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

                                   FORM 10-KSB
(MARK ONE)

     |X|  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
          OF 1934

                   For the fiscal year ended December 31, 2003


     |_|  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
          ACT OF 1934

               For the transition period from        to

                        Commission file number 000-50348
                                               ---------

                       MILLSTREAM ACQUISITION CORPORATION
                 (Name of Small Business Issuer in Its Charter)

                  Delaware                        06-1688360
          (State of Incorporation)      (I.R.S. Employer Identification No.)

        435 Devon Park Drive, Bldg. 400                    (610) 293-2511
           Wayne, Pennsylvania 19087                (Issuer's Telephone Number,
    (Address of Principal Executive Offices)            Including Area Code)

       Securities registered under Section 12(b) of the Exchange Act: None

         Securities registered under Section 12(g) of the Exchange Act:


                 Units consisting of one share of Common Stock,
                 ----------------------------------------------
                  par value $.0001 per share, and two Warrants
                  --------------------------------------------

                    Common Stock, par value $.0001 per share
                    ----------------------------------------

                   Warrants to purchase shares of Common Stock
                   -------------------------------------------
                                (Title of Class)

      Check whether the small business issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the issuer was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes
|X| No |_|


<PAGE>


      Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. |_|

      State issuer's revenues for its most recent fiscal year:  None

      State the aggregate market value of voting common stock held by
non-affiliates of registrant based upon the average bid and asked sale price on
February 4, 2004: $19,557,000

      State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 4,775,000 as of February 4,
2004

                       DOCUMENTS INCORPORATED BY REFERENCE

      None.

      Transitional small business disclosure format.   Yes  |_|  No |X|




<PAGE>
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                       MILLSTREAM ACQUISITION CORPORATION
                    (a corporation in the development stage)

                                FORM 10-KSB INDEX

                                                                                                                 Page No.
                                                                                                                 ---------
                                                         PART 1

<S>                 <C>                                                                                             <C>
               Item 1.   Description of Business.                                                                   1

               Item 2.   Description of Property.                                                                   13

               Item 3.    Legal Proceedings.                                                                        13

               Item 4.    Submission of Matters to a Vote of Security Holders.                                      13

                                                         PART II

               Item 5.  Market for Common Equity and Related Stockholder Matters.                                   14

               Item 6.   Plan of Operations.                                                                        15

               Item 7.   Financial Statements.                                                                      17

               Item 8.   Changes In and Disagreements With Accountants or Accounting and Financial
                          Disclosure.                                                                               27

               Item 8A. Controls and Procedures.                                                                    27

                                                        PART III

               Item 9.   Directors, Executive Officers, Promoters and Control Persons; Compliance With
                          Section 16(a) of the Exchange Act.                                                        27

               Item 10. Executive Compensation.                                                                     33

               Item 11.  Security Ownership of Certain Beneficial Owners and Management and Related
                          Stockholder Matters.                                                                      33

               Item 12.  Certain Relationships and Related Transactions.                                            35

               Item 13.  Exhibits and Reports on Form 8-K.                                                          36

               Item 14.  Principal Accountant Fees and Services.                                                    38

               Signature Page                                                                                       40

</TABLE>


<PAGE>



               CAUTIONARY STATEMENT FOR FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-KSB includes forward-looking statements within the
meaning of Section 27A of the  Securities  Act of 1933, as amended,  and Section
21E of the  Securities  Exchange  Act of 1934,  as amended.  We have based these
forward-looking  statements on our current  expectations  and projections  about
future events. These forward-looking statements are subject to known and unknown
risks, uncertainties and assumptions about us that may cause our actual results,
levels of activity,  performance or achievements to be materially different from
any future results, levels of activity, performance or achievements expressed or
implied by such  forward-looking  statements.  In some cases,  you can  identify
forward-looking  statements  by  terminology  such as "may,"  "will,"  "should,"
"could,"  "would,"  "expect,"  "plan,"  "anticipate,"   "believe,"   "estimate,"
"continue," or the negative of such terms or other similar expressions.  Factors
that  might  cause or  contribute  to such a  discrepancy  include,  but are not
limited to,  those  described  in this  Annual  Report on Form 10-KSB and in our
other Securities and Exchange Commission filings.

                                     PART I
Item 1.  Description of Business.

Introduction

     We are a  blank  check  company  formed  to  serve  as a  vehicle  for  the
acquisition  of a  target  business  that  we  believe  has  significant  growth
potential.  We were  incorporated  in  Delaware on April 11,  2003.  Our initial
stockholders  purchased 750,000 common shares,  $.0001 par value, for $25,039 on
April 14, 2003. The registration statement for our initial public offering ("the
Offering") was declared  effective  August 25, 2003. We consummated the Offering
on August 28, 2003 and raised net proceeds of $21,417,726.

     We are not presently engaged in, and we will not engage in, any substantive
commercial business for an indefinite period of time following the Offering.  We
intend to utilize cash derived  from the proceeds of the  Offering,  our capital
stock, debt or a combination of these in effecting a business  combination.  Our
management has broad discretion with respect to the specific  application of the
net proceeds of the Offering and, as a result, the Offering was characterized as
a blank check offering.  While we may seek to effect business  combinations with
more than one target business, we will probably have the ability, as a result of
our limited resources, to effect only a single business combination.

     $20,685,000  of these net  proceeds  has been  placed  in a trust  fund and
invested in United  States  government  securities.  The funds held in the trust
account  will  not be  released  until  the  earlier  of the  date on  which  we
consummate a business combination or liquidate our assets.

Current trends

     As a result of the decline in the United States equity  markets  during the
period from 2000 through 2002,  many privately held companies have been shut off
from the public  marketplace.  Additionally,  as the economy  slowed during this
period,  many  companies  were  interested  in  divesting  non-core  assets  and
divisions  and   valuations  of  these  assets  and  divisions   have  decreased
significantly.  Despite  the  recovery  of the equity  markets  and the  general
economy in 2003, these factors still remain.  Due to this economic  environment,
we  believe  that  there  are  substantial   opportunities  to  make  attractive
acquisitions  and  that,  as a  well-financed  public  entity  possessing  broad
investment and acquisition expertise,  we are well positioned to identify target
acquisitions  and to effect a business  combination  to take  advantage of these
current trends.



<PAGE>

Effecting a business combination

     General

     Although substantially all of the net proceeds of the Offering are intended
to be generally  applied toward effecting a business  combination,  the proceeds
are not otherwise being designated for any more specific purposes.  Accordingly,
our  stockholders  do not have an opportunity to evaluate the specific merits or
risks of any one or more  business  combinations.  A  business  combination  may
involve  the  acquisition  of, or merger  with,  a company  which  does not need
substantial  additional  capital but which desires to establish a public trading
market  for  its  shares,  while  avoiding  what  it  may  deem  to  be  adverse
consequences of undertaking a public offering itself. These include time delays,
significant expense,  loss of voting control and compliance with various Federal
and state  securities  laws.  In the  alternative,  a business  combination  may
involve a company  which may be  financially  unstable or in its early stages of
development or growth.

     We have not identified a target business or target industry

     Our  efforts in  identifying  a  prospective  target  business  will not be
limited to a particular industry and we may ultimately acquire a business in any
industry we deem  appropriate.  We intend to focus on various  industries  where
changes in industrial  technology provide  particular  opportunities for growth.
Innovative industrial  technologies have given small and medium-sized  companies
the  ability  not only to compete  with  larger  organizations,  but to leapfrog
existing  products,  processes and services and establish new market leadership.
We believe that companies  with these types of innovations  obtain a competitive
edge and the opportunity for rapid and sustainable  growth.  Innovations of this
nature  occur  frequently  in chemicals  and other  material  sciences,  energy,
medical  products and  manufacturing  processes.  While we have had  preliminary
discussions with several companies,  we have not selected any target business or
industry on which to concentrate our search for a business combination. While we
intend to focus on target businesses in the United States, we are not limited to
those entities and may consummate a business  combination with a target business
outside of the United  States.  Accordingly,  there is no basis for investors to
evaluate the possible  merits or risks of the target  business or the particular
industry in which we may ultimately  operate. To the extent we effect a business
combination with a financially  unstable company or an entity in its early stage
of development or growth,  including  entities  without  established  records of
sales or earnings, we may be affected by numerous risks inherent in the business
and  operations of  financially  unstable and early stage or potential  emerging
growth  companies.  In  addition,  to the  extent  that  we  effect  a  business
combination with an entity in an industry characterized by a high level of risk,
we may be affected by the currently  unascertainable  risks of that industry. An
extremely high level of risk  frequently  characterizes  many  industries  which
experience rapid growth.  In addition,  although our management will endeavor to
evaluate the risks  inherent in a  particular  industry or target  business,  we
cannot assure you that we will properly ascertain or assess all significant risk
factors.

     Sources of target businesses

     We  anticipate  that  target  business  candidates  will be  brought to our
attention   from   various    unaffiliated    sources,    including   securities
broker-dealers,  investment  bankers,  venture  capitalists,  bankers  and other
members of the financial  community,  who may present  solicited or  unsolicited
proposals. Our officers and directors and their affiliates may also bring to our
attention  target  business  candidates.  While we do not  presently  anticipate
engaging  the  services  of  professional  firms  that  specialize  in  business
acquisitions  on any formal basis,  we may engage these firms in the future,  in
which  event we may pay a  finder's  fee or  other  compensation.  In no  event,
however,  will


                                       2
<PAGE>


we pay any of our initial officers, directors or stockholders or any entity with
which they are  affiliated any finder's fee or other  compensation  for services
rendered to us prior to or in  connection  with the  consummation  of a business
combination.

     Selection of a target business and structuring of a business combination

     Subject to the requirement  that our initial  business  combination must be
with a target  business with a fair market value that is at least 80% of our net
assets at the time of such  acquisition,  our  management  will  have  virtually
unrestricted  flexibility  in  identifying  and selecting a  prospective  target
business.  In evaluating a prospective  target  business,  our  management  will
consider,  among other factors, the following:


          o    financial condition and results of operation;

          o    growth potential;

          o    experience and skill of management and availability of additional
               personnel;

          o    capital requirements;

          o    competitive position;

          o    stage of development of the products, processes or services;

          o    degree of current or potential market acceptance of the products,
               processes or services;

          o    proprietary features and degree of intellectual property or other
               protection of the products, processes or services;

          o    regulatory environment of the industry; and

          o    costs associated with effecting the business combination.

     These criteria are not intended to be exhaustive.  Any evaluation  relating
to the merits of a particular business  combination will be based, to the extent
relevant,  on the above factors as well as other considerations  deemed relevant
by our  management  in  effecting  a business  combination  consistent  with our
business objective. In evaluating a prospective target business, we will conduct
an extensive  due  diligence  review which will  encompass,  among other things,
meetings with incumbent  management  and  inspection of  facilities,  as well as
review of financial and other information which will be made available to us.

     We will endeavor to structure a business  combination  so as to achieve the
most  favorable  tax  treatment to us, the target  business and both  companies'
stockholders.  We cannot assure you, however,  that the Internal Revenue Service
or  appropriate  state tax  authority  will agree with our tax  treatment of the
business combination.

     The time and costs required to select and evaluate a target business and to
structure and complete the business  combination cannot presently be ascertained
with  any  degree  of  certainty.   Any  costs  incurred  with  respect  to  the
identification  and  evaluation  of a prospective  target  business


                                       3
<PAGE>


with which a business  combination is not ultimately  completed will result in a
loss to us and reduce the amount of capital  available to  otherwise  complete a
business combination.

     Fair Market Value of Target Business

     The initial  target  business that we acquire must have a fair market value
equal to at least  80% of our net  assets at the time of such  acquisition.  The
fair market value of such  business will be determined by our board of directors
based upon  standards  generally  accepted by the financial  community,  such as
actual and potential sales,  earnings and cash flow and book value. If our board
of directors is not able to independently determine that the target business has
a sufficient fair market value, we will obtain an opinion from an  unaffiliated,
independent   investment  banking  firm  which  is  a  member  of  the  National
Association of Securities Dealers, Inc. with respect to the satisfaction of such
criteria.  Since any opinion,  if obtained,  would merely state that fair market
value meets the 80% of net assets  threshold,  it is not anticipated that copies
of such opinion would be distributed to our  stockholders,  although copies will
be provided to stockholders who request it. We will not be required to obtain an
opinion from an investment banking firm as to the fair market value if our board
of  directors  independently  determines  that the  target  business  does  have
sufficient fair market value.

     Probable lack of business diversification

     While we may seek to effect business combinations with more than one target
business,  our initial business combination must be with a target business which
satisfies the minimum  valuation  standard at the time of such  acquisition,  as
discussed above.  Consequently,  it is probable that we will have the ability to
effect only a single business  combination.  Accordingly,  the prospects for our
success  may be  entirely  dependent  upon the  future  performance  of a single
business. Unlike other entities which may have the resources to complete several
business  combinations of entities operating in multiple  industries or multiple
areas of a single  industry,  it is probable that we will not have the resources
to diversify our  operations or benefit from the possible  spreading of risks or
offsetting of losses. By consummating a business  combination with only a single
entity,  our lack of  diversification  may

          o    subject  us to  numerous  economic,  competitive  and  regulatory
               developments,  any or all of which may have a substantial adverse
               impact  upon the  particular  industry  in  which we may  operate
               subsequent to a business combination, and


          o    result  in  our  dependency   upon  the   development  or  market
               acceptance of a single or limited  number of products,  processes
               or services.

     Limited ability to evaluate the target business' management

     Although we intend to closely  scrutinize  the  management of a prospective
target  business  when  evaluating  the  desirability  of  effecting  a business
combination,  we cannot assure you that our  assessment of the target  business'
management will prove to be correct. In addition,  we cannot assure you that the
future management will have the necessary skills, qualifications or abilities to
manage  a  public  company   intending  to  embark  on  a  program  of  business
development.  Furthermore,  the future  role of our  directors,  if any,  in the
target  business  cannot  presently  be stated with any  certainty.  While it is
possible  that  one or more of our  directors  will  remain  associated  in some
capacity  with us following a business  combination,  it is unlikely that any of
them will  devote  their full  efforts to our affairs  subsequent  to a business
combination.  Moreover,  we  cannot  assure


                                       4
<PAGE>


you that our directors will have significant experience or knowledge relating to
the operations of the particular target business.

     Following  a  business  combination,  we may  seek  to  recruit  additional
managers to supplement  the  incumbent  management  of the target  business.  We
cannot assure you that we will have the ability to recruit additional  managers,
or that  additional  managers  will  have the  requisite  skills,  knowledge  or
experience necessary to enhance the incumbent management.

     Opportunity for stockholder approval of business combination

     Prior to the  completion  of a  business  combination,  we will  submit the
transaction  to  our  stockholders  for  approval,  even  if the  nature  of the
acquisition is such as would not ordinarily require  stockholder  approval under
applicable  state law. In  connection  with  seeking  stockholder  approval of a
business  combination,  we will furnish our stockholders with proxy solicitation
materials  prepared in  accordance  with the  Securities  Exchange  Act of 1934,
which, among other matters,  will include a description of the operations of the
target business and audited historical financial statements of the business.

     Our initial stockholders have agreed to vote their 750,000 shares of common
stock in  accordance  with the vote of the  majority of the public  stockholders
with  respect to any business  combination.  This voting  arrangement  shall not
apply to  shares  included  in units  purchased  in the  Offering  or  purchased
following  the  Offering in the open market by any of our initial  stockholders,
officers and directors.  We will proceed with the business  combination  only if
the public  stockholders,  who own at least a  majority  of the shares of common
stock sold in the Offering, vote in favor of the business combination and public
stockholders  owning less than 20% of the shares sold in this offering  exercise
their conversion rights.

     Conversion rights

     At the time we seek stockholder  approval of any business  combination,  we
will offer the  public  stockholders  the right to have  their  shares of common
stock  converted to cash if they vote against the business  combination  and the
business combination is approved and completed.  The actual per-share conversion
price will be equal to the amount in the trust fund,  inclusive of any interest,
as of the record date for determination of stockholders  entitled to vote on the
business  combination,  divided by the number of shares sold in the Offering. An
eligible stockholder may request conversion at any time after the mailing to our
stockholders  of the proxy statement and prior to the vote taken with respect to
a proposed  business  combination  at a meeting held for that  purpose,  but the
request will not be granted  unless the  stockholder  votes against the business
combination and the business combination is approved and completed.  Any request
for  conversion,  once made,  may be withdrawn at any time up to the date of the
stockholders'  meeting.  It is  anticipated  that the funds to be distributed to
stockholders  entitled  to convert  their  shares who elect  conversion  will be
distributed  promptly  after  completion of a business  combination.  Any public
stockholders  who  convert  their stock into their share of the trust fund still
have the right to exercise the warrants that they received as part of the units.
We will not complete any business combination if public stockholders, owning 20%
or more of the shares sold in this offering, exercise their conversion rights.

     Liquidation if no business combination

     If we do not  complete a business  combination  within 18 months  after the
completion of the Offering  (February 28, 2005), or within 24 months (August 28,
2005) if the extension criteria


                                       5
<PAGE>


described below have been satisfied, we will be dissolved and will distribute to
all of our  public  stockholders,  in  proportion  to  their  respective  equity
interests,  an aggregate sum equal to the amount in the trust fund, inclusive of
any  interest,  plus any  remaining net assets.  Our initial  stockholders  have
waived their rights to participate in any liquidation  distribution with respect
to shares of common stock owned by them immediately prior to the Offering. There
will be no distribution from the trust fund with respect to our warrants.

     If we were to expend all of the net  proceeds of the  Offering,  other than
the  proceeds  deposited  in the trust  fund,  and without  taking into  account
interest,  if any, earned on the trust fund, the initial  per-share  liquidation
price would be $5.10. The proceeds  deposited in the trust fund could,  however,
become  subject to the claims of our  creditors,  which  could rank prior to the
claims  of our  public  stockholders.  We  cannot  assure  you that  the  actual
per-share  liquidation price will not be less than $5.10, plus interest,  due to
claims of creditors.  If we liquidate  prior to the  consummation  of a business
combination,  Arthur Spector, our chairman of the board, chief executive officer
and  president,  and Dr.  Heinz  Schimmelbusch,  a  director  of  ours,  will be
personally liable to pay debts and obligations to vendors or other entities that
are owed money by us for services  rendered or products  sold to us in excess of
the net proceeds of the Offering not held in the trust account. We cannot assure
you, however, that they would be able to satisfy those obligations.

     If we enter into either a letter of intent,  an agreement in principle or a
definitive  agreement to complete a business combination prior to the expiration
of 18 months  (February 28, 2005) after the completion of the Offering,  but are
unable to complete the business  combination within the 18-month period, then we
will have an  additional  six months  (August 28, 2005) in which to complete the
business  combination  contemplated  by  the  letter  of  intent,  agreement  in
principle or definitive  agreement.  If we are unable to do so by the expiration
of the  24-month  period  from the  completion  of the  Offering,  we will  then
liquidate.  Upon  notice  from us, the  trustee of the trust fund will  commence
liquidating the investments  constituting  the trust fund and will turn over the
proceeds  to  our  transfer  agent  for  distribution  to our  stockholders.  We
anticipate that our instruction to the trustee would be given promptly after the
expiration of the applicable 18-month or 24-month period.

     Our public  stockholders  will be entitled to receive  funds from the trust
fund only in the event of our liquidation or if the stockholders seek to convert
their  respective  shares  into  cash  upon a  business  combination  which  the
stockholder  voted  against and which is actually  completed  by us. In no other
circumstances  shall a stockholder  have any right or interest of any kind to or
in the trust fund.

Competition

     In identifying,  evaluating and selecting a target  business,  we expect to
encounter  intense  competition from other entities having a business  objective
similar to ours. Many of these entities are well  established and have extensive
experience  identifying and effecting business  combinations directly or through
affiliates. Many of these competitors possess greater technical, human and other
resources than us and our financial  resources  will be relatively  limited when
contrasted with those of many of these  competitors.  While we believe there are
numerous potential target businesses that we could acquire with the net proceeds
of the  Offering,  our ability to compete in acquiring  certain  sizable  target
businesses will be limited by our available financial  resources.  This inherent
competitive  limitation gives others an advantage in pursuing the acquisition of
a target business.
Further:


                                       6
<PAGE>


          o    our  obligation  to  seek  stockholder  approval  of  a  business
               combination may delay the completion of a transaction;

          o    our  obligation  to convert into cash shares of common stock held
               by our public  stockholders  in certain  instances may reduce the
               resources available to us for a business combination; and

          o    our  outstanding  warrants and options,  and the future  dilution
               they  potentially  represent,  may  not be  viewed  favorably  by
               certain target businesses.

     Any of these  obligations  may place us at a  competitive  disadvantage  in
successfully  negotiating  a  business  combination.  Our  management  believes,
however,  that our status as a public entity and potential  access to the United
States  public  equity  markets  may  give  us  a  competitive   advantage  over
privately-held entities having a similar business objective as us in acquiring a
target business with significant growth potential on favorable terms.

     If we succeed in  effecting a business  combination,  there will be, in all
likelihood,  intense  competition from  competitors of the target  business.  In
particular,  certain  industries that experience rapid growth frequently attract
an  increasingly  larger  number  of  competitors,  including  competitors  with
increasingly  greater financial,  marketing,  technical and other resources than
the  initial   competitors   in  the   industry.   The  degree  of   competition
characterizing  the industry of any prospective target business cannot presently
be ascertained. We cannot assure you that, subsequent to a business combination,
we will have the resources to compete effectively, especially to the extent that
the target business is in a high-growth industry.

Employees

     We presently  have two  officers.  These  individuals  are not obligated to
contribute  any  specific  number of hours per week and intend to devote only as
much time as they deem  necessary to our  affairs.  The amount of time they will
devote in any time period will vary based on the availability of suitable target
businesses to investigate.  Mr. Spector has devoted an average of  approximately
ten hours per week to our  business and we expect him to continue to do so until
we  consummate  a business  combination.  We do not intend to have any full time
employees prior to the consummation of a business combination.

Risks Related To Our Business

     In addition to other  information  included in this report,  the  following
factors should be considered in evaluating our business and future prospects.

We are a development  stage company with an extremely  limited operating history
and will be unable  to  generate  any  revenues  until we  complete  a  business
combination.

     We are a development  stage company with no revenues to date. Since we have
an extremely  limited  operating  history,  you will have no basis upon which to
evaluate our ability to achieve our business  objective,  which is to acquire an
operating  business.  We will not generate any revenues  until, at the earliest,
after the consummation of a business combination.



                                       7
<PAGE>

If we are  forced  to  liquidate  before  a  business  combination,  our  public
stockholders  may receive less than the purchase  price per share that they paid
for our  securities  upon  distribution  of the trust fund and our warrants will
expire worthless.

     If we are  unable to  complete  a  business  combination  and are forced to
liquidate our assets,  the per-share  liquidation  distribution may be less than
the purchase  price per share that they paid for our  securities  because of the
expenses  of the  Offering,  our  general and  administrative  expenses  and the
anticipated costs of seeking a business combination.  Furthermore, there will be
no distribution with respect to our outstanding warrants and,  accordingly,  the
warrants  will expire  worthless  if we  liquidate  before the  completion  of a
business combination.

If third  parties  bring claims  against us, the proceeds held in trust could be
reduced and the per-share liquidation price received by stockholders may be less
than the purchase price per share that they paid for our securities.

     Our placing of funds in trust may not protect  those funds from third party
claims  against us. The proceeds  held in trust could be subject to claims which
could take priority over the claims of our public stockholders. We cannot assure
our public  shareholders  that the per-share  liquidation price will not be less
than the  purchase  price per share  that they paid for our  securities,  due to
claims of  creditors.  If we  liquidate  before  the  completion  of a  business
combination,  Arthur Spector, our chairman of the board, chief executive officer
and  president,  and Dr.  Heinz C.  Schimmelbusch,  a director of ours,  will be
personally liable under certain circumstances to ensure that the proceeds in the
trust fund are not  reduced by the claims of various  vendors or other  entities
that are owed money by us for services rendered or products sold to us. However,
we cannot assure you that these individuals could satisfy those obligations.

Since we have  not  currently  selected  a  particular  industry  or any  target
business  with  which to  complete  a  business  combination,  we are  unable to
currently  ascertain the merits or risks of the industry or business in which we
may ultimately operate.

     We may consummate a business  combination with a company in any industry we
choose  and are not  limited to any  particular  industry  or type of  business.
Accordingly,  there is no current  basis for  investors to evaluate the possible
merits or risks of the particular industry in which we may ultimately operate or
the target business which we may ultimately acquire. To the extent we complete a
business  combination  with a financially  unstable  company or an entity in its
development stage, we may be affected by numerous risks inherent in the business
operations  of those  entities.  If we complete a business  combination  with an
entity in an industry  characterized by a high level of risk, we may be affected
by the currently unascertainable risks of that industry. Although our management
will endeavor to evaluate the risks inherent in a particular  industry or target
business,  we cannot assure you that we will properly ascertain or assess all of
the  significant  risk factors.  We also cannot assure you that an investment in
our  securities  will not  ultimately  prove to be less  favorable than a direct
investment, if an opportunity were available, in a target business.

We may issue  shares of our  common  stock and  preferred  stock to  complete  a
business combination, which would reduce the equity interest of our stockholders
and likely cause a change in control of our ownership.

     Our  certificate  of  incorporation   authorizes  the  issuance  of  up  to
20,000,000  shares of common  stock,  par value $.0001 per share,  and 1,000,000
shares of preferred stock, par value $.0001 per share.  There are authorized but
unissued  6,125,000  shares of our common stock


                                       8
<PAGE>


available for issuance (after appropriate reservation for the issuance of shares
upon full exercise of our  outstanding  warrants and the purchase option granted
to  EarlyBirdCapital,  Inc., the  representative of the underwriters) and all of
the 1,000,000 shares of preferred stock available for issuance. Although we have
no commitments as of the date of this report to issue our  securities,  we will,
in all likelihood, issue a substantial number of additional shares of our common
stock or preferred  stock,  or a combination of common and preferred  stock,  to
complete a business combination. The issuance of additional shares of our common
stock or any number of shares of our preferred stock may:


          o    significantly reduce the equity interest of our stockholders;

          o    likely cause a change in control if a  substantial  number of our
               shares of common stock are issued,  which may affect, among other
               things, our ability to use our net operating loss carry forwards,
               if any, and most likely also result in the resignation or removal
               of our present officers and directors; and

          o    adversely affect prevailing market prices for our common stock.

It  is  likely  that  our  current  officers  and  directors  will  resign  upon
consummation of a business  combination and we will have only limited ability to
evaluate the management of the target business.

     Our ability to successfully  effect a business  combination will be totally
dependent  upon the  efforts of our key  personnel.  The future  role of our key
personnel in the target  business,  however,  cannot  presently be  ascertained.
Although it is possible that some of our key personnel will remain associated in
various capacities with the target business following a business combination, it
is likely that the management of the target business at the time of the business
combination will remain in place.  Although we intend to closely  scrutinize the
management of a prospective  target  business in connection  with evaluating the
desirability of effecting a business combination, there can be no assurance that
our assessment of management will prove to be correct.

Our officers and directors  may allocate  their time to other  businesses  which
could cause a conflict of interest as to which  business  they  present a viable
acquisition opportunity.

     Our  officers and  directors  are not required to commit their full time to
our affairs, which may result in a conflict of interest in allocating their time
between our operations and other businesses.  Some of these persons are now, and
may in the future  become,  affiliated  with  entities,  including  other "blank
check" companies, engaged in business activities similar to those intended to be
conducted  by us.  Our  officers  and  directors  may become  aware of  business
opportunities  which may be appropriate  for  presentation  to us as well as the
other  entities with which they may be  affiliated.  Accordingly,  they may have
conflicts  of interest in  determining  to which  entity a  particular  business
opportunity should be presented.  We cannot assure you that these conflicts will
be resolved in our favor.

All of our directors own shares of our securities  which will not participate in
liquidation  distributions and therefore they may have a conflict of interest in
determining  whether a particular  target business is appropriate for a business
combination.

     All of our directors own stock in our company,  but have waived their right
to receive distributions upon liquidation. The securities owned by our directors
will be worthless if we do


                                       9
<PAGE>

not consummate a business  combination.  The personal and financial interests of
our directors  may influence  their  motivation in  identifying  and selecting a
target business and completing a business combination timely. Consequently,  our
directors'  discretion in identifying  and selecting a suitable  target business
may  result in a  conflict  of  interest  when  determining  whether  the terms,
conditions and timing of a particular  business  combination are appropriate and
in our stockholders' best interest.

Our board of directors will have  substantial  influence over the selection of a
target company and the completion of a business combination.

     Our board of  directors  is divided  into two  classes,  each of which will
generally  serve for a term of two years with only one class of directors  being
elected in each year.  It is  unlikely  that there will be an annual  meeting of
stockholders  to elect new  directors  prior to the  consummation  of a business
combination,  in which case all of the current directors will continue in office
at least until the  consummation  of the  business  combination.  If there is an
annual meeting of our stockholders, as a consequence of our "staggered" board of
directors,  only a minority of the board of  directors  will be  considered  for
election.  Accordingly, our existing stockholders will continue to exert control
at least until the  consummation  of a business  combination.  Accordingly,  our
board of  directors  will have  substantial  influence  over the  selection of a
target company and the completion of a business combination.

It is probable  that we will only be able to complete one business  combination,
which will cause us to be solely  dependent  on a single  business and a limited
number of products or services.

     We presently have $20,751,198 on deposit in a trust fund that we may use to
complete a business combination. Our initial business combination must be with a
business  with a fair market value of at least 80% of our net assets at the time
of such acquisition.  Consequently, it is probable that we will have the ability
to complete only a single business combination.  Accordingly,  the prospects for
our success may be:


          o    solely dependent upon the performance of a single business, or

          o    dependent upon the  development or market  acceptance of a single
               or limited number of products, processes or services.

     In this case,  we will not be able to diversify  our  operations or benefit
from the  possible  spreading  of risks or  offsetting  of losses,  unlike other
entities which may have the resources to complete several business  combinations
in different industries or different areas of a single industry.

Because of our limited  resources and the  significant  competition for business
combination  opportunities,  we  may  not  be  able  to  consummate  a  business
combination with growth potential.

     We expect to encounter  intense  competition  from other entities  having a
business objective similar to ours,  including venture capital funds,  leveraged
buyout funds and operating businesses competing for acquisitions.  Many of these
entities are well  established and have extensive  experience in identifying and
effecting business  combinations  directly or through affiliates.  Many of these
competitors possess greater technical,  human and other resources than we do and
our financial resources will be relatively limited when contrasted with those of
many of these  competitors.  While we believe that there are numerous  potential
target  businesses that we could acquire with the net proceeds of this offering,
our ability to compete in acquiring  certain  sizable target  businesses will be
limited  by  our  available  financial  resources.   This  inherent  competitive
limitation  gives others an advantage  in pursuing  the  acquisition  of certain
target businesses.  Further, the obligation we have to seek stockholder approval
of a business  combination  may delay the  consummation  of a  transaction;  our
obligation  to  convert  into cash the  shares of  common  stock  held by public
stockholders  in certain  instances  may reduce the  resources  available  for a
business combination; and our outstanding warrants, and the future dilution they
potentially represent, may not be viewed favorably by certain target businesses.
Any  of  these  obligations  may  place  us  at a  competitive  disadvantage  in
successfully negotiating a business combination.



                                       10
<PAGE>


We may be unable to obtain  additional  financing,  if  required,  to complete a
business  combination  or to  fund  the  operations  and  growth  of the  target
business,  which could compel us to  restructure  the  transaction  or abandon a
particular business combination.

     Although we believe  that the cash on deposit in our trust  account will be
sufficient to allow us to consummate a business combination, inasmuch as we have
not yet identified any  prospective  target  business,  we cannot  ascertain the
capital requirements for any particular  transaction.  If the cash on deposit in
our trust account is  insufficient,  either  because of the size of the business
combination or the depletion of the available net proceeds in search of a target
business,  or because we become  obligated  to convert  into cash a  significant
number of shares  from  dissenting  stockholders,  we will be  required  to seek
additional  financing.  We  cannot  assure  you  that  such  financing  would be
available  on  acceptable  terms,  if at  all.  To the  extent  that  additional
financing  proves to be  unavailable  when  needed to  consummate  a  particular
business  combination,  we would be compelled to restructure  the transaction or
abandon that  particular  business  combination  and seek an alternative  target
business candidate. In addition, if we consummate a business combination, we may
require  additional  financing  to fund the  operations  or growth of the target
business.  The  failure  to secure  additional  financing  could have a material
adverse effect on the continued  development  or growth of the target  business.
None of our  officers,  directors  or  stockholders  is  required to provide any
financing to us in connection with or after a business combination.

Our  outstanding  warrants  may have an adverse  effect on the  market  price of
common stock and make it more difficult to effect a business combination.

     We  presently  have  reserved  9,100,000  shares  of our  common  stock for
issuance  upon  exercise of issued and  outstanding  warrants  and the option to
purchase 350,000 units that we granted to the representative of the underwriters
in our public offering.  To the extent we issue shares of common stock to effect
a business combination, the potential for the issuance of substantial numbers of
additional  shares upon  exercise of these  warrants and options could make us a
less  attractive  acquisition  vehicle in the eyes of a target  business as such
securities,  when exercised,  will increase the number of issued and outstanding
shares of our common stock and reduce the value of the shares issued to complete
the business combination. Accordingly, our warrants and options may make it more
difficult  to  effectuate  a business  combination  or increase  the cost of the
target business. Additionally, the sale, or even the possibility of sale, of the
shares  underlying  the warrants and options could have an adverse effect on the
market  price for our  securities  or on our  ability  to obtain  future  public
financing.  If and to the extent these warrants and options are  exercised,  you
may experience dilution to your holdings.

If our original  stockholders exercise their registration rights, it may have an
adverse  effect on the market  price of our common  stock and the  existence  of
these rights may make it more difficult to effect a business combination.

     Our  original  stockholders  are  entitled to demand  that we register  the
resale of their shares of common stock at any time after the date on which their
shares are released from escrow.  If our original  stockholders  exercise  their
registration  rights with respect to all of their shares of common  stock,  then
there will be an additional  750,000 shares of common stock eligible for trading
in the public market. The presence of this additional number of shares of common
stock  eligible for trading in the public  market may have an adverse  effect on
the market price of our common stock. In addition, the existence of these rights
may make it more difficult to effectuate a business  combination or increase the
cost of the target  business,  as the stockholders of the target business may be
discouraged from entering into a business  combination with us or will request a



                                       11
<PAGE>

higher price for their business as a result of these registration rights and the
potential  future effect their  exercise may have on the trading  market for our
common stock.

Shares of our common stock lack a significant trading market.

     Shares of our common  stock are not eligible for trading on any national or
regional   exchange.   Our  common   stock  is  eligible   for  trading  in  the
over-the-counter market on the Over-The-Counter  Bulletin Board pursuant to Rule
15c2-11 of the Securities  Exchange Act of 1934.  This market tends to be highly
illiquid,  in part  because  there  is no  national  quotation  system  by which
potential  investors  can  trace  the  market  price of  shares  except  through
information received or generated by certain selected broker-dealers that make a
market in that  particular  stock.  There  are  currently  no plans,  proposals,
arrangements or understandings with any person with regard to the development of
a trading  market in our common stock.  There can be no assurance that an active
trading market in our common stock will develop,  or if such a market  develops,
that it will be  sustained.  In addition,  there is a greater  chance for market
volatility for securities that trade on the  Over-The-Counter  Bulletin Board as
opposed to  securities  that trade on a national  exchange or quotation  system.
This  volatility  may be caused by a variety of factors,  including  the lack of
readily  available   quotations,   the  absence  of  consistent   administrative
supervision of "bid" and "ask" quotations and generally lower trading volume.

If we are deemed to be an  investment  company,  we may be required to institute
burdensome compliance  requirements and our activities may be restricted,  which
may make it difficult for us to complete a business combination.

     If we are deemed to be an investment  company under the Investment  Company
Act of 1940, our activities may be restricted,  including:

          o    restrictions on the nature of our investments; and

          o    restrictions  on the  issuance of  securities,  which may make it
               difficult for us to complete a business combination.

In addition, we may have imposed upon us burdensome requirements, including:

          o    registration as an investment company;

          o    adoption of a specific form of corporate structure; and

          o    reporting,   record   keeping,   voting,   proxy  and  disclosure
               requirements and other rules and regulations.

     We do not believe that our principal business activities will subject us to
the  Investment  Company Act of 1940.  To this end,  the  proceeds of our public
offering  held in trust may only be invested  by the trust agent in  "government
securities"  with specific  maturity dates. By restricting the investment of the
proceeds  to these  instruments,  we  intend  to meet the  requirements  for the
exemption  provided in Rule 3a-1 promulgated under the Investment Company Act of
1940.  If we were deemed to be subject to this  statute,  compliance  with these
additional  regulatory burdens would require additional expense that we have not
allotted for.



                                       12
<PAGE>


Item 2. Description of Property.

     We maintain our  executive  offices at 435 Devon Park Drive,  Building 400,
Wayne,  Pennsylvania  19087.  The cost for this space is  included in the $7,500
per-month fee 400 Building LLC, an affiliate of Arthur Spector,  our chairman of
the board,  chief  executive  officer and president,  charges us for general and
administrative  services  pursuant  to a  letter  agreement  between  us and 400
Building  LLC. We believe,  based on rents and fees for similar  services in the
Philadelphia  metropolitan  area, that the fee charged by 400 Building LLC is at
least as favorable as we could have obtained  from an  unaffiliated  person.  We
consider our current office space adequate for our current operations.

Item 3. Legal Proceedings.

     We are not presently a party to any pending legal proceeding.

Item 4. Submission of Matters to a Vote of Security Holders.

     There were no matters  submitted to a vote of security  holders  during the
fourth quarter of the year ended December 31, 2003.





                                       13
<PAGE>




                                     PART II

Item 5.  Market for Common Equity and Related Stockholders Matters.

     Our units,  common  stock and  warrants are each quoted on the OTC Bulletin
Board under the symbols MSTMU, MSTM and MSTMW, respectively. The following table
sets forth the high and low closing  bid  quotations  for the periods  indicated
since  such units  commenced  public  trading on August 25,  2003 and since such
common stock and warrants  commenced  public  trading on September 9, 2003.  The
over-the-counter  market quotations reported below reflect  inter-dealer prices,
without  markup,   markdown  or  commissions   and  may  not  represent   actual
transactions.
<TABLE>
<CAPTION>


                                                        Units             Common Stock          Warrants
                                                    -------------        --------------         --------
2003                                                High      Low       High        Low       High      Low
----                                                ----      ---       ----        ---       ----      ---
<S>                                                 <C>      <C>        <C>       <C>        <C>        <C>
Third Quarter................................       $6.25    $6.00      $5.00     $4.75      $0.65      $0.60
Fourth Quarter...............................       $6.60    $6.01      $5.00     $4.84      $0.71      $0.60

</TABLE>


     We have not  paid any cash  dividends  on the  common  stock  and we do not
intend to pay any dividends prior to the consummation of a business combination.

     As of December 31, 2003, we had three holders of record of our units, seven
holders of record of our common stock and one holder of record of our warrants.

     As of  December  31,  2003,  we had no  compensation  plans under which our
equity securities were authorized for issuance.

Recent Sales of Unregistered Securities and Use of Proceeds

     In April  2003,  we sold the  following  shares  of  common  stock  without
registration under the Securities Act of 1933, as amended:

        Stockholders                                   Number of Shares
        ---------------------------                    ----------------
        Arthur Spector                                        360,000
        Spector Family Trust                                  180,000
        Dr. Heinz C. Schimmelbusch                            150,000
        Robert E. Keith, Jr.                                   20,000
        Don K. Rice                                            20,000
        J. Brian O'Neill                                       20,000

     Such shares were issued in connection with our organization pursuant to the
exemption from  registration  contained in Section 4(2) of the Securities Act as
they were sold to  sophisticated,  wealthy  individuals  or  entities.  Of these
shares,  the 360,000  shares issued to Mr. Spector were sold at a purchase price
of  approximately  $.06944 per share. The other shares issued to the individuals
and entity listed above were sold at purchase prices of $0.0001 per share.

     On August 28,  2003,  we closed our initial  public  offering of  3,500,000
Units,  with each Unit  consisting of one share of our common stock and warrants
to purchase  two shares of our common  stock at an  exercise  price of $5.00 per
share. The managing underwriter in the offering was  EarlyBirdCapital,  Inc. The
securities sold in the offering were registered under the Securities


                                       14
<PAGE>


Act of 1933 on a  registration  statement  on Form  S-1  (No.  333-105388).  The
Securities and Exchange Commission declared the registration statement effective
on August 25, 2003.

     On August 26, 2003, the underwriters  exercised their over-allotment option
to purchase  525,000  Units at the initial  public  offering  price of $6.00 per
share. With the  over-allotment  option, the aggregate initial offering proceeds
totaled $24,150,000.

     We paid a total of $1,690,500 in  underwriting  discounts and  commissions,
and  approximately  $1,041,500  has been or will be paid for costs and  expenses
related   to  the   offering,   including   $724,500   for   the   underwriters'
non-accountable expense allowance of 3% of the gross proceeds.

     After deducting the underwriting discounts and commissions and the offering
expenses,  the total net  proceeds to us from the  offering  were  approximately
$21,418,000,  of  which  $20,685,000  was  deposited  into a trust  fund and the
remaining  proceeds are available to be used to provide for business,  legal and
accounting due diligence on  prospective  business  combinations  and continuing
general and  administrative  expenses.  Through  December 31, 2003, we have used
$203,892 of the net proceeds that were not deposited  into the trust fund to pay
general and administrative  expenses.  The net proceeds deposited into the trust
fund  remain on deposit in the trust fund and have  earned  $66,448 in  interest
through December 31, 2003.

Item 6.  Plan of Operations.

     The following  discussion  should be read in conjunction with our Financial
Statements and related Notes thereto included elsewhere in this report.

     We were  formed on April 11, 2003 to serve as a vehicle to effect a merger,
capital stock exchange,  asset acquisition or other similar business combination
with a currently unidentified operating business that we believe has significant
growth  potential.  We intend to utilize  the  proceeds  of our  initial  public
offering,  our capital stock,  debt or a combination of cash,  capital stock and
debt, in effecting a business combination.

     We consummated our initial public  offering on August 28, 2003.  Operations
commenced  August 29,  2003.  Net loss of $88,239  reported  for the period from
April 11, 2003  (inception)  through  December  31, 2003  consists  primarily of
$44,000 expense for director and officer  liability  insurance,  $30,000 expense
for a monthly administrative  services agreement,  $23,734 for professional fees
and $57,848 for other expenses.  Interest  accreted on the trust fund investment
was $66,448 and other interest income was $895.

     $20,685,000  of the net proceeds of the  Offering,  plus  accrued  interest
thereon, is held in trust and the remaining proceeds are available to be used to
provide  for  business,  legal  and  accounting  due  diligence  on  prospective
acquisitions and continuing  general and  administrative  expenses.  We will use
substantially  all of the net proceeds of our initial public offering to acquire
a target business,  including identifying and evaluating prospective acquisition
candidates,  selecting the target  business,  and  structuring,  negotiating and
consummating the business  combination.  To the extent that our capital stock is
used in whole or in part as consideration to effect a business combination,  the
proceeds  held in the trust fund as well as any other net  proceeds not expended
will be used to finance the operations of the target  business.  We believe that
we have  sufficient  available funds outside of the trust fund to operate for at
least 24 months  from the date of the  Offering  (August 28,  2005),  assuming a
business combination is not consummated during that time. Over this time period,
we anticipate approximately $163,000 of expenses for legal, accounting and other
expenses attendant to the



                                       15
<PAGE>

due  diligence  investigations,   structuring  and  negotiating  of  a  business
combination,  $180,000  for the  administrative  fee payable to 400 Building LLC
($7,500 per month for two years),  $50,000 of expenses for the due diligence and
investigation of a target business,  $40,000 of expenses in legal and accounting
fees relating to our SEC reporting  obligations and $300,000 for general working
capital that will be used for  miscellaneous  expenses and  reserves,  including
approximately  $264,000 for director and officer  liability  insurance  premiums
(for two  years).  We do not believe we will need to raise  additional  funds in
order to meet the expenditures required for operating our business.  However, we
may need to raise  additional funds through a private offering of debt or equity
securities  if it is  required  to  consummate  a business  combination  that is
presented to us. We would only  consummate  such a fund  raising  simultaneously
with the consummation of a business combination.

     We are obligated, commencing September 1, 2003, to pay to 400 Building LLC,
an  affiliate of Arthur  Spector,  our  chairman of the board,  chief  executive
officer and  president,  a monthly fee of $7,500 for general and  administrative
services. In addition, on April 28, 2003, Mr. Spector advanced $35,000 to us, on
a non-interest  bearing basis,  for payment on our behalf of offering  expenses.
This loan was repaid in September 2003 out of proceeds of the Offering.

     We presently  have two  officers.  These  individuals  are not obligated to
contribute  any  specific  number of hours per week and intend to devote only as
much time as they deem  necessary to our  affairs.  The amount of time they will
devote in any time period will vary based on the availability of suitable target
businesses to investigate.  Mr. Spector has devoted an average of  approximately
ten hours per week to our  business and we expect him to continue to do so until
we  consummate  a business  combination.  We do not intend to have any full time
employees prior to the consummation of a business combination.

Off-balance sheet arrangements

     There were no off-balance sheet  arrangements  during the period from April
11, 2003  (inception)  through  December  31,  2003 that have or are  reasonably
likely to have a current or future effect on our financial condition, changes in
financial  condition,  revenues or expenses,  results of operations,  liquidity,
capital expenditures, or capital resources that is material to our investors.


                                       16
<PAGE>



Item 7. Financial Statements.

               Report of Independent Certified Public Accountants
               --------------------------------------------------



Millstream Acquisition Corporation
Wayne, Pennsylvania

We have  audited  the  accompanying  balance  sheet  of  Millstream  Acquisition
Corporation (a corporation  in the  development  stage) as of December 31, 2003,
and the related statements of operations,  stockholders'  equity, and cash flows
for the period from April 11, 2003 (inception)  through December 31, 2003. 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 audit.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  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  audit  provides  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  Millstream  Acquisition
Corporation (a corporation  in the  development  stage) as of December 31, 2003,
and the results of its  operations  and its cash flows for the period from April
11, 2003  (inception)  through  December 31, 2003 in conformity  with accounting
principles generally accepted in the United States of America.





/s/ BDO Seidman, LLP

Philadelphia, Pennsylvania
February 9, 2003



                                       17
<PAGE>



<TABLE>
<CAPTION>


                       MILLSTREAM ACQUISITION CORPORATION
                    (a corporation in the development stage)

                                  BALANCE SHEET


                                                                                   December 31,
                                                                                       2003
                                                                                   ------------
ASSETS
<S>                                                                                <C>
Cash and cash equivalents                                                          $    557,123
Investments held in trust                                                            20,751,198
Prepaid expenses                                                                         89,270
                                                                                   ------------
     Total assets                                                                  $ 21,397,591
                                                                                   ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
   Accounts payable                                                                $     18,815
   Accrued expenses                                                                      24,250
                                                                                   ------------
     Total current liabilities                                                           43,065
                                                                                   ------------

Common stock, subject to possible redemption, 804,598 shares at conversion
   value                                                                              4,103,450

Commitment

Stockholders' Equity:
   Preferred stock, $.0001 par value, authorized 1,000,000 shares; none issued               --
   Common stock, $.0001 par value, authorized 20,000,000 shares; issued and
      outstanding 3,970,402 shares, net of 804,598 shares subject to possible
      redemption                                                                            397
   Additional paid-in capital                                                        17,338,918
   Deficit accumulated during the development stage                                     (88,239)
                                                                                   ------------
     Total stockholders' equity                                                      17,251,076
                                                                                   ------------

     Total liabilities and stockholders' equity                                    $ 21,397,591
                                                                                   ============





                 See accompanying notes to financial statements.

</TABLE>

                                       18
<PAGE>

<TABLE>
<CAPTION>

                       MILLSTREAM ACQUISITION CORPORATION
                    (a corporation in the development stage)

                             STATEMENT OF OPERATIONS


                                               April 11, 2003
                                               (inception) to
                                             December 31, 2003
                                             -------------------

<S>                                               <C>
 General and administrative expenses              $   155,582
                                                  -----------

   Operating loss                                    (155,582)

Other income:
   Interest income                                        895
   Interest accreted on trust fund investment          66,448
                                                  -----------
   Total other income                                  67,343
                                                  -----------


   Net loss                                       $   (88,239)
                                                  ===========






 Weighted average shares of common
   stock outstanding

       Basic and diluted                            4,775,000
                                                  ===========

  Loss per common share

       Basic and diluted                          $      (.02)
                                                  ===========



</TABLE>


                 See accompanying notes to financial statements.


                                       19
<PAGE>

<TABLE>
<CAPTION>



                       MILLSTREAM ACQUISITION CORPORATION
                    (a corporation in the development stage)

                        STATEMENT OF STOCKHOLDERS' EQUITY




                                                                                                    Deficit
                                                                                                  Accumulated
                                                                                  Additional       during the
                                            Preferred        Common Stock          Paid-In        Development
                                              Stock       Shares      Amount       Capital           Stage            Total
                                           -----------------------------------------------------------------------------------------
Balance, April 11, 2003
<S>                                       <C>                           <C>           <C>             <C>                  <C>
(inception)                               $       --          --        $       --    $   --          $       --           $    --

Sale of 750,000 shares of common
stock to initial stockholders at
$.0334 per share                                         750,000               75        24,964                              25,039

Sale of 3,220,402 shares of
common stock to public stockholders
at $6.00 per share, net of 804,598
shares subject to possible redemption
at $5.10 per share and net of
underwriters' discount and offering
expenses of $2,732,374                                 3,220,402             322       17,313,954                        17,314,276

Net loss for the period April
11, 2003 (inception) to December
31, 2003                                                                                                   (88,239)         (88,239)


------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2003                $       --   3,970,402      $      397     $ 17,338,918     $    (88,239)    $ 17,251,076
====================================================================================================================================

</TABLE>


                 See accompanying notes to financial statements.



                                       20
<PAGE>
<TABLE>
<CAPTION>


                       MILLSTREAM ACQUISITION CORPORATION
                    (a corporation in the development stage)

                             STATEMENT OF CASH FLOWS


                                                                                     April 11, 2003
                                                                                     (inception) to
                                                                                      December 31,
                                                                                         2003
                                                                                     -----------
  Cash flows from operating activities:
<S>                                                                                  <C>
  Net loss                                                                           $    (88,239)
  Adjustments to reconcile net loss to net cash used in operating activities:
     Change in operating assets and liabilities:
      Increase in prepaid expenses                                                        (89,270)
      Increase in accounts payable and accrued expenses                                    43,065
                                                                                     ------------
        Net cash used in operating activities                                            (134,444)
                                                                                     ------------

  Cash flows from investing activities:
  Investments held in trust fund                                                      (20,751,198)
                                                                                     ------------

  Cash flows from financing activities:
  Proceeds from sale of shares of common stock to initial stockholders                     25,039
  Proceeds from note payable, stockholder                                                  35,000
  Repayment of note payable, stockholder                                                  (35,000)
  Proceeds from public offering of 4,025,000 units, net of underwriting discount
     and offering expenses                                                             21,417,726
                                                                                     ------------
        Net cash provided by financing activities                                      21,442,765
                                                                                     ------------

  Net increase in cash and cash equivalents                                               557,123
  Cash and cash equivalents at beginning of period                                           --
                                                                                     ------------
  Cash and cash equivalents at end of period                                         $    557,123
                                                                                     ============

</TABLE>


                 See accompanying notes to financial statements.


                                       21
<PAGE>



<PAGE>



                       MILLSTREAM ACQUISITION CORPORATION
                    (a corporation in the development stage)

                          NOTES TO FINANCIAL STATEMENTS


1.  Organization and Business Operations

Millstream  Acquisition  Corporation (a corporation  in the  development  stage)
("the Company") was  incorporated in Delaware on April 11, 2003 as a blank check
company whose  objective is to acquire an operating  business in an industry not
yet determined.  The Company's  initial  stockholders  purchased  750,000 common
shares, $.0001 par value, for $25,039 on April 14, 2003.

The  registration  statement for the Company's  initial  public  offering  ("the
Offering") was declared  effective on August 25, 2003.  The Company  consummated
the  Offering on August 28, 2003 and raised net  proceeds  of  $21,417,726.  The
Company's   management  has  broad  discretion  with  respect  to  the  specific
application of the net proceeds of the Offering,  although  substantially all of
the net proceeds of the Offering  are  intended to be generally  applied  toward
consummating a business  combination  with an operating  business in an industry
yet to be determined  ("Business  Combination").  There is no assurance that the
Company will be able to successfully effect a Business Combination.  $20,685,000
of the net  proceeds  are  being  held in a trust  account  ("Trust  Fund")  and
invested in government  securities  until the earlier of (i) the consummation of
the Company's first Business Combination or (ii) liquidation of the Company. The
Trust Fund indenture  limits  investments  to U.S.  government  securities  with
maturities of 180 days or less.  The  remaining  proceeds may be used to pay for
business,  legal and accounting due diligence on  prospective  acquisitions  and
continuing general and administrative expenses.

The Company,  after  signing a definitive  agreement  for the  acquisition  of a
target business,  will submit the transaction for stockholder  approval.  In the
event that  stockholders  owning 20% or more of the outstanding stock excluding,
for this  purpose,  those persons who were  stockholders  prior to the Offering,
vote against the Business  Combination,  the  Business  Combination  will not be
consummated.  All of the Company's stockholders prior to the Offering, including
all of the officers and directors of the Company ("Initial Stockholders"),  have
agreed to vote their 750,000 shares of common stock in accordance  with the vote
of the majority of all other stockholders of the Company ("Public Stockholders")
with respect to any Business  Combination.  After  consummation of the Company's
first Business  Combination,  all of these voting  safeguards  will no longer be
applicable.

With respect to the first Business  Combination that is approved by stockholders
and  consummated,   any  Public  Stockholder  who  voted  against  the  Business
Combination  may  demand  that the  Company  redeem  his  shares.  The per share
redemption  price will equal the amount in the Trust Fund as of the record  date
for determination of stockholders  entitled to vote on the Business  Combination
divided by the number of shares of common stock held by Public  Stockholders  at
the  consummation  of the Offering.  Accordingly,  Public  Stockholders  holding
19.99% of the aggregate  number of shares owned by all Public  Stockholders  may
seek  redemption  of their shares in the event of a Business  Combination.  Such
Public  Stockholders  are  entitled to receive  their per share  interest in the
Trust Fund computed  without regard to the shares held by Initial  Stockholders.
Accordingly, a portion of the net proceeds from the Offering has been classified
as common stock subject to possible redemption in the balance sheet.



                                       22
<PAGE>


The Company's Certificate of Incorporation provides for mandatory liquidation of
the Company,  without stockholder  approval,  in the event that the Company does
not  consummate  a Business  Combination  within 18 months  from the date of the
consummation  of the  Offering  (February  28,  2005),  or 24  months  from  the
consummation  of the Offering  (August 28, 2005) if certain  extension  criteria
have been  satisfied.  In the event of  liquidation,  it is likely  that the per
share  value  of  the  residual  assets  remaining  available  for  distribution
(including  Trust Fund assets) will be less than the offering price per share in
the Offering due to costs  related to the Offering,  general and  administrative
expenses  incurred  prior to the  liquidation  event and since no value would be
attributed to the Warrants contained in the Units sold (see Note 5).

2.  Summary of Significant Accounting Policies

Basis of Presentation
The  financial  statements  include  the  accounts of the  Company.  The Company
commenced  operations effective August 29, 2003. All activity through August 28,
2003 related to the Company's  formation and  preparation  of the Offering.  The
Company has selected December 31 as its fiscal year end.

Use of Estimates
The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingencies  at the date of the financial  statements and the reported amounts
of expenses during the reporting period.  Actual amounts could differ from those
estimates.

Cash Equivalents
The Company considers all highly liquid investments with original  maturities of
three months or less to be cash equivalents.

Concentration of Credit Risk
Financial  instruments  that  potentially  subject  the  Company to credit  risk
consist of cash equivalents and short-term investments.  The Company's policy is
to limit the amount of credit  exposure  to any one  financial  institution  and
place investments with financial  institutions  evaluated as being creditworthy,
or in short-term  money market funds which are exposed to minimal  interest rate
and credit risk and in a highly rated United States Treasury bill.

Fair Value of Financial Instruments
The  following  methods and  assumptions  are used to estimate the fair value of
each class of financial instruments for which it is practical to estimate:

      Cash and cash equivalents: The carrying amount approximates the fair value
      due to the short maturity of the cash equivalents.

      Investment in United States Treasury bill: The carrying amount is at cost,
      including accreted interest, which approximates market.

Income Taxes
The Company  recognizes  deferred  tax assets and  liabilities  for the expected
future tax  consequences  of events that have been  recognized  in the Company's
financial statements or tax returns. Under this method,  deferred tax assets and
liabilities  are  determined  based  on the


                                       23
<PAGE>



difference between the financial statement carrying amounts and the tax bases of
assets and  liabilities  using enacted tax rates in effect in the years in which
the differences are expected to reverse. At December 31, 2003, a deferred income
tax asset  relating  to the  Company's  net  operating  loss is offset by a full
valuation allowance based upon a lack of earnings history for the Company.

Earnings per Common Share
Basic  earnings per share ("EPS") is computed by dividing net income  applicable
to common stock by the weighted  average  common shares  outstanding  during the
period.  Diluted  EPS  reflects  the  additional  dilution  for all  potentially
dilutive securities such as stock warrants.

Recently Issued Accounting Standards
In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting
and Disclosure  Requirements for Guarantees,  including  Indirect  Guarantees of
Indebtedness  of  Others"  ("Interpretation  No.  45").  Interpretation  No.  45
elaborates  on  the  existing  disclosure   requirements  for  most  guarantees,
including loan guarantees  such as standby letters of credit.  It also clarifies
that at the time a company  issues a guarantee,  the company  must  recognize an
initial  liability for the fair market value of the obligations it assumes under
that  guarantee  and must disclose  that  information  in its interim and annual
financial  statements.  The initial  recognition and  measurement  provisions of
Interpretation  No.  45 apply on a  prospective  basis to  guarantees  issued or
modified after December 31, 2002.  Interpretation  No. 45 did not have an effect
on the financial statements.

In January  2003,  the FASB  issued  Interpretation  No. 46,  "Consolidation  of
Variable  Interest  Entities"  ("Interpretation  No. 46"),  that  clarifies  the
application  of Accounting  Research  Bulletin No. 51,  "Consolidated  Financial
Statements,"  to certain  entities  in which  equity  investors  do not have the
characteristics  of a controlling  financial  interest or do not have sufficient
equity at risk for the  entity to  finance  its  activities  without  additional
subordinated  financial  support from other  parties.  Interpretation  No. 46 is
applicable  immediately for variable interest entities created after January 31,
2003.  For variable  interest  entities  created prior to January 31, 2003,  the
provisions of  Interpretation  No. 46 are applicable no later than July 1, 2003.
Interpretation No. 46 did not have an effect on the financial statements.

In December 2002, the FASB issued Statement No. 148, "Accounting for Stock-Based
Compensation-Transition  and Disclosure", an amendment of FASB Statement No. 123
("SFAS  148").  SFAS  148  amends  FASB  Statement  No.  123,   "Accounting  for
Stock-Based  Compensation",  to provide alternative methods of transition for an
entity that voluntarily changes to the fair value based method of accounting for
stock-based employee  compensation.  It also amends the disclosure provisions of
that Statement to require prominent disclosure about the effects on reported net
income of an entity's  accounting  policy  decisions with respect to stock-based
employee  compensation.  Finally,  this Statement amends  Accounting  Principles
Board  ("APB")  Opinion  No.  28,  "Interim  Financial  Reporting",  to  require
disclosure  about those effects in interim  financial  information.  SFAS 148 is
effective for financial  statements  for fiscal years ending after  December 15,
2002. SFAS 148 did not have an effect on the financial statements.

In May  2003,  the FASB  issued  Statement  No.  150,  "Accounting  for  Certain
Financial  Instruments  with  Characteristics  of both  Liabilities  and Equity"
("SFAS  150").  SFAS 150  requires  an  issuer  to  classify  certain  financial
instruments, such as mandatorily redeemable shares and obligations to repurchase
the issuer's  equity  shares,  as  liabilities.  The  guidance is effective  for
financial  instruments  entered into or modified subsequent to May 31, 2003, and
otherwise is effective



                                       24
<PAGE>

at the beginning of the first interim  period after June 15, 2003.  SFAS 150 did
not have a material impact on the financial condition or results of operations.

3.  Investments Held in Trust

Investments  held in trust as of December 31, 2003 are primarily  comprised of a
zero  coupon  United  States  treasury  bill  with a face  value of  $20,786,000
purchased  at a discount  of 99.512%  due March 11,  2004 and are carried on the
Company's financial statements at $20,751,198,  which includes accreted interest
of $66,448.

4.  Earnings per Share

The following table sets forth the computation of basic and diluted earnings per
share as of December 31, 2003:

         Numerator:  Net loss                                        $ (88,239)

         Denominator:  Average common shares outstanding             4,775,000

         Basic and diluted earnings per share                        $   (0.02)

Operations  commenced  subsequent to the  Offering,  therefore,  average  common
shares  outstanding  reflect shares issued in the Offering.  No computation  for
diluted earnings per share was prepared for the Redeemable Common Stock Purchase
Warrants  and the  underwriters'  option (see Note 5) that were  outstanding  at
December 31, 2003 to purchase an  aggregate of 9,100,000  shares of common stock
at $5.00 per share and $6.00 per  share,  respectively,  because  the  warrants'
exercise  price was greater than the average  market price of the common  shares
and  conversion  of the  warrants  and  underwriters'  option  would have had an
antidilutive effect on loss per share.

5.  Stockholders' Equity

The Offering
The Company sold 4,025,000 units  ("Units") in the Offering,  which included all
of the 525,000 Units subject to the underwriters'  over-allotment  option.  Each
Unit consists of one share of the Company's common stock,  $.0001 par value, and
two  Redeemable  Common  Stock  Purchase  Warrants  ("Warrants").  Each  Warrant
entitles the holder to purchase from the Company one share of common stock at an
exercise  price of $5.00  commencing  the later of the  completion of a business
combination  with a target  business or August 25, 2004 and expiring  August 25,
2007.  The Warrants  will be  redeemable  at a price of $.01 per Warrant upon 30
days notice after the Warrants  become  exercisable,  only in the event that the
last  sale  price of the  common  stock is at least  $8.50  per share for any 20
trading days within a 30 trading day period ending on the third day prior to the
date on which notice of redemption is given.  In connection  with this Offering,
the Company issued an option for $100 to the  representative of the underwriters
to purchase  350,000 Units at an exercise  price of $9.90 per Unit. The warrants
underlying such Units are exercisable at $6.00 per share, but otherwise have the
same terms and conditions as the Warrants.  Separate trading of the Common Stock
and Warrants underlying the Company's Units commenced on September 9, 2003.



                                       25
<PAGE>


Preferred Stock
The Company is  authorized to issue  1,000,000  shares of preferred  stock,  par
value  $.0001 per share,  with such  designations,  voting and other  rights and
preferences as may be determined from time to time by the Board of Directors. As
of December 31, 2003, no shares of preferred stock have been issued.

Common Stock Reserved
The Company has  9,100,000  shares of common stock  reserved  for issuance  upon
exercise of the Warrants and the underwriters' option.

6.  Note Payable, Stockholder

The Company issued a $35,000 unsecured promissory note to a stockholder on April
28, 2003.  The note was  non-interest  bearing and was repaid in September  2003
with proceeds from the Offering.

7.  Commitment

The Company  presently  occupies  office  space  provided by an  affiliate of an
Initial Stockholder.  Such affiliate has agreed that, until the acquisition of a
target  business  by the  Company,  it will make the  office  space,  as well as
certain office and  secretarial  services,  available to the Company,  as may be
required  by the  Company  from time to time.  The Company has agreed to pay the
affiliate $7,500 per month for such services commencing September 1, 2003.










                                       26
<PAGE>






Item  8.  Changes  In and  Disagreements  With  Accountants  or  Accounting  and
Financial Disclosure.

None.

Item 8A. Controls and Procedures.

     Under  the  supervision  and  with  the  participation  of our  management,
including  our chief  executive  officer and chief  financial  officer,  we have
evaluated  the  effectiveness  of the design  and  operation  of our  disclosure
controls and procedures as of December 31, 2003 (the  "Evaluation  Date"),  and,
based on their  evaluation,  our chief  executive  officer  and chief  financial
officer have concluded  that these controls and procedures  were effective as of
the Evaluation Date. There were no significant  changes in our internal controls
or in other factors that could significantly affect these controls subsequent to
the Evaluation Date.

     Disclosure  controls and  procedures  (as defined in the Exchange Act Rules
13a-15(e) and 15d-15(e)) are controls and other  procedures that are designed to
ensure  that  information  required  to be  disclosed  in our  reports  filed or
submitted  under  the  Exchange  Act are  recorded,  processed,  summarized  and
reported,  within the time  periods  specified  in the  Securities  and Exchange
Commission's  rules.   Disclosure  controls  and  procedures  include,   without
limitation, controls and procedures designed to ensure that information required
to be disclosed in our reports filed under the Exchange Act is  accumulated  and
communicated  to  management  to  allow  timely  decisions   regarding  required
disclosures.

                                    PART III

     Item 9.  Directors,  Executive  Officers,  Promoters  and Control  Persons;
Compliance With Section 16(a) of the Exchange Act.


Directors and Executive Officers

         Our current directors and executive officers are as follows:


    Name                              Age        Position
    -------------------------         ---        ------------------------
    Arthur Spector                     63        Chairman  of the  Board,
                                                 Chief  Executive Officer
                                                 and President
    Robert E. Keith, Jr.               62        Director
    Don K. Rice                        55        Director
    Dr. Heinz C. Schimmelbusch         59        Director
    Lynda R. Guinan                    46        Chief Financial Officer

     Arthur Spector has been our chairman of the board,  chief executive officer
and president  since our  inception.  Mr.  Spector has  extensive  experience in
mergers and acquisitions  and managing private equity funds.  From March 1995 to
October 2002, Mr.  Spector  served as chairman of the board of Neoware  Systems,
Inc. ("Neoware  Systems"),  a manufacturer of


                                       27
<PAGE>


sophisticated  computer appliances and related software, and from May 1996 until
June 1997, he also served as its president and chief executive officer.  Neoware
Systems was originally known as Information  Systems  Acquisition Corp., a blank
check  company  with an  objective  to  acquire  an  operating  business  in the
information  systems industry.  Information Systems Acquisition Corp. was formed
in 1992 and from its  inception  until it merged  with Human  Designed  Systems,
Inc., Mr. Spector was its chairman of the board,  president and chief  executive
officer.  In this role, Mr. Spector directed the completion of a public offering
that raised gross proceeds of approximately $13.8 million.  Mr. Spector has also
served  as a  director  of  Docucorp  International,  Inc.,  a  public  document
automation  company,  since 1997. Since 1997, Mr. Spector has served as managing
director  of the  general  partner and of the  management  company of  Safeguard
International Fund, L.P., an international private equity fund. Mr. Spector also
serves as a director  and officer of several  portfolio  companies  of Safeguard
International.  Mr. Spector has been a director of Metallurg Holdings,  Inc. and
Metallurg,  Inc.  since  July  1998 and has been  executive  vice  president  of
Metallurg Holdings, Inc. since July 1998 and treasurer since August 2000. He was
elected vice chairman of the board of Metallurg  Holdings,  Inc. and  Metallurg,
Inc.  in  November  2002.  Metallurg  Holdings,  Inc.  is a holding  company  of
Metallurg,  Inc., a company that produces and sells specialty metals, alloys and
chemicals.  From 1997 to 1998, Mr.  Spector served as a managing  director of TL
Ventures  LLC, a fund  management  company  organized  to manage the  day-to-day
operations of TL Ventures III L.P. and TL Ventures III Offshore L.P.,  which are
venture capital partnerships investing in tandem. From 1995 to 1996, Mr. Spector
served as Director of  Acquisitions  of  Safeguard  Scientifics,  Inc., a public
company that owns  controlling  interests in and  operates  numerous  public and
private  companies.  From  1998 to 2002,  he  served  as a  director  of  USDATA
Corporation.  Mr. Spector  received a B.S. from the Wharton School of Finance at
the University of  Pennsylvania  and a J.D. from The University of  Pennsylvania
Law School.

     Robert E. Keith,  Jr. has been a member of our board of directors since our
inception.  Since 1988,  Mr. Keith has been a managing  director of TL Ventures,
L.P., its predecessor  entity and related  entities that serve as the management
companies for several of the TL Ventures funds. He has served as president of TL
Ventures  Inc., a successor to Technology  Leaders  Management,  Inc., a private
equity capital management company, since 1991 and as its chief executive officer
since 1996.  From its  inception  until it merged with Human  Designed  Systems,
Inc., Mr. Keith served as vice president, treasurer and secretary and a director
of  Information  Systems  Acquisition  Corp.  Since October 2001,  Mr. Keith has
served as chairman of the board of directors of Safeguard Scientifics,  Inc. and
served as its vice chairman from  February 1999 through  September  2001. He was
also a member of the office of the chief  executive  of  Safeguard  Scientifics,
Inc. from April 2001 through October 2001. Mr. Keith is also the chairman of the
management  companies for, and a senior  advisor to and co-founder of,  EnerTech
Capital  Partners and EnerTech  Capital  Partners II, venture capital funds that
invest in technology and service companies related to energy, communications and
the  broader  utilities  marketplace.  Since  1996,  Mr.  Keith has  served as a
director of  Internet  Capital  Group,  Inc.,  a public  company  that  provides
software  solutions  and  related  services  to  businesses,  and  served as its
chairman of the board from 1996 through December 2001. Mr. Keith received a B.A.
from Amherst College and J.D. from Temple University.

     Don K.  Rice  has  been a  member  of our  board  of  directors  since  our
inception.  Mr. Rice is the managing  partner of Rice Sangalis Toole & Wilson, a
privately held firm that through limited  partnerships  invests primarily in the
subordinated  debt of middle  market  companies  located  throughout  the United
States,  which he co-founded in 1989.  Prior to forming Rice,  Sangalis  Toole &
Wilson,  Mr.  Rice was  president  and chief  executive  officer of First  Texas
Merchant Banking Group, a firm which specialized in providing  subordinated debt
financing, and


                                       28
<PAGE>


a vice president of PruCapital, Inc., an investment subsidiary of The Prudential
Insurance  Company of America.  Mr. Rice received a B.B.A.  and M.B.A.  from the
University of Texas.

     Dr.  Heinz C.  Schimmelbusch  has been a member of our  board of  directors
since our  inception.  Since  1997,  he has served as  managing  director of the
general partner and of the management company of Safeguard  International  Fund,
L.P.  Dr.  Schimmelbusch  also  serves as a  director  and  officer  of  several
portfolio   companies  of  Safeguard   International.   Since  July  1998,   Dr.
Schimmelbusch  has served as chairman of the board and a director of  Metallurg,
Inc. and has served as its chief  executive  officer since November 2002. He has
also served as president,  chief  executive  officer and a director of Metallurg
Holdings,  Inc.  since July 1998. Dr.  Schimmelbusch  is also chairman and chief
executive  officer  of Allied  Resource  Corporation,  a global  technology  and
engineering group. Dr. Schimmelbusch served as a member of the Presidency of the
Federation of German  Industries  (BDI) in Cologne,  Germany and chairman of its
Environmental  Committee  and a member of the  Presidency  of the  International
Chamber of Commerce (ICC) in Paris,  France.  He also chaired the  International
Advisory  Committee  of the  Austrian  Chancellor  for which he was  awarded the
Golden Cross of Honor for services to the Republic of Austria. Dr. Schimmelbusch
received a B.A.,  M.A. and Ph.D. in economics  from the  University of Tubingen,
Germany.

     Lynda R. Guinan was named Chief Financial Officer in September 2003. She is
also the Controller for Allied Resource Corporation.  Prior to joining Allied in
December  1999, she was the Director of Accounting and Reporting for IKON Office
Solutions,  Inc., a $5 billion  international  Fortune 500 company. From 1989 to
1995, Ms. Guinan was the Corporate Controller of Horsehead  Industries,  Inc., a
privately-held  industrial  mineral  and  manufacturing  company,  where she had
worked since 1987. Prior to joining  Horsehead  Industries,  Inc., Ms. Guinan, a
CPA,  was on the audit staff of Ernst & Young for over seven years.  Ms.  Guinan
earned her B.S. degree in Accounting from Susquehanna University.

     Collectively,  through their positions  described above, our directors have
extensive  experience acting as managing  directors of private equity funds that
invested their funds in, or acquired control of, private companies.

     Our board of  directors  is divided into two classes with only one class of
directors being elected in each year and each class serving a two-year term. The
term of  office  of the  first  class  of  directors,  consisting  of Dr.  Heinz
Schimmelbusch and Robert E. Keith Jr., will expire at our next annual meeting of
stockholders. The term of office of the second class of directors, consisting of
Arthur Spector and Don K. Rice, will expire at the following annual meeting.

     Our board of directors  established an audit committee comprised of Messrs.
Keith and Rice,  with Mr.  Keith  acting as the  chairman.  Our audit  committee
appoints,   retains,  sets  compensation  of,  and  supervises  our  independent
accountants,  reviews the  results  and scope of the audit and other  accounting
related  services and reviews our  accounting  practices and systems of internal
accounting and disclosure controls.

Audit Committee Financial Expert

     We do not have an audit  committee  financial  expert  serving on our audit
committee.  As our plan of operations involves identifying a target business and
completing a business  combination with such business,  we presently do not have
material   operations  and  do  not  experience   complex   accounting   issues.
Accordingly,  our board of directors has determined that it is not necessary for
us to have an audit committee financial expert at this time.



                                       29
<PAGE>


Code of Ethics

     We have  not  adopted  a code  of  ethics  that  applies  to our  principal
executive officer,  principal financial officer, principal accounting officer or
controller,  or persons performing  similar  functions.  We experience a limited
number of financial  transactions  in our present  operations,  all of which are
approved and executed by our two executive officers.  Accordingly,  our board of
directors does not believe that it is necessary to implement a code of ethics at
this time.

Compliance with Section 16(a) of the Exchange Act

     Section  16(a) of the  Securities  Exchange  Act  requires  our  directors,
executive  officers and persons who are the  beneficial  owners of more than ten
percent of our common  stock  (collectively,  the  "Reporting  Persons") to file
reports of ownership and changes in ownership  with the  Securities and Exchange
Commission and to furnish us with copies of these reports.

     We do not believe that any of the Reporting Persons was deficient in filing
reports of ownership or changes in ownership  with the  Securities  and Exchange
Commission other than Don Rice, who was deficient in filing a Form 4 required by
Section  16(a) of the  Securities  Exchange  Act  relating  to the  purchase  of
warrants to  purchase  50,000  shares of our common  stock on the open market on
September 16, 2003 and the purchase of warrants to purchase 50,000 shares of our
common stock on the open market on September 18, 2003.

Conflicts of Interest

         Investors should be aware of the following potential conflicts of
interest:

     o    None of our officers and  directors  are required to commit their full
          time to our  affairs  and,  accordingly,  they may have  conflicts  of
          interest  in  allocating   management  time  among  various   business
          activities.

     o    In the course of their other  business  activities,  our  officers and
          directors  may become aware of investment  and business  opportunities
          which may be appropriate  for  presentation to us as well as the other
          entities with which they are  affiliated.  They may have  conflicts of
          interest  in  determining  to  which  entity  a  particular   business
          opportunity should be presented.

     o    Our officers and directors may in the future  become  affiliated  with
          entities,  including other blank check companies,  engaged in business
          activities similar to those intended to be conducted by us.

     o    Since our  directors  own  shares of our  common  stock  which will be
          released from escrow only if a business  combination  is  successfully
          completed,  our board may have a conflict of  interest in  determining
          whether  a  particular  target  business  is  appropriate  to effect a
          business  combination.  The  personal and  financial  interests of our
          directors and officers may influence  their  motivation in identifying
          and  selecting a target  business,  completing a business  combination
          timely and securing the release of their stock.

     In general,  officers and directors of a corporation incorporated under the
laws of the State of Delaware are required to present business  opportunities to
a corporation if:


                                       30
<PAGE>


     o    the corporation could financially undertake the opportunity;

     o    the opportunity is within the corporation's line of business; and

     o    it would not be fair to the corporation and its  stockholders  for the
          opportunity not to be brought to the attention of the corporation.

     Accordingly,  as a result of multiple business  affiliations,  our officers
and directors may have similar legal obligations relating to presenting business
opportunities  meeting  the  above-listed  criteria  to  multiple  entities.  In
addition,  conflicts of interest may arise when our board evaluates a particular
business opportunity with respect to the above-listed criteria. We cannot assure
you that any of the above mentioned conflicts will be resolved in our favor.

     In order to minimize  potential  conflicts of interest which may arise from
multiple corporate  affiliations,  each of our officers and directors has agreed
in principle,  until the earlier of a business  combination,  our liquidation or
such time as he ceases to be an  officer or  director,  to present to us for our
consideration,   prior  to  presentation  to  any  other  entity,  any  business
opportunity  which  may  reasonably  be  required  to be  presented  to us under
Delaware law, subject to any pre-existing fiduciary obligations he might have or
new fiduciary  obligations related to or affiliated with entities to whom he has
pre-existing  fiduciary  obligations,  including,  but not limited to, fiduciary
obligations to next generation,  follow-on or successor entities to any entities
to which the individual has pre-existing obligations.

     Each of our directors  have, to a certain  degree,  pre-existing  fiduciary
obligations.  Dr.  Schimmelbusch  and Mr.  Spector have  pre-existing  fiduciary
obligations to Safeguard International Fund, L.P. ("Safeguard International") as
they are each managing  directors of the general  partner and of the  management
company  of the fund.  Safeguard  International  does not  presently  have funds
available for new investments.  Furthermore,  Safeguard  International  does not
presently  intend to consummate a fundraising  or to establish  successor  funds
during the next eighteen months. Accordingly, although Dr. Schimmelbusch and Mr.
Spector have pre-existing fiduciary obligations to Safeguard International,  the
potential for  conflicts of interest due to these  pre-existing  obligations  is
minimal.

     Mr. Rice has a pre-existing  fiduciary  obligation to Rice Sangalis Toole &
Wilson as he is the managing  partner of this firm. Rice Sangalis Toole & Wilson
does not  presently  have funds  available  for new loans and does not presently
intend  to  consummate  a  fundraising   or  to  establish   successor   limited
partnerships during the next eighteen months. Furthermore, Rice Sangalis Toole &
Wilson primarily makes minority  ownership  investments in subordinated  debt of
middle market  companies,  which is different  from our plan to acquire a target
business. Accordingly, although Mr. Rice has a pre-existing fiduciary obligation
to Rice Sangalis Toole & Wilson,  the potential for conflicts of interest due to
this pre-existing obligation is minimal.

     Mr. Keith has a  pre-existing  fiduciary  obligation to the TL Ventures and
EnerTech Capital Partners  families of funds including Radnor Venture  Partners,
Technology  Leaders,  Technology Leaders II, TL Ventures III, TL Ventures IV, TL
Ventures V,  EnerTech  Capital  Partners  and EnerTech  Capital  Partners II and
related entities. To the extent that Mr. Keith identifies business opportunities
that may be suitable for any of these entities,  he will honor his  pre-existing
fiduciary   obligations  to  these   entities  and  any  of  their   successors.
Accordingly,  he may not present  opportunities to Millstream that otherwise may
be  attractive  to it unless each of these  entities has declined to accept such
opportunities.



                                       31
<PAGE>


     In connection with the vote required for any business  combination,  all of
our initial  stockholders,  including  all of our officers and  directors,  have
agreed to vote their respective shares of common stock which were owned prior to
the Offering in  accordance  with the vote of the public  stockholders  owning a
majority of the shares of our outstanding  common stock. In addition,  they have
agreed to waive  their  respective  rights  to  participate  in any  liquidation
distribution  but only with respect to those shares of common stock  acquired by
them prior to the Offering.

     To further minimize potential conflicts of interest,  we have agreed not to
consummate a business  combination with an entity that is affiliated with any of
our  existing  stockholders  unless  we obtain an  opinion  from an  independent
investment   banking  firm  that  the  business   combination  is  fair  to  our
stockholders from a financial perspective.

Prior Involvement of Principals in Blank Check Companies

     Arthur  Spector and Robert E. Keith,  Jr. are our only  directors  who have
been principals of another company that has completed an initial public offering
similar to the  Offering  and  executed a business  plan similar to our business
plan. Mr. Spector and Mr. Keith directed the completion of a public  offering of
Information Systems  Acquisition Corp.  ("Information  Systems"),  a blank check
company with an objective  to acquire an operating  business in the  information
systems  industry,  on March 25,  1993,  which  raised  gross  proceeds of $13.8
million at an offering price of $6.00 per unit.

     From its inception until it merged with Human Designed  Systems,  Inc. (the
predecessor  of  Neoware  Systems,  Inc.) on  March 2,  1995,  Mr.  Spector  was
Information  Systems'  chairman  of the  board,  president  and chief  executive
officer.  During  this  period,  Mr.  Spector did not receive any salary for his
services to  Information  Systems;  however,  Safeguard  Scientifics,  Inc.,  an
affiliate  of Mr.  Spector's,  received a $5,000 per month fee from  Information
Systems for use of office  space and  administrative  services.  Pursuant to the
merger  agreement with Human  Designed  Systems,  Inc.,  all of the  outstanding
shares of Human Designed Systems,  Inc. were converted into the right to receive
a total of  2,810,000  shares of  Information  Systems'  common  stock,  618,200
redeemable  common stock purchase  warrants and $5,500,000 in cash.  Information
Systems'  remaining  cash, by way of merger,  became working  capital of Neoware
Systems. At the time of the acquisition,  Messrs.  Spector and Keith held 90,000
and 75,000 shares of Neoware Systems,  respectively,  which, based on the market
price  at the  time  of  acquisition,  was  valued  at  $562,500  and  $468,750,
respectively.  Neoware  Systems  is a  manufacturer  of  sophisticated  computer
appliances  and related  software  and is traded on the Nasdaq  National  Market
under the symbol NWRE.

     Mr.  Spector  remained as chairman  of the board of Neoware  Systems  until
December  2002, at which time he determined  not to stand for  re-election  as a
director at Neoware  System's  annual  shareholders'  meeting.  Mr. Spector also
acted as chief  executive  officer and  president  from May 1996 (after the then
chief executive  officer died) until June 1997.  During the period following the
consummation  of  Information   Systems'   initial  public  offering  until  the
expiration  of his term in  December  2002,  Mr.  Spector  received  options  to
purchase an aggregate of 97,500 shares of Neoware  Systems common stock,  all of
which had exercise  prices equal to the fair market value of the common stock on
the date of grant.  Additionally,  from May 1996 until June  1997,  Mr.  Spector
received a salary of  approximately  $60,000  per annum in  connection  with his
acting as chief executive officer and president. Mr. Spector has sold all of the
securities  of  Information  Systems he owned for  aggregate  gross  proceeds of
approximately $3,561,000 and taxable profits of approximately $1,675,000.



                                       32
<PAGE>


     From its inception until it merged with Human Designed  Systems,  Inc., Mr.
Keith was  Information  Systems' vice  president,  treasurer and secretary and a
member of its board of directors.  During this period of time, Mr. Keith did not
receive any salary or option  grants for his  services to  Information  Systems.
Upon  consummation  of the merger with Human Designed  Systems,  Inc., Mr. Keith
voluntarily  resigned from all of his positions with the company.  Mr. Keith has
sold all of the securities of Information  Systems he owned for aggregate  gross
proceeds and profits of approximately $600,000.

Item 10. Executive Compensation.

     Except for Ms. Guinan, who received $5,000 for work performed in connection
with the  preparation  of our  Securities and Exchange  Commission  filings,  no
executive  officer has received any cash  compensation for services  rendered to
us.

     Commencing  September 1, 2003 and ending upon the  acquisition  of a target
business,  we will pay 400 Building LLC a fee of $7,500 per month for  providing
us with office space and certain  office and  secretarial  services.  Other than
this $7,500  per-month fee, no compensation of any kind,  including  finders and
consulting  fees,  will be paid to any of our  initial  stockholders,  or any of
their  respective  affiliates,  for services  rendered prior to or in connection
with  a  business  combination.   However,  our  initial  stockholders  will  be
reimbursed for any out-of-pocket expenses incurred in connection with activities
on our behalf such as identifying potential target businesses and performing due
diligence on suitable business combinations.  There is no limit on the amount of
these  out-of-pocket  expenses and there will be no review of the reasonableness
of the  expenses by anyone  other than our board of  directors,  which  includes
persons who may seek reimbursement, or a court of competent jurisdiction if such
reimbursement is challenged.

     Since  our  formation,  we have not  granted  any  stock  options  or stock
appreciation rights or any awards under long-term incentive plans.


Item 11.  Security  Ownership of Certain  Beneficial  Owners and  Management and
Related Stockholder Matters.

     The  following  table  sets  forth  information  regarding  the  beneficial
ownership of our common stock as of February 6, 2004, by:

     o    each  person  known  by us to be the  owner  of  more  than  5% of our
          outstanding shares of common stock;

     o    each of our executive officers and directors; and

     o    all our executive officers and directors as a group.

     Unless otherwise indicated,  we believe that all persons named in the table
have sole voting and investment power with respect to all shares of common stock
beneficially  owned by them.  As of  February 6, 2004,  4,775,000  shares of our
common  stock  were  issued  and  outstanding.


                                       33
<PAGE>

<TABLE>
<CAPTION>


                                                        Amount  and                 Approximate
                                                        Nature of                   Percentage of
                                                        Beneficial               Outstanding  Common
Name and Address of Beneficial Owner(1)                 Ownership(2)                   Stock(2)
---------------------------------------                 ------------             --------------------

<S>           <C> <C>                                     <C>                            <C>
Arthur Spector(3) (4)                                     360,000                        7.5%

Dr. Heinz C. Schimmelbusch(4) (5)                         150,000                        3.1%

Robert E. Keith, Jr.(4)(6)                                 20,000                           *

Don K. Rice(4)(7)                                          20,000                           *

Jack Silver(8)                                            250,000                        5.2%

All directors and executive officers as a group           550,000                       11.5%
(4 individuals)
-----------------------------------

</TABLE>

*       Less than 1%.

     (1)  Unless  otherwise  indicated,  the  business  address  of  each of the
          individuals is 435 Devon Park Drive, Building 400, Wayne, Pennsylvania
          19087.

     (2)  Beneficial ownership has been determined in accordance with Rule 13d-3
          under the  Securities  Exchange Act of 1934.

     (3)  Arthur Spector is our chairman of the board,  chief executive  officer
          and president.

     (4)  Each of these individuals is a director of ours.

     (5)  The  business   address  of  Dr.   Schimmelbusch   is  c/o   Safeguard
          International  Fund, L.P., 435 Devon Park Drive,  Building 400, Wayne,
          Pennsylvania 19087.

     (6)  The business  address of Mr.  Keith is 435 Devon Park Drive,  Building
          700, Wayne,  Pennsylvania 19087. Does not include warrants to purchase
          an  aggregate of 150,000  shares of our common stock as such  warrants
          are not  exercisable  within 60 days of the date of this Annual Report
          on Form 10-KSB.

     (7)  The  business  address of Mr.  Rice is 517  Fishers  Road,  Bryn Mawr,
          Pennsylvania 19010. Does not include warrants to purchase an aggregate
          of  100,000  shares  of our  common  stock  as such  warrants  are not
          exercisable  within 60 days of the date of this Annual  Report on Form
          10-KSB.

     (8)  The business address of Mr. Silver is 660 Madison Avenue, New York, NY
          10021.

         All of the shares of our common stock owned by the initial shareholders
have been placed in escrow with Continental Stock Transfer & Trust Company, as
escrow agent, until the earlier of:

     o    August 25, 2006;



                                       34
<PAGE>


     o    our liquidation; or

     o    the  consummation  of a liquidation,  merger,  stock exchange or other
          similar  transaction  which results in all of our stockholders  having
          the  right  to  exchange  their  shares  of  common  stock  for  cash,
          securities or other property subsequent to our consummating a business
          combination with a target business.

     During the escrow  period,  the holders of these shares will not be able to
sell their  securities,  but will retain all other  rights as our  stockholders,
including,  without limitation,  the right to vote their shares of common stock.
If we are unable to effect a business  combination  and  liquidate,  none of our
initial  stockholders will receive any portion of the liquidation  proceeds with
respect to common stock owned by them prior to the Offering.

     Messrs.  Arthur Spector,  the Spector Family Trust and Heinz  Schimmelbusch
may be deemed to be our  "parents" and  "promoters,"  as these terms are defined
under the Federal securities laws.


Item 12.  Certain Relationships and Related Transactions.

     Prior to the  Offering,  we issued  360,000  shares of our common  stock to
Arthur  Spector,  our chairman,  chief  executive  officer and  president,  at a
purchase  price of  approximately  $.06944 per share.  We also issued a total of
370,000  shares of our common  stock to the  Spector  Family  Trust and  Messrs.
Schimmelbusch,  Keith and Rice at a purchase  price of $0.0001  per share as set
forth below:

<TABLE>
<CAPTION>


Name                                  Number of Shares              Relationship to Us
--------------------------            ----------------              ---------------------------------------
<S>                                   <C>
Arthur Spector                        360,000                       Chairman of the Board,  Chief Executive
                                                                    Officer and President
Spector Family Trust                  180,000                       Stockholder
Dr. Heinz C. Schimmelbusch            150,000                       Director
Robert E. Keith, Jr.                   20,000                       Director
Don K. Rice                            20,000                       Director

</TABLE>


     The holders of the  majority of these shares are entitled to make up to two
demands  that  we  register  these  shares  pursuant  to a  registration  rights
agreement dated August 25, 2003. The holders of the majority of these shares can
elect to exercise these registration  rights at any time after the date on which
these  shares of common  stock are released  from  escrow.  In  addition,  these
stockholders  have  certain  "piggy-back"  registration  rights on  registration
statements  filed  subsequent  to the date on which these shares of common stock
are released from escrow.  We will bear the expenses incurred in connection with
the filing of any such registration statements.

     400  Building  LLC, an  affiliate  of Arthur  Spector,  our chairman of the
board,  chief  executive  officer  and  president,  has agreed  that  commencing
September 1, 2003 and ending upon the acquisition of a target business,  it will
make  available  to us a small  amount of office  space and  certain  office and
secretarial services, as we may require from time to time. We have agreed to pay
400 Building LLC $7,500 per month for these services. Arthur Spector is the sole



                                       35
<PAGE>

member and sole  manager of 400  Building  LLC. As of December  31, 2003 we have
paid 400 Building LLC $30,000.

     Mr.  Spector  made  advances  aggregating  $35,000 to us to cover  expenses
related to the Offering. The loan was payable without interest on the earlier of
May 1,  2004 or the  consummation  of the  Offering.  The  loan  was  repaid  in
September 2003 from the proceeds of the Offering.

     We have and will  reimburse our officers and  directors for any  reasonable
out-of-pocket  business  expenses  incurred by them in  connection  with certain
activities on our behalf such as identifying and  investigating  possible target
businesses  and  business  combinations.  There  is no limit  on the  amount  of
accountable  out-of-pocket  expenses  reimbursable by us, which will be reviewed
only by our board of  directors  or a court of  competent  jurisdiction  if such
reimbursement is challenged.

     Other  than  the  $7,500  per-month  administrative  fee  and  reimbursable
out-of-pocket expenses payable to our officers and directors, no compensation or
fees of any kind,  including finders and consulting fees, will be paid to any of
our initial stockholders, officers or directors who owned our common stock prior
to the Offering,  or to any of their respective affiliates for services rendered
to us prior to or with respect to the business combination.

     All ongoing and future transactions  between us and any of our officers and
directors or their respective affiliates,  will be on terms believed by us to be
no less favorable than are available  from  unaffiliated  third parties and will
require  prior  approval  in each  instance  by a majority of the members of our
board who do not have an interest in the transaction.

Item 13. Exhibits and Reports on Form 8-K.

         (a) The following Exhibits are filed as part of this report.

        Exhibit No.                          Description
        -----------                          -----------

          3.1       Amended   and   Restated    Certificate   of   Incorporation
                    (incorporated  by  reference to the  Company's  Registration
                    Statement on Form S-1 filed on May 19, 2003).

          3.2       By-laws   (incorporated   by  reference  to  the   Company's
                    Registration Statement on Form S-1 filed on May 19, 2003).

          4.1       Specimen Common Stock Certificate (incorporated by reference
                    to Amendment No. 3 to the Company's  Registration  Statement
                    on Form S-1 filed on July 24, 2003).

          4.2       Specimen Warrant  Certificate  (incorporated by reference to
                    Amendment No. 1 to the Company's  Registration  Statement on
                    Form S-1 filed on June 27, 2003).

          4.3       Form of Unit Purchase Option to be granted to Representative
                    (incorporated  by  reference  to  Amendment  No.  5  to  the
                    Company's Registration Statement on Form S-1 filed on August
                    1, 2003).



                                       36
<PAGE>


          4.4       Form of Warrant Agreement between Continental Stock Transfer
                    &  Trust  Company  and  the  Registrant   (incorporated   by
                    reference to Amendment No. 4 to the  Company's  Registration
                    Statement on Form S-1 filed on July 28, 2003).

          4.5       Specimen  Unit  Certificate  (incorporated  by  reference to
                    Amendment No. 3 to the Company's  Registration  Statement on
                    Form S-1 filed on July 24, 2003).

          10.1      Letter Agreement among the Registrant, EarlyBirdCapital,Inc.
                    and Arthur  Spector  (without  schedules)  (incorporated  by
                    reference to the  Company's  Registration  Statement on Form
                    S-1 filed on May 19, 2003).

          10.2      Letter  Agreement  among the  Registrant,  EarlyBirdCapital,
                    Inc.  and Dr.  Heinz C.  Schimmelbusch  (without  schedules)
                    (incorporated  by  reference to the  Company's  Registration
                    Statement on Form S-1 filed on May 19, 2003).

          10.3      Letter  Agreement  among the  Registrant,  EarlyBirdCapital,
                    Inc.  and  The  Spector  Family  Trust  (without  schedules)
                    (incorporated  by  reference to the  Company's  Registration
                    Statement on Form S-1 filed on May 19, 2003).

          10.4      Letter  Agreement  among the  Registrant,  EarlyBirdCapital,
                    Inc. and J. Brian O'Neill (without schedules)  (incorporated
                    by reference to the Company's Registration Statement on Form
                    S-1 filed on May 19, 2003).

          10.5      Form   of   Letter    Agreement    among   the   Registrant,
                    EarlyBirdCapital,  Inc.  and each of Robert E. Keith and Don
                    K. Rice (without  schedules)  (incorporated  by reference to
                    the  Company's  Registration  Statement on Form S-1 filed on
                    May 19, 2003).

          10.6      Form  of  Investment   Management  Trust  Agreement  between
                    Continental  Stock  Transfer & Trust Company and  Registrant
                    (incorporated  by  reference  to  Amendment  No.  4  to  the
                    Company's  Registration  Statement on Form S-1 filed on July
                    28, 2003).

          10.7      Form of  Stock  Escrow  Agreement  between  the  Registrant,
                    Continental  Stock  Transfer & Trust Company and the Initial
                    Stockholders  (incorporated  by reference to Amendment No. 4
                    to the Company's Registration Statement on Form S-1 filed on
                    July 28, 2003).

          10.8      Form  of  Letter  Agreement  between  400  Building  LLC and
                    Registrant regarding administrative support (incorporated by
                    reference to the  Company's  Registration  Statement on Form
                    S-1 filed on May 19, 2003).

          10.9      Promissory Note dated April 28, 2003 in the principal amount



                                       37
<PAGE>

                    of  $35,000  issued  to  Arthur  Spector   (incorporated  by
                    reference to the  Company's  Registration  Statement on Form
                    S-1 filed on May 19, 2003).

          10.10     Warrant  Purchase   Agreement  between  Arthur  Spector  and
                    EarlyBirdCapital,   Inc.   (incorporated   by  reference  to
                    Amendment No. 3 to the Company's  Registration  Statement on
                    Form S-1 filed on July 24, 2003).

          10.11     Letter Agreement among the Registrant, EarlyBirdCapital,Inc.
                    and each of Arthur Spector, Dr. Heinz C. Schimmelbusch,  The
                    Spector Family Trust, J. Brian O'Neill, Robert E. Keith, Jr.
                    and Don K. Rice  (incorporated by reference to Amendment No.
                    3 to the Company's  Registration Statement on Form S-1 filed
                    on July 24, 2003).

          10.12     Registration  Rights  Agreement among the Registrant and the
                    Investors  (incorporated  by reference to Amendment No. 2 to
                    the  Company's  Registration  Statement on Form S-1 filed on
                    July 21, 2003).

          10.13     Letter  Agreement  among the  Registrant,  EarlyBirdCapital,
                    Inc.   and  Robert  E.  Keith,   Jr.   (without   schedules)
                    (incorporated  by  reference  to  Amendment  No.  3  to  the
                    Company's  Registration  Statement on Form S-1 filed on July
                    24, 2003).

          10.14     Letter  Agreement  among the  Registrant,  EarlyBirdCapital,
                    Inc. and Don K. Rice (without  schedules)  (incorporated  by
                    reference to Amendment No. 3 to the  Company's  Registration
                    Statement on Form S-1 filed on July 24, 2003).

          31.1      Certification of Chief Executive Officer pursuant to Section
                    302 of the Sarbanes-Oxley Act of 2002.

          31.2      Certification of Chief Financial Officer pursuant to Section
                    302 of the Sarbanes-Oxley Act of 2002.

          32        Certification of Chief Executive Officer and Chief Financial
                    Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
                    2002.



     (b) We did not file any  Current  Reports on Form 8-K  during  the  quarter
ended December 31, 2003.

Item 14. Principal Accountant Fees and Services.

     The firm of BDO Seidman LLP acts as our principal accountant. The following
is a summary of fees paid to our principal accountant for services rendered.




                                       38
<PAGE>

     Audit Fees
     ----------

     During 2003, the aggregate fees billed for professional  services  rendered
by our principal accountant was $51,182. $45,000 of these fees were paid for the
audit they  performed in connection  with the Offering,  including the financial
statements  included in the Current Report on Form 8-K filed with the Securities
and Exchange  Commission  on August 28, 2003.  We have also paid them $6,182 for
fees and expenses relating to the review of our Quarterly Report on Forms 10-QSB
for the quarters  ended June 30, 2003 and  September  30, 2003. We estimate that
fees for the 2003 audit services will be approximately $15,000.

     Audit-Related Fees
     ------------------

     During 2003, our principal  accountant did not render assurance and related
services  reasonably  related  to the  performance  of the  audit or  review  of
financial statements.

     Tax Fees
     --------

     During 2003, our principal accountant did not render services to us for tax
compliance, tax advice and tax planning.

     All Other Fees
     --------------

     During 2003,  there were no fees billed for products and services  provided
by the principal accountant other than those set forth above.

     Audit Committee Approval
     ------------------------

     All of the services listed above were approved by our audit committee prior
to their performance.



                                       39
<PAGE>




                                   SIGNATURES

     In accordance  with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                         MILLSTREAM ACQUISITION CORPORATION

                         By: /s/ Arthur Spector
                         ---------------------------
                         Arthur Spector
                         Chairman,  President and Chief Executive  Officer Date:
                         February 13, 2004


     In  accordance  with the Exchange Act, this report had been signed below by
the following  persons on behalf of the  registrant in the capacities and on the
dates indicated.



                         /s/ Arthur Spector
                         ------------------------------------
                         Arthur Spector
                         Chairman,  President and Chief Executive  Officer Date:
                         February 13, 2004


                         /s/ Lynda R. Guinan
                         ------------------------------------
                         Lynda R. Guinan Chief Financial Officer
                         Date: February 13, 2004


                         /s/ Robert E. Keith, Jr.
                         ------------------------------------
                         Robert E. Keith, Jr. Director
                         Date: February 13, 2004


                         /s/ Don K. Rice
                         ------------------------------------
                         Don   K.   Rice
                         Director
                         Date: February 13, 2004


                         /s/ Dr. Heinz Schimmelbusch
                         ------------------------------------
                         Dr. Heinz Schimmelbusch Director
                         Date: February 13, 2004




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