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FORWARD-LOOKING STATEMENTS

     The report contains forward-looking statements within the meaning of the “safe harbor” provisions of The Private Securities Litigation Reform Act of 1995 that address, among other things, the anticipated per unit cost of certain of our products and the sufficiency of available resources to fund operations. We generally identify forward looking statements in this report using words like “believe,” “anticipate,” “will,” “expect,” “may,” “could,” “intend” or similar statements. There are important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including lack of demand or low demand for our products or for safety products generally; a determination of our licensees to focus their marketing efforts on products other than those licensed from us; delays in introduction of products licensed by us due to manufacturing difficulties or other factors; our inability to license or enter into joint venture or similar arrangements regarding our other products and other factors discussed in this report generally and in our Annual Report on Form 10-K for the year ended December 31, 2003. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date of this report. We undertake no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date of this report.

Overview

     Reference is made to the “Overview” section in our Annual Report on Form 10-K for the year ended December 31, 2003. The following discussion supplements the discussion in the Form 10-K “Overview” under the caption “Revenue Growth.”

     Revenues from the sale of the 1Shot Safety Dental Syringe has been very limited to date. We understand that Sultan Chemists, which is marketing the 1Shot Safety Dental Syringe, has only sold a limited quantity of syringes to customers who are evaluating the product. We are hopeful that, following an evaluation period, customers will purchase larger quantities of the syringes, but no such larger quantity orders have been received to date.

     We anticipate that revenues will be enhanced by sales of the Low Profile Safety Huber Needle, which we acquired in April 2004 from Luther Needlesafe Products, as described under “Recent Developments.” The product is subject to manufacturing and distribution arrangements that were assigned to us in connection with the acquisition. Revenues from this product will be reflected in results for the second quarter of 2004.

     Royalties revenues from our licensed products increased during the quarter but are still below our expectations. We are optimistic that sales of these licensed products will increase, generating higher revenues.

Results of Operations

Results of Operations for the Three-Month Periods Ended March 31, 2004 and 2003

     Revenue for the three months ended March 31, 2004 was $89,511, an increase of $50,420 as compared to revenue of $39,091 for the corresponding period in 2003. The majority of the revenue for the three months ended March 31, 2004 and 2003 reflected royalty payments from our licensing agreements with BD and Medamicus. Royalties increased due to increased sales volume. Sales of the 1Shot Safety Dental Syringe for the quarter ended March 31, 2004 were approximately $3,000.

     Product costs, which consist of direct and indirect costs related to the sale of the 1Shot Safety Dental Syringe were $2,729 for the three months ended March 31, 2004. Product costs for the current quarter reflect low volume production and were substantially higher on a per unit basis than we anticipate will be the case when the product is in full automated production. There were no costs related to product sales for the corresponding period in 2003.

     General and administrative expenses for the three months ended March 31, 2004 were $1,351,502, a decrease of $182,855 as compared to general and administrative expenses of $1,534,357 for the corresponding period in 2003. The decrease in general and administrative expenses was primarily due a reduction in expenditures for employee compensation of approximately $50,000 resulting from a reduction in staff and a reduction in stock based compensation expense of approximately $200,000, related to equity arrangements with the officers of the Company, offset by increases in legal fees resulting from the negotiation of the Safety Huber Needle asset acquisition described below under “Recent Developments.”

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