SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-KSB

       |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                                    EXCHANGE
             ACT OF 1934 for the fiscal year ended February 29, 2005

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

      For the transition period from February 28, 2004 to February 29, 2005

                          Commission File No. 33-51218

                          MEDISCIENCE TECHNOLOGY CORP.
             (Exact name of registrant as specified in its charter)

                     New Jersey                          22-1937826
         (State or other jurisdiction of               (I.R.S. Employer
          incorporation or organization)              Identification No.)

                1235 Folkstone Way, Cherry Hill, New Jersey 08034
                    (Address of Principal executive offices)

         Issuer's telephone number, including area code: (201)-925-5077
        Securities registered pursuant to section 12(b) of the Act: None
          Securities registered pursuant to section 12(g) of the Act:
                     Common Stock, par value $.01 per share

Check whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities  Exchange Act of 1934 during the preceding
12 months (or for such shorter  period that the  registrant was required to file
such reports) and (2) has been subject to such filing  requirements for the past
90 days, Yes |X| No |_|

Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. Registrant is in full conformance/compliance to all applicable
provisions of the Sarbanes-Oxley Act effective August 29, 2002 and SEC section
16 form 5 rules effective August 27, 2002 |X|

The issuer's revenues for its most recent fiscal year were: $ none

The aggregate market value of the voting stock and non-voting common equity held
by non-affiliates computed by the average bid and asked price of the common
equity of the Registrant, as of, June 2, 2005, ($0.56 per share)
was:$32,696,908.24

The number of shares outstanding of Registrant's common stock, as of June 2,
2005, was 58,837,334. (See subsequent events Item 13) The issuer has no other
classes of common equity outstanding as of that date.

         Title of Each Class                       Number of Shares Outstanding

Common Stock, par value $.01 per share                       58,837,334

Preferred Stock, par value $0.1 per share                       -0-


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8-K report Dated March 31, 2005: April 1, 2005--Registrant has engaged The
Investor Relations Group, Inc. (IRG), based in New York City, to serve as its
financial relations and corporate communications agency of record. Agreement
filed as Exhibit 99.1 hereto. Press Release Exhibit 99.2

8-K report dated February 26, 2005 Parente Randolph LLC Our Former Independent
Auditor Firm was resigned effective February 28, 2005 Item 4.01 Changes in
Registrant's Certifying Accountant.)

8-K report dated March 14, 2005 registrant engaged auditors Cogan Sklar LLP 150
Monument Road Suite 500 Bala Cynwyd Penna. 19004 as Auditor for for the year
ended February 28, 2005. Cogan Sklar LLP is registered and approved by the
Public Company Oversight Board and is independent with respect to registrant
within the meaning of applicable Securities Acts (Item 4.01 Changes in
Registrant's Certifying Accountant).

8-K report dated Nov. 17, 2003--Registrant announced its agreement dated April
1, 2005 with Research Foundation - City University of New York (RF-CUNY) to
modify and integrate the Company's CD-Ratiometer(TM) and CD-Map(TM) to couple a
micro-endscope for molecular fluorescence measurements of breast ducts.
Agreement filed as Exhibit 99.1 hereto under Item Section 1 Registrants Business
and Operations and Item 1.01. Entry into a material definitive agreement

8-K Report dated January 27, 2005 CONSULTANT RESEARCH AND DEVELOPMENT AGREEMENT
dated January 21, 2005 by and between Registrant and Dr. Julian Kim of the
Cleveland Clinic

Registrant announced SB-2 SEC registration 333-117820 SEC was declared effective
January 12, 2005 dated December 21, 2004 for 8,075,000 shares. On March 8, 2004,
under the terms of a preferred stock private placement offering concluded in
February 2004, the Company converted had 60 shares of its preferred stock into
6,000,000 shares of its common stock.

8-KA Report dated Decewmber,9,2004 an amended and restated employment agreement
dated December 9, 2004 through April 2006 between the Company and Michael
Engelhart to clarify the original intent with respect to the original employment
agreement and the instruments issued to the employee pursuant to the original
employment agreement so as to eliminate any ambiguities and inconsistencies._

8-K December 9, 2004 Medi-Photonics Development LLC wholly owned NY Subsidiary
announced the COMPLETION OF DEVELOPMENT OF ITS OPTICAL BIOPSY "CANCER DIAGNOSTIC
RATIOMETER"(TM) AND SUBMISSION TO THE FDA OF PRE-IDE BRIEFING MATERIALS

8-K November 9, 2004 Agreement between Registrants NY sub. Medi-Photonics LLC
and Infotonics Technology Center, a not-for-profit corp. - consortium (Corning,
,Kodak and Xerox) for the funding and development of commercially device/s i.e
("The Compact Photonic Explorer (CPE) project, a four-year
multidisciplinary/multi-institutional effort to develop miniature devices that
use light to remotely monitor the health of various environments. Initial focus
is developing a "photonic pill" to detect cancer and monitor body functions.")
for Mediscience Technology Corp. that will make use of ultraviolet light to
diagnose the health of living tissue remotely monitoring the health/status of
various medical environments, e.g., the detection of various types of cancer and
the monitoring of body functions. The Parties also wish to develop from the
research program commercially viable miniature devices for other markets, such
as the "sensing" of biological and chemical species and other non-medical
applications Agreement filed as Exhibit 99.1 hereto.

                      DOCUMENTS INCORPORATED BY REFERENCE:

All SEC 10-KSB, 8-K and 10-Q filings, SEC 14C filing, Registrant. filed its
"Definitive" Information Statement 14C after SEC review and compliance on
January 20, 2004, noticing, January 16, 2004 as the legal "Record Date" and
identifying those shareholders entitled to receive with a mailing to
shareholders of record on January 20, 2004. A summary of our letter to
shareholders and proposed agenda is included in for your information. See ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS supra

8-K Report, filed May 6,, 2004 Registrant executed a Project Agreement with the
Research Foundation City University of New York (RFCUNY), effective May 7, 2004


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8-K Report dated February 20, 2004 Peter Katevatis Chairman/ CEO, of Registrant,
"announced the State of New York approval the formation of "MEDIPHOTONICS
DEVELOPMENT LLC" as of February 20, 2004. The LLC Company is a wholly owned New
York City, New York County, NY State subsidiary of Mediscience Technology
located at 101 31st Street New York, NY

8-K Report dated February 18, 2004: "Change in Articles of Incorporation" On
February 17, 2004 the Board of Directors by unanimous written consent increased
the authorized common shares from 40,000,000 to 200,000,000. The number of
shares of the Corporation issued and entitled to vote thereon based on the
Corporations established record date of January 16, 2004 and shareholder notice
per its SEC 14C filing was 39,372,753. The amendment was duly adopted by written
consent of a majority of shareholders holding 23,316,168) in accordance with the
applicable provisions of Section 14A:5-6 Corporation, General, of the State of
New Jersey Statutes.

8-K dated January 18, 2004 On Jauary17, 2004 registrant initiated and completed
a 1.5 Million private placement of Mediscience non-interest bearing Convertible
Preferred, with individual dollar investment at no less than $25,000 for each of
60 shares each convertible into (100,000 shares of MTC common. at $.25 cents per
share). MTC will issue on conversion of all MTC CP shares a total of six (6)
million common shares. The private placement agreement by its terms provide that
MTC management can at any time and for any reason and without notice to the
investors convert all MTC CP shares issued.

8-K filing dated: December 4, 2003 Mediscience Technology Corp. qualified by FDA
for reduced or waived fees and expedited 3rd Party review process on its medical
device 510K submissions

8-K filing dated: December 4, 2003 registrant secures exclusive World-Wide
license to US molecular imaging patent applications, expected to EXTEND CORE
technology additional 17+ years,

8-K Report dated June 4, 2003 Michael Engelhart, President and COO of
Registrant, "announced the State of Delaware approval and formation of
"PROSCREEN, LLC" as of (June 3, 2003) and Photonics for Woman's Oncology LLC. as
of (February 27, 2003. "Both LLC Company's are wholly owned subsidiaries of
Mediscience Technology. "PROSCREEN, LLC" its second LLC Company has a potential
clinical application for non-invasively diagnosing prostate cancers without
removing prostate tissues".

8-K Report w/exhibits dated March 13, 2003 effective April 26, 2003 Mr. Sidney
Braginsky, former President COO and the Registrant agreed to the total and
immediate nullification and termination of his July 9, 2001 agreement with
Mediscience Technology Corp. together with all its terms and conditions,
including any claim for accruals in salary and/or expenses effective
retroactively as of July 9, 2001. Mr. Braginsky continues as an active Board
member.

8-K Report dated March 13, 2003, On unanimous Board of Directors approval
Registrant appointed Michael Engelhart to the Mediscience Board of Directors
effective immediately.

8-K Report January22. 2003 On January 13, 2003 Registrant entered into an
agreement with THMGROUP of Ramsey NJ as exclusive advisor to explore
commercialization of Registrants technology applications. Terminated April 12,
2004 by THM GROUP. Michael Engelhart has assumed full time COO responsibilities
to commercialize Registrants technology applications

                                MEDISCIENCE CORP.
                          Annual Report on Form 10-KSB

Table of Contents

                                     PART I

Item 1. Description of Business

Item 2. Description of Properties (Technology and Products)

Item 3. Legal Proceedings

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

                                     PART II

Item 5. Market for Common Equity and Related Shareholder Matters


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Item 6. Management's Discussion and Analysis or Plan of Operation

Item 7. Financial Statements

      Consolidated Balance Sheets- February 29, 2005 and February 28, 2004

      Consolidated Statements of Operations for the years ended February 29,
2005, and February 28, 2004 and February 28, 2003

      Consolidated Statement of Stockholders Deficit for the years ended
February 29, 2005, and February 28, 2004 and February 28, 2003

      Consolidated Statements of Cash Flows for the years ended February 29,
2005, and February 28, 2004 and February 28, 2003

      Notes to Consolidated Financial Statements

Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

Item 8A. Controls and Procedures

                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons

Item 10. Executive Compensation

Item 11. Security Ownership of Certain Owners and Management

Item 12. Certain Relationships and Related Transactions

Item 13. Principal Accountant Fees and Services

Item 14. Exhibits and Reports on Form 8-K

Item 15. Subsequent Events

Item 1. DESCRIPTION OF BUSINESS

Introduction

This annual report on Form 10-KSB contains certain forward-looking " Safe
Harbor" statements within the meaning of Section 27A of the Securities Act of
1933 and Section 21E the Securities Act of 1934 and Item 16 Risk Factors
incorporated herein. Actual events or results may differ materially from those
projected in the forward-looking statements as a result of the factors described
herein Such forward-looking statements include, but are not limited to,
statements concerning business strategy, development and introduction of new
products, research and development, marketing, sales and distribution,
manufacturing, competition, third-party reimbursement, government regulation
(including, but not limited to, FDA requirements), continued clinical trial
relationships and operating and capital requirements. Mediscience is in full
compliance with SEC regulation FD "Full Disclosure" requirements, adopted August
10, 2000 (see SEC release No. 33-7881), by exclusive reporting of material
events (disclosures where it is reasonably foreseeable that the information will
result in trading in an issuer's securities), through periodic 8-K filings and
postings on its internet site MEDISCIENCETECH.com

Safe Harbor Information of importance to our shareholders: Effective October,
2003 SEC III: Rule 10b-18 Safe Harbor Changes are statutorily applicable to the
repurchase of a company's common stock in the open market. The SEC changes to
Rule 10b-18, provide companies with a safe harbor from liability for stock
manipulation if they repurchase their common stock in the open market in
accordance with the rule's manner, time, price, and volume conditions. As
amended, Rule 10b-18 requires companies to disclose all repurchases - even those
occurring outside Rule 10b-18 - in tabular form in their quarterly and annual


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reports. The tables will include, among other things, the total number of shares
repurchased, the average price paid per share, and the number of shares
repurchased as part of a publicly announced plan or program. The SEC Rule 10b-18
change is not presently applicable to registrant. The Company has no present or
future commitment or intentions to re-purchase any of its outstanding common
stock.

Background

The Company operates in one business segment and is principally engaged in the
design and development of medical diagnostic instruments that detect cancer in
vivo in humans by using light to excite the molecules contained in tissue and
measuring the differences in the resulting natural fluorescence between
cancerous and normal tissue. On December 1, 1988, registrant acquired all the
outstanding stock of Laser Diagnostic Instruments, Inc. ("LDI"), a wholly owned
subsidiary of the Company. The principle asset of LDI was the ownership of a
patent application entitled "Method and Apparatus for Detecting Cancerous Tissue
Using Visible Luminescence," which was subsequently granted as patent number
4,930,516 by the US Patent and Trademark Office on June 5, 1990. The "516"
claims were expanded from 9 to 59 on August 8, 1998 in a reexamination of that
patent initiated by the Company. Our research and development activities are
centered around and the expansion of this patent and its technology and other
patents either acquired subsequently by Mediscience or for which Mediscience is
the exclusive licensee.

Registrant contractually acquired two exclusive world-wide licenses for US
patent applications filed by The Research Foundation City University of New York
(RFCUNY). 1. "Stokes-Shift Fluorescence spectroscopy for detection of disease
and physiological state of specimen" and 2. "Three-dimensional Radiative
Transfer Tomography for Turbid Media." The work results from the Company's
continual 10-year+ University research funding relationship. President and Chief
Operating Officer Michael Engelhart. and CUNY inventor and Registrant founder
Dr. Robert Alfano state that "the Stokes-Shift patent, when issued, would extend
the Company's core technology in Optical Biopsy expanding, maintaining and
continuing IP leadership in the Optical Biopsy field. Registrant's claim of
priority right will run from the filing date of the US Provisional Patent filing
of February 5, 2003 Serial Number 60/444,869 thus providing Mediscience core
technology a twenty (20) year period of patent protection running to February 5,
2023". NOTE: SEE: Registrant SEC/EDGAR 8-k filing dated: December 4, 2003 See
Web Page: MEDISCIENCETECH.com; See (IEEE Journal of selected topics in Quantum
Electronics, March-April 2003 Vol. 9, Dr. Alfano page 148.

The Company has successfully conducted preclinical and clinical evaluations
which continue to support our belief that our proprietary technology, when fully
developed, will be useful in the screening and diagnosis of cancer. The
Company's technology, if successfully developed, will have substantial
commercial appeal due to its: non-invasive nature; delivery of immediate
results; enhanced diagnostic sensitivity and specificity and; appeal to
physicians whom will potentially generate better patient outcomes and revenues
that currently accrue to an off site pathology laboratory.

On January 25, 1999 the FDA classified our Mediscience CD-Scan as a
non-significant risk device for human trial Phase I clinical investigation of
the biological basis of fluorescence as applied to medically significant female
OBGYN health issues. This pilot study is being conducted under a research
agreement with Yale University and CUNY under the direction of Dr. Frederick
Naftolin, Chairman OBGYN Dept. of Obstetrics and Gynecology. On December 11,
2003 the FDA, after review, qualified Registrant under MDUFMA allowing both
reduced or waived FDA fees for its 2004 medical device 510K or other market
approval submissions." and Company participation in expedited FDA review through
FDA clinical inspections conducted independently by third party FDA approved
"accredited" persons, directly employed by Mediscience.

Strategy

The Company's strategy is to commercialize early cancer screening and detection
devices based upon its developed technology, completed proto-type's, and
expertise in the area of Fluorescent Imaging. In addition to acquiring and
seeking additional conventional direct investment into the Company the Company
optionally may use an Organizational Structure of wholly owned subsidiary LLC,
each with its own Intellectual Property supported application. Our key purpose
is to maximize the value of the Company's Intellectual Property. Our first LLC
commercial effort "MEDI-PHOTONICS


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DEVELOPMENT, a New York City New York State domiciled LLC" will be in the area
of early cancer screening and detection for cervical cancer. To that end, the
company is: in possession of a working prototype; building upon the management
team; and completing a plan for submitting its CD-Ratiometer, an optical biopsy
device to the Food and Drug Administration (FDA) for a Pre-IDE Meeting. The
company is working on early cancer detection devices in the areas of breast
(both in-vivo and ex-vivo), prostate, colon, esophagus, ingestible pill camera
and skin cancer; with encouraging results. With regard to the company's
commercialization plan, the company is in various stages of business development
activity with potential distributors, strategic partners, and other strategic
investors. We believe that our Technology will be broadly applicable in cancer
screening and diagnosis; the company is preparing to submit for 510k exemption,
however presently, each approved labeled indication is expected to require
separate pre-marketing approval (a "PMA"), which will be both time-consuming and
costly. In using LLC's we could carefully select and prioritize targeted
diagnostic indications to maximize the return on development and clinical
investments. We regard our "516" and other related patents (such as 5,131,398)
as pioneering, blocking and dominant in the area of cancer diagnosis using
fluorescence spectroscopy both in-vivo and in-vitro.

All above are Safe Harbor" statements per the Private Securities Litigation
Reform Act of 1995 as certain matters and subject areas discussed in our
strategy and not historical or current facts but deal with future circumstances
and developments. The discussion of such matters and subject areas is qualified
by the inherent risks and uncertainties surrounding future expectations
generally and may also differ materially from our future experience involving
any or more of such matters and subject areas. Such risks and uncertainties
include overall economic trends, successful development of products and
regulatory matters including but not limited to FDA as well as those more fully
described from time to time in our reports filed with the SEC

Effective June 10, 2002 Registrant executed a new contract with the Research
Foundation City University of New York (RFCUNY), that supercedes all prior
agreements with (RFCUNY), restructures all MTC debt to RFCUNY and reduces MTC
royalty rate from 5% to 3.25% as to all patent/patent applications of a medical
nature in exchange for the following consideration to (RFCUNY): 1. Registrant's
cash payment of $85,045.00; 2. Registrant's issuance to RFCUNY of 283,228 SEC144
shares. 3. Registrant's issuing a five (5) year. Warrant to (RFCUNY) providing
(RFCUNY) the right to purchase six hundred thousand (600,000) SEC144 shares at
one dollar ($1.00) per share. The agreement protects Registrant by affirming
Registrant's ownership and/or exclusive license of all MEDICAL APPLICATIONS
embodied in Registrants patent list attached to the contract as exhibit A.
(RFCUNY) prior warrant to purchase five hundred thousand (500,000) shares of
Mediscience common Rule 144 shares at one dollar ($1.00) per share expired by
its terms on December 31, 2003. Total warrants presently in RFCUNY for
Mediscience common SEC 144 shares 600,000 expiring June 10, 2007

In addition, according to the terms of our research and licensing agreement with
the University, the Company must negotiate a minimum royalty Agreement within 5
years of the date of filing for all licensed patents "Attachment list Exhibit A"
for which product commercialization has not yet occurred. The Company has
negotiated with the Research Foundation and extended the period of exclusivity
for all intellectual property. The Company holds and totally owns certain
patents independent of CUNY e.g. "516 as reviewed and expanded by the US Patent
Office" that are not so affected which are seminal to its basic technology.

Effective May 31, 2002 Registrant executed and fully funded an agreement with
"The Institute for Ultra fast Spectroscopy and Lasers Center for Ultrafast
Photonics and Mediphotonics Laboratory of City University of New York". Term:
July 1, 2002 to June 30, 2003.at which time the agreement terminated by its
terms. (See Registrants 8-K filed June 1, 2002).

Registrants present agreement with CUNY executed May 7, 2004 controls and
provides for continual technical and research assistance to Registrant in
support of existing and anticipated FDA clinical trials in the United States,
and possibly CE approvals in Europe. The Company and the Research Foundation of
CUNY established a Project Agreement (See 8-K Dated May 6, 2004 See Item 13
subsequent events) at the Institute of Ultrafast Spectroscopy and Lasers
("IUSL") at the City College of New York. The objective of the project agreement
is to complete a commercially viable CD-Ratiometer by November 30, 2004 for
cancer detection and diagnosis of the cervix, mouth, esophagus, and colon. The
objective of the project agreement is the complete development of the Company's
fourth generation prototype products (CD Scan, CD Ratiometer and CD Map),
including the enhancement of fiberoptic attachments to enable devices to be used
with various types of endoscopes and core biopsy needles. Previously, the
Company and CUNY have conducted in-vitro preclinical evaluation of various
tissues to determine the most appropriate excitation and emission wavelengths
for use with a device and created the algorithms and computer software necessary
for the accurate performance of the instruments.

Since the February 2004 $1.5M private placement offering has been completed, the
principal issue of concern to the Company is the future need for financial
resources and liquidity required to


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maintain business momentum and to properly leverage intellectual property assets
through FDA clinicals / approvals into the market place as products. The
resolution of this issue is, and will continue to be the highest priority of
management. In the absence of the availability of such financing on a timely
basis, the Company could be forced to materially curtail, limit or cease its
operations.

Products and Technology

                                 Our Technology

      Optical Biopsy is a novel approach based on optical spectroscopy to
diagnose the state of a tissue (in vivo or ex vivo) without removing the tissue
from the body. Mediscience possesses the foundations for Optical Biopsy by
developing technology based on UV-visible fluorescence, excitation, Raman,
time-resolved, diffuse reflectance, and most recently, Stokes shift
spectroscopies. Using the appropriate wavelengths, at this time, Optical Biopsy
can determine whether a tissue is malignant, dysplastic (pre-cancer) or benign;
in addition to whether it being invasive cancer. Seminal patents have been
issued over the years for various approaches to Optical Biopsy.

      The Optical Biopsy characterizes the fluorescence signatures from normal
and malignant tissue from multiple organ sites and developed algorithms to
distinguish malignant tissue from normal. The onset of carcinogenesis causes
molecular and structural changes in tissues. These molecular and structural
changes can be observed in the differences in the fluorescence spectra between
benign, precancerous and cancerous tissues. The important diagnostic
fluorophores found in human tissue include several amino acids, proteins and
other biomolecules (i.e. tryptophan, collagen, nicotinamide adenine dinucleotide
{NADH}, elastin, flavins and porphyrins). Optical Biopsy offers some significant
improvements over classical methods. It does not require removal of tissue,
results are available in real time, and it is highly sensitive to changes
occurring on a sub millimeter size scale. Our instrumentation is lamp-based. It
does not require the use of lasers. The use of broad band UV-visible lamps as an
excitation source extends the capability of the technology by allowing the
instrumentation to probe multiple fluorophores. Our instrumentation permits
acquisition of emission, excitation, diffuse reflection, and, the recently
developed, Stokes shift spectra for enhanced diagnostic accuracy.

      Ex vivo studies have been performed on breast, cervical, oral cavity,
esophageal, colon and lung tissue. These studies have been performed in
collaboration with Memorial Sloan Kettering Cancer Center (MSKCC) - oral cavity,
breast; New York Eye and Ear Infirmary - oral cavity; Weill Medicine College of
Cornell University, New York Hospital and Columbia Presbyterian Hospital (now
New York - Presbyterian Hospital) - esophageal and digestive tract; St.
Vincent's hospital of Staten Island; and Hackensack University Medical Center.
An in vivo study were performed, in collaboration with MSKCC, on oral cancer
patients. In the ex vivo studies, the accuracy (sensitivity) of our fluorescence
methods varied from 87% to 97% and the specificity varied from 87% to 100%. The
results of our research are tabulated on the following page, and have been
confirmed by researchers at other universities, who have employed our type of
technology.

      In an ex vivo study of the esophagus, fluorescence measurements were able
to differentiate between normal, Barrett's, dysplastic and adenocarcinoma tissue
specimens. In similar research, an animal study performed by CCNY and MSKCC,
using a rat esophageal model demonstrated that fluorescence could detect
precancerous changes in the rat esophagus prior to any visual indication of
malignancy. The in vivo oral cancer study at MSKCC was able to discern
differences between normal healthy controls and "normal" appearing contra
lateral sites in oral cancer patients. A preliminary study performed at the
IUSL, which focused on ex vivo breast cancer specimens, demonstrated that
fluorescence spectroscopy could identify different types of cancer. In this
study, spectral differences were observed between invasive carcinoma, mixed
invasive and in situ carcinoma, fibroadenoma and normal breast tissues. In this
study is shown that diffuse reflectance spectra reflected differences in
proteins and DNA from tissues with different disease states. A larger study,
involving a greater number of specimens with a more detailed histopathological
analysis should be implemented to confirm these results. Currently, three
generations of instrumentation have been developed, with the fourth generation,
commercial unit in process. We currently have instrumentation which may probe
the following organ sites: oral cavity, cervix, aerodigestive tract and colon.
Use in the aerodigestive tract and colon requires that our instrumentation be
coupled to an endoscope. We have already coupled our instrumentation to a GI
tract endoscope.


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      Table 1. Optical Biopsy Accuracy Statistics

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
Tissue Type             Number of
(in vitro)               Samples       Pathology                    Sensitivity      Specificity       Year
--------------------------------------------------------------------------------------------------------------
<S>                         <C>        <C>                             <C>              <C>            <C>
Breast                      16         Cancer                          87.5%                           1988
--------------------------------------------------------------------------------------------------------------
                            15         Normal                                            87%
--------------------------------------------------------------------------------------------------------------
Breast                      40         Cancer                          92.5%                           1988
--------------------------------------------------------------------------------------------------------------
                            47         Benign and Normal                                 98%
--------------------------------------------------------------------------------------------------------------
GYN                         22         Malignant                        95%                            1992
--------------------------------------------------------------------------------------------------------------
                            10         Non-Malignant                                     100%
--------------------------------------------------------------------------------------------------------------
GYN                         65         Cancer                           97%                            1994
--------------------------------------------------------------------------------------------------------------
                            24         Normal                                           87.5%
--------------------------------------------------------------------------------------------------------------
Colon                       35         Cancer                           94%                            1995
--------------------------------------------------------------------------------------------------------------
                            39         Normal                                            92%
--------------------------------------------------------------------------------------------------------------
Breast                      99         Cancer                           90%                            1995
--------------------------------------------------------------------------------------------------------------
                            67         Normal                                            90%
--------------------------------------------------------------------------------------------------------------
Breast                      97         Cancer                           95%                            1996
--------------------------------------------------------------------------------------------------------------
                           127         Normal                                            93%
--------------------------------------------------------------------------------------------------------------
Esophagus                   31         Cancer                           93%                            1998
--------------------------------------------------------------------------------------------------------------
                            33         Normal                                            93%
--------------------------------------------------------------------------------------------------------------
Breast                     103         Cancer                           90%                            1998
--------------------------------------------------------------------------------------------------------------
                            63         Normal                                            90%
--------------------------------------------------------------------------------------------------------------
Colon                       11         Cancer                           95%                            1999
--------------------------------------------------------------------------------------------------------------
                            11         Normal                                            95%
--------------------------------------------------------------------------------------------------------------
</TABLE>

                                  The Products

The Company is developing commercially viable products in the areas of cervical,
full spectrum GI, ingestible pill camera, breast and oral cavity that employ our
technology for cancer screening and diagnosis. The Company's devices are based
upon the Company's Cancer Detection ("CD") Scan, CD Ratiometer and CD Map. These
devices use lamplight to provide a broad spectrum of safe, scanning excitation
light wavelengths to insure that the appropriate target tissue molecules are
sufficiently fluoresced to provide maximum diagnostic sensitivity. A fiber optic
probe is attached to each of our devices to transmit the optical excitation
signal and to retrieve the native fluorescence response. The CD instruments
demonstrate a great deal of versatility and a broad range of potential
alternative applications depending on the preferred configuration of the fiber
optic probe. For example, the fiber optic probe can be configured as a
convenient hand held probe for easy-to-access areas such as the oral cavity or
the skin surface, or the optical fiber can be fed down the working channel of a
rigid or flexible endoscopes for assessment of the upper or lower GI tract,
through a cystoscope for study of the urinary tract, a colposcope for
gynecological evaluation or a laparoscope's for evaluation of internal organs,
and even through a core biopsy needle to optically assess breast tumors or other
deep tissue tumors, such as sometimes occur in the pancreas, liver or prostate.
The CD Scan product prototype is oriented to medical research. It is designed to
provide optical scanning capability over a broad spectrum of optical wavelengths
for evaluation of tissue. We use the CD Scan whenever possible to help define
the critical scanning and emission wavelengths for our two other prototypes
products.

The CD-Ratiometer is a simple, compact instrument with user-friendly features
and characteristics and has been designed to optically assess the scanned tissue
only at pre-established optical wavelengths and to instantaneously report out a
"yes "no" or "maybe" result on a computer screen. We expect that the CD
Ratiometer with its anticipated assortment of disposable probe designs will be
the preferred product for medical practitioners to use in the office or clinical
setting.

The CD Map is a vision instrument that is being designed to optically
interrogate an area of


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tissue rather than selective individual points. Although it is at an earlier
stage of design than either the CD Scan or CD Ratiometer, it is expected to
report out similar results in the form of a colored map on a computer screen
distinguishing normal areas from abnormal areas via color differentiation.
Successful development of the CD Map will be especially useful in assisting
cancer surgeons in clearly defining the surgical margins of tumors, real time,
during cancer surgery without the use of extrinsic dyes, drugs or other invasive
agents.

Research and Product Development

The potential utility of native tissue fluorescence spectroscopy for in vivo
cancer detection in humans was first discovered by Professor Robert R. Alfano,
Distinguished Professor of Physics and Engineering at the City College of the
City University of New York ("CUNY") in the early 1980's. Subsequent to the
acquisition by the Company of LDI from Dr. Alfano in 1988, we developed a
research agreement with the Research Foundation of CUNY to provide us with
research and development services. In 1992, the Company, CUNY, and the Research
Foundation of CUNY established the Mediphotonics Laboratory ("MPL") at the City
College of New York to provide research and development services in the area of
tissue spectroscopy and cancer detection and other biological applications.

The staff of MPL, which is supervised by Dr. Alfano, developed our current CD
prototype devices. MPL has also conducted in vitro, pre-clinical testing of
various human tissue types such as breast, cervical, colon and the upper
aerodigestive tract, to develop the preferred optical scanning and emission
wavelengths that yield the most definitive information about the native
fluorescence characteristics of specific scanned tissue. The insight gained from
this work has been the principal source of knowledge for the subsequently issued
and pending patents which the Company either owns outright or for which it
possesses a world wide exclusive license, and which the Company regards as
pioneering, blocking and dominant in the area of cancer diagnosis using
fluorescence. The information derived from this work was also the source for a
number of scientific papers published in peer-review journals and for
presentations made at scientific symposia. This in-vitro pre-clinical research
and development work also provided the starting basis for the optical scanning
parameters for the Company's in vivo human clinical studies.

The Company entered into a support contract with the Ultra-fast Spectroscopy and
Lasers Center for Ultrafast Photonics and Mediphotonics Laboratory of City
University of New York". Term: July 1, 2002 to June 30, 2003. The agreement
provides continual technical and research assistance to Registrant in support of
existing and anticipated clinical trials in the United States and India. See
Registrants 8-K filed June 1, 2002. and expired June 30, 2003

Clinical Development

Our CD products are designed primarily to be used directly on human patients
in-vivo. Part of the process of product development and FDA approval is the
development of sufficiently compelling clinical evidence to demonstrate safety
and effectiveness of one or more of the Company's prototype CD products for each
intended diagnostic application (labeled or intended use). Because ofanticipated
clinical utility of our technology and prototype CD products, we have been able
to develop important collaborative relationships with some of the most highly
regarded cancer center research hospitals in the United States to assist in the
clinical evaluation of our prototype products. These institutions include
Memorial Sloan-Kettering Cancer Center, Columbia Presbyterian Hospital and the
New York Hospital (Cornell Medical Center), each of New York, and the
Massachusetts General Hospital (Harvard Medical School) in Boston

A Phase I clinical feasibility study of the upper aerodigestive tract was
carried out at Memorial Sloan-Kettering under the principal investigation of
Stimson P. Schantz, M.D., Associate Professor of Surgery and Director of Cancer
Prevention. It was established in this study that the Company's CD Scan
prototype product is able to distinguish between cancerous and normal tissue in
the oral cavity using its technology. A Phase II clinical study in the upper
aerodigestive tract is scheduled to begin when funding is available.

Another planned, Phase I clinical study will be conducted at New York Hospital's
Cornell Medical Center to assess the potential utility of the Company's CD
Ratiometer with fiberoptic probe adapted to a flexible endoscope furnished by
Pentax Precision Instrument Corporation for monitoring Barrett's Esophagus. On
April 24, 1997, we entered into a clinical trial agreement and provided initial
funding for this clinical study. However, further progress on this study will
require additional funding which cannot be provided at this time due to resource
constraints. Barrett's Esophagus is a malady that is thought to be a possible
precursor to esophageal cancer in certain people. Barrett's patients are
routinely monitored because of the heightened risk that a small proportion of
them are predisposed to the development of esophageal cancer. The current
medical practice requires that multiple excisional biopsies be taken during
regularly scheduled follow-up appointments (typically annually) to monitor the
progression of the disease. The


                                     Page 9
<PAGE>

practice is painful, costly and probably unnecessary in the majority of
Barrett's patients, but the current state of medical practice does not provide
sufficient molecular information to distinguish between the high risk group and
the lower risk group. It is hoped that endoscopic application of our technology
will provide gastroenterologists with the ability to better assess the condition
of Barrett's tissue without a need for painful multiple biopsies. It is also
hoped that this additional molecular information will provide the ability to
assess the relative risk of Barrett's patients to the development of esophageal
cancer allowing gastroenterologists to establish individual patient monitoring
schedules appropriate to their relative level of perceived risk. Dr. Basuk has
reported that his work shows that UV emission measurements can effectively
distinguish normal esophageal tissue from Barrett's or adenocarcinoma. Further,
preliminary data also indicates that the combination of UV emission and
excitation measurements can potentially separate Barrett's from dysplasia and
cancer as well as from normal tissues. On March 19, 1999 the NEW ENGLAND JOURNAL
of MEDICINE (Vol.340, No. 11) reported on a study of "Symptomatic
Gastrosophageal Reflux as a risk factor for esophageal Adenocarcinoma,"
concluding that there is a strong and probable causal relation between
gastrosophageal reflux and esophageal adenocarcinoma. Esophageal adenocarcinoma
is treatable but rarely curable, mortality is high and successful treatment
depends on early detection, thus screening high-risk patients would be
appropriate. Mediscience experience in excitation of important tissue molecules
shows improved diagnostic accuracy in the range of 80 to 90 percent with
measurement time of a few seconds (real-time). The greatest incidence of this
decease is seen in males over age 60, with the major risk factors being the use
of alcohol and tobacco.

Business Development and Marketing

More than 120,000 new cancer cases are diagnosed annually in the United States
according to the American Cancer Society. It is estimated by Theta Corporation,
a market research firm, that as many as 85 million people currently alive in the
United States, nearly 1/3 of the population, will develop cancer during their
lifetimes. Cancer care and treatment is estimated to cost $104 billion annually,
$35 billion of which is estimated to be the direct cost of the disease. Cancer
therapy has progressed rapidly in recent years but the axiom that early
diagnosis is critical for successful treatment for the majority of cancer types
still remains true.

Although several cancer screening techniques have been developed for the early
indication of various types of cancer in humans, such as, mammography for breast
cancer, PAP tests for cervical cancer, PSA tests for prostate cancer and chest
x-rays for lung cancer, excision biopsy is still the "gold standard" for making
a definitive cancer diagnosis and for cancer staging, i.e., determining the
extent of the progression of the disease prior to mapping out the most
appropriate course of therapy.

The excision biopsy, however, often requires a significant amount of surgical
intervention to collect an adequate tissue sample to make a proper diagnosis and
staging determinations. The process can sometimes expose the patient to
unnecessary risks, lengthy hospital stays, long recovery times, pain and
discomfort and significant health care expense. The Company's technology is
believed to offer the potential of a less physically invasive method to diagnose
and stage a variety of cancers without the excessive costs and potentially
debilitating effects of biopsy. The most widely practiced technique for
definitive diagnosis of breast cancer, the leading cause of death among American
women between the ages of 40 and 55, is open surgical biopsy (a specific type of
biopsy) which is done under a general anesthetic and typically results in
surgical excision of a golf ball-sized mass of breast tissue. About 800,000 such
procedures are performed annually in the United States at an estimated annual
cost of between $2 billion and $4 billion. If the Company can successfully adapt
its technology to diagnose and stage breast cancers, it believes it will save up
to half the current cost by reducing and /or eliminating extensive hospital
stays and frequency of surgery as well as impacting significantly the amount of
patient discomfort for those patients medically determined to have cancer, and
eliminate most of the trauma for the 70% to 80% of the patients who are found
not to have cancer.

We believe that our technology incorporated into one or more of our prototype CD
products will be useful in diagnosing and staging for more than half of the
various types of cancers. In addition to the pre-clinical and clinical
evaluations currently projected or already completed, i.e., upper aerodigestive
tract, breast and esophagus, we are in the process of creating a prioritized
list of other potential applications to evaluate on a pre-clinical basis. If
successful, on a pre-clinical basis, we contemplate progressing to the clinical
evaluation phase and pre-market approval ("PMA") application phase.

We plan to develop certain of our CD products for diagnostic applications,
(sometimes referred to as "labeled indications"), that we will ultimately market
for our own account in the United States. In addition, we plan to co-develop one
or more of our prototype CD products for specific cancer diagnostic applications
with one or more selected other companies. We have nurtured relationships with a
small number of highly qualified companies which have expressed interest in


                                    Page 10
<PAGE>

working with us to co-develop one or more of our existing CD prototype products
or possible variations thereof in exchange for certain as yet undetermined
rights to commercially exploit a finished approved product in the marketplace or
a geographic segment thereof.

We have, in the past, and continue to presently encourage these possible
collaborations especially with firms that have strong existing franchises in
certain specialized fields of diagnosis and treatment and who have established
reputations with prospective purchasers of diagnostic products and who have
proven selling, marketing and distribution capabilities. A select number of
these kinds of relationships, if we are successful in fostering them, are
expected to add value to the Company by leveraging the our financial resource
base with development and licensing revenues that the Company can then use to
help fund the development of its own products.

We also believe that a market for our CD products will exist in the European
Union and possibly Asia. We contemplate making a concerted effort to identify
one or more possible licensees to help develop our products or variations
thereof for the key markets of the European Union during 2004-5. We will also
make a preliminary investigation of the potential for our products in Asia and
if the findings are positive, will develop a strategy for exploiting our
technology in that region as well.

Manufacturing

Our prototype products have been assembled to date by the staff of the MPL at
the City College of New York from components that are generally readily
available from one or more sources in the marketplace. We contemplate continuing
with this approach until the quantity of devices projected to be required makes
it appropriate and necessary to find a contract manufacturer. Although
additional design improvements will likely be required to refine the current
prototype products for commercial use, we still believe that the key components
will be available from one or more suppliers. We executed a lease agreement,
dated January 19, 1997 with City College providing space as an "incubator" in
which prototypes of the products have been designed and assembled by MPL staff
working in concert with personnel from an engineering design firm engaged by the
Company. The lease has terminated by its terms and our prototypes are completed.

Manufacturing

Our prototype products have been assembled to date by the staff of the MPL at
the City College of New York from components that are generally readily
available from one or more sources in the marketplace. We contemplate continuing
with this approach until the quantity of devices projected to be required makes
it appropriate and necessary to find a contract manufacturer. Although
additional design improvements will likely be required to refine the current
prototype products for commercial use, we still believe that the key components
will be available from one or more suppliers. We executed a lease agreement,
dated January 19, 1997 with City College providing space as an "incubator" in
which prototypes of the products have been designed and assembled by MPL staff
working in concert with personnel from an engineering design firm engaged by the
Company. The lease has terminated by its terms and our prototypes are completed.

We are negotiating a New York City lease agreement with City College providing
space for our Mediphotonics Development LLC as a New York Co. "incubator"
located at 101 East 31st Street New York City NY

We plan to outsource the manufacture and assembly of our medical device products
to contract manufacturers when it is no longer feasible for the MPL to perform
that service. Our contract manufacturer(s) will be selected from a list of
highly qualified New York companies who are familiar with the regulatory
requirements of the FDA for the manufacture of medical devices, who are
registered with and in good standing with the FDA and who employ current Good
Manufacturing Practices (GMP) in accordance with FDA guidelines. Additionally,
an opportunity for a business arrangement with a major marketing co-developer
could involve manufacture as well.

Competition

The development of minimally diagnostics for cancer detection is driven by a
critical need for more cost effective screening procedures with increased
sensitivity and specificity. In-vivo tissue auto fluorescence spectral analysis,
as pioneered by Mediscience Technology is a paradigm shift emerging diagnostic
technology with clear potential to favorably impact health care clinical
outcomes as well as economics. In spite of what we believe is a seminal and
dominant Mediscience intellectual property position (in the United States),
there is intense competitive activity in this area, with at least seven
companies to date conducting active research and development programs.


                                    Page 11
<PAGE>

Competition in cancer detection is significant. Current screening systems are
dominated by the Pap smear and colposcopy, are well established and pervasive.
Improvements and new technologies for cervical cancer detection, include Digene
Corporation's Human Papilloma Virus testing and Cytyc Corporation's Thin-Prep.
In addition, there are other companies and institutions attempting to develop
products using forms of biophotonic technologies in cervical cancer detection
and they include Spectrx Inc, MD Anderson, University of Michigan to name a few.
Mediscience is and will continue to develop devices that are more accurate,
easier to use and/or less costly to administer too create and maintain
competitive advantage.

We are aware of other approaches to cancer screening based on X-ray, CT,
ultrasound, magnetic resonance and radionuclide imaging technologies; these,
however, are based on the detection of intra-tissue structural abnormalities and
are not ideally suited to the evaluation of tissue surface lesions. Our
proprietary approach based on imaging and analysis of autofluorescence native
spectra represents a new diagnostic paradigm. It offers the promise of providing
a more cost effective and user friendly screening procedure with increased
sensitivity and specificity, and ultimately, of replacing excision biopsy as the
diagnostic standard.

While we believe that we have a dominant intellectual property position that
will ultimately permit us to achieve leadership in this important new area,
competition from both new and established firms will continue to be intense.
Many of these firms have greater resources than the Company, and more experience
in the field of cancer diagnostics. Finally, there can be no assurances that the
Mediscience Technology, even if developed successfully, will be accepted
commercially in the marketplace.

Government Regulation (FDA) Matters

On December 11, 2003 the FDA, after its financial audit review and approval,
qualified the Company under MDUFMA allowing both reduced or waived FDA fees for
its 2004 medical device 510K market approval submissions." and Company
participation in expedited FDA review through FDA clinical inspections conducted
independently by third party FDA approved "accredited" persons, directly
employed by Mediscience.

The FDA classifies medical devices into one of three classes, Class I, II, or
III. This classification is based on the controls deemed necessary by the FDA to
reasonably insure the safety and effectiveness of the device. Class I devices
are those whose safety and effectiveness can be reasonably ensured through the
use of general controls, such as labeling, adherence to GMP requirements and the
"510-(k)" process of marketing pre-notification. Class II devices are those
whose safety and effectiveness can reasonably be ensured through implementation
of general and special controls, such as performance standards, post market
surveillance, patient registries, and FDA guidelines. Class III devices are
those devices that must receive pre-market approval ("PMA") to insure their
safety and effectiveness. They are generally life-sustaining, life-supporting,
or implantable devices, and also include devices that are not substantially
equivalent to a legally marketed Class I or II device or to a Class III device
first marketed prior to May 28, 1976 for which a PMA has not yet been requested
by the FDA.

Although we believe that our cancer diagnostic products will ultimately be
approved, there is no assurance the FDA will act favorably or quickly in making
such reviews and approving our products for sale. We may encounter delays or
unanticipated costs in our efforts to secure governmental approvals or licenses,
which could delay or possibly preclude us from marketing our CD products. The
company is in the process of: Preparing and submitting pre-IDE Document

1. a. Draft protocol outline b. Manufacturing information c. Review previous
human experience d. Review preclinical testing e. Clinical and .non-clinical
development protocol; f. arrangement of pre-IDE meeting; g. preparing study
protocol; h. preparing and submitting the IDE

2. Introductory statement and general investigational plan; .investigation
brochure; protocol; Manufacturing and control; non-clinical testing information;
previous human experience; certifications

design of the case report form; design of the informed consent form;
identification of potential study sites; Preparing a 510(k) for submission to
the FDA

      NOTE: To the extent that we intend to market our CD products in foreign
      markets, we will be subject to foreign governmental regulations, as well


                                    Page 12
<PAGE>

      as USA, with respect to the manufacture and sale of our medical device
      products. We cannot accurately estimate the cost and time that will be
      required in order to comply with such regulations.

Patents and Proprietary Rights

On April 14, 2003 registrant secured the exclusive world-wide license for US
patent application Stokes-Shift Fluorescence spectroscopy for detection of
disease and physiological state of specimen. The patent was also filed by
registrant under the Patent Cooperation Treaty ("PCT") (1970) for EU approval on
January 23, 2004. Inventor and founder Dr. Robert Alfano states that "the
patent, when issued, would extend the Company's core technology in Optical
Biopsy for an additional 17+ years, thus expanding, maintaining and continuing
our IP leadership in the Optical Biopsy field".(see Patent list infra.)

The Patent Cooperation Treaty makes it possible for registrant to seek patent
protection for its patent invention simultaneously in each of a large number of
countries by filing an "international" patent application. Such an application
may be filed by anyone who is a national or resident of a Contracting State e.g.
USA.

The application is then subjected to an "international search." The said
search results in an "international search report," that is, a listing of the
citations of such published documents that might affect the patentability of the
invention claimed in the international application. The ISA also prepares a
written opinion on patentability. The report and the written opinion are
communicated by the ISA to the applicant who may decide to withdraw the
application, if the said report or opinion makes the granting of a patent
unlikely. If the international application is not withdrawn, it is, together
with the international search report, published by the International Bureau. The
written opinion is not published. The procedure under the PCT has great
advantages for Registrant,

(I) Registrant has up to 18 months more than he has in a procedure outside the
PCT to reflect on the desirability of seeking protection in foreign countries,
to appoint local patent agents in each foreign country, to prepare the necessary
translations and to pay the national fees; he is assured that, if his
international application is in the form prescribed by the PCT, it cannot be
rejected on formal grounds by any designated Office during the national phase of
the processing of the application; on the basis of the international search
report or the written opinion, he can evaluate with reasonable probability the
chances of his invention being patented; and Registrant has the possibility
during the international preliminary examination to amend the international
application to put it in order before processing by the designated Offices;

The medical device industry places considerable importance on obtaining patent
protection and protecting trade secrets for new technologies, products, and
processes because of the substantial length of time and expense associated with
bringing new products through development and regulatory approval to the
marketplace. Accordingly, the Company or the Research Foundation of CUNY files
patent applications to protect technologies that the Company believes are
significant to the development of the Company's business. The Company either
owns or holds exclusive licenses to 27 U.S. patents, plus 1 in Japan, for a
total of 28, and has rights to exclusively license an additional 10 U.S. patents
pending. There can be no assurance, however, that the pending patent
applications will ultimately issue as patents, or if patents do issue, that the
claims will be sufficiently broad to protect what the Company believes to be its
proprietary rights. In addition, there can be no assurance that issued patents
or pending patent applications will not be challenged or circumvented by
competitors, or that the rights granted thereunder will provide competitive
advantage to the Company.

The Company also relies on trade secrets and know-how that it seeks to protect
in part, through the use of confidentiality agreements. There can be no
assurance that these agreements will not be breached, that the Company will have
adequate remedies for any breach, or that the Company's trade secrets and
know-how will not otherwise become known to or independently developed by
competitors.

Third Party Reimbursement

If the Company is successful in completing the development of its screening and
diagnostic technology, and this technology is subsequently incorporated into
medical devices that are used by health care providers for screening and
diagnostic testing for which the providers may seek reimbursement from
third-party payers, primarily in the United States through Federal, State,
Medicare, Medicaid and private health insurance plans, and in other countries,
typically national government sponsored health and welfare plans, such
reimbursement will be subject to the regulations and policies of governmental
agencies and other third-party payers. Reduced


                                    Page 13
<PAGE>

governmental expenditures in the United States and in other countries continue
to put pressure on diagnostic procedure reimbursement. The Company cannot
predict what, if any changes, may be forthcoming in these policies and
procedures, nor the effect of such changes on our business potential.

Other Technologies and other applications

In addition to our developments in native tissue fluorescence spectroscopy we
have also invented certain other potentially useful diagnostic optical imaging
technology. The optical imaging technology uses laser light to image dense
tissues by capturing the early photons of light shown through the imaged tissue
and gating off the scattered, later arriving light, which reduces the
interference and results in clearer images than can be traditionally be seen
using currently available optical imaging technologies, such as, computed
tomography scanning or x-rays or mammograms. In 1997 the Company and General
Electric Company ("GE") acting on behalf of its Corporate Research and
Development component signed a five-year non-exclusive Collaborative Research
Agreement to explore potential uses of our optical imaging technology. To this
date, no material activity has occurred under this contract. which expired by
its terms year 2002.

Significant Patents covered by the May 31, 2002 contract with the Research
Foundation City University of New York (RFCUNY), see 8-K filed June 1, 2002,
superceding all prior agreements with (RFCUNY). RFCUNY/Mediscience May 31, 2002
contract Attachment "A" MTC Licensed/Funded Patents: (See subsequent events Item
13 May 7, 2004 Project agreement re: other patent issues para: (a))

                                  ATTACHMENT A

Our Patents

                      Medical Diagnostic Optical Technology

US Patent Pending "Stokes-Shift Fluorescence spectroscopy for detection of
disease and physiological state of specimen".

#5,042,494, August 27, 1991, Method and Apparatus for Detecting Cancerous Tissue
using Luminescence Excitation Spectra, R. R. Alfano.

#5,131,398, July 21, 1992, Method and Apparatus for Distinguishing Cancerous
Tissue from Benign Tumor Tissue, Benign Tissue or Normal Tissue using Native
Fluorescence, R. R. Alfano, B. Das, G. Tang.

#5,261,410, November 16, 1993, Method for determining if a Tissue is a Malignant
Tumor Tissue, a Benign Tumor Tissue, or a Normal Benign Tissue using Raman
Spectroscopy, R. R. Alfano, C. H. Liu, W. S. Glassman.

#5,293,872, March 15, 1994, Method for Distinguishing between Calcified
Atherosclerotic Tissue and Fibrous Atherosclerotic Tissue or Normal
Cardiovascular Tissue Using Raman Spectroscopy, R. R. Alfano, C. H. Liu

#5,348,018, September 20, 1994, Method for determining if Tissue is Malignant as
opposed to Non-Malignant using Time-Resolved Fluorescence Spectroscopy, R. R.
Alfano, A. Pradhan, G. C. Tang, L. Wang, Y. Budansky, B. B. Das.

#5,413,108, May 9, 1995, Method and Apparatus for Mapping a Tissue Sample for
and Distinguishing Different Regions thereof based on Luminescence Measurements
of Cancer-indicative Native Fluorophor, R. R. Alfano.

#5,467,767, November 21, 1995, Method for Determining if Tissue is Malignant as
opposed to Non-Malignant using Time-resolved Fluorescence Spectroscopy, R. R.
Alfano, Asima Pradhan, G. C. Tang, L. Wang, Y. Budansky, B. B. Das.

#5,635,402, June 3, 1997. Technique for Determining whether a Cell is Malignant
as opposed to Non-malignant using Extrinsic Fluorescence Spectroscopy, R. R.
Alfano, Cheng H. Liu, Wei L. Sha, Yury Budansky.

#5,769,081, June 23, 1998, Method for Detecting Cancerous Tissue using Optical
Spectroscopy and Fourier Analysis, R. R. Alfano, A. Katz, Y. Yang.

#5,849,595, December 15, 1998, Method for Monitoring the Effects of
Chemotherapeutic Agents on Neoplasmic Media, R. R. Alfano, G. C. Tang, S. P.
Schantz.

#5,983,125, November 9, 1999, Method and apparatus for in vivo examination of
subcutaneous tissues inside an organ of a body using optical spectroscopy, R. R.
Alfano, Y. Budansky.

#6,006,001, December 21, 1999, Fiber optic assembly useful in optical
spectroscopy, R. R. Alfano, S. Demos, G. Zhang.


                                    Page 14
<PAGE>

#6,080,584, June 27, 2000, Method and apparatus for detecting the presence of
cancerous and precancerous cells in a smear using native fluorescence
spectroscopy, Robert R. Alfano, Singaravelu Ganesan, and Yury Budansky.

#6,091,985, July 18, 2000, Detection of cancer and precancerous conditions in
tissues and/or cells using native fluorescence excitation spectroscopy, Robert
R. Alfano, Singaravelu Ganesan, Alvin Katz, Yang Yuanlong.

                      Optical Imaging for Medical Purposes

US Patent Pending "Three-dimensional Radiative Transfer Tomography for Turbid
Media."

#5,371,368, December 6, 1994, Ultrafast Optical Imaging of Objects in a
Scattering Medium, R. R. Alfano, P. P. Ho, L. Wang.

#5,625,458, April 29, 1997, Method and System for Imaging Objects in Turbid
Media using Diffusive Fermat Photons, R. R. Alfano, A. Y. Polishchuk.

#5,644,429, July 1, 1997 (see #5,371,368), 2-Dimensional Imaging of Translucent
Objects in Turbid Media, R. R. Alfano, P. P. Ho, X. Liang.

#5,710,429, January 20, 1998, Ultrafast Optical Imaging of objects in or Behind
Scattering Media, R. R. Alfano, Feng Liu, Q. Z. Wang P. Ho, L. M. Wang, X.
Liang.

#5,719,399, February 17, 1998, Imaging and Characterization of Tissue based upon
the Preservation of Polarized Light transmitted therethrough, R. R. Alfano, S.
G. Demos.

#5,799,656, September 1, 1998, Optical Imaging of Breast Tissues to enable the
Detection therein of Calcification Regions Suggestive of Cancer, R. R. Alfano,
P. P. Ho, L. Wang, X. Liang, P. Galland.

#5,813,988, September 29, 1998, Time Resolved Diffusion Tomographic Imaging in
Highly Scattering Turbid Media, R. R. Alfano, W. Cai, F. Liu, M. Lax, Bidyut B.
Das.

#5,847,394, December 8, 1998, Imaging of Objects Based upon the Polarization or
Depolarization of Light, R. R. Alfano, S. G. Demos.

#5,931,789, August 3, 1999, Time-resolved diffusion tomographic 2D and 3D
imaging in highly scattering turbid media, Robert R. Alfano, Wei Cai, Feng Liu,
Melvin Lax.

# 6,208,886 B1, March 27, 2001, Non-linear optical tomography of turbid media,
Robert R. Alfano, Yici Guo, Feng Liu, Ping Pei Ho.

# 6,215,587, April 10, 2001, Microscope imaging inside highly scattering media,
Robert R. Alfano, Gordon Anderson, Feng Liu.

The Company and CUNY Research Foundation have been diligent in the payment of
maintenance obligations to the US Patent Office during the life of each of the
Company's significant patents.

                                   Copyrights

Registrant applied for copyright protection on December 10, 2004 for the
following: CANCER DIAGNOSTIC RATIOMETER and PHOTONIC DIAGNOSTIC INSTRUMENTS and
is awaiting US Patent Office status.

Employees

As of February 29, 2005 and February 28, 2004 the Company had three full-time
employees in its New York Subsidiary Medi-photonics LLC 3960 Broadway 6tth
floor, New York NY 10032: Michael Engelhart President COO, Peter Katevatis
Chairman CEO, Nicole Valderale and one retained consultant, Dr. Robert R.
Alfano. Neither the employees nor the retained consultant is governed by any
collective bargaining agreement; the relations between the Company and its
employees and all retained consultants are believed to be satisfactory at the
present time. see 8-K dated March 13, 2003 - as of April 26, 2003 Michael
Engelhart was appointed President COO of Registrant.

As of February 28, 2003, the Company had two full-time employees: Sidney
Braginsky President COO, Peter Katevatis Chairman CEO and one retained
consultant, Dr. Robert R. Alfano. On March 13, 2003 effective April 26, 2003 Mr.
Sidney Braginsky, former President COO and the Registrant agreed to the total
and immediate nullification and termination of his July 9, 2001 agreement with
Mediscience Technology Corp. together with all its terms and conditions,
including any claim for accruals in salary and/or expenses effective
retroactively as of July 9, 2001. Mr. Braginsky continues as an active Board
member available to provide compensated consulting services to the


                                    Page 15
<PAGE>

Board and President COO Michael Engelhart as needed. On March 13, 2003, By
unanimous Board of Directors approval Registrant appointed Michael W. Engelhart
as President and Chief Operating Officer effective April 26,2003 ( his
employment contract is part of and an attachment to Registrants SEC 10-K 2003
page 44 "Employment contract and warrants Exhibits "A","B","C" herein
incorporated by reference.

ITEM 2. DESCRIPTION OF PROPERTIES

The New York corporate research and development office of Mediphotonics
Development LLC Registrants wholly owned New York State subsidiary LLC to be
located at 3960 Broadway 6th floor New York City, NY subject to a lease
agreement presently negotiated with CUNY.

Properties: Our corporate headquarters are located in Cherry Hill, New Jersey.
We have a month-to-month lease dated July 25, 2002 with Mr. Katevatis, our
Chairman and Chief Executive Officer, for use of approximately 3,000 square feet
of office space, pursuant to which we pay no rent but have assumed the
obligation to pay all taxes, maintenance, insurance, utilities and repairs
relating to such premises.

Medi-Photonics, our wholly-owned subsidiary, leases a corporate research and
development office in New York City 3960 Broadway 6th floor New York City, under
a one-year lease agreement with Columbia University, commencing and dated June
9, 2005 , for approximately 2,500 square feet of office space which lease may be
terminated by CUNY for any reason upon 60 days notice.We believe that our
current facilities adequately provide for our operations. If and when we expand
our operations, we expect to require additional office space for sales,
marketing and business development.

ITEM 3. LEGAL PROCEEDINGS

We are not presently a party to any pending litigation, nor, to the knowledge of
our management, is any litigation threatened against us which may materially
affect our operations or business.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During its fiscal year ending February 29, 2005,no matters were Submitted, or
required to be submitted to a vote of the Company's security holders.

During its fiscal year ending February 29, 2004, the following matters were
submitted January 20, 2004 by "NOTICE OF ACTION OF STOCKHOLDERS BY WRITTEN
CONSENT" to a vote of the Company's security holders. Pursuant to an SEC
approved Definitive 14C filing. All items were approved at a Board of Directors
and shareholders meeting by the majority of those entitled to vote (39,372,753)
with a quorum present on February 17, 2004 and implemented as directed by
appropriate Board of Director resolutions. The Definitive 14C document (5 AGENDA
PROPOSALS) and its appendix is incorporated by reference hereto in its entirety,
See EDGAR filings; See Mediscience web MEDISCIENCETECH.com

ALL 5 AGENDA PROPOSALS were approved by a majority of shareholders upon written
authorization and consent and a quorum of 39,372,753 shareholders entitled to
vote as of the close of business on January 16, 2004, (record date), on February
17, 2004 at 2:00 p.m., at a Board of Directors and shareholders meeting held at
the offices of Cust, Dori & Benick CPA's 100 Main Street Flemington NJ 08822.
All 5 agenda items were duly adopted by written consent of a majority holding
23,316,168) in accordance with the applicable provisions of Section 14A:5-6
Corporation, General, of the State of New Jersey Statutes.

1. A Proposal to increase Mediscience authorized common shares from the present
forty million to two hundred million with the immediate amendment of the first
sentence the October 30, 1991 Mediscience New Jersey Certificate of
Incorporation Article III to reflect the new authorized common shares. "The
aggregate number of shares which the Corporation shall have authority to issue
is 200,000,000 shares of capital stock, par value $.01 per share, of which
50,000 shares are designated Preferred Stock par value $.01 per share, and
199,950,000 shares are designated Common Stock."

2. The Ratification of 2003 Consultants Stock Plan (option/warrant/award) (see
A-1)

3. The Adoption of the 1999 Board Approved Incentive Stock Plan (see B-1)

4. Elect seven (7) directors: Directors for the forthcoming year and to serve
until their successors shall be elected and shall qualify


                                    Page 16
<PAGE>

5. Act upon a proposal to ratify the appointment of Parente Randolph LLP as the
Company's independent public accountants for 2004;

Each Item (1, 2, 3, 4, 5) of business received the affirmative vote of a
majority of the authorized and issued shares. Under NJ corporation Law and the
bylaws of the Company

Michael Engelhart President/COO                     Peter Katevatis Chairman/CEO

                          1999 INCENTIVE STOCK PLAN

Adopted and Board approved February 17, 2004: see Definitive 14C SEC NOTICE
Appendix A-1 incorporated by reference hereto in its entirety, see Mediscience
web site MEDISCIENCETECH.com (SEE SB-2 Registration statement SEC effective
January 12, 2005 Incorporated herein by reference hereto)

Presented to the Definitive 14C SEC NOTICE meeting and Majority of shareholders
entitled to vote, quorum present, approved the proposal on February 17, 2004 to
adopt the 1999 Incentive Stock Plan (the "Plan") previously approved by the
board of directors and referenced in SEC EDGAR 10-K filings 1999 thru 2003. The
Board of Directors believes stock options and other stock-based incentives play
an important role in retaining the services of outstanding personnel and in
encouraging such employees to have a greater financial investment in the Company
(although the Plan does not necessarily require them to hold for investment the
stock received under the Plan). The Board of Directors had approved the 1999
Incentive Stock Plan and directed that it be submitted to stockholders for
approval.

The proposed Plan is set forth in detail Appendix Definitive 14C A -1. Primary
aspects of the proposed Plan are as follows: The 1999 Plan actually consists of
six different plans:

      o a plan which contemplates the grant of incentive stock options;

      o a plan which contemplates the grant of non-qualified stock options
      (which we refer to as "supplemental stock options");

      o a plan which contemplates the grant of stock appreciation rights;

      o a plan which contemplates the grant of performance shares;

      o a plan which contemplates the grant of stock options and other awards to
      directors; and

      o a plan which contemplates the grant of stock options and other awards to
      members of any advisory board.

Approved by Company stockholders, the Plan became effective ApriI 1, 2003 and
will terminate on April 1, 2013, unless terminated earlier by the Board of
Directors or extended by the Board with the approval of the stockholders. The
Board may amend the Plan as it deems advisable but, if the Securities Exchange
Act of 1934 requires the Company to obtain stockholder approval, then such
approval will be sought. Unless approved by stockholders or as specifically
otherwise required by the Plan (for example, in the case of a stock split), no
adjustments or reduction of the exercise price of any outstanding incentive may
be made in the event of a decline in stock price, either by reducing the
exercise price of outstanding incentives or by canceling outstanding incentives
in connection with regranting incentives at a lower price to the same
individual. Options and/or option rights (see referenced SEC EDGAR 10-K-2003)
Co-Founders Alfano-Katevatis grandfathered and established option conversion and
assignment rights* below) not grandfathered are not assignable or transferable
except for limited circumstances upon a grantee's death, or pursuant to rules
that may be adopted by the Committee. The Committee may establish rules and
procedures to permit a grantee to defer recognition of income or gain for
incentives under the Plan.

* Peter Katevatis Pres/CEO and Dr. Alfano principal scientific advisor have
agreed to forbear any and all collection action against Mediscience for accrued
salary and related contractually entitled items including forgiveness of
interest in exchange for the option of converting such accrued debts into MTC
common stock on the basis of (0.25 cents), which is above the average High Bid


                                    Page 17
<PAGE>

price on June 9 through the 12th 1998, which was 0.15 cents. Said option to be
unlimited in duration. Should MTC receive funding Katevatis and Alfano may elect
to receive all or part of such accrued debt in cash/shares. This right shall be
assignable in whole or in part without condition to any assignee or heirs and in
no way is intended to negate the corporate debt accrued and owing to Katevatis/
Alfano. This offer by Katevatis/ Alfano was unanimously accepted by the Board of
Directors December 4,1998 and continues in effect.

                              2003 CONSULTANTS PLAN

Adopted and Board approved February 17, 2004: 2003 CONSULTANTS STOCK OPTION,
STOCK WARRANT AND STOCK AWARD PLAN See Definitive 14C SEC NOTICE Appendix B-1
incorporated by reference hereto in its entirety, see Mediscience web site
MEDISCIENCETECH.com (SEE SB-2 Registration statement SEC effective January 12,
2005 Incorporated herein by reference hereto)

On December 24, 2003, our Board of Directors adopted, subject to shareholder
approval, the Mediscience Technology Corp. 2003 Consultants Stock Option, Stock
Warrant and Stock Award Plan (the "2003 Consultants Plan"). The purpose of the
2003 Consultants Plan is to enable us to pay for certain consulting services
provided to us by individuals with our equity securities when it is in our best
interest to do so to preserve cash for other purposes, and to provide these
persons with an additional incentive to contribute to our success. A copy of the
2003 Consultants Plan is set forth as Definitive 14C SEC NOTICE Annex B-1 to the
information statement. Shareholders were urged to read the 2003 Consultants Plan
in its entirety. The plan was Presented to the Definitive 14C SEC NOTICE
meeting, quorum present, on February 17, 2004 and Majority of shareholders
entitled to vote approved the proposal to adopt the 1999 Incentive Stock Plan
(the "Plan")

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's Common Stock is traded on the over-the-counter market under the
symbol "MDSC." The following table sets forth the range of high and low bid
quotations of the Company's Common Stock for the periods set forth below, as
reported by the National Association of Securities Dealers, Inc. and Silicon
Investors Historical data Such quotations represent inter-dealer quotations,
without adjustment for retail markets, markdowns or commissions, and do not
necessarily represent actual transaction

         Fiscal Period                            Common Stock
         -------------                            ------------

                                            High Bid        Low Bid

  2005

1st Quarter         05/31/04                  0.50            0.45

2nd Quarter         08/31/04                  0.76            0.65

3rd Quarter         11/30/04                  0.62            0.61

4th Quarter         02/29/05                  0.69            0.60

  2004

1st Quarter         05/31/03                  0.30            0.25

2nd Quarter         08/31/03                  0.31            0.16

3rd Quarter         11/30/03                  0.38            0.22

4th Quarter         02/29/04                  0.93            0.25

   2003

1st Quarter         05/31/02                  0.13            0.10

2nd Quarter         08/31/02                  0.08            0.08

3rd Quarter         11/30/02                  0.08            0.07

4th Quarter         02/28/03                  0.26            0.24


                                    Page 18
<PAGE>

(a) Holders: as of February 29, 2005 The approximate number of all holders of
record of the Company's Common Stock 2,338 and Series A Preferred Stock -0-

(b) Dividends. The Company has not paid or declared any dividends on its Common
Stock since its inception, and intends to reinvest earnings, if any, in the
Company to accelerate its growth. Accordingly, the Company does not contemplate
or anticipate paying any dividends upon its Common Stock in the foreseeable
future.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

                         FORWARD-LOOKING STATEMENTS

This Discussion and Analysis of Financial Condition and Results of Operations
contains forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act, including but not limited to
our assumptions underlying our critical accounting determinations; efforts to
raise additional financing; and our commitment of resources. You should not
place undue reliance on these forward-looking statements. Actual results could
differ materially from those anticipated in these forward-looking statements as
a result of a number of factors, including our good faith assumptions being
incorrect. The forward-looking statements may also be impacted by the additional
risks faced by us as, described in this report, including those set forth under
the section entitled "Risk Factors." All forward-looking statements included in
this report are based on information available to us on the date hereof, and we
assume no obligation to update any such forward-looking statements.

CRITICAL ACCOUNTING POLICIES & ESTIMATES

Our consolidated financial statements are prepared in conformity with accounting
principles generally accepted in the United States of America. Note 1 to the
consolidated financial statements describes the significant accounting policies
and methods used in the preparation of our consolidated financial statements.

We have identified the policies below as some of the more critical to our
business and the understanding of our results of operations. These policies may
involve a higher degree of judgment and complexity in their application and
represent the critical accounting policies used in the preparation of our
financial statements. Although we believe our judgments and estimates are
appropriate and correct, actual future results may differ from our estimates. If
different assumptions or conditions were to prevail, the results could be
materially different from our reported results. The impact and any associated
risks related to these policies on our business operations is discussed
throughout Management's Discussion and Analysis of Financial Condition and
Results of Operations where such policies affect our reported and expected
financial results.

Use of Estimates

The preparation of our consolidated financial statements, in conformity with
accounting principles generally accepted in the United States, requires
management to make estimates and assumptions that affect the reported amounts of
assets, liabilities and equity and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. These estimates have a
material impact on our financial statements, and are discussed in detail
throughout our analysis of the results of operations.

In addition to evaluating estimates relating to the items discussed above, we
also consider other estimates, including, but not limited to, Patent licenses
and their related costs including the maintenance of Patents licenses and all
costs incurred in connection with acquiring patents, patent licenses and other
proprietary rights related to our commercially developed products, income taxes,
and financing operations. We base our estimates on historical experience and on
various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying value of assets, liabilities and equity that are not readily
apparent from other sources. Actual results could differ from those estimates


                                    Page 19
<PAGE>

under different assumptions or conditions. Additional information regarding risk
factors that may impact our estimates is included below under "Risk Factors.
"Income Taxes

As part of the process of preparing our consolidated financial statements we are
required to estimate our income taxes in each of the jurisdictions in which we
operate. This process involves us estimating our actual current tax expense
together with assessing temporary differences resulting from differing treatment
of items, for tax and accounting purposes. These differences result in deferred
tax assets and liabilities, which are included within our consolidated balance
sheet. We must then assess the likelihood that our deferred tax assets will be
recovered from future taxable income and to the extent we believe that recovery
is not likely, we must establish a valuation allowance. In the event that we
determine that we would be able to realize deferred tax assets in the future in
excess of the net recorded amount, an adjustment to the deferred tax asset would
increase income in the period such determination was made.

Significant management judgment is required in determining the valuation
allowance recorded against our net deferred tax assets, which consist of net
operating loss carry forwards. We have recorded a valuation allowance of $ 5.2
million as of February 28, 2005, due to uncertainties related to our ability to
utilize our deferred tax assets before they expire. The valuation allowance is
based on our estimates of taxable income by jurisdiction in which we operate and
the period over which our deferred tax assets will be recoverable.

     Year Ending February 28, 2005 Compared to Year Ending February 29, 2004

Revenues
--------

We had no revenues during our fiscal year ending February 28, 2005 ("2005 fiscal
year) and February 29, 2004 ("2004 fiscal year). Our primary focus was our
continued development of our light-based technology.

General and Administrative Expense
----------------------------------

General and administrative expenses increased approximately $1,051,000 or 119%
during the 2005 fiscal year as compared to our 2004 fiscal year. This increase
was comprised of the net increase and decrease in several key operating expense
categories. Salaries, wages, and payroll related costs increased approximately
$19,000 in the 2005 fiscal year when compared to the 2004 fiscal year. This
increase is represented by payroll costs associated with our wholly owned
subsidiary, Medi-Photonics, approximating $31,500, in addition to a full year's
salary in 2005 for Michael Engelhart, who because our chief operating officer at
the end of April 2003, representing a differential in costs between periods of
$17,500. Also there was an increase in payroll related costs, including
employment taxes approximating $30,000 and health insurance costs approximating
$10,000. These increases totaling $89,000 are net of a non-cash compensation
charge of $70,000 relating to stock options awarded in the 2004 fiscal year.
Professional fees increased approximately $289,000 in the 2005 fiscal year when
compared to the prior fiscal year. The principal reason for the increase is
related to the legal and accounting costs associated with the registration of
our securities and the increased accounting and legal activities associated with
financial and development activities. Administrative and secretarial costs
increased approximately $54,000 during the 2005 fiscal year when compared to the
prior period. This increase is a result of the issuance of common stock at fair
market value for secretarial services rendered to the Company approximating
$34,000, plus accruals of $20,000 incurred during the 2005 fiscal year. Included
in the increase in general and administrative expenses is an increase in
consulting costs of approximately $642,000 during the 2005 fiscal year when
compared to the 2004 fiscal year. This increase was comprised of approximately
$587,000 of deferred costs amortized as an expense plus an increase in other
consulting costs expended approximating $55,000, all associated with corporate
management, marketing opportunities, product development, corporate funding and
FDA clinical trials. The Company made an inducement offer to a creditor to
convert all of its then outstanding notes. In March 2004 the creditor accepted
the offer to convert the principal amount of $150,045 plus related accrued
interest of $35,470 to 1,460,000 common shares. In connection with the
inducement offer and related conversion, the Company recognized a non-cash
expense of $58,555 during the 2005 fiscal year. With the exception of
advertising, travel and marketing, all other general and administrative costs
increased approximately $20,000 during the 2005 fiscal year when compared to the
2004 fiscal year. This increase is associated with the general increase in
administrative activities of managing the Company as it continues to develop and
promote its light-based technology. Included in general and administrative
expense is a decrease in advertising,


                                    Page 20
<PAGE>

travel, and marketing approximating $32,000 during the 2005 fiscal year when
compared to the 2004 fiscal year. This decrease was primarily the result of
decreased activity pursuing the establishment of co-promotional arrangements for
the marketing, distribution, and commercial exploitation of cancer detection
technology, along with the promotional activities of raising capital to support
these objectives.

Research and Development Expense
--------------------------------

Research and development expense increased approximately $401,000 during the
2005 fiscal year when compared to the 2004 fiscal year, due principally to the
increase in research funding approximating $300,000 provided by us though
Medi-Photonics to the Research Foundation City University of New York (RFCUNY)
under a one-year project agreement for research and development in the area of
optical biopsy for the development of a commercially viable CD-Ratiometer and
adjunctive technology. Included in the increase in research and development is
approximately $59,000 of deferred costs amortized as an expense. The company
though its subsidiary Medi-Photonics entered into a collaborative research and
development agreement with Infotonics Technology Center Inc., a consortium of
founding participants such as Corning Inc., Eastman Kodak Company and Xerox
Corporation. Infotonics and the Company will collaborate with one another in the
conduct of a research program involving the development of commercially viable,
miniature devices for the Company that will make use of ultraviolet light to
diagnose the health of living tissue, remotely monitoring the health/status of
various medical environments, e.g. the detection of various types of cancer and
the monitoring of body functions. The period of research under this agreement
will terminate upon completion of the research, currently estimated to be five
years. As consideration for Infotonics to carry out the research, the company
issued to Infotonics 1,000,000 shares of its common stock, having a fair market
value of $754,100. The increase in research and development is also represented
by developmental payroll costs associated with Medi-Photonics approximating
$42,000.

    YEAR ENDING FEBRUARY 29, 2004 COMPARED TO YEAR ENDING FEBRUARY 28, 2003

The Company had no revenues during its fiscal year ending February 29, 2004
("its 2004 fiscal year"). The Company's primary focus was its continued
development of its light-based technology. General and administrative expenses
increased approximately $312,000 or 55% during the 2004 fiscal year as compared
to its 2003 fiscal year. This increase was comprised of the net increase and
decrease in several key operating expense categories. Salaries and wages
increased approximately $247,000 in the current fiscal year when compared to the
prior fiscal year. This increase is represented by almost a full year's salary
accrual for Michael Engelhart, the new Chief Operating Officer totaling
$102,500, along with the reversal of salary and fringe benefit accruals in the
prior year totaling $74,500 for the former Chief Operating Officer, Sidney
Braginsky, who resigned in the prior fiscal year and noncash compensation of
$70,000 relating to stock options. Travel and entertainment increased
approximately $48,000 in the current fiscal year when compared to the prior
fiscal year. The increase was primarily the result of increased activity
pursuing the establishment of Co-Promotional arrangements for the Marketing,
Distribution and Commercial Exploitation of its Cancer Detection Technology
along with the promotional activities of raising capital to support these
objectives. Professional fees increased approximately $27,000 in the current
fiscal year when compared to the prior fiscal year. The principal reason for the
current increase relates to annual professional fee costs, to include compliance
with Sarbanes - Oxley and increased accounting activities associated with
financial and developmental activities. Other reasons for an increase in general
and administrative expenses were the consulting costs of Michael Engelhart, the
new C.O.O., approximating $10,000, increased transfer fees and printing costs
approximating $8,000, along with an increase in occupancy costs of $6,000. A
reason for a decrease in general and administrative expenses was a decline in
secretarial and financial consulting costs approximating $35,000 during the
current fiscal year when compared to the prior fiscal year. The Company's
product development expense was approximately $26,300 for fiscal year 2004. This
was a decrease of approximately $6,100 or 19% when compared to the prior fiscal
year. During fiscal year 2004, approximately $11,700 in costs were associated
with the Institute for Ultrafast Spectroscopy and Lasers Center for Ultrafast
Photonics and Mediphotonics Laboratory of City College of New York. In addition,
the Company incurred approximately $14,600 of patent filing fees associated with
the Research Foundation of City College of New York during the current fiscal
year.


                                    Page 21
<PAGE>

In the 2003 fiscal year, the Company recognized as income $16,000 on the
settlement of a $40,000 debt with the issuance of 160,000 shares of common stock
at its fair market value of $24,000. In addition, during fiscal year 2003, the
Company recognized as income $164,451 on the settlement of $283,484 debt with
the issuance of 283,228 shares of common stock with a fair market value of
$33,988 along with a payment of $85,045. No gains on the restructuring of
payables were recorded in the 2004 fiscal year. In the 2003 fiscal year, the
Company recognized an income tax benefit approximating $217,700 under the State
of New Jersey Technology Business Tax Certificate Program. The program allows
emerging technology and biotechnology companies to sell their unused state net
operating losses to corporate taxpayers in New Jersey. The proceeds have been
used to pay approximately $31,300 to an officer for prior loans to the Company
with the balance approximating $186,400 to be used for general operations. No
income tax benefit under this program was recorded in the 2004 fiscal year,
since the Company completed the program in fiscal year 2003.

      YEAR ENDING FEBRUARY 28, 2003 COMPARED TO YEAR ENDING FEBRUARY 28, 2002

The Company had no revenues during its fiscal years ending February 28, 2003
("its 2003 fiscal year"). The Company's primary focus was the development of its
light-based technology. General and administrative expenses increased
approximately $1,300 or .2% during the 2003 fiscal year as compared to its 2002
fiscal year. This increase was comprised of the net increase and decrease in
several key operating expense categories. Travel and entertainment increased
approximately $42,500 in the current fiscal year when compared to the prior
fiscal year. The increase was primarily the result of increased activity as a
result of increased funds. Another reason for an increase in general and
administrative expenses was the availability of funds to pay for increased
general expenses such as insurance, office expenses, repairs and maintenance and
transfer fees all totaling $23,000. Professional fees decreased approximately
$22,300 in the current fiscal year when compared to the prior fiscal year. The
principal reason for the current decrease was a decrease of annual professional
fee costs. Another reason for a decrease in general and administrative expenses
was a decline in secretarial and financial consulting costs approximating
$48,000 during the current fiscal year when compared to the prior fiscal year.
The Company's product development expense was approximately $32,400 for fiscal
year 2003. In the prior fiscal year product development costs were zero. During
fiscal year 2003 approximately $23,000 in costs were associated with the
Institute for Ultra-fast Spectroscopy and Lasers Center for Ultra-fast Photonics
and Medi-photonics of City College of New York. In addition, the Company
incurred approximately $9,000 of other costs associated with the Research
Foundation of City College of New York during the current fiscal year. In the
2003 fiscal year the Company recognized an income tax benefit approximating
$217,700 under the State of New Jersey Technology Business Tax Certificate
Program. The program allows emerging technology and biotechnology companies to
sell their unused state net operating losses to corporate taxpayers in New
Jersey. The proceeds have been used to pay approximately $31,300 to an officer
for prior loans to the Company with the balance approximating $186,400 to be
used for general operations. In the 2003 fiscal year the Company recognized as
income a $16,000 gain on the settlement of a $40,000 debt with the issuance of
160,000 shares of common stock of the Company at its fair market value of
$24,000. In addition, during fiscal year 2003, the Company recognized as income
a $164,451 gain on the settlement of a $283,484 debt with the issuance of
283,228 shares of common stock of the Company with a fair market value of
$70,807 along with a payment of $85,045. No gains on the re-structuring of
payables were recorded in the 2002 fiscal year. The Company also issued a
five-year option to purchase 600,000 shares of Common Stock at a $1.00 per
share.

2005 Liquidity and Capital Resources
------------------------------------

We had a deficiency in working capital as of February 28, 2005 of approximately
$2,180,000 compared to a deficiency of approximately $1,924,000 at February 29,
2004 or an increase in the deficiency of approximately $256,000 for the 2005
fiscal year. The increase in the deficiency was comprised of a decrease of
approximately $472,000 in current assets primarily composed of cash, as compared
to a decrease of approximately $216,000 in current liabilities which was
primarily composed of accrued liabilities and accounts payable. The deficiency
in working capital is primarily represented by accruals for professional fees,
consulting, salaries, and wages and other general obligations.


                                    Page 22
<PAGE>

Cash flows from financing activities was $1,100,000 for the year ended February
28, 2005, which is related to the proceeds from an ongoing private placement of
common stock. Included in the $1,100,000 was $350,000 in proceeds from the
issuance of promissory notes, which were later converted in common stock of the
Company. The proceeds from the private placement will be used for the clinical
development of certain prototypes, regulatory, medical and scientific affairs,
market research, and working capital.

Our ability to continue our operations is largely dependent upon obtaining
regulatory approval for the commercialization of our cancer detection
technology. There can be no assurance as to whether or when the various
requisite government approvals will be obtained or the terms or scope of these
approvals, if granted. We intend to defray the costs of obtaining regulatory
approval for the commercialization of such technology by the establishment of
clinical trial arrangements with medical institutions. We intend to continue to
pursue the establishment of co-promotional arrangements for the marketing,
distribution and commercial exploitation of its cancer detection technology.
Such arrangements, if established, may include up-front payments, sharing of
sales revenues after deduction of certain expenses, and/or product development
funding. Our management anticipates that substantial resources will be committed
to a continuation of our research and development efforts and to finance
government regulatory applications. While management believes that we will
obtain sufficient funds to satisfy our liquidity and capital resources needs for
the short term from the private placement of our securities and short term
borrowings, no assurances can be given that additional funding or capital from
other sources, such as co-promotion arrangements, will be obtained on a
satisfactory basis, if at all. In the absence of the availability of financing
on a timely basis, we may be forced to materially curtail or cease our
operations. Our operating and capital requirements, as described above, may
change depending upon several factors, including: (i) results of research and
development activities; (ii) competitive and technological developments; (iii)
the timing and cost of obtaining required regulatory approvals for our products;
(iv) the amount of resources which we devote to clinical evaluation and the
establishment of marketing and sales capabilities; and (v) our success in
entering into, and cash flows derived from, co-promotion arrangements.

Liquidity and Capital Resources 2004

The Company has a deficiency in working capital as of February 29, 2004 of
approximately $1,924,000 representing a decrease in the deficiency approximating
($582,200) during the 2004 fiscal year. The deficiency is primarily comprised of
accruals for professional fees, consulting and general obligations , and
salaries and wages. Cash flows from financing activities was $1,571,000 for the
year ended February 29, 2004, which primarily related to proceeds from a $1.5
million private placement of convertible preferred stock. The proceeds will be
used for the clinical development of certain prototypes, regulatory, medical and
scientific affairs, market research, and working capital. The Company's ability
to maintain its operations is largely dependent upon obtaining regulatory
approval for the commercialization of its cancer detection technology. There can
be no assurance as to whether or when the various requisite government approvals
will be obtained or the terms or scope of these approvals. The Company intends
to defray the costs of obtaining regulatory approval for the commercialization
of such technology by the establishment of clinical trial arrangements with
medical institutions, similar to its agreement with Sloan Kettering Memorial
Hospital. The Company intends to continue to pursue the establishment of
co-promotional arrangements for the marketing, distribution and commercial
exploitation of its cancer detection technology. Such arrangements, if
established, may include up-front payments sharing of sales revenues after
deduction of certain expenses, and/or product development funding. Management of
the Company anticipates that substantial resources will be committed to a
continuation of its research and development efforts and to finance government
regulatory applications. While management believes that the Company will obtain
sufficient funds to satisfy its liquidity and capital resources needs for the
short term, no assurances can be given that additional funding, or capital from
other sources, such as co-promotion arrangements, will be obtained on a
satisfactory basis. In the absence of the availability of financing on a timely
basis, the Company may be forced to materially curtail or cease its operations.
The Company's operating and capital requirements, as described above, may change
depending upon several factors, including: (i) results of research and
development activities; (ii) competitive and technological developments; (iii)
the timing and cost of obtaining required regulatory approvals for its products;
(iv) the amount of resources which the


                                    Page 23
<PAGE>

Company devotes to clinical evaluation and the establishment of marketing and
sales capabilities; and (v) the Company's success in entering into, and cash
flows derived from, co-promotion arrangements. Liquidity and Capital Resources:

2003

The Company has a deficiency in working capital as of February 28, 2003 of
approximately ($2,506,200) representing an increase in the deficiency
approximating ($145,700) during the 2003 fiscal year. The deficiency is
primarily comprised of accruals for professional fees, research and development
costs, consulting and salaries and wages. The Company's ability to maintain its
operations is largely dependent upon obtaining regulatory approval for the
commercialization of its cancer detection technology. There can be no assurance
as to whether or when the various requisite government approvals will be
obtained or the terms or scope of these approvals. The Company intends to defray
the costs of obtaining regulatory approval for the commercialization of such
technology by the establishment of clinical trial arrangements with medical
institutions, similar to its agreement with Sloan Kettering Memorial Hospital.
The Company intends to continue to pursue the establishment of co-promotional
arrangements for the marketing, distribution and commercial exploitation of its
cancer detection technology. Such arrangements, if established, may include
up-front payments sharing of sales revenues after deduction of certain expenses,
and/or product development funding. Management of the Company anticipates that
substantial resources will be committed to a continuation of its research and
development efforts and to finance government regulatory applications. While
management believes that the Company will obtain sufficient funds to satisfy its
liquidity and capital resources needs for the short term, no assurances can be
given that additional funding, or capital from other sources, such as
co-promotion arrangements, will be obtained on a satisfactory basis. In the
absence of the availability of financing on a timely basis, the Company may be
forced to materially curtail or cease its operations. The Company's operating
and capital requirements, as described above, may change depending upon several
factors, including: (i) results of research and development activities; (ii)
competitive and technological developments; (iii) the timing and cost of
obtaining required regulatory approvals for its products; (iv) the amount of
resources which the Company devotes to clinical evaluation and the establishment
of marketing and sales capabilities; and (v) the Company's success in entering
into, and cash flows derived from, co-promotion arrangements.

The Company received benefits under the State of New Jersey Technology Business
Tax Certificate Program. The program allowed Registrant as a qualified emerging
technology and biotechnology businesses to sell its unused Net Operating Loss
(NOL) carryover to any New Jersey corporate taxpayer for no less than 75% of the
audited and allowable tax benefit through the sale of its New Jersey Net
Operating Loss carryover. Registrant entered into a three-year agreement on
favorable terms (83.3%) with purchaser NJ Public Service Electric and Gas Co. On
September 27, 2001 Peter Katevatis Esq. successfully re-negotiated this
percentage increasing it from 83.3% to 87.0%. On June 28, 2000, Registrant was
approved and receiving $237,556 in net proceeds. On November 16, 2001 our (2nd)
application for State fiscal year 2002 Registrant was approved and received
$241,867 in proceeds on January 3, 2002. The Company filed for tax benefits in
the fiscal year 2003 pursuant to its agreement with PS&G of NJ and received
$217,712 on December 20, 2002 on the same terms and conditions of 87.0%. This
completed the three-year contract relationship with Public Service Electric and
Gas Co. of NJ. and effectively used all of the Company's then available NOL. The
registrants existing relationship with Public Service Electric and Gas Co. of
NJ. will preserves future participation in the program as registrant develops
future NJ NOL On January 23, 2001 registrant paid the Research Foundation of
CUNY $175,000 thus satisfying all its immediate financial obligations and curing
all present patent issues with RF/CUNY. See 8-K filing dated May 10, 2001. City
University had agreed to accept receipts from the Company's tax sale to repay
the outstanding obligation over a three-year period. This agreed payment
structure to RF/CUNY has been fully paid.


                                    Page 24
<PAGE>

                                  RISK FACTORS

The following risk factors should be considered carefully in addition to the
other information presented in this report. This report contains forward looking
statements that involve risks and uncertainties. Our actual results may differ
significantly from the results discussed in the forward looking statements.
Factors that might cause such differences include, but are not limited to, the
following:

WE DO NOT HAVE A LONG OPERATING HISTORY, WHICH MAKES IT DIFFICULT FOR YOU TO
EVALUATE OUR BUSINESS.

Because limited historical information is available on our revenue trends and
operations, it will be difficult for you to evaluate our business. Our prospects
must be considered in light of the substantial risks, expenses, uncertainties
and difficulties encountered by entrants into the medical device industry, which
is characterized by increasing intense competition and a high failure rate.

WE HAVE A HISTORY OF LOSSES, AND WE EXPECT LOSSES TO CONTINUE.

We have never been profitable, and we have had operating losses since our
inception. We expect our operating losses to continue as we continue to expend
substantial resources to launch our product line, to complete development of
ourproducts, obtain regulatory clearances or approvals, build our marketing,
sales,manufacturing and finance organizations, and conduct further research and
development. To date, we have engaged primarily in research and development
efforts. The further development and commercialization of our products will
require substantial development,regulatory, sales and marketing, manufacturing
and other expenditures.

IF WE CANNOT OBTAIN ADDITIONAL FUNDS WHEN NEEDED, WE WILL NOT BE ABLE TO
IMPLEMENT OUR BUSINESS PLAN.

We will require substantial additional capital to develop our products,
including completing product testing and clinical trials, obtaining all required
regulatory approvals and clearances, beginning and scaling up manufacturing, and
marketing our products. We have historically funded a significant portion of our
activities through private placements. We are seeking a collaborative partner
for our technology and are seeking targeted funding for our cervical cancer
program. Any failure to find collaborative partners to fund our capital
expenditures, or our inability to obtain capital through other sources, would
limit our ability to grow and operate as planned. Even if we do enter into an
agreement with a collaborative partner, the obligations of a collaborative
partner to fund our expenditures is largely discretionary and depends on a
number of factors, including our ability to meet specified milestones in the
development and testing of the relevant product. We may not be able to meet
these milestones, or our collaborative partner may not continue to fund our
expenditures.

We bear responsibility for all aspects of our product line and our cervical
cancer product, which are not being developed with a collaborative partner. We
may be required to raise additional funds through public or private financing,
additional collaborative relationships or other arrangements. We believe that
our existing capital resources may not be sufficient to fund our operations to
the point of commercial introduction of our monitoring products, our cervical
cancer detection product. . Any failure to achieve adequate funding in a timely
fashion would delay our development programs and could lead to abandonment of
one or more of our development initiatives. Any required additional funding may
not be available on terms attractive to us, or at all. To the extent we cannot
obtain additional funding, our ability to continue to develop and introduce
products to market will be limited. Any additional equity financing may be
dilutive to stockholders, and debt financing, if available, may involve
restrictive covenants that would limit how we conduct our business or finance
our operations.

IF WE CANNOT OBTAIN ADDITIONAL FUNDS WHEN NEEDED, OR ACHIEVE PROFITABILITY WE
MAY NOT BE ABLE TO CONTINUE AS A GOING CONCERN.

Our independent auditors have included an explanatory paragraph in their audit
report referring to our recurring operating losses and a substantial doubt about
our ability to continue as a going concern. Absent additional funding from
private or public equity or debt financings, collaborative or other partnering
arrangements, or other sources and If we do not secure additional funding, we
will be unable to conduct all of our product development efforts as planned, and
we may need to cease operations or sell assets. In addition, the existence of
the explanatory paragraph in the audit report may in and of itself cause our
stock price to decline as certain investors may be restricted or precluded from
investing in companies that have received this notice in an audit report.


                                    Page 25
<PAGE>

OUR ABILITY TO SELL OUR PRODUCTS IS CONTROLLED BY GOVERNMENT REGULATIONS, AND WE
MAY NOT BE ABLE TO OBTAIN ANY NECESSARY CLEARANCES OR APPROVALS.

The design, manufacturing, labeling, distribution and marketing of medical
device products are subject to extensive and rigorous government regulation,
which can be expensive and uncertain and can cause lengthy delays before we can
begin selling our products.

IN THE UNITED STATES, THE FOOD AND DRUG ADMINISTRATION'S ACTIONS COULD DELAY OR
PREVENT OUR ABILITY TO SELL OUR PRODUCTS, WHICH WOULD ADVERSELY AFFECT OUR
GROWTH AND STRATEGY PLANS.

In order for us to market our products in the United States, we must obtain
clearance or approval from the Food and Drug Administration, or FDA. We cannot
be sure: that we or any collaborative partners will make timely filings with the
FDA; that the FDA will act favorably or quickly on these submissions; that we
will not be required to submit additional information or perform additional
clinical studies; that we would not be required to submit an application for PMA
as described below; or that other significant difficulties and costs will not be
encountered to obtain FDA clearance or approval. The pre-market approval process
is more rigorous and lengthier than the 510(k) clearance process for pre-market
notifications; it can take several years from initial filing and require the
submission of extensive supporting data and clinical information clinical study
data.

The FDA may impose strict labeling or other requirements as a condition of its
clearance or approval, any of which could limit our ability to market our
products. Further, if we wish to modify a product after FDA clearance of a
pre-market notification or approval of a pre-market approval application,
including changes in indications or other modifications that could affect safety
and efficacy, additional clearances or approvals will be required from the FDA.
Any request by the FDA for additional data, or any requirement by the FDA that
we conduct additional clinical studies or submit to the more rigorous and
lengthier pre-market approval process, could result in a significant delay in
bringing our products to market and substantial additional research and other
expenditures. Similarly, any labeling or other conditions or restrictions
imposed by the FDA on the marketing of our products could hinder our ability to
effectively market our products. Any of the above actions by the FDA could delay
or prevent altogether our ability to market and distribute our products.
Further, there may be new FDA policies or changes in FDA policies that could be
adverse to us.

IN FOREIGN COUNTRIES, INCLUDING EUROPEAN COUNTRIES, WE ARE ALSO SUBJECT TO
GOVERNMENT REGULATION, WHICH COULD DELAY OR PREVENT OUR ABILITY TO SELL OUR
PRODUCTS IN THOSE JURISDICTIONS.

In order for us to market our products in Europe and some other international
jurisdictions, we and our distributors and agents must obtain required
regulatory registrations or approvals. We must also comply with extensive
regulations regarding safety, efficacy and quality in those jurisdictions. We
may not be able to obtain the required regulatory registrations or approvals, or
we may be required to incur significant costs in obtaining or maintaining any
regulatory registrations or approvals we receive. Delays in obtaining any
registrations or approvals required to market our products, failure to receive
these registrations or approvals, or future loss of previously obtained
registrations or approvals would limit our ability to sell our products
internationally. For example, international regulatory bodies have adopted
various regulationsgoverning product standards, packaging requirements, labeling
requirements, import restrictions, tariff regulations, duties and tax
requirements. These regulations vary from country to country. In order to sell
our products in Europe, we must maintain ISO 9001 certification and CE mark
certification, which is an international symbol of quality and compliance with
applicable European medical device directives. Failure to receive or maintain
ISO 9001 certification or CE mark certification or other international
regulatory approvals would prevent us from selling in Europe.

EVEN IF WE OBTAIN CLEARANCE OR APPROVAL TO SELL OUR PRODUCTS, WE ARE SUBJECT TO
ONGOING REQUIREMENTS AND INSPECTIONS THAT COULD LEAD TO THE RESTRICTION,
SUSPENSION OR REVOCATION OF OUR CLEARANCE.

We, as well as any collaborative partners, will be required to adhere to
applicable FDA regulations regarding good manufacturing practice, which include
testing, control, and documentation requirements. We are subject to similar
regulations in foreign countries. Ongoing compliance with good manufacturing
practice and other applicable regulatory requirements will be strictly enforced
in the United States through periodic inspections by state and federal agencies,
including the FDA, and in international jurisdictions by comparable agencies.
Failure to comply with these regulatory requirements could result in, among
other things, warning letters, fines, injunctions, civil penalties, recall or
seizure of products, total or partial suspension of production, failure to
obtain premarket clearance or premarket approval for devices, withdrawal of


                                    Page 26
<PAGE>

approvals previously obtained, and criminal prosecution. The restriction,
suspension or revocation of regulatory approvals or any other failure to comply
with regulatory requirements would limit our ability to operate and could
increase our costs.

OUR SUCCESS LARGELY DEPENDS ON OUR ABILITY TO OBTAIN AND PROTECT THE PROPRIETARY
INFORMATION ON WHICH WE BASE OUR PRODUCTS.

Our success depends in large part upon our ability to establish and maintain the
proprietary nature of our technology through the patent process, as well as our
ability to possibly license from others patents and patent applications
necessary to develop products. If any of our patents are successfully
challenged, invalidated or circumvented, or our right or ability to manufacture
our products were to be limited, our ability to continue to manufacture and
market our products could be adversely affected. In addition to patents, we rely
on trade secrets and proprietary know-how, which we seek to protect, in part,
through confidentiality and proprietary information agreements. The other
parties to these agreements may breach these provisions, and we may not have
adequate remedies for any breach. Additionally, our trade secrets could
otherwise become known to or be independently developed by competitors.

We have been issued, or have rights to, 25 U.S. patents (including those under
license). In addition, we have filed for, or have rights to, 1 U.S. patents
(including those under license) that are still pending. . One or more of the
patents we hold directly or license from third parties, may be successfully
challenged, invalidated or circumvented, or we may otherwise be unable to rely
on these patents. These risks are also present for the process we use or will
use for manufacturing our products. In addition, our competitors, many of whom
have substantial resources and have made substantial investments in competing
technologies, may apply for and obtain patents that prevent, limit or interfere
with our ability to make, use and sell our products, either in the United States
or in international markets.

The medical device industry has been characterized by extensive litigation
regarding patents and other intellectual property rights. In addition, the
United States Patent and Trademark Office may institute interference
proceedings. The defense and prosecution of intellectual property suits, Patent
and Trademark Office proceedings and related legal and administrative
proceedings are both costly and time consuming. Moreover, we may need to
litigate to enforce our patents, to protect our trade secrets or know-how, or to
determine the enforceability, scope and validity of the proprietary rights of
others. Any litigation or interference proceedings involving us may require us
to incur substantial legal and other fees and expenses and may require some of
our employees to devote all or a substantial portion of their time to the
proceedings. An adverse determination in the proceedings could subject us to
significant liabilities to third parties, require us to seek licenses from third
parties or prevent us from selling our products in some or all markets. We may
not be able to reach a satisfactory settlement of any dispute by licensing
necessary patents or other intellectual property. Even if we reached a
settlement, the settlement process may be expensive and time consuming, and the
terms of the settlement may require us to pay substantial royalties. An adverse
determination in a judicial or administrative proceeding or the failure to
obtain a necessary license could prevent us from manufacturing and selling our
products.

WE ARE DEVELOPING OUR CURRENT PRODUCT LINE INDEPENDENTLY FROM ANY COLLABORATIVE
PARTNERS, WHICH MAY REQUIRE US TO ACCESS ADDITIONAL CAPITAL AND TO DEVELOP
ADDITIONAL SKILLS TO PRODUCE, MARKET AND DISTRIBUTE THESE PRODUCTS.

We are also currently seeking direct funding for and expect to commercialize our
cervical cancer detection product independently of any collaborative partner.
These activities require additional resources and capital that we will need to
secure. There is no assurance that we will be able to raise sufficient capital
or attract and retain skilled personnel to enable us to finish development,
launch and market these products. Thus, there can be no assurance that we will
be able to commercialize all, or any

BECAUSE OUR PRODUCTS, WHICH USE DIFFERENT TECHNOLOGY OR APPLY TECHNOLOGY IN MORE
INNOVATIVE WAYS THAN OTHER MEDICAL DEVICES, ARE OR WILL BE NEW TO THE MARKET, WE
MAY NOT BE SUCCESSFUL IN LAUNCHING OUR PRODUCTS AND OUR OPERATIONS AND GROWTH
WOULD BE ADVERSELY AFFECTED.

Our products are based on new methods of cervical cancer detection. If our
products do not achieve significant market acceptance, our sales will be limited
and our financial condition may suffer. Physicians and individuals may not
recommend or use our products unless they determine that these products are an
attractive alternative to current tests that have a long history of safe and
effective use. To date, our products have been used by only a limited number of
people, and few independent studies regarding our products have been published.
The lack of independent studies limits the ability of doctors or consumers to
compare our products to conventional products.


                                    Page 27
<PAGE>

IF WE ARE UNABLE TO COMPETE EFFECTIVELY IN THE HIGHLY COMPETITIVE MEDICAL DEVICE
INDUSTRY, OUR FUTURE GROWTH AND OPERATING RESULTS WILL SUFFER.

The medical device industry in general, and the markets in which we expect to
offer products in particular, are intensely competitive. Many of our competitors
have substantially greater financial, research, technical, manufacturing,
marketing and distribution resources than we do and have greater name
recognition and lengthier operating histories in the health care industry. We
may not be able to effectively compete against these and other competitors. .
Further, if our products are not available at competitive prices, health care
administrators who are subject to increasing pressures to reduce costs may not
elect to purchase them. Accordingly, competition in this area is expected to
increase.

Furthermore, our competitors may succeed in developing, either before or after
the development and commercialization of our products, devices and technologies
that permit more efficient, less expensive non-invasive and less invasive
monitoring, or cancer detection. It is also possible that one or more
pharmaceutical or other health care companies will develop therapeutic drugs,
treatments or other products that will substantially render our products
obsolete.

WE HAVE LITTLE MANUFACTURING EXPERIENCE, WHICH COULD LIMIT OUR GROWTH.

We do not have manufacturing experience that would enable us to make products in
the volumes that would be necessary for us to achieve significant commercial
sales, and we rely upon our suppliers. In addition, we may not be able to
establish and maintain reliable, efficient, full scale manufacturing at
commercially reasonable costs, in a timely fashion. Difficulties we encounter in
manufacturing scale-up, or our failure to implement and maintain our
manufacturing facilities in accordance with good manufacturing practice
regulations, international quality standards or other regulatory requirements,
could result in a delay or termination of production.

THE AVAILABILITY OF THIRD-PARTY REIMBURSEMENT FOR OUR PRODUCTS IS UNCERTAIN,
WHICH MAY LIMIT CONSUMER USE AND THE MARKET FOR OUR PRODUCTS.

In the United States and elsewhere, sales of medical products are dependent, in
part, on the ability of consumers of these products to obtain reimbursement for
all or a portion of their cost from third-party payors, such as government and
private insurance plans. Any inability of patients, hospitals, physicians and
other users of our products to obtain sufficient reimbursement from third-party
payors for our products, or adverse changes in relevant governmental policies or
the policies of private third-party payors regarding reimbursement for these
products, could limit our ability to sell our products on a competitive basis.
We are unable to predict what changes will be made in the reimbursement methods
used by third-party health care payors. Moreover, third-party payors are
increasingly challenging the prices charged for medical products and services,
and some health care providers are gradually adopting a managed care system in
which the providers contract to provide comprehensive health care services for a
fixed cost per person. Patients, hospitals and physicians may not be able to
justify the use of our products by the attendant cost savings and clinical
benefits that we believe will be derived from the use of our products, and
therefore may not be able to obtain third-party reimbursement.

Reimbursement and health care payment systems in international markets vary
significantly by country and include both government sponsored health care and
private insurance. We may not be able to obtain approvals for reimbursement from
these international third-party payers in a timely manner, if at all. Any
failure to receive international reimbursement approvals could have an adverse
effect on market acceptance of our products in the international markets in
which approvals are sought.

OUR SUCCESS DEPENDS ON OUR ABILITY TO ATTRACT AND RETAIN SCIENTIFIC, TECHNICAL,
MANAGERIAL AND FINANCE PERSONNEL.

Our ability to operate successfully and manage our future growth depends in
significant part upon the continued service of key scientific, technical, and
managerial and finance personnel, as well as our ability to attract and retain
additional highly qualified personnel in these fields. We may not be able to
attract and retain key employees when necessary, which would limit our
operations and growth.

WE ARE SIGNIFICANTLY INFLUENCED BY OUR DIRECTORS, EXECUTIVE OFFICERS AND THEIR
AFFILIATED ENTITIES.

Our directors, executive officers and entities affiliated with them beneficially
owned an aggregate of 30.0% of our outstanding common stock as of February 29,
2005 . Additionally Founders Katevatis and Alfano have historical and board
approved anti-dilution rights of 17% and 4% respectively. The founders are owed
significant non-interest bearing debt which they have the right to assign at any
time or conversly convert upon 60 days notice to the board at $.25 cents per
share These stockholders, acting together, would be able to exert significant
influence on substantially all matters requiring approval by our stockholders,
including the election of directors and the approval of mergers and other
business combination transactions.


                                    Page 28
<PAGE>

ITEM 7 Financial statements

                          MEDISCIENCE TECHNOLOGY CORP.
                                AND SUBSIDIARIES

                                   ----------

                        CONSOLIDATED FINANCIAL STATEMENTS
                               FOR THE YEARS ENDED
                      FEBRUARY 29, 2005, FEBRUARY 28, 2004
                              AND FEBRUARY 28, 2003
                                        &
                        REPORT OF INDEPENDENT REGISTERED
                             PUBLIC ACCOUNTING FIRM

<PAGE>

                          MEDISCIENCE TECHNOLOGY CORP.
                                AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                      FEBRUARY 28, 2005, FEBRUARY 29, 2004
                              AND FEBRUARY 28, 2003

<PAGE>

                  MEDISCIENCE TECHNOLOGY CORP. AND SUBSIDIARIES

                                 C O N T E N T S
                                 ---------------

                                                                           PAGE
                                                                         -------

REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS                 1 - 2

CONSOLIDATED BALANCE SHEETS                                                 3

CONSOLIDATED STATEMENTS OF OPERATIONS                                       4

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT                 5

CONSOLIDATED STATEMENTS OF CASH FLOWS                                       6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                7 - 19

<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
Mediscience Technology Corp.
Cherry Hill, New Jersey

We have audited the accompanying consolidated balance sheet of Mediscience
Technology Corp. and subsidiaries (the "Company") as of February 28, 2005, and
the related consolidated statements of operations, changes in stockholders'
deficit and cash flows for the year ended February 28, 2005. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted  our audit in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audits to  obtain  reasonable  assurance  about  whether  the
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in  all  material  respects,  the  financial  position  of  Mediscience
Technology  Corp. and  subsidiaries  as of February 28, 2005, and the results of
its  operations  and cash  flows  for the  year  ended  February  28,  2005,  in
conformity with accounting principles generally accepted in the United States.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As disclosed in Note 1 to the
financial statements,  the Company has no revenues,  incurred significant losses
from operations,  has negative working capital and an accumulated  deficit which
raises  substantial  doubt about its  ability to  continue  as a going  concern.
Management's  plan in regard to these  matters is also  described in Note 1. The
financial   statements   do  not  include  any   adjustments   relating  to  the
recoverability  and  classification  of asset carrying amounts or the amount and
classification  of liabilities that might result should the Company be unable to
continue as a going concern.

                                        /s/ COGEN, SKLAR, LLP
                                        ---------------------------------

Bala Cynwyd, Pennsylvania
May 13, 2005


                                     - 1 -
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
Mediscience Technology Corp.
Cherry Hill, New Jersey:

We have  audited the  accompanying  consolidated  balance  sheet of  Mediscience
Technology Corp. and  subsidiaries  (the "Company") as of February 29, 2004, and
the related  consolidated  statements of  operations,  changes in  stockholders'
deficit,  and cash flows for the years ended  February 29, 2004 and February 28,
2003.  These  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in  all  material  respects,  the  financial  position  of  Mediscience
Technology  Corp. and  subsidiaries  as of February 29, 2004, and the results of
their  operations and their cash flows for the years ended February 29, 2004 and
February 28, 2003 in conformity with accounting principles generally accepted in
the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  disclosed  in  Note 1 to the
financial statements,  the Company has no revenues,  incurred significant losses
from operations,  has negative working capital and an accumulated  deficit which
raises  substantial  doubt about its  ability to  continue  as a going  concern.
Management's  plans in regard to these matters are also described in Note 1. The
financial   statements   do  not  include  any   adjustments   relating  to  the
recoverability  and  classification  of asset carrying amounts or the amount and
classification  of liabilities that might result should the Company be unable to
continue as a going concern.


/s/ Parente Randolph, LLC

Philadelphia, Pennsylvania
May 4, 2004


                                     - 2 -
<PAGE>

                  MEDISCIENCE TECHNOLOGY CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                     FEBRUARY 28, 2005 AND FEBRUARY 29, 2004

<TABLE>
<CAPTION>
                                                               2005               2004
                                                           ------------       ------------
<S>                                                        <C>                <C>
         ASSETS

CURRENT ASSETS
    Cash                                                   $    934,212       $  1,406,371
    Prepaid expenses                                              3,848              3,388
                                                           ------------       ------------

TOTAL CURRENT ASSETS                                            938,060          1,409,759

EQUIPMENT - Net                                                     637                892

DEFERRED CHARGES                                              1,453,834                 --

OTHER ASSETS                                                      1,800              1,800
                                                           ------------       ------------

TOTAL ASSETS                                               $  2,394,331       $  1,412,451
                                                           ============       ============

         LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
    Current portion of officer and other loans             $     31,542       $    181,587
    Accounts payable                                             93,504             19,505
    Accrued liabilities                                       2,992,911          3,132,686
                                                           ------------       ------------

TOTAL CURRENT LIABILITIES                                     3,117,957          3,333,778

TOTAL LIABILITIES                                             3,117,957          3,333,778
                                                           ------------       ------------

STOCKHOLDERS' DEFICIT
  Convertible preferred stock, $.01 par value, 50,000
    shares authorized, -0- and 60 shares issued and
    outstanding in 2005 and 2004, respectively                       --                  1
  Common Stock - $.01 par value; 199,950,000 shares
    authorized; 56,124,210 and 39,372,753
    shares issued and outstanding in 2005 and 2004,             561,243            393,727
    respectively

ADDITIONAL PAID-IN CAPITAL                                   23,217,702         20,076,019

COMMON STOCK SUBSCRIBED                                         250,000                 --

ACCUMULATED DEFICIT                                         (24,752,571)       (22,391,074)
                                                           ------------       ------------

TOTAL STOCKHOLDERS' DEFICIT                                    (723,626)        (1,921,327)
                                                           ------------       ------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                $  2,394,331       $  1,412,451
                                                           ============       ============
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                     - 3 -
<PAGE>

                  MEDISCIENCE TECHNOLOGY CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
              YEARS ENDED FEBRUARY 28, 2005, FEBRUARY 29, 2004 AND
                                FEBRUARY 28, 2003

<TABLE>
<CAPTION>
                                                                        2005               2004              2003
                                                                   ------------       ------------       ------------
<S>                                                                <C>                <C>                <C>
SALES                                                              $         --       $         --       $         --

COST OF SALES                                                                --                 --                 --
                                                                   ------------       ------------       ------------

GROSS PROFIT                                                                 --                 --                 --
                                                                   ------------       ------------       ------------

GENERAL AND ADMINISTRATIVE EXPENSE                                    1,933,453            882,432            570,598

RESEARCH & DEVELOPMENT EXPENSE                                          428,057             26,265             32,383
                                                                   ------------       ------------       ------------

TOTAL EXPENSE                                                         2,361,510            908,697            602,981
                                                                   ------------       ------------       ------------

LOSS FROM OPERATIONS                                                 (2,361,510)          (908,697)          (602,981)
                                                                   ------------       ------------       ------------

OTHER (INCOME) EXPENSE
  Interest expense, net of interest income of $3,679 in 2005,
    $1,004 in 2004 and $694 in 2003                                         (13)            15,876             12,220
  Gain on restructuring of payables                                          --                 --           (180,451)
                                                                   ------------       ------------       ------------
                                                                            (13)            15,876           (168,231)
                                                                   ------------       ------------       ------------

LOSS BEFORE INCOME TAX BENEFIT                                       (2,361,497)          (924,573)          (434,750)

INCOME TAX BENEFIT                                                           --                 --            217,712
                                                                   ------------       ------------       ------------

NET LOSS                                                           $ (2,361,497)      $   (924,573)      $   (217,038)
                                                                   ============       ============       ============

BASIC AND DILUTED NET LOSS PER
    COMMON SHARE                                                   $     (0.045)      $     (0.024)      $     (0.006)
                                                                   ============       ============       ============

BASIC AND DILUTED WEIGHTED AVERAGE
    NUMBER OF SHARES OUTSTANDING                                     52,456,872         38,660,309         37,242,965
                                                                   ============       ============       ============
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                     - 4 -
<PAGE>

                  MEDISCIENCE TECHNOLOGY CORP. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
              YEARS ENDED FEBRUARY 28, 2005, FEBRUARY 29, 2004 AND
                                FEBRUARY 28, 2003

<TABLE>
<CAPTION>
                                                                      Preferred Stock                     Common Stock
                                                               -----------------------------     ----------------------------
                                                                   Number                            Number
                                                                 of Shares         Amount          of Shares         Amount
                                                               ------------     ------------     ------------    ------------
<S>                                                                             <C>                <C>           <C>
BALANCE AT FEBRUARY 28, 2002                                             --     $         --       36,976,870    $    369,769

  Issuance of stock for restructuring of payables                        --               --          283,228           2,832
  Issuance of stock for restructuring of payables                        --               --          160,000           1,600
  Issuance of stock for services                                         --               --          100,000           1,000
  Issuance of stock related to anti-dilution rights                      --               --           62,041             620
  Net loss                                                               --               --               --              --
                                                               ------------     ------------     ------------    ------------
BALANCE AT FEBRUARY 28, 2003                                             --               --       37,582,139         375,821

  Issuance of stock                                                      --               --          100,000           1,000
  Issuance of preferred stock - private placement                        60                1               --              --
  Issuance of stock related to anti-dilution rights                      --               --        1,690,614          16,906
  Cash received for common stock to be issued                            --               --               --              --
  Noncash compensation                                                   --               --               --              --
  Net loss                                                               --               --               --              --
                                                               ------------     ------------     ------------    ------------
BALANCE AT FEBRUARY 29, 2004                                             60                1       39,372,753         393,727

  Conversion of preferred stock                                         (60)              (1)       6,000,000          60,000
  Issuance of stock - exercise of warrants                               --               --          150,000           1,500
  Issuance of stock for future consulting services                       --               --        1,925,000          19,250
  Issuance of stock - anti-dilution rights                               --               --        4,160,901          41,610
  Issuance of stock - debt conversion                                    --               --        1,460,000          14,600
  Issuance of stock - past and future consulting services                --               --          200,000           2,000
  Issuance of stock for secretarial and consulting services              --               --          155,556           1,556
  Issuance of stock - collaborative research agreement                   --               --        1,000,000          10,000
  Issuance of stock for cash                                             --               --        1,000,000          10,000
  Issuance of stock in cancellation of promissory notes                  --               --          700,000           7,000
  Recognition of cash received for future issuance of stock              --               --               --              --
  Net loss                                                               --               --               --              --
                                                               ------------     ------------     ------------    ------------
BALANCE AT FEBRUARY 28, 2005                                             --     $         --       56,124,210    $    561,243
                                                               ============     ============     ============    ============

<CAPTION>

                                                                                       Common
                                                                    Additional          Stock        Accumulated
                                                                 Paid-in Capital     Subscribed         Deficit
                                                                 ---------------    ------------    ------------
<S>                                                                <C>              <C>             <C>
BALANCE AT FEBRUARY 28, 2002                                       $ 18,400,490     $         --    $(21,249,463)

  Issuance of stock for restructuring of payables                        31,156               --              --
  Issuance of stock for restructuring of payables                        22,400               --              --
  Issuance of stock for services                                         14,000               --              --
  Issuance of stock related to anti-dilution rights                        (620)              --              --
  Net loss                                                                   --               --        (217,038)
                                                                   ------------     ------------    ------------
BALANCE AT FEBRUARY 28, 2003                                         18,467,426               --     (21,466,501)

  Issuance of stock                                                      18,000               --              --
  Issuance of preferred stock - private placement                     1,499,999               --              --
  Issuance of stock related to anti-dilution rights                     (16,906)              --              --
  Cash received for common stock to be issued                            37,500               --              --
  Noncash compensation                                                   70,000               --              --
  Net loss                                                                   --               --        (924,573)
                                                                   ------------     ------------    ------------
BALANCE AT FEBRUARY 29, 2004                                         20,076,019               --     (22,391,074)

  Conversion of preferred stock                                         (59,999)              --              --
  Issuance of stock - exercise of warrants                               (1,500)              --              --
  Issuance of stock for future consulting services                    1,232,000               --              --
  Issuance of stock - anti-dilution rights                              (41,610)              --              --
  Issuance of stock - debt conversion                                   229,470               --              --
  Issuance of stock - past and future consulting services               116,000               --              --
  Issuance of stock for secretarial and consulting services              90,222               --              --
  Issuance of stock - collaborative research agreement                  744,100               --              --
  Issuance of stock for cash                                            490,000               --              --
  Issuance of stock in cancellation of promissory notes                 343,000               --              --
  Recognition of cash received for future issuance of stock                  --          250,000              --
  Net loss                                                                   --               --      (2,361,497)
                                                                   ------------     ------------    ------------
BALANCE AT FEBRUARY 28, 2005                                       $ 23,217,702     $    250,000    $(24,752,571)
                                                                   ============     ============    ============
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                     - 5 -
<PAGE>

                  MEDISCIENCE TECHNOLOGY CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              YEARS ENDED FEBRUARY 28, 2005, FEBRUARY 29, 2004 AND
                                FEBRUARY 28, 2003

<TABLE>
<CAPTION>
                                                                             2005            2004            2003
                                                                         -----------     -----------     -----------
<S>                                                                      <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                                              $(2,361,497)    $  (924,573)    $  (217,038)
   Adjustments to reconcile net loss
     to net cash used in operating activities
        Depreciation                                                             255             255           1,417
        Amortization                                                         671,200              --              --
        Common stock and warrants issued for legal and other services         32,778              --          15,000
        Debt conversion inducement expense                                    58,555              --              --
        Gain on restructuring of payables                                         --              --        (180,451)
        Noncash compensation                                                      --          70,000              --
        (Increase) decrease in assets
           Prepaid expenses                                                     (460)         11,465         (14,853)
           Other assets                                                           --              --          (1,800)
        Increase (decrease) in liabilities
           Accounts payable                                                   73,999         (24,368)         30,500
           Accrued liabilities                                               (46,989)        583,273         283,892
                                                                         -----------     -----------     -----------

   Net cash used in operating activities                                  (1,572,159)       (283,948)        (83,333)
                                                                         -----------     -----------     -----------

CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of equipment                                                          --              --          (1,275)
                                                                         -----------     -----------     -----------

CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from issuance of debt                                            350,000              --              --
   Issuance of common stock - warrants                                            --          56,500              --
   Issuance of preferred stock - private placement                                --       1,500,000              --
   Proceeds from officer and other loans                                          --          14,138         120,045
   Repayments of officer and other loans                                          --              --         (31,307)
   Issuance of common stock for cash                                         500,000              --              --
   Cash received for common stock subscribed                                 250,000              --              --
                                                                         -----------     -----------     -----------

   Net cash provided by financing activities                               1,100,000       1,570,638          88,738
                                                                         -----------     -----------     -----------

NET INCREASE (DECREASE) IN CASH                                             (472,159)      1,286,690           4,130

CASH - BEGINNING OF PERIOD                                                 1,406,371         119,681         115,551
                                                                         -----------     -----------     -----------

CASH - END OF PERIOD                                                     $   934,212     $ 1,406,371     $   119,681
                                                                         ===========     ===========     ===========

SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES:

  Common stock issued for legal and other services                       $ 2,215,128     $        --     $    15,000
                                                                         ===========     ===========     ===========
  Common stock issued for restructuring of payables                      $        --     $        --     $    57,988
                                                                         ===========     ===========     ===========
  Common stock issued - anti-dilutive rights                             $    41,610     $    16,906     $       620
                                                                         ===========     ===========     ===========
  Noncash compensation - stock options                                   $        --     $    70,000     $        --
                                                                         ===========     ===========     ===========
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                     - 6 -
<PAGE>

                  MEDISCIENCE TECHNOLOGY CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           FEBRUARY 28, 2005, FEBRUARY 29, 2004 AND FEBRUARY 28, 2003

NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of the Business
----------------------

The  consolidated  financial  statements  include the  accounts  of  Mediscience
Technology  Corp.  ("Mediscience")  and  its  wholly-owned  subsidiaries,  Laser
Diagnostic  Instruments,  Inc.  ("Laser"),  Photonics for Women's Oncology,  LLC
("Photonics") and Mediphotonics Development, LLC ("Mediphotonics") (collectively
the "Company"). Mediphotonics is the only active subsidiary of the Company.

The Company operates in one business  segment and is principally  engaged in the
design and development of medical  diagnostic  instruments that detect cancer in
vivo in humans by using light to excite the  molecules  contained  in tissue and
measuring  the  differences  in  the  resulting  natural   fluorescence  between
cancerous and normal tissue.

The Company is subject but not limited to a number of risks  similar to those of
other  companies  at this  stage of  development,  including  dependence  on key
individuals,  the  development of  commercially  usable  products and processes,
competition  from substitute  products or alternative  processes,  the impact of
research and product development  activity,  competitors of the Company, many of
whom have greater  financial or other  resources than those of the Company,  the
uncertainties related to technological improvements and advances, the ability to
obtain adequate additional financing necessary to fund continuing operations and
product development and the uncertainties of future  profitability.  The Company
expects to incur  substantial  additional  costs  before  beginning  to generate
income from  product  sales,  including  costs  related to ongoing  research and
development   activities,   preclinical   studies  and  regulatory   compliance.
Substantial additional financing is needed by the Company.

The Company has no revenues, incurred significant losses from operations, has an
accumulated  deficit and a highly  leveraged  position  that raises  substantial
doubt  about  the  Company's  ability  to  continue  as  a  going  concern.  The
consolidated  financial  statements do not include any  adjustments  relating to
recoverability  and  classification  of recorded asset amounts or the amount and
classification  of  liabilities  that might be  necessary  should the Company be
unable to continue as a going concern.  The Company expects to incur substantial
expenditures to further the development and  commercialization  of its products.
To  achieve  this,  management  will  seek to  enter  into an  agreement  with a
consulting  firm  to be an  advisor  and  explore  options  for the  Company  to
commercialize  its technology,  will seek additional  financing  through private
placements  or other  financing  alternatives,  and might  also seek to sell the
Company or its technology.  There can be no assurance that continued  financings
will be  available  to the Company or that,  if  available,  the amounts will be
sufficient or that the terms will be acceptable to the Company.

Use of Estimates
----------------

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

Equipment
---------

Equipment is stated at cost.  Depreciation  is computed using the  straight-line
method over an  estimated  useful life of five years.  Depreciation  expense was
$255, $255 and $1,417 in 2005, 2004 and 2003, respectively.


                                     - 7 -
<PAGE>

                  MEDISCIENCE TECHNOLOGY CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           FEBRUARY 28, 2005, FEBRUARY 29, 2004 AND FEBRUARY 28, 2003

NOTE 1 - NATURE OF  BUSINESS  AND  SUMMARY OF  SIGNIFICANT  ACCOUNTING  POLICIES
(Continued)

Income Taxes
------------

The  Company  follows  the  provisions  of  Statement  of  Financial  Accounting
Standards ("SFAS") No. 109, Accounting for Income Taxes, utilizing the liability
method,  and deferred  taxes are  determined  based on the estimated  future tax
effects of differences  between the financial  statement and tax bases of assets
and liabilities at currently enacted tax laws and rates.

Research and Development
------------------------

Research and  development  costs are charged to operations  when  incurred.  The
amounts charged to expense were $428,057, $26,265 and $32,383 in 2005, 2004, and
2003, respectively.

Loss per Common Share
---------------------

SFAS No. 128,  "Earnings Per Share," requires the presentation of basic earnings
(loss) per share and diluted earnings (loss) per share.  Basic loss per share is
based on the average number of shares  outstanding during the year. Diluted loss
per share is the same as basic loss per share,  as the inclusion of common stock
equivalents would be antidilutive.

Accounting for Stock-Based Compensation
---------------------------------------

At February  28, 2005,  the Company had one  stock-based  employee  compensation
plan,  which is  described  more fully in Note 9. The Company  accounts for this
plan under the intrinsic value  recognition  and  measurement  principles of APB
Opinion  No.  25,  Accounting  for  Stock  Issued  to  Employees,   and  related
interpretations.  The  Company  reports  stock-based  compensation  through  the
disclosure  only  requirements  of SFAS  No.  123,  Accounting  for  Stock-Based
Compensation, as amended by SFAS No 148, Accounting for Stock-Based Compensation
in Transition and Disclosure.

The following table illustrates the effect on net loss and loss per common share
if the Company applied the fair value recognition  provisions of SFAS No. 123 to
stock-based  employee  compensation.  For purposes of applying SFAS No. 123, the
estimated per share fair value of options granted during 2005, 2004 and 2003 was
$0.00,  $0.05 and $0.06,  respectively.  The fair value was estimated  using the
Black-Scholes   option-pricing   model  with  the  following   weighted  average
assumptions for 2005, 2004 and 2003: dividend yield of $0.0%; volatility ranging
between 1.0603 and 1.5625;  risk-free  interest rate of 3.0%; and expected lives
ranging between 2 and 5 years.

<TABLE>
<CAPTION>
                                                            2005             2004            2003
                                                        ------------     -----------     -----------
<S>                                                     <C>              <C>             <C>
       Net loss, as reported                            $ (2,361,497)    $  (924,573)    $  (217,038)

       Deduct: Total stock-based employee
         compensation expense determined under
         fair value based method for all awards, net
         of related tax effects                                   --         (87,494)        (38,859)
                                                        ------------     -----------     -----------
         Pro forma net loss                             $ (2,361,497)    $(1,012,067)    $  (255,897)
                                                        ============     ===========     ===========
       Basic and diluted loss per share:
         As reported                                    $     (0.045)    $     (0.02)    $     (0.01)
                                                        ============     ===========     ===========
         Pro forma                                      $     (0.045)    $     (0.03)    $     (0.01)
                                                        ============     ===========     ===========
</TABLE>


                                     - 8 -
<PAGE>

                  MEDISCIENCE TECHNOLOGY CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           FEBRUARY 28, 2005, FEBRUARY 29, 2004 AND FEBRUARY 28, 2003

NOTE 1 - NATURE OF  BUSINESS  AND  SUMMARY OF  SIGNIFICANT  ACCOUNTING  POLICIES
(Continued)

Recent Accounting Pronouncements
--------------------------------

In December  2004,  the FASB issued SFAS No. 123  (revised  2004),  "Share-Based
Payment." SFAS No. 123, as revised, requires recognition of the cost of employee
services  provided in exchange for stock options and similar equity  instruments
based on the fair value of the  instrument at the date of grant.  Statement 123,
as originally  issued, is effective until the provisions of Statement 123(R) are
fully  adopted.  Statement  123(R) is effective  the next fiscal year  beginning
after December 15, 2005 for small business  issues.  The Company will adopt this
guidance as of March 1, 2006 and begin recognizing  compensation expense related
to stock options should any be issued.

Concentration of Credit Risk Involving Cash
-------------------------------------------

The Company may have deposits  with major  financial  institutions  which exceed
Federal Deposit  Insurance limits during the year. These financial  institutions
have strong credit ratings,  and management  believes the credit risk related to
these deposits is minimal.

NOTE 2 - RELATED PARTY TRANSACTIONS

At times, Mr. Katevatis  advances funds to the Company to provide funding to pay
operational  expenses as they became due. These advances do not accrue interest.
At February 28, 2005,  February  29, 2004 and February 28, 2003,  officer  loans
payable to Mr. Katevatis were $31,542, $31,542 and $17,404, respectively.

Legal services  rendered by Mr. Peter  Katevatis,  Chief  Executive  Officer and
Chairman,  amounted to $50,000  for each of the three years in the period  ended
February 28,  2005.  These  amounts are  recorded in general and  administrative
expense.

As part of Mr. Katevatis' employment agreement,  the Company pays property taxes
and certain  operating  expenses on the home of Mr.  Katevatis  in lieu of rent,
since the Company's  operations  are located in Mr.  Katevatis'  home.  Expenses
recognized   were  $17,306,   $19,637  and  $9,097  in  2005,   2004  and  2003,
respectively, and are recorded in general and administrative expense.

During 2004, the Company  entered into an agreement with THM Group,  LLC ("THM")
to be the exclusive  advisor to explore options for the Company to commercialize
its technology. Mr. Michael Engelhart, President and Chief Operating Officer, is
the  President  and Chief  Executive  Officer of THM.  During 2004,  the Company
incurred  $9,000 for  services  of THM.  On April 9, 2004,  THM  terminated  its
agreement with the Company.

See Note 8 for details regarding the Company's  consulting agreement with one of
its principal stockholders and Notes 4 and 5 for related party loans and accrued
liabilities.


                                     - 9 -
<PAGE>

                  MEDISCIENCE TECHNOLOGY CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           FEBRUARY 28, 2005, FEBRUARY 29, 2004 AND FEBRUARY 28, 2003

NOTE 3 - DEFERRED CHARGES

In fiscal 2005, the Company issued 3,225,000 fully vested  restricted  shares of
its  common  stock to six  consulting  groups in  exchange  for  services  to be
rendered,  over a  period  of 12 - 60  months,  for  matters  such as  corporate
management, marketing opportunities, product development and research, corporate
funding,  internal  accounting  and FDA clinical  trials.  These costs have been
capitalized  and will be  recognized  ratably over the terms of the  agreements.
Expected future amortization of these costs is as follows:

                  Years Ending
               -----------------

               February 28, 2006                $ 433,535
               February 28, 2007                $ 390,612
               February 29, 2008                $ 378,320
               February 28, 2009                $ 150,820
               February 28, 2010                $ 100,547

NOTE 4 - OFFICER AND OTHER LOANS

In fiscal 2000, the Company entered into two interest-bearing  convertible notes
with the Olive Cox Sleeper Trust totaling  $30,000.  Both notes bear interest at
the rate of 8.25% per annum and are  convertible  into common stock on the basis
of $.25 per share.  The conversion  option is unlimited in duration.  Both notes
are demand  instruments  and the holder can demand and  receive  payment in full
including  interest.  The principal balance of the notes was $-0- and $30,000 at
February  28, 2005 and  February 29,  2004,  respectively.  Accrued  interest at
February 28, 2005 and February 29, 2004 was $-0- and $10,626,  respectively.  On
March 8, 2004, the notes plus accrued  interest were converted into common stock
of the Company (Note 10).

On June 20, 2002, the Company  entered into a $120,045  promissory note with the
Olive Cox Sleeper Trust (the  "Trust") with interest at 12% per annum.  The note
was amended on June 13, 2003 to extend the maturity  date to March 31, 2004 from
February 20, 2004. The principal amount of the note plus accrued interest is due
and payable on the maturity date. There is a conversion  feature that allows the
Trust to convert the principal and accrued  interest on the note to common stock
of the Company at the rate of one share for each $.12 of  principal  and accrued
interest  at date of  conversion.  Accrued  interest  at  February  28, 2005 and
February 29, 2004 was $-0- and $24,844, respectively. On March 8, 2004, the note
plus accrued  interest  was  converted  into common  stock of the  Company.  The
conversion  resulted  in an  inducement  expense of  $58,555  for the year ended
February 28, 2005.

NOTE 5 - ACCRUED LIABILITIES

Accrued liabilities consist of the following:

                                              2005          2004
                                           ----------    ----------

         Legal and professional fees       $  257,924    $  365,354
         Consulting and university fees     1,220,415     1,164,915
         Salaries and wages                 1,412,333     1,508,833
         Other                                102,239        93,584
                                           ----------    ----------

                                           $2,992,911    $3,132,686
                                           ==========    ==========


                                     - 10 -
<PAGE>

                  MEDISCIENCE TECHNOLOGY CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           FEBRUARY 28, 2005, FEBRUARY 29, 2004 AND FEBRUARY 28, 2003

NOTE 5 - ACCRUED LIABILITIES (Continued)

Accrued  legal and  professional  fees  include  services  rendered by Mr. Peter
Katevatis. The amount of the accrual was $57,500 and $287,500 as of February 28,
2005 and February 29, 2004, respectively (Note 2).

Accrued  consulting  and  university  fees include  costs owed to Dr.  Robert R.
Alfano,  a  principal  stockholder  and  chairman  of the  Company's  Scientific
Advisory Board (Note 8), with respect to his consulting  agreement of $1,170,818
and $1,121,318 as of February 28, 2005 and February 29, 2004, respectively.

Accrued  salaries and wages include  amounts to Mr.  Katevatis of $1,406,333 and
$1,406,333  as of February 28, 2005 and February  29,  2004,  respectively,  and
$2,500 and  $102,500 to Mr.  Engelhart  as of February 28, 2005 and February 29,
2004, respectively (Note 8).

NOTE 6 - INCOME TAXES

Income tax benefit consists of the following:

                                 2005              2004                2003
                              ---------         ---------           ---------

      Current                 $      --         $      --           $ 217,712
                              =========         =========           =========

In 2001, the Company became eligible to receive  benefits under the State of New
Jersey Technology Business Tax Certificate Program. This program allows emerging
technology and biotechnology businesses to sell their unused state net operating
losses (NOL) to any  corporate  taxpayer in the State of New Jersey for at least
75% of the tax  benefits.  The Company is eligible to sell a maximum of $713,987
and the amount sold and  realized  during the years ended  February 28, 2003 and
2002 was  $217,712 and  $241,867,  respectively.  Proceeds  from the sale of net
operating  losses  are  reported  as an income tax  benefit in the  consolidated
statement of operations.  No income tax benefit under the New Jersey tax program
was recorded in the 2005 and 2004 fiscal years,  since the Company completed the
program in the 2003 fiscal year.

The components of the net deferred income tax asset and liability as of February
28,  2005 and  February  29, 2004 are as  follows:

                                                  2005              2004
                                              -----------       -----------

      Defered income tax asset:
        Net operating loss carryforward       $ 5,200,870       $ 4,372,289
        Valuation allowance                    (5,200,870)       (4,372,289)
                                              -----------       -----------
      Deferred income tax liability                    --                --
                                              -----------       -----------

                                              $        --       $        --
                                              ===========       ===========

As of February  28,  2005 and  February  29,  2004,  the  Company has  valuation
allowances of $5,200,870 and $4,372,289,  respectively, which relates to federal
and state net operating loss  carryforwards.  The Company evaluates a variety of
factors in  determining  the amount of the  valuation  allowance,  including the
Company's earnings history,  the number of years the Company's  operating losses
can be carried  forward,  the existence of taxable  temporary  differences,  and
near-term earnings expectations. Future reversal of the valuation allowance will
be recognized either when the benefit is realized or when it has been determined
that it is more likely than not that the benefit will be realized through future
earnings.  As of February 28, 2005 and  February  29, 2004,  the Company has net
operating loss  carryforwards  of  approximately  $14,620,000  and  $12,607,000,
respectively for federal  purposes and $3,871,000 and $1,446,000,  respectively,
for state purposes,  which may be used to reduce future income subject to income
taxes.


                                     - 11 -
<PAGE>

                  MEDISCIENCE TECHNOLOGY CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           FEBRUARY 28, 2005, FEBRUARY 29, 2004 AND FEBRUARY 28, 2003

NOTE 6 - INCOME TAXES (Continued)

The net operating losses are scheduled to expire in the following years:

                           Federal           State            Total
                         -----------      -----------      -----------

      2006               $   369,000      $        --      $   369,000
      2007                   307,000               --          307,000
      2008                   370,000               --          370,000
      2009                   854,000               --          854,000
      2010                   615,000          129,000          744,000
      2011                 1,136,000          315,000        1,451,000
      2012                 1,556,000          216,000        1,772,000
      2013                 2,636,000          850,000        3,486,000
      2014                 1,128,000        2,361,000        3,489,000
      2019 (*)               808,000               --          808,000
      2020 (*)               943,000               --          943,000
      2021 (*)               298,000               --          298,000
      2022 (*)               316,000               --          316,000
      2023 (*)               182,000               --          182,000
      2024 (*)               786,000               --          786,000
      2025 (*)             2,316,000               --        2,316,000
                         -----------      -----------      -----------

          Total          $14,620,000      $ 3,871,000      $18,491,000
                         ===========      ===========      ===========

(*)  Under the  Taxpayer  Relief  Act of 1997,  the  carryforward  period of net
operating losses arising after May 1, 1998 was extended from 15 to 20 years.

NOTE 7 - RESTRUCTURING OF PAYABLES

In June 2002, in connection the Company's agreement with the Research Foundation
of the City University of New York ("RFCUNY"), the Company issued 283,228 shares
of common  stock at its fair value of $.12 per share at the date of  transfer to
RFCUNY to settle a $70,807  payable,  resulting  in a gain on  restructuring  of
payables of $36,820.

In accordance with this agreement,  the Company also granted  warrants to RFCUNY
to purchase 600,000 shares of the Company's common stock at a price of $1.00 per
share  (Note 8) to  settle  a  $127,631  payable,  which  resulted  in a gain on
restructuring of payables of $127,631.

In January 2003, the Company issued 160,000 shares of common stock at a value of
$24,000  for  accounting  services  provided  to the Company to settle a $40,000
payable, which resulted in a gain on restructuring of payables of $16,000.

These  transactions  resulted in a gain on restructuring of payables of $180,451
during  the year  ended  February  28,  2003.  The  effect on basic and  diluted
earnings  per share was $.005.  There is no tax effect due to the net  operating
loss carryforward.


                                     - 12 -
<PAGE>

                  MEDISCIENCE TECHNOLOGY CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           FEBRUARY 28, 2005, FEBRUARY 29, 2004 AND FEBRUARY 28, 2003

NOTE 8 - COMMITMENTS AND CONTINGENCIES

Dr. Robert R. Alfano
--------------------

The Company has a consulting agreement (the "Agreement") through March 2007 with
Dr. Robert R. Alfano, a principal stockholder of the Company and Chairman of its
Scientific Advisory Board. Pursuant to the terms of the Agreement, Dr. Alfano is
paid a  consulting  fee of not less  than  $150,000  per annum in  exchange  for
services to be rendered  for  approximately  fifty days per annum in  connection
with the company's  medical photonics  business.  The Agreement further provides
that Dr.  Alfano is to be paid a bonus and fringe  benefits in  accordance  with
policies and formulas provided to key executives of the Company (Note 4).

In connection  with the  acquisition  of patent  rights to its cancer  detection
technology,  the Company assumed an obligation to pay to Dr. Alfano's daughter a
royalty of one  percent of the gross  sales  derived  from any  equipment  made,
leased or sold which  utilizes the concepts  described in the  Company's  cancer
detection  patent.  Since there has been no activity,  no amounts have been paid
during the three years ended February 28, 2005.

Other Royalties
---------------

The Company obtained worldwide licensing rights for patents from Yale University
and has agreed to pay  royalties  based on net sales of all  products  generated
from the patents and fifty percent of any income  received from  sublicensing of
the patents.  The Company has not recorded any revenues  since the  inception of
this  agreement and therefore has not recorded or paid any royalties  during the
three years ended February 28, 2005.

Employment Agreements
---------------------

Mr. Peter Katevatis, the Chief Executive Officer,  Chairman and a stockholder of
the  Company,  has an  employment  agreement.  The  agreement  states  that  Mr.
Katevatis is to be paid  $200,000 per year.  The  agreement  also provides for a
bonus and fringe  benefits in  accordance  with  policies and formulas  mutually
agreed upon by Mr.  Katevatis and the Board of Directors.  The contract  expires
March 5, 2007 (Note 4).

On July 9, 2001, the Company entered into a three-year employment agreement with
Mr. Sidney  Braginsky.  Pursuant to the terms of the  agreement,  Mr.  Braginsky
became the  President and Chief  Operating  Officer of the Company and was to be
paid $100,000 per annum. On April 26, 2003, Mr. Braginsky voluntarily terminated
employment  as President and Chief  Operating  Officer of the Company and waived
all rights to any accrued  compensation owed to him in respect to this agreement
(Note 9).

On April 23, 2003, the Company  entered into a three-year  employment  agreement
with  Mr.  Michael  Engelhart.  Pursuant  to the  terms  of the  agreement,  Mr.
Engelhart became the President and Chief Operating Officer of the Company and is
to be paid $120,000 per annum (Note 2).


                                     - 13 -
<PAGE>

                  MEDISCIENCE TECHNOLOGY CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           FEBRUARY 28, 2005, FEBRUARY 29, 2004 AND FEBRUARY 28, 2003

NOTE 9 - STOCKHOLDERS' DEFICIT

Authorized Capital
------------------

On February  17,  2004,  the  Company's  stockholders  approved to increase  the
authorized common shares of the Company from 40,000,000 to 199,950,000 shares.

Preferred Stock
---------------

The Company is authorized to issue 50,000  shares of preferred  stock,  $.01 par
value per share,  which may be issued from  time-to-time  in one or more series,
the terms of which may be designated by the Board of Directors  without  further
action by  stockholders.  The Board of Directors has designated  2,074 shares of
preferred  stock as series A  preferred  stock.  During  the  fiscal  year ended
February 28, 2002,  this stock was redeemed for 20,740  shares of common  stock.
Any  preferred  stock issued will have  preferences  with respect to  dividends,
liquidation and other rights, but will not have preemptive rights.

Holders of series A  preferred  stock are  entitled to a  preference  of $10 per
share  before any payment is made to holders of common stock in  liquidation  of
the assets of the  Company.  Additionally,  holders of series A preferred  stock
have no  redemption  or dividend  rights and vote only with respect to corporate
matters affecting their respective  rights,  preferences or limitations,  but do
not vote for the election of directors or on general corporate matters.

Private Placements
------------------

      Common Stock
      ------------

      During 2002,  the Company issued 180,000 shares of common stock at a price
      of $.25 per share for $45,000.

      Preferred Stock
      ---------------

      On  February  1,  2004,  the  Company  completed  a $1.5  million  private
      placement of convertible preferred shares to accredited investors, issuing
      60 shares  of  convertible  preferred  stock at  $25,000  per  share.  The
      convertible preferred shares maybe converted into 100,000 shares of common
      stock at the sole  discretion  of the Company  subsequent  to February 17,
      2004.  The  securities  were  sold  pursuant  to an  exemption  under  the
      Securities  Act of 1933.  The  Company  has agreed to file a  registration
      statement within six months or sooner after February 17, 2004 covering the
      resale  by the  investors  of  the  shares  purchased.  Such  shares  were
      converted into common stock of the Company in March 2004. The registration
      statement was filed in December 2004.

Common Stock Issued for Services
--------------------------------

During 2003, the Company  issued 100,000 shares of restricted  common stock at a
value of $15,000 for  services  provided to the  Company.  The  transaction  was
recognized based on the fair value of shares issued. This amount was recorded as
general and administrative expense in the consolidated statement of operations.

During  August 2004,  the Company  issued 55,556 shares of its common stock at a
value  of  $32,878  for  secretarial  services  provided  to  the  Company.  The
transaction  was  recognized  based on the fair  value of  shares  issued.  This
non-cash  expense  was  recorded as general  and  administrative  expense in the
consolidated statement of operations.

Stock Issued for Future Services
--------------------------------

During March and April 2004, the Company issued 1,925,000  restricted  shares of
its common stock to three consulting groups in exchange for consulting  services
to be rendered over a 12 - 48 month period.

During August 2004, the Company issued 300,000  restricted  shares of its common
stock to two consulting  groups in exchange for past services and services to be
rendered over approximately a two year period.


                                     - 14 -
<PAGE>

                  MEDISCIENCE TECHNOLOGY CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           FEBRUARY 28, 2005, FEBRUARY 29, 2004 AND FEBRUARY 28, 2003

NOTE 9 - STOCKHOLDERS' DEFICIT (Continued)

Common Stock Issued for Collaborative Research and Development Agreement
------------------------------------------------------------------------

On November 9, 2004, the Company,  through its subsidiary  MEDI,  entered into a
collaborative  research and  development  agreement with  Infotonics  Technology
Center   Inc.,  a   not-for-profit   corporation,   a  consortium   of  founding
participants:  Corning,  Inc.,  Eastman  Kodak  Company  and Xerox  Corporation.
Infotonics and the Company will collaborate with one another in the conduct of a
research  program  involving the  development of commercially  viable  miniature
devices for the Company that will make use of ultraviolet  light to diagnose the
health of living tissue remotely monitoring the health/status of various medical
environments,  e.g., the detection of various types of cancer and the monitoring
of body  functions.  Other  markets  from the  research  program  would  include
commercially  viable  miniature  devices for sensing of biological  and chemical
species  like  bacteria  and  pollutants.  The  period of  research  under  this
agreement will terminate upon completion of the research, currently estimated to
be five years.  The  Agreement has certain  rights  including but not limited to
ownership,  future development services,  first right and right of first refusal
for manufacturing and indemnification.

As consideration for Infotonics to carry out the research, the Company issued to
Infotonics  1,000,000 shares of its common stock,  having a fair market value of
$754,100.  In addition,  the Company granted a warrant  exercisable at $3.00 per
share  for  1,000,000  shares of common  stock,  and will pay fees for  specific
research services to be determined by Infotonics based upon detailed  Statements
of Work, to be agreed upon as the research progresses.

2003 Consultants Stock Plan
---------------------------

The Board of Directors  previously adopted,  subject to stockholder  approval, a
2003  Consultants  Stock Plan  ("Consultants  Plan").  The Consultants  Plan was
subsequently  approved by the  stockholders  on February 17, 2004. The aggregate
number  of shares  that may be  issued  under  the  options  shall not  exceed 7
million.  No options  were issued prior to  stockholder  approval and no options
were outstanding under this plan as of February 29, 2005.

1999 Incentive Stock Option Plan
--------------------------------

The Board of Directors  previously adopted,  subject to stockholder  approval, a
1999 Incentive  Stock Option Plan (the "Plan") for officers and employees of the
Company. The stockholders  subsequently  approved the Plan on February 17, 2004.
Accordingly  awards issued under the Plan prior to February 17, 2004 were deemed
not to be granted until that date.  The  aggregate  number of shares that may be
issued under the options shall not exceed 3 million.

Mr.  Braginsky  was granted  options to purchase up to  2,000,000  shares of the
Company's  common  stock at an  option  price of $.25 per  share  for the  first
150,000  shares  and at an option  price of $1.00  per  share for the  remaining
1,850,000 shares. Mr.  Braginsky's  ability to exercise these options is subject
to a series of milestones  described in his employment  agreement.  On April 26,
2003, Mr. Braginsky resigned from the Company and forfeited the stock options.

Mr.  Engelhart  was granted  options to purchase up to  2,000,000  shares of the
Company's  common  stock at an  option  price of $.25 per  share  for the  first
200,000  shares  and at an option  price of $1.00  per  share for the  remaining
1,800,000 shares. Mr.  Engelhart's  ability to exercise the 1,800,000 options is
subject to a series of milestones described in his employment agreement. Noncash
compensation expense related to the grant of 200,000 options amounted to $70,000
in 2004.

Common Stock Subscribed
-----------------------

In February 2005, the Company  received  $250,000 in common stock  subscriptions
for 500,000 shares issued in March 2005.


                                     - 15 -
<PAGE>

                  MEDISCIENCE TECHNOLOGY CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           FEBRUARY 28, 2005, FEBRUARY 29, 2004 AND FEBRUARY 28, 2003

NOTE 9 - STOCKHOLDERS' DEFICIT (Continued)

Activity  related to stock options during the  three-year  period ended February
28, 2005 is as follows:

<TABLE>
<CAPTION>
                                                                              Weighted
                                                            Exercise           Average
                                                              Price           Exercice
                                            Shares            Range             Price
                                          ----------       ------------       --------
<S>                                        <C>             <C>                <C>
      Outstanding, February 28, 2002       2,000,000       $.25 - $1.00       $   0.94
      Granted                                     --
      Forfeited                           (2,000,000)      $.25 - $1.00       $   0.94
                                          ----------

      Outstanding, February 28, 2003              --
      Granted                              2,000,000       $.25 - $1.00       $   0.93
                                          ----------

      Outstanding, February 29, 2004       2,000,000       $.25 - $1.00       $   0.93
      Granted                                400,000      $1.50 - $2.00       $   1.63
                                          ----------

      Outstanding, February 29, 2005       2,400,000       $.25 - $2.00       $   1.04
                                          ==========
</TABLE>

As of February 28, 2005, the following options are exercisable:  200,000 at $.25
and 100,000 at $2.00.

During August 2004,  Allan Moses was granted an option to purchase up to 100,000
shares of the Company's  restricted  common stock at a price of $2.00 per share.
The option shall be exercisable from August 8, 2004 to August 8, 2006.

During August 2004, John Matheu, a Director of the company,  was granted options
to purchase up to 300,000 shares of the Company's  restricted common stock at an
option price of $1.50 per share.  Mr. Matheu's ability to exercise these options
is subject to a series of milestones described in his consulting agreement.


                                     - 16 -
<PAGE>

                  MEDISCIENCE TECHNOLOGY CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           FEBRUARY 28, 2005, FEBRUARY 29, 2004 AND FEBRUARY 28, 2003

NOTE 9 - STOCKHOLDERS' DEFICIT (Continued)

Stock Warrants
--------------

Stock warrant  activity during the three year period ended February 28, 2005 was
as follows:

                                                                     Exercise
                                                    Shares            Price
                                                   Available          Range
                                                 ------------      ------------

         Outstanding, February 28, 2002             5,397,916      $.25 - $1.00
         Granted                                      800,000      $.25 - $1.00
         Forfeited                                 (2,000,000)
                                                 ------------

         Outstanding, February 28, 2003             4,197,916      $.25 - $1.00
         Granted                                           --
         Exercised                                   (100,000)
         Forfeited                                 (3,297,916)
                                                 ------------

         Outstanding, February 29, 2004               800,000      $.25 - $1.00
         Granted                                    2,700,000     $1.00 - $3.00
                                                 ------------

         Outstanding, February 29, 2005             3,500,000
                                                 ============

As of February 28, 2005, an additional  $250,000 in private  placement  proceeds
have been received for common stock not yet issued. Once issued,  stock warrants
will be granted for 500,000 shares at $1.00.

In connection  with private  placement  offerings  during fiscal 1997,  1996 and
1995, the Company granted  warrants to purchase  400,000,  1,025,000 and 256,250
shares of common stock, respectively. The warrants expired in April 2003.

During  fiscal 1999,  the Company  borrowed  funds from Mr. Tami  Adelstein  and
issued a warrant to purchase  100,000  shares of the  Company's  common stock at
$.25 per share.  Also during  1999,  the Company  issued Mr.  Adelstein  200,000
warrants to purchase the Company's common stock at an exercise price of $.25 per
share for $50,000. The warrants expired during fiscal 2004.

Also,  during  2000  warrants  were  issued to  purchase  566,666  shares of the
Company's  common stock at an exercise  price of $.25 to $.75 per share for cash
and services. The Company also granted the City College of New York a warrant to
purchase  500,000  shares of the Company's  common stock at an exercise price of
$1.00, which expired during fiscal 2004.

During 2001,  warrants  were issued to purchase  50,000  shares of the Company's
common stock at an exercise price of $.25 per share for services provided to the
company. The warrants expire in March 2004. Also during 2001, the Company issued
150,000  shares of common stock and warrants to purchase  150,000  shares of the
Company's  common stock at an exercise price of $.25 per share for $37,500.  The
warrants expired in April 2003.

During fiscal 2002,  Mr. Sidney  Braginsky,  in connection  with his  employment
agreement,  was  issued a warrant  to  purchase  up to  2,000,000  shares of the
Company's  common  stock at an  exercise  price of $.25 per  share for the first
150,000  shares and at an  exercise  price of $1.00 per share for the  remaining
1,850,000 shares. Mr.  Braginsky's  ability to exercise these options and shares
under  the  warrant  is  subject  to a series  of  milestones  described  in his
employment agreement. On April 26, 2003, Mr. Braginsky resigned as President and
Chief Operating  Officer of the Company.  As a result of his resignation and the
milestones not being attained as of that date, the warrants have been forfeited.


                                     - 17 -
<PAGE>

                  MEDISCIENCE TECHNOLOGY CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           FEBRUARY 28, 2005, FEBRUARY 29, 2004 AND FEBRUARY 28, 2003

NOTE 9 - STOCKHOLDERS' DEFICIT (Continued)

Also during 2002, the Company issued 50,000 shares of common stock at a value of
$7,000 and warrants to purchase  50,000 shares of the Company's  common stock at
an exercise  price of $.25 per share for  secretarial  services  provided to the
Company. The warrants expired in April 2003.

In  connection  with the Company's  agreement  with RFCUNY (Note 6), the Company
granted  options to RFCUNY to purchase  600,000  shares of the Company's  common
stock at an option price of $1.00 per share.

In 2003, the Company issued 400,000 shares of common stock at a value of $76,000
and issued warrants to purchase  200,000 shares of the Company's common stock at
an  exercise  price of $.25 per  share  for  financial  advisory  services.  The
warrants expire in 2006.

During fiscal 2004, Peter J. Katevatis,  son of the Chairman and Chief Executive
Officer,  exercised a warrant acquired through a prior company private placement
on May 20, 2000 to purchase  100,000  shares of the  company's  common stock for
$19,000.  The original exercise price of these warrant shares was $.25 per share
which was  modified  to $.19 per share on March 5,  2003.  The  market  value of
Mediscience  shares on March 5, 2003 was $.13 per share.  This warrant otherwise
expired by its terms on April 6, 2003.

During November 2004, the Company issued  1,000,000  shares of common stock at a
value of  $754,100  and issued a warrant  to  purchase  1,000,000  shares of the
Company's  common stock at an exercise  price of $3.00 per share to  Infotonics,
Inc. The warrants expire in November 2010.

In  connection  with its private  placement  offering  during 2005,  the Company
granted  warrants  to  purchase  1,700,000  shares of common  stock at $1.00 per
share. The warrants expire in August 2007.

During  March 2004,  the Company  issued  50,000  shares of its common  stock to
Laurence  Elgart to satisfy his  exercise  of the  warrant in February  2004 for
$12,500.

During  March 2004,  the Company  issued  100,000  shares of its common stock to
William  Baker to satisfy  his  exercise  of the  warrant in  February  2004 for
$25,000.

Anti-Dilution Rights
--------------------

The Company and Mr. Peter Katevatis have an anti-dilution rights agreement which
provides that Mr. Katevatis' ownership interest would at all times represent 17%
of the issued and outstanding  shares of the Company.  The anti-dilution  rights
are  exercisable  at Mr.  Katevatis'  sole  discretion.  During the years  ended
February 28, 2005,  February  29, 2004 and  February  28,  2003,  Mr.  Katevatis
exercised his right and requested  the Company  issue  3,533,599,  1,619,057 and
44,312 common  shares  respectively.  In  connection  with the issuance of these
shares,  the  Company  has  capitalized  only the stock's par value from paid in
capital because of the Company's accumulated deficit position.

The Company and Dr. Robert Alfano have an  anti-dilution  rights agreement which
provides that Dr. Alfano's ownership interest would at all times represent 4% of
the issued and outstanding shares of the Company.  The anti-dilution  rights are
exercisable at Dr. Alfano's sole discretion. During the years ended February 28,
2005,  February 29, 2004 and February 28, 2003,  Dr. Alfano  exercised his right
and  requested  the Company  issue  627,302,  71,557 and 17,729  common  shares,
respectively.  In connection with the issuance of these shares,  the Company has
capitalized  only the  stock's  par value  from paid in  capital  because of the
Company's accumulated deficit position.


                                     - 18 -
<PAGE>

                  MEDISCIENCE TECHNOLOGY CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           FEBRUARY 28, 2005, FEBRUARY 29, 2004 AND FEBRUARY 28, 2003

NOTE 9 - STOCKHOLDERS' DEFICIT (Continued)

Debt Conversion
---------------

On March 8, 2004, the Trust converted  $185,515 of promissory  notes and related
interest into 1,460,000 shares of the Company's common stock. (Note 4)

On January  23,  2005,  the Trust  converted  $200,000 of  promissory  notes and
related interest into 400,000 shares of the Company's common stock.

On January 23, 2005,  Linda L. Lawn  converted  $50,000 of promissory  notes and
related interest into 100,000 shares of the Company's common stock.

On January 23, 2005,  William Baker  converted  $50,000 of promissory  notes and
related interest into 200,000 shares of the Company's common stock.


                                     - 19 -
<PAGE>

ITEM 8 Changes in and disagreements with accountants on accounting and Financial
Disclosure

See 8-K report dated February 26, 2005 referenced herein Parente Randolph LLC
Our Former Independent Auditor Firm resigned effective February 28, 2005 Item
4.01 Changes in Registrant's Certifying Accountant.) The resignation of the
Former Auditor was accepted by the Registrant's Audit Committee on February 26,
2005

The Former Auditor's report on Registrant's financial statements for each of the
fiscal years ended February 28 , 2004 and 2003 (collectively, the Prior Fiscal
Periods) did not contain an adverse opinion or disclaimer of opinion, nor were
such reports qualified or modified as to uncertainty, audit scope, or accounting
principles, except that the Former Auditor's report on the Registrant's
financial statements for the fiscal year ended February 28, 2004 contained an
explanatory paragraph indicating that there was substantial doubt as to the
Registrant's ability to continue as a going concern.

During either of the Prior Fiscal Periods or the period from January 12, 2005
effective date of SEC registration SB-2 filing through date of resignation by
Parente Randoph (the Interim Period), there were no disagreements between the
Registrant and the Former Auditor on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure (the
Disagreements), which Disagreements, if not resolved to the satisfaction of the
Former Auditor, would have caused the Former Auditor to make reference to the
subject matter of the Disagreements in connection with its report on the
Registrant's financial statements.

ITEM 8A. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

As of February 28, 2005, we carried out an evaluation of the effectiveness of
the design on operations of our "disclosure controls and procedures" (as defined
in the Exchange Act Rules 13a-15(e) and 15d-15(e)) under the supervision and
with the participation of our management, including our Chief Executive Officer
and Chief Financial Officer. Based upon that evaluation, they concluded that our
disclosure controls and procedures were not effective due to a material
weakness. There were no significant changes in our disclosure controls and
procedures that have materially affected or are reasonably likely to materially
affect our internal control over financial reporting during the quarter ended
February 28, 2005.

Disclosure controls and procedures are controls and other procedures that are
designed to ensure the information required to be disclosed in our reports
filed or submitted under the Exchange ACt are recorded, processed, summarized
and reported, within the time periods specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures include,
without limitations, controls and procedures designed to ensure that information
required to be disclosed in our reports filed under the Exchange Act is
accumulated and communicated to management to allow timely decisions regarding
required disclosure.

(b) Changes in Internal Controls

There were no significant changes in the Company's internal controls over
financial reporting that occurred during the fourth quarter that could
significantly affect or is reasonably likely to materially affect the Company's
internal control over financial reporting. A control system, no matter how
well-designed and operated, cannot provide absolute assurance that the
objectives of the controls system are met, and no evaluation of internal
controls can provide absolute assurance that all control issues and instances of
fraud, if any, within a company have been detected.


                                    Page 29
<PAGE>

Subsequent to the date of their evaluation there have been no significant
changes in internal controls or in other factors that could significantly affect
theses controls.

This section discusses Mediscience Technology Corp. structures and governance
procedures.

Governance and policy..........................................................
                     Executive officers
                     The Board/Committees
                     Accountability, audit and internal control framework......

Executive Officers: The Chief Executive of Mediscience Technology Corp. and
other senior executives are responsible for the day-to-day management of the
Company The Executive Committee which comprises the executive directors and
certain other senior executives of MTC (the 'Executive Officers'), assists the
Chief Executive in the management of the business. The following are Executive
Officers of MTC and all, are members of the MTC EC: John Kennedy, Peter
Katevatis , Sidney Braginsky.

Board/Committees/ Corporate Governance
--------------------------------------

Mediscience Technology corp MTC. Compliance principles within the provisions OF
Sarbanes-Oxley Act ."code" as a Non-Accelerated SEC filer. On 2 March 2005 the
SEC announced the postponement by a further year for non-accelerated filers
(MTC) registrants of the deadline for compliance with s404 of the Sarbanes-Oxley
Act of 2002. When s404 is effective in 2006, management will be required to
report on the Group's infernal controls over financial reporting. Work has been
carried out during 2004 in preparation for reporting in accordance with the Act
and will continue to be progressed during 2005.

      The Board is committed to the highest standards of Corporate Governance
and considers that it has complied with the new Code throughout the year. The
Board considers that the members of the Audit Committee have the skills and
experience of corporate financial matters to discharge properly the Committee's
responsibilities. All members meet the definition of 'financial expert' in the
Sarbanes-Oxley Act.

Corporate Governance policies and procedures applied
----------------------------------------------------

The Company's Shares are listed on the NASDAQ BB and the Company is therefore
subject to the rules of the NASADAQ as well as the US securities laws and the
rules of the US Securities and Exchange Commission ("SEC" as applicable.) . The
Board believes that it has complied throughout the year with both SEC and NASDAQ
BB requirements related to corporate governance. with the exception that, our
Executive Board committee does not consist wholly of independent directors,

The Board: The Board of Directors of MTC consists of an non-independent
Chairman/CEO, Peter Katevatis and 6 directors. The meetings of the Board and the
various committees are described specifically infra. Board management has a
formal schedule of matters reserved for its decisions which include the approval
of certain policies, budgets, financing plans, large capita! expenditure
projects, acquisitions, divestments and treasury arrangements and traditionally
delegates specific responsibilities to Board Committees and/or board members. It
reviews key activities of the businesses and considers and reviews the work
undertaken by the Committees. and/or board members. The board annually evaluate
the performance of the Chairman/CEO .and President COO. Board meetings are held
to enable directors to have a greater understanding of the business and to query
the management. All directors have full and timely access to all relevant
information and, if necessary, to independent professional advice. Legal updates
relevant to Mediscience corporate issues is periodically distributed and put
into board minutes by counsel , who is responsible to the Board for ensuring
that Board legal procedures are complied with.

Whilst the Chairman and Chief Executive collectively are responsible for the
leadership , there is a clear division of respective responsibilities which have
been agreed by the Board. The Chairman's/CEO primary responsibility is for
leading the Board, including ensuring its effectiveness and setting its agenda,
whilst the Chief Operating Officer by terms of his contract is responsible for
managing the day-to-day business in accordance with the strategy, policies,
budgets and business plans approved by the Board. The executive Board members
stand ready to advise and assists both in the management of the Company


                                    Page 30
<PAGE>

During fiscal year2004, an informal periodic evaluation of the performance of
the Board and its Committees was undertaken by its then auditor Parente Randolph
LLP with the emphasis on MTC continuous improvement and effectiveness of MTC
corporate governance in compliance to Sarbanes-Oxley. as a as a Non-Accelerated
SEC filer.

The suggestions were discussed by the audit committee and to the extent
described here have been implemented. Each director was apprised and the
suggestions presented to the whole Board with a number of recommendations acted
upon.

None of the directors or their immediate families has ever had any relationship
with MTC either directly as an employee or as a partner, shareholder or officer
of any organisation that has a relationship with MTC. (however Director John
Matheu is a contracted paid FDA consultant ,infra). They do not receive
remuneration and do not participate in MTC's shareoption or performance related
pay schemes, and are not members of the MTC pension schemes. No director of MTC
is a director of a company or an affiliate in which any other director of MTC is
a director.

Details of MTC material service/consulting contracts and compensation payments
are included herein either as narrative or as exhibits filed as part of the SB-2
registration SEC effective Jan. 12, 2005 included herein in its totality by
reference thereto or if subsequent to Jan 12, 2005 have been filed with the SEC
as exhibits, MTC 8-K filings, Form 4's of material events.

MTC By-laws any director who has been appointed by the Board of Directors since
the previous annual general meeting of shareholders, either to fill a casual
vacancy or as an additional director, holds office only until the next annual
general meeting and then is eligible for re-appointment by the shareholders. The
directors are subject to removal with or without cause by the Board of Directors
or the shareholders.

The code of MTC business principles is available at MEDISCIENCETECH.com and is
available on request, applies to all directors, officers and employees. Any
breaches of the code are directed in writing to the Company Secretary who is
obliged to raise the issue with the Chief Operating Office or Chairman. During
2004 and up until February 28, 2005 there have been no breaches of the Code
alleged. No waivers have been put in place nor any amendments made to the Code.

Board Committees: see infra and also may be found on MTC web site
MEDISCIENCETECH.com.

                                 Audit Committee

The Audit Committee met on 4 occasions in 2004 (individual attendance is shown
in parenthesis;. The Committee, consisting entirely of independent non-executive
directors, is chaired by John Kennedy (2). The other members of the Committee
are John Matheu (3), William Armstrong (3) The Chairman of the Committee reports
orally to the Board and minutes of the meetings are circulated to all members of
the Board as reflected in MTC quarterly SEC 10-Q filings

As a consequence of the preparatory work to satisfy and implement compliance
within the provisions OF Sarbanes-Oxley Act after review management has
identified certain internal control adjustments that were needed to effect
reconciliations in prior years and has restated for these as disclosed in its
SEC SB-2 registration filing with exhibits effective Jan. 12, 2005. These
adjustments, when taken together, are indicators of a material weakness in the
internal controls relating to US GAAP which management is in the process of
re-mediating. In our opinion there have been no other changes in MTC's internal
control over financial reporting that occurred during the period covered by this
10-K Annual Report that has materially affected, or is reasonably likely to
materially affect MTC's internal control over financial reporting.

                          Code of Business Principles:

Code of Ethics for all officers and directors The Board of Directors has adopted
a Code of Ethics for all officers and directors which is available here and at
MEDISCIENCETECH.com and is available on request. It applies to all Executive,
Officers and Directors. There have been no waivers to any of the Code'
provisions nor any amendments made to the Code during 2004 or up to 2005
Activities of the Audit Committee for 2004

The Audit Committee's remit, which is set out in its terms of reference, include
responsibility for: monitoring the integrity of the Company's accounts, ensuring
that they meet statutory and associated legal and regulatory requirements and
reviewing significant financial reporting judgments contained. Monitoring
announcements relating to the Company's financial performance; Monitoring and
reviewing the effectiveness of the Company's internal audit function quarterly
(10-Q) and annually (10-K) Making recommendations to the Board, regarding the


                                    Page 31
<PAGE>

appointment, re-appointment and removal of the external auditors, as
appropriate; Approving the remuneration and terms of engagement of the external
auditors; Monitoring and reviewing the external auditors' independence and the
effectiveness of the audit process; developing policy for and pre-approval of
the external auditors to supply non-audit services; Monitoring the effectiveness
of internal financial controls; Reviewing the operation of the risk management
process; and Reviewing arrangements by which staff may raise complaints against
the Company regarding financial reporting or other matters.

                     MTC has specific policies which govern:

The Chief Executive, the Chief Financial Officer and other members of management
attend the meetings when necessary and the external auditors have unrestricted
access to the Audit Committee.

The principal activities of the Audit Committee during the year ended February
28, 2005 include consideration of the reports on the quarterly reports, interim
and annual accounts; Consideration of the proposed changes US GAPP brought to
the attention of the committee by auditors; Consideration of the Group's
preparation for the introduction of s404 of the Sarbanes-Oxley Act 2002 2006; A
review of the Group's approach to internal financial control, its processes,
outcomes and disclosures; A review of the reports from the auditors past and
present on their professional and regulatory compliance in order to maintain
independence and objectivity, including the rotation of partners, if applicable;

The Committee may obtain legal and other independent professional advice, at the
Company's expense, as it deems necessary. During the year, Such advice was
sought by the Board at the request of investor registration Directly resulting
in the registration document SB-2 effective Jan 12, 2005 (see associated
expenses related to this filing)

These systems, which accord with within the provisions OF Sarbanes-Oxley Act
"code" as a Non-Accelerated SEC filer. have been in place for Fiscal year ending
Feb 28, 2005 involving the identification, evaluation and management of key
risks through business reviews by the Board; and the review by the Audit
Committee of internal financial controls and the management process. These
systems are to be reviewed annually by the Board. It is important to advise that
such systems are not providing absolute assurance against material misstatements
or loss, these systems are designed to identify and manage those risks that
could adversely impact the achievement of the MTC objectives.

The Chairman and Chief Operating Officer have evaluated the effectiveness of the
design and operation of MTC disclosure controls and procedures as at February
28, 2005. Based upon, and as of the date of, that evaluation, they concluded
that the disclosure controls and procedures were effective, in all material
respects, to ensure that information required to be disclosed in the SEC reports
that MTC files and submits is recorded, processed, summarized and reported as
and when required. Management will continue to refine the governance issues for
compliance effectiveness in year 2006.

              Corporate Governance and Management's Responsibility

Mediscience Technology is governed by the values set forth in our Credo.
Although MTC is a fledgling company these principles have guided us for many
years and continue to set the tone of integrity for the entire Company. At all
levels, the employees of Mediscience and its Subsidiaries are committed to our
ethical principles and these principles have been woven into the day to day
fabric of the Company. Our stated values extend to our accounting and financial
reporting responsibilities that we have to our shareholders and investors. We,
the management of Mediscience Technology Corp. are responsible for the integrity
and objectivity of the accompanying financial statements and related
information. We are also responsible for ensuring that financial data is
reported accurately and in a manner that facilitates the understanding of this
data. As evidence of our commitment to this responsibility, we maintain a
well-designed periodically reviewed system of internal accounting controls,
encourage open, strong and effective corporate governance from our employees,
consultants, executives. The Directors, continuously review our business results
and strategic choices and focus on financial stewardship. Our professionally
trained internal accountants monitor and critique our system of internal
accounting controls designed to provide reasonable assurance mat assets are
safeguarded and that transactions and events are recorded properly. Our internal
controls include self-assessments and reviews. During 2004 the Company invested
significant time and cash resources (audit and legal review) addressing our
internal control system, and our compliance obligations as a non-accelerated SEC
filer (see SB-2 130 pg.registration document SEC effective Jan 12, 2005 in order
to ensure compliance with Section 404 of the Sarbanes-Oxley Act of 2002. Based
on the work performed, we have concluded that our internal control over
financial reporting was effective as of January 12, 2005. We also require the
responsible management person of our company projects to certify their
compliance with our Policy on Business Conduct and we have instituted a
systematic certification program to ensure compliance with these policies at all
employee levels up to and including our top executive officers CEO, COO and
Board of Directors. Our Audit Committee of the Board of Directors is partially
composed (2 of the three) of independent directors with the financial


                                    Page 32
<PAGE>

knowledge and experience to provide appropriate oversight. We review internal
control matters and key accounting and financial reporting issues with the Audit
Committee on a regular basis including a quarterly 10-Q review and discussion
meeting. In addition, the independent auditors, and retained counsel may meet in
private sessions with our Audit Committee to discuss the results of their work
including observations on the adequacy of internal financial controls, the
quality of financial reporting and confirmation that they are properly
discharging their responsibilities and other relevant matters. Our Executive
Committee is continuously involved in the review of financial results, as well
as developing and understanding strategies and key initiatives for long-term
growth. As developed by our COO and CEO. Our Intent is to ensure that we
maintain objectivity in our business assessments, constructively challenge the
approach to business opportunities and issues and monitor our business results
and the related controls, our consolidated financial statements and financial
data that follow have been prepared in conformity with accounting principles
generally accepted in the United States of America and include amounts that are
based upon our best judgments. We are committed to present and discuss results
of operations in a clear and transparent manner in order to provide timely,
accurate and understandable information to our shareholders,

Executive committee signatures below:

                          Peter Katevatis Chairman/CEO

                         Michael Engelhart President COO

                       John Kennedy Chair Audit committee


                                    Page 33
<PAGE>

                                    PART 111

ITEM 9 Directors ,Executive Officers, Promoters and Control Persons

              Our directors and executive officers are as follows:

      Name                      Age              Position
      ----                      ---              --------

Sidney Braginsky                 61              Director

Peter Katevatis Esq.             71              Chairman of the Board,
                                                 Chief Executive Officer

John M. Kennedy                  67              Director, Vice President,
                                                 Chief Financial Officer

William Armstrong                88              Director

Michael Engelhart                42              Director, President,
                                                 Chief Operating Officer

Michael N. Kouvatas              77              Director

John P. Matheu                   82              Director

Each director holds office until the next annual meeting of shareholders or
until their successors have been duly elected and qualified. Executive officers
are appointed and serve at the discretion of the Board of Directors.

No compensation has been paid to any individual for services rendered as a
director.

Sidney Braginsky has served as our President and Chief Operating Officer from
July 2001 until April 2003 and as a director since 2001. Mr. Braginsky was with
Olympus Optical Ltd., a multi-national corporation which develops medical
devices and related drug delivery systems, for 27 years, most recently from 1991
to 2001 as chief executive officer, and from 1999 to July 2001 as president and
chief executive officer of Olympus America. Mr. Braginsky serves on the board of
Noven Pharmaceuticals, Redox Pharmaceuticals, Electro-Optical Systems, Inc., a
medical device developer using light-based computer vision, photonics and
statistical pattern recognition, Semrock, Inc., a manufacturer of biomedical
optics, Viatronics Inc., a company involved in 3D medical imaging computer
technology and Diomed Holdings, Inc., a company involved in minimal and
microinvasive medical procedures.

Peter Katevatis has served as our Chairman of the Board of Directors and Chief
Executive Officer since 1993 and as a director since 1981. Prior thereto from
November 1983 until March 1996 Katevatis served as our President and Chief
Executive Officer and from 1981 until his election as President and Chief
Executive Officer in November 1983, Mr. Katevatis served as a Vice President.
Mr. Katevatis was elected Treasurer of the Company in January 1996. Mr.
Katevatis has been a practicing attorney in Philadelphia, Pennsylvania and
Marlton, New Jersey, and is also licensed as an attorney in the State of New
York and in the District of Columbia. Mr. Katevatis was a trustee of the New
Jersey State's Police and Fireman Retirement Pension Fund from 1989 to 1996 and
served as a member of the State of New Jersey Investment Council from 1990 to
December 1992. Mr. Katevatis is a member of the American Arbitration
Association, serves as an arbitrator with the National Association of Security
Dealers and is a member of the National District Attorney's Association and the
New York Academy of Science.

John M. Kennedy currently serves as a Vice President, Chief Financial Officer
and Secretary of our company, and has been a director of the Company since 1982
and chairman of the audit committee since 2000. Mr. Kennedy served as Vice
President since 1983, as Treasurer from 1984 to January 1996 and as Secretary
since 1986. Mr. Kennedy is Chief Executive Officer of Pepco Manufacturing Co., a
sheet metal fabricator for the electronics industry. Mr. Kennedy also was a
director and member of the Audit Committee of First Peoples Bank of New Jersey
from 1979 and also served as a member of its executive board until 1994 when
Core-States Bank purchased First Peoples Bank.

William W. Armstrong has served as a director since 1978 and as a member of the
audit committee since 2000. Mr. Armstrong has been in retirement since 1982
following a 36 year career as a research scientist with Pfizer Inc, a global
consumer health care and pharmaceutical company. Since his retirement, Mr.
Armstrong has continued to serve as a consultant to Pfizer, currently in the
animal health division. Mr. Armstrong has been awarded 14 patents concerning
therapeutic agent dosage delivery systems.

Michael Engelhart has served as our President and Chief Operating Officer and as
a director since April 2003. From 2000 to 2003, Mr. Engelhart was the president
and chief executive officer of THM Group, LLC, a firm providing


                                    Page 34
<PAGE>

strategic consulting services in the areas of business strategy, development and
operations and product branding, launch and development. Prior thereto, Mr.
Engelhart was president and chief executive officer of Redwood Capital Advisors
Inc., a portfolio management firm and registered investment advisor.

John P. Matheu has served as a director since July 1996 and as a member of the
audit committee from 2000 to October 2004. Mr. Matheu has been general partner
and co-founder of Matco Associates, a consulting firm specializing in providing
management consulting services to companies in the pharmaceutical, medical
device and health care industries since 1990. Prior thereto, Mr. Matheu was
employed by Pfizer Inc. from 1950 to 1984, where Mr. Matheu held a wide range of
management positions primarily in distribution, marketing and sales, established
and directed Pfizer's generic drug division and directed Pfizer Laboratories'
800 person field sales force, hospital marketing group and training department.

Michael N. Kouvatas has served as a director since 1971. For the past 10 years,
Mr. Kouvatas has been an attorney with offices in Haddonfield, New Jersey and is
a principal in various food operations in the Southern New Jersey area.

There are no family relationships between any of our directors or executive
officers.

                             AUDIT COMMITTEE CHARTER

"The audit committee Chair John Kennedy, John Matheu and William Armstrong are
responsible for reviewing and considering actions of the Company's Board of
Directors in matters related to audit functions; selecting and terminating the
Company's independent accountants and auditors, reviewing with the Company's
independent accountants and auditors the scope and results of their audit,
reviewing the internal audits and the effectiveness of procedures. The members
of the audit committee who are directors are "independent" as required by the
SEC Rules and are financially literate with accounting and financial experience
appropriate for proper and competent oversight." All members have relevant
financial experience and the Board considers that the members of the Audit
Committee have the skills and experience of corporate financial matters to
discharge properly the Committee's responsibilities. All members meet the
definition of 'financial expert' in the Sarbanes-Oxley Act.

Mr. Kennedy, Mediscience audit committee chairman, has served as Audit committee
chairman on the 1st People Bank of New Jersey, Pepco Mfg Co. of NJ and has an
understanding of GAAP and financial statements as well as the ability to assess
proper accounting for estimates, accruals, and reserves He has experience in the
preparation, auditing, evaluating of financial statements as well as required
internal controls and the supervision experience for such auditing functions.

                                Board Committees

The Board of Directors has six structured standing committees: Audit Committee,
Committee on Corporate Governance, Compensation and Benefits Committee,
Executive Committee, Finance Committee, and Committee on Public Policy and
Social Responsibility. Members of the individual committees are named below:
Registrant is in the process of retaining a Chief Financial Officer with
appropriate Sarbanes-Oxley credentialed experience.

<TABLE>
<CAPTION>
                                                                                                         Committee on
                         Committee on                                                                    Public Policy
                           Corporate       Compensation and                                                and Social
     Audit                Governance            Benefits            Executive             Finance        Rsponsibility
     -----                ----------            --------            ---------             -------        -------------
<S>                   <C>                 <C>                  <C>                  <C>                  <C>
John Kennedy*         John Kennedy*       John Kennedy*        John Kennedy         John Kennedy*        All directors

Sidney Braginsky      Sidney Braginsky    William Armstrong    Michael Engelhart    Michael Kouvatas

WilliamArmstrong      William Armstrong   Sidney Braginsky     Peter Katevatis*     William Armstrong
</TABLE>

----------
(*)   Chairperson


                                    Page 35
<PAGE>

      The Audit Committee, three independent directors, is governed by a Board
approved charter containing, its membership requirements and responsibilities.
It oversees Company accounting, financial reporting process, internal controls
and audits, consults with management, the internal auditors and the independent
public accountants on, matters related to quarterly 10-Q's and the annual 10-KSB
audit, the published financial statements and the accounting principles applied.
The Audit Committee appoints, evaluates and retains the Company's independent
public accountants. It has responsibility for the compensation, termination and
oversight of the Company's independent public accountants and evaluates their
qualifications, performance and independence on a confidential basis. It
approves all services provided to the Company by the independent public
accountants and reviews all non-attest services to ensure they are permitted
under current law. The Committee will monitor compliance with the Foreign
Corrupt Practices Act and Company's policies on ethical business practices and
report to the Board. It will establish policies and procedures for the
pre-approval of services provided by the independent public accountants. The
Audit Committee will establish procedures for the receipt, retention and
treatment, on a confidential basis, of any and all complaints received by the
Company regarding accounting, internal accounting controls or auditing matters,
and the confidential, anonymous submissions by employees regarding questionable
accounting or auditing matters. Its Charter is also available on the Company's
website. MEDISCIENCETECH.com

      Financial Expert on Audit Committee: The Board has determined that John
Kennedy currently President CEO and Chief Financial Officer of PEPCO
Corporation, and previously chairman of the audit committee of Peoples Bank of
NJ, is the audit committee financial expert. The Board made a qualitative
assessment of John Kennedy's and the other two members level of knowledge and
experience based on a number of factors, including their education and
experience.

The Committee on Corporate Governance, is comprised of three independent
directors, considers and makes recommendations on matters related to the
\practices, policies and procedures of the Board and takes a leadership role in
shaping the corporate governance of the Company. As part of its duties, the
Committee assesses the size, structure and composition of the Board and Board
Committees. The Committee acts as a screening and nominating committee for
candidates considered for election to the Board. In this capacity it concerns
itself with the composition of the Board with respect to depth of experience,
balance of professional interests, required expertise and other factors, and
evaluates prospective nominees identified by the Committee on its own initiative
or referred to it by other Board members, management, stockholders or external
sources.

The Compensation and Benefits Committee, which is comprised of three independent
directors, consults generally with management on matters concerning executive
compensation and on pension, savings and welfare benefit plans where Board or
stockholder action is or may be contemplated with respect to the adoption of or
amendments to such plans. It makes recommendations to the Board of Directors on
compensation generally, executive officer salaries, bonus awards and stock
option grants, special awards and supplemental compensation. The Committee makes
recommendations on organization, succession, the election of officers,
consultant-ships and similar matters.

      The Executive Committee (3)-Peter Katevatis CEO, Michael Engelhart COO and
John Kennedy chair of the Audit committee, act for the Board of Directors when
formal Board action is required between meetings in connection with matters
already approved in principle by the full Board or to fulfill the formal duties
of the Board.


                                    Page 36
<PAGE>

      The Finance Committee, which is comprised of three independent directors,
considers and makes recommendations on matters related to the financial affairs
and policies of the Company, including capital structure issues, dividend
policy, investment and debt policies, asset and portfolio management and
financial transactions, all as necessary.

      The Committee on Public Policy and Social Responsibility, which is
comprised of all directors, advises the Board and management on Company policies
and practices that pertain to the Company's responsibilities as a global
corporate citizen, its obligations as a Bio-Medical company whose products and
services affect health and quality of life around the world.

Board and Board Committee Meetings

In 2004, the Board of Directors met 2 times. Board committees met as follows
during 2004: Committee on Corporate Governance, 3 times; Audit Committee 3 times
with auditors Parente Randolph LLP, 1 special meeting February 27, 2005 of Board
and audit committee to approve the retention of new auditors Cogan Sklar LLP. 1
time with Cogen Sklar LLP auditors; Compensation and Benefits Committee, 1 time;
Committee on Public Policy and Social Responsibility, 0 ; and Finance Committee,
0. No meetings of the Executive Committee were held in 2004. All incumbent
directors attended 90 percent of the meetings of the Board and of the committees
on which they served.

Compensation Committee Interlocks and Insider Participation: NONE

Independence of Directors

The Board of Directors has determined that to be considered independent, an
outside director may not have a direct or indirect material relationship with
the Company. A material relationship is one which impairs or inhibits--or has
the potential to impair or inhibit--a director's exercise of critical and
disinterested judgment on behalf of the Company and its stockholders. In
determining whether a material relationship exists. The Board consults with the
Company's counsel to ensure that the Board's determinations are consistent with
all relevant securities and other laws, recent relevant cases and regulations
regarding the definition of "independent director," "business judgment"
including those set forth in listing standards of the New York Stock Exchange as
in effect from time to time. Consistent with these considerations, the Board
affirmatively has determined that all directors are independent directors except
Mr. Michael Engelhart COO, Peter Katevatis Esquire CEO employees and John Mateu
Director consultant. (see below)

ITEM 10  Executive Compensation

The following sets forth information for the three most recently completed
fiscal years concerning the compensation of (i) the Chief Executive Officer and
(ii) all other executive officers who earned in excess of $100,000 in salary and
bonus in the fiscal year ended February 29, 2004.


                                    Page 37
<PAGE>

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                       Long Term Compensation
                                                                   ----------------------------
                                         Annual Compensation       Securities
                                         -------------------       Underlying        All Other
                                                     Salary          Options       Compensation
    Name and Principal Position          Year          $               (#)              ($)
----------------------------------       ----       --------       ----------      ------------
<S>                                      <C>        <C>                 <C>         <C>
Peter Katevatis                          2005       $200,000            --          $70,065(1)
Chairman and Chief                       2004       $200,000            --          $60,450(1)
Executive Officer                        2003       $200,000            --          $65,617(1)

Michael Engelhart                        2005       $120,000            --          $ 4,030(2)
President and Chief                      2004       $105,500-           --               --
Operating Officer                        2003             --            --               --
</TABLE>

(1)   Includes annual retainer of $50,000 for the provision of legal services,
      automobile expense of $ 8,612.00 and health insurance of $12,043 for 2005
      Includes annual retainer of $50,000 for the provision of legal services,
      automobile expense of $774.00 and insurance of $9,676 for 2004; Includes
      annual retainer of $50,000 for the provision of legal services automobile
      expense of $6,779 and health insurance of $8,838 in 2003

(2)   Includes automobile expense of $ $710.00 and health insurance of $
      3,320.00 for 2005

Employment Agreements

Peter Katevatis, our Chairman of the Board and Chief Executive Officer, has an
employment agreement with us ending March 5, 2007. The Agreement provides that
Mr. Katevatis will be compensated at an annual base salary of $200,000 (with an
annual cost of living increase of no less than 6%) with a discretionary annual
bonus in an amount to be determined in accordance with a formula to be agreed
upon by the Board of Directors and Mr. Katevatis. The agreement may be
terminated by us for cause upon ninety days notice and by Mr. Katevatis for any
reason, and by us without cause, upon sixty days notice. If Mr. Katevatis is
terminated by us without cause, he will be entitled to his base salary for the
balance of the term of the Agreement and 200% of his annual bonus paid for the
most recently ended fiscal year.

Michael Engelhart, our President and Chief Operating Officer, has an employment
agreement with us ending April 23, 2006. The agreement may be renewed for
additional one-year terms unless either party notifies the other at least 30
days prior to the end of the then current term of its desire to terminate the
agreement. The agreement provides that Mr. Engelhart will be compensated at an
annual base salary of $120,000 with an annual bonus to be awarded, at the
discretion of the Board, in cash or our common stock at the election of Mr.
Engelhart. The agreement may be terminated by us for cause and by Mr. Engelhart
for any reason or by us without cause or in connection with a change of control
of our company. If Mr. Engelhart is terminated by us without cause or upon a
change of control, he will be entitled to receive compensation through the first
anniversary of the date of termination or change of control, or if later, the
expiration date of his employment contract. The agreement also provided for the
grant to Mr. Engelhart of (i) a three-year incentive stock option to purchase
1,800,000 shares of our Common Stock at $1.00 per share which shall vest in
600,000 share increments upon our raising certain levels of equity investment
based on our business plan, 380,000 share increments upon the achievement of
certain critical milestones described in the employment agreement, or a
combination thereof, provided that in no event shall Mr. Englehart be entitled
to purchase in excess of 1,800,000 shares thereunder. Such option will fully
vest upon a change of control, as defined in the agreement and (ii) a three-year
non-qualified stock option to purchase 200,000 shares of our Common Stock at
$0.25 per share.

Change of Control

Our 1999 Stock Incentive Plan and our 2003 Consultants Stock Option, Stock
Warrant and Stock Award Plan provide that all outstanding options, warrants and
restricted stock will become vested and immediately exercisable, in the case of
options and warrants, or free from all restrictions, in the case of restricted
stock, upon the change of control of our company.


                                    Page 38
<PAGE>

              OPTION GRANTS/Executive Officers IN LAST FISCAL YEAR

The following tables show the number of shares subject to exercisable and
unexercisable stock options held by our executive officers as of February 29,
2004. The table also reflects the values of such options, which represent the
positive spread between the exercise price of such options and $0.60 which was
the closing price for our common stock on February 29, 2004 as reported by the
OTC Bulletin Board.

<TABLE>
<CAPTION>
                                Number Of
                                Securities         Percent of Total
                            Underlying Options    Options Granted to
          Name                   Granted              Employees          Exercise Price       Expiration Date
    -----------------       ------------------    ------------------     --------------       ---------------
<S>                             <C>                      <C>                  <C>                 <C>
    Michael Engelhart           1,800,000                100%                 $1.00               4/23/06

    Michael Engelhart            200,000                 100%                 $0.25               4/23/06
</TABLE>

Mr. Engelhart was granted a three-year option to purchase 200,000 shares of
Common Stock at $0.25 per share pursuant to a stock option agreement dated April
23, 2003. Mr. Engelhart was granted a three-year option to purchase an aggregate
of 1,800,000 shares of Common Stock at $1.00 per share which shall vest as to
600,000 shares when we have raised at least $5,000,000, $10,000,000 and
$15,000,000, respectively, based upon our business plan, as to 380,000 shares
when we have achieved certain critical milestones described in Mr. Englehart's
employment agreement, or a combination thereof, pursuant to a stock option
agreement dated April 23, 2003.

The market price on April 23, 2003, the date of grant of the option was $0.10
per share, which represents the mean between the closing price of our Common
Stock on April 21, 2003 and the opening price on April 24, 2003 as reported on
the OTC Bulletin Board. Our shares did not trade on April 22, 2003 or April 23,
2003.

                     UNEXERCISED OPTIONS AT FISCAL YEAR-END

<TABLE>
<CAPTION>
                                              Number of Shares Underlying        Value of Unexercised In-The-Money
                 Name                       Unexercised Options at Year-End              Options at Year-End
           ------------------               -------------------------------      ---------------------------------
                                              Exercisable / Unexercisable            Exercisable / Unexercisable
                                            -------------------------------      ---------------------------------
<S>                                               <C>                                        <C>
           Michael Engelhart                      200,000 / 1,800,000                        $70,000 /0
</TABLE>

We do not have any other form of compensation for officers and directors,
including any pension, retirement, stock bonus or other compensation plan.

                        Scientific/Medical Advisory Board

The Company established a Scientific Advisory Board in January, 1993 under the
chairmanship of Founder Professor Robert R. Alfano to provide critical review
and analysis of its research and product development programs in the area of
photonics (lasers and optics) and to serve as a source of information on new
product ideas, new technologies and current research activities. Its function
served the Company well during the formative stages of its research. Currently,
the Board consisting of Dr. Alfano and one other continuing member, is being
expanded to include increased representation from the medical arts, including
pathology, and will be staffed with medical specialists who are skilled in the
medical fields of primary interest to the Company. We believe that we will be
able to attract accomplished clinicians who will help guide us in clinical study
design aimed at gaining regulatory approval for applications of our diagnostic
technology. They will also be called upon to advise us about priorities and
unmet needs in their respective disciplines and in matters such as physician's
habits and preferences that would bear on product design and configuration.

The Scientific Advisory Board's Chairman is Dr. Robert R. Alfano* distinguished
Professor of Science and Engineering and the Director of the IUSL at the City
College of CUNY. He is co-author of a number of patents concerning the Company's
photonic technology. and a *principal stockholder of the Company. He supervises
the research and development of the Company's cancer diagnostic technology and
is principal investigator at CCNY. Since 1972, he has been affiliated with the
Physics Department of CCNY. He presently directs the institute for Ultra fast


                                    Page 39
<PAGE>

Spectroscopy and Lasers and the Photonics Engineering Laboratories at City
College. From 1964 to 1972, he was a member of the technical staff of General
Telephone & Electronics Laboratories. Dr. Alfano received an Alfred P. Sloan
Fellowship Research corporation Award and was made a Fellow of the American
Physical Society in 1976. In 1983 he received the Outstanding Italian-American
Award for Science. In May 1989, Dr. Alfano was elected a Fellow of the Optical
Society of America for his studies of ultra fast phenomena. He has been a
consultant to several major corporations including GTE, Clairol, Phillips Dental
and Hamamatsu Photonics. Dr. Alfano is on the advisory board of Photonics
Spectra Magazine. He is a reviewer for prestigious professional journals in the
fields of physics, optics, photobiology, photochemistry and biophysics. He
received his B.S. and M.S. degrees in Physics from Farleigh Dickinson University
in 1963 and 1964, respectively. He received his Ph.D in Physics from New York
University in 1972. He directs scientists from CCNY and other institutions,
including Memorial Sloan Kettering Medical Center, New York Hospital-Cornell
Medical School, Hackensack University Medical Center and the Lawrence Livermore
National Laboratory working to set up hospital programs evaluating optical
imaging research for diagnosis. Dr. Alfano holds over 73 patents and has
published over 600 papers. Dr. Alfano is a contracted paid consultant. (See
infra)

Stimson P. Schantz, M.D. is Director of Cancer Prevention, Department of Surgery
Cornell University Memorial Sloan-Kettering Cancer Center, New York. Dr. Schantz
has been appointed as the principal investigator under the Company's Clinical
Trial Agreement with Memorial Hospital for Cancer and Allied Diseases and in
such capacity, oversees the pilot study of tissue auto fluorescence pursuant to
such agreement. Between 1984 and 1991, Dr. Schantz served in various faculty
positions at the M.D. Anderson Cancer Center in the Department of Head and Neck
Surgery. Dr. Schantz is presently a member of the Society of Surgical Oncology,
American Society for Head and Neck Surgeons, the Society of Head and Neck
Surgery, and has served as the Director of research programs and as a member of
the research committee at the University of Texas, M.D Anderson Cancer Center.
He has been the recipient of several honors and awards, including the First
Independent Investigator Award of the National Cancer Institute awarded in March
1988 and an NCI contract to study biomarkers awarded in 1995. Dr. Schantz serves
as reviewer and editor of a number of professional medical publications and is
the author of numerous articles, papers, books and chapters, and abstracts. He
was awarded a Bachelor of Arts Degree from Harvard College in 1970 and his M.D.
from the University of Cincinnati in 1975. In April, 1998 Dr. Schantz was
recruited to lead a multi-institutional effort revolving around cancer
prevention clinical research programs and constituting a consortium effort with
hospitals in the metropolitan New York City area supported by the National
Cancer Institute approval and high priority rating on a $1.6 million dollar
grant to carry out collaborative clinical trials which will be targeted
specifically at developing Mediscience Technology and positioned to conduct
phase II and phase III trials on a multi-organ basis involving diseases of the
breast, upper and lower aerodigestive tract, and gynecologic tissues.

Stephane Lubicz, M.D.

EDUCATION: 1965-1968 BS, Cum Laude, Free University of Brussels, Belgium. M.D.,
Free University of Brussels, Belgium. PROFESSIONAL EXPERIENCE: Pharmaceutical,
Medical and Gynecologic Oncology

I. Pharmaceutical Industry Experience (A) USA consultant to B. & A, Inc. The
Company operates for the coordination and organization of clinical trials in
Mexico (and throughout Latin America). This includes all Phase II, III trials
and post marketing surveillance activities through Phase IV Clinical trials).
(B) Medical director, Clinical Development Oncology Daiichi Pharmaceutical
Corporation, Montvale, NJ (08/2000-011/2002) (I) Phase III: Project Pancreas-
Global (US and Europe: Protocol Global project (Japan, USA + Mexico, EU) (II)
Phase II: completion and initiation of multiple Phase II studies: Solid tumors
and leukemia's, initiations and monitoring of sites and investigators for Phase
II (US, Canada, Mexico)

(2) TZT-1027 project: Global project with Japan and EU (parallel and or
complementary studies in EU and Japan) Phase II: All Solid Tumors. Phase II
includes 3 studies (use of a template protocol for multiple protocols/drug
projects).

(3) CPT-11 project: Gynecologic Project. Finalization of project in gynecologic
malignancies and selection of endometrial cancer project (a Phase II study

II. Clinical experience


                                    Page 40
<PAGE>

1969-1971 Rotating Externship, Brussels University Hospitals, Brussels, Belgium.
1971-1972 Rotating Internship, Brussels University Hospitals, Brussels, Belgium.
1972-1975 Residency, Obstetrics and Gynecology, Brussels University Hospital and
Affiliated Hospitals, Belgium. 1975-1979. Residency, Obstetrics and Gynecology.
The Jewish Hospital and Medical Center of Brooklyn, N.Y.1979-1981 Fellow,
Gynecology Oncology, Department of Obstetrics, Gynecology and Reproductive
Sciences. Mount Sinai School of Medicine, New York, N.Y. 1981-1982 Attending
Physician, Department of Obstetrics and Gynecology, Mount Sinai Hospital Medical
Center of Chicago, Chicago, IL. 1981-1982. Assistant Professor, Rush Medical
College, Chicago, IL.1981-1982. Director of Medical Education for Residents and
Students, Rush Medical College, Chicago, IL.1982-1984 Full-time Attending,
Department of Obstetrics, Gynecology, and Reproductive Science, The Mount Sinai
Medical Center, New York, N.Y.1982-1984 Assistant Director, Division of
Gynecologic- Oncology, Department of Obstetrics & Gynecology, and Reproductive
Science, The Mount Sinai Medical Center, New York, N.Y.1982-1991 Instructor,
Mount Sinai School of Medicine, New York, N.Y. 1982-1984 Assistant Attending,
Department of Obstetrics and Gynecology, The City Hospital Center at Elmhurst,
N.Y. 1982-1984 Assistant Director, Gynecologic Oncology, Dept of Obstetrics and
Gynecology, The City Hospital Center at Elmhurst, N.Y 1985 to 1994-Pres
Attending, The Mount Sinai Medical Center, New York, N.Y., LaGuardia Hospital,
Queens, N.Y., Doctors Hospital, New York, N.Y. St. Vincent Hospital, New York,
Syosset Community Hospital, L.I. St. Clare's Hospital, N.Y.C. 1995-1996
Director, Division of Gyn/Oncology St.Vincent's Hospital, N.Y
07/00-11/02Director of Oncology, Clinical development, Daiichi Pharma. Corp
Montvale, New Jersey (Japan, Canada, Mexico and Europe)

CERTIFICATION:

E.C.F.M.G., July 25, 1973, #202-214-3. Board Certified in Obstetrics and
Gynecology, July 1977, Belgium., Board Certified in Obstetrics and Gynecology,
November 1982, U.S.A., Board Certified in Gynecologic Oncology, December 1987.,
HIP Panel, Sub-Specialty Gynecologic Oncology, January 1988- June 1996.

PROFESSIONAL MEMBERSHIPS:

American College of Obstetricians and Gynecologists (ACOG). American Association
of French-Speaking Health Professionals (AAFSHP). Chicago Medical Society.
Society of Chicago Gynecologic Oncologists. American Society of Gynecologic
Laparoscopists.American Society of Clinical Oncology. Cancer Committee Board,
Department of Obstetrics and Gynecology, The City Hospital Center at Elmhurst,
N.Y.International Correspondence Society of Obstetricians and Gynecologists. New
York State Medical Society of Colposcopy and Cervical Pathology, Gynecologic
Laser Society. New York Gynecological Society Society of Surgical Oncology
(SSO). Drug Information Association America Association of Clinical Research The
Gynecologic Surgery Society The American College of Forensic Examiners The
Society of Pelvic Reconstructive Surgeons American Medical Association

OTHER PROFESSIONAL ACTIVITIES: Relevant Papers

7/94"Fluorescence spectroscopy in the diagnosis of gynecologic
malignancies."9/94"Fluorescence spectroscopy in the diagnosis of gynecologic
malignancies

Optical Fluorescence Spectroscopy in the Detection of Cervical Cancer. Tang
G.C., Pradhan, A., Lubicz S. and Alfano CCNY, New York Gynecologic Oncology vol.
32, p. 128.

Fluorescence spectra from normal and tumor tissues of the gynecological tract.
She W., Liu C.H., Tang G.C., Lubicz S., Alfano CCNY

Ultraviolet Excited Fluorescence Spectra from non-malignant and Malignant
Tissues of the Gynecological Tract. Lubicz S, Alfano RR, Tang GC, Sha Glassman W
and Liu CH. CCNY

Raman, Fluorescence, and Time-Resolved Light Scattering as Optical Diagnostic
Techniques to Separate Diseased and Normal Biomedical Media.Liu CH,
Photochemical J and RR. Photobiology: Biol., vol. 16 (1992

Julian A. Kim, M.D.


                                    Page 41
<PAGE>

Education

1982 Miami University, Oxford, OH. B.A. 1986 Medical College of Ohio, Toledo,
OH. M.D. Professional Training1993-1994 Immunotherapy Fellow, Biologic Response
Modifier Program, Ohio State University Comprehensive Cancer Center, Columbus,
OH 1991-1993 Surgical Oncology Fellow: Arthur G. James Cancer Hospital and
Research Institute, Ohio State University, Columbus, OH1986-1991 Surgical
Resident:University of Maryland Hospitals, Baltimore, MD

Professional Status

1998Associate Staff, Department of General Surgery and Center for Surgery
Research, Cleveland Clinic Foundation1994 Staff surgeon, Arthur G. James Cancer
Hospital, OSU1994 AssistantProfessor of Surgery, Ohio State University College
of Medicine1993 Licensure, State Medical Board of Ohio1992 Diplomat, American
Board of Surgery Diplomat, American Board of Surgery 1990Diplomat, National
Board of Medical Examiners

AWARDS Zollinger Surgical Society Research Award Columbus Surgical Society
Research Award National Cancer Institute, National Research Service Award
American Cancer Society Research Oncology Award American Cancer Society Clinical
Oncology AwardBaltimore Academy of Surgery Basic Research Award Society of Head
and Neck Surgeons Basic Research Award Alpha Omega Alpha Medical Honor Society
Phi Sigma Biologic Honor SocietySociety of Surgical OncologyAmerican Association
for Cancer ResearchSociety of Biologic TherapyAmerican College of
SurgeonsAmerican Association for the Advancement of ScienceNew York Academy of
SciencesInteramerican Society for ChemotherapyAlpha Omega Alpha Medical Honor
SocietyZollinger Surgical SocietyUniversity of Maryland Surgical Society

PUBLICATIONS

Kim JA, Bresler HS, Martin EW, Aldrich W, Heffelfinger M, and Triozzi PL.
Cellular Immunotherapy of Patients with Metastatic Colorectal Cancer Using Lymph
Node Lymphocytes Localized In Vivo by Radiolabeled Monoclonal Antibody. Cancer
1999, 86(1): 22-30.

Bakalakos E, Kim JA, Young D, Martin EW, Jr. Determinants of Survival in Hepatic
Resection of Colorectal Cancer Metastases. World J Surg 1998, 22: 399-405.

Doran T, Stuhlmiller H, Kim JA, Martin, EW Jr, and Triozzi PL. Oncogene and
Cytokine Expression of Human Colorectal Tumors Responding to Immunotherapy. J
Immunotherapy, 1997; 20:5, 372-6.

Triozzi PL, Kim JA, Martin EW Jr, Colcher D, Heffelfinger M and Rucker Renee.
Clinical and Immunologic Effects of Monoclonal Antibody CC49 and Interleukin-2
in Patients with Metastatic Colorectal Cancer. Hybridoma 1997, 16(2): 147-151.

Fischer WE, Muscarella P, O'Dorisio TM, O'Dorisio MS, Kim JA, Doran TA, Sabourin
CL, Schirmer WJ. Differential Expression of the Somatostatin Receptor Subtype-2
Gene Predicts Response of Human Pancreatic Cancer to Somatostatin. Surgery 1996;
120(2): 234-41.

Triozzi PL, Kim JA and Martin EW Jr. Adoptive immunotherapy using lymph node
lymphocytes localized in vivo by radiolabeled

Triozzi PL, Kim JA, Martin EW Jr, Colcher D, Heffelfinger M and Rucker Renee.
Clinical and Immunologic Effects of Monoclonal Antibody CC49 and Interleukin-2
in Patients with Metastatic Colorectal Cancer. Hybridoma 1997, 16(2): 147-151.

Fischer WE, Muscarella P, O'Dorisio TM, O'Dorisio MS, Kim JA, Doran TA, Sabourin
CL, Schirmer WJ. Differential Expression of the Somatostatin Receptor Subtype-2
Gene Predicts Response of Human Pancreatic Cancer to Somatostatin. Surgery 1996;
120(2): 234-41.

Triozzi PL, Kim JA and Martin EW Jr. Adoptive immunotherapy using lymph node
lymphocytes localized in vivo by radiolabeled monoclonal antibody. J Natl Cancer
Inst 1995; 87: 1180-1181.

Triozzi PL, Kim JA, Aldrich WA, Martin EW and Benzies T. Phase I trial of
escalating doses of Interleukin-1 beta in conjunction with fixed doses of
Interleukin-2. J Clin Onc 1995; 13: 482- 9.

Kim JA, Martin EW, Morgan C, Aldrich W, Mojzisik C, Berens A, Triozzi PL.
Expansion of tumor-reactive lymph node lymphocytes from colorectal cancer
patients for adoptive immunotherapy. Cancer Biotherapy 1995; 10: 115- 123.

Burak WE, Schneebaum SS, Kim JA, Arnold MA, Hinkle G,

Berens A, Mojzisik CM and Martin EW. A pilot study evaluating the intraoperative
localization of radiolabeled monoclonal antibody CC83 in patients with
metastatic colorectal cancer. Surgery 1995; 118: 103- 108.

Triozzi PL, Kim JA, Aldrich W, Sampsel JA and Martin EW. Identification of
tumor-reacting lymph node lymphocytes in vivo using radiolabeled monoclonal
antibody. Cancer 1994; 73: 580-9.

Triozzi PL, Aldrich W, Kim JA, Kinney P, Sagone A, and Rinehart J. Application
of monocyte depletion using L-phenylalanine methyl ester ex vivo to adoptive
cellular therapy. Immunopharmacology, 1994; 28: 39-45.

Kim JA, Triozzi PL, and Martin EW. Radioimmunoguided surgery for colorectal
cancer. Oncology 1993; 7: 55-60.

Kim JA, Moore VL, Didolkar MS, Ordonez JV, Van Wesep RA, Suter CM. Flow
cytometric DNA analysis of primary and concurrent metastatic squamous cell
carcinoma of the head and neck. Am. J. Surg. 1989; 158: 288-91.

Borrero E, Grace T, Kim JA, and Queral L. Primary aortoduodenal fistula.
Contemporary Surgery 1986; 33: 11-15.

Farrar WA, Lavalle G and Kim JA. Breast Cancer. In: McKenna and Murphy eds.
Cancer Surgery. 2nd ed. Philadelphia: JB Lippincott, 1994 pp 209-261.

Farrar WA, Kim JA. Biopsy Techniques to Establish Diagnosis and Type of
Malignant Lymphoma. In: Surgical Clinics of North America. 1993. Vol 2 No.2,
pp159-167.

Kim JA, Triozzi PL. Application of Radioimmunoguided Surgery to locate tumor-
Reactive cells for the adoptive therapy of cancer. In: Martin EW, and Arnold MA,
eds. Radioimmunoguided surgery in the detection and treatment of colorectal
cancer. Austin: RG Landes, 1994, p161- 170.


                                    Page 42
<PAGE>


Kim JA. Observations on the Immunologic Basis of the Radioimmunoguided Surgery
System. In: Schoetz DJ, Jr, ed. Seminars in Colon and Rectal Surgery. W.B.
Saunders, 1995. Vol 6, No 4, pp202-206.

Kim JA and Martin EW, Jr. Radioimmunoguided Surgery for Recurrent and Metastatic
Colorectal Cancer. In: Lotze MT and Rubin JT, eds. Regional Therapy of Advanced
Cancer. J.B. Lippincott-Raven, 1997, pp391-400.

Kim JA. Activated Cellular Therapy of Liver Tumors. In: Clavien P ed. Malignant
Liver Tumors: Current and Emerging Therapies. Blackwell Science, 1999,
pp248-258.Tumor therapy with adoptively transferred CD4 cells (1 RO1 CA78263)
NIH/NCI. $915,709.00 7/01/98-04/30/2002 Shu S, Kim JA. (P.I./Co-I). U.S. #
5,814,295. Determination of lymph nodes enriched in tumor reactive cells, their
proliferation and their use in adoptive cellular therapy. Granted September 29,
1998.

Minimally invasive approaches to breast diseases, Cleveland Clinic Foundation,
Cleveland, OH. September 1999.

The Scientific Advisory Board is paid a fee of $1,000 for each meeting attended.
Additionally, certain members past and present have been granted an option of
unlimited duration to purchase 10,000 shares from the Company's Common Stock at
a price of $2.00 per share

Ronald Tygar

President and Chairman of RT Industries, a NASDAQ publicly held manufacturing
and distribution Company specializing in Automobile brakes and automotive
computer parts; Chairman of RT funding Corp., a New York State based mortgage
lender; President and chairman of RT consultants advisory services in business
development, corporate marketing, manufacturing and distribution operations. Mr.
Tygar will counsel the Mediscience management team on matters pertaining to
business development, corporate marketing, manufacturing and distribution
operations.

Jeremy Rosen DDS

Presents extensive Medical/Dental/Oral Health experience regarding FDA Clinical,
structuring, management, and overview and expertise in the area of Dental/Oral
applications of the Company's Technology. Dr. Rosen will be
supporting/participating in management presentations seeking corporate funding
and/or corporate relationships

ITEM 11 Security Ownership of Certain Beneficial Owners and Management

                             PRINCIPAL SHAREHOLDERS

The following table sets forth certain information regarding beneficial
ownership of our Common Stock as of September 30, 2004 by (i) each person known
by us to own beneficially more than 5% of our outstanding Common Stock, (ii)
each of our directors and executive officers, and (iii) all directors and
executive officers as a group. Except as otherwise indicated, each of the
stockholders named below has sole voting and investment power with respect to
such shares of Common Stock:

<TABLE>
<CAPTION>
            Name and Address of                        Number of Shares               Percentage
              Beneficial Owner                        Beneficially Owned          Beneficially Owned
--------------------------------------                ------------------          ------------------
<S>                                                       <C>                             <C>
William W. Armstrong
P.O. Box 607
Tupper Lake, NY 12986                                       355,200(1)                       *

Sidney Braginsky
6 Stoney Court
Dix Hills, NY 11746                                               0                          0

Michael Engelhart
161 North Franklin Turnpike
Ramsey, NJ 07446                                          2,000,000(2)                     3.7%

Peter Katevatis
1235 Folkestone Way
Cherry Hill, NJ
08034                                                     8,921,525(3)                    17.0%
</TABLE>


                                    Page 43
<PAGE>

<TABLE>
<CAPTION>
            Name and Address of                        Number of Shares               Percentage
              Beneficial Owner                        Beneficially Owned          Beneficially Owned
--------------------------------------                ------------------          ------------------
<S>                                                       <C>                             <C>
John M. Kennedy
802 Chestnut Avenue
Somerdale, NJ 08083                                       2,574,599(6)                     4.8%

Michael N. Kouvatas
27 Kings Highway
East Haddonfield, NJ 08033                                  550,666(4)                     1.0%

John Matheu
215 Longhill Drive
Short Hills, NJ 07078                                       321,055(5)                       *

All directors and executive officers as a
group(7 persons)                                         14,386,375                       28.0%
</TABLE>

----------
*Represents less than 1%

(1) Includes 6,000 shares held by Mr. Armstrong's wife for which Mr. Armstrong
disclaims beneficial ownership.

(2) Represents shares issuable upon the exercise of a three-year stock option to
purchase an aggregate of (i) 1,800,000 shares at $1.00 per share, which vests in
600,000 share increments upon raising certain levels of equity and (ii) 200,000
shares at $0.25 per share. (See Engelhart employment agreement for terms 10-K
2005 incorporated herein by reference thereto)

(3) Includes 6,217,357 (5,349,794 shares and 867,563 shares issued January 20,
2005 as correction 50,499,149 subject to 17% anti-dilution right all issued
pursuant to an anti-dilution agreement/resolution nunc pro tunc dated July 16,
2004 between the Board and Mr. Katevatis, and (ii) 1,416,667 shares issued at
$0.25 in lieu of salary and fees for legal services rendered to us by Mr.
Katevatis, (iii) 552,664 shares issued in connection with a salary reduction
required by the terms of a private placement of our stock, and (iv) 398,167
shares received in a cashless exercise of a stock option. (total 2,367,498)
Excludes 200,000 shares owned by Mr. Katevatis daughter as custodian for his
grandchildren, and a total of 500,000 shares owned by his sons, as to all of
which he disclaims beneficial ownership. (See Katevatis employment agreement for
terms 10-K 2005 incorporated herein by reference thereto)

(4) Includes (i) 118,000 shares owned by Mr. Kouvatas's wife for which Mr.
Kouvatas, disclaims beneficial ownership; and 40,000 shares currently in the
estate of Mr. Kouvatas' son of which Mr. Kouvatas and his wife are
beneficiaries. Includes the 466,666 restricted shares acquired by Mr. Kouvatas
pursuant to the exercise of stock options,6000 shares for which Mr. Kouvatas is
custodian for three (3) of his children and 36,000 shares for which Mr.
Kouvatas's daughter is custodian for her two children under the New Jersey
Uniform Gift to Minors Act; and 30,000 shares registered in the names of each
his children.

(5) Includes 300,000 shares subject to a stock option.

(6) Includes the issuance of a net of 1,833,333 restricted shares acquired by
Mr. Kennedy pursuant to the exercise of stock options On December 13, 1985 the
Company granted stock options at an exercise price of $0.25 per share to the
following Officers and Directors in exchange for cancellation of certain of the
Company's accrued indebtedness to such persons, portions of which were assigned
as follows: Mr. Katevatis received options to purchase 4,400,000 shares
(2,200,000 of which were assigned by Mr. Katevatis to Mr. Kennedy); and . Also
includes 100,000 shares registered in the name of Mr. Kennedy wife.


                                    Page 44
<PAGE>

                                     NOTES

NOTE:1.In April 1996, Messrs. Katevatis, Kouvatas, Kennedy and Armstrong,
directors and shareholders of the Company, collectively exercised options for
2,763,166 shares of the Company's common stock at no cost in consideration for
the cancellation of the remaining 452,582 options held by these individuals. The
exercise price for these options was $0.25 per share and accordingly, the
Company recorded $690,792 as additional compensation expense.

Excludes 3,041,500 shares beneficially owned by Allen & Company, Incorporated,
(included 1,041,500 warrants) reflected in Amendment No. 6 to their Schedule
SC13G/A dated 2/14/02 filed by Allen & Co. This Allen Warrant expired April 6,
2003 present beneficial ownership reduced to 2,041,500. shares of common.

Note 2 10-Q October 14, 2003 In August of 2003 the company issued 1,619,057
shares of common stock to Peter Katevatis, Chairman/ CEO and 71,557 shares of
common stock to Dr.Robert Alfano co-founders at par value of .01 per share in
accordance with their contractual anti-dilution rights with the company. The
anti-dilution rights are exercisable at their sole discretion and are for
established valuable consideration, and per auditor certified vested contractual
rights 17% Katevatis and 4% Dr. Robert Alfano anti-dilution rights. Katevatis
directed his 1,619,057 shares issued as follows: 1,000,000 Peter Katevatis as to
the following parties he asserts no control and disclaims beneficial ownership.
300,000 Marie Sten, 219,057 Robert J. Katevatis, 100,000 Peter J. Katevatis

NOTE 3 Board minute/action of July16, 2004 in support of historical contractual
continual anti-dilution (JV) issuances to Peter Katevatis and Robert Alfano
founders is incorporated in its entirety and made a part hereof. (see SB-2 SEC
registration filing exhibits board minute resolution SB-2 shares held by
Katevatis_ Alfano "RESOLVED, that the Corporation's agreement to issue, from
time to time, additional shares of Common Stock to Katevatis such that the
Katevatis Shares represent the Katevatis Anti-Dilution Percentage (17%) and the
Alfano Shares represent the Alfano Anti-Dilution Percentage (4%) of the issued
and outstanding shares of Common Stock, and is hereby unanimously ratified,
confirmed and approved nunc pro tunc in all respects". Katevatis Anti-dilution
transactions reflected in FORM 4 Filings

Katevatis SEC Form 4 filing dated 09/13/2004 Total shares issued as per his JV
ant-dilution requirement 7, 717,292 (all SEC rule 144 legend) Katevatis SEC Form
4 filing dated 05/ 13/2005 Total shares issued to March 30, 2005 per his JV
ant-dilution requirement 9,220,895 (all SEC rule 144 legend)

ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Mr. Katevatis is paid $50,000 for legal services rendered to us during each
fiscal year. Mr. Katevatis received $50,000 for each of our fiscal years
commencing in 1998 through 2004.

In July 2002, we entered into a month-to-month lease agreement with Peter
Katevatis, our Chairman and Chief Executive Officer, for approximately 3,000
square feet for our corporate offices for which we pay no rent but have assumed
the obligation to pay all taxes, maintenance, insurance, utilities and repairs
relating to such premises.

Mr. Katevatis has agreed to forbear any and all collection action against us for
accrued salary and fees including forgiveness of interest in exchange for the
option of converting any such accrued salary and fees into our common stock at
$0.25 per share. If we receive financing, Mr. Katevatis may elect to receive all
or part of such accrued salary or fees in cash or common stock. As of September
30, 2004, accrued salary and fees amounted to $1,406,333 for Mr. Katevatis.

On December 1, 1988, we acquired from Dr. Robert Alfano, a principal
shareholder, all of the issued and outstanding stock of LDI including the
"Method and Apparatus for Detecting Cancerous Tissue Using Visible Luminescence"
patent in exchange for 1,500,000 shares of our Common Stock. LDI is under a
continuing obligation to pay a royalty in the aggregate amount of 1% of gross
sales from any equipment made, leased or sold which embodies the concepts
described in such patent to Michelle Alfano, Dr. Alfano's daughter.

On August 1, 2004, we entered into a thirteen-month consulting agreement with
John Matheu, a director, a former member of the audit committee, pursuant to
which Mr. Matheu will provide management consulting services to us. Mr. Matheu
will be paid a monthly consulting fee of $4,166 during the term of the
agreement, and received an option to purchase 300,000 shares of Common Stock at
$1.50 per share.

On December 9, 2004, we entered into an Amended and Restated Employment
Agreement with Michael Engelhart, a director and our President and Chief
Operating Officer, which restated and amended the terms of the Mr. Engelhart's
Employment Agreement with us to clarify the original intent of the parties with
respect to the nature of the stock options granted to Mr. Engelhart thereunder.

On July16, 2004 Board minute/action in support of historical contractual
continual anti-dilution (JV) issuances to Peter Katevatis and Robert Alfano
founders is incorporated in its entirety and made a part hereof. (see SB-2 SEC
registration filing effective Jan. 12, 2005 with exhibits including board minute
resolution. Reported shares by the companys


                                    Page 45
<PAGE>

transfer agent, Registrar and transfer Co.,. on February 28, 2005 held by Peter
Katevatis 8,921,525 and Robert Alfano 1,946,588

"RESOLVED, that the Corporation's agreement to issue, from time to time,
additional shares of Common Stock to Katevatis such that the Katevatis Shares
represent the Katevatis Anti-Dilution Percentage (17%) and the Alfano Shares
represent the Alfano Anti-Dilution Percentage (4%) of the issued and outstanding
shares of Common Stock, and is hereby ratified, confirmed and approved nunc pro
tunc in all respects" Item 26. Recent Sales of Unregistered Securities

     DURING THE LAST THREE YEARS, WE HAVE ISSUED THE FOLLOWING UNREGISTERED
                                  SECURITIES.

None of these transactions involved any underwriters, underwriting discounts or
commissions, except as specified below, or any public offering, and we believe
that each transaction was exempt from the registration requirements of the
Securities Act by virtue of Section 4(2) thereof and/or Regulation D promulgated
there-under. All recipients had adequate access, through their relationships
with us, to information about us.

Sidney Braginsky, our director and former president and chief operating officer,
was granted options to purchase up to 2,000,000 shares of Common Stock at $0.25
per share as to 150,000 shares and $1.00 per share as to the remaining 1,850,000
shares, pursuant to his employment agreement, dated July 9, 2001, with us, which
agreement terminated and such options were forfeited upon his resignation as an
officer on April 26, 2003.

On January 28, 2003, August 7, 2003, March 8, 2004, April 12, 2004, July 19,
2004, August 18, 2004 and August 23, 2004, we issued 44,312 shares, 1,000,000
shares, 1,595,450 shares, 69,700 shares, 609,886 shares, 624,580 shares and
51,000 shares of Common Stock, respectively, to Peter Katevatis pursuant to an
anti-dilution agreement between us and Mr. Katevatis.

On January 28, 2003, August 27, 2003, March 8, 2004, April 12, 2004, July 19,
2004 and August 23, 2004, we issued 17,729 shares, 71,557 shares, 375,400
shares, 16,400 shares, 143,502 shares and 12,000 shares of Common Stock,
respectively, to Dr. Alfano pursuant to an anti-dilution agreement between us
and Dr. Alfano.

In February 2004, we issued and sold to accredited investors in a private
placement 60 shares of our convertible preferred stock which were converted into
an aggregate of 6,000,000 shares of Common Stock on March 8, 2004, for an
aggregate of $1,500,000 or $25,000 per share of our preferred stock.

On April 23, 2004, we granted an option to purchase (i) 1,800,000 shares of our
Common Stock at $1.00 per share which vest in 600,000 share increments upon our
raising certain levels of equity based on our business plan, 380,000 share
increments upon the achievement of certain critical milestones, or a combination
thereof, and (ii) an option to purchase 200,000 shares of our Common Stock at
$0.25 per share to Michael Engelhart, a director and our President and Chief
Operating Officer.

On March 8, 2004, we issued 325,000 shares of Common Stock to Dr. Jeremy Rosen
as compensation for Dr. Rosen's medical/ FDA clinical advisory services for a
period from February 1, 2004 to February 1, 2005.

In February 2004, we issued and sold to accredited investors in a private
placement 60 shares of our convertible preferred stock which were converted into
an aggregate of 6,000,000 shares of Common Stock on March 8, 2004, for an
aggregate of $1,500,000 or $25,000 per share of our preferred stock.

On November 15, 2001, we entered into an agreement with Chesterbrook Partners
Inc. pursuant to which, among other things, Chesterbrook Partners received
five-year warrants to purchase an aggregate of 200,000 shares of Common Stock,
at $0.25 per share, as compensation for shareholder support services provided to
us during the period February 28, 1999 to November 15, 2001.

On each of December 3, 2001 and June 21, 2002, Chesterbrook Partners Inc.
assigned all of its right, title and interest in a five-year warrant to purchase
100,000 shares of Common Stock for $0.25 per share to William M. Baker, a
non-affiliated accredited investor. Mr. Baker exercised the warrants as to all
of the 100,000 shares of Common Stock on February 18, 2004 for an aggregate
purchase price of $25,000.

On December 21, 2001, Chesterbrook Partners Inc. assigned all of its right,
title and interest in a five-year warrant to purchase 50,000 shares of Common
Stock for $0.25 per share to Lawrence B. Elgart, a non-affiliated accredited
investor. Mr. Elgart exercised the warrant as to all of the 50,000 shares of
Common Stock on February 2, 2004 for an aggregate purchase price of $12,500.

On April 23, 2004, we granted an option to purchase (i) 1,800,000 shares of our
Common Stock at $1.00 per share


                                    Page 46
<PAGE>

which vest in 600,000 share increments upon our raising certain levels of equity
based on our business plan, 380,000 share increments upon the achievement of
certain critical milestones, or a combination thereof, and (ii) an option to
purchase 200,000 shares of our Common Stock at $0.25 per share to Michael
Engelhart, a director and our President and Chief Operating Officer.

On March 8, 2004, we issued 325,000 shares of Common Stock to Dr. Jeremy Rosen
as compensation for Dr. Rosen's medical/ FDA clinical advisory services for a
period from February 1, 2004 to February 1, 2005.

In February 2004, we issued and sold to accredited investors in a private
placement 60 shares of our convertible preferred stock which were converted into
an aggregate of 6,000,000 shares of Common Stock on March 8, 2004, for an
aggregate of $1,500,000 or $25,000 per share of our preferred stock.

On November 15, 2001, we entered into an agreement with Chesterbrook Partners
Inc. pursuant to which, among other things, Chesterbrook Partners received
five-year warrants to purchase an aggregate of 200,000 shares of Common Stock,
at $0.25 per share, as compensation for shareholder support services provided to
us during the period February 28, 1999 to November 15, 2001.

On each of December 3, 2001 and June 21, 2002, Chesterbrook Partners Inc.
assigned all of its right, title and interest in a five-year warrant to purchase
100,000 shares of Common Stock for $0.25 per share to William M. Baker, a
non-affiliated accredited investor. Mr. Baker exercised the warrants as to all
of the 100,000 shares of Common Stock on February 18, 2004 for an aggregate
purchase price of $25,000.

On December 21, 2001, Chesterbrook Partners Inc. assigned all of its right,
title and interest in a five-year warrant to purchase 50,000 shares of Common
Stock for $0.25 per share to Lawrence B. Elgart, a non-affiliated accredited
investor. Mr. Elgart exercised the warrant as to all of the 50,000 shares of
Common Stock on February 2, 2004 for an aggregate purchase price of $12,500.

On April 23, 2004, we granted an option to purchase (i) 1,800,000 shares of our
Common Stock at $1.00 per share which vest in 600,000 share increments upon our
raising certain levels of equity based on our business plan, 380,000 share
increments upon the achievement of certain critical milestones, or a combination
thereof, and (ii) an option to purchase 200,000 shares of our Common Stock at
$0.25 per share to Michael Engelhart, a director and our President and Chief
Operating Officer.

On March 8, 2004, we issued 325,000 shares of Common Stock to Dr. Jeremy Rosen
as compensation for Dr. Rosen's medical/ FDA clinical advisory services for a
period from February 1, 2004 to February 1, 2005.

On March 8, 2004, we issued 1,400,000 shares of Common Stock to RT Consulting
Services Inc. as compensation for RT Consulting Services Inc.'s medical/FDA
engineering, manufacturing, and financial advisory services from February, 2004
to February, 2008.

On May 5, 2004, we issued 200,000 shares of Common Stock to Chesterbrook
Partners Inc. as compensation for Chesterbrook Partners Inc.'s public relation
and shareholder advisory services for our 2004 fiscal year through February 28,
2005.

In August 2004, we (i) issued 100,000 shares of our Common Stock at $0.59 per
share, and (ii) granted a warrant to purchase 100,000 shares of Common Stock at
$2.00 per share, to Alan Moses under a consulting agreement pursuant to which
Mr. Moses provided us with website management and design services.

In August 2004, we issued 200,000 shares of Common Stock at $0.59 per share for
accounting services provided to us.

In August 2004, we issued 55,556 shares of Common Stock at $0.59 per share for
secretarial services provided to us.

In November 2004, we issued (i) 1,000,000 shares of Common Stock at $0.75 per
share, and (ii) a six-year warrant to purchase 1,000,000 shares of Common Stock
at an exercise price of $3.00 per share to INFO TONICS (Kodak,Corning,Xerox) in
connection with INFO TONICS FUNDING A collaborative research and development
agreement between INFOTONICS and us.

On August 1, 2004, we granted an option to purchase 300,000 share of Common
Stock at $1.50 per share to Director John Matheu pursuant to a consulting
agreement with the Company


                                    Page 47
<PAGE>

ITEM 13 PRINCIPAL ACCOUNTANT FEES AND SERVICES

Fees for professional services provided by Parente Randolph LLP the Group's
independent auditors in each of the last two fiscal years, in each of the
following categories were:

<TABLE>
<CAPTION>
       Accounting Fee Disclosure:           10-k/10-q            other/sb-2 etc
<S>                                           <C>                   <C>
          fiscal year 2005                    32,580                37,420 (Sarbanes compliance)
          fiscal year 2004                    35,250                  -0-
          fiscal year 2003                    26,946                  -0-
</TABLE>

Audit fees include fees associated with the annual audit and 10-Q reviews
required. Audit-related fees principally include accounting consultation and
advice regarding compliance with Sarbanes-Oxley in 2004-2005 preparatory for
2006 compliance by MTC. The directors are required to prepare annual 10-K for
each financial year that gives a true and fair view of the state of affairs of
the Company as at the end of the financial year February 28, 2005 and of the
results of MTC for the year. In preparing the accounts, appropriate accounting
policies have been used and applied consistently, and reasonable and prudent
judgements and estimates have been made, Applicable accounting standards have
been followed

The amount included in Other in 2004 related to legal corporate work in relation
to the successful Reg. D PPM $1.5 Million raise and the filing of an MTC SB-2
registration document deemed SEC effective Jan 12, 2005.

ITEM 14 EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits.

3.1 Restated Certificate of Incorporation, dated December 9, 2004 (incorporated
herein by reference to Exhibit 3.1 to our Registration Statement on Form SB-2
(Registration No. 333-117820) ("Registration Statement")).

3.2 By-laws (incorporated herein by reference to Exhibit 3.2 to our Registration
Statement).

4.1 Letter Agreement, dated November 15, 2001 between us and Chesterbrook
Partners Inc. (incorporated herein by reference to Exhibit 4.1 to our
Registration Statement).

4.2 Stock Purchase Warrant, dated November 15 2001, issued by us to Chesterbrook
Partners Inc. to purchase 100,000 shares at an exercise price of $0.25
(incorporated herein by reference to Exhibit 4.2 to our Registration Statement).

4.3 Stock Purchase Warrant, dated November 15, 2001, issued by us to
Chesterbrook Partners Inc. to purchase 50,000 shares at an exercise price of
$0.25 (incorporated herein by reference to Exhibit 4.3 to our Registration
Statement).

4.4 Stock Purchase Warrant, dated November 15 2001, issued by us to Chesterbrook
Partners Inc. to purchase 50,000 shares at an exercise price of $0.25
(incorporated herein by reference to Exhibit 4.4 to our Registration Statement).

4.5 Assignment of Stock Purchase Warrant, dated December 3, 2001 and June 21,
2002, to purchase 100,000 shares at an exercise price of $0.25 from Chesterbrook
Partners Inc. to William Baker (incorporated herein by reference to Exhibit 4.5
to our Registration Statement).

4.6 Assignment of Stock Purchase Warrant dated December 21, 2001, to purchase
50,000 shares at an exercise price of $0.25 from Chesterbrook Partners Inc. to
Lawrence B. Elgart (incorporated herein by reference to Exhibit 4.6 to our
Registration Statement).

4.7 Consulting Agreement, dated April 1, 2004, between us and Chesterbrook
Partners Inc. (incorporated herein by reference to Exhibit 4.7 to our
Registration Statement).

4.8 Consulting Agreement, dated February 1, 2004, between us and Jeremy Rosen
(incorporated herein by reference to Exhibit 4.8 to our Registration Statement).

4.9 Consulting Agreement, dated February 1, 2004, between us and Consulting
Services Inc. (incorporated herein by reference to Exhibit 4.9 to our
Registration Statement).

4.10 Form of Subscription Agreement between us an each of the Selling
Shareholders which participated in the Private Placement (incorporated herein by
reference to Exhibit 4.10 to our Registration Statement).

10.1 Agreement dated as of June 10, 2002, between us and RFCUNY (incorporated
herein by reference to Exhibit 10.1 to our Registration Statement).

                                    Page 48
<PAGE>

10.2 Project Agreement, dated as of May 1, 2004, between Medi-Photonics and
RFCUNY (incorporated herein by reference to our Quarterly Report for the quarter
ended May 31, 2004 on Form 10-QSB/A ("Form 10-QSB/A")).

10.3 Consulting Agreement between us and John Matheu, dated August 1, 2004
(incorporated herein by reference to Exhibit 10.3 to our Registration
Statement).

10.4 Consulting Agreement between us and Robert Alfano, dated April 21 1992,
(incorporated herein by reference to Exhibit 10.2 to our Annual Report on Form
10-K for the year ended February 28, 1993).

10.5 Employment Agreement between us and Peter Katevatis, dated March 5, 1992
(incorporated herein by reference to Exhibit 10.5 to our Registration
Statement).

10.6 Amended and Restated Employment Agreement between us and Michael Engelhart,
dated December 9, 2004 (incorporated herein by reference to Exhibit 99.1 to our
Current Report on Form 8-K, dated December 10, 2004 ("December 2004 Form 8-K")).

10.7 Nonqualified Stock Option Agreement, dated as of April 23, 2003, between us
and Michael Engelhart (incorporated herein by referred to Exhibit 99.1 to our
December 2004 Form 8-K).

10.8 Incentive Stock Option Agreement, dated December 9, 2004, between us and
Michael Engelhart (incorporated herein by reference to Exhibit 99.1 to our
December 2004 Form 8-K).

10.9 Anti-Dilution Agreement between us and Peter Katevatis, dated July 19, 2004
(incorporated herein by reference to Exhibit 10.1 to our Form 10-QSB/A).

10.10 Anti-Dilution Agreement between us and Robert Alfano, dated July 19, 2004
(incorporated herein by reference to Exhibit 10.2 to our Form10-QSB/A).

10.11 Agreement between us and Peter Katevatis, dated October 1, 2004
(incorporated herein by reference to Exhibit 10.2 to our Quarterly Report for
the quarter ended August 31, 2004 on Form 10-QSB ("Form 10-QSB")).

10.12 Agreement between us and Robert Alfano, dated October 1, 2004
(incorporated herein by reference to Exhibit 10.1 to our Form 10-QSB).

10.13 Lease Agreement between us and Peter Katevatis, dated July 25, 2002 10.14
1999 Incentive Stock Option Plan (incorporated herein by reference to Appendix
B-1 to our Definitive Proxy Statement on Schedule 14C as filed on January 23,
2004 ("Schedule 14C")).

10.15 2003 Consultants Stock Option, Stock Warrant and Stock Award Plan
(incorporated herein by reference to Appendix B-1 to the our Schedule 14C).

10.16 Collaborative Research and Development Agreement, dated November 11, 2004,
by and between Infotonics Technology Center Inc., Medi-Photonics and us
(incorporated herein by reference to Exhibit 99.1 to our Current Report on Form
8-K, dated November 12, 2004).

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

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

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

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

(b) Reports on Form 8-K

Form 8-K filed February 2, 2005 relating to a material agreement between us and
Dr. Julian Kim.

Form 8-K filed March 2, 2005 relating to a change in our certifying accountant.

Form 8-K filed March 16, 2005 relating to a change in our certifying accountant.

                                    Page 49
<PAGE>


Form 8-K filed March 16, 2005 relating to a material agreement between us and
the Research Foundation--City University of New York.

Form 8-K filed April 1, 2005 relating to a material agreement between us and
Investor Relations Group.


ITEM 15 SUBSEQUENT EVENTS

Frank Benick, CPA, 110 Main Street, Flemington NJ, has been retained as our
Chief Financial Officer effective July 10, 2005 on terms favorable to Registrant
to be EDGAR filed in a 8-K on or about July 10, 2005.

On January 18, 2005, we began a Regulation D private placement to a limited
number of accredited investors of our units, which private placement was
initially scheduled to expire on May 15, 2005, and which we extended to expire
on August 15, 2005. Each unit is comprised of 50,000 shares of our common stock
and 50,000 or our warrants expiring on August 1, 2007, each warrant entitling
the holder to purchase one share of common stock at an exercise price of $1.00
per share.

                        POWER OF ATTORNEY AND SIGNATURES

We, the undersigned officers and directors of Mediscience Technology Corp.
hereby severally constitute and appoint Peter Katevatis Esq., our true and
lawful attorney, with full power to sign for us and in our names in the
capacities indicated below, any amendments to this report on Form 10-KSB, and
generally to do all things in our names and on our behalf in such capacities to
enable Mediscience Technology Corp. to comply with the provisions of the
Securities Exchange Act of 1934, as amended, and all the requirements of the
Securities and Exchange Commission.

Pursuant to the requirements of section 13 or 15(d) of the Securities and
Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the date indicated.

<TABLE>
<CAPTION>

         Name                                             Title                                   Date
         ----                                             -----                                   ----
<S>                                  <C>                                                    <C>
ss/ Peter Katevatis                  Director, Board Chairman/Chief Executive Officer        June 13, 2005
-------------------
    Peter Katevatis, Esq.

ss/ William Armstrong                Director                                                June 13, 2005
---------------------
    William Armstrong

ss/ John Kennedy                     Director, Chief Financial Officer                       June 13, 2005
----------------
    John Kennedy

ss/ Michael N. Kouvatas              Director                                                June 13, 2005
-----------------------
    Michael N. Kouvatas, Esq.

ss/John Matheu                       Director                                                June 13, 2005
--------------
   John Matheu

ss/ Michael Engelhart                Director, President/Chief Operating Officer             June 13, 2005
---------------------
    Michael Engelhart
</TABLE>


                                    Page 50