It is believed that approximately 15 million people in the United States suffer from AMD. According to a ten-year study published in Ophthalmology in October 2002, the prevalence of AMD increases sharply with age, from 18% among people 65 to 74 years of age to 47% among people 85 years and older. A study by Duke University published in 2003 reported that the prevalence of AMD among a selected sample of U.S. residents aged 65 and older was 27% in 1999. According to the U.S. Census Bureau, the number of people in the United States aged 50 or older is approximately 80 million and is expected to increase by approximately 40% over the next two decades. It is expected that this increase in the number of elderly people will result in a significant increase in the number of cases of AMD in the United States.

Dry AMD is the most common form of the disease. It is believed that Dry AMD affects approximately 13.0 to 13.5 million people in the United States, or approximately 85% to 90% of all AMD cases. Dry AMD is characterized by a gradual decrease of visual acuity, by pigment abnormalities on the macula and by the build-up of protein and lipid deposits, called drusen. This build-up of macromolecules affects the microcirculation in the eye. Research suggests that the retinal cells, overwhelmed by the lack of oxygen and nutrients and the build-up of debris, enter into a dysfunctional state of dormancy. Without treatment, the retinal cells ultimately die and do not regenerate, leading to irreversible vision loss either through the progression of Dry AMD or conversion to Wet AMD. Patients with Dry AMD are classified at the time of diagnosis into four categories of worsening severity. The higher the category, the greater the risk of progression, or conversion, to Wet AMD within five years.

The OctoNova pump is a microprocessor controlled device used to circulate blood and plasma from the patient through the filters, and back to the patient. The OctoNova pump is complemented by single-use sterilized tubing which creates a closed-loop system. Blood is pumped through the tubing with small gear-like sprockets that create a peristaltic action in the tube similar to that which occurs in the Company’s intestines. The smooth-edged teeth of the sprockets press against the outside surface of the tube pushing the blood along the length of the tube as the wheels turn all at the same rate and direction. No blood ever leaves the closed-loop system. The OctoNova pump was developed in the 1990s by Diamed and licensed to the Company in 2002. The Company is seeking FDA approval of the OctoNova pump as part of the Company’s System PMA.

Cost of sales decreased by 61% to $84,030 for the three months ended March 31, 2004 from $217,905 for the three months ended March 31, 2003, as a result of the decrease in sales from the prior period.

General and administrative expenses increased by 663% to $1,804,687 for the three months ended March 31, 2004 from $236,392 for the three months ended March 31, 2003.

Clinical and regulatory expenses increased by 116% to $455,369 for the three months ended March 31, 2004 from $211,168 for the three months ended March 31, 2003, as a result of increased activities associated with MIRA-1.