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


                                   FORM 10QSB

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

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

                  For the Quarterly period ended March 31, 2005

                        Commission file number 002-90519

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

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

    9229 West Sunset Blvd., Suite 830
         Los Angeles, California                            90069
     ---------------------------------                      -----
    (Address of Principal Executive Offices)              (Zip Code)

                                 (310) 860-1362
                                  -------------
              (Registrant's telephone number, including area code)

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

                               Yes __X___ No _____

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

Transitional Small Business Disclosure Format (check one):

                              Yes ______ No ___X___

<PAGE>



                            APPLIED DNA SCIENCES, INC

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

                                Table of Contents
<TABLE>
<CAPTION>

PART I.  FINANCIAL INFORMATION

     Item 1.    Financial Statements

<S>                                                                                                              <C>
                    Condensed Consolidated Balance Sheet:
                    March 31, 2005 (Unaudited)                                                                    3

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

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

                    Condensed Consolidated Statements of Cash Flows:
                    Three Months Ended March 31, 2005 and 2004 (Unaudited) and
                    the Period from September 16, 2002 (Date of Inception) Through March
                    31, 2005 (Unaudited)                                                                         14

                    Notes to Unaudited Condensed Consolidated Financial Information:
                    March 31, 2005                                                                             15-29

     Item 2.    Management Discussion and Analysis                                                               30

     Item 3.    Controls and Procedures                                                                          42

PART II.  OTHER INFORMATION

     Item 1.    Legal Proceedings                                                                                43

     Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds                                      43

     Item 3.    Defaults Upon Senior Securities                                                                  44

     Item 4.    Submission of Matters to a Vote of Security Holders                                              44

     Item 5.    Other Information                                                                                45

     Item 6.    Exhibits                                                                                         45

Signatures                                                                                                       46

</TABLE>

                                        2


<PAGE>


                          PART I. FINANCIAL INFORMATION


Item 1.  Financial Statements (Unaudited)

                           APPLIED DNA SCIENCES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                     ASSETS
                                                                                                 March 31, 2005
                                                                                              ------------------
<S>                                                                                                   <C>
 Current assets:                                                                              $       2,975,017
                                                                                              ------------------
 Cash and Equivalents                                                                                 2,975,017

 Total Current Assets

 Property, Plant and Equipment - Net                                                                     22,134
 Deposits and Prepaid Expenses                                                                           47,500
 Patent Filing - Net                                                                                     26,442
                                                                                              ------------------

 Total Assets                                                                                       $ 3,071,092
                                                                                              ==================
                      LIABILITIES AND STOCKHOLDERS' EQUITY

 Current Liabilities:
 Accounts Payable and Accrued Liabilities                                                           $ 1,653,709
 Accrued Liabilities Due Related Parties                                                                122,162
 Due to Related Parties                                                                                  91,312
 Note Payable                                                                                           425,000
                                                                                              ------------------
 Total Current Liabilities                                                                            2,292,183

 Commitments and contingencies

 Stockholders' Equity:
 Preferred Stock, par value $.001 per share; 10,000,000 shares authorized;
  60,000 issued and outstanding                                                                               6
 Common Stock, par value $.001 per share; 250,000,000 shares authorized; 66,755,267 shares
  issued and outstanding                                                                                 66,755
 Common Stock Subscription                                                                             (880,000)
 Additional Paid-In-Capital                                                                          50,562,133
 Accumulated Deficit                                                                                (48,969,986)
                                                                                              ------------------
                                                                                                        778,909
                                                                                              ------------------
 Total Liabilities and Deficiency in Stockholders' Equity                                     $       3,071,092
                                                                                              ==================
</TABLE>

                                       3
<PAGE>


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

<TABLE>
<CAPTION>

                                                                                                                 September 16, 2002,
                                      For The Three Months Ended March 31   For The Six Months Ended March 31    (Date of Inception)
                                                                                                                        through
                                              2005              2004            2005               2004             March 31, 2005
                                         --------------    --------------   --------------    --------------        --------------
<S>                                          <C>                  <C>            <C>                <C>                 <C>
Operating expenses:
Selling, general and administrative      $   6,150,046     $   1,909,050      $16,942,967     $   9,316,900            38,003,040
Depreciation and amortization                    7,306               351           12,027               703                15,188
                                         --------------    --------------   --------------    --------------        --------------
Total operating expenses                     6,157,352         1,909,501          432,984         9,317,603
597,016            38,018,228

Operating loss                              (6,157,352)       (1,909,501)     (16,774,994)       (9,317,603)          (37,838,228)

Other Income (expense)                           3,100               700            3,415             1,385                29,800
Interest (expense)                          (7,635,563)         (527,838)      (9,203,372)         (662,912           (10,981,558)
Income (taxes) benefit                               -                 -                -                 -                     -
                                         --------------    --------------   --------------    --------------        --------------

Net loss                                 $ (13,789,815)    $  (2,436,638)   $ (26,154,951)    $   9,979,130)        $ (48,969,986)
                                         ==============    ==============   ==============    ==============        ==============
                                                                                                                                -
Loss per common share
(basic and assuming dilution)                  $ (0.26)    $       (0.12)   $       (0.65)    $       (0.51)              $ (1.81)
                                         ==============    ==============   ==============    ==============        ==============

Weighted average shares outstanding         53,044,883        20,700,599       40,082,628        19,575,190            27,017,824
                                         ==============    ==============   ==============    ==============        ==============

 See accompanying notes to unaudited condensed consolidated financial statements
</TABLE>

                                       4
<PAGE>
                            APPLIED DNA SCIENCES, INC
                          (A development stage company)
            CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
          FOR THE PERIOD SEPTEMBER 16, 2002 (DATE OF INCEPTION) THROUGH
                                 MARCH 31, 2005

<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 in exchange
for services valued at
$0.0001  per share in
March 2003                        -           -  10,140,000       1,014           -            -          -           -       1,014
Issuance of  common stock
in exchange for consulting
services valued at
$2.50 per share in March 2003     -           -      91,060           9     230,625            -          -           -     230,634
</TABLE>


 See accompanying notes to unaudited condensed consolidated financial statements

                                        5


<PAGE>

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

<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 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
</TABLE>

                                        6


<PAGE>


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


<TABLE>
<CAPTION>
                                                                                                               Deficit
                                                                         Additional                            Accumulated
                                       Preferred              Common      Paid in     Common     Stock         During
                            Preferred  Shares       Common    Stock       Capital     Stock      Subscription  Development
                             Shares    Amount       Shares    Amount      Amount      Subscribed Receivable    Stage        Total
                           --------- ----------- ----------- ----------- -----------  ---------- ----------- ----------- -----------
<S>                           <C>       <C>          <C>         <C>       <C>           <C>         <C>         <C>         <C>
Common stock canceled
in July 2003,
previously issued for
services rendered  at
$2.50 per share                   -           -     (24,000)         (2)    (59,998)           -          -           -     (60,000)
Common stock issued
in exchange for
options exercised at
$1.00 in July 2003                -           -      20,000           2      19,998            -          -           -      20,000
Common stock issued
in exchange for
exercised of options
previously
subscribed at $1.00 in
July 2003                         -           -      10,000           1       9,999      (10,000)         -           -           -
Common stock issued in
exchange for
consulting services at
approximately
$2.38 per share,
August 2003                       -           -     172,500          17     410,913            -          -           -     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
</TABLE>

                                        7


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

<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>
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
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
</TABLE>


                                        8


<PAGE>

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


<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>
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 $3.00 per
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
</TABLE>


                                        9


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

<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>
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
</TABLE>


                                       10


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

<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>
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)
                           --------- ----------- ----------- ----------- -----------  ---------- ----------- ----------- -----------
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
</TABLE>


                                       11


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

<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>
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
</TABLE>
                                       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
                                 MARCH 31, 2005

<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>
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)
Warrants exercised at
$0.10 share during the
three months ended
March 31, 2005                    -           -     107,500      53,750     (43,000)           -          -           -      10,750

Common Stock issued in
settlement of debt at
$0.33 share during the
three months ended
March 31, 2005                    -           -   4,998,551   2,499,276    (849,754)           -          -           -   1,649,522

Common Stock issued in
settlement of debt at
$0.50 share during the
three months ended
March 31, 2005                    -           -   3,000,000   1,500,000    (300,000)           -          -          -    1,200,000

Common Stock issued in
exchange for consulting
services at $0.50 share
during the three months
ended March 31, 2005              -           -   2,758,977   1,379,489           -            -          -           -   1,379,489

Common stock issued
pursuant to subscription
at  $0.50 per share
during the three months
ended March 31, 2005              -           -  14,742,000   7,371,000           -            -          -           -   7,371,000

Common Stock issued in
exchange for consulting
services at $0.60 share
during the three months
ended March 31, 2005              -           -     200,000     100,000      20,000            -          -           -     120,000

Warrants exercised at
$0.60 share during the
three months ended
March 31, 2005                    -           -     100,000      50,000      10,000            -          -            -     60,000

Adjust common stock par
value from $0.50 to
$0.001 per share, per
amendment of articles
dated March 2005                  -           -           - (33,310,880) 33,310,880            -          -           -           -

Beneficial Conversion
discount relating to
Notes Payable                     -           -           -           -   4,179,554            -          -           -   4,179,554

Beneficial Conversion
Feature relating to
Warrants                          -           -           -           -   3,191,446            -          -           -   3,191,446

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



Net Loss                          -           -           -           -           -            -          - (13,789,815)(13,789,815)
                           --------- ----------- ----------- ----------- -----------  ---------- ----------- ----------- -----------
Balance as of March
31, 2005                     60,000           6  66,755,267      66,755  50,562,133     (879,000)    (1,000)(48,969,986)    778,909
                           ========= =========== =========== =========== ===========  ========== =========== =========== ===========

 See accompanying notes to unaudited condensed consolidated financial statements
</TABLE>

                                       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 Six Months Ended           through
                                                                                            March 31,                March 31,
                                                                                    2005            2004              2005
                                                                                ------------   ------------         ------------

<S>                                                                                   <C>           <C>                   <C>
Cash flows from operating activities:
Net Cash Provided by (Used In) Operating Activities ......................       $(5,312,827)   $(1,808,549)        $(8,884,666)

Cash Flows From Investing Activities:
Net Cash (Used In) Investing Activities ..................................           (28,288)       (53,066)           (102,705)

Cash Flows From Financing Activities:
Net Cash (Used In)Provided by Financing Activities........................         8,314,300      1,866,351          11,962,388
                                                                                ------------   ------------         ------------
Net increase (decrease) in cash and cash equivalents                               2,973,185          4,736           2,975,017
Cash and cash equivalents at beginning of period .........................             1,832        193,471                  --
                                                                                ------------   ------------         ------------
Cash and cash equivalents at the end of period............................       $ 2,975,017    $   198,207           2,975,017

 See accompanying notes to unaudited condensed consolidated financial statements
</TABLE>


                                       15


<PAGE>


                            APPLIED DNA SCIENCES, INC
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (UNAUDITED)

NOTE A - SUMMARY OF ACCOUNTING POLICIES

General

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with the instructions to Form 10-QSB,  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  March  31,  2005 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  March  31,  2005,  the  Company  has  accumulated  losses of
$48,969,986.

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.

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.

                                       16
<PAGE>

                            APPLIED DNA SCIENCES, INC
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                  (UNAUDITED)

NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)

Had compensation  costs for the Company's stock options been determined based on
the fair value at the grant dates for the  awards,  the  Company's  net loss and
losses  per share  would  have been as  follows  (transactions  involving  stock
options issued to employees and Black-Scholes model assumptions are presented in
Note C):
<TABLE>
<CAPTION>
                                                                                For the Period
                                                                                September 16,
                                                                                2002 (Date of
                                            For The Three     For The Three     Inception)
                                            Months ended      Months ended      through
                                            March 31,         March 31,         March 31,
                                            2005              2004              2005
                                            --------------    ------------     -------------
<S>                                         <C>               <C>             <C>
Net loss - as reported                      $ (13,789,815)    $(2,436,638)    $ (48,969,986)
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                        $ (13,789,815)    $(2,436,638)    $ (48,969,986)
                                            ==============    ============    ==============
Net loss attributable to common
stockholders - Pro forma                    $ (13,789,815)    $(2,436,638)    $ (48,969,986)
                                            ==============    ============    ==============

Basic (and assuming dilution) loss
per share - as reported                     $       (0.26)    $     (0.12)    $       (1.81)
                                            ==============    ============    ==============
Basic (and assuming dilution) loss
per share - Pro forma                       $       (0.26)    $     (0.12)    $       (1.81)
                                            ==============    ============    ==============
</TABLE>

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


NOTE B - CAPITAL STOCK

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

                                       17
<PAGE>

                            APPLIED DNA SCIENCES, INC
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (UNAUDITED)

NOTE B - CAPITAL STOCK (continued)

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  .  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.


                                       18
<PAGE>

                            APPLIED DNA SCIENCES, INC
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (UNAUDITED)

NOTE B - 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.

                                       19
<PAGE>

                            APPLIED DNA SCIENCES, INC
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (UNAUDITED)

NOTE B - CAPITAL STOCK (continued)

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

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

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

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

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

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

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

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

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

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.


                                       20
<PAGE>

                            APPLIED DNA SCIENCES, INC
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (UNAUDITED)

NOTE B - CAPITAL STOCK (continued)

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
subscription  to  purchase  the  Company's  common  stock  pursuant to a private
placement.

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

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

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

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

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

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

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




                                       21
<PAGE>

                            APPLIED DNA SCIENCES, INC
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (UNAUDITED)

NOTE B - CAPITAL STOCK (continued)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       22
<PAGE>

                            APPLIED DNA SCIENCES, INC
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (UNAUDITED)

NOTE B - CAPITAL STOCK (continued)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       23
<PAGE>

                            APPLIED DNA SCIENCES, INC
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (UNAUDITED)

NOTE B - CAPITAL STOCK (continued)

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

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

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

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

In 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.

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

                                       24
<PAGE>


                            APPLIED DNA SCIENCES, INC
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (UNAUDITED)

NOTE B - CAPITAL STOCK (continued)

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.

                                       25
<PAGE>

                            APPLIED DNA SCIENCES, INC
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (UNAUDITED)

NOTE B - CAPITAL STOCK (continued)

During the three months ended March 31, 2005, we issued 107,500 shares of common
stock for warrants  exercised at $0.10 share. This issuance is considered exempt
under  Regulation  D of the  Securities  Act of 1933 and  Rule  506  promulgated
thereunder.

During  the three  months  ended  March  31,  2005,  we  retired  $1,649,522  of
convertible  notes payable for 4,998,551  shares of common stock.  The Notes are
convertible into shares of our common stock at a price of $0.33 per share.

During  the three  months  ended  March 31,  2005,  we  retired $  1,200,000  of
convertible  notes payable for 3,000,000  shares of common stock.  The Notes are
convertible into shares of our common stock at a price of $0.50 per share.

During the three  months  ended March 31,  2005,  the Company  issued  2,758,977
shares of common stock in exchange for consulting  services.  The Company valued
the shares issued at  approximately  $0.50 per share for a total of $ 1,379,489,
which  represents  the fair value of the services  received which did not differ
materially from the value of the stock issued.

During the three months ended March 31, 2005,  the Company issued 200,000 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 $120,000,  which
represents  the  fair  value  of the  services  received  which  did not  differ
materially from the value of the stock issued.

During the three  months  ended March 31, 2005,  the Company  issued  14,742,000
shares of common stock  subscribed  for cash at $0.50 per share for a total of $
7,371,000  pursuant to the exercise  terms of a promissory  note  payable.  This
issuance is considered  exempt under  Regulation D of the Securities Act of 1933
and Rule 506 promulgated thereunder.

In March 2005, the Company issued 100,000 shares of common stock in exchange for
services.  The Company valued the shares issued at approximately $0.60 per share
for a total  of $  60,000,  which  represents  the fair  value  of the  services
received which did not differ materially from the value of the stock issued.

The Company recognized an imbedded beneficial  conversion feature present in the
January/February Offering note ("January/February PPM"). 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
4,179,554 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.

The Company  recognized the value  attributable to the warrants in the amount of
$3,191,446   to  additional   paid  in  capital  and  a  discount   against  the
January/February PPM.

                                       26
<PAGE>


                            APPLIED DNA SCIENCES, INC
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (UNAUDITED)

NOTE B - 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 C - 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           105,464              4.29             $0.10           105,464             $0.10
        $0.50            50,000              4.52             $0.50            50,000             $0.50
        $0.60         6,222,750              4.04             $0.60         6,222,750             $0.60
        $0.70           750,000              2.34             $0.70           750,000             $0.70
        $0.75        17,672,000              4.53             $0.75        17,672,000             $0.75
        $1.00           386,000              0.54             $1.00           386,000             $1.00
        $3.00            62,503              0.75             $3.00            62,503             $3.00
                  --------------                                        --------------
                     25,248,717                                            25,248,717
                  ==============                                        ==============
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                                            20,708,000                     0.73
          Exercised                                            (329,536)                    0.25
          Canceled or expired                                         -                        -
                                                          --------------           --------------
       Outstanding at March 31, 2005                         25,248,717                 $   0.72
                                                          ==============           ==============
</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 six
months ended March 31, 2005.

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

                                       27
<PAGE>



                            APPLIED DNA SCIENCES, INC
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (UNAUDITED)

NOTE C - STOCK OPTIONS AND WARRANTS (continued)
<TABLE>
<CAPTION>

                     Options Outstanding                                   Options Exercisable
                     -------------------                                   -------------------
                                Weighted Average
      Exercise      Number    Remaining Contractual  Weighed Average    Number     Weighted Average
       Prices    Outstanding      Life (Years)       Exercise Price   Exercisable   Exercise Price
       ------    -----------      ------------       --------------   -----------   --------------
<S>    <C>           <C>               <C>            <C>                 <C>             <C>
      $   0.60      300,000           2.00           $        0.60       300,000    $        0.60
                 -----------          -----          --------------   -----------   --------------
                    300,000           2.00           $        0.60       300,000    $        0.60
                 ===========          =====          ==============   ===========   ==============
</TABLE>

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

                                                  Number of    Weighted Average
                                                    Shares      Price Per Share
                                                 -----------     -----------
       Outstanding at October 1, 2004                     -               -
          Granted                                   300,000            0.60
          Exercised                                       -               -
          Canceled or expired                            --              --
                                                 -----------     -----------
       Outstanding at March 31, 2005                300,000      $     0.60
                                                 ===========     ===========

During the three months ended March 31, 2005,  the Company  granted an aggregate
of 300,000  stock  options to employees  that vested  immediately.  The exercise
prices of the stock  options  granted were below the fair value of the Company's
common  stock at the grant date.  Compensation  expense of  $180,000  and $0 was
charged  to  operations  during  the  period  ended  March  31,  2005 and  2004,
respectively.

NOTE D- COMMITMENTS AND CONTINGENCIES

Registration of Securities

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

Consulting Agreements

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

                                       28
<PAGE>

                            APPLIED DNA SCIENCES, INC
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                                 MARCH 31, 2005
                                   (UNAUDITED)

NOTE D- COMMITMENTS AND CONTINGENCIES (continued)

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

Litigation

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

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

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

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


NOTE E- SUBSEQUENT EVENTS

The Company has entered into an  agreement  as amended  with Biowell  Technology
Inc.,  a company  formed under the laws of Taiwan  ("Biowell"),  to acquire from
Biowell  certain  intellectual   property  and  other  assets  in  exchange  for
approximately  36,000,000  shares of the Company's  restricted common stock. The
consummation  of the transaction is subject to a number of terms and conditions,
including, but not limited to, approval by Biowell shareholders.
Stern & Co. v. Applied DNA Sciences, Inc., Case No.: 05 CV 00202

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

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

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


                                       29
<PAGE>
Item 2. Management's Discussion and Analysis

FORWARD-LOOKING STATEMENTS

     The following  discussion  should be read in conjunction with the Company's
Consolidated  Financial Statements and Notes thereto,  included elsewhere within
this report. The quarterly report contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended,  including  statements using
terminology such as "can", "may", "believe",  "designated to", "will", "expect",
"plan",  "anticipate",  "estimate",  "potential" or "continue",  or the negative
thereof or other comparable terminology regarding beliefs,  plans,  expectations
or intentions regarding the future. Forward looking statements involve risks and
uncertainties and actual results could differ materially from those discussed in
forward-looking  statements.  All forward  looking  statements  and risk factors
included in this document are made as of the date hereof,  based on  information
available  to the Company as of the date  thereof,  and the  Company  assumes no
obligations to update any forward-looking  statement or risk factor,  unless the
Company is required to do so by law.

Plan of Operation

Revenues

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

Costs and Expenses

     From our  inception  through  March 31, 2005,  we have  incurred  losses of
$48,969,986.  These  expenses  were  associated  principally  with  equity-based
compensation  to  employees  and  consultants,  product  development  costs  and
professional services.

Liquidity and Capital Resources

     From the  Company's  inception to March 31, 2005 the Company has incurred a
operating  cash  flow  deficit  of  $8,884,666.  Cash  flows  used in  investing
activities was $102,705 during the period  September 16, 2002 (date of Company's
inception)  through  March 31, 2005.  We met our cash  requirements  through the
issuance  of  capital  and other  notes  payable  (net of  repayments);  private
placement  of our  common  stock and  advances  from  Company  shareholders  and
officers of $ 11,962,388.

     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.

                                       30
<PAGE>
     From the Company's inception,  the Company's priorities were to recruit and
build its team,  organize  its new  infrastructure  and to develop a  successful
strategy  how best to  exploit  its  exclusive  Biowell  license  agreement.  No
revenues  were  generated.  Although  the  management  of the  Company is of the
opinion that continuing to develop and finance the Company's present business of
providing  DNA   anti-counterfeit   technology  may  ultimately  be  successful,
management   nevertheless   expects  that  the  Company  will  need  substantial
additional capital before the Company's operations can be fully implemented.

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

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

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

     To obtain  funding  for our  ongoing  operations,  we  conducted  a private
placement  offering in January and February 2005, in which we sold $7,371,000 of
10%  Secured  Convertible  Promissory  Notes to 61  investors.  The 10%  Secured
Convertible  Promissory Notes automatically  converted into shares of our common
stock,  at a price of $0.50  per  share,  upon the  filing  of the  registration
statement  on February  15,  2005.  In  connection  with the  private  placement
offering, we have issued 14,742,000 warrants. The warrants are exercisable until
five years from the date of issuance at a purchase price of $0.75 per share.

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

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

Off-Balance Sheet Arrangements

     We do not have any off-balance sheet arrangements.

                                       31
<PAGE>
Product Research and Development

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

Acquisition of Plant and Equipment and Other Assets

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

Number of Employees

     From our inception  through the period ended March 31, 2005, we have 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.

Going Concern

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

Trends, Risks and Uncertainties

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

                                  RISK FACTORS

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

                                       32
<PAGE>
     Such estimates,  projections or other "forward-looking  statements" involve
various risks and  uncertainties  as outlined  below. We caution the reader that
important  factors  in some  cases  have  affected  and,  in the  future,  could
materially  affect actual results and cause actual results to differ  materially
from  the  results  expressed  in  any  such  estimates,  projections  or  other
"forward-looking statements".

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

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

     We incurred net losses of $19,358,259 for the year ended September 30, 2004
and  $3,445,164 for the year ended December 31, 2003. For the three months ended
March 31, 2005, we incurred a net loss of $13,789,815. We cannot assure you that
we can achieve or sustain  profitability  on a quarterly  or annual basis in the
future. Our operations are subject to the risks and competition  inherent in the
establishment  of a business  enterprise.  There can be no assurance that future
operations  will be profitable.  Revenues and profits,  if any, will depend upon
various factors,  including  whether we will be able to generate  revenue.  As a
result of  continuing  losses,  we may  exhaust  all of our  resources  prior to
completing  the  development  of our products.  Additionally,  as we continue to
incur losses,  our  accumulated  deficit will continue to increase,  which might
make it harder for us to obtain financing in the future.  We may not achieve our
business  objectives and the failure to achieve such goals would have an adverse
impact on us, which could result in reducing or terminating our operations.

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

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

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

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

     In their report dated January 11, 2005,  our  independent  auditors  stated
that our  financial  statements  for the year  ended  September  31,  2004  were
prepared  assuming  that we would  continue as a going  concern.  Our ability to
continue as a going  concern is an issue raised due to our  incurring net losses
of $22,815,035  during the period September 16, 2002 through September 30, 2004.
In addition,  we have a deficiency in  stockholder's  equity of  $4,706,508.  We
continue to experience net operating losses.  Our ability to continue as a going
concern is subject to our ability to generate a profit and/or  obtain  necessary
funding from outside sources,  including  obtaining  additional funding from the
sale of our  securities,  generating  sales or  obtaining  loans and grants from
various  financial  institutions  where  possible.  Our  continued net operating
losses  increases  the  difficulty  in  meeting  such  goals and there can be no
assurances that such methods will prove successful.

                                       33
<PAGE>
Our Research and Development Efforts for New Products May be Unsuccessful.

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

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

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

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

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

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

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

                                       34
<PAGE>
If We Fail to Introduce New Products, or Our existing Products are not Accepted
by Potential Customers, We May Not Gain or May Lose Market Share.

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

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

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

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

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

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

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

     We  compete  with  other  companies  for  the  production  capacity  of our
manufacturers and import quota capacity.  Some of these competitors have greater
financial and other  resources  than we have,  and thus may have an advantage in
the  competition  for production and import quota  capacity.  If we experience a
significant  increase in demand, or if an existing  manufacturer of ours must be
replaced,  we may have to expand  our  third-party  manufacturing  capacity.  We
cannot assure you that this additional  capacity will be available when required

                                       35
<PAGE>
on terms that are  acceptable  to us or similar to existing  terms which we have
with our  manufacturers,  either  from a  production  standpoint  or a financial
standpoint.  We do not have long-term  contracts with any manufacturer.  None of
the manufacturers we use produces our products exclusively.

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

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

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

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

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

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

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

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

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

                                       36
<PAGE>
If We Are Unable to Retain the Services of Messrs. Hutchison, Brocklesby, Botash
or Klemm, or If We Are Unable to Successfully  Recruit Qualified  Managerial and
Sales Personnel  Having  Experience in Business,  We May Not Be Able to Continue
Our Operations.

     Our success depends to a significant  extent upon the continued  service of
Mr. Rob  Hutchison,  our Chief  Executive  Officer,  Mr. Peter  Brocklesby,  our
President,  Mr. Adrian Botash,  our Chief Marketing Officer and Ms. Karin Klemm,
our Chief Operating Officer and Interim Chief Financial Officer.  We do not have
employment agreements with Messrs. Hutchison,  Brocklesby, Botash or Klemm. Loss
of the services of Messrs. Hutchison,  Brocklesby,  Botash or Klemm could have a
material adverse effect on our growth, revenues, and prospective business. We do
not maintain  key-man  insurance on the life of Messrs.  Hutchison,  Brocklesby,
Botash or Klemm.  Besides Mr.  Hutchison's  desire to retire within the next few
months,  we are not aware of any other named  executive  officer or director who
has plans to leave us or retire. In addition, in order to successfully implement
and manage our business  plan,  we will be dependent  upon,  among other things,
successfully   recruiting   qualified  managerial  and  sales  personnel  having
experience in business.  Competition for qualified individuals is intense. There
can be no assurance  that we will be able to find,  attract and retain  existing
employees  or  that  we will be able  to  find,  attract  and  retain  qualified
personnel on acceptable terms.

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

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

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

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

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

     We are engaged in a segment of the biomedical  research  products  industry
that is highly  competitive.  We  compete  with  many  other  suppliers  and new
competitors  continue to enter the market. Many of our competitors,  both in the
United   States  and   elsewhere,   are  major   pharmaceutical,   chemical  and
biotechnology  companies,  and many of them have  substantially  greater capital
resources, marketing experience,  research and development staff, and facilities

                                       37
<PAGE>
than we do. Any of these companies could succeed in developing products that are
more  effective  than the  products  that we have or may develop and may be more
successful than us in producing and marketing  their products.  It is impossible
to quantify the number of  competitors  since they include both the companies we
attempt to sell our  products  and  services  to through  their use of  internal
security  and  various  other  security  product  companies.  Also,  it is  also
impossible  to  determine  market  size  and  market  data  information  because
companies  are secretive  about what security  methods they utilize and how much
they  spend  on  such  measures.  Some  of  the  anti-counterfeiting  and  fraud
protection  competitors that we are aware of include:  Authentix,  InkSure,  DNA
Technologies, Inc., Art Guard International,  Theft Protection Systems, Tracetag
and November AG.

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

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

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

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

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

Intellectual Property Litigation Could Harm Our Business.

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

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

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

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

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

Accidents Related to Hazardous Materials Could Adversely Affect Our Business.

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

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

     We face a potential  risk of  liability  claims  based on our  products and
services,  and we have faced such claims in the past.  We  currently do not have
any product  liability  coverage but are attempting to obtain  coverage which we
will believe to be adequate. We cannot assure,  however, that we will be able to
obtain or maintain this insurance at reasonable cost and on reasonable terms. We
also cannot assure that this insurance, if obtained, will be adequate to protect

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<PAGE>
us against a product  liability  claim,  should  one arise.  In the event that a
product liability claim is successfully brought against us, it could result in a
significant  decrease in our  liquidity  or assets,  which  could  result in the
reduction or termination of our business.

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

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

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

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

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

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

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

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

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

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

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

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

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


                                       41
<PAGE>
Item 3. Controls and Procedures

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

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

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<PAGE>
PART II--OTHER INFORMATION

Item 1. Legal Proceedings

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


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

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

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

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

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

     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.

     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 $7,361,000 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

                                       43
<PAGE>
statement.  In connection with the private  placement  offering,  we have issued
14,742,000 warrants. The warrants are exercisable until five years from the date
of issuance at a purchase price of $0.75 per share.  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.

During the three months ended March 31, 2005, we issued 107,500 shares of common
stock for warrants  exercised at $0.10 share. This issuance is considered exempt
under  Regulation  D of the  Securities  Act of 1933 and  Rule  506  promulgated
thereunder.

During  the three  months  ended  March  31,  2005,  we  retired  $1,649,522  of
convertible  notes payable for 4,998,551  shares of common stock.  The Notes are
convertible into shares of our common stock at a price of $0.33 per share.

During  the three  months  ended  March 31,  2005,  we  retired $  1,200,000  of
convertible  notes payable for 3,000,000  shares of common stock.  The Notes are
convertible into shares of our common stock at a price of $0.50 per share.

During the three  months  ended March 31,  2005,  the Company  issued  2,758,977
shares of common stock in exchange for consulting  services.  The Company valued
the shares issued at  approximately  $0.50 per share for a total of $ 1,379,489,
which  represents  the fair value of the services  received which did not differ
materially from the value of the stock issued.

During the three months ended March 31, 2005,  the Company issued 200,000 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 $120,000,  which
represents  the  fair  value  of the  services  received  which  did not  differ
materially from the value of the stock issued.

During the three  months  ended March 31, 2005,  the Company  issued  14,742,000
shares of common stock  subscribed  for cash at $0.50 per share for a total of $
7,371,000  pursuant to the exercise  terms of a promissory  note  payable.  This
issuance is considered  exempt under  Regulation D of the Securities Act of 1933
and Rule 506 promulgated thereunder.

In March 2005, the Company issued 100,000 shares of common stock in exchange for
services.  The Company valued the shares issued at approximately $0.60 per share
for a total  of $  60,000,  which  represents  the fair  value  of the  services
received which did not differ materially from the value of the stock issued.

Item 3. Defaults Upon Senior Securities

         None.

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

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

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

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

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

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

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

Item 5. Other Information

         None.

Item 6. Exhibits

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

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

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

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

                                       45
<PAGE>
                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.

                           APPLIED DNA SCIENCES, INC.

Date:  May 23, 2005                             By: /s/ ROB HUTCHISON
                                                   ------------------
                                                Rob Hutchison
                                                Chief Executive Officer
                                                (Principal Executive Officer)

Date:  May 23, 2005                             By: /s/ KARIN KLEMM
                                                   ----------------
                                                Karin Klemm
                                                Chief Financial Officer
                                                (Principal Financial Officer and
                                                Principal Accounting Officer)




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