is unaudited)

     assumptions that affect reported amounts of assets and liabilities and
     disclosure of contingent assets and liabilities at the date of the balance
     sheet and the reported amounts of revenue and expenses during the reporting
     periods. Actual results could differ significantly from those estimates.


     Fair value of financials instruments - The fair value of the note payable,
     related party is not practicable to estimate, due to the related party
     nature of the underlying transactions. The carrying amounts of the
     Company's other financial instruments approximate fair value because of
     their variable interest rates and \ or short maturities.

     Much of the information used to determine fair values is highly subjective
     and judgmental in nature and, therefore the results may not be precise. In
     addition, estimates of cash flows, risk characteristics, credit quality and
     interest rates are all subject to change. Since the fair values are
     estimated as of the balance sheet date, the amounts, which will actually be
     realized or paid upon settlement or maturity of the various instruments,
     could be significantly different.

     Income taxes - The Company accounts for income taxes under the provisions
     of SFAS No. 109, Accounting for Income Taxes. Under the asset and liability
     method of SFAS No. 109, deferred tax assets and liabilities are recognized
     for the future tax consequences attributable to differences between the
     financial statement carrying amounts of existing assets and liabilities and
     their respective tax bases and operating loss and tax credit carry
     forwards. Deferred tax assets and liabilities are measured using enacted
     tax rates expected to apply to taxable income in the years in which those
     temporary differences are expected to be recovered or settled. Under SFAS
     No. 109, the effect on deferred tax assets and liabilities of a change in
     tax rates is recognized in operations in the period that includes the
     enactment date. A valuation allowance is required to the extent any
     deferred tax assets may not be realizable.

     Stock-based compensation - SFAS No. 123, Accounting for Stock Based
     Compensation, defines a fair-value-based method of accounting for
     stock-based employee compensation plans and transactions in which an entity
     issues its equity instruments to acquire goods or services from
     non-employees, and encourages but does not require companies to record
     compensation cost for stock-based employee compensation plans at fair
     value. The Company has chosen to account for employee stock-based
     compensation using the intrinsic value method prescribed in Accounting
     Principles Board Opinion No. 25 ("APB No. 25"), Accounting for Stock Issued
     to Employees, and related interpretations. Accordingly, employee
     compensation cost for stock options is measured as the excess, if any, of
     the estimated fair value of the Company's stock at the date of the grant
     over the amount an employee must pay to acquire the stock. The Company has
     provided pro forma disclosures of net income as if the fair value based
     method of accounting for stock-based compensation, as prescribed by SFAS
     No. 123, had been applied. Options issued to non-employees or directors for
     services are accounted for in accordance with SFAS No. 123.

     The Company applies APB Opinion No. 25, Accounting for Stock Issued to
     Employees, and related Interpretations in accounting for its stock-based
     employee compensation plans. Accordingly, no compensation expense has been
     recognized for options granted at fair market value. The following table
     illustrates the effect on net income (loss) and income (loss) per share if
     the Company had applied the fair value recognition provisions of FASB
     Statement No. 123, Accounting for Stock-Based Compensation to its
     stock-based employee plans.



                                      F-10

<PAGE>
                                 AspenBio, Inc.
                          Notes to Financial Statements

         (Information as of June 30, 2004 and for the six-month periods
                   ended June 30, 2004 and 2003 is unaudited)

     The Company estimates the fair value of each stock option at the grant date
     by using the Black-Scholes option pricing model with the following weighted
     average assumptions used for grants in 2003 and 2002, a dividend yield of
     0%; a risk-free interest rate of 3.7% and 2.7%; an expected life ranging
     from 5-10 years; and an expected volatility of 111% and 172%, respectively.
     The following table illustrates the effect on net loss and loss per share
     if the Company had applied the fair value recognition provisions of FASB
     Statement No. 123, Accounting for Stock-Based Compensation to its
     stock-based employee plans.
<TABLE>
<CAPTION>
                                  Six-Months Ended June 30,      Year Ended December 31,
                                 -------------------------      -----------------------
                                 2004                 2003      2003               2002
                                 ----                 ----      ----               ----
                                        (Unaudited)
<S>                             <C>            <C>            <C>            <C>
Net (loss), as reported         $(1,006,000)   $  (664,000)   $(1,717,000)   $(1,224,000)
Deduct:  Total stock-based
employee compensation expense
determined under fair value
based method for awards
granted, modified or settled,
net of related tax effects         (195,000)      (104,000)      (195,000)        (2,000)
                                -----------    -----------    -----------    -----------

Pro forma net (loss)            $(1,201,000)   $  (768,000)   $(1,912,000)   $(1,226,000)
                                ===========    ===========    ===========    ===========


Earnings (loss) per share:
   Basic and diluted - as
reported                        $      (.10)   $      (.07)   $      (.19)   $      (.13)
                                ===========    ===========    ===========    ===========
   Basic and diluted - pro
forma                           $      (.11)   $      (.08)   $      (.21)   $      (.13)
                                ===========    ===========    ===========    ===========
</TABLE>


Income (loss) per share - Basic earnings (loss) per share includes no dilution
and is computed by dividing net earnings (loss) available to stockholders by the
weighted number of common shares outstanding for the period. Diluted earnings
per share reflect the potential dilution of securities that could share in the
Company's earnings. The dilutive effect of options and warrants for all periods
presented, was not sufficient to change the basic amounts per share disclosed or
the options and warrants are anti-dilutive.

Comprehensive income - SFAS No. 130, Reporting Comprehensive Income, requires
disclosure of comprehensive income, which includes certain items not reported in
the statement of income, including unrealized gains and losses on
available-for-sale securities and foreign currency translation adjustments.
During the years ended December 31, 2003 and 2002, and the period ended June 30,
2004, the Company did not have any components of comprehensive income to report.



                                      F-11

<PAGE>

                                 AspenBio, Inc.
                          Notes to Financial Statements

         (Information as of June 30, 2004 and for the six-month periods
                   ended June 30, 2004 and 2003 is unaudited)

Recently issued accounting pronouncements -

Stock-Based Compensation - In December 2002, the FASB issued FASB No. 148 (SFAS
148), Accounting for Stock-Based Compensation - Transition and Disclosure. This
Statement amends FASB Statement No. 123; Accounting for Stock-Based
Compensation, to provide alternative methods of transition for a voluntary
change to the fair value based method of accounting for stock-based employee
compensation. It also amends disclosure requirements to require prominent
disclosures in both annual and interim financial statements about the method and
the effect of the method used for stock based compensation on reported results.
The statement is effective for fiscal years ending after December 15, 2002.
Adoption of SFAS 148 did not have a material effect on the Company's financial
statements.


Variable Interest Entities - In January 2003, the FASB issued FASB
Interpretation No. 46 (FIN 46), Consolidation of Variable Interest Entities. FIN
46 clarifies the application of Accounting Research Bulletin No. 51,
Consolidated Financial Statements, for certain entities which do not have
sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties or in which equity
investors do not have the characteristics of a controlling financial interest
("variable interest entities"). Variable interest entities will be required to
be consolidated by their primary beneficiary. The primary beneficiary of a
variable interest entity is determined to be the party that absorbs a majority
of the entity's expected losses, receives a majority of its expected returns, or
both, as a result of holding variable interests, which are ownership,
contractual, or other pecuniary interests in an entity. In December 2003, the
FASB approved a partial deferral of FIN 46 along with various other amendments.
The effective date for this interpretation has been extended until the first
fiscal period ending after December 15, 2004. However, prior to the required
application of this interpretation, a public company that is a small business
issuer shall apply this interpretation to those entities that are considered to
be special purpose entities no later than the end of the first fiscal reporting
period after December 15, 2003. The Company does not have any variable interest
entities, and therefore, the adoption of the provisions of FIN 46 will not have
a material effect on the financial condition or results of operations of the
Company.

Revenue Arrangements - In November 2002, the Emerging Issues Task Force ("EITF")
reached a consensus on Issue 00-21, Accounting for Revenue Arrangements with
Multiple-Deliverables (EITF 00-21). EITF 00-21 addresses how to account for
arrangements that may involve the delivery or performance of multiple products,
services and/or rights to use assets. The consensus mandates how to identify
whether goods or services or both which are to be delivered separately in a
bundled sales arrangement should be accounted for separately because they are
"separate units of accounting." The guidance can affect the timing of revenue
recognition for such arrangements, even though it does not change rules
governing the timing or pattern of revenue recognition of individual items
accounted for separately. The final consensus will be applicable to agreements
entered into in fiscal years beginning after June 15, 2003 with early adoption
permitted. Additionally, companies will be permitted to apply the consensus
guidance to all existing arrangements as the cumulative effect of a change in
accounting principle in accordance with APB Opinion No. 20, Accounting Changes.
The Company does not believe the adoption of EITF 00-21 had a material impact on
its financial position or results of operations.



                                      F-12


<PAGE>

                                 AspenBio, Inc.
                          Notes to Financial Statements

         (Information as of June 30, 2004 and for the six-month periods
                   ended June 30, 2004 and 2003 is unaudited)


Financial Instruments - In May 2003 the FASB issued Statement of Financial
Accounting Standards No. 150 ("SFAS 150"), Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. This statement
establishes standards for how an issuer classifies and measures in its balance
sheet certain financial instruments with characteristics of both liabilities and
equity. In accordance with this standard, financial instruments that embody
obligations of the issuer are required to be classified as liabilities. SFAS No.
150 is effective for all financial instruments entered into or modified after
May 31, 2003, except for those provisions relating to mandatorily redeemable
non-controlling interests, which have been deferred. . For existing financial
instruments, SFAS No. 150 is effective at the beginning of the fiscal quarter
commencing July 1, 2003. The adoption of SFAS No. 150 did not have an effect on
the Company's financial position, results of operations or cash flows. If the
deferred provisions of SFAS No. 150 are finalized in their current form,
management does not expect adoption to have a material impact on the financial
position, results of operations or cash flows.

Note 2 - Global Development and Distribution Agreement \ Deferred Revenue

In March 2003, the Company entered into a global development and distribution
agreement with Merial Limited ("Merial"). The agreement provides Merial with
exclusive rights to market and distribute the Company's new, patent-pending
diagnostic blood test. The test is designed to be used approximately 18 days
after insemination to determine the early pregnancy status of dairy and beef
cattle. Upon execution of the agreement the Company received $200,000, which has
been recorded as deferred revenue. During June 2003, AspenBio determined that
the results of its large-scale field trial were not proceeding as anticipated.
The results continue to be analyzed and modifications to the test are ongoing.
AspenBio believes improvements to the test need to be achieved. Accordingly, the
test was not launched by October 2003 and receipt of the second development
payment of $700,000 from Merial also has been delayed. Such payment could be
reduced or eliminated if Merial is not satisfied with the test results or the
product. Should Merial elect to terminate the agreement, they may also request a
refund of 50% ($100,000) of the development payment received to date. Pursuant
to the agreement, if the Company terminates the agreement within three years
from the launch date, as defined in the agreement, monies paid by the third
party must be refunded on a pro-rata basis.

Note 3 - Inventories

Total inventories consisted of:

                                               June 30, 2004  December 31, 2003
                                               -------------  -----------------
                                                (Unaudited)
Finished goods                                   $148,069         $170,799
Goods in process                                   33,419           33,419
Raw materials                                      74,085           55,754
                                                 --------         --------

              Total inventories                  $255,573         $259,972
                                                 ========         ========



                                      F-13
<PAGE>

                                 AspenBio, Inc.
                          Notes to Financial Statements

         (Information as of June 30, 2004 and for the six-month periods
                    ended June 30, 2004 and 2003 is unaudited

Note 4 - Property and Equipment

Property and equipment consisted of the following:
<TABLE>
<CAPTION>
                                                        June 30, 2004      December 31, 2003
                                                        -------------      -----------------
                                                          (Unaudited)
<S>                                                       <C>                    <C>
     Land and improvements                                $ 1,107,508            $ 1,107,508
     Building                                               2,589,231              2,589,231
     Lab equipment                                            434,466                406,712
     Office and computer equipment                             72,306                 72,306
                                                          -----------           ------------

                   Total cost                               4,203,511              4,175,757

     Less accumulated depreciation                            528,164                411,749
                                                          -----------            -----------

                   Property and equipment                 $ 3,675,347            $ 3,764,008
                                                          ===========            ===========
</TABLE>



During January 2003, AspenBio completed the construction of its own building and
relocated into it, moving out of its prior leased space, which had been occupied
on a month-to-month basis.

Note 5 - Intangible and Other Assets

Intangible and other assets consisted of the following:
<TABLE>
<CAPTION>
                                                            June 30, 2004    December 31, 2003
                                                            -------------    -----------------
                                                             (Unaudited)
<S>                                                             <C>                  <C>
     Patent and trademark applications                          $ 400,819            $ 187,401
     Deferred consulting costs, net of accumulated
        amortization of $203,958 and $0                           241,042                    -
     Deferred loan costs, net of accumulated
        amortization of $4,605 and $1,751                          52,480               55,334
     Deferred offering expenses                                    20,000                    -
                                                                   ------                    -

                   Total intangible and other assets            $ 714,341            $ 242,735
                                                                =========            =========
</TABLE>


The Company capitalizes legal costs and filing fees associated with obtaining
patents on its new discoveries. Once the patents have been issued, the Company
will amortize these costs over the shorter of the legal life of the patent or
its estimated economic life. During 2004, the Company entered into a license
agreement with a university, for rights to the university's patents for use in
animal health products, at a total cost of $190,000, of which $60,000 was paid
in cash and $130,000 was paid in Company stock.

Consulting costs and loan costs are being amortized over the term of the related
agreements using the straight-line method.



                                      F-14
<PAGE>
                                 AspenBio, Inc.
                          Notes to Financial Statements

         (Information as of June 30, 2004 and for the six-month periods
                   ended June 30, 2004 and 2003 is unaudited)

Note 6 - Lines of Credit

On July 29, 2004, the Company finalized a $150,000 line of credit agreement with
a bank, which matures April 30, 2005. The facility bears interest at the prime
rate plus 1% (with an interest rate floor of 6.5%). The line of credit is
collateralized by the assets of the Company and guaranteed by the president of
the Company. The line modifies a prior $250,000 line. As of June 30, 2004, there
was $250,000 outstanding on the line that was paid down to zero in August 2004.

In February 2003, the Company entered into a one-year $250,000 revolving line of
credit agreement with interest at the New York Prime Rate plus 1% (with an
interest rate floor of 6.5%). Due to the floor interest rate, the average
interest rate on outstanding balances was 6.5% for 2003. The average outstanding
balance on the line of credit since it was obtained during the year ended
December 31, 2003 was $212.000. At December 31, 2003, there was $248,502
outstanding under the line of credit. The line of credit was collateralized by
the assets of the Company and guaranteed by the president of the Company.

The Company also has a $36,000 line of credit with another bank bearing interest
at bank's daily periodic rate (16.75% at December 31, 2003). At December 31,
2003 the outstanding balance under this line was $29,978.

Note 7 - Notes Payable- Related Parties

During June 2003, the Company's president agreed to consolidate the Company's
previously outstanding notes payable to him in the aggregate principal amount of
$958,651, into one new note with an interest rate of 6% per annum and the
maturity date extended to June 2008. Based upon revised agreements entered into
in 2004, following the Company achieving specified fund raising levels, an
advance principal payment of $200,000 was made on the note in August 2004, and
thereafter thirty-six monthly payments of $10,000 will be made, at which time
the then remaining balance will be due.

During August 2003, the Company finalized an agreement with the holder of a
$500,000 convertible note payable which matured in July 2003, to convert
$150,000, plus $38,281 in accrued interest into common stock, be repaid $300,000
in principal and have $50,000 remain outstanding under a new 10% note due
November 26, 2003. In consideration for the revisions that were made to the
note, the Company agreed to reduce the conversion price from the $1.50 per share
under the original note to $1.00 per share for the converted portion.
Additionally, the Company granted the holder a warrant to purchase 250,000
shares of common stock at $1.50 per share through July 2005. As a result of the
reduction in the conversion rate to $1.00 per share, the Company recorded a debt
conversion inducement expense of $81,500, representing the value of the
additional shares received as of the date of conversion. The value of the
warrant granted to the holder was computed and allocated to the components of
the transaction. The value of the portion allocated to the new debt was recorded
as additional interest expense over the life of the new note. The $50,000
remaining balance under the note plus accrued interest of $2,100 was repaid on
December 3, 2003.

During October 2003, the Company completed a $350,000 offering of convertible
debt. The unsecured notes bear interest at 8% and were due at the earlier of May
2004 or at the time $1,000,000 is raised in an equity offering. The debt
offering consisted of a note for $1.00 and one share of common stock for each
$1.00 invested in the notes. To reduce the amount of the dilution as a result of
the debt offering, the Company's



                                      F-15
<PAGE>
                                 AspenBio, Inc.
                          Notes to Financial Statements

         (Information as of June 30, 2004 and for the six-month periods
                   ended June 30, 2004 and 2003 is unaudited)


president contributed 350,000 shares of common stock to the Company that were
used in the offering. The proceeds of the offering have been allocated between
the estimated value of the notes, the stock and the warrant, based upon their
respective estimated fair values. The amount allocated to the non-debt elements
will be accreted back to the debt as additional interest expense over the life
of the notes. The Placement Agent selling the notes received fees and expenses
of 13% of the proceeds raised plus a warrant to acquire 150,000 shares of common
stock at $1.50 per share exercisable through June 2006. During December 2003 an
equity offering exceeding $1,000,000 was closed and accordingly, the bridge
loans matured. Out of the total $350,000, $205,000 was converted into common
stock of the Company at $1.00 per share and $145,000 was repaid, with $45,000 of
the amount repaid outstanding at December 31, 2003 and paid in January 2004.

In the third quarter of 2003, Cambridge Holdings, Ltd., a stockholder of the
Company, loaned a total of $40,000 under two notes to the Company. The proceeds
of the notes were used for working capital, with the notes due on demand bearing
interest at 10%. During December 2003 these notes and accrued interest of $1,322
was repaid.

During April 2004 a stockholder advanced the Company $51,360 under a ninety-day
unsecured note, bearing interest at 10%. Proceeds from the note were used for
corporate obligations. The note was repaid in July 2004.

During the years ended December 31, 2003 and 2002, interest expense of
approximately $104,100 and $66,700, respectively, was incurred on notes payable
to stockholders. At December 31, 2003, accrued interest expense, due to
stockholders was approximately $21,500 and is included with accrued expenses on
the accompanying balance sheet. Also included in accrued expenses is $13,333 in
compensation accrued to an officer \ director.

Note 8 - Debt Agreements

Mortgage note -

During June 2003, the Company closed on a $3,250,000 permanent mortgage facility
on its land and building. The mortgage is held by a commercial bank and includes
approximately 39% that is guaranteed by the U. S. Small Business Administration.
The loan is collateralized by the real property and is also personally
guaranteed by the Company's president. The interest rate on the bank portion is
one percentage over the Wall Street Journal Prime Rate (minimum 7%) and the
guaranteed portion bears interest at the rate of 4.42%. The loan requires total
monthly payments of approximately $23,700. At December 31, 2003 the outstanding
balance under the mortgage totaled $3,263,287, inclusive of loan fees.

Prior to closing on the mortgage obligation, the Company utilized a construction
loan to finance construction of its new facility. Interest on the construction
loan was at the Wall Street Journal prime rate plus 1% with a floor of 6%. The
loan was collateralized by first deed of trust of building and $350,000
restricted cash and was guaranteed by a stockholder. In connection with the
construction loan, the Company was required to obtain a $395,593 letter of
credit naming the Town of Castle Rock Public Works Department as the
beneficiary. The letter of credit expired with no amounts having been drawn when
the permanent mortgage was closed. For the years ended December 31, 2003 and
2002, during the construction period, interest expense on this loan of $27,401
and $21,431, respectively was capitalized to construction in progress.


                                      F-16

<PAGE>
                                 AspenBio, Inc.
                          Notes to Financial Statements

         (Information as of June 30, 2004 and for the six-month periods
                   ended June 30, 2004 and 2003 is unaudited)

Minimum annual principal payments due on long-term notes payable at June 30,
2004, are as follows:

      Year ending                Third                   Related
      December 31,               Parties                 Parties (1)
      ------------            ------------              ------------
          2004                $     73,026              $    271,130
          2005                      77,193                    75,156
          2006                      81,613                    79,791
          2007                      86,301                   577,574
          2008                      91,275                        --
          Thereafter             2,853,880                        --
                              ------------               -----------


          Total               $  3,263,288               $ 1,003,651
                              ============               ===========

     (1) - Under subsequently agreed to terms, the $958,651, shareholder loan
     will be amortized beginning in 2004, as described in Note 7.


Note 9 - Stockholders' Equity and Associated Agreements

During the fourth quarter of 2003 the Company completed the sale of 1,087,750
shares of the Company's common stock, generating net proceeds to the Company of
$923,000 after deducting offering expenses. In connection with the offering the
Company paid fees of $121,725 to the placement agent and also granted the agent
warrants to purchase 474,995 shares of common stock at $1.50 per share,
exercisable until June 1, 2006.

As of September 30, 2003 the Company repurchased and retired 500,000 shares of
common stock from a stockholder for total consideration of $100,000.

During February 2004 the Company sold 342,857 shares of common stock and in
March an additional 114,286 shares were sold each at $.875 per share (as
subsequently revised per the terms of the investment agreements). The investors
were also granted warrants to purchase 457,143 shares of common stock at $1.50
per share.

During the first quarter of 2004, a previous consulting agreement was amended
whereby the consultant agreed to terminate 50,000 options that the Company had
agreed to issue and 5,000 common shares previously issued to the consultant were
returned to the Company.

The Company's president had agreed that 2,250,000 of the 4,246,757 shares of the
Company's common stock owned by him would be voted at shareholder meetings in
the same proportion as the other shares of the Company's common stock are voted.
This voting arrangement was terminated on July 21, 2004 in connection with the
agreement whereby he contributed 1,896,757 shares back to the Company for no
consideration as discussed in Note 13.


                                      F-17

<PAGE>
                                 AspenBio, Inc.
                          Notes to Financial Statements

         (Information as of June 30, 2004 and for the six-month periods
                   ended June 30, 2004 and 2003 is unaudited)

During April 2004 the Company signed a license agreement with a university,
providing the Company with rights to the university's patent rights for
specified animal health uses. In connection with that agreement, the Company
issued 138,298 shares of common stock to the university valued at $130,000 plus
agreed to a cash payment of $60,000 at inception.

At the Company's Annual Meeting of its shareholders held in May 2004, an
amendment to the Company's Articles of Incorporation was approved to increase
the number of authorized shares of Common Stock to 30,000,000 from 15,000,000.

Note 10 - Stock Options and Warrants

         Stock options

In 2002, the Board of Directors of the Company adopted the 2002 Stock Incentive
Plan for the benefit of certain employees and consultants. The Company has
reserved a total of 1,500,000 shares, (as amended at the May 2004 Annual
Meeting), of its common stock for issuance pursuant to the exercise of options
to be granted. The Plan is administered by an Option Committee of the Board of
Directors. The exercise prices of the options granted are determined by the
Option Committee and are established at the estimated fair value of the
Company's common stock at the date of grant. The Option Committee determines the
term of each option, the number of shares for which each option is granted and
the rate at which each option is exercisable. Options are granted with terms not
to exceed 10 years. To date all options granted under the Plan, at the dates of
the grants, the exercise prices of the options were equal to the estimated fair
value of the Company's common stock, therefore, no compensation expense has been
recorded for the options granted.

A summary of the status of the Company's stock options as of December 31, 2003
and 2002, and changes during the years then ended, is presented below:

<TABLE>
<CAPTION>
                                                        2003                        2002
                                                ---------------------       --------------------
                                                            Weighted                    Weighted
                                                            Average                     Average
                                                            Exercise                    Exercise
                                                 Shares      Price           Shares      Price
                                                 ------      -----           ------      -----
<S>                                              <C>          <C>            <C>         <C>
        Outstanding, beginning of year           250,000      $ 1.05         200,000     $ 1.00
                                                              ======                     ======
        Granted                                  310,000      $ 1.49         250,000     $ 1.25
                                                              ======                     ======
        Exercised                                      -                           -
        Forfeited                                300,000                     200,000
                                                 -------                    --------
        Outstanding, end of year                 260,000      $ 1.45         250,000     $1.05
                                                 =======      ======         =======     =====
        Options exercisable end of year           16,667      $ 1.25         200,000     $1.00
                                                 =======      ======         =======     =====
</TABLE>





                                      F-18
<PAGE>

                                 AspenBio, Inc.
                          Notes to Financial Statements

         (Information as of June 30, 2004 and for the six-month periods
                   ended June 30, 2004 and 2003 is unaudited)


During the six months ended June 30, 2004, a total of 440,000 options were
granted under the 2002 Stock Incentive Plan at exercise prices ranging from
$1.21 to $1.50 per share. Subsequent to June 30, 2004, an additional 100,000
options were granted under the Plan at an exercise price of $1.20 per share,
585,000 options where granted at an exercise price of $.75 per share and 50,000
options expired.

Prior to the establishment of the 2002 Stock Incentive Plan, on August 1, 2001,
the Board of Directors granted stock options to two directors to acquire a total
of 200,000 shares for $1 per share. The options were fully vested on December
31, 2001 and expire August 1, 2006.

As of June 30, 2004, the Company had 900,000 stock options outstanding under its
plans at exercise prices ranging from $1.00 to $1.50. These options had a
weighted average contractual life remaining of 7.2 years and a weighted average
exercise price of $1.29. Of these options 265,000 were then exercisable at a
weighted average exercise price of $1.11.

     Common stock purchase warrants

On December 28, 2001, the Company entered into an agreement to sell 1,000,000
shares of common stock and 830,000 warrants to purchase common stock at $1.00
per share for total consideration of $600,000 and a consulting contract. The
warrants are currently exercisable and expire in January 2007.

In July 2002 the Company issued a total of 375,000 warrants. The warrants
entitle the holders to exercise their warrants to purchase shares of common
stock at $1.50 per share at any time through July 2005.

In August 2003 the Company issued 250,000 warrants in connection with a
conversion of debt. The warrants entitle the holder to exercise their warrants
to purchase shares of common stock at $1.50 per share at any time through June
2006.

During September to December 2003 the Company issued a total of 624,995 warrants
in connection with bridge loans and common shares sold in the 2003 private
placement of common stock. The warrants entitle the holders to exercise their
warrants to purchase shares of common stock at $1.50 per share at any time
through June 2006.

In connection with a private placement offering closed subsequent to June 30,
2004, the Company issued an additional 2,897,143 warrants, exercisable at $1.50
per share, expiring in five years.

Note 11 - Income Taxes

Income taxes at the federal statutory rate are reconciled to the Company's
actual income taxes as follows:
<TABLE>
<CAPTION>

                                                          2003                  2002
                                                          ----                  ----
<S>                                                   <C>                   <C>
    Federal income tax expense (benefit) at 34%       $   (584,000)         $   (418,000)
    State income tax net of federal tax effect             (57,000)              (24,600)
    Permanent items                                         28,000               (15,702)
    Valuation allowance                                    613,000               463,600
                                                      ------------          ------------
                                                      $          -          $     (5,298)
                                                       ===========          =============
</TABLE>

As of December 31, 2003 the Company has net operating loss carry forwards of
approximately $2,974,000 for federal and state tax purposes, which are available
to offset future taxable income, if any, expiring through December 2023. A
valuation allowance was recorded at December 31, 2003 due to the uncertainty of
realization of deferred tax assets in the future.

The tax effects of temporary differences that give rise to significant portions
of deferred tax assets and liabilities at December 31, 2003 are as follows:



                                      F-19
<PAGE>


                                 AspenBio, Inc.
                          Notes to Financial Statements

         (Information as of June 30, 2004 and for the six-month periods
                   ended June 30, 2004 and 2003 is unaudited)



         Current deferred tax assets (liabilities):
         Net operating loss carry forwards                  $     1,119,000
         Accounts receivable                                            600
         Property and equipment                                      22,200
         Goodwill                                                    (2,000)
                                                            ----------------
         Deferred tax asset                                       1,139,800
         Valuation allowance                                     (1,139,800)
                                                            ---------------
         Net current deferred tax asset                     $             -
                                                            ===============


Note 12 - Commitments and Contingencies

     Customer concentrations

At December 31, 2003, no one customer accounted for more than 10% of total
accounts receivable. One customer accounted for 54% and 48% of total net sales
for the years ended December 31, 2003 and 2002.

For the six-month periods ended June 30, 2004 and 2003, one customer accounted
for approximately 45% and 61% of the Company's sales and a second customer
accounted for approximately 21% and 4% of the Company's sales.

     Consulting Agreement

During January 2004 the Company entered into an agreement with a consulting
organization to provide investor relations services to the Company for a term of
twelve months. The consulting organization was initially being compensated at
the rate of $6,000 per month, until certain specified conditions were met and
then increased to $8,000 per month. The consultant was also granted options,
expiring in January 2009, to acquire 800,000 shares of common stock of the
Company at a price of $1.07 per share. The Company has determined the value of
the 800,000 options to be $445,000 and recorded this amount as a deferred
consulting cost, included with other intangible assets, with a corresponding
increase to equity. The deferred consulting cost is being amortized over the
one-year life of the agreement.

     Development and license agreements

The Company has entered into three separate agreements under which the Company
obtained exclusive proprietary rights to certain patents, licenses and
technology to manufacture, market and sell newer developed products. Under the
agreements, the Company is obligated to make quarterly royalty payments and
milestone payments, as defined, based on a percentage of sales of the products
through the fourth year of commercial sales. For two of the agreements, for the
years ended December 31, 2003 and 2002, there were no such commercial sales.
Under one of the agreements, the Company paid the annual minimum royalty of
$25,000, which is to be credited against future earned royalties.



                                      F-20

<PAGE>

                                 AspenBio, Inc.
                          Notes to Financial Statements

         (Information as of June 30, 2004 and for the six-month periods
                   ended June 30, 2004 and 2003 is unaudited)

In addition, under one of the agreements, the Company is to fund research over a
two-year period. Total research payments of $70,000 were expensed as research
and development expense for each of the years ended December 31, 2003 and 2002.
Under separate agreements with another university the Company acquired rights to
the university's patent portfolio for use in the animal health industry for a
total cost of $190,000, of which $60,000 was paid in cash and $130,000 was paid
in Company common shares and the Company agreed to fund $46,550 payable over a
six-month period for consulting and research assistance on one of the Company's
products in development.

The Company with 30 days notice and without future obligations may terminate the
agreements.


Note 13 - Subsequent Events

Subsequent to June 30, 2004, the Company closed on $2,535,000, ($1,247,500 on
July 21, 2004 and $1,287,500 on August 19, 2004) under a Private Placement of
unregistered Units (consisting of 20,000 common shares and 20,000 warrants
exercisable for three years at $1.50/ share for $17,500 per Unit) through its
placement agent. The purpose of the private placement is to raise funds for
working capital, new product development and general corporate purposes. As a
result of that funding, under an agreement previously entered into with the
Company's president and principal shareholder, the shareholder contributed
1,896,757 common shares he owned of the Company, back to the Company for no
consideration, which reduced the outstanding shares by that amount.
Additionally, the voting agreement described in Note 13 above was terminated as
part of this transaction. A principal reduction was also made in a note owed to
the Company's president as described in Note 7.











                                      F-21



<PAGE>
_______________________________________________________________________________



                                                            ASPENBIO, INC.



We have not authorized any dealer, salesperson or
other person to give any information or represent
anything not contained in this prospectus. You must
not rely on any unauthorized information. This
prospectus does not offer to sell or buy any shares in
any jurisdiction where it is unlawful. The information
in this prospectus is current as of its date.


                                                    12,820,486 SHARES OF COMMON
                                                                 STOCK










                                                           ______________

                                                             PROSPECTUS
                                                           ______________





                                                         October 28, 2004







<PAGE>

