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



                                  FORM 10QSB/A
                                 Amendment No. 4


                 |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

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

                  For the Quarterly period ended March 31, 2005

                        Commissions file number 002-90519

                           APPLIED DNA SCIENCES, INC.
             (Exact name of registrant as specified in its charter)

                   Nevada                               59-2262718
---------------------------------------------    --------------------------
      (State or other jurisdiction of                (I.R.S. Employer
       incorporation or organization)             Identification Number)


    25 Health Sciences Drive, Suite 113, Stony Brook, New York            11790
--------------------------------------------------------------------  ----------
             (Address of Principal Executive Offices)                 (Zip Code)

                          (631)   444-6862   (Registrant's   telephone   number,
       including area code)



Indicate by check mark whether the registrant (1) filed all reports  required to
be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during
the last 12 months (or for such shorter  period that the registrant was required
to file such reports),  and (2) has been subject to such filing requirements for
the past 90 days.

                                 Yes |X| No |_|

The number of shares of Common Stock, $0.001 par value, outstanding on April 26,
2005, was 68,371,025 shares, held by approximately 589 shareholders.

Transitional Small Business Disclosure Format (check one):

                                 Yes |_| No |X|



<PAGE>



                                EXPLANATORY NOTE

This  Amendment  No. 4 to Form 10-QSB/A  ("Amendment  No. 4") amends the amended
Quarterly Report of Applied DNA Sciences,  Inc. (the "Company") on Form 10-QSB/A
for the quarter ended March 31, 2005, as filed with the  Securities and Exchange
Commission  on May 23, 2005 (the  "Original  Filing").  This  Amendment No. 4 is
being  filed for the  purpose  of  correcting  typographical  errors in the Form
10-QSB/A  that we filed on October  10,  2006,  manely  that Form  10-QSB/A  was
Amendment No. 2 to the Form 10-QSB when in fact it was the third amendment.


We have not  updated  the  information  contained  herein for  events  occurring
subsequent to May 31, 2005, the filing date of the Original Filing.

                            APPLIED DNA SCIENCES, INC


                    Quarterly Report on Form 10-QSB/A for the
                     Quarterly Period Ending March 31, 2005

                                Table of Contents

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

 Condensed Consolidated Balance Sheet:
 March 31, 2005 (Unaudited)                                                  3

 Condensed Consolidated Statements of Losses:
 Three and Six Months Ended March 31, 2005 and 2004 (Unaudited) and
 the Period from September 16, 2002 (Date of Inception) Through March
 31, 2005 (Unaudited)                                                        4

 Condensed Consolidated Statement of Stockholder's Equity:
 For the Period from September 16, 2002 (Date of Inception) Through March
 31, 2005 (Unaudited)                                                        5

 Condensed Consolidated Statements of Cash Flows:
 Six Months Ended March 31, 2005 and 2004 (Unaudited) and
 the Period from September 16, 2002 (Date of Inception) Through March
 31, 2005 (Unaudited)                                                       16

 Notes to Unaudited Condensed Consolidated Financial Information:
 March 31, 2005                                                            18-40

 Item 2. Management Discussion and Analysis                                 41

 Item 3. Controls and Procedures                                            51


<PAGE>




Part II. OTHER INFORMATION

Item 1. Legal Proceedings                                                   52

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds         52

Item 3. Defaults Upon Senior Securities                                     53

Item 4. Submission of Matters to a Vote of Security Holders                 53

 Item 5. Other Information                                                  54

 Item 6. Exhibits                                                           54


Signatures                                                                  55

                                      2


<PAGE>


                          Part I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)

                           APPLIED DNA SCIENCES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                    RESTATED
                                   (Unaudited)

<TABLE>
<CAPTION>
                                ASSETS
                                                              March 31, 2005
                                                        ------------------------
 <S>                                                    <C>
 Current assets:

 Cash and Equivalents                                    $            2,975,017
                                                         -----------------------
 Total Current Assets                                                 2,975,017

 Property and Equipment - Net                                            22,134
 Deposits                                                                47,500
 Patent Filing - Net                                                     26,441
                                                         -----------------------
 Total Assets                                            $            3,071,092
                                                         =======================


          LIABILITIES AND DEFICIENCY IN STOCKHOLDERS' EQUITY

 Current Liabilities:
 Accounts Payable and Accrued Liabilities                $            1,653,709
 Accrued Liabilities Due Related Parties (Note C)                       213,474
 Note Payable-Related Party (Note C)                                    425,000
                                                         -----------------------
 Total Current Liabilities                                            2,292,183

Warrant Liability (Note D)                                           15,481,312

 Commitments and contingencies (Note F)

 Deficiency in Stockholders' Equity:
 Preferred Stock, par value $.001 per share;
 10,000,000 shares authorized;
 60,000 issued and outstanding                                                6
 Common Stock, par value $.001 per share;
 250,000,000 shares authorized; 64,755,267 shares
 issued and outstanding                                                  64,755
 Common Stock Subscription                                            (129,000)
Common stock receivable                                                 (1,000)
 Additional Paid-In-Capital                                          52,342,895
 Deficit Accumulated During Development Stage                      (66,980,059)
                                                          ----------------------
 Total Stockholders' Equity                                        (14,702,403)
                                                          ----------------------
 Total Liabilities and Deficiency in Stockholders'
 Equity                                                   $          3,071,092
                                                         =======================
</TABLE>


        See accompanying notes to unaudited consolidated financial statements

                                      3

<PAGE>



                           APPLIED DNA SCIENCES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   CONDENSED CONSOLIDATED STATEMENTS OF LOSSES
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                                 September 16, 2002,
                                     For The Three Months Ended March 31    For The Six Months Ended March 31    (Date of Inception)
                                                                                                                        through
                                            2005                2004            2005                 2004           March 31, 2005
                                    --------------------  ---------------  ---------------     ---------------  --------------------
                                          RESTATED                               RESTATED                              RESTATED
<S>                                 <C>                 <C>                <C>               <C>                <C>
Operating expenses:
Selling, general and administrative $      17,205,512   $    1,909,149    $    22,580,580    $      9,316,900   $        43,402,117
Research & Development                                                                                                      238,535
Depreciation and amortization                   7,306              351             12,027                 703                15,188
                                    ------------------  ---------------   ----------------    -----------------  -------------------
Total operating expenses                   17,212,818        1,909,500         22,592,607           9,317,603            43,655,840
Loss from operations                     (17,212,818)      (1,909,500)       (22,592,607)         (9,317,603)          (43,655,840)

Net gain/(loss) on revaluation of
warrant liability                          10,775,753                          10,775,753                                10,775,753

Other Income (expense)                          3,100              700              3,415               1,385                29,800
Interest (expense)                       (30,783,777)        (527,838)       (32,351,586)           (662,912)          (34,129,772)
Income (taxes) benefit                            --                --                  --                  --                   --
                                    ------------------  ---------------   ----------------   -----------------  --------------------
Net loss                            $    (37,217,742)   $  (2,436,638)    $  (44,165,025)    $    (9,979,130)   $      (66,980,059)

                                    ==================  ===============   ================   =================  ====================
Loss per common share
(basic and assuming dilution)       $          (0.71)   $       (0.12)    $        (1.11)    $         (0.51)   $            (2.68)

                                    ==================  ===============   ================   =================  ====================

Weighted average shares outstanding        53,002,278       20,700,599         40,061,781          19,575,190           25,069, 138

                                    ==================  ===============   ================   =================  ====================

</TABLE>


See accompanying notes to unaudited condensed consolidated financial statements

                                      4


<PAGE>

                         APPLIED DNA SCIENCES, INC
                      (A development stage company)
     CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY, (DEFICIENCY)
  FOR THE PERIOD SEPTEMBER 16, 2002 (DATE OF INCEPTION) THROUGH MARCH 31, 2005
                                RESTATED
                               (Unaudited)

<TABLE>
<CAPTION>
                                                                                                               Deficit
                                                                         Additional                          Accumulated
                                        Preferred               Common     Paid in     Common       Stock       During
                              Preferred   Shares    Common      Stock      Capital     Stock    Subscription Development
                                Shares    Amount    Shares      Amount     Amount    Subscribed  Receivable     Stage      Total
                              --------- --------- ---------- ----------- ----------- ---------- ------------ ----------- ----------
<S>                                 <C> <C>       <C>        <C>         <C>         <C>        <C>          <C>         <C>
Issuance of common stock
to Founders in exchange
for services on September
16, 2002 at $.01 per share          -         -      100,000 $       10  $       990 $      -   $        -   $       -    $   1,000

Net Loss                            -         -         -           -           -           -            -       (11,612)   (11,612)
                              --------- --------- ---------- ----------- ----------- ---------- ------------ -----------  ----------

Balance at September 30, 2002       -   $     -      100,000 $       10  $       990 $      -   $        -   $   (11,612) $ (10,612)
                              ========= ========= ========== =========== =========== ========== ============ ===========  ==========
Issuance of common stock in
connection with merger with
Prohealth Medical Technologies,
 Inc on October 1, 2002             -         -   10,178,352       1,015        -           -            -           -        1,015

Cancellation of Common stock
in connection with merger with
Prohealth Medical
Technologies, Inc on October
21, 2002                            -         -     (100,000)        (10)     (1,000)       -            -           -       (1,010)

Issuance of common stock in
exchange for services in
October 2002 at $ 0.65 per
share                               -         -      602,000          60      39,070        -            -           -       39,130

Issuance of common stock in
exchange for subscription in
November and December 2002
at $ 0.065 per share                -         -      876,000          88      56,852        -        (56,940)        -          -

Cancellation of  common stock
in January 2003 previously
issued  in exchange for
consulting services                 -         -     (836,000)        (84)    (54,264)       -         54,340         -           (8)

Issuance of common stock in
exchange for licensing services
valued at $ 0.065 per share in
January 2003                        -         -    1,500,000         150      97,350        -            -           -       97,500

Issuance of common stock in
exchange for consulting
services valued at $ 0.13 per
share in January  2003              -         -      586,250          58      76,155        -            -           -       76,213

Issuance of common stock in
exchange for consulting
services at $ 0.065 per share
in February 2003                    -         -        9,000           1         584        -            -           -          585

Issuance of common stock to
Founders in exchange for
services valued at $0.0001  per
share in March 2003                 -         -   10,140,000       1,014        -           -            -           -        1,014

Issuance of  common stock in
exchange for consulting
services valued at $2.50 per
share in March 2003                 -         -       91,060          10     230,624        -            -           -      230,634
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements

                                      5


<PAGE>


                          APPLIED DNA SCIENCES, INC
                       (A development stage company)
     CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY, (DEFICIENCY)
  FOR THE PERIOD SEPTEMBER 16, 2002 (DATE OF INCEPTION) THROUGH MARCH 31, 2005
                                RESTATED
                               (Unaudited)
                               (Continued)

<TABLE>
<CAPTION>
                                                                                                               Deficit
                                                                         Additional                          Accumulated
                                        Preferred              Common      Paid in     Common       Stock       During
                              Preferred   Shares    Common      Stock      Capital     Stock    Subscription Development
                                Shares    Amount    Shares     Amount       Amount   Subscribed  Receivable     Stage       Total
                              --------- --------- ---------- ----------- ----------- ---------- ------------ ----------- ----------
<S>                                 <C>       <C> <C>               <C>      <C>         <C>             <C>         <C>   <C>
Issuance of common stock in
exchange for consulting services
valued at  $ 0.065 per share in
March 2003                          -         -        6,000           1         389        -            -           -         390

Common stock subscribed in
exchange for cash at $1 per
share in March 2003                 -         -         -           -         18,000        -            -           -      18,000

Common stock issued in
exchange for consulting
services at $ 0.065 per
share on April 1, 2003              -         -      860,000          86      55,814        -            -           -      55,900

Common stock issued in
exchange for cash at $ 1.00 per
share on April 9, 2003              -         -       18,000           2        -           -            -           -           2

Common stock issued in
exchange for consulting services
at $ 0.065 per share on April 9,
2003                                -         -        9,000           1         584        -            -           -         585

Common stock issued in
exchange for consulting services
at $ 2.50 per share on April 23,
2003                                -         -        5,000           1      12,499        -            -           -      12,500

Common stock issued in
exchange for consulting services
at $ 2.50 per share, on June 12,
2003                                -         -       10,000           1      24,999        -            -           -      25,000

Common stock issued in
exchange for cash at $ 1.00 per
share on June 17, 2003              -         -       50,000           5      49,995        -            -           -      50,000

Common stock subscribed in
exchange for cash at $ 2.50 per
share pursuant to private
placement on June 27, 2003          -         -         -           -           -        24,000          -           -      24,000

Common stock retired in
exchange for note payable
at $0.0118 per share,
on June 30, 2003                    -         -   (7,500,000)       (750)        750        -            -           -          -

Common stock issued in
exchange for consulting services
at $0.065 per share, on June 30,
2003                                -         -      270,000          27      17,523        -            -           -      17,550

Common stock  subscribed in
exchange for cash at $ 1.00 per
share pursuant to private
placement on June 30, 2003          -         -         -           -           -        10,000          -           -      10,000

Common stock  subscribed in
exchange for cash at $ 2.50 per
share pursuant to private
placement on June 30, 2003          -         -         -           -           -        24,000          -           -      24,000

Common stock issued in
exchange for consulting services
at approximately $2.01 per
share, July 2003                    -         -      213,060          21     428,798        -            -           -     428,819
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements

                                      6


<PAGE>


                          APPLIED DNA SCIENCES, INC
                       (A development stage company)
     CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY, (DEFICIENCY)
  FOR THE PERIOD SEPTEMBER 16, 2002 (DATE OF INCEPTION) THROUGH MARCH 31, 2005
                                RESTATED
                               (Unaudited)
                               (Continued)

<TABLE>
<CAPTION>
                                                                                                               Deficit
                                                                         Additional                          Accumulated
                                        Preferred              Common      Paid in     Common       Stock       During
                              Preferred   Shares    Common      Stock      Capital      Stock   Subscription Development
                                Shares    Amount    Shares     Amount      Amount    Subscribed  Receivable     Stage       Total
                              --------- --------- ---------- ----------- ----------- ---------- ------------ ----------- ----------
<S>                                 <C> <C>       <C>        <C>         <C>         <C>        <C>         <C>          <C>
Common stock canceled in July
2003, previously issued for
services rendered  at $2.50 per
share                               -         -      (24,000)         (2)    (59,998)       -           -           -       (60,000)

Common stock issued in
exchange for options exercised
at $1.00 in July 2003               -         -       20,000           2      19,998        -           -           -        20,000

Common stock issued in
exchange for exercised of
options previously subscribed at
$1.00 in July 2003                  -         -       10,000           1       9,999    (10,000)        -           -            -

Common stock issued in
exchange for consulting services
at approximately $2.38 per
share, August 2003                  -         -      172,500          17     410,915        -           -           -       410,932

Common stock issued in
exchange for options exercised
at $1.00 in August 2003             -         -       29,000           3      28,997        -           -           -        29,000

Common stock issued in
exchange for consulting services
at approximately $2.42 per
share, September 2003               -         -      395,260          40     952,957        -           -           -       952,997

Common stock issued in
exchange  for cash at $2.50 per
share-subscription
payable-September 2003              -         -       19,200          2       47,998    (48,000)        -           -            -

Common stock issued in
exchange for cash at $2.50 per
share pursuant to private
placement September 2003            -         -        6,400           1      15,999        -           -           -        16,000

Common stock issued in
exchange for options exercised
at $1.00 in  September 2003         -         -       95,000          10      94,991        -           -           -        95,001

Common stock subscription
receivable reclassification
adjustment                          -         -         -           -           -           -         2,600         -         2,600

Common Stock subscribed to
at $2.50 per share in September
2003                                -         -         -           -           -       300,000         -           -       300,000

Net Loss for the year
ended September 30, 2003            -         -         -           -           -           -           -    (3,445,164) (3,445,164)
                              --------- --------- ---------- ----------- ----------- ---------- ----------- -----------  ----------

Balance at September 30, 2003       -   $     -   17,811,082 $     1,781 $ 2,577,568 $  300,000 $       -   $(3,456,776) $ (577,427)
                              ========= ========= ========== =========== =========== ========== =========== ===========  ==========
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements

                                      7


<PAGE>


                          APPLIED DNA SCIENCES, INC
                       (A development stage company)
     CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY, (DEFICIENCY)
  FOR THE PERIOD SEPTEMBER 16, 2002 (DATE OF INCEPTION) THROUGH MARCH 31, 2005
                                RESTATED
                               (Unaudited)
                               (Continued)

<TABLE>
<CAPTION>
                                                                                                               Deficit
                                                                         Additional                          Accumulated
                                        Preferred              Common      Paid in     Common       Stock       During
                              Preferred   Shares    Common      Stock      Capital      Stock   Subscription Development
                                Shares    Amount    Shares     Amount      Amount    Subscribed  Receivable     Stage      Total
                              --------- --------- ---------- ----------- ----------- ---------- ------------ ----------- ----------
<S>                              <C>          <C>  <C>        <C>        <C>           <C>               <C>         <C> <C>
Preferred shares issues in
exchange for services at $25.00
per share, October 2003          15,000       15        -           -           -           -            -           -          15

Common stock issued in
exchange for consulting services
at approximately $2.85 per
share, October 2003                 -         -      287,439          29     820,389        -            -           -     820,418

Common stock issued in
exchange  for cash at $2.50 per
share-subscription
payable-October 2003                -         -      120,000          12     299,988   (300,000)         -           -          -

Common stock canceled in
October 2003, previously issued
for services rendered  at $2.50
per share                           -         -     (100,000)        (10)   (249,990)       -            -           -    (250,000)

Common stock issued in
exchange for consulting services
at approximately $3 per share,
November 2003                       -         -      100,000          10     299,990        -            -           -     300,000

Common stock subscribed in
exchange for cash at $2.50 per
share pursuant to private
placement, November, 2003           -         -      100,000          10     249,990        -            -           -     250,000

Common stock subscribed in
exchange for cash at $2.50 per
share pursuant to private
placement, December, 2003           -         -        6,400           1      15,999        -            -           -      16,000

Common stock issued in
exchange for consulting services
at approximately $2.59   per
share, December 2003                -         -    2,125,500         213   5,504,737        -            -           -   5,504,950

Common Stock subscribed to
at $2.50 per share in Dec 2003

                                    -         -         -           -           -       104,000          -           -     104,000

Beneficial conversion feature
relating to notes payable           -         -         -           -      1,168,474        -            -           -   1,168,474

Beneficial conversion feature
relating to warrants                -         -         -           -        206,526        -            -           -     206,526

Adjust common stock par value
from $0.0001 to $0.50 per share,
per amendment of articles dated
Dec 2003                            -         -         -     10,223,166 (10,223,166)       -            -           -          -

Common Stock issued pursuant
to subscription at $2.50 share in
Jan 2004                            -         -       41,600      20,800      83,200   (104,000)         -           -          -

Common stock issued in
exchange for consulting services
at $2.95 per share, Jan 2004        -         -       13,040       6,520      31,948        -            -           -      38,468

Common stock issued in
exchange for consulting services
at $2.60 per share, Jan 2004        -         -      123,000      61,500     258,300        -            -           -     319,800
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements

                                      8


<PAGE>


                          APPLIED DNA SCIENCES, INC
                       (A development stage company)
     CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY, (DEFICIENCY)
  FOR THE PERIOD SEPTEMBER 16, 2002 (DATE OF INCEPTION) THROUGH MARCH 31, 2005
                                RESTATED
                               (Unaudited)
                               (Continued)

<TABLE>
<CAPTION>
                                                                                                               Deficit
                                                                         Additional                          Accumulated
                                        Preferred              Common      Paid in     Common       Stock       During
                              Preferred   Shares    Common      Stock      Capital      Stock   Subscription Development
                                Shares    Amount    Shares     Amount      Amount    Subscribed  Receivable     Stage      Total
                              --------- --------- ---------- ----------- ----------- ---------- ------------ ----------- ----------
<S>                              <C>          <C>    <C>         <C>         <C>            <C>       <C>        <C>       <C>
Common stock issued in
exchange for consulting services
at $3.05 per share, Jan 2004        -         -        1,000         500       2,550        -            -           -       3,050

Common stock issued in
exchange for employee services
at $3.07 per share, Feb 2004        -         -        6,283       3,142      16,147        -            -           -      19,289

Common stock issued in
exchange for consulting services
at $3.04 per share, Mar 2004        -         -       44,740      22,370     113,640        -            -           -     136,010

Common Stock issued for
options exercised at $1.00 per
share in Mar 2004                   -         -       55,000      27,500      27,500        -            -           -      55,000

Common stock issued in
exchange for employee services
at $3.00 per share, Mar 2004        -         -        5,443       2,722      13,623        -            -           -      16,345

Common stock issued in
exchange for employee services
at $3.15 per share, Mar 2004        -         -        5,769       2,885      15,292        -            -           -      18,177

Preferred shared converted to
common shares for consulting
services at $3.00 per share,
Mar 2004                         (5,000)      (5)    125,000      62,500     312,500        -            -           -     374,995

Common stock issued in
exchange for employee services
at $3.03 per share, Mar 2004        -         -        8,806       4,400      22,238        -            -           -      26,638

Common Stock issued pursuant
to subscription at $2.50 per
share in Mar. 2004                  -         -       22,500      11,250      (9,000)       -            -           -       2,250

Beneficial Conversion Feature
relating to Notes Payable                               -           -        122,362        -           -           -      122,362

Beneficial Conversion Feature       -         -
relating to Warrants                                    -           -        177,638        -            -           -     177,638

Common stock issued in
exchange for consulting services
at $2.58 per share, Apr 2004        -         -        9,860       4,930      20,511        -            -           -      25,441

Common stock issued in
exchange for consulting services
at $2.35 per share, Apr 2004        -         -       11,712       5,856      21,667        -            -           -      27,523

Common stock issued in
exchange for consulting services
at $1.50 per share, Apr 2004        -         -      367,500     183,750     367,500        -            -           -     551,250

Common stock returned to
treasury at $0.065 per share,
April 2004                          -         -      (50,000)    (25,000)     21,750        -            -           -      (3,250)

Preferred stock converted to
common stock for consulting
services at $1.01 per share in
May 2004                         (4,000)      (4)    100,000      50,000      51,250        -            -           -     101,246

Common stock issued per
subscription May 2004               -         -       10,000       5,000      (4,000)       -         (1,000)        -          -
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements

                                      9


<PAGE>


                          APPLIED DNA SCIENCES, INC
                       (A development stage company)
     CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY, (DEFICIENCY)
  FOR THE PERIOD SEPTEMBER 16, 2002 (DATE OF INCEPTION) THROUGH MARCH 31, 2005
                                RESTATED
                               (Unaudited)
                               (Continued)

<TABLE>
<CAPTION>
                                                                                                               Deficit
                                                                         Additional                          Accumulated
                                        Preferred              Common      Paid in     Common       Stock       During
                              Preferred   Shares    Common      Stock      Capital      Stock   Subscription Development
                                Shares    Amount    Shares     Amount      Amount    Subscribed  Receivable     Stage       Total
                              --------- --------- ---------- ----------- ----------- ---------- ------------ ----------- ----------
<S>                              <C>          <C>  <C>           <C>         <C>            <C>          <C>         <C>   <C>
Common stock issued in
exchange for consulting
services at $0.86 per
share in May 2004                   -         -      137,000      68,500      50,730        -            -           -     119,230

Common stock issued in
exchange for consulting
services at $1.15 per
share in May 2004                   -         -       26,380      13,190      17,147        -            -           -      30,337

Common stock returned to
treasury at $0.065 per
share, Jun 2004                     -         -       (5,000)     (2,500)     2,175         -            -           -        (325)

Common stock issued in
exchange for consulting
services at $0.67 per
share in June 2004                  -         -      270,500     135,250      45,310        -            -           -     180,560

Common stock issued in
exchange for consulting services
at $0.89 per share in June 2004     -         -        8,000       4,000       3,120        -            -           -       7,120

Common stock issued in
exchange for consulting services
at $0.65 per share in June 2004     -         -       50,000      25,000       7,250        -            -           -      32,250

Common stock issued pursuant
to private placement at $1.00
per share in June 2004              -         -      250,000     125,000     125,000        -            -           -     250,000

Common stock issued in
exchange for consulting services
at $0.54 per share in July 2004     -         -      100,000      50,000       4,000        -            -           -      54,000

Common stock issued in
exchange for consulting services
at $0.72 per share in July 2004     -         -        5,000       2,500       1,100        -            -           -       3,600

Common stock issued in
exchange for consulting services
at $0.47 per share in July 2004     -         -      100,000      50,000      (2,749)       -            -           -      47,251

Common stock issued in
exchange for consulting
services at $0.39 per
share in August 2004                -         -      100,000      50,000     (11,000)       -            -           -      39,000

Preferred stock converted
to common stock for
consulting services at
$0.39 per share in August 2004   (2,000)      (2)     50,000      25,000      (5,500)       -            -           -      19,498

Common stock issued in
exchange for consulting
services at $0.50 per
share in August 2004                -         -      100,000      50,000         250        -            -           -      50,250

Common stock issued in
exchange for consulting
services at $0.56 per
share in August 2004                -         -      200,000     100,000      12,500        -            -           -     112,500

Common stock issued in
exchange for consulting
services at $0.41 per
share in August 2004                -         -       92,500      46,250      (8,605)       -            -           -      37,645

Common stock issued in
exchange for consulting
services at $0.52 per
share in September 2004             -         -    1,000,000     500,000      17,500        -            -           -     517,500
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements

                                      10


<PAGE>


                          APPLIED DNA SCIENCES, INC
                       (A development stage company)
     CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY, (DEFICIENCY)
  FOR THE PERIOD SEPTEMBER 16, 2002 (DATE OF INCEPTION) THROUGH MARCH 31, 2005
                                RESTATED
                               (Unaudited)
                               (Continued)

<TABLE>
<CAPTION>
                                                                                                               Deficit
                                                                         Additional                          Accumulated
                                        Preferred              Common      Paid in     Common       Stock       During
                              Preferred   Shares    Common      Stock      Capital      Stock   Subscription Development
                                Shares    Amount    Shares     Amount      Amount    Subscribed  Receivable     Stage      Total
                              --------- --------- ---------- ----------- ----------- ---------- ------------ ----------- ----------
<S>                              <C>    <C>       <C>        <C>         <C>          <C>      <C>        <C>           <C>
Common stock issued in
exchange for consulting
services at $0.46 per
share in September 2004             -         -        5,000       2,500        (212)      -           -           -          2,288

Common stock issued pursuant
to subscription at  $0.50 per
share in September 2004             -         -       40,000      20,000        -          -           -           -         20,000

Preferred shares converted to
common stock for consulting
services at $0.41 per share in
September 2004                   (4,000)      (4)    100,000      50,000       4,000       -           -           -         53,996

Preferred shares issued in
exchange for service at $25 per
share in September 2004          60,000        6        -           -      1,499,994       -           -           -      1,500,000

Fair value of 2,841,000 warrants
issued to non-employees and
consultants for services rendered
at approximately $.71 per warrant
in September 2004                   -         -         -           -      2,019,862       -           -           -      2,019,862


Net Loss                            -         -         -           -           -          -           -   (19,358,258) (19,358,258)
                              --------- --------- ---------- ----------- -----------  -------  ---------  ------------  -----------
Balance at September 30, 2004    60,000 $      6  23,981,054 $11,990,527 $ 6,118,993  $    -   $  (1,000) $(22,815,034) $(4,706,508)
                              ========= ========= ========== =========== ===========  =======  =========  ============  ===========
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements

                                      11


<PAGE>


                          APPLIED DNA SCIENCES, INC
                       (A development stage company)
     CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY, (DEFICIENCY)
  FOR THE PERIOD SEPTEMBER 16, 2002 (DATE OF INCEPTION) THROUGH MARCH 31, 2005
                                RESTATED
                               (Unaudited)
                               (Continued)

<TABLE>
<CAPTION>
                                                                                                               Deficit
                                                                         Additional                          Accumulated
                                        Preferred               Common     Paid in     Common       Stock       During
                              Preferred   Shares    Common       Stock     Capital      Stock   Subscription Development
                                Shares    Amount    Shares      Amount     Amount    Subscribed  Receivable     Stage      Total
                              --------- --------- ---------- ----------- ----------- ---------- ------------ ----------- ----------
<S>                                 <C>       <C> <C>           <C>         <C>        <C>               <C>         <C>  <C>
Common stock issued in
exchange for consulting services
at $0.68 per share in October
2004                                -         -      200,000     100,000      36,000        -            -           -     136,000

Common stock returned
to treasury at $0.60
per share, Oct 2004                 -         -   (1,069,600)   (534,800)   (107,297)       -            -           -    (642,097)

Common stock issued in
exchange for consulting services
at $0.60 per share in Oct 2004      -         -       82,500      41,250       8,250        -            -           -      49,500

Common Stock issued pursuant
to subscription at $0.60 share in
October 2004                        -         -      500,000     250,000      50,000   (300,000)         -           -          -

Common stock issued in
exchange for consulting services
at $0.50 per share in October 2004  -         -      532,500     266,250        -           -            -           -     266,250

Common Stock issued in
exchange for debt at $0.50 share
in October 2004                     -         -      500,000     250,000        -           -            -           -     250,000

Common Stock issued pursuant
to subscription at $0.45 share in
October 2004                        -         -    1,000,000     500,000     (50,000)  (450,000)         -           -          -

Common stock issued in
exchange for consulting services
at $0.45 per share in October 2004  -         -      315,000     157,500     (15,750)       -            -           -     141,750

Common Stock issued in
exchange for consulting
services at $0.47 share
in November 2004                    -         -      100,000      50,000      (3,000)       -            -           -      47,000

Common Stock issued in
exchange for consulting
services at $0.80 share
in November 2004                    -         -      300,000     150,000      90,000        -            -           -     240,000

Common Stock issued in
exchange for consulting
services at $1.44 share
in November 2004                    -         -      115,000      57,500     108,100        -            -           -     165,600

Common Stock issued in
exchange for employee
services at $1.44 share
in November 2004                    -         -        5,000       2,500       4,700        -            -           -       7,200
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements

                                      12


<PAGE>


                          APPLIED DNA SCIENCES, INC
                       (A development stage company)
     CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY, (DEFICIENCY)
  FOR THE PERIOD SEPTEMBER 16, 2002 (DATE OF INCEPTION) THROUGH MARCH 31, 2005
                                RESTATED
                               (Unaudited)
                               (Continued)

<TABLE>
<CAPTION>
                                                                                                               Deficit
                                                                         Additional                          Accumulated
                                        Preferred               Common     Paid in     Common       Stock       During
                              Preferred   Shares    Common       Stock     Capital      Stock   Subscription Development
                                Shares    Amount    Shares      Amount     Amount    Subscribed  Receivable     Stage      Total
                              --------- --------- ---------- ----------- ----------- ---------- ------------ ----------- ----------
<S>                              <C>          <C>  <C>         <C>        <C>           <C>            <C>    <C>       <C>
Warrants exercised
at $0.60 per share
in November 2004                    -         -       60,000      30,000       6,000     (4,000)         -           -      32,000

Beneficial Conversion discount
relating to Notes Payable           -         -         -           -      1,465,000        -            -           -   1,465,000

Common stock issued at $0.016 per
share in exchange for note
payable in December 2004            -         -    5,500,000   2,750,000  (2,661,500)       -            -           -      88,500

Fair value of 6,063,500 warrants
issued to non employees and
consultants for services rendered
at $.52 per warrant in
October and December 2004           -         -         -           -      3,169,052        -            -           -   3,169,052

Warrants exercised at $0.10 per
share in January 2005               -         -       25,000      12,500     (10,000)       -            -           -       2,500

Common Stock issued in
settlement of debt at $0.33 per
share in January 2005               -         -    1,628,789     814,395    (276,895)       -            -           -     537,500

Fair value of warant liability
reclassed due to registration
rights granted in January 2005      -         -         -           -     (3,108,851)       -            -           -  (3,108,851)

Warrants exercised at $0.10 per
share in January 2005               -         -       17,500       8,750      (7,000)       -            -           -       1,750

Common Stock issued in
settlement of debt at $0.33 per
share in January 2005               -         -    2,399,012   1,199,504    (407,830)       -            -           -     791,674

Common Stock issued in
exchange for consulting
services at $1.30 per share         -         -      315,636     157,818     252,508        -            -           -     410,326
in January 2005

Common Stock issued in
settlement of debt at $0.33 per
share in February 2005              -         -       75,757      37,879     (12,879)       -            -           -      25,000
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements

                                      13


<PAGE>


                          APPLIED DNA SCIENCES, INC
                       (A development stage company)
     CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY, (DEFICIENCY)
  FOR THE PERIOD SEPTEMBER 16, 2002 (DATE OF INCEPTION) THROUGH MARCH 31, 2005
                                RESTATED
                               (Unaudited)
                               (Continued)

<TABLE>
<CAPTION>
                                                                                                               Deficit
                                                                         Additional                          Accumulated
                                        Preferred               Common     Paid in     Common       Stock       During
                              Preferred   Shares    Common       Stock     Capital      Stock   Subscription Development
                                Shares    Amount    Shares      Amount     Amount    Subscribed  Receivable     Stage      Total
                              --------- --------- ---------- ----------- ----------- ---------- ------------ ----------- ----------
<S>                                 <C>       <C> <C>          <C>         <C>         <C>             <C>         <C>   <C>
Warrants exercised at $0.10 per
share in February 2005              -         -       20,000      10,000      (8,000)       -            -           -       2,000

Common Stock issued in
settlement of debt at $0.33 per
share in February 2005              -         -      606,060     303,030    (103,030)       -            -           -     200,000

Warrants exercised at $0.10 per
share in February 2005              -         -       45,000      22,500     (18,000)       -            -           -       4,500

Common Stock issued in
exchange for related party debt
at $1.31 per share in February
2005                                -         -    1,500,000     750,000   1,215,000        -            -           -   1,965,000

Common Stock issued in
settlement of debt at $0.33 per
share in February 2005              -         -      278,433     139,217     (47,334)       -            -           -      91,883

Common Stock issued in
exchange for consulting services
at $1.17 per share in February
2005                                -         -       17,236       8,618      11,548        -            -           -      20,166

Common stock issued in
exchange for debt at $0.50 per
share in February 2005              -         -      300,000     150,000        -           -            -           -     150,000

Common Stock issued in
exchange for consulting
services at $0.95 per share
in February 2005                    -         -      716,500     358,250     322,425        -            -           -     680,675

Common Stock issued in
exchange for consulting
services at $1.44 per share
in February  2005                   -         -    5,796,785   2,898,393   5,418,814        -            -           -   8,317,207

Common stock issued in
settlement of debt at  $0.50 per
share in February 2005              -         -    2,930,000   1,465,000         -     (125,000)         -           -   1,340,000

Common Stock issued in
exchange for consulting
services at $0.95 per share
in February 2005                    -         -       10,500       5,250       4,725        -            -           -       9,975

Fair value of 55,000 warrants
issued to consultants for
services at $1.31 per warrant in
February 2005                       -         -           -           -       72,017                                        72,017

Common stock issued in
exchange for debt at $0.50 per
share in March 2005                 -         -   13,202,000   6,601,000        -           -            -           -   6,601,000

Common Stock issued in
exchange for consulting
services at $1.19 per share
in March 2005                       -         -      185,000      92,500     127,650        -            -           -     220,150

Options exercised at $0.60 per
share in March 2005                 -         -      100,000      50,000      10,000        -            -           -      60,000

Common Stock issued in
exchange for consulting
services at $0.98 per share
in March 2005                       -         -    1,675,272     837,636     804,131        -            -           -   1,641,767
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements

                                      14


<PAGE>


                          APPLIED DNA SCIENCES, INC
                       (A development stage company)
     CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY, (DEFICIENCY)
  FOR THE PERIOD SEPTEMBER 16, 2002 (DATE OF INCEPTION) THROUGH MARCH 31, 2005
                                RESTATED
                               (Unaudited)
                               (Continued)

<TABLE>
<CAPTION>
                                                                                                               Deficit
                                                                         Additional                          Accumulated
                                        Preferred               Common     Paid in     Common       Stock       During
                              Preferred   Shares    Common       Stock     Capital      Stock   Subscription Development
                                Shares    Amount    Shares      Amount     Amount    Subscribed  Receivable     Stage      Total
                              --------- --------- ---------- ----------- ----------- ---------- ------------ ----------- ----------
<S>                              <C>          <C> <C>        <C>          <C>          <C>       <C>       <C>          <C>
Common Stock issued in
exchange for consulting
services at $0.92 per share
in March 2005                       -         -       24,333      12,167      10,219        -          -           -         22,386

Common Stock issued in
exchange for consulting
services at $0.99 per share
in March 2005                       -         -       15,000       7,500       7,350        -          -           -         14,850

Common stock issued in exchange
for debt at $0.50 per share
in March 2005                       -         -    1,240,000     620,000        -           -          -           -        620,000

Common stock canceled for
shares issued in exchange of
debt in March 2005                  -         -     (500,000)   (250,000)       -           -          -           -       (250,000)

Common stock subscribed
Canceled in March 2005              -         -         -           -           -       750,000        -           -        750,000

Common Stock issued in
exchange for consulting
services at $0.89 per share
in March 2005                       -         -       10,000       5,000       3,900        -          -           -          8,900

Adjust common stock par value
from $0.50 to $0.001 per share,
per amendment of articles dated
March 2005                          -         -         -    (32,312,879) 32,312,879        -          -           -             -

Beneficial Conversion discount
relating to Notes Payable in
March 2005                          -         -         -           -      7,371,000        -          -           -      7,371,000

Stock options granted to
employees in exchange for
services rendered, at exercise
price below fair value of common
stock in March 2005                 -         -         -           -        180,000        -          -           -        180,000

Net Loss                                                                                                   (44,165,025) (44,165,025)
                              --------- --------- ---------- ----------- ----------- ---------- ---------- -----------  -----------
Balance at March 31, 2005        60,000        6  64,755,267      64,755  52,342,895   (129,000)   (1,000) (66,980,059) (14,702,403)
                              ========= ========= ========== =========== =========== ========== ========== ===========  ===========
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements

                                      15


<PAGE>




                           APPLIED DNA SCIENCES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                                For the Period
                                                                                                              September 16, 2002
                                                                        For the Six Month Ended              (Date of Inception)
                                                                        March 31,          March 31,           through March 31
                                                                           2005              2004                    2005
                                                                   ------------------------------------------------------------
                                                                         RESTATED                                  RESTATED
<S>                                                                 <C>                  <C>                  <C>
Cash Flows (used in) operating activities:
Net loss                                                            $  (44,165,025)      $(9,979,130)         $   (66,980,059)
Adjustments  to reconcile  net loss to net cash
provided by (used in) operating
activities:
Depreciation and amortization                                               12,027               703                   15,188
Organizational expenses                                                         --                --                   88,500
Preferred shares issued in exchange for services                                --                --                1,500,000
Warrants issued to  in exchange for services                             3,241,069                --                5,260,931
 Income attributable to re-pricing of warrants                         (10,775,753)               --              (10,775,753)
Financing costs attributable to the issuance of warrants                23,148,214                --               23,148,214
Vested option expense                                                      180,000                --                  180,000
Amortization of beneficial conversion feature                            8,836,000           661,111               10,461,000
Fair value of common stock issued to related party  in
excess of  previously incurred debt                                      1,365,000                --                1,365,000

Common stock issued in exchange for  services                           12,399,702         7,844,142               24,797,434

Common stock canceled--previously issued for services rendered            (142,098)         (282,000)                (427,673)
Increase (decrease)  in assets and liabilities:
Other Assets                                                                    --                --                  (13,890)
Security Deposits                                                          (23,941)          (23,559)                 (47,500)
Due  related parties, net                                                  (20,631)                                   132,065
Accounts payable and accrued liabilities                                  (140,782)          (40,469)               1,614,927
                                                                   ------------------------------------------------------------
Net cash (used in) operating activities                                 (6,086,218)       (1,819,202)              (9,681,616)

Cash flows from investing activities:

Acquisition of property and equipment                                           --           (29,507)                 (29,507)
Payment of  patent filing fees                                              (4,347)          (12,906)                 (25,698)
                                                                   ------------------------------------------------------------
Net cash (used in) investing activities                                     (4,347)          (42,413)                 (55,205)

Cash flows from financing activities:
Proceeds from sale of common stock, net of cost                                 --           104,000                  432,000
Proceeds from  issuance  of convertible debt                             8,961,000            87,000                9,086,000
Proceeds from exercise  of options and warrants                            102,750            34,004                  343,750
Repayment of related party advances, net                                                     (33,653)
Net advances from shareholders                                                  --                                    100,088

</TABLE>

See accompanying notes to unaudited condensed
consolidated financial statements

                                      16


<PAGE>


<TABLE>
<CAPTION>
                                                                                                                For the Period
                                                                                                              September 16, 2002
                                                                        For the Six Month Ended              (Date of Inception)
                                                                        March 31,          March 31,           through March 31
                                                                           2005              2004                    2005
                                                                   ------------------------------------------------------------
                                                                         RESTATED                                  RESTATED
<S>                                                                 <C>                  <C>                  <C>
Proceeds from loans                                                             --         1,675,000                2,750,000
                                                                   ------------------------------------------------------------
Net cash provided by financing activities                                9,063,750         1,866,351               12,711,838
                                                                   ------------------------------------------------------------
Increase (decrease) in cash and cash equivalents                         2,973,185             4,736                2,975,017
Cash and cash equivalents, beginning of  period                              1,832           193,471
                                                                   ------------------------------------------------------------
Cash and cash equivalents, end of period                            $    2,975,017       $   198,207          $     2,975,017
                                                                   ============================================================
Supplemental Information:
Cash paid during the period for interest                                        --                --
Cash paid during the year for taxes                                             --                --

Non--cash disclosures:
Common stock issued for services                                        12,399,702         7,844,142               24,797,434
Common stock issued in exchange for previously incurred debt             2,313,500                --                2,313,500
Amortization of beneficial conversion feature attributed to
convertible notes                                                        8,836,000                                 10,461,000

Common stock canceled--previously issued for services rendered            (142,098)         (282,000)                (427,673)
Preferred shares issued in exchange for services                                --                                  1,500,000
Warrants issued to consultants                                             394,698                                  2,414,560
Acquisition:
Common stock retained                                                                             --                    1,015
Assets acquired                                                                                   --                     (135)
                                                                                                              ---------------
Total consideration paid                                                                          --                      880
                                                                                                              ===============
Organization expenses-- note  issued in exchange of  shares retired                               --                   88,500
</TABLE>


See accompanying notes to unaudited condensed consolidated financial statements

                                      17


<PAGE>


                           APPLIED DNA SCIENCES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (Unaudited)

NOTE A - SUMMARY OF ACCOUNTING POLICIES

General

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with the instructions to Form 10-QSB/A, and therefore, do
not include all the information  necessary for a fair  presentation of financial
position,  results of  operations  and cash flows in conformity  with  generally
accepted accounting principles.

In the opinion of management,  all adjustments  (consisting of normal  recurring
accruals)  considered  necessary  for a fair  presentation  have been  included.
Operating  results for the three and six month  periods ended March 31, 2005 are
not  necessarily  indicative  of the results that may be expected for the fiscal
year ending September 30, 2005. The unaudited condensed  consolidated  financial
statements  should be read in  conjunction  with  September  30, 2004  financial
statements.

Business and Basis of Presentation

On  September  16,  2002,  Applied  DNA  Sciences,   Inc.  (the  "Company")  was
incorporated  under  the laws of the  State of  Nevada.  The  Company  is in the
development stage, as defined by Statement of Financial Accounting Standards No.
7 ("SFAS No. 7") and its efforts have been principally devoted to developing DNA
embedded  biotechnology  security  solutions in the United States.  To date, the
Company has generated  nominal  sales  revenues,  has incurred  expenses and has
sustained  losses.  Consequently,  its  operations  are subject to all the risks
inherent in the establishment of a new business enterprise.  For the period from
inception  through  March  31,  2005,  the  Company  has  accumulated  losses of
$66,980,059.

The consolidated  financial  statements include the accounts of the Company, and
its wholly-owned  subsidiary  ProHealth Medical  Technologies,  Inc. Significant
inter-company transactions have been eliminated in consolidation.

Reclassification

Certain prior period amounts have been reclassified for comparative purposes.

Property and Equipment

Property and equipment are stated at cost and  depreciated  over their estimated
useful lives of 3 to 5 years using the straight  line method.  At March 31, 2005
property and equipment consist of:

<TABLE>
<CAPTION>
                                      March 31, 2005
<S>                             <C>
Furniture                       $               29,507
Accumulated  depreciation                      (7,373)

Net                             $               22,134
</TABLE>

                                      18


<PAGE>


                           APPLIED DNA SCIENCES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (Unaudited)

NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)

Stock Based Compensation

In December  2002,  the FASB issued SFAS No. 148,  "Accounting  for  Stock-Based
Compensation-Transition and Disclosure-an amendment of SFAS 123." This statement
amends SFAS No.  123,  "Accounting  for  Stock-Based  Compensation,"  to provide
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee  compensation.  In addition,  this
statement  amends  the  disclosure  requirements  of  SFAS  No.  123 to  require
prominent  disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method used on reported  results.  The Company has chosen to continue to account
for stock-based  compensation using the intrinsic value method prescribed in APB
Opinion No. 25 and related  interpretations.  Accordingly,  compensation expense
for stock options is measured as the excess, if any, of the fair market value of
the  Company's  stock at the date of the grant  over the  exercise  price of the
related option. The Company has adopted the annual disclosure provisions of SFAS
No. 148 in its financial  reports for the year ended  September 30, 2003 and for
the subsequent periods.

Had compensation  costs for the Company's stock options been determined based on
the fair value at the grant dates for the  awards,  the  Company's  net loss and
losses  per share  would  have been as  follows  (transactions  involving  stock
options issued to employees and Black-Scholes model assumptions are presented in
Note C):

<TABLE>
<CAPTION>
                                                                                                 For the Period
                                                                                                  September 16,
                                                                                                  2002 (Date of
                                                         For The Three       For The Three         Inception)
                                                         Months ended         Months ended           through
                                                           March 31,           March 31,            March 31,
                                                             2005                 2004                2005
                                                    -------------------  ------------------  -------------------
<S>                                                 <C>                  <C>                 <C>
Net loss - as reported                              $      (37,217,742)  $      (2,436,638)  $      (66,980,059)
Add: Total stock based employee
compensation expense as reported under
intrinsic value method (APB. No. 25)                           180,000                   -                    -

Net loss - Pro Forma                                $      (37,397,742)  $      (2,436,638)  $      (66,980,059)
                                                    ===================  ==================  ===================

Net loss attributable to common
stockholders - Pro forma                            $      (37,397,742)  $      (2,436,638)  $      (66,980,059)
                                                     ===================  ==================  ===================
per share - as reported                             $            (0.71)  $           (0.12)  $            (2.68)
                                                    ===================  ==================   ===================
Basic (and assuming dilution) loss
per share - Pro forma                               $            (0.71)  $           (0.12)  $            (2.56)
                                                    ===================  ==================  ===================
</TABLE>

                                      19


<PAGE>


                           APPLIED DNA SCIENCES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (Unaudited)

NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)

On December 16, 2004,  the Financial  Accounting  Standards  Board (FASB) issued
FASB  Statement  No.  123R  (revised  2004),  "Share-Based  Payment"  which is a
revision of FASB Statement No. 123,  "Accounting for Stock-Based  Compensation".
Statement 123R  supersedes APB opinion No. 25,  "Accounting  for Stock Issued to
Employees",  and amends  FASB  Statement  No.  95,  "Statement  of Cash  Flows".
Generally,  the approach in Statement 123R is similar to the approach  described
in Statement 123. However,  Statement 123R requires all share-based  payments to
employees,  including grants of employee stock options,  to be recognized in the
income statement based on their fair values.  Pro-forma  disclosure is no longer
an  alternative.  On April 14, 2005,  the SEC amended the effective  date of the
provisions of this  statement.  The effect of this  amendment by the SEC is that
the Company will have to comply with Statement 123R and use the Fair Value based
method of accounting no later than the first quarter of 2006. Management has not
determined   the  impact  that  this   statement  will  have  on  the  Company's
consolidated financial statements.

NOTE B - CAPITAL STOCK

The Company is authorized to issue  10,000,000  shares of preferred stock with a
$.001 par value per share. The Company is authorized to issue 250,000,000 shares
of  common  stock,  with a  $0.001  par  value  per  share  as the  result  of a
shareholder  meeting  conducted on February 14, 2005.  Prior to the February 14,
2005 share increase and par value change, the Company had 100,000,000 authorized
shares  with a par  value of $0.50.  In  February  2005,  the  Company  passed a
resolution  authorizing change in the par value per common shares from $0.50 per
share to $0.001 per share.

During the period  September 16, 2002 through  September  30, 2003,  the Company
issued 100,000 shares of common stock in exchange for  reimbursement of services
provided by the founders of the Company. The Company valued the shares issued at
approximately  $1,000,  which represents the fair value of the services received
which did not differ materially from the value of the stock issued.

In  October,  2002,  the Company  issued  10,178,352  shares of common  stock in
exchange for the previously  issued 100,000 shares to the Company's  founders in
connection with the merger with Prohealth  Medical  Technologies,  Inc (see Note
B).

In October,  2002 the Company  canceled 100,000 shares of common stock issued to
the Company's founders.

In October 2002 the Company  issued  602,000  shares of common stock in exchange
for  services  valued at $0.065 per  share.  In  accordance  with EITF 96-18 the
measurement  date to determine fair value was in October 2002. This was the date
at which a commitment  for  performance  by the counter party to earn the equity
instrument was reached.  The Company  valued the shares issued at  approximately
$0.065 per share,  which presents the fair value of the services  received which
did not differ materially from the value of the stock issued.

In November and December 2002, the Company issued 876,000 shares of common stock
in exchange for subscription at $ 0.065 per share. In accordance with EITF 96-18
the  measurement  date to determine fair value was in October 2002. This was the
date at which a  commitment  for  performance  by the counter  party to earn the
equity  instrument  was  reached.  The  Company  valued  the  shares  issued  at
approximately  $0.065 per share,  which  presents the fair value of the services
received which did not differ materially from the value of the stock issued.

In January 2003, the Company  canceled 836,000 shares of common stock previously
issued in exchange for consulting services.

                                      20


<PAGE>


                           APPLIED DNA SCIENCES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (Unaudited)

NOTE B - CAPITAL STOCK (continued)

In January 2003, the Company issued 1,500,000 shares of common stock in exchange
for  a  licensing   agreement  .  The  Company   valued  the  shares  issued  at
approximately $ .065 per share,  which  represents the fair value of the license
received which did not differ materially from the value of the stock issued. The
Company charged the cost of the license to operations.

In January 2003,  the Company  issued 586,250 shares of common stock in exchange
for consulting  services.  In accordance with EITF 96-18 the measurement date to
determine  fair  value  was in  October  2002.  This  was the  date  at  which a
commitment for  performance  by the counter party to earn the equity  instrument
was reached.  The Company  valued the shares issued at  approximately  $0.13 per
share,  which  presents  the fair value of the services  received  which did not
differ materially from the value of the stock issued.

In February  2003,  the Company  issued 9,000 shares of common stock in exchange
for consulting  services.  In accordance with EITF 96-18 the measurement date to
determine  fair  value  was in  October  2002.  This  was the  date  at  which a
commitment for  performance  by the counter party to earn the equity  instrument
was reached.  The Company valued the shares issued at  approximately  $0.065 per
share,  which  presents  the fair value of the services  received  which did not
differ materially from the value of the stock issued.

In March 2003, the Company issued 10,140,000 shares of common stock to Company's
founders in exchange for services. In accordance with EITF 96-18 the measurement
date to determine fair value was in September 2002. This was the date at which a
commitment for  performance  by the counter party to earn the equity  instrument
was reached.  The Company valued the shares issued at approximately  $0.0001 per
share,  which  presents  the fair value of the services  received  which did not
differ materially from the value of the stock issued.

In March 2003,  the Company issued 91,060 shares of common stock in exchange for
consulting services. The Company valued the shares issued at approximately $2.53
per share,  which  represents the fair value of the services  received which did
not differ materially from the value of the stock issued.

In March 2003,  the Company  issued 6,000 shares of common stock in exchange for
consulting  services.  The  Company  valued the shares  issued at  approximately
$0.065 per share, which represents the fair value of the services received which
did not differ materially from the value of the stock issued. In March 2003, the
Company received  subscription for 18,000 shares of common stock in exchange for
cash at $1 per share.

On April 1, 2003,  the Company issued 860,000 shares of common stock in exchange
for consulting  services provided to the Company.  In accordance with EITF 96-18
the  measurement  date to determine fair value was in October 2002. This was the
date at which a  commitment  for  performance  by the counter  party to earn the
equity  instrument  was  reached.  The  Company  valued  the  shares  issued  at
approximately  $0.065 per share,  which  presents the fair value of the services
received which did not differ materially from the value of the stock issued.

On April 9, 2003,  the Company  issued 18,000 shares of common stock in exchange
for previously  issued  options to purchase the Company's  common stock at $1.00
per share.

On April 9, 2003,  the Company  issued  9,000 shares of common stock in exchange
for consulting  services provided to the Company.  In accordance with EITF 96-18
the  measurement  date to determine fair value was in October 2002. This was the
date at which a  commitment  for  performance  by the counter  party to earn the
equity  instrument  was  reached.  The  Company  valued  the  shares  issued  at
approximately  $0.065 per share,  which  presents the fair value of the services
received which did not differ materially from the value of the stock issued.

                                      21


<PAGE>


                           APPLIED DNA SCIENCES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (Unaudited)

NOTE B - CAPITAL STOCK (continued)

On April 23, 2003,  the Company  issued 5,000 shares of common stock in exchange
for consulting  services provided to the Company.  The Company valued the shares
issued at approximately  $2.50 per share, which represents the fair value of the
services  received which did not differ  materially  from the value of the stock
issued.

On June 12, 2003,  the Company issued 10,000 shares common stock in exchange for
consulting  services  provided to the  Company.  The  Company  valued the shares
issued at approximately $ 2.50 per share, which represents the fair value of the
services  received which did not differ  materially  from the value of the stock
issued.

On June 17 2003,  the Company  issued  50,000 shares of common stock in exchange
for cash at $1.00 per share.

On June 30, 2003,  the Company issued 270,000 shares of common stock in exchange
for consulting  services provided to the Company.  In accordance with EITF 96-18
the  measurement  date to determine fair value was in October 2002. This was the
date at which a  commitment  for  performance  by the counter  party to earn the
equity  instrument  was  reached.  The  Company  valued  the  shares  issued  at
approximately  $0.065 per share,  which  presents the fair value of the services
received which did not differ materially from the value of the stock issued.

On June 30, 2003, the Company  received  $10,000 as subscription  for options to
purchase the Company's common stock at $1.00 per share.

In June, 2003, the Company received $48,000 in connection with a subscription to
purchase the Company's common stock pursuant to a private placement.

In connection with the Company's acquisition of ProHealth, the controlling owner
of ProHealth  granted the Company an option to acquire up to 8,500,000 shares of
the  Company's  common stock in exchange  for $100,000  (see Note B). The option
expires on December 10, 2004. On June 30, 2003, the Company exercised its option
and acquired  7,500,000  common  shares under this  agreement in exchange for an
$88,500 convertible promissory note payable to the former controlling owner. The
Company  has an option  through  December  10,  2004 to  acquire  the  remaining
1,000,000 shares from the former  controlling owner in exchange for $11,500.  On
June 30, 2003, the Company retired the 7,500,000 shares common acquired pursuant
to the option agreement.

In July 2003 the Company  issued  213,060  shares of common stock for consulting
services  provided  to the  Company.  The  Company  valued the shares  issued at
approximately $ 2.01 per share,  which represents the fair value of the services
received which did not differ materially from the value of the stock issued.

In July 2003,  the Company  canceled  24,000 shares of common stock,  previously
issued for services valued at $2.50 per share.

In July 2003, the Company  received  $20,000 in exchange for  previously  issued
options to purchase the Company's common stock at $1.00 per share.

In July  2003,  the  Company  issued  10,000  shares  of  common  stock for cash
previously subscribed at $1.00 per share.

In August 2003,  the Company  issued  172,500 shares of common stock in exchange
for consulting  services provided to the Company.  The Company valued the shares
issued at approximately $ 2.38 per share, which represents the fair value of the
services  received which did not differ  materially  from the value of the stock
issued

                                      22


<PAGE>


                           APPLIED DNA SCIENCES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (Unaudited)

NOTE B - CAPITAL STOCK (continued)

In August 2003, the Company received  $29,000 in exchange for previously  issued
options to purchase the Company's common stock at $1.00 per share.

In September 2003, the Company issued 395,260 shares of common stock in exchange
for consulting  services provided to the Company.  The Company valued the shares
issued at approximately $ 2.42 per share, which represents the fair value of the
services  received which did not differ  materially  from the value of the stock
issued.

In September  2003,  the Company  issued  19,200 shares of common stock for cash
previously subscribed at $2.50 per share.

In  September  2003,  the Company  issued 6,400 shares of common stock issued in
exchange for cash at $2.50 per share pursuant to private placement.

In September  2003,  the Company  received  $95,000 in exchange  for  previously
issued options to purchase the Company's common stock at $1.00 per share.

In September 2003, the Company received $2,600 in connection with a subscription
to purchase the Company's common stock pursuant to a private placement.

The Company valued the shares issued for  consulting  services at the rate which
represents  the  fair  value  of the  services  received  which  did not  differ
materially from the value of the stock issued.

In October 2003, the Company issued 15,000 shares of convertible preferred stock
in exchange for  services.  The Company  valued the shares issued at the $15 par
value and recorded the value for services  when the shares were  converted  into
common shares as identified below.

In October 2003,  the Company  issued 287,439 shares of common stock in exchange
for consulting  services.  The Company valued the shares issued at approximately
$2.85 per share for a total of $820,418,  which represents the fair value of the
services  received which did not differ  materially  from the value of the stock
issued.

In October 2003,  the Company  issued  120,000 shares of common stock for shares
previously subscribed at $2.50 per share in September 2003. In October 2003, the
Company canceled  100,000 shares of common stock  previously  issued in exchange
for services at $2.50 per share.

In November  2003, the Company issued 100,000 shares of common stock in exchange
for consulting  services.  The Company valued the shares issued at approximately
$3.00 per share,  which represents the fair value of the services received which
did not differ materially from the value of the stock issued.

In November 2003, the Company sold 100,000 shares of common stock subscribed for
cash at $2.50 per share pursuant to private placement.

In December 2003,  the Company sold 6,400 shares of common stock  subscribed for
cash at $2.50 per share pursuant to private placement.

                                      23


<PAGE>


                           APPLIED DNA SCIENCES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (Unaudited)

NOTE B - CAPITAL STOCK (continued)

In  December  2003,  the  Company  issued  2,125,500  shares of common  stock in
exchange for  consulting  services.  . The Company  valued the shares  issued at
approximately  $2.59 per share,  which represents the fair value of the services
received which did not differ materially from the value of the stock issued.

In December 2003, the Company  received  $104,000 in exchange for a common stock
subscription at $2.50 per share pursuant to private placement.

In January 2004, the Company issued 41,600 shares of common stock at $2.50 share
pursuant to a subscription made on December 2003.

In January 2004,  the Company  issued 13,040 shares of common stock at $2.95 per
share in exchange for consulting services valued at $38,468.

In January 2004,  the Company issued 123,000 shares of common stock at $2.60 per
share in exchange for consulting services valued at $319,800.

In January  2004,  the Company  issued 1,000 shares of common stock at $3.05 per
share in exchange for consulting services valued at $3,050.

In February  2004,  the Company issued 6,283 shares of common stock at $3.07 per
share in exchange for employee services valued at $19,288.

In March 2004,  the Company  issued  44,740  shares of common stock at $3.04 per
share in exchange for consulting services valued at $136,010.

In March 2004, the Company  issued 55,000 of common stock for options  exercised
at $1.00 per share.

In March 2004,  the Company  issued  5,443  shares of common  stock at $3.00 per
share in exchange for employee services valued at $16,344.

In March 2004,  the Company  issued  5,769  shares of common  stock at $3.15 per
share in exchange for employee services valued at $18,177.

In March 2004, the Company  converted 5,000 preferred shares into 125,000 shares
of common stock at $3.00 per share in exchange for employee  services  valued at
$375,000.

In March 2004,  the Company  issued  8,806  shares of common  stock at $3.03 per
share in exchange for employee services valued at $26,639.

In April 2004,  the Company  issued  22,500  shares of common stock at $0.10 for
subscription of warrants to be exercised.

In April 2004,  the Company  issued  9,860  shares of common  stock at $2.58 per
share in exchange for employee services valued at $25,441.

                                      24


<PAGE>


                           APPLIED DNA SCIENCES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (Unaudited)

NOTE B - CAPITAL STOCK (continued)

In April 2004,  the Company  issued  11,712  shares of common stock at $2.35 per
share in exchange for consulting services valued at $27,523.

In April 2004,  the Company  issued  367,500 shares of common stock at $1.50 per
share in exchange for consulting services valued at $551,250.

In April 2004,  the Company  retired  50,000  shares of common stock  previously
issued for consulting services at $0.065 per share or $3,250.

In May 2004, the Company converted 4,000 preferred shares into 100,000 shares of
common stock at $1.01 per share in exchange for  consulting  services  valued at
$101,250.

In May 2004, the Company issued 10,000 shares of common stock at $0.10 per share
in a stock subscription for $1,000.

In May 2004,  the Company  issued  137,000  shares of common  stock at $0.86 per
share in exchange for consulting services valued at $119,233.

In May 2004, the Company issued 26,380 shares of common stock at $1.15 per share
in exchange for consulting services valued at $30,337.

In June 2004, the Company retired 5,000 shares of common stock previously issued
for consulting services at $0.065 per share or $325.

In June 2004,  the Company  issued  270,500  shares of common stock at $0.67 per
share in exchange for consulting services valued at $180,560.

In June 2004, the Company issued 8,000 shares of common stock at $0.89 per share
in exchange for consulting services valued at $7,120.

In June 2004,  the Company  issued  50,000  shares of common stock at $0.645 per
share in exchange for consulting services valued at $32,250.

In June 2004, the Company sold 250,000 shares of common stock at $1.00 per share
for total proceeds of $250,000 pursuant to private placement.

In July 2004,  the Company  issued  100,000  shares of common stock at $0.54 per
share in exchange for consulting services valued at $54,000.

In July 2004, the Company issued 5,000 shares of common stock at $0.72 per share
in exchange for consulting services valued at $3,600.

In July 2004,  the Company  issued  100,000  shares of common stock at $0.47 per
share in exchange for consulting services valued at $47,250.

                                      25


<PAGE>


                           APPLIED DNA SCIENCES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (Unaudited)

NOTE B - CAPITAL STOCK (continued)

In August 2004, the Company  converted 2,000 preferred shares into 50,000 shares
of common stock at $0.39 in exchange for consulting services valued at $19,500.

In August 2004,  the Company  issued  100,000 shares of common stock at $0.39 in
exchange for consulting services valued at $39,000.

In August 2004,  the Company  issued  100,000 shares of common stock at $0.50 in
exchange for consulting services valued at $50,250.

In August 2004,  the Company  issued  200,000 shares of common stock at $0.56 in
exchange for consulting services valued at $112,500.

In August 2004,  the Company  issued  92,500  shares of common stock at $0.41 in
exchange for consulting services valued at $37,645

In September 2004, the Company issued  1,000,000 shares of common stock at $0.52
in exchange for consulting services valued at $517,500.

In September  2004, the Company issued 45,000 shares of common stock at $0.50 in
exchange for consulting services valued at $22,288.

In September 2004, the Company  converted  4,000  preferred  shares into 100,000
shares of common stock at $0.54 in exchange for  consulting  services  valued at
$54,000.

In September  2004, the Company issued 60,000  convertible  preferred  shares at
$25.00, in exchange for consulting services valued at $1,500,000.

In October 2004,  the Company  issued 200,000 shares of common stock in exchange
for consulting  services.  The Company valued the shares issued at approximately
$0.68 per share for a total of $136,000,  which represents the fair value of the
services  received which did not differ  materially  from the value of the stock
issued.

In October  2004,  shareholders  returned  1,069,600  shares to treasury  issued
earlier in exchange for services valued at $642,098.

In October  2004,  the Company  issued 82,500 shares of common stock in exchange
for consulting  services.  The Company valued the shares issued at approximately
$0.60 per share for a total of $49,500,  which  represents the fair value of the
services  received which did not differ  materially  from the value of the stock
issued.

In October 2004, the Company sold 500,000 shares of common stock  subscribed for
cash at $0.60 per share pursuant to private placement.

In October 2004,  the Company  issued 532,500 shares of common stock to existing
noteholders in exchange for advisory  services.  . The Company valued the shares
issued at approximately $0.50 per share and charged $266,250 to operations.

                                      26


<PAGE>


                           APPLIED DNA SCIENCES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (Unaudited)

NOTE B - CAPITAL STOCK (continued)

In October 2004, the Company sold 500,000 shares of common stock  subscribed for
cash at $0.50 per share pursuant to private placement.

In October 2004,  the Company sold 1,000,000  shares of common stock  subscribed
for cash at $0.45 per share pursuant to private placement.

In October 2004,  the Company  issued 315,000 shares of common stock in exchange
for consulting  services.  The Company valued the shares issued at approximately
$0.45 per share for a total of $141,750,  which represents the fair value of the
services  received which did not differ  materially  from the value of the stock
issued.

In November  2004, the Company issued 100,000 shares of common stock in exchange
for consulting  services.  The Company valued the shares issued at approximately
$0.47 per share for a total of $47,000,  which  represents the fair value of the
services  received which did not differ  materially  from the value of the stock
issued.

In November  2004, the Company issued 300,000 shares of common stock in exchange
for consulting  services.  The Company valued the shares issued at approximately
$0.80 per share for a total of $240,000,  which represents the fair value of the
services  received which did not differ  materially  from the value of the stock
issued.

In November  2004, the Company issued 115,000 shares of common stock in exchange
for consulting  services.  The Company valued the shares issued at approximately
$1.44 per share for a total of $165,600,  which represents the fair value of the
services  received which did not differ  materially  from the value of the stock
issued.

In November  2004,  the Company  issued 5,000 shares of common stock in exchange
for employee  services.  The Company  valued the shares issued at  approximately
$1.44 per share for a total of $7,200,  which  represents  the fair value of the
services  received which did not differ  materially  from the value of the stock
issued.

In November  2004,  the Company issued 60,000 shares of common stock in exchange
for employee  services.  The Company  valued the shares issued at  approximately
$0.60 per share for a total of $36,000,  which  represents the fair value of the
services  received which did not differ  materially  from the value of the stock
issued.

In December 2004,  the Company  issued net 5,500,000  shares of common stock for
default  as per terms of notes  payable  for  $88,500.  Out of total,  3,500,000
shares were  retained in escrow on behalf of another  party for future  deferred
compensation.

In January 2005, the Company  received $2,500 in exchange for previously  issued
warrants  to  purchase  the  Company's  common  stock at $0.10 per  share.  This
issuance is considered  exempt under  Regulation D of the Securities Act of 1933
and Rule 506 promulgated thereunder.

In January 2005, the Company retired  $537,500 of convertible  notes payable for
1,628,789  shares of common stock.  The Notes are convertible into shares of our
common stock at a price of $0.33 per share (see Note D).

In January 2005, the Company  received $1,750 in exchange for previously  issued
warrants  to  purchase  the  Company's  common  stock at $0.10 per  share.  This
issuance is considered  exempt under  Regulation D of the Securities Act of 1933
and Rule 506 promulgated thereunder.

In January 2005, the Company retired  $791,673 of convertible  notes payable for
2,399,012  shares of common stock.  The Notes are convertible into shares of our
common stock at a price of $0.33 per share (see Note D).

                                      27


<PAGE>


                           APPLIED DNA SCIENCES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (Unaudited)

NOTE B - CAPITAL STOCK (continued)

In January 2005,  the Company  issued 315,636 shares of common stock in exchange
for consulting  services.  The Company valued the shares issued at approximately
$1.30 per share for a total of $ 410,327, which represents the fair value of the
services  received which did not differ  materially  from the value of the stock
issued.

In  February  2005,  the  Company  issued  5,796,785  shares of common  stock in
exchange  for  consulting  services.  The  Company  valued the shares  issued at
approximately  $1.44 per share for a total of $8,317,207,  which  represents the
fair value of the services  received  which did not differ  materially  from the
value of the stock issued.

In February 2005, the Company issued 2,930,000 shares of common stock subscribed
for cash at $0.50 per share  pursuant to the exercise  terms of a note  payable.
This issuance is considered  exempt under  Regulation D of the Securities Act of
1933 and Rule 506 promulgated thereunder (See note D).

In February 2005, the Company retired  $25,000 of convertible  notes payable for
75,757  shares of common  stock.  The Notes are  convertible  into shares of our
common stock at a price of $0.33 per share (see Note D).

In February 2005, the Company received $2,000 in exchange for previously  issued
warrants  to  purchase  the  Company's  common  stock at $0.10 per  share.  This
issuance is considered  exempt under  Regulation D of the Securities Act of 1933
and Rule 506 promulgated thereunder.

In February 2005, the Company retired $200,000 of convertible  notes payable for
606,060  shares of common stock.  The Notes are  convertible  into shares of our
common stock at a price of $0.33 per share (see Note D).

In February 2005, the Company received $4,500 in exchange for previously  issued
warrants  to  purchase  the  Company's  common  stock at $0.10 per  share.  This
issuance is considered  exempt under  Regulation D of the Securities Act of 1933
and Rule 506 promulgated thereunder.

In February 2005,  the Company  exchanged a related party note payable valued at
$1,965,000 with 1,500,000 shares using a price of $1.31 per share. (See note C).
The  Company  valued  the  shares at $1.31 per share for a total of  $1,965,000,
which represents the fair value of the common stock on the date of the exchange.
The difference  between the fair value of the common stock of $1,965,000 and the
face amount of the debt $ 600,000,  or $1,365,000 has been charged to operations
as current period interest expense.

In February 2005, the Company retired  $91,883 of convertible  notes payable for
278,433  shares of common stock.  The Notes are  convertible  into shares of our
common stock at a price of $0.33 per share (see Note D).

In February  2005,  the Company issued 17,236 shares of common stock in exchange
for consulting  services.  The Company valued the shares issued at approximately
$1.17 per share for a total of $ 20,166,  which represents the fair value of the
services  received which did not differ  materially  from the value of the stock
issued.

In February 2005, the Company issued 300,000 shares of common stock at $0.50 per
share  pursuant  to the  exercise  terms of a note  payable.  This  issuance  is
considered  exempt under Regulation D of the Securities Act of 1933 and Rule 506
promulgated thereunder. (See note D)

In February  2005, the Company issued 716,500 shares of common stock in exchange
for consulting  services.  The Company valued the shares issued at approximately
$0.95 per share for a total of $ 680,675, which represents the fair value of the
services  received which did not differ  materially  from the value of the stock
issued.
                                      28


<PAGE>


                           APPLIED DNA SCIENCES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (Unaudited)

NOTE B - CAPITAL STOCK (continued)

In February  2005,  the Company issued 10,500 shares of common stock in exchange
for consulting  services.  The Company valued the shares issued at approximately
$0.95 per share for a total of $9,975  which  represents  the fair  value of the
services  received which did not differ  materially  from the value of the stock
issued.

In March 2005, the Company issued 13,202,000 shares of common stock at $0.50 per
share  pursuant  to the  exercise  terms of a note  payable.  This  issuance  is
considered  exempt under Regulation D of the Securities Act of 1933 and Rule 506
promulgated thereunder. (See note D)

In March 2005, the Company issued 185,000 shares of common stock in exchange for
consulting services. The Company valued the shares issued at approximately $1.19
per share  for a total of $  220,150,  which  represents  the fair  value of the
services  received which did not differ  materially  from the value of the stock
issued.

In March 2005, the Company  received  $60,000 in exchange for previously  issued
options to purchase the Company's common stock at $0.60 per share.

In March 2005, the Company issued  1,675,272  shares of common stock in exchange
for consulting  services.  The Company valued the shares issued at approximately
$0.98 per share for a total of $ 1,641,767,  which  represents the fair value of
the  services  received  which did not differ  materially  from the value of the
stock issued.

In March 2005,  the Company issued 24,333 shares of common stock in exchange for
consulting services. The Company valued the shares issued at approximately $0.92
per  share  for a total of $  22,386,  which  represents  the fair  value of the
services  received which did not differ  materially  from the value of the stock
issued.

In March 2005,  the Company issued 15,000 shares of common stock in exchange for
consulting services. The Company valued the shares issued at approximately $0.99
per  share  for a total of $  14,850,  which  represents  the fair  value of the
services  received which did not differ  materially  from the value of the stock
issued.

In March 2005, the Company issued  1,240,000 shares of common stock at $0.50 per
share  pursuant  to the  exercise  terms of a note  payable.  This  issuance  is
considered  exempt under Regulation D of the Securities Act of 1933 and Rule 506
promulgated thereunder. (See note D)

In March 2005, the Company  canceled 500,000 shares of common stock related to a
debt exchange for shares valued at $0.50 per share.

In March 2005,  the Company issued 10,000 shares of common stock in exchange for
consulting services. The Company valued the shares issued at approximately $0.89
per  share  for a total  of $ 8,900,  which  represents  the  fair  value of the
services  received which did not differ  materially  from the value of the stock
issued.


In accordance with EITF 96-18 the  measurement  date to determine fair value was
the date at which a commitment for  performance by the counter party to earn the
equity  instrument  was  reached.  The  Company  valued  the  shares  issued for
consulting  services at the rate which represents the fair value of the services
received which did not differ materially from the value of the stock issued.

                                      29


<PAGE>


                           APPLIED DNA SCIENCES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (Unaudited)

NOTE C - RELATED PARTY TRANSACTIONS

At March 31, 2005, notes payable are as follows:

<TABLE>
<CAPTION>
                                                                                      March 31, 200
                                                                                       (Unaudited)
                                                                                     ================
<S>                                                                                  <C>
Note payable,  unsecured,  related party,  payable from August 1, 2005, right to
convert to restricted stock in lieu of cash, rate of interest 4%, 160,000 shares
prior to October 31, 2005 or 180,000 shares after that date.
                                                                                             425,000
                                                                                     ===============
                                                                                             425,000

Less; current portion                                                                        425,000
Note Payable - long-term                                                             $             0
                                                                                     ===============
</TABLE>


The Company issued 1,500,000 shares of its restricted  common stock to a Company
officer and Director in exchange for $600,000 of previously  incurred  debt. The
debt was in the form of a promissory note.

The  Company  valued  the  shares at $1.31 per share for a total of  $1,965,000,
which represents the fair value of the common stock on the date of the exchange.
The difference  between the fair value of the common stock of $1,965,000 and the
face value of the debt of $600,000  or  $1,365,000  has been  charged to current
period interest expense.

The Company's officers have advanced funds to the Company for travel related and
working capital purposes.  No formal repayment terms or arrangements  exist. The
amount of the advances due at March 31, 2005 was $213,474.

NOTE D - PRIVATE PLACEMENT OF CONVERTIBLE NOTES

$ 1,675,000 Convertible Notes

Convertible notes payable ("Bridge Unit Offering") in quarterly  installments of
interest only at 10% per annum,  secured by all assets of the Company and due on
the  earlier  of the 9 month  anniversary  date of the  initial  closing  of the
offering or the  completion of any equity  financing of $3,000,000 or more;  the
Company,  at its sole  discretion  may  prepay  principal  at any  time  without
penalty.  The Bridge Unit Offering Notes unpaid principal and accrued and unpaid
interest  were  converted to an aggregate of 4,988,051  shares of the  Company's
common  shares at a price  equal to  approximately  $. 33 per share  during  the
quarter ended March 31, 2005 (see Note B).

$ 1,465,000 Convertible Notes

Beginning in December, 2004, the Company sold a 10% convertible debenture in the
aggregate  amount of $ 1,465,000 in a private  placement and exempt offerings to
sophisticated investors, net of costs and fees ("Convertible Notes").

The  Convertible  Note's terms called for the debt to  automatically  convert at
$.50 per share upon the filing a of a registration statement with the Securities
and Exchange Commission.

                                      30


<PAGE>


                           APPLIED DNA SCIENCES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (Unaudited)

NOTE D - PRIVATE PLACEMENT OF CONVERTIBLE NOTES (continued)

The  Company  filed the  registration  statement  on  February  15, 2005 and the
Convertible  Notes were  converted to an  aggregate  of 2,930,000  shares of the
Company's common stock during the quarter ended March 31, 2005 (see Note B).

As  additional  consideration  for the purchase of the  Convertible  Notes,  the
Company  granted to the holders  warrants  entitling  it to  purchase  2,930,000
common  shares of the  Company's  common  stock at the price of $ .75 per share.
These  warrants  were  issued  in  February,  2005 and lapse if  unexercised  by
February,  2010. A registration  rights  agreement was executed in December 2004
and  consummated in February,  2005 requiring the Company to register the shares
of its common  stock  underlying  the  Convertible  Notes and  warrants so as to
permit the public resale thereof. The registration rights agreement provided for
the payment of  liquidated  damages of 3.5% of the  aggregate  Convertible  Note
financing per month if the stipulated  registration  deadlines were not met. The
liquidated  damages,  which  approximate $ 51,275 per month, may be paid, at the
Company's option, in cash or unregistered shares of the Company's common stock.

In  accordance  with  Emerging  Issues  Task Force Issue  98-5,  Accounting  for
Convertible  Securities  with a Beneficial  Conversion  Features or Contingently
Adjustable  Conversion Ratios ("EITF 98-5"),  the Company recognized an imbedded
beneficial  conversion  feature  present in the Convertible  Notes.  The Company
allocated a portion of the proceeds equal to the intrinsic value of that feature
to additional paid-in capital.  The Company recognized and measured an aggregate
of  $1,465,000 of the  proceeds,  which is equal to the  intrinsic  value of the
imbedded  beneficial  conversion  feature,  to additional  paid-in capital and a
discount  against  the  Convertible  Notes.  Since the  Convertible  Notes  were
converted to the  Company's  common stock in December  2004,  the debt  discount
attributed to the  beneficial  conversion  feature of $1,465,000  was charged to
interest expense in its entirety during the six months ended March 31, 2005.


In conjunction  with raising capital through the issuance of Convertible  Notes,
the Company has issued a warrant in February,  2005 that has registration rights
for the  underlying  shares.  As the contract must be settled by the delivery of
registered shares and the delivery of the registered shares is not controlled by
the  Company,  pursuant  to EITF 00-19,  "Accounting  for  Derivative  Financial
Instruments  Indexed to, and Potentially Settled in, a Company's Own Stock", the
net value of the  warrants  at the date of  issuance  was  recorded as a warrant
liability on the balance sheet $23,148,214 and charged to operations as interest
expense.  Upon the  registration  statement being declared  effective,  the fair
value of the warrant on that date will be  reclassified  to equity.  The Company
initially  valued the warrants  using the  Black-Scholes  pricing model with the
following  assumptions:  (1) dividend  yield of 0%; (2) expected  volatility  of
152.59%, (3) risk-free interest rate of 3.67%, and (4) expected life of 5 years.


In connection  with the  placement of the  $1,465,000  of  convertible  notes as
described above, the Company agreed to registered shares of the Company's common
stock underlying  certain  previously issued and outstanding  warrants that were
not subject to a  registration  rights  agreement at the time the warrants  were
issued. These warrants consist of following:



   o     105,464 warrants entitling the holder to purchase 105,464 shares of the
         Company's common stock at the price of $ .10 per share.  These warrants
         were issued in July, 2004 and lapse if unexercised by July, 2009.


   o     1,602,500 warrants entitling the holder to purchase 1,602,500 shares of
         the  Company's  common  stock at the  price of $ .60 per  share.  These
         warrants  were  issued in  October,  2003 and lapse if  unexercised  by
         October, 2008.

                                      31


<PAGE>


                           APPLIED DNA SCIENCES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (Unaudited)

NOTE D - PRIVATE PLACEMENT OF CONVERTIBLE NOTES (continued)

As a result,  the Company is required to  classify  the  warrants as  derivative
liabilities  and mark then to market at each  reporting  date. The fair value of
the warrants that were subject to registration  reclassified as liabilities from
additional  paid in  capital  at March 31,  2005  totaled  $3,108,851.  Upon the
registration statement being declared effective,  the fair value of the warrants
on that date will be reclassified to equity.  The Company  initially  valued the
warrants using the Black-Scholes  pricing model with the following  assumptions:
(1) dividend  yield of 0%; (2) expected  volatility  of 148.66%,  (3)  risk-free
interest rate of 3.21%, and (4) expected life of 3 years.


$ 7,371,000 Convertible Notes

In January and February,  2005, the Company sold an 10% convertible debenture in
the aggregate  amount of $7,371,000 in a private  placement and exempt offerings
to sophisticated investors, net of costs and fees ("Convertible Notes").

The  Convertible  Note's terms called for the debt to  automatically  convert at
$.50 per share upon the filing a of a registration statement with the Securities
and Exchange Commission.

The  Company  filed the  registration  statement  on  February  15, 2005 and the
Convertible  Notes were  converted to an aggregate of  14,742,000  shares of the
Company's common stock (see Note B).

As  additional  consideration  for the purchase of the  Convertible  Notes,  the
Company  granted to the holders  warrants  entitling  it to purchase  14,742,000
common  shares of the  Company's  common  stock at the price of $ .75 per share.
These warrants lapse if  unexercised  by February,  2010. A registration  rights
agreement was executed and consummated in January, 2005 requiring the Company to
register the shares of its common stock  underlying  the  Convertible  Notes and
warrants so as to permit the public  resale  thereof.  The  registration  rights
agreement  provided  for  the  payment  of  liquidated  damages  of  3.5% of the
aggregate  Convertible  Note financing per month if the stipulated  registration
deadlines were not met. The liquidated damages,  which approximate $ 257,985 per
month, may be paid, at the Company's option,  in cash or unregistered  shares of
the Company's common stock.

In  accordance  with  Emerging  Issues  Task Force Issue  98-5,  Accounting  for
Convertible  Securities  with a Beneficial  Conversion  Features or Contingently
Adjustable  Conversion Ratios ("EITF 98-5"),  the Company recognized an imbedded
beneficial  conversion  feature  present in the Convertible  Notes.  The Company
allocated a portion of the proceeds equal to the intrinsic value of that feature
to additional paid-in capital.  The Company recognized and measured an aggregate
of $ 7,731,000 of the  proceeds,  which is equal to the  intrinsic  value of the
imbedded  beneficial  conversion  feature,  to additional  paid-in capital and a
discount  against  the  Convertible  Notes.  Since the  Convertible  Notes  were
converted  to the  Company's  common  stock in February,  2005,  2005,  the debt
discount  attributed  to the  beneficial  conversion  feature of $ 7,371,000 was
charged to interest  expense in its  entirety  during the six months ended March
31, 2005.


In conjunction  with raising capital through the issuance of Convertible  Notes,
the Company has issued a warrant that has registration rights for the underlying
shares. As the contract must be settled by the delivery of registered shares and
the delivery of the registered shares is not controlled by the Company, pursuant
to EITF 00-19,  "Accounting for Derivative Financial Instruments Indexed to, and
Potentially Settled in, a Company's Own Stock", the net value of the warrants at
the date of issuance  was recorded as a warrant  liability on the balance  sheet
$23,148,214 and charged to operations as interest expense. Upon the registration
statement being declared  effective,  the fair value of the warrant on that date
will be reclassified to equity.  The Company initially valued the warrants using
the  Black-Scholes  pricing model with the following  assumptions:  (1) dividend
yield of 0%; (2) expected volatility of 152.59%,  (3) risk-free interest rate of
3.67%, and (4) expected life of 5 years.

                                      32


<PAGE>


                           APPLIED DNA SCIENCES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (Unaudited)

NOTE D - PRIVATE PLACEMENT OF CONVERTIBLE NOTES (continued)

Revaluation of Warrant Liability

In accordance with SFAS 133  "Accounting for Derivative  Instruments and Hedging
Activities",  the Company  revalued the warrants  issued subject to registration
rights as of March  31,  2005  using the  Black-Scholes  option  pricing  model.
Assumptions  regarding the life, the expected dividend yield and volatility were
left unchanged but the Company did apply a risk free interest rate from 3.96% to
4.18%, a volatility of 151.61% and a deemed fair value of common stock of $0.89,
which was the closing price of the Company's common stock on March 31, 2005. The
difference of $10,775,753 between the fair value of the warrants as of March 31,
2005 and the  previous  valuation  as of February , 2005 has been  recorded as a
gain on  revaluation  of warrant  liability,  and  included in the  accompanying
consolidated financial statements.

NOTE E - STOCK OPTIONS AND WARRANTS

Warrants

The  following  table  summarizes  the changes in warrants  outstanding  and the
related  prices  for  the  shares  of  the  Company's  common  stock  issued  to
non-employees  of the  Company.  These  warrants  were  granted  in lieu of cash
compensation for services performed or financing expenses in connection with the
sale of the Company's common stock.

<TABLE>
<CAPTION>
                                             Warrants Outstanding                                             Exercisable
                                                   Remaining              Weighted           Weighted          Weighted
                             Number               Contractual              Average           Average            Average
         Exercise                                                         Exercise                             Exercise
         Prices            Outstanding           Life (Years)              Price           Exercisable          Price
     ================    ===============    =======================    ===============    ==============   =================
     <S>                 <C>                 <C>                        <C>               <C>               <C>
          $0.10                 105,464              4.29                  $0.10                105,464         $0.10
          $0.20                   5,000              3.60                  $0.20                  5,000         $0.20
          $0.50                  50,000              4.52                  $0.50                 50,000         $0.50
          $0.60               9,132,000              4.04                  $0.60              9,132,000         $0.60
          $0.70                 750,000              2.34                  $0.70                750,000         $0.70
          $0.75              17,727,000              4.53                  $0.75             17,727,000         $0.75
          $1.00                 100,000              0.54                  $1.00                100,000         $1.00
                             27,869,464                                                      27,869,464
                         ===============                                                  ==============
</TABLE>

                                      33


<PAGE>


                           APPLIED DNA SCIENCES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (Unaudited)

NOTE E - STOCK OPTIONS AND WARRANTS (continued)

Transactions involving warrants are summarized as follows:

<TABLE>
<CAPTION>

                                         Number of Shares      Weighted Average
                                                               Price Per Share
 <S>                                 <C>                     <C>
 Outstanding at September 30, 2004            4,870,253      $              .66
 Granted                                     23,873,000                    0.63
 Exercised                                    (142,500)                    0.60
 Canceled or expired                          (731,289)                    0.29
 Outstanding at March 31, 2005               27,869,464      $             0.72
                                    ====================     ===================
</TABLE>

During the six months  ended  March 31,  2005,  the  Company  granted  6,118,500
warrants to non-employees in exchange for services and financing  expenses.  The
estimated fair value of the  compensatory  warrants  granted to non-employees in
exchange  for  services  and  financing   expenses  was  determined   using  the
Black-Scholes pricing model and the following assumptions: contractual term of 2
to 5 years, a risk free interest rate from 2.47 to 3.53%, a dividend yield of 0%
and  volatility  from 65.7% to  148.7%.  The  amount of the  expense  charged to
operations  for  compensatory  warrants  granted in exchange  for  services  and
financing expenses was $ 3,241,069 for the six months ended March 31, 2005.

Options

The  following  table  summarizes  the  changes in options  outstanding  and the
related  prices  for  the  shares  of  the  Company's  common  stock  issued  to
shareholders at March 31, 2005.


<TABLE>
<CAPTION>
                           Options Outstanding                              Options Exercisable
                    ---------------------------------                   -----------------------------
                                          Weighed
                                          Average         Weighed                          Weighed
                                         Remaining        Average                          Average
      Exercise        Number           Contractual       Exercise          Number          Exercise
       Prices        Outstanding       Life (Years)        Price         Exercisable        Price
    -------------   ---------------    --------------    -----------    --------------    -----------
      <S>           <C>                <C>               <C>             <C>             <C>
          $ 0.60           300,000                 2         $ 0.60           300,000         $ 0.60
                    ---------------    --------------    -----------    --------------    -----------
                           300,000                 2         $ 0.60           300,000         $ 0.60
                    ===============    ==============                   ==============    ===========
</TABLE>

Transactions involving the Company's options issuance are summarized as follows:

<TABLE>
<CAPTION>
                                                  Weighted
                                                  Average
                                   Number        Price Per
                                  of Shares        Share
                                  ----------   ------------
<S>                             <C>            <C>
Outstanding at October 1, 2004          -                -
Granted                           300,000             0.60
Exercised                               -                -
Canceled or expired                     -                -
                                ----------     ------------
Outstanding at June 30,2005       300,000           $ 0.60
                                ==========     ============
</TABLE>

                                      34


<PAGE>


                           APPLIED DNA SCIENCES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (Unaudited)

NOTE E - STOCK OPTIONS AND WARRANTS (continued)

During the six months ended March 31, 2005, the Company  granted an aggregate of
300,000 stock options to employees that vested immediately.  The exercise prices
of the stock options  granted were below the fair value of the Company's  common
stock at the grant  date.  Compensation  expense  of  $180,000  was  charged  to
operations during the period ended March 31, 2005.

NOTE F- COMMITMENTS AND CONTINGENCIES

Registration of Securities

In connection  with is private  placement of  convertible  debt, the Company was
obligated to file a  registration  statement  with the  Securities  and Exchange
Commission registering the underlying the Company's shares of common stock on or
before  February 15, 2005.  In  addition,  the Company is subject to  liquidated
damages, payable at the Company's option in cash or common stock of the Company,
in an amount equal to Three and a Half Percent  (3.5%) or an estimated  $257,985
per month or part thereof that the registration is not declared effective within
120 days of February 15, 2005

Consulting Agreements

On August 6, 2004 the Company  retained  Giuliani  Partners,  on a non-exclusive
basis,  to  provide  advice  and  assistance  to the  Company  regarding  issues
associated  with Applied DNA's  proprietary DNA embedded  security.  On April 8,
2005 the Company terminated the agreement with Giuliani  Partners,  whereby both
parties agreed to discharge,  waive and release one another from all obligations
under the consulting  agreement.  Total  compensation  paid to Giuliani Partners
through March 31, 2005 was $1,250,000.

On March 24, 2005,  the Company  amended its existing  Cooperative  Research and
Development  Agreement  ("CRADA") with Battelle  Energy  Alliance,  LLC, and the
Department  of  Energy's  National   Laboratory  in  Idaho  Falls,   Idaho  (the
Amendment").  The Amendment adds additional joint research  projects,  including
development of marker applications for textiles,  inks, gasoline,  and explosive
materials.  Per the Amendment and at the Company's  discretion,  the Company can
spend up to  $1,701,216 to further  develop and refine  selected DNA and related
applications.

Litigation

Stern & Co. v. Applied DNA Sciences, Inc., Case No.: 05 CV 00202

Plaintiff  Stern & Co.  commenced  this action  against us in the United  States
District  Court for the  Southern  District of New York on or about  January 10,
2005. In this action,  Stern & Co.  alleges that it entered into a contract with
us to perform media and investor relations for a monthly fee of $5,000 and stock
options.  Stern & Co. claims that we failed to make certain payments pursuant to
the contract and seeks damages in the amount of $96,042.00. Although our time to
answer  the  complaint  has not  expired,  we  dispute  the  allegations  of the
complaint  in its  entirety  and intend on  vigorously  defending  this  matter.
Management believes the ultimate outcome of this matter will not have a material
adverse effect on the Company's  consolidated  financial  position or results of
operations.

                                      35


<PAGE>


                           APPLIED DNA SCIENCES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (Unaudited)

NOTE F- COMMITMENTS AND CONTINGENCIES (continued)

Oceanic Consulting, S.A. v. Applied DNA Sciences, Inc., Index No.: 603974/04

Plaintiff  Oceanic  Consulting,  S.A.  commenced  this action  against us in the
Supreme Court of the State of New York, County of New York. Oceanic  Consulting,
S.A.  asserts a cause of action for breach of contract based upon the allegation
that we failed to make payments  pursuant to a  consulting  agreement.   Oceanic
Consulting,   S.A.   also   asserts   a  causes  of  action   in which it  seeks
reimbursement    of  its   expenses  and  attorneys'  fees.  Oceanic Consulting,
S.A.  seeks  damages  in the  amount of  $137,500.00.  Oceanic  Consulting, S.A.
moved   for   a  default  judgment,  which  we  have  opposed based upon Oceanic
Consulting,  S.A.'s failure to  properly  serve  the  complaint  as well as  our
meritorious defenses.  We intend on vigorously defending this matter. Management
believes  the  ultimate outcome of this matter will not have a material  adverse
effect    on   the   Company's  consolidated  financial  position or  results of
operations.

NOTE G - RESTATEMENT OF QUARTERLY FINANCIAL STATEMENTS

The accompanying  financial statements for the three months ended March 31, 2005
have been  restated for the purpose of correcting  errors in accounting  for and
disclosing the issuance by the Company of common stock, warrants and options for
services and in exchange for  previously  incurred debt. In addition the Company
is correcting  certain errors in accounting for the exchange of its common stock
for previously incurred debt with a Company Director.

Accordingly,  the Company has restated their financial  statements as of and for
the six months ended March 31, 2005 by disclosing  the effect of these errors in
this amended Form 10-QSB.

The  result  of  the  March  31,  2005  Condensed   Consolidated  Balance  Sheet
restatement is to:
   -   Reflect the   reclassification  of  warrants  from  equity  to  liability
       resulting in a $15,481,312 increase to Warrant Liability compared to  the
       previous filing.
   -   Reduced   outstanding  shares  by  2,000,000   following  reconciliations
       resulting   in   reduced  common  stock  of $2,000  and subscriptions  of
       $750,000.
   -   Reduced   Additional  Paid  in  Capital  by $948,000  as a result of  the
       $750,000 subscription adjustment and the $100,000 additional compensation
       recorded in the restatement
   -   Reduced   Additional   Paid  in  Capital  by   $3,108,851   as  a  result
       of reclassification   of   warrant   liability
   -   Increased  Accumulated  Deficit  by  $12,272,461 as a result of  the  net
       $12,272,461   warrant   liability   reclassification    and  the $100,000
       compensation revision
   -   Net Deficiency in Shareholder Equity decreased by $15,481,312 as a result
       of the  combination of factors described above

The changes in reported amounts are summarized in the following  reconciliations
of the Company's  restatement of the Condensed  Consolidated Balance Sheet as of
March 31, 2005.

                                      36


<PAGE>


                           APPLIED DNA SCIENCES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (Unaudited)

NOTE G - RESTATEMENT OF QUARTERLY FINANCIAL STATEMENTS (continued)

<TABLE>
<CAPTION>
                                                                 For the Period Ended March 31, 2005
                                                                  (As Restated)       (As Reported)
                                                                   -------------      --------------
<S>                                                         <C>                       <C>
   ASSETS                                                         $  3,071,092        $   3,071,092

   LIABILITIES AND DEFICIENCY IN STOCKHOLDERS' EQUITY

    Total Current Liabilities                                        2,292,183            2,292,183

   Warrant Liability                                                15,481,312                    -

    Deficiency in Stockholders' Equity:
    Preferred Stock                                                          6                    6
    Common Stock                                                        64,755               66,755
    Common Stock Subscription                                         (130,000)            (880,000)
    Additional Paid-In-Capital                                      52,342,895           53,453,375
    Deficit Accumulated During Development Stage                   (66,980,059)         (51,861,227)
    Total Deficiency in Stockholders' Equity                       (14,702,403)             778,909
                                                                  ------------        -------------
    Total Liabilities and  Deficiency in Stockholders'
   Equity                                                         $  3,071,092        $   3,071,092

</TABLE>


For both the six months ended as well as the period  September  16, 2002 through
March 31, 2005, the result of the March 31, 2005 Condensed  Consolidated  Income
Statement restatement is to: - Decrease Selling,  General and Administrative for
compensation  expense by $100,000. - Reflect gain on the revaluation of warrants
of $10,775,753 as a result of reclassifying warrants from
      equity to a liability.
- Correct  valuation of warrants issued to non-employees of $2,846,371 - Reflect
initial  valuation of warrants of $23,148,214 as a charge to interest  expense -
Net loss  increased by  $12,272,461  for the three months and six month ended as
well as the period
      September 16, 2002 through  March 31, 2005 as a result of the  combination
of factors described above

The changes in reported amounts are summarized in the following  reconciliations
of the Company's  restatement of the Condensed  Consolidated Income Statement as
of March 31, 2005.

                                      37


<PAGE>


                           APPLIED DNA SCIENCES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (Unaudited)

NOTE G - RESTATEMENT OF QUARTERLY FINANCIAL STATEMENTS (continued)



<TABLE>
<CAPTION>
                                                                                                       For the Period September 16,
                            For the Three Months Ended March   For the Six Months Ended March 31,        2002 (Date of Inception)
                                        31, 2005                                 2005                     Through March 31, 2005
                              (As Restated)   (As Reported)     (As Restated)     (As Reported)     (As Restated)      (As Reported)
<S>                         <C>               <C>              <C>                <C>               <C>                <C>
Operating Expenses:
Selling general and
administrative              $   17,205,512    $  9,041,288       $ 22,580,580     $  19,834,209     $  40,555,746      $ 43,402,117
Research and development                 -               -                  -                 -           238,535           238,535
Depreciation and
amortization                         7,306           7,306             12,027            12,027            15,188            15,188

Total Operating Expenses        17,212,818       9,048,594         22,592,607        19,846,236        43,655,840        40,909,469
Operating Loss                 (17,212,818)     (9,048,594)       (22,592,607)      (19,846,236)      (43,655,840)      (40,909,469)

Net gain/(loss) on
revaluation of warrant
liability                       10,775,753               -         10,775,753                 -        10,775,753                 -
Other income (expense)               3,100           3,100              3,415             3,415            29,800            29,800

Interest income
(expense)                      (30,783,777)     (7,635,563)       (32,351,586)       (9,203,372)      (34,129,772)      (10,981,558)

Net Income (Loss)           $  (37,217,742)    (16,681,057)      $(44,165,025)    $ (29,046,193)    $ (66,980,059)     $(51,861,227)
Gain (Loss) per common
share                       $        (0.71)          (0.31)      $      (1.11)    $       (0.72)    $       (2.68)     $      (1.92)
(basic and assuming
dilution) Weighted average
shares outstanding              53,002,728      53,044,883         40,061,781        40,082,628        25,069,138        27,017,824
</TABLE>


The result of the Condensed Consolidated Income Statement restatement is to:
   -  Increase  loss for the six  months  ended  March 31,  2005 by  $15,118,832
      within  operating  activities as a result of the net  $12,372,461  warrant
      liability  reclassification,  correcting  initial  warrant  valuations  of
      $2,846,371 and the $100,000 compensation revision
   -  Reflect the ($10,775,753)  warrant  revaluation gain and  the  $23,148,214
      warrant valuation or $12,372,461, net
   -  Within  the  summarized  Other Operating Activities  shown  below, reflect
      $849,460  in common  stock, subscription and Additional  Paid  in  Capital
      revisions.
   -  Net    cash   flow   from   operating  activities  decreased  by  $749,640
      primarily as a result of  $849,460 in equity revisions net of the $100,000
      in compensation adjustments.

                                      38


<PAGE>


   -  Net cash flow from financing  activities increased by $749,640 as a result
      of the  combination of factors described above. See preceding comment.



                           APPLIED DNA SCIENCES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (Unaudited)

NOTE G - RESTATEMENT OF QUARTERLY FINANCIAL STATEMENTS (continued)


The changes in reported amounts are summarized in the following  reconciliations
of the Company's  restatement  of the Condensed  Consolidated  Statement of Cash
Flows for the periods ended March 31, 2005.

Consistent with the original summary presentation, following is a reconciliation
of the Company's  restatement  of the Condensed  Consolidated  Statement of Cash
Flows for the periods ended March 31, 2005. See the full Condensed  Consolidated
Statement  of Cash Flows for the periods  ended  March 31,  2005 for  additional
details.

<TABLE>
<CAPTION>
                                                                              For the Period September 16, 2002
                                       For the Six Months Ended March 31,     (Date of Inception) Through March
                                                      2005                                 31, 2005
                                          (As Restated)       (As Reported)      (As Restated)      (As Reported)
<S>                                      <C>                 <C>                <C>                <C>
Cash Flows from operating
activities:

Net loss from operating activities       $ (44,165,025)      $ (29,046,193)     $ (66,980,059)     $ (51,861,227)
Summary of adjustments to
reconcile net loss to net cash
(used in) operating activities:

Warrant revaluation                        (10,775,753)                  -        (10,775,753)
Initial warrant valuation                   23,148,214                             23,148,214                  -
Other operating activities - see
Cash Flow statement for full
details                                     25,706,346          23,733,376         44,925,982         42,976,561
Net cash (used in) operating
activities                                  (6,086,218)         (5,312,817)        (9,681,616)        (8,884,666)

Cash flows from investing activities:
- see Cash Flow statement for full
details                                         (4,347)            (28,288)           (55,205)          (102,705)
Net cash (used in) investing
activities                                      (4,347)            (28,288)           (55,205)          (102,705)
</TABLE>

                                      39


<PAGE>


                           APPLIED DNA SCIENCES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (Unaudited)

NOTE G - RESTATEMENT OF QUARTERLY FINANCIAL STATEMENTS (continued)


<TABLE>
<CAPTION>
<S>                                      <C>                 <C>                <C>                <C>
Cash flows from financing activities:
- see Cash Flow statement for full
details                                      1,365,000                              1,365,000          9,961,838
Proceeds from loans                          9,063,750           8,314,300         12,711,838          2,750,000
Net cash provided by financing
activities:                                 10,428,750           8,314,300         14,076,838         12.711,838
Increase (decrease) in cash and
cash equivalents                             2,973,185           2,973,195          2,975,017          2,975,017
Cash and cash
equivalents-beginning of period                  1,832               1,832                  -                  -
Cash and cash equivalents-end of
period                                   $   2,975,017       $   2,975,017      $   2,975,017      $   2,975,017
</TABLE>


Note H- SUBSEQUENT EVENTS

The Company has entered into an  agreement  as amended  with Biowell  Technology
Inc.,  a company  formed under the laws of Taiwan  ("Biowell"),  to acquire from
Biowell  certain  intellectual   property  and  other  assets  in  exchange  for
approximately  36,000,000  shares of the Company's  restricted common stock. The
consummation  of the transaction is subject to a number of terms and conditions,
including, but not limited to, approval by Biowell shareholders.

Stern & Co. v. Applied DNA Sciences, Inc., Case No.: 05 CV 00202

Plaintiff  Stern & Co.  commenced  this action  against us in the United  States
District  Court for the  Southern District of New York on or about   January 10,
2005.  In this  action,  Stern & Co.  alleges that it entered  into  a  contract
with us to perform media and investor  relations  for a  monthly  fee of  $5,000
and stock  options.  Stern & Co.  claims that we failed to make certain payments
pursuant  to  the  contract and seeks   damages  in  the amount  of  $96,042.00.
Although  our time to answer  the  complaint  has not  expired,  we  dispute the
allegations  of the complaint in its entirety and intend on vigorously defending
this matter.

Oceanic Consulting, S.A. v. Applied DNA Sciences, Inc., Index No.: 603974/04

Plaintiff  Oceanic  Consulting,  S.A.  commenced  this action  against us in the
Supreme  Court of the State of New York, County of New York. Oceanic Consulting,
S.A.  asserts a cause of action for breach of contract based upon the allegation
that   we  failed to make payments pursuant to a consulting  agreement.  Oceanic
Consulting,  S.A.   also   asserts   a  causes   of   action  in which it  seeks
reimbursement  of its  expenses  and  attorneys' fees.  Oceanic Consulting, S.A.
seeks damages in the amount of  $137,500.00.  Oceanic  Consulting,  S.A.   moved
for a default  judgment,  which we have opposed based upon  Oceanic  Consulting,
S.A.'s   failure  to  properly  serve  the  complaint as well as our meritorious
defenses. We intend on vigorously defending this matter.

                                      40


<PAGE>


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS

FORWARD-LOOKING STATEMENTS

 The  following  discussion  should be read in  conjunction  with the  Company's
Consolidated  Financial Statements and Notes thereto,  included elsewhere within
this report. The quarterly report contains 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,  including  statements using
terminology such as "can", "may", "believe",  "designated to", "will", "expect",
"plan",  "anticipate",  "estimate",  "potential" or "continue",  or the negative
thereof or other comparable terminology regarding beliefs,  plans,  expectations
or intentions regarding the future. Forward looking statements involve risks and
uncertainties and actual results could differ materially from those discussed in
forward-looking  statements.  All forward  looking  statements  and risk factors
included in this document are made as of the date hereof,  based on  information
available  to the Company as of the date  thereof,  and the  Company  assumes no
obligations to update any forward-looking  statement or risk factor,  unless the
Company is required to do so by law.

Plan of Operation

Revenues

 From our inception on September  16, 2002, we have not generated  revenues from
operations.  We believe we will begin generating revenues from operations in the
fiscal year as the Company  transitions  from a development  stage enterprise to
that of an active growth and acquisition stage company.

Costs and Expenses

From  our  inception  through  March  31,  2005,  we  have  incurred  losses  of
$66,980,059.  These  expenses  were  associated  principally  with  equity-based
compensation  to  employees  and  consultants,   warrant  revaluation,   product
development costs and professional services.

Selling,  general and  administrative  expenses  for the six month  period ended
March 31, 2005 compared to same period in 2004 increased $13.264 million or 242%
to $22.581  million from $9.317 million in the prior period due to financing and
related costs incurred during the March 2005 quarter.

Depreciation and Amortization

In the six month  period  ended March 31, 2005,  depreciation  and  amortization
increased  $11,000 for the period  compared to the same period in 2004 from $700
to $12,000.

Total Operating Expense

Total  operating  expenses  during the six month  period  ended  March 31,  2005
increased  to $22.593  million  from $9.318  million,  or an increase of $13.275
million as a result of the combination of factors listed above.

Other income/expense

The  Company  realized a gain on  revaluation  of warrant  liability  of $10.776
million  which  compared  to the six month  period  ended  March 31,  2004 is an
increase of $10.776 million.

Interest Expenses

Interest  expense,  for the six month period  ended March 31, 2005  increased to
$32,352 million from $663,000 in the same period of 2004, an increase of $31.689
million  primarily  resulting from $23.148  million  initial  warrant  valuation
charged to interest expense and $8.541 million in increased financing in 2005 as
compared to 2004.

Net Loss

                                      41


<PAGE>


Net Loss for the six month  period  ended  March 31, 2005  increased  to $41.319
million  from a loss of $9.979  million  in the prior  period as a result of the
combination of factors described above.

 Liquidity and Capital Resources

From the Company's inception through ended March 31, 2005, the Company generated
a net cash flow deficit from  operating  activities  of  $9,681,616,  consisting
primarily  losses  of  $66,980,059,  $12,372,461  of  net  losses  from  warrant
revaluation, $24,797,434 in net stock issued for consulting services, $8,836,000
for  beneficial  conversion  of  convertible  notes  payable  and  warrants  and
$5,260,931 for warrants issued to consultants.

Cash used in investing  activities totaled $4,347 for the six month period ended
March 31,  2005,  which was  utilized  for  patent  filings.  Cash  provided  by
financing  activities  for the same  period  totaled  $9,063,750  consisting  of
$8,961,000  in proceeds  notes and common stock and $103,000  from  warrants and
options.

By adjusting our operations and development to the level of  capitalization,  we
believe  we have  sufficient  capital  resources  to meet  projected  cash  flow
deficits. However, if during that period or thereafter, we are not successful in
generating sufficient liquidity from operations or in raising sufficient capital
resources,  on terms acceptable to us, this could have a material adverse effect
on our business, results of operations liquidity and financial condition.

The Company  presently  does not have any available  credit,  bank  financing or
other  external  sources of liquidity.  Due to its brief history and  historical
operating losses, the Company's  operations have not been a source of liquidity.
The Company will need to obtain additional capital in order to expand operations
and become profitable. The Company intends to pursue the building of a re-seller
network outside the United States, and if successful,  the re-seller  agreements
would  constitute  an  additional  source of liquidity and capital over time. In
order to obtain capital,  the Company may need to sell additional  shares of its
common  stock or borrow funds from  private  lenders.  There can be no assurance
that  the  Company  will be  successful  in  obtaining  additional  funding  and
execution of re-seller agreements outside the Unites States.

From the Company's inception, the Company's priorities were to recruit and build
its team,  organize its new infrastructure and to develop a successful  strategy
how best to exploit its exclusive  Biowell license  agreement.  No revenues were
generated.  Although  the  management  of the  Company  is of the  opinion  that
continuing  to develop and finance the Company's  present  business of providing
DNA  anti-counterfeit  technology  may  ultimately  be  successful,   management
nevertheless  expects that the Company will need substantial  additional capital
before the Company's operations can be fully implemented.

 While we have raised capital to meet our working capital and financing needs in
the past,  additional  financing  is  required  in order to meet our current and
projected  cash flow deficits from  operations and  development.  We are seeking
financing in the form of equity through a Private Placement  Memorandum in order
to provide the necessary  working capital.  We currently have no commitments for
financing. There is no guarantee that we will be successful in raising the funds
required.

The effect of inflation on the Company's  operating results was not significant.
The Company's  operations are located in North America and there are no seasonal
aspects that would have a material effect on the Company's  financial  condition
or results of operations.

The Company's independent certified public accountant has stated in their report
included in the Company's  September 30, 2004 Form 10-KSB,  that the Company has
incurred operating losses from its inception,  and that the Company is dependent
upon management's ability to develop profitable operations.  These factors among
others may raise  substantial doubt about the Company's ability to continue as a
going concern.

To obtain funding for our ongoing  operations,  we conducted a private placement
offering  in January  and  February  2005,  in which we sold  $7,371,000  of 10%
Secured  Convertible   Promissory  Notes  to  61  investors.   The  10%  Secured
Convertible  Promissory Notes automatically  converted into shares of our common
stock,  at a price of $0.50  per  share,  upon the  filing  of the  registration
statement  on February  15,  2005.  In  connection  with the  private  placement

                                      42


<PAGE>


offering, we have issued 14,742,000 warrants. The warrants are exercisable until
five years from the date of issuance at a purchase price of $0.75 per share.

 Since the  conversion  price will be less than the  market  price of the common
stock at the time the secured convertible notes are issued, we are recognizing a
charge relating to the beneficial  conversion feature of the secured convertible
notes during the quarter in which they are issued,  including  this quarter when
$7,371,000 of secured convertible notes were issued.

We will still need  additional  investments  in order to continue  operations to
cash flow break even.  Additional  investments  are being sought,  but we cannot
guarantee  that  we  will  be  able  to  obtain  such   investments.   Financing
transactions  may include the issuance of equity or debt  securities,  obtaining
credit facilities, or other financing mechanisms.  However, the trading price of
our common stock and the downturn in the U.S.  stock and debt markets could make
it more  difficult  to obtain  financing  through the issuance of equity or debt
securities. Even if we are able to raise the funds required, it is possible that
we could  incur  unexpected  costs and  expenses,  fail to  collect  significant
amounts owed to us, or experience  unexpected cash requirements that would force
us to seek alternative financing. Further, if we issue additional equity or debt
securities,  stockholders may experience  additional  dilution or the new equity
securities  may  have  rights,  preferences  or  privileges  senior  to those of
existing  holders of our common stock. If additional  financing is not available
or is not available on acceptable terms, we will have to curtail our operations.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Product Research and Development

As a result of the recent financings, the Company anticipates expending $555,000
of available cash towards  research and development  activities  during the next
twelve  (12)  months.  The  anticipated  development  programs  consist of Petro
Chemical Marker,  Ink/Substraits  and Hologram projects with planned spending of
$250,000, $150,000 and $155,000, respectively.

Acquisition of Plant and Equipment and Other Assets

We do not  anticipate  the sale of any  material  property,  plant or  equipment
during the next 12 months.  We do not anticipate the acquisition of any material
property, plant or equipment during the next 12 months.

Number of Employees

From our inception  through the period ended March 31, 2005,  we have  primarily
relied on the  services of outside  consultants  for  services.  The Company has
employment  agreements  with the Company's  officers and certain  employees.  In
order for us to attract and retain quality personnel, we anticipate we will have
to offer  competitive  salaries to future  employees.  We anticipate that it may
become  desirable to add additional full and or part time employees to discharge
certain critical functions during the next 12 months. This projected increase in
personnel is dependent upon our ability to generate  revenues and obtain sources
of  financing.  There is no guarantee  that we will be successful in raising the
funds required or generating  revenues sufficient to fund the projected increase
in the number of employees.  As we continue to expand,  we will incur additional
cost for personnel.

Going Concern

The  financial  statements  included  in  this  filing  have  been  prepared  in
conformity with generally  accepted  accounting  principles that contemplate the
continuance of the Company as a going  concern.  The Company's cash position may
be inadequate to pay all of the costs  associated  with testing,  production and
marketing of products.  Management  intends to use borrowings and security sales
to mitigate the effects of its cash position,  however no assurance can be given
that debt or equity  financing,  if and when  required  will be  available.  The
financial   statements   do  not  include  any   adjustments   relating  to  the
recoverability  and  classification  of recorded  assets and  classification  of
liabilities  that might be  necessary  should the  Company be unable to continue
existence.

                                      43


<PAGE>


Trends, Risks and Uncertainties

We have sought to identify what we believe to be the most  significant  risks to
our business,  but we cannot  predict  whether,  or to what extent,  any of such
risks may be realized nor can we guarantee that we have  identified all possible
risks that might arise.  Investors  should  carefully  consider all of such risk
factors  before  making an  investment  decision  with respect to the  Company's
Common Stock.

                                  RISK FACTORS

Much of the information  included in this quarterly  report includes or is based
upon  estimates,   projections  or  other  "forward-looking   statements".  Such
forward-looking  statements  include any projections or estimates made by us and
our  management  in  connection  with  our  business  operations.   While  these
forward-looking  statements,  and any assumptions upon which they are based, are
made in good faith and reflect our current  judgment  regarding the direction of
our business, actual results will almost always vary, sometimes materially, from
any estimates, predictions, projections, assumptions or other future performance
suggested herein.

Such  estimates,  projections  or  other  "forward-looking  statements"  involve
various risks and  uncertainties  as outlined  below. We caution the reader that
important  factors  in some  cases  have  affected  and,  in the  future,  could
materially  affect actual results and cause actual results to differ  materially
from  the  results  expressed  in  any  such  estimates,  projections  or  other
"forward-looking statements".

Our common  shares are  considered  speculative.  Prospective  investors  should
consider carefully the risk factors set out below.

We Have a History Of Losses Which May  Continue,  Which May  Negatively   Impact
Our Ability to Achieve Our Business Objectives.

We incurred net losses of $19,358,259  for the year ended September 30, 2004 and
$3,445,164 for the year ended September 30, 2003. For the six months ended March
31, 2005,  we incurred a net loss of  $44,165,025.  We cannot assure you that we
can  achieve or sustain  profitability  on a  quarterly  or annual  basis in the
future. Our operations are subject to the risks and competition  inherent in the
establishment  of a business  enterprise.  There can be no assurance that future
operations  will be profitable.  Revenues and profits,  if any, will depend upon
various factors,  including  whether we will be able to generate  revenue.  As a
result of  continuing  losses,  we may  exhaust  all of our  resources  prior to
completing  the  development  of our products.  Additionally,  as we continue to
incur losses,  our  accumulated  deficit will continue to increase,  which might
make it harder for us to obtain financing in the future.  We may not achieve our
business  objectives and the failure to achieve such goals would have an adverse
impact on us, which could result in reducing or terminating our operations.

If We Are Unable to Obtain  Additional  Funding Our Business  Operations Will be
Harmed and If We Do Obtain Additional  Financing Our Then Existing  Shareholders
May Suffer Substantial Dilution.

We will  require  additional  funds to  sustain  and  expand  our  research  and
development  activities.  We anticipate that we will require up to approximately
$555,000 to fund our  anticipated  research and  development  operations for the
next twelve months,  depending on revenue from  operations.  Additional  capital
will  be  required  to  effectively  support  the  operations  and to  otherwise
implement  our  overall  business  strategy.  Even if we do  receive  additional
financing,  it may not be  sufficient  to  sustain or expand  our  research  and
development operations or continue our business operations.

There can be no  assurance  that  financing  will be  available in amounts or on
terms  acceptable to us, if at all. The inability to obtain  additional  capital
will  restrict  our  ability to grow and may reduce our  ability to  continue to
conduct business operations. If we are unable to obtain additional financing, we
will likely be  required to curtail our  research  and  development  plans.  Any
additional  equity  financing  may  involve  substantial  dilution  to our  then
existing shareholders.

Our Independent  Auditors Have Expressed  Substantial Doubt About Our Ability to
Continue  As a Going  Concern,  Which May  Hinder Our  Ability to Obtain  Future
Financing.

                                      44


<PAGE>


In their report dated January 11, 2005, our independent auditors stated that our
financial  statements  for the year  ended  September  30,  2004  were  prepared
assuming that we would continue as a going concern. Our ability to continue as a
going concern is an issue raised due to our incurring net losses of  $22,815,035
during the period September 16, 2002 through  September 30, 2004. We continue to
experience net operating  losses.  Our ability to continue as a going concern is
subject to our ability to generate a profit and/or obtain necessary funding from
outside sources,  including  obtaining  additional  funding from the sale of our
securities,  generating  sales  or  obtaining  loans  and  grants  from  various
financial  institutions  where  possible.  Our continued  net  operating  losses
increases  the  difficulty  in meeting such goals and there can be no assurances
that such methods will prove successful.

Our Research and Development Efforts for New Products May be Unsuccessful.

We will incur  significant  research  and  development  expenses  to develop new
products and technologies.  There can be no assurance that any of these products
or technologies will be successfully developed or that if developed they will be
commercially   successful.   In  the  event   that  we  are  unable  to  develop
commercialized  products  from our  research and  development  efforts or we are
unable or  unwilling  to  allocate  amounts  beyond  our  currently  anticipated
research and  development  investment,  we could lose our entire  investment  in
these new products and this may  materially  and  adversely  affect our business
operations,  which  would  result  in loss of  revenues  and  greater  operating
expenses.

Failure to License New Technologies Could Impair Our New Product Development.

To generate  broad  product  lines,  it is  advantageous  to  sometimes  license
technologies  from third  parties  rather  than  depend  exclusively  on our own
employees.  As a result, we believe our ability to license new technologies from
third  parties is and will  continue to be important to our ability to offer new
products.  In  addition,  from time to time we are  notified or become  aware of
patents held by third parties that are related to technologies we are selling or
may sell in the future. After a review of these patents, we may decide to seek a
license for these  technologies  from these  third  parties or  discontinue  our
products.  There  can be no  assurance  that we will  be  able  to  continue  to
successfully identify new technologies  developed by others. Even if we are able
to identify  new  technologies  of  interest,  we may not be able to negotiate a
license  on  favorable  terms,  or at all.  If we lose the  rights  to  patented
technology,  we may need to discontinue selling certain products or redesign our
products, and we may lose a competitive  advantage.  Potential competitors could
license  technologies  that we fail to license and potentially  erode our market
share for  certain  products.  Our  licenses  typically  subject  us to  various
commercialization,  sublicensing,  minimum payment, and other obligations. If we
fail to comply with these  requirements,  we could lose important rights under a
license. In addition, certain rights granted under the license could be lost for
reasons beyond our control. We may not receive significant  indemnification from
a licensor against third party claims of intellectual property infringement.

We Currently Have no or Limited Manufacturing, Sales, Marketing or  Distribution
Capabilities.

We currently have no in-house manufacturing  capability.  We rely on third-party
vendors for this service.  We do not currently  have any  arrangements  with any
distributors  and we may not be able to enter into  arrangements  with qualified
distributors  on acceptable  terms or at all. We currently  have a limited sales
and marketing  team. If we are not able to develop  greater sales,  marketing or
distribution  capacity,  we may not be able to  generate  revenue or  sufficient
revenue to support our operations.

We Rely on Our License Agreement With Biowell  Technology for the Development of
Our Products,  and the Termination of the License Would Have a Material  Adverse
Impact on Our Business.

We have executed a licensing  agreement with Biowell Technology and we intend to
focus our business on the products developed under this licensing agreement.  We
will rely upon Biowell  Technology to develop,  test and produce  products under
this  licensing  agreement.  As a result of the license  agreement,  we will not
incur  expenses  with  developing   products  for  sale,  however,  we  will  be
responsible  for marketing  the product and building  brand  recognition  in our
licensed  territories.  Our license  could  terminate  if we fail to perform any
material term or covenant under the license  agreement.  The  termination of our
license agreement would have a material adverse impact on our business,  such as
the loss of products and services,  which would reduce or eliminate  most of our
potential revenue source.

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If We Fail to Introduce New Products,  or Our existing Products are not Accepted
by Potential Customers, We May Not Gain or May Lose Market Share.

Rapid technological  changes and frequent new product  introductions are typical
for the markets we serve.  Our future success will depend in part on continuous,
timely development and introduction of new products that address evolving market
requirements.   We  believe  successful  new  product  introductions  provide  a
significant  competitive  advantage  because  customers  invest  their  time  in
selecting  and learning to use new products,  and are often  reluctant to switch
products. To the extent we fail to introduce new and innovative products, we may
lose market share to our  competitors,  which will be difficult or impossible to
regain.  Any inability,  for  technological  or other reasons,  to  successfully
develop and  introduce  new products  could reduce our growth rate or damage our
business.

We may experience  delays in the  development and  introduction of products.  We
cannot  assure  that we will keep  pace  with the  rapid  rate of change in life
sciences research or that our new products will adequately meet the requirements
of the marketplace or achieve market  acceptance.  Some of the factors affecting
market acceptance of new products include:

  o  Availability, quality and price relative to competitive products;
  o  The timing of introduction of the product relative to competitive products;
  o  Customers' opinions of the products' utility;
  o  Ease of use;
  o  Consistency with prior practices;
  o  Scientists' opinions of the
  o  products' usefulness;
  o  Citation of the product in published research; and
  o  General trends in
  o  life sciences research.

We have not experienced any difficulties  with the preceding  factors,  however,
there  can be no  assurance  that we will  not  experience  difficulties  in the
future. The expenses or losses associated with unsuccessful  product development
or lack of market  acceptance  of our new products  could  materially  adversely
affect our business, operating results and financial condition.

A   Manufacturer's   Inability   to   Produce   Our  Goods   on  Time and to Our
Specifications  Could Result in Lost Revenue and Net Losses

We do not own or operate any manufacturing  facilities and therefore depend upon
independent  third  parties  for the  manufacture  of all of our  products.  Our
products are manufactured to our specifications. The inability of a manufacturer
to ship  orders  of our  products  in a timely  manner  or to meet  our  quality
standards could cause us to miss the delivery date requirements of our customers
for those items, which could result in cancellation of orders, refusal to accept
deliveries or a reduction in purchase prices, any of which could have a material
adverse effect as our revenues would decrease and we would incur net losses as a
result of sales of the  product,  if any  sales  could be made.  Because  of our
business,  the  dates  on which  customers  need and  require  shipments  of our
security products from us are critical.

If We Need to Replace Manufacturers, Our  Expenses  Could  Increase Resulting in
Smaller Profit Margins

We compete with other companies for the production capacity of our manufacturers
and import quota capacity.  Some of these competitors have greater financial and
other  resources than we have, and thus may have an advantage in the competition
for  production  and import  quota  capacity.  If we  experience  a  significant
increase in demand, or if an existing  manufacturer of ours must be replaced, we
may have to expand our third-party  manufacturing capacity. We cannot assure you
that this additional  capacity will be available when required on terms that are
acceptable  to  us  or  similar  to  existing  terms  which  we  have  with  our
manufacturers, either from a production standpoint or a financial standpoint. We
do not have long-term contracts with any manufacturer. None of the manufacturers
we use produces our products exclusively.

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Should  we be  forced  to  replace  one or  more  of our  manufacturers,  we may
experience an adverse financial impact, or an adverse  operational  impact, such
as being forced to pay increased  costs for such  replacement  manufacturing  or
delays upon  distribution  and delivery of our products to our customers,  which
could cause us to lose customers or lose revenues because of late shipments.

If a  Manufacturer  of Ours Fails to Use  Acceptable  Labor Practices,  We Might
Have Delays in  Shipments or Face Joint Liability for  Violations, Resulting  in
Decreased Revenue and Increased Expenses

While we require our  independent  manufacturers  to operate in compliance  with
applicable laws and regulations, we have no control over the ultimate actions of
our  independent   manufacturers.   While  our  internal  and  vendor  operating
guidelines  promote ethical  business  practices and our staff and buying agents
periodically visit and monitor the operations of our independent  manufacturers,
we do not control these manufacturers or their labor practices. The violation of
labor or other laws by an  independent  manufacturer  of ours,  or by one of our
licensing  partners,  or the  divergence  of an  independent  manufacturer's  or
licensing  partner's labor practices from those generally accepted as ethical in
the United  States,  could  interrupt,  or  otherwise  disrupt  the  shipment of
finished  products to us or damage our reputation.  Any of these, in turn, could
have a  material  adverse  effect on our  financial  condition  and  results  of
operations,  such as the loss of  potential  revenue  and  incurring  additional
expenses.

The Failure To Manage Our Growth In  Operations And  Acquisitions Of New Product
Lines And New  Businesses  Could Have A Material Adverse Effect On Us.

The expected  growth of our  operations  (as to which no  representation  can be
made) will place a significant  strain on our current management  resources.  To
manage this  expected  growth,  we will need to improve  our: o  operations  and
financial systems;  o procedures and controls;  and o training and management of
our employees.

Our future growth may be  attributable  to acquisitions of and new product lines
and  new  businesses.  We  expect  that  future  acquisitions,  if  successfully
consummated,  will create  increased  working capital  requirements,  which will
likely precede by several months any material  contribution of an acquisition to
our net income.

Our failure to manage growth or future acquisitions successfully could seriously
harm our operating  results.  Also,  acquisition costs could cause our quarterly
operating results to vary significantly.  Furthermore, our stockholders would be
diluted if we financed the acquisitions by incurring convertible debt or issuing
securities.

Although we currently only have operations  within the United States, if we were
to acquire an international operation; we will face additional risks, including:

  o  difficulties in staffing, managing and integrating international operations
     due to language,  cultural or other differences;
  o  Different or conflicting regulatory or legal requirements;
  o  foreign currency  fluctuations;  and
  o  Diversion  of  significant  time  and  attention  of our management.

If We Are Unable to Retain the Services of Messrs. Hutchison, Brocklesby, Butash
or Klemm, or If We Are Unable to Successfully  Recruit Qualified  Managerial and
Sales Personnel  Having  Experience in Business,  We May Not Be Able to Continue
Our Operations.

Our success  depends to a significant  extent upon the continued  service of Mr.
Rob Hutchison, our Chief Executive Officer, Mr. Peter Brocklesby, our President,
Mr. Adrian Butash,  our Chief Marketing  Officer and Ms. Karin Klemm,  our Chief
Operating Officer and Interim Chief Financial Officer. We do not have employment
agreements  with Messrs.  Hutchison,  Brocklesby,  Butash or Klemm.  Loss of the
services of Messrs. Hutchison, Brocklesby, Butash or Klemm could have a material
adverse effect on our growth,  revenues,  and  prospective  business.  We do not
maintain key-man insurance on the life of Messrs. Hutchison,  Brocklesby, Butash
or Klemm.  Besides Mr.  Hutchison's desire to retire within the next few months,
we are not aware of any other named executive  officer or director who has plans
to      leave     us     or      retire.       In     addition,  in   order   to
successfully         implement         and       manage       our       business

                                      47


<PAGE>


plan, we   will   be   dependent  upon,   among  other   things,    successfully
recruiting       qualified     managerial    and    sales    personnel    having
experience in business.  Competition for qualified individuals is intense. There
can be no assurance  that we will be able to find,  attract and retain  existing
employees  or  that  we will be able  to  find,  attract  and  retain  qualified
personnel on acceptable terms.

Failure to Attract and Retain Qualified Scientific or Production Personnel Could
Have a Material Adverse Effect On Us.

Recruiting  and  retaining  qualified  scientific  and  production  personnel to
perform research and development work and product  manufacturing are critical to
our success.  Because the industry in which we compete is very  competitive,  we
face significant challenges attracting and retaining a qualified personnel base.
Although  we believe we have been and will be able to attract  and retain  these
personnel,  there  is  no  assurance  that  we  will  be  able  to  continue  to
successfully attracting qualified personnel. In addition, our anticipated growth
and expansion into areas and activities requiring additional expertise,  such as
clinical testing,  government approvals,  production, and marketing will require
the addition of new  management  personnel  and the  development  of  additional
expertise by existing  management  personnel.  The failure to attract and retain
these personnel or,  alternatively,  to develop this expertise  internally would
adversely affect our business as our ability to conduct research and development
will be reduced or  eliminated,  resulting  in fewer or no products for sale and
lower revenues.  We generally do not enter into employment  agreements requiring
these employees to continue in our employment for any period of time.

We Need to  Expand  Our Sales  and  Support  Organizations  to  Increase  Market
Acceptance of Our Products.

We currently have a small  customer  service and support  organization  and will
need to increase our staff to support new customers  and the expanding  needs of
existing  customers.  The  employment  market for sales  personnel  and customer
service and support personnel in this industry is very  competitive,  and we may
not be able to hire the kind and number of sales personnel, customer service and
support  personnel we are  targeting.  Our  inability to hire  qualified  sales,
customer  service and support  personnel  may  materially  adversely  affect our
business, operating results and financial condition.

The Biomedical  Research Products  Industry is Very  Competitive,  and We may be
Unable to Continue to Compete Effectively in this Industry in the Future.

We are engaged in a segment of the biomedical research products industry that is
highly  competitive.  We compete with many other  suppliers and new  competitors
continue to enter the market. Many of our competitors, both in the United States
and elsewhere,  are major pharmaceutical,  chemical and biotechnology companies,
and  many  of them  have  substantially  greater  capital  resources,  marketing
experience,  research and development  staff,  and facilities than we do. Any of
these  companies  could succeed in developing  products that are more  effective
than the products that we have or may develop and may be more successful than us
in producing  and  marketing  their  products.  It is impossible to quantify the
number of  competitors  since they include both the companies we attempt to sell
our products and services to through their use of internal  security and various
other  security  product  companies.  Also,  it is also  impossible to determine
market size and market data  information  because  companies are secretive about
what  security  methods they  utilize and how much they spend on such  measures.
Some of the  anti-counterfeiting  and fraud  protection  competitors that we are
aware  of  include:  Authentix,  InkSure,  DNA  Technologies,  Inc.,  Art  Guard
International, Theft Protection Systems, Tracetag and November AG.

We expect this competition to continue and intensify in the future.  Competition
in our markets is primarily driven by:

   o   Product performance, features and liability;
   o   Price;
   o   Timing of product introductions;
   o   Ability to develop, maintain   and  protect   proprietary   products  and
       technologies;
   o   Sales and distribution  capabilities;
   o   Technical  support and
       service;
   o   Brand loyalty;

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<PAGE>


   o   Applications support; and
   o   Breadth of product line.

If a competitor develops superior  technology or cost-effective  alternatives to
our products, our business,  financial condition and results of operations could
be materially adversely affected.

Our  Trademark  and Other  Intellectual  Property  Rights May not be  Adequately
Protected Outside the United States, Resulting in Loss of Revenue.

We  believe  that our  trademarks,  whether  licensed  or owned by us, and other
proprietary rights are important to our success and our competitive position. In
the course of our international expansion, we may, however,  experience conflict
with  various  third  parties who acquire or claim  ownership  rights in certain
trademarks.  We cannot  assure that the actions we have taken to  establish  and
protect  these  trademarks  and other  proprietary  rights  will be  adequate to
prevent imitation of our products by others or to prevent others from seeking to
block sales of our products as a violation  of the  trademarks  and  proprietary
rights of others.  Also, we cannot assure you that others will not assert rights
in, or ownership of, trademarks and other proprietary  rights of ours or that we
will  be  able  to  successfully   resolve  these  types  of  conflicts  to  our
satisfaction. In addition, the laws of certain foreign countries may not protect
proprietary rights to the same extent, as do the laws of the United States.

Intellectual Property Litigation Could Harm Our Business.

Litigation regarding patents and other intellectual property rights is extensive
in the biotechnology industry. In the event of an intellectual property dispute,
we  may be  forced  to  litigate.  This  litigation  could  involve  proceedings
instituted by the U.S. Patent and Trademark  Office or the  International  Trade
Commission,  as well as proceedings  brought directly by affected third parties.
Intellectual property litigation can be extremely expensive, and these expenses,
as well as the  consequences  should we not prevail,  could  seriously  harm our
business.

If a third party claims an intellectual  property right to technology we use, we
might need to  discontinue  an  important  product or  product  line,  alter our
products  and  processes,  pay  license  fees or  cease  our  affected  business
activities.  Although  we might under  these  circumstances  attempt to obtain a
license to this intellectual  property, we may not be able to do so on favorable
terms, or at all. We are currently not aware of any intellectual property rights
that are being  infringed nor have we received notice from a third party that we
may be infringing on any of their patents.

Furthermore, a third party may claim that we are using inventions covered by the
third party's  patent rights and may go to court to stop us from engaging in our
normal  operations  and  activities,  including  making or selling  our  product
candidates. These lawsuits are costly and could affect our results of operations
and divert the attention of managerial and technical personnel.  There is a risk
that a court would decide that we are infringing  the third party's  patents and
would order us to stop the activities covered by the patents. In addition, there
is a risk that a court will order us to pay the other  party  damages for having
violated the other party's patents.  The  biotechnology  industry has produced a
proliferation of patents,  and it is not always clear to industry  participants,
including  us, which  patents cover various types of products or methods of use.
The  coverage of patents is subject to  interpretation  by the  courts,  and the
interpretation is not always uniform. If we are sued for patent infringement, we
would  need to  demonstrate  that our  products  or methods of use either do not
infringe the patent claims of the relevant  patent and/or that the patent claims
are  invalid,  and we  may  not be  able  to do  this.  Proving  invalidity,  in
particular,  is  difficult  since it requires a showing of clear and  convincing
evidence to overcome the presumption of validity enjoyed by issued patents.

Because  some patent  applications  in the United  States may be  maintained  in
secrecy until the patents are issued,  because patent applications in the United
States and many foreign jurisdictions are typically not published until eighteen
months after filing, and because publications in the scientific literature often
lag behind actual  discoveries,  we cannot be certain that others have not filed
patent  applications for technology  covered by our licensors' issued patents or
our pending  applications or our licensors'  pending  applications or that we or
our licensors were the first to invent the technology.  Our competitors may have
filed,  and may in the future  file,  patent  applications  covering  technology
similar to ours. Any such patent  application  may have priority over our or our
licensors' patent  applications and could further require us to obtain rights to
issued patents covering such  technologies.  If another party has filed a United
States  patent  application  on  inventions  similar  to  ours,  we may  have to
participate in an interference  proceeding  declared by the United States Patent
and          Trademark          Office       to      determine   priority     of

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<PAGE>


invention  in  the    United   States.  The  costs of  these  proceedings  could
be  substantial,  and it is possible that such efforts  would be   unsuccessful,
resulting in a loss of our United  States patent position with respect to   such
inventions.

Some of our  competitors  may be able to  sustain  the costs of  complex  patent
litigation more effectively than we can because they have substantially  greater
resources.  In addition,  any  uncertainties  resulting  from the initiation and
continuation  of any  litigation  could  have a material  adverse  effect on our
ability to raise the funds necessary to continue our operations.

Accidents Related to Hazardous Materials Could Adversely Affect Our Business.

Some of our  operations  require  the  controlled  use of  hazardous  materials.
Although we believe our safety procedures  comply with the standards  prescribed
by  federal,  state,  local  and  foreign  regulations,  the risk of  accidental
contamination  of property or injury to individuals  from these materials cannot
be completely  eliminated.  In the event of an accident,  we could be liable for
any damages that result,  which could seriously  damage our business and results
of operations.

Potential   Product   Liability  Claims  Could Affect Our Earnings and Financial
Condition.

We face a potential risk of liability claims based on our products and services,
and we have faced such claims in the past.  We currently do not have any product
liability  coverage but are attempting to obtain  coverage which we will believe
to be adequate.  We cannot  assure,  however,  that we will be able to obtain or
maintain this  insurance at reasonable  cost and on  reasonable  terms.  We also
cannot assure that this insurance,  if obtained,  will be adequate to protect us
against a product liability claim, should one arise. In the event that a product
liability  claim is  successfully  brought  against  us,  it could  result  in a
significant  decrease in our  liquidity  or assets,  which  could  result in the
reduction or termination of our business.

There Are a Large Number of Shares Underlying Our Warrants That May be Available
for Future Sale and the Sale of These Shares May Depress the Market Price of Our
Common Stock and Will Cause Immediate and  Substantial  Dilution to Our Existing
Stockholders.

As of April 26,  2005,  we had  68,371,025  shares of common  stock  issued  and
outstanding and  outstanding  warrants to purchase  25,248,717  shares of common
stock.  All of the shares  issuable  upon  exercise of our  warrants may be sold
without  restriction.  The sale of these shares may adversely  affect the market
price of our common stock. The issuance of shares upon exercise of warrants will
cause immediate and substantial  dilution to the interests of other stockholders
since the selling  stockholders may convert and sell the full amount issuable on
exercise.

If We Fail to Remain Current on Our Reporting Requirements,  We Could be Removed
From the OTC Bulletin Board Which Would Limit the Ability of  Broker-Dealers  to
Sell Our Securities and the Ability of Stockholders to Sell Their  Securities in
the Secondary Market.

Companies  trading on the OTC  Bulletin  Board,  such as us,  must be  reporting
issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and
must be current in their reports  under  Section 13, in order to maintain  price
quotation  privileges on the OTC Bulletin Board. If we fail to remain current on
our reporting requirements,  we could be removed from the OTC Bulletin Board. As
a result,  the market liquidity for our securities  could be severely  adversely
affected by limiting the ability of  broker-dealers  to sell our  securities and
the ability of  stockholders to sell their  securities in the secondary  market.
Prior  to May 2001  and new  management,  we were  delinquent  in our  reporting
requirements,  having failed to file our  quarterly  and annual  reports for the
years ended 1998 - 2000 (except the quarterly reports for the first two quarters
of 1999). We have been current in our reporting  requirements for the last three
years,  however,  there can be no assurance that in the future we will always be
current in our reporting requirements.

Our  Common  Stock is  Subject  to the  "Penny  Stock"  Rules of the SEC and the
Trading Market in Our  Securities is Limited,  Which Makes  Transactions  in Our
Stock Cumbersome and May Reduce the Value of an Investment in Our Stock.

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<PAGE>


The Securities and Exchange  Commission has adopted Rule 15g-9 which establishes
the  definition  of a "penny  stock,"  for the  purposes  relevant to us, as any
equity  security that has a market price of less than $5.00 per share or with an
exercise price of less than $5.00 per share, subject to certain exceptions.  For
any transaction involving a penny stock, unless exempt, the rules require:

   o   that a broker or dealer approve a person's  account for  transactions  in
       penny stocks; and
   o   the broker or dealer receive from the investor a written agreement to the
       transaction, setting forth the identity and quantity of the  penny  stock
       to be purchased.

      In order to approve a person's  account for  transactions in penny stocks,
the broker or dealer must:

   o   obtain financial information and investment experience objectives of  the
       person; and
   o   make a reasonable  determination  that the  transactions in penny  stocks
       are suitable for that person and the person has sufficient knowledge  and
       experience in financial matters to be capable of evaluating the risks  of
       transactions in penny stocks.

The broker or dealer  must also  deliver,  prior to any  transaction  in a penny
stock, a disclosure  schedule prescribed by the Commission relating to the penny
stock market, which, in highlight form:

   o   sets  forth the basis on which the  broker or dealer made the suitability
       determination;  and
   o   that the  broker or  dealer  received  a  signed,  written agreement from
       the investor prior to the transaction.

Generally,  brokers may be less willing to execute  transactions  in  securities
subject  to the  "penny  stock"  rules.  This  may  make it more  difficult  for
investors to dispose of our common stock and cause a decline in the market value
of our stock.

Disclosure  also has to be made about the risks of  investing in penny stocks in
both public offerings and in secondary trading and about the commissions payable
to both the broker-dealer and the registered representative,  current quotations
for the securities and the rights and remedies available to an investor in cases
of fraud in penny stock  transactions.  Finally,  monthly  statements have to be
sent disclosing recent price information for the penny stock held in the account
and information on the limited market in penny stocks.

Item 3. Controls and Procedures

Evaluation  of Disclosure  Controls and  Procedures.  As of March 31, 2005,  the
Company's  management  carried out an evaluation,  under the  supervision of the
Company's  Chief  Executive  Officer  and the  Chief  Financial  Officer  of the
effectiveness  of the design and operation of the Company's system of disclosure
controls  and  procedures  pursuant to the  Securities  and Exchange  Act,  Rule
13a-15(e) and 15d-15(e) under the Exchange Act). Based upon that evaluation, the
Chief Executive Officer and Chief Financial Officer concluded that the Company's
disclosure  controls  and  procedures  were  effective,  as of the date of their
evaluation,  for the purposes of recording,  processing,  summarizing and timely
reporting material  information required to be disclosed in reports filed by the
Company under the Securities Exchange Act of 1934.

Changes in internal  controls.  There were no changes in internal  controls over
financial  reporting,  known to the Chief  Executive  Officer or Chief Financial
Officer  that  occurred  during  the  period  covered  by this  report  that has
materially  affected,  or is likely to materially effect, the Company's internal
control over financial reporting.

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PART II--OTHER INFORMATION

Item 1. Legal Proceedings

From  time to time,  we may  become  involved  in  various  lawsuits  and  legal
proceedings which arise in the ordinary course of business.  However, litigation
is subject to inherent  uncertainties,  and an adverse  result in these or other
matters  may  arise  from  time to time  that may harm our  business.  Except as
described  below,  we are currently not aware of any such legal  proceedings  or
claims that we believe will have,  individually or in the aggregate,  a material
adverse affect on our business, financial condition or operating results.

Stern & Co. v. Applied DNA Sciences, Inc., Case No.: 05 CV 00202

Plaintiff  Stern & Co.  commenced  this action  against us in the United  States
District  Court for the  Southern District of New York on or about   January 10,
2005.  In this  action,  Stern & Co.  alleges that it entered  into a   contract
with us to perform media and investor  relations  for a monthly  fee  of  $5,000
and stock  options.  Stern & Co.  claims that we failed to make certain payments
pursuant to the contract and seeks damages in the amount of $96,042.00. Although
our time to answer the complaint has not  expired,  we dispute  the  allegations
of the complaint in its entirety and intend on vigorously defending this matter.

Oceanic Consulting, S.A. v. Applied DNA Sciences, Inc., Index No.: 603974/04

Plaintiff  Oceanic  Consulting,  S.A.  commenced  this action  against us in the
Supreme  Court of the State of New York, County of New York. Oceanic Consulting,
S.A.  asserts a cause of action for breach of contract based upon the allegation
that   we  failed to make payments pursuant to a consulting  agreement.  Oceanic
Consulting,   S.A.  also  asserts  a  causes  of   action   in  which  it  seeks
reimbursement  of its  expenses  and  attorneys'  fees. Oceanic Consulting, S.A.
seeks damages in the  amount of  $137,500.00.  Oceanic  Consulting,  S.A.  moved
for a default judgment,  which we have opposed based  upon  Oceanic  Consulting,
S.A.'s   failure  to properly serve  the complaint as  well  as  our meritorious
defenses. We intend on vigorously defending this matter.

Item 2. Changes in Securities and Use of Proceeds

On January 4, 2005 we issued  25,000  shares  related to warrant  exercises  for
which  we  received   $2,500.   Such  issuances  were  considered   exempt  from
registration by reason of Section 4(2) of the Securities Act of 1933.

On January 10, 2005, we issued  1,628,789  shares in exchange for debt valued at
$537,500.  Such issuances were considered  exempt from registration by reason of
Section 4(2) of the Securities Act of 1933.

On January 10, 2005, we issued 17,500  shares  related to warrant  exercises for
which  we  received   $1,750.   Such  issuances  were  considered   exempt  from
registration by reason of Section 4(2) of the Securities Act of 1933.

On January 21, 2005, we issued  2,399,012  shares in exchange for debt valued at
$791,674.  Such issuances were considered  exempt from registration by reason of
Section 4(2) of the Securities Act of 1933.

On January 21, 2005,  we issued  315,636  shares in exchange for legal  services
valued at $410,327.  Such issuances were considered  exempt from registration by
reason of Section 4(2) of the Securities Act of 1933.

On  February 1, 2005,  we issued  75,757  shares in exchange  for debt valued at
$25,000.  Such issuances were considered  exempt from  registration by reason of
Section 4(2) of the Securities Act of 1933.

On February 3, 2005 we issued  20,000  shares  related to warrant  exercises for
which  we  received   $2,000.   Such  issuances  were  considered   exempt  from
registration by reason of Section 4(2) of the Securities Act of 1933.

On February 4, 2005,  we issued  606,060  shares in exchange  for debt valued at
$200,000.  Such issuances were considered  exempt from registration by reason of
Section 4(2) of the Securities Act of 1933.

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<PAGE>


On February 4, 2005 we issued  45,000  shares  related to warrant  exercises for
which  we  received   $4,500.   Such  issuances  were  considered   exempt  from
registration by reason of Section 4(2) of the Securities Act of 1933.

On February 4, 2005, we issued  1,500,000  shares in exchange for debt valued at
$1,965,000. Such issuances were considered exempt from registration by reason of
Section 4(2) of the Securities Act of 1933.

On February  10,  2005,  we issued  278,433  shares in exchange  for debt valued
at$91,883.  Such issuances were considered exempt from registration by reason of
Section 4(2) of the Securities Act of 1933.

On February 10, 2005, we issued 17,236 shares in exchange for financial advisory
services  valued  at  $20,166.   Such  issuances  were  considered  exempt  from
registration by reason of Section 4(2) of the Securities Act of 1933.

On February 10, 2005,  we issued  300,000  shares in exchange for debt valued at
$150,000.  Such issuances were considered  exempt from registration by reason of
Section 4(2) of the Securities Act of 1933.

On  February  22,  2005,  we issued  716,500  shares in exchange  for  financial
advisory services valued at $680,675. Such issuances were considered exempt from
registration by reason of Section 4(2) of the Securities Act of 1933.

On February 22, 2005,  we issued  10,500  shares  related to the  repricing of a
previous financing valued at $9,975.  Such issuances were considered exempt from
registration by reason of Section 4(2) of the Securities Act of 1933.

On March 1, 2005,  we issued  13,202,000  shares in exchange  for debt valued at
$6,601,000. Such issuances were considered exempt from registration by reason of
Section 4(2) of the Securities Act of 1933.

On March 3, 2005,  we issued  185,000  shares in exchange for employee  services
valued at $220,150.  Such issuances were considered  exempt from registration by
reason of Section 4(2) of the Securities Act of 1933.

On March 8, 2005 we issued 100,000 shares related to warrant exercises for which
we received $60,000.  Such issuances were considered exempt from registration by
reason of Section 4(2) of the Securities Act of 1933.

On March 14, 2005, we issued 1,675,272 shares in exchange for financial advisory
services  valued at  $1,641,767.  Such  issuances  were  considered  exempt from
registration by reason of Section 4(2) of the Securities Act of 1933.

On March 18, 2005, we issued 24,333 shares in exchange for legal services valued
at $22,386. Such issuances were considered exempt from registration by reason of
Section 4(2) of the Securities Act of 1933.

On March 29, 2005,  we issued  15,000  shares in exchange for employee  services
valued at $14,850.  Such issuances were considered  exempt from  registration by
reason of Section 4(2) of the Securities Act of 1933.

On March 31, 2005, we issued  1,240,000  shares related to the  January/February
PPM subscription for which we received $620,000.  Such issuances were considered
exempt from  registration  by reason of Section  4(2) of the  Securities  Act of
1933.

On March 31, 2005, we issued  1,500,000  shares related to the  January/February
PPM subscription for which we received $600,000.  Such issuances were considered
exempt from  registration  by reason of Section  4(2) of the  Securities  Act of
1933.

On March 31, 2005, we issued  10,000  shares in exchange for financial  advisory
services  valued  at  $8,900.   Such  issuances  were  considered   exempt  from
registration by reason of Section 4(2) of the Securities Act of 1933.

Item 3. Defaults Upon Senior Securities

     None.

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

                                      53


<PAGE>


Pursuant to a written consent of a majority of  stockholders  dated February 15,
2005  in  lieu  of a  special  meeting  of the  stockholders,  the  majority  of
stockholders approved the following actions:

     1. To Amend  the  Company's  Articles  of  Incorporation,  as  amended,  to
increase the number of  authorized  shares of common  stock,  par value $.50 per
share  (the  "Common  Stock"),   of  the  Company  from  100,000,000  shares  to
250,000,000 shares;

     2. To Amend the Company's Articles of Incorporation, as amended, to the par
value of the Common Stock of the Company from $.50 per share to $.001 per share;

      3. To ratify the  selection of Russell  Bedford  Stefanou  Mirchandani  as
independent registered public accounting firm of the Company for the year ending
September 30, 2005;

      4. To elect five  directors to the Company's  Board of Directors,  to hold
office until their  successors  are elected and qualified or until their earlier
resignation or removal; and

      5. To adopt the Company's 2005 Incentive Stock Plan.

Item 5. Other Information

      None.

Item 6. Exhibits

31.1       Certification of Chief Executive  Officer pursuant to Rule 13a-14 and
           Rule 15d-14(a),  promulgated under the Securities and Exchange Act of
           1934, as amended

31.2       Certification of Chief Financial  Officer pursuant to Rule 13a-14 and
           Rule 15d 14(a),  promulgated under the Securities and Exchange Act of
           1934, as amended

32.1       Certification  pursuant  to 18  U.S.C.  Section  1350,  as    adopted
           pursuant  to  Section  906  of  the Sarbanes-Oxley Act of 2002 (Chief
           Executive Officer)

32.2       Certification  pursuant  to 18  U.S.C.   Section  1350,   as  adopted
           pursuant  to  Section  906  of  the Sarbanes-Oxley Act of 2002 (Chief
           Financial Officer)

                                      54


<PAGE>


                                   SIGNATURES


     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant has duly caused this Amendment No. 4 to Form 10-QSB/A to be signed on
its behalf by the undersigned, thereunto duly authorized.


                                                 APPLIED DNA SCIENCES, INC.

Date: October 13, 2006                          By: /s/ JAMES A. HAYWARD
                                                     ---------------------

                                               Chief Executive Officer
                                               (Principal  Executive  Officer,
                                               Principal   Financial    Officer
                                               and Principal Accounting Officer)

                                      55