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

                                 Amendment No. 1
                                       To
                                   FORM 10-QSB

 Quarterly Report Pursuant to Section 13 Or 15(D) Of The Securities Act Of 1934

                For the quarterly period ended December 31, 2004

                        Commission file number: 002-90519

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

                  NEVADA                                    59-2262718
  (State or other jurisdiction of              (IRS Employer Identification No.)
 incorporation or organization)

          9229 West Sunset Boulevard, Suite 830, Los Angeles, CA 90069
                    (Address of principal executive offices)

                                 (310) 860-1362
                           (Issuer's telephone number)

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

Yes  X           No
    ----           ------

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:

Common Stock, $0.50 par value                        47,280,993
       (Class)                             (Outstanding as of February 8, 2005)


<PAGE>
                                Table of Contents

PART I.  FINANCIAL INFORMATION

   Item 1.  Financial Statements (Unaudited)............................ 3

   Item 2.  Management's Discussion and Analysis or Plan of Operation...34

   Item 3.  Controls and Procedures.....................................40


PART II.  OTHER INFORMATION

   Item 1.  Legal Proceedings...........................................41

   Item 2.  Changes in Securities.......................................41

   Item 3.  Defaults Upon Senior Securities.............................41

   Item 4.  Submission of Matters to a Vote of Security Holders.........41

   Item 5.  Other Information...........................................41

   Item 6.  Exhibits....................................................42

   Signatures...........................................................43



                                       2


<PAGE>

Item 1.  Financial Statements (Unaudited)

                           APPLIED DNA SCIENCES, INC.

                          (A DEVELOPMENT STAGE COMPANY)
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)

 ASSETS                                             (Unaudited)
                                                     December 31,  September 30,
                                                       2004             2004
                                                     -----------    -----------
Current assets:
Cash and Equivalents .............................   $    62,665    $     1,832
                                                     -----------    -----------
Total Current Assets .............................        62,665          1,832

Property, Plant and Equipment:
Furniture and Equipment ..........................        29,507         29,507
Less: Accumulated Depreciation ...................        (1,756)        (1,405)
                                                     -----------    -----------
                                                          27,751         28,102
Other Assets:
Deposits and Prepaid Expenses ....................        47,585         23,559


Patent Filing ....................................        34,257         29,910
Less: Accumulated Amortization ...................        (6,126)        (1,756)

                                                     -----------    -----------
Net Patents ......................................        28,131         28,154

Restricted Cash ..................................     1,065,318           --
                                                     -----------    -----------
Total Other Assets ...............................     1,141,034         51,713
                                                     -----------     ----------

Total Assets .....................................   $ 1,231,450    $    81,647
                                                     ===========    ===========

LIABILITIES AND DEFICIENCY IN STOCKHOLDERS' EQUITY

Current Liabilities:
Accounts Payable and Accrued Liabilities .........   $ 2,973,686    $ 1,770,379
Accrued Liabilities Due Related Parties ..........       168,857        117,333
Convertible Notes Payable ........................     1,675,000      1,625,000
Due to Related Parties ...........................        61,943        111,943
Note Payable .....................................     1,125,000      1,163,500
                                                     -----------    -----------
Total Current Liabilities ........................     6,004,486      4,788,156

Long Term Liabilities:
Note Payable .....................................          --             --
                                                     -----------    -----------
 Deficiency in Stockholders' Equity:
 Preferred Stock, par value $.0001 per share;
10,000,000 shares authorized;
60,000 issued at December 31, 2004 and
September 30, 2004 ...............................             6              6
 Common Stock, par value $.50 per share;
100,000,000 shares authorized; 40,848,239
shares and 23,981,054 shares issued and
outstanding at December 31, 2004 and
September 30, 2004, respectively .................    20,424,120     11,990,527
 Common Stock Subscription .......................      (880,000)        (1,000)
 Additional Paid-In-Capital ......................    10,863,008      6,118,993
 Accumulated Deficit .............................   (35,180,170)   (22,815,034)
                                                     -----------    -----------
                                                      (4,773,036) (4,706,508)
                                                     -----------    -----------

 Total Liabilities and Deficiency in
Stockholders' Equity                                 $ 1,231,450       $ 81,647
                                                     ===========    ===========

 See accompanying notes to unaudited condensed consolidated financial statements

                                        3
<PAGE>
                           APPLIED DNA SCIENCES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   CONDENSED CONSOLIDATED STATEMENTS OF LOSSES
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                     For the Period,
                                     For The Three  For The Three   September 16, 2002,
                                      Months Ended   Months Ended  (Date of Inception)
                                      December 31,   December 31,       through
                                         2004              2003     December 31, 2004
                                         ----              ----       ----------
<S>                                   <C>             <C>             <C>
Revenues:
Sales .............................   $       --      $       --      $       --

COGS ..............................   $       --      $       --      $       --

Operating expenses:
Selling, general and administrative     10,792,921       7,407,750      31,852,994
Depreciation and amortization .....          4,721             351           7,882
                                      ------------    ------------    ------------
Total operating expenses ..........     10,797,642       7,408,101      31,860,876

Operating loss ....................    (10,797,642)     (7,408,101)    (31,860,876)

Other Income (expense) ............            315             685          26,700
Interest (expense) ................     (1,567,809)       (135,074)     (3,345,995)
Income (taxes) benefit ............           --              --              --
                                      ------------    ------------    ------------

Net loss ..........................   $(12,365,136)   $ (7,542,490)   $(35,180,171)
                                      ============    ============    ============

Loss per common share
(basic and assuming dilution) .....   $      (0.45)   $      (0.41)   $      (1.28)
                                      ============    ============    ============

Weighted average shares outstanding     27,402,160      18,503,162      27,402,160
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements

                                       4

<PAGE>
                            APPLIED DNA SCIENCES, INC
                          (A development stage company)
     CONDENSED CONSOLIDATED STATEMENT OF DEFICIENCY IN STOCKHOLDER'S EQUITY
          FOR THE PERIOD SEPTEMBER 16, 2002 (Date of Inception) THROUGH
                                DECEMBER 31, 2004
<TABLE>
<CAPTION>
                                                                                                          Deficit
                                                                      Additional                          Accumulated
                                         Preferred                      Paid in    Common        Stock      During
                               Preferred  Shares   Common 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 1,018             -         -             -            -            1,000
Cancellation of Common
stock in connection with
merger with Prohealth
Medical Technologies ,
Inc on October
21, 2002                            -      -     (100,000)   10        (1,000)        -             -            -           (1,000)
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            -                -
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 1in 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     9       230,625         -             -            -          230,634

 See accompanying notes to unaudited condensed consolidated financial statements

                                        5
<PAGE>
                            APPLIED DNA SCIENCES, INC
                          (A development stage company)
     CONDENSED CONSOLIDATED STATEMENT OF DEFICIENCY IN STOCKHOLDER'S EQUITY
          FOR THE PERIOD SEPTEMBER 16, 2002 (Date of Inception) THROUGH
                                DECEMBER 31, 2004
                                   (Continued)
                                                                                                             Deficit
                                                                      Additional                            Accumulated
                                         Preferred                      Paid in  Common         Stock         During
                               Preferred  Shares   Common Common Stock  Capital   Stock      Subscription   Development
                                Shares    Amount   Shares   Amount      Amount  Subscribed     Receivable     Stage        Total
                              ---------   -------  ---------- -------   --------   ----------   ----------    -------     --------
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        21 428,797             -             -            -          428,818

 See accompanying notes to unaudited condensed consolidated financial statements

                                        6
<PAGE>
                            APPLIED DNA SCIENCES, INC
                          (A development stage company)
     CONDENSED CONSOLIDATED STATEMENT OF DEFICIENCY IN STOCKHOLDER'S EQUITY
          FOR THE PERIOD SEPTEMBER 16, 2002 (Date of Inception) THROUGH
                                DECEMBER 31, 2004
                                   (Continued)



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

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     410,913        -         -                -     410,931
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        -         -                -      95,000
Common stock subscription
receivable reclassification
adjustment
Common Stock subscribed to
at $2.50 per share in
September 2003                                         -              -           -        -     2,600                -       2,600



Net Loss for the year
ended September 30, 200                                -              -           -  300,000         -                -     300,000

Balance at September 30,
2003                          -           -            -              -           -        -         -       (3,445,164) (3,445,164)
                         --------   --------  -----------      -------- ----------- --------- ---------   ------------- -----------
                              -         $ -   17,811,082       $  1,781  $2,577,568 $300,000   $     -      $(3,456,776)  $(577,427)
                         ========   ========  ===========      ======== =========== ========= =========   ============= ============

 See accompanying notes to unaudited condensed consolidated financial statements

                                        7
<PAGE>
                            APPLIED DNA SCIENCES, INC
                          (A development stage company)
     CONDENSED CONSOLIDATED STATEMENT OF DEFICIENCY IN STOCKHOLDER'S EQUITY
          FOR THE PERIOD SEPTEMBER 16, 2002 (Date of Inception) THROUGH
                                DECEMBER 31, 2004
                                   (Continued)



                                                                                                              Deficit
                                                                          Additional                         Accumulated
                                     Preferred                             Paid in    Common       Stock       During
                          Preferred   Shares     Common     Common Stock   Capital    Stock     Subscription  Development
                            Shares     Amount    Shares        Amount       Amount   Subscribed   Receivable    Stage        Total
                          ---------   -------  ----------     -------       ------   ----------   ----------    -------     --------
Preferred shares issues
in exchange for services
at $25.00 per share,
October 2003                1500        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
December 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
Common stock issued in
exchange for consulting
 services at $3.05 per
share, Jan 2004                                    1,000         500          2,550           -          -           -        3,050

 See accompanying notes to unaudited condensed consolidated financial statements

                                        8
<PAGE>
                            APPLIED DNA SCIENCES, INC
                          (A development stage company)
     CONDENSED CONSOLIDATED STATEMENT OF DEFICIENCY IN STOCKHOLDER'S EQUITY
          FOR THE PERIOD SEPTEMBER 16, 2002 (Date of Inception) THROUGH
                                DECEMBER 31, 2004
                                   (Continued)


                                                                                                              Deficit
                                                                          Additional                         Accumulated
                                     Preferred                             Paid in    Common       Stock       During
                          Preferred   Shares     Common     Common Stock   Capital    Stock     Subscription  Development
                            Shares     Amount    Shares        Amount       Amount   Subscribed   Receivable    Stage        Total
                          ---------   -------  ----------     -------       ------   ----------   ----------    -------     --------

Common stock issued in
exchange for employee
services at $3.07 per
share, Feb 2004                                    6,283       3,142         16,147           -          -           -       19,288
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           -          -           -       16,344

 See accompanying notes to unaudited condensed consolidated financial statements


                                        9
<PAGE>

                            APPLIED DNA SCIENCES, INC
                          (A development stage company)
     CONDENSED CONSOLIDATED STATEMENT OF DEFICIENCY IN STOCKHOLDER'S EQUITY
          FOR THE PERIOD SEPTEMBER 16, 2002 (Date of Inception) THROUGH
                                DECEMBER 31, 2004
                                   (Continued)
                                                                           Deficit
                                                                          Additional                         Accumulated
                                     Preferred                             Paid in    Common       Stock       During
                          Preferred   Shares     Common     Common Stock   Capital    Stock     Subscription  Development
                            Shares     Amount    Shares        Amount       Amount   Subscribed   Receivable    Stage        Total
                          ---------   -------  ----------     -------       ------   ----------   ----------    -------     --------
Common stock issued in
exchange for employee
services at $3.15 per
share, Mar 2004                                  5,769          2,885         15,293       -              -       -        18,177
Preferred shared
converted to common
shares for consulting
services at $3.00per
share, Mar 2004              5000      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          4,403         22,236       -              -       -        26,639
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,
Apr 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        4000      4       100,000         50,000         51,250       -              -       -       101,246
Common stock issued per
subscription May 2004                           10,000          5,000         (4,000)      -         (1,000)      -             -
Common stock issued in
exchange for consulting
services at $0.86 per
share in May 2004                              137,000         68,500         50,913       -              -       -       119,413
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)


 See accompanying notes to unaudited condensed consolidated financial statements

                                       10
<PAGE>
                            APPLIED DNA SCIENCES, INC
                          (A development stage company)
     CONDENSED CONSOLIDATED STATEMENT OF DEFICIENCY IN STOCKHOLDER'S EQUITY
          FOR THE PERIOD SEPTEMBER 16, 2002 (Date of Inception) THROUGH
                                DECEMBER 31, 2004
                                   (Continued)
                                                                         Deficit
                                                                          Additional                         Accumulated
                                     Preferred                             Paid in    Common       Stock       During
                          Preferred   Shares     Common     Common Stock   Capital    Stock     Subscription  Development
                            Shares     Amount    Shares        Amount       Amount   Subscribed   Receivable    Stage        Total
                          ---------   -------  ----------     -------       ------   ----------   ----------    -------     --------
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                  (2000)   (2)        50,000          25,000      (5,500)          -         -            -       19,498


 See accompanying notes to unaudited condensed consolidated financial statements

                                       11
<PAGE>
                            APPLIED DNA SCIENCES, INC
                          (A development stage company)
     CONDENSED CONSOLIDATED STATEMENT OF DEFICIENCY IN STOCKHOLDER'S EQUITY
          FOR THE PERIOD SEPTEMBER 16, 2002 (Date of Inception) THROUGH
                                DECEMBER 31, 2004
                                   (Continued)
                                                                           Deficit
                                                                          Additional                         Accumulated
                                     Preferred                             Paid in    Common       Stock       During
                          Preferred   Shares     Common     Common Stock   Capital    Stock     Subscription  Development
                            Shares     Amount    Shares        Amount       Amount   Subscribed   Receivable    Stage        Total
                          ---------   -------  ----------     -------       ------   ----------   ----------    -------     --------



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      (8,787)          -         -            -       37,463
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
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                       (4000)   (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
Warrants issued to
consultants in the
fourth quarter 2004                                                       2,019,862                                       2,019,862


Net Loss                                              -               -           -           -         -  (19,358,259) (19,358,259)

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)
                          ======    ==       ==========      ==========   =========      ========  ======= ============  ===========

 See accompanying notes to unaudited condensed consolidated financial statements

                                       12
<PAGE>
                            APPLIED DNA SCIENCES, INC
                          (A development stage company)
     CONDENSED CONSOLIDATED STATEMENT OF DEFICIENCY IN STOCKHOLDER'S EQUITY
          FOR THE PERIOD SEPTEMBER 16, 2002 (Date of Inception) THROUGH
                                DECEMBER 31, 2004


                                                                                                              Deficit
                                                                          Additional                         Accumulated
                                     Preferred                             Paid in    Common       Stock       During
                          Preferred   Shares     Common     Common Stock   Capital    Stock     Subscription  Development
                            Shares     Amount    Shares        Amount       Amount   Subscribed   Receivable    Stage        Total
                          ---------   -------  ----------     -------       ------   ----------   ----------    -------     --------
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)   (107,298)           -            -           -    (642,098)

Common stock issued
in exchange for
consulting services at
$0.60 per share in
October 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 by noteholders
at $0.50 per share
in October 2004                 -         -      532,500      266,250           -            -            -           -     266,250

Common Stock issued
pursuant to subscription
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 by noteholders
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

 See accompanying notes to unaudited condensed consolidated financial statements

                                       13
<PAGE>
                            APPLIED DNA SCIENCES, INC
                          (A development stage company)
     CONDENSED CONSOLIDATED STATEMENT OF DEFICIENCY IN STOCKHOLDER'S EQUITY
          FOR THE PERIOD SEPTEMBER 16, 2002 (Date of Inception) THROUGH
                                DECEMBER 31, 2004




Common Stock issued in
exchange for employee
services at $0.60 share
in November 2004                -         -       60,000       30,000       6,000       (4,000)           -           -      32,000

Beneficial Conversion
discount relating to
Notes Payable                   -         -            -            -     936,541            -            -           -     936,541

Beneficial Conversion
Feature relating to
Warrants                        -         -            -            -     528,459            -            -           -     528,459

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

Common Stock issued in
exchange for consulting
services at $1.44 share
in December 2004                -         -    5,796,785    2,898,393   5,418,815            -            -           -   8,317,207

Common stock issued
pursuant to subscription
at  $0.50 per share in
December 2004                   -         -    2,930,000    1,465,000           -     (125,000)           -           -   1,340,000

Warrants issued to
consultants in
Dec. 2004                       -         -                               394,698                                           394,698

Net Loss                        -         -            -            -           -            -            - (12,365,136)(12,365,136)
                          ---------   -------  ----------  ----------  ----------    -----------  --------- ------------ -----------
                           60,000         6   40,848,239   20,424,120  10,863,008     (879,000)      (1,000)(35,180,171) (4,773,035)
                          =========   ======= ===========  ==========  ==========    ===========  ========= ============ ===========
</TABLE>

 See accompanying notes to unaudited condensed consolidated financial statements

                                       14

<PAGE>

                           APPLIED DNA SCIENCES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                                                    For the period
                                                                                                                     September 16,
                                                                                                                     2002 (date of
                                                                                                                       inception)
                                                                                  For The Three Months Ended             through
                                                                                        December 31,                   December 31,
                                                                                    2004               2003               2004
                                                                                    ----               ----               ----
<S>                                                                              <C>                   <C>                <C>
Cash flows from operating activities:
Net loss from operating activities ........................................      $(12,365,136)      $(7,542,490)    $(35,180,170)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation ..............................................................             4,721               351            7,882
Organizational Expenses ...................................................                                               88,500
Preferred Shares issued in exchange for service ...........................              --              --            1,500,000

Warrants issued to consultants .......................... .................           394,698            --            2,414,560

Amortization of beneficial conversion feature-convertible notes............         1,515,000           133,273        3,140,000
Common stock issued in exchange for consultant services rendered ..........         9,366,507         6,625,368       21,764,239
Common stock canceled-previously issued for services rendered .............          (642,605)         (282,000)        (928,180)

Changes in Assets and Liabilities:

Increase in-other assets ..................................................        (1,065,318)           --           (1,079,208)
Increase  in due related parties            ................................             1,523           --              154,219

Increase (decrease) in accounts payable and accrued liabilities ...........         1,203,816           (61,589)       2,959,525
                                                                                 ------------      ------------     ------------

Net cash used in operating activities .....................................        (1,586,794)       (1,127,087)      (5,158,633)
                                                                                                                    ------------
Cash flows from investing activities:

Payments for patent filing ................................................            (4,347)           --              (25,698)
Payments for security deposits ............................................           (24,026)          (23,559)         (47,585)
Capital expenditures ......................................................                (0)          (29,507)         (29,507)
                                                                                 ------------      ------------     ------------

Net cash used in investing activities .....................................           (28,373)          (53,066)        (102,790)
                                                                                                                    ------------
Cash flows from financing activities:
Proceeds from sale of common stock, net of cost ...........................              --             266,000          432,000
Proceeds from subscription of common stock ................................           250,000           104,000          375,000
Proceeds from sale of options .............................................            36,000            32,000          277,000
Advances from shareholders ................................................              --              34,004          100,088

Proceeds from notes payablele..............................................         1,390,000         1,175,030        4,140,000
                                                                                 ------------      ------------     ------------

Net cash provided by financing activities .................................         1,676,000         1,611,034        5,324,088
                                                                                                                    ------------

Net increase in cash and cash equivalents .................................            60,833           430,881           62,665
Cash and cash equivalents at beginning of period ..........................             1,832           193,471             --
Cash and cash equivalents at end of period ................................      $     62,665       $   624,352     $     62,665
                                                                                 ============      ============     ============

Supplemental Disclosures of Cash Flow Information:
Cash paid during period for interest ......................................              --              --                 --
Cash paid during period for taxes .........................................              --              --                 --

Non-cash transaction
Common stock issued for services ..........................................         9,366,507         6,625,368       21,765,239
Common stock canceled-previously issued for services rendered .............          (642,605)         (282,000)        (928,180)
Common stock retired ......................................................              --              --                 --
Deferred financing  costs .................................................                          200,000.00             --
Beneficial conversion feature related to notes payable ....................           936,541      1,168,474.00        2,321,812
Beneficial conversion feature related to warrants .........................           528,459        206,526.00          818,188

Preferred Shares 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 excahnge of shares retired .........                                               88,500

Common stock issued in exchange for note payable ..........................            88,500            --               88,500
</TABLE>
 See accompanying notes to unaudited condensed consolidated financial statements

                                       15
<PAGE>
                           APPLIED DNA SCIENCES, INC.
                          (A Development Stage Company)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                DECEMBER 31, 2004
                                   (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,  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-month  period  ended  December 31, 2004 is not
necessarily  indicative  of the results  that may be expected for the year ended
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  December 31,  2004,  the Company has  accumulated  losses of
$35,180,171

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 December 31,
2004 property and equipment consist of:

                                               December 31, 2004
                                               -----------------

Furniture                                             $   29,507
Accumulated depreciation                                   1,756
                                               =================
Net                                                   $   27,751

Advertising

The  Company  will  follow a policy  of  charging  the costs of  advertising  to
expenses  incurred.  The Company  incurred  advertising  costs of $4,490 and $0,
respectively  during  the  three  months  ended  December  31,  2004.

Intangible Assets

Intangible  assets  are  amortized  using the  straight-line  method  over their
estimated  period of benefit,  ranging  from one to ten years.  We  periodically
evaluate the recoverability of intangible assets and take into account events or
circumstances  that warrant  revised  estimates of useful lives or that indicate
that  an  impairment  exists.  All of  our  intangible  assets  are  subject  to
amortization.

                                       16
<PAGE>
                           APPLIED DNA SCIENCES, INC.
                          (A Development Stage Company)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                DECEMBER 31, 2004
                                   (UNAUDITED)


NOTE A - SUMMARY OF ACCOUNTING POLICIES (continue)

Intangible Assets (continue)


At December 31, 2004, intangible assets consist of:

                                                             December 31,
                                                                 2004

       Intangible assets                                        $ 34,257
       Accumulated amortization                                   (6,126)
                                                             -----------

       Net Intangible Assets                                    $ 28,131
                                                             ===========



Restricted Cash
Per terms of the December Promissory Note Payable agreement dated December 20,
2004, all proceeds received from note holders remain in escrow subject to (1)
the filing of a Definitive Information Statement that increases the authorized
Common Stock and reduces par value, and (2) the closing of a Private Placement
for $1 million or more and in the event of such occurrence the Note will
automatically without notice to the note holder, in to Common Stock of the
Company, at any time at $0.50 per share plus 100% warrant coverage with said
warrant being exerciseable at $0.75 per share for a period of three years and
callable at $1.25 after the underlying stock is registered if said stock trades
at above $1.25 per share for 10 days - See Note F.

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 E):


                                       17
<PAGE>
                           APPLIED DNA SCIENCES, INC.
                          (A Development Stage Company)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                DECEMBER 31, 2004
                                   (UNAUDITED)



 NOTE A - SUMMARY OF ACCOUNTING POLICIES (Continued)

Stock Based Compensation (Continued)


<TABLE>
<CAPTION>
                                                                                                   For the Period
                                                                                                    September 16,
                                                                                                    2002 (Date of
                                                                 For The Three     For The Three      Inception)
                                                                  Months ended     Months ended        through
                                                                  December 31,     December 31,      December 31,
                                                                      2004             2003              2004
<S>                                                                <C>               <C>              <C>
Net loss - as reported                                             $ (12,365,136)    $(7,542,490)     $(35,180,171)

Add:   Total  stock  based   employee   compensation   expense
as
reported under intrinsic value method (APB. No. 25)                            -               -                 -
Deduct:  Total stock based  employee  compensation  expense as
reported under fair value based method (SFAS No. 123)                          -               -                 -
                                                                               -               -                 -
Net loss - Pro Forma                                               $ (12,365,136)
                                                                                     $(7,542,490)    $ (35,180,171)
Net loss attributable to common stockholders - Pro forma
                                                                   $ (12,365,136)    $(7,542,490)    $ (35,180,171)
                                                                   ==============    ============    ==============
Basic (and assuming dilution) loss per share - as reported         $       (0.45)    $     (0.40)    $       (1.28)
                                                                   ==============    ============    ==============
Basic (and assuming dilution) loss per share - Pro forma           $       (0.45)    $     (0.40)    $       (1.28)
                                                                   ==============    ============    ==============
</TABLE>
NOTE B - MERGER

Acquisition

On  October  21,  2002,   the  Company   completed  a  Plan  and   Agreement  of
Reorganization   ("Merger")   with   ProHealth   Medical   Technologies,    Inc.
("ProHealth")  an  inactive  publicly   registered  shell  corporation  with  no
significant assets or operations.  For accounting purposes, the Company shall be
the surviving entity. The transaction is accounted for using the purchase method
of  accounting.  The total  purchase  price  and  carrying  value of net  assets
acquired  of was $ 880.  From  November  1988  until  the  date  of the  merger,
ProHealth was an inactive entity with no significant assets and liabilities


                                       18
<PAGE>
                           APPLIED DNA SCIENCES, INC.
                          (A Development Stage Company)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                DECEMBER 31, 2004
                                   (UNAUDITED)


Effective with the Merger, all previously  outstanding  common stock,  preferred
stock,  options and warrants owned by the Company's  shareholders were exchanged
for an aggregate of 10,178,352  shares of ProHealth  common stock.  The value of
the  stock  that was  issued  was the  historical  cost of the  ProHealth's  net
tangible  assets,  which did not differ  materially  from their fair  value.  In
accordance with SFAS No. 141, the Company is the acquiring entity.

Effective with the Merger,  ProHealth  changed its name to Applied DNA Sciences,
Inc.

The total purchase price and carrying value of net assets  acquired of ProHealth
was $1. The net assets acquired were as follows:

       Common stock retained by  ProHealth shareholders          $1,015
       Assets acquired                                             (135)
       Total consideration paid                                    $880

In accordance with SOP 98-5, the Company expensed $880 as organization costs.


NOTE C - RELATED PARTY TRANSACTIONS

At December 31, 2004, notes payable are as follows:
<TABLE>
<CAPTION>
                                                                                      December
                                                                                       31, 2004
                                                                                      ----------

<S>                                                                                     <C>
Note payable , related party, together with interest at 8% per annum, unsecured.
Upon default,  the Company issued noteholder 7.5 million shares of the Company's
common stock. The noteholder retained 2 million shares and set aside 3.5 million
in escrow as third party deferred compensation for a future transaction              $        -

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

Due to ex-president, in September 2004, note holder entered into a private
transaction, selling a total of 2,500,000 shares to him, after which he loaned
all proceeds of $600,000 to us. 600,000

Note payable,  ex-officer of the Company,  due $100,000 upon first funding,  20%
rate of interest, or 100,000 shares at par value of $0.001                               100,000
                                                                                      ----------

                                                                                       1,125,000

Less: current portion                                                                  1,125,000
                                                                                      ----------
Note payable - long-term                                                              $        -
                                                                                      ----------
</TABLE>

Included in current liabilities is $61,943 at December 31, 2004, which
represents advances from the stockholders of the Company. No formal agreements
or repayment terms exist.

Also, the Company owed $168,857 at December 31, 2004 to the stockholders and
other related parties towards accrued expenses.

The  Company  leases  office  space under a sub lease  agreement  with an entity
controlled by a significant former shareholder of the Company.

                                       19
<PAGE>
                           APPLIED DNA SCIENCES, INC.
                          (A Development Stage Company)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                DECEMBER 31, 2004
                                   (UNAUDITED)



The Company has entered into long term employment and consulting agreements with
Company's  President and Chief Executive  Officer and an entity  controlled by a
former significant Company shareholder, respectively.

NOTE D - 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 100,000,000 shares
of common stock,  with a $0.50 par value per share. In January 2004, the Company
passed a resolution  authorizing  change in the par value per common shares from
$0.0001 per share to $0.50 per share.  As of December 31, 2004,  the Company has
issued and outstanding 40,848,239 common share with par value of $0.50 per share
and 60,000 convertible preferred shares with par value of $0.0001.

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.

In January 2003, the Company issued 1,500,000 shares of common stock in exchange
for a licensing  agreement (see Note H). 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.

                                       20
<PAGE>
                           APPLIED DNA SCIENCES, INC.
                          (A Development Stage Company)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                DECEMBER 31, 2004
                                   (UNAUDITED)

NOTE D - CAPITAL STOCK (continued)

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.

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.

                                       21
<PAGE>
                           APPLIED DNA SCIENCES, INC.
                          (A Development Stage Company)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                DECEMBER 31, 2004
                                   (UNAUDITED)

NOTE D - CAPITAL STOCK (continued)

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

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   $300,000  in  connection  with  a
7subscription  to purchase  the  Company's  common  stock  pursuant to a private
placement.


                                       22
<PAGE>
                           APPLIED DNA SCIENCES, INC.
                          (A Development Stage Company)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                DECEMBER 31, 2004
                                   (UNAUDITED)


NOTE D - CAPITAL STOCK (continued)

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.

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.

                                       23
<PAGE>
                           APPLIED DNA SCIENCES, INC.
                          (A Development Stage Company)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                DECEMBER 31, 2004
                                   (UNAUDITED)

NOTE D - CAPITAL STOCK (continued)

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.

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.

                                       24
<PAGE>
                           APPLIED DNA SCIENCES, INC.
                          (A Development Stage Company)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                DECEMBER 31, 2004
                                   (UNAUDITED)


NOTE D - CAPITAL STOCK (continued)

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.

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 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 $0.41 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.  The Company  valued the shares issued at  approximately  $0.50 per
share for a total of $266,250.

                                       25
<PAGE>
                           APPLIED DNA SCIENCES, INC.
                          (A Development Stage Company)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                DECEMBER 31, 2004
                                   (UNAUDITED)


NOTE D - 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  December  2004,  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 December 2004, 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 promissory  note
payable.

                                       26
<PAGE>
                           APPLIED DNA SCIENCES, INC.
                          (A Development Stage Company)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                DECEMBER 31, 2004
                                   (UNAUDITED)



NOTE D - CAPITAL STOCK (Continued)


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.


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 Prices      Outstanding       Life (Years)     Exercise Price     Exercisable      Exercise Price
 ---------------      -----------                        --------------     -----------      --------------
<S>     <C>             <C>                  <C>              <C>             <C>                 <C>
        $0.10           335,000              4.54             $0.10           335,000             $0.10
        $0.50            50,000              4.77             $0.50            50,000             $0.50
        $0.60         6,322,750              4.30             $0.60         6,322,750             $0.60
        $0.70           750,000              2.58             $0.70           750,000             $0.70
        $0.75         2,830,000              2.98             $0.75         2,830,000             $0.75
        $1.00           386,000              0.79             $1.00           386,000             $1.00
        $3.00            62,503              1.00             $3.00            62,503             $3.00
                     ----------                                            ----------
                     10,736,253                                            10,736,253
                     ==========                                            ==========
Transactions involving warrants are summarized as follows:
                                                       Number of Shares          Weighted Average
                                                                                  Price Per Share
       Outstanding at September 30, 2004                      4,870,253                 $   0.63
          Granted                                             5,866,000                     0.68
          Exercised                                                   -                        -
          Canceled or expired                                         -                        -
                                                   --------------------                        -
       Outstanding at December 31, 2004                      10,736,253                 $   0.66
                                                   ====================                 ========
</TABLE>
The estimated 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 of 4.25%,  a  dividend  yield of 0% and
volatility  of 22.9%.  The  amount of the  expense  charged  to  operations  for
compensatory  warrants  granted in exchange  for  services was $ 394,698 for the
three months ended December 31, 2004.

                                       27
<PAGE>
                           APPLIED DNA SCIENCES, INC.
                          (A Development Stage Company)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                DECEMBER 31, 2004
                                   (UNAUDITED)



NOTE F - CONVERTIBLE PROMISSORY NOTES PAYABLE

A  summary  of  convertible  promissory  notes  payable  at  December  31,  2004
(Unaudited) is as follows:
<TABLE>
<CAPTION>
                                                                     December 31, 2004
                                                                      (Unaudited)
<S>                                                                       <C>
A)  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 $3M or more;  The
Company, in its sole discretion, may prepay principal at any time
without penalty.  The Notes are convertible into shares of common
stock of the Company at a price of $2.50 per share.                       1,675,000

Debt Discount - beneficial conversion feature, net of accumulated
amortization of $1,290,837 as of December 31, 2004                                -

Debt Discount - value attributable to warrants attached to notes,
net of  accumulated  amortization  of $384,163 as of December 31,
2004                                                                              -

B)  Convertible  notes  payable  totaling  $1,465,000  ("December
Promissory  Notes"),  at the  earlier of  Definitive  Information
Statement that increases the authorized  Common Stock and reduces
par value or the  completion  of any equity  financing  of $1M or
more bearing  interest at 6% per annum. The Notes are convertible
into  shares of common  stock of the  Company at a price of $0.50
per share.At  December 31, 2004,  convertible notes are converted
into common shares of the Company as per the terms                                -

Debt Discount - beneficial  conversion feature, net of accumulated
amortization of $936,541 as of December 31, 2004.                                 -

Debt Discount - value attributable to warrants attached to notes,
net of  accumulated  amortization  of $528,459 as of December 31,                 -
2004.                                                                   -----------

                                                                        $ 1,675,000
                                                                        ===========
</TABLE>
Convertible Debentures

During 2004,  the Company sold 33.5 units (the "Units") to accredited  investors
at a  price  of  $50,000  per  Unit  (the  "Bridge  Offering")  for a  total  of
$1,675,000.  Each Unit  consists of (i) a $50,000  Principal  Amount 10% Secured
Convertible  Promissory  Note  ("Note" or  "Notes"),  (ii)  warrants to purchase
50,000 shares of our common stock,  exercisable  for a period of five years at a
price of $0.60 per share ("$0.60 Warrant") and (iii) warrants to purchase 10,000
shares of our common stock, exercisable for a period of five years at a price of
$0.10 per share  ("$0.10  Warrant"  and  together  with the $0.60  Warrant,  the
"Warrants").  The Notes are  convertible  into  shares of our common  stock at a
price of $0.33 per share.


                                       28
<PAGE>
                           APPLIED DNA SCIENCES, INC.
                          (A Development Stage Company)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                DECEMBER 31, 2004
                                   (UNAUDITED)


NOTE F - CONVERTIBLE PROMISSORY NOTES PAYABLE (continued)


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 Bridge Offering note. 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  $1,290,837 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 Bridge  Offering.  The debt  discount  attributed  to the
beneficial  conversion feature is amortized over the Bridge Offering's  earliest
maturity period of 9 months from the date of issue as interest expense.

In  connection  with the  placement of the Bridge  Offering  notes,  the Company
offered 100% warrant  coverage for each dollar of promissory  note,  exercisable
for a period of three years at a price of $0.75 per share ("$0.75 Warrant").  In
accordance with EMERGING ISSUES TASK FORCE ISSUE 00-27, APPLICATION OF ISSUE NO.
98-5 TO CERTAIN CONVERTIBLE  INSTRUMENTS ("EITF - 0027"), the Company recognized
the value  attributable  to the warrants in the amount of $384,163 to additional
paid in capital and a discount against the Bridge  Offering.  The Company valued
the warrants in accordance with EITF 00-27 using the Black-Scholes pricing model
and the following  assumptions:  contractual  terms of 5 years,  an average risk
free interest rate of 4.25%, a dividend  yield of 0.00%,  and volatility of 42%.
The debt discount  attributed  to the value of the warrants  issued is amortized
over the Bridge Offering's earliest maturity period of 9 months from the date of
issue as interest expense.

In December 2004, the Company sold  convertible  promissory  notes to accredited
investors in the aggregate of $1,465,000.  Each $1.00 is convertible into common
stock at $0.50 and includes 100% warrant  coverage to purchase our common stock,
exercisable  for a period of three  years at a price of $0.75 per share  ("$0.75
Warrant") and callable at $1.25 after the underlying stock is registered if said
stock trades at above $1.25 per share for 10 days - See Note A, Restricted Cash.

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 Bridge Offering note. 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  $936,541  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 Bridge  Offering.  The debt  discount  attributed  to the
beneficial  conversion feature was fully amortized over the fiscal first quarter
period as interest expense.

In  connection  with the  placement of the Bridge  Offering  notes,  the Company
offered 100% warrant  coverage for each dollar of promissory  note,  exercisable
for a period of three years at a price of $0.75 per share ("$0.75 Warrant").  In
accordance with EMERGING ISSUES TASK FORCE ISSUE 00-27, APPLICATION OF ISSUE NO.
98-5 TO CERTAIN CONVERTIBLE  INSTRUMENTS ("EITF - 0027"), the Company recognized
the value  attributable  to the warrants in the amount of $528,459 to additional
paid in capital and a discount against the Bridge  Offering.  The Company valued
the warrants in accordance with EITF 00-27 using the Black-Scholes pricing model
and the following  assumptions:  contractual  terms of 3 years,  an average risk
free  interest  rate of 4.25%,  a dividend  yield of 0.00%,  and  volatility  of
26.72%.  The debt discount  attributed  to the value of the warrants  issued was
fully amortized over the fiscal first quarter period as interest expense.



                                       29
<PAGE>
                           APPLIED DNA SCIENCES, INC.
                          (A Development Stage Company)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                DECEMBER 31, 2004
                                   (UNAUDITED)


NOTE G- INCOME TAXES



The Company has adopted Financial Accounting Standard No. 109 which requires the
recognition of deferred tax  liabilities  and assets for the expected future tax
consequences of events that have been included in the financial statement or tax
returns.  Under this method,  deferred tax liabilities and assets are determined
based on the difference between financial statements and tax bases of assets and
liabilities  using  enacted  tax  rates in  effect  for the  year in  which  the
differences  are  expected to reverse.  Temporary  differences  between  taxable
income  reported for  financial  reporting  purposes and income tax purposes are
insignificant.

At December 31, 2004, the Company has available for federal income tax purposes
a net operating loss carryforward of approximately $35,000,000,  expiring in the
year 2023,  that may be used to offset future  taxable  income.  The Company has
provided a valuation  reserve  against the full amount of the net operating loss
benefit,  since in the opinion of management  based upon the earnings history of
the Company,  it is more likely than not that the benefits will not be realized.
Due to  significant  changes in the Company's  ownership,  the future use of its
existing net operating losses may be limited.

Components of deferred tax assets as of December 31, 2004 are as follows:

                Non current:
                Net operating loss carryforward
                                                                  $12,000,000
                Valuation allowance                               (12,000,000)
                                                                  -----------
                Net deferred tax asse                             $         -
                                                                  ===========

NOTE H-LOSSES PER SHARE

The following  table  presents the  computation  of basic and diluted losses per
share:


                                       30
<PAGE>
                           APPLIED DNA SCIENCES, INC.
                          (A Development Stage Company)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                DECEMBER 31, 2004
                                   (UNAUDITED)


NOTE H-LOSSES PER SHARE

The following  table  presents the  computation  of basic and diluted losses per
share:



<TABLE>
<CAPTION>
                                         For the Three Months Ended  For the Three Months Ended
                                             December 31, 2004           December 31, 2003
                                             -----------------           -----------------
<S>                                                 <C>                      <C>
Loss available for common shareholders        $ (12,365,136)              $ (7,542,590)
                                             =================           =================
Basic and fully diluted loss per share        $       (0.45)              $      (0.41)
                                             =================           =================
Weighted average common shares outstanding       27,402,160                 18,503,162
</TABLE>


Net loss per share is based upon the weighted  average of shares of common stock
outstanding



NOTE  I- COMMITMENTS AND CONTINGENCIES

Licensing Agreement

In October  2002,  the Company  entered  into an exclusive  Licensing  Agreement
("License")  with Biowell  Technology,  Inc., a company formed under the laws of
Taiwan, Republic of Taiwan. The initial term of the License expires in 2007 with
renewal  options  under  certain terms and  conditions.  The License  grants the
Company the exclusive  use of certain  patented DNA  technology,  along with the
rights to future  technology,  in exchange  for an initial  payment of 1,500,000
shares of the  Company's  restricted  common  stock (see Note D). The Company is
obligated to order minimum purchase orders or make future certain minimum annual
royalty payments as follows:


    Year ending                   Minimum purchase orders    Alternative Minimum
     October 8,                                                Royalty Payable
       2005                                  360,000                     -
       2006                                  432,000                     -
       2007                                  518,400                     -

Consulting Agreement

GP has been engaged, on a non-exclusive  basis, to provide advice and assistance
to the Company  regarding issues  associated with Applied DNA's  proprietary DNA
embedded  security  solutions.   GP  will  assist  the  Company  with  strategic
positioning  and  enhancement  of the  Company's  business,  and will assist the
Company in the development of domestic and  international  marketing  strategies
for the Company's DNA products and services.  The term of the  engagement is one
year from the effective  date,  with  automatic one year renewals  unless either
party expresses,  in writing,  an intention not to renew within 60 days prior to
the expiration of the term.

                                       31
<PAGE>
                           APPLIED DNA SCIENCES, INC.
                          (A Development Stage Company)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                DECEMBER 31, 2004
                                   (UNAUDITED)

NOTE  I- COMMITMENTS AND CONTINGENCIES

Consulting Agreements (continued)

As  compensation  for GP's  performance,  the Company  will pay GP an  aggregate
advisory fee of Two Million Dollars  ($2,000,000) payable in increments over the
term and renewal term. Two payments of $500,000 each were made by the Company in
September 2004 and January 2005. Thereafter,  eight payments of $125,000 are due
monthly over the period  February  through  September  2005.  Additionally,  the
Company will issue a net-exercisable  warrant to purchase shares of Common Stock
of the  Company  at a later  date.  Fees  were  placed  in  escrow  during  GP's
completion of its due diligence review.

All  promotional  materials of the Company,  on a going forward  basis,  will be
submitted  to GP for  its  review,  including  all  advertising,  written  sales
promotion,  press releases,  news clippings and other publicity matters relating
to GP's engagement and the strategic relationship created.


Franchising and Distribution Agreements

The  Company  has  entered  into  a  Distribution   and  Franchising   Agreement
("Franchise  Agreement")  in  July  2003.  Under  the  terms  of  the  Franchise
Agreement,  the  franchisee is obligated to pay the Company  $3,000,000  payable
$25,000 upon execution of the Franchise  Agreement and the balance of $2,975,000
payable  over five (5) years with  interest  accruing at 8% per annum.  Payments
under the  Franchise  Agreement  are subject to  franchisee's  net  profits,  as
defined, under the Franchise Agreement.

Note Payable Settlement

In  October  2004,  the  Company  defaulted  on a note held by a former  company
officer and  director in the amount of $88,500  (See Note C), and in  accordance
with the default,  the noteholder  had the right to demand that his  outstanding
note be converted back into 7,500,000 shares. The Company  subsequently  settled
the  matter  for  5,500,000  shares  with the  noteholder.  Included  within the
5,500,000  shares are  3,500,000  shares  retained in escrow for  negotiated  on
behalf of another party for future deferred compensation.

Litigation

Ex-officer was named as a defendant in a lawsuit  brought by an outside party in
the United States District Court for the Central District of California,  and in
that action,  Applied DNA was named as a "nominal  defendant."  The plaintiff is
alleging that the ex-officer violated the short swing rule. The Company believes
it has meritorious defenses and will prevail in this matter.



                                       32
<PAGE>
                           APPLIED DNA SCIENCES, INC.
                          (A Development Stage Company)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                DECEMBER 31, 2004
                                   (UNAUDITED)


NOTE I- COMMITMENTS AND CONTINGENCIES (continued)

Operating Lease Commitments

The Company leases office space under operating lease in Los Angeles, California
for  its  corporate  use  from  an  entity  controlled  by  significant   former
shareholder,  expiring in November  2006.  Total lease  rental  expenses for the
three months ended on December 31, 2004 was $47,194.

Commitments for minimum rentals under non-cancelable lease at September 30, 2004
were as follows:

Year ended September 30,
2005                                            $ 139,308
2006                                              143,977
2007                                               12,031
                                              -----------
                                                $ 295,316


Employment and Consulting Agreements

The Company has employment  agreements  with the Company's  officers and certain
employees.  These  employment  agreements  provide for  salaries  and  benefits,
including  stock options and extend up to seven years. In addition to salary and
benefit  provisions,  the  agreements  include  defined  commitments  should the
employer terminate the employee with or without cause.

The Company has a consulting  agreement  with an entity  controlled  by a former
significant  shareholder of the Company.  The consulting  agreement provides for
compensation  and certain  benefits,  including  stock options and extends up to
seven years. In addition to compensation and benefit provisions,  the agreements
include defined commitments should the employer terminate the consultant with or
without cause.

The  Company has  consulting  agreements  with  outside  contractors  to provide
marketing and financial  advisory  services.  The Agreements are generally for a
term of 12 months from inception and renewable  automatically  from year to year
unless either the Company or consultant  terminates  such  engagement by written
notice.

NOTE J- SUBSEQUENT EVENTS

In January 2005,  the Company  arranged a $5.970  million  private  placement of
11.940  million  shares at $0.50 per share  along with 11.940  million  attached
warrants with an exercise price of $0.75 that expires in 5 years.

In January 2005,  holders of 1,675,000 of convertible  notes payable  elected to
convert their notes to common stock at $0.33 per share (See Note F).

On January  2005,  the Company  entered  into a stock  purchase  agreement  with
Biowell Technology Inc.,a Taiwan corporation ("Biowell"), whereby a to-be-formed
wholly-  owned  subsidiary  of the Company  would acquire a company to be formed
which would own all of the  intellectual  property  of Biowell in  exchange  for
36,000,000 shares of the Company's common stock to be issued to the shareholders
of Biowell.  The Acquisition Shares represent 50% of the total shares issued and
outstanding  on a fully diluted basis on the date of execution of the Agreement.
In February  2005,  the Company in a private  placement,  sold an  aggregate  of
$1,391,000 in secured convertible  promissory notes and 2,782,000 warrants.  The
notes bear interest at 10% per annum, mature one year from the date of issuance,
and are  convertible:  into shares of common  stock of the Company at a price of
$0.50 per share  (i) at the  holder's  option;  or (ii)  automatically  upon the
Company's filing of a registration  statement  registering the shares underlying
the notes and Warrants.


                                       33
<PAGE>
ITEM 2. MANAGEMENTS  DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS FOR THE THREE
MONTHS ENDED DECEMBER 31, 2004

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

Liquidity and Capital Resources

     As of  December  31,  2004,  we had a  deficiency  in  working  capital  of
$5,942,000.  For the three  months ended  December 31, 2004,  we generated a net
cash  flow  deficit  from  operating  activities  of  ($1,587,000),   consisting
primarily  of year to date  losses  of  ($12,365,000),  $8,724,000  in net stock
issued  for  consulting  services,   $1,515,000  for  beneficial  conversion  of
convertible  notes  payable  and  warrants,  $395,000  for  warrants  issued  to
consultants  as well as a net  increase  in  current  liabilities  and  other of
$144,000.

     Cash used in investing  activities totaled $28,000,  which was utilized for
patent  filings  and,  facility  lease  deposits.  Cash  provided  by  financing
activities totaled  $1,676,000  consisting of $1,390,000 in proceeds from loans,
and  $250,000  and  $36,000  in common  stock and  exercised  options  proceeds,
respectively.

     We expect  capital  expenditures  to be  nominal  for  fiscal  2005.  These
anticipated expenditures are for continued investments in property and equipment
used in our business.

     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.

During the three months ended  December 31, 2004 and 2003 and from September 16,
2002  (inception)  through  December 31 2003, 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.

From our  inception  through  December  31,  2004,  we have  incurred  losses of
$35,180,171.  These  expenses  were  associated  principally  with  equity-based
compensation  to  employees  and  consultants,  product  development  costs  and
professional services.

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.
                                       34
<PAGE>
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.

Bridge Unit Offering

From  November  through  December  2003,  we sold 33.5  units (the  "Units")  to
accredited investors at a price of $50,000 per Unit (the "Offering") for a total
of $1,675,000.  Each Unit consists of (i) a $50,000 Principal Amount 10% Secured
Convertible  Promissory  Note  ("Note" or  "Notes"),  (ii)  warrants to purchase
50,000 shares of our common stock,  exercisable  for a period of five years at a
price of $3.20 per share ("$3.20 Warrant") and (iii) warrants to purchase 10,000
shares of our common stock, exercisable for a period of five years at a price of
$0.10 per share  ("$0.10  Warrant"  and  together  with the $3.20  Warrant,  the
"Warrants").  The Notes are  convertible  into  shares of our common  stock at a
price of $2.50 per share.


December Promissory Notes Payable
In December 2004,  the Company  received  $1,065,318 in proceeds  subject to the
terms of the December  Promissory Notes Payable agreement.  The Company held the
proceeds in escrow and  classified  the amount as Restricted  Cash - See Note A,
Restricted Cash.


The  aggregate  principal  amount of Notes  sold was  $1,375,000.  The Notes are
secured and bear  interest at 10% per annum,  computed on the basis of a 365-day
year,  accruing from the date an investor's  subscription was closed upon by the
Company.  Principal  and all  accrued  interest  will be  payable in full on the
earlier  of (i) the  9-month  anniversary  date of the  initial  closing  of the
Offering,  or (ii) the completion of any equity financing of $3,000,000 or more.
The Company,  in its sole  discretion,  may prepay principal at any time without
penalty. The Notes are convertible into shares of common stock of the Company at
a price of $2.50 per share.

The Notes are  secured  by a  security  agreement  giving  the Holder a security
interest  in all the  patents,  licenses,  equipment,  fixtures,  inventory  and
accounts receivable of the Company, and/or any of its subsidiaries.

The following events constitute events of default under the Notes:


(i) Default in the payment of the  principal or accrued  interest on any Note or
upon any other indebtedness of the Company that is greater than $100,000, as and
when the same shall become due,  whether by default or otherwise,  which Default
shall have continued for a period of five (5) business days; or

(ii) Any  representation  or warranty  made by the Company or any officer of the
Company in the Notes, or in any agreement, report, certificate or other document
delivered to the Holder  pursuant to the Notes shall have been  incorrect in any
material  respect  when made which  shall not have been  remedied  ten (10) days
after written notice thereof shall have been given by the Holder; or

(iii) The  Company  shall fail to perform or observe  any  affirmative  covenant
contained  in  Section 4 of the  Notes and such  Default,  if  capable  of being
remedied,  shall  not have been  remedied  ten (10) days  after  written  notice
thereof shall have been given by the Holder; or

(iv) The  Company  or any  subsidiary  (A) shall  institute  any  proceeding  or
voluntary  case  seeking to  adjudicate  it  bankrupt or  insolvent,  or seeking
dissolution,  liquidation, winding up, reorganization,  arrangement, adjustment,
protection,  relief or  composition of it or its debts under any law relating to
bankruptcy,  insolvency or reorganization  or relief of debtors,  or seeking the
entry of any  order  for  relief  or the  appointment  of a  receiver,  trustee,
custodian or other  similar  official for such Company or any  subsidiary or for
any  substantial  part of its  property,  or shall  consent to the  commencement
against  it of such a  proceeding  or case,  or shall file an answer in any such
case or proceeding  commenced  against it consenting  to or  acquiescing  in the
commencement of such case or proceeding, or shall consent to or acquiesce in the
appointment  of such a receiver,  trustee,  custodian or similar  official;  (B)
shall be unable to pay its debts as such debts  become  due,  or shall  admit in
writing its  inability  to apply its debts  generally;  (C) shall make a general
assignment  for the  benefit  of  creditors;  or (D)  shall  take any  action to
authorize or effect any of the actions set forth above ; or

                                       35
<PAGE>
(v) Any proceeding shall be instituted against the Company seeking to adjudicate
it bankrupt  or  insolvent,  or seeking  dissolution,  liquidation,  winding up,
reorganization,  arrangement,  adjustment,  protection,  relief of  debtors,  or
seeking  the entry of an order  for  relief or the  appointment  of a  receiver,
trustee,  custodian  or  other  similar  official  for  the  Company  or for any
substantial part of its property, and either such proceeding shall not have been
dismissed  or shall not have been  stayed for a period of sixty (60) days or any
of the actions sought in such proceeding  (including,  without  limitation,  the
entry of any order for  relief  against  it or the  appointment  of a  receiver,
trustee,  custodian or other similar official for it or for any substantial part
of its property) shall occur; or

(vi) One or more final judgments,  arbitration  awards or orders for the payment
of money in excess of $100,000 in the  aggregate  shall be rendered  against the
Company,  which judgment remains unsatisfied for thirty (30) days after the date
of such entry; or

(vii)Delisting  of the Common  Stock from the  principal  market or  exchange on
which the Common Stock is listed for trading;  Company's  failure to comply with
the  conditions  for  listing;  or  notification  that  the  Company  is  not in
compliance with the conditions for such continued listing; or

(viii)The  issuance of an SEC stop trade order or an order suspending trading of
the Common Stock from the principal market or exchange on which the Common Stock
is listed for trading for longer than five (5) trading days; or

(ix) The  failure by the Company to issue  shares of Common  Stock to the Holder
upon exercise by the Holder of the conversion rights of the Holder in accordance
with the terms of the Notes,  or the failure to  transfer or cause its  transfer
agent to transfer  (electronically  or in certificated form) any certificate for
shares of Common  Stock  issued to the Holder upon  conversion  of or  otherwise
pursuant  to the Notes as and when  required  by the  Notes,  or the  failure to
remove any restrictive legend (or to withdraw any stop transfer  instructions in
respect thereof) on any certificate for any shares of Common Stock issued to the
Holder  upon  conversion  of or  otherwise  pursuant  to the  Notes  as and when
required by the Notes,  and any such failure shall continue uncured for ten (10)
days  after the  Company  shall  have been  notified  thereof  in writing by the
Holder; or

(x) The  failure  by the  Company  to file  the  Registration  Statement  within
forty-five (45) days following the Closing Date (as defined in the  Subscription
Agreement) or obtain  effectiveness with the Securities and Exchange  Commission
of the  Registration  Statement  within  one  hundred  thirty  five  (135)  days
following  the Closing Date (as defined in the  Subscription  Agreement) or such
Registration  Statement  lapses in effect  (or sales  cannot  otherwise  be made
thereunder  effective,  whether by reason of the  Company's  failure to amend or
supplement  the  prospectus   included   therein)  for  more  than  twenty  (20)
consecutive  days or forty  (40)  days in any  twelve  month  period  after  the
Registration Statement becomes effective; or

(xi) The Company shall  encumber or hypothecate  the  collateral  subject to the
Security Agreement to any party; or

(xii) A default  by the  Company  of a  material  term,  covenant,  warranty  or
undertaking of any other  agreement to which the Company and Holder are parties,
or the occurrence of an event of default under any such other agreement.

Holders shall, at any time prior to the Maturity Date, have the right to convert
the Note into Shares of the  Company at $2.50 per such Share,  which right shall
be exercised in the Holder's sole and absolute  discretion.  Holders shall, with
respect  to any  Shares  acquired  thereby,  be  granted  the  same  demand  and
piggy-back  registration  rights as if such Shares were purchased as part of the
Units.


In the event of and  immediately  upon the  occurrence of an "Event of Default,"
the Notes shall  become  immediately  due and payable  without any action by the
Holder and the Notes shall bear interest until paid at the rate of 12% per annum
or such amount as shall be allowed by law.

In the event that the sum due under the Note is not repaid on the Maturity Date,
the Holder will have the option to either  have the Note accrue  interest at 12%
or such amount as legally  allowed until paid, or to convert the entirety of the
debt  then  outstanding  under the Note into the  number  of shares  derived  by
dividing  the sum of such debt by the dollar  value  equal to 80% of the closing
ask price of the  shares  on the last  trading  day  immediately  preceding  the
Maturity  Date as  reported  on the market  upon which the shares  shall then be
trading,  provided,  however, that the conversion price shall never be less than
$1.00 per share.  Any shares  acquired  thereby shall carry with them the demand
and piggy back registration  rights granted to the Holder under the terms of the
Note.

                                       36
<PAGE>
Bridge Offering Warrants

Each  Unit,  or $50,000  principal  amount of the Note,  entitles  the holder to
50,000  warrants  exercisable on a one for one basis into shares of Common Stock
at an  exercise  price of $3.20  during a  five-year  period  commencing  on the
initial closing of the Offering (which was December 15, 2003,  2003). per share.
In addition,  each Unit also entitles the holder to 10,000 warrants  exercisable
on a one for one basis into shares of Common Stock at an exercise price of $0.10
per share during a five-year  period  commencing  on the initial  closing of the
Offering  (which was December 15, 2003) In the event a holder of Warrants  fails
to exercise the Warrants  prior to their  expiration,  the Warrants will expire,
and the holder thereof will have no further rights with respect to the Warrants.

The Warrants expire at 5:00 p.m., New York time, on the fifth  anniversary after
the initial closing of the Offering.  In the event a holder of Warrants fails to
exercise the Warrants  prior to their  expiration,  the Warrants will expire and
the holder thereof will have no further rights with respect to the Warrants.

Product Research and Development

Without substantial  financial resources we do not anticipate incurring material
research and development costs during the next twelve months.

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.  Without  substantial  financial  resources 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  December 31, 2004 , we have relied
on the services of outside  consultants  for services and have no 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.

                                       37
<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.

Risks

Applied  DNA  Sciences,  Inc.  is a  small  company  entering  a  technical  and
specialized  scientific  industry.  The  Company's  growth  will depend upon the
working capital and financial  support,  which we are in the process of seeking.
The Company will need  substantial  additional  capital to expand and to exploit
its potential.  While the management  team has strong contacts in the geographic
and product territories,  the Company is small with limited assets and a limited
operating history and may, as a result, have difficulties  securing large enough
and increasing financial commitments from potential investors.  Thus the Company
may be subject to the high risks  associated  with start-up  companies and small
business.

The Company relies on a small number of key  individuals to implement  plans and
operations.  Although the Company may obtain key person life insurance  coverage
on the  Company's  key  individuals  once  substantial  financial  resources are
obtained, the Company has not done so at this time. Should for some reason their
services  become  unavailable,  the Company  will be  required  to retain  other
qualified personnel.

Reductions  or delays in research  and  development  budgets  and in  government
funding may negatively  impact the Company's  sales.  Future clients may include
researchers  at  pharmaceutical  and  biotechnology  companies  as well as other
industrial   sectors,   academic   institutions   and   government  and  private
laboratories.  Fluctuations  in the  research and  development  budgets of these
researchers and their  organizations  could have a significant  effect on demand
for the Company's  products.  Research and development  budgets fluctuate due to
numerous  factors that are outside the  Company's  control and are  difficult to
predict,  including  changes in available  resources,  spending  priorities  and
institutional  budgetary  policies.  The Company's  business  could be seriously
damaged by any decrease in life science research and development expenditures by
pharmaceutical, biotechnological and other industrial sector companies, academic
institutions  or  government  and private  laboratories.  Although  the level of
research  funding has increased  during the past several years, we cannot assure
that this trend will continue. Government funding of research and development is
subject to the political  process,  which is inherently fluid and unpredictable.
Also  government  proposals  to  reduce or  eliminate  budgetary  deficits  have
sometimes included reduced allocations to government agencies that fund research
and development  activities.  Also, our potential  customers  receive funds from
approved  grants at  particular  times of the year, as determined by the federal
government.  Grants have, in the past, been frozen for extended  periods or have
otherwise become unavailable to various institutions without advance notice. The
timing of receipt of grant funds affects the timing of purchase decisions by our
customers and, as a result,  can cause  fluctuations  in our sales and operating
results.

The Company regards trademarks, trade secrets and other intellectual property as
a component of its success, The Company relies on trademark law and trade secret
protection and  confidentiality  and /or license  agreements  with  consultants,
customers,  partners and others to protect our intellectual property.  Effective
trademark and trade secret  protection  may not be available in every country in
which the Company's  products are available.  The Company cannot be certain that
the  Company has taken  adequate  steps to protect  its  intellectual  property,
especially in countries  where the laws may not protect the Company's  rights as
fully  as  in  the  United  States.  In  addition,  the  Company's  third  party
non-disclosure and confidentiality  agreements can be breached and, if they are,
there may not be adequate  remedy  available  to the Company.  If the  Company's
trade secrets become known, the Company may lose its competitive edge.

The  Company may be unable to protect its  trademarks,  trade  secrets and other
intellectual  property  rights that are important to its  business.  The Company
regards  its  trademarks,  trade  secrets and other  intellectual  property as a
component of its success.  The Company  relies on trademark law and trade secret
protection and  confidentiality  and/or  license  agreements  with  consultants,
employees, customers, partners and others to protect our intellectual property.

                                       38
<PAGE>
Litigation as regards the Company intellectual property or other subject matters
could  harm the  Company's  business.  Litigation  regarding  patents  and other
intellectual  property rights is extensive in the  biotechnology  industry.  The
Company is aware that patents have been applied for, and in some cases issued to
others,  claiming technologies that are closely related to Applied DNA Sciences,
Inc. As a result,  and in part due to the  ambiguities  and  evolving  nature of
intellectual   property  law,  the  Company  periodically  receives  notices  of
potential  infringements of patents held by others. Although to date the Company
has successfully  resolved these types of claims, the Company may not be able to
do so in the  future.  In the event of an  intellectual  property  dispute,  the
Company may be forced to litigate.  This  litigation  could involve  proceedings
declared 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 the Company not prevail, could seriously harm
the Company's business,  If a third party claimed an intellectual property right
to  technology  the Company  uses,  the  Company  might need to  discontinue  an
important product or product line, alter its products and processes, pay license
fees or cease its affected business activities, Although the Company might under
these circumstances  attempt to obtain a license to this intellectual  property,
it may not be able to do so on favorable terms, or at all.

In addition to  intellectual  property  rights  litigation,  other  substantial,
complex  or  extended  litigation  could  result in large  expenditures  for the
Company and distraction of its management.  For example, law suits by employees,
shareholders, collaborators, distributors or re-sellers could be very costly and
substantially  disrupt the Company's  business.  Disputes from time to time with
companies or individuals are not uncommon in the industry and the Company cannot
assure that it will always be able to resolve them out of court.

The  Company's  growth  depends upon the ability to  undertake  sales in current
markets and to expand sales  nationally  to  additional  market  segments and to
Europe,  South America,  Australia and parts of the Middle East. There can be no
certainty  that the  Company's  efforts  to  increase  and  expand  sales can be
accomplished on a profitable  basis. The expansion to other delivery methods and
to other venues will depend on a number of factors,  most notably the timely and
successful  promotion  and sale of the Company's  products and related  services
directly or via re-sellers agreements.. The Company's inability to expand sales,
in a timely  manner,  would  have a  material  adverse  effect on its  business,
operating results and its financial condition.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

                                       39
<PAGE>
Item 3.  Controls and Procedures

Evaluation of Disclosure  Controls and Procedures:  As of December 31, 2004, 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.



                                       40
<PAGE>

PART II:  OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

          NONE

ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS

On October 1, 2004, we issued a total of 199,999 shares to parties related to an
investment banker with which we have a non-exclusive engagement.

On October 13, 2004, we issued a total of 257,500 shares to two  consultants for
financial advisory and marketing services.

On October 18, 2004, we issued a total of 347,500  shares to previous  investors
as consideration for our agreement to extend our registration commitment.

On October 19, 2004, we issued  1,000,000  shares to a single investor for total
proceeds of $500,000.

On October 26, 2004, we issued a total of 500,000  shares to parties  related to
our investment  banker in settlement for various  breaches made in our Placement
Agent Agreement.

On  November 4, 2004,  we issued  100,000 to an  employee  as  compensation  for
services previously rendered.

On November  15, 2004 through  December  17, 2004,  we issued a total of 415,000
shares to a consultant for financial advisory services.

On  December  17,  2004,  we issued  5,000  shares to an employee  for  services
previously rendered.

To obtain funding for our ongoing operations,  we sold $1,465,000 in convertible
promissory  notes to 13 investors in December  2004.  Each  promissory  note was
automatically  convertible  into shares of our common stock, at a price of $0.50
per share,  upon the closing of a private  placement  for $1 million or more. In
connection  with  the  sale  of the  convertible  promissory  notes,  we  issued
2,930,000  warrants  to  purchase  shares  of common  stock.  The  warrants  are
exercisable  until three years from the date of issuance at a purchase  price of
$0.75 per share.  This issuance is considered  exempt under  Regulation D of the
Securities Act of 1933 and Rule 506 promulgated thereunder.

Subsequent Sale of Equity Securities

On  January  4,  2005,  we issued  12,500  shares  as a result of an  investor's
exercise  of his $0.10  warrants.  This  issuance  is  considered  exempt  under
Regulation D of the Securities Act of 1933 and Rule 506 promulgated thereunder.

Also on January  10,  2005,  we issued  additional  shares to our  investors  in
accordance with an adjustment  provision in our private  placement and placement
agent  agreement.  We issued a total of  3,249,750  shares of Common Stock to 24
investors.  This  issuance  is  considered  exempt  under  Regulation  D of  the
Securities Act of 1933 and Rule 506 promulgated thereunder.

On  January  13,  2005,  we  issued  additional  shares  to two  consultants  in
accordance with an adjustment provision in their consulting agreements.  A total
of 662,000  shares  were  issued.  This  issuance  is  considered  exempt  under
Regulation D of the Securities Act of 1933 and Rule 506 promulgated thereunder.

To obtain funding for our ongoing  operations,  we conducted a private placement
offering  in January  and  February  2005,  in which we sold  $7,311,000  of 10%
Secured  Convertible   Promissory  Notes  to  61  investors.   The  10%  Secured
Convertible  Promissory  Notes  automatically  convert into shares of our common
stock,  at a price of $0.50 per  share,  upon the  filing  of this  registration
statement.  In connection with the private  placement  offering,  we have issued
15,222,000 warrants. The warrants are exercisable until five years from the date
of issuance at a purchase price of $0.75 per share.  This issuance is considered
exempt under Regulation D of the Securities Act of 1933 and Rule 506 promulgated
thereunder.

On January 28, 2005, we closed upon a private placement transaction in excess of
$1 million,  and on February 2, 2005,  the  promissory  notes issued in December
2004 were converted into an aggregate of 2,930,000 shares of common stock.  This
issuance is considered  exempt under  Regulation D of the Securities Act of 1933
and Rule 506 promulgated thereunder.

     (c) The following table provides  information about purchases by us and our
affiliated  purchasers  during the  quarter  ended  December  31, 2004 of equity
securities  that are  registered by us pursuant to Section 12 of the  Securities
Exchange Act of 1934:

<TABLE>
<CAPTION>

                                                         ISSUER PURCHASES OF EQUITY SECURITIES
Period              (a)                 (b)                        (c)                                       (d)
              Total Number of      Average Price    Total Number of Shares (or Units)   Maximum Number (or Approximate Dollar Value)
             Shares (or Units)    Paid per Share      Purchased as Part of Publicly         of Shares (or Units) that May Yet Be
                Purchased)           (or Unit)       Announced Plans or Programs (1)      Purchased Under the Plans or Programs (1)
<S>               <C>                  <C>                        <C>                                         <C>
10/01/04-
10/31/04             0                  $0                          0                                         0
11/01/04-
11/30/04             0                  $0                          0                                         0
12/01/04-
12/31/04             0                  $0                          0                                         0
</TABLE>
(1) We have not entered into any plans or programs under which we may repurchase
its common stock.

Securities Act of 1933.

On December 17, 2003, we issued a total of 1,850,000  shares to ten  consultants
in connection with our agreement with the company's investment bankers, Vertical
Capital Partners,  Inc.. These issuances are considered exempt from registration
by reason of the 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

          NONE

ITEM 5.   OTHER INFORMATION

          NONE



                                       41
<PAGE>

ITEM 6.   EXHIBITS

(a)    Exhibits


31.1      Principal Executive Officer certification  pursuant to Rule 13a-14 and
          15d-14  under the  Securities  Exchange  Act of 1934,  as amended,  as
          adopted  pursuant  to Section 302 of the  Sarbanes-Oxley  Act of 2002.
          Filed herein.

31.2      Principal Financial Officer certification  pursuant to Rule 13a-14 and
          15d-14  under the  Securities  Exchange  Act of 1934,  as amended,  as
          adopted  pursuant  to Section 302 of the  Sarbanes-Oxley  Act of 2002.
          Filed herein.

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

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



                                       42
<PAGE>
                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

Date:   February 15, 2004                Applied DNA Sciences, Inc.

                                         /s/ Rob Hutchison
                                         ----------------
                                         Rob Hutchison
                                         Chief Executive Officer

                                         /s/Rob Hutchison
                                         ---------------
                                         Rob Hutchison
                                         Interim Chief Financial Officer


                                       43