Millstream 10QSB/A

We are filing this Amendment No. 1 on Form 10-QSB/A to Millstream II Acquisition Corp.’s Quarterly Report on Form 10-QSB for the quarterly period ended September 30, 2006, which was originally filed with the Securities and Exchange Commission on November 14, 2006 (the “Original Form 10-QSB”), to amend footnote 7. Merger, for an amendment to the definitive merger agreement which was signed on November 15, 2006 (subsequent to the Original Form 10-QSB filing date). In addition, certain disclosures in the Plan of Operations were amended to conform to the language in Amendment No. 2 to the Preliminary Proxy Statement on Schedule 14A as filed with the Securities and Exchange Commission on November 17, 2006. Lastly, we are include two new exhibits that should have been filed with the Original Form 10-QSB.

	(Unaudited) September 30, 2006		December 31, 2005

ASSETS
Current assets:
Cash and cash equivalents	$	153,573	$	533,658
Investments held in trust		25,282,491		24,443,182
Prepaid expenses and other current assets		92,595		26,125
Deferred income taxes		254,300		141,000
Total current assets		25,782,959		25,143,965

Deferred acquisition costs		310,515		-
Total assets	$	26,093,474	$	25,143,965

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	361,398	$	121,388
Income taxes payable		310,443		106,800
Deferred interest		309,243		141,416
Total liabilities		981,084		369,604

Commitment

Common stock, subject to possible conversion, 919,540 shares at conversion value		4,744,826		4,744,826

Stockholders’ Equity:
Preferred stock, $.0001 par value, authorized 1,000,000 shares; none issued		-		-
Common stock, $.0001 par value, authorized 15,000,000 shares; issued and outstanding 5,600,000 shares (which includes 919,540 shares subject to possible conversion)		560		560
Additional paid-in capital		19,970,368		19,970,368
Retained earnings accumulated during development stage		396,636		58,607
Total stockholders’ equity		20,367,564		20,029,535

Total liabilities and stockholders’ equity	$	26,093,474	$	25,143,965

	Quarter Ended September 30, 2006			Quarter Ended September 30, 2005			Nine Months Ended September 30, 2006			Nine Months Ended September 30, 2005			September 24, 2004 (Inception) to September 30, 2006

General and administrative expenses	$	(34,621	)	$	140,323		$	165,476		$	292,620		$	656,469

Operating income (loss)		34,621			(140,323	)		(165,476	)		(292,620	)		(656,469	)

Other income:
Interest income		1,443			2,500			6,374			10,365			19,508
Interest on trust fund investment		243,596			155,699			671,731			390,412			1,237,747
Total other income		245,039			158,199			678,105			400,777			1,257,255

Income before income taxes		279,660			17,876			512,629			108,157			600,786

Income tax provision		(95,100	)		(7,950	)		(174,600	)		(42,950	)		(204,150	)

Net income	$	184,560		$	9,926		$	338,029		$	65,207		$	396,636


Weighted average shares of common
stock outstanding

Basic and diluted		5,600,000		5,600,000		5,600,000		5,600,000		5,079,918

Earnings per common share

Basic and diluted	$	.03	$	.00	$	.06	$	.01	$	.08

		Nine Months Ended September 30, 2006			Nine Months Ended September 30, 2005			September 24, 2004 (Inception) to September 30, 2006
Cash flows from operating activities:
Net income	$	338,029		$	65,207		$	396,636
Adjustments to reconcile net income to net cash used in operating activities:
Interest income on investments held in trust		(839,559	)		(487,954	)		(1,546,991	))
(Increase) decrease in prepaid expenses and other current assets		(66,470	)		8,950			(92,595	)
Increase in deferred income taxes		(113,300	)		-			(254,300	)
Increase in accounts payable and accrued expenses		22,520			35,832			143,908
Increase in income taxes payable		203,643			-			310,443
Increase in deferred interest		167,827			97,542			309,243
Net cash used in operating activities		(287,310	)		(280,423	)		(733,656	)

Cash flows from investing activities:
Payments of acquisition costs		(93,025	)		-			(93,025	)
Purchase of treasury bills held in trust		(99,746,599	)		(48,233,485	)		(196,130,666	)
Maturity of treasury bills held in trust		99,747,000			48,233,000			172,396,000
(Increase) decrease in cash held in trust		(151	)		735			(834	)
Net cash (used in) provided by investing activities		(92,775	)		250			(23,828,525	)

Cash flows from financing activities:
Proceeds from sale of shares of common stock to initial stockholders		-			-			25,000
Proceeds from note payable, stockholder		-			-			35,000
Repayment of note payable, stockholder		-			-			(35,000	)
Proceeds from public issuance of 4,600,000 units		-			-			27,600,000
Proceeds from issuance of option		-			-			100
Payment of costs of public offering		-			(32,401	)		(2,909,346	)
Net cash (used in) provided by financing activities		-			(32,401	)		24,715,754

Net (decrease) increase in cash and cash equivalents		(380,085	)		(312,574	)		153,573
Cash and cash equivalents at beginning of period		533,658			941,943			-
Cash and cash equivalents at end of period	$	153,573		$	629,369		$	153,573

The condensed financial statements at September 30, 2006 and for the three and nine months ended September 30, 2006 and 2005, and for the period from September 24, 2004 (inception) to September 30, 2006 are unaudited and include the accounts of Millstream II Acquisition Corporation (a corporation in the development stage) (the “Company”). The condensed balance sheet at December 31, 2005 has been derived from the audited financial statements.

In the opinion of management, all adjustments (consisting of normal accruals) have been made that are necessary to present fairly the financial position of the Company as of September 30, 2006 and 2005 and the results of its operations and its cash flows for the three and nine months ended September 30, 2006 and 2005. The Company commenced operations effective September 24, 2004. Operating results for the interim period presented are not necessarily indicative of the results to be expected for a full year.

The registration statement for the Company’s initial public offering (the “Offering") was declared effective on December 17, 2004. The Company consummated the Offering, including the over-allotment option, on December 23, 2004 and December 30, 2004, respectively, and raised total net proceeds of approximately $24,691,000. The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Offering, although substantially all of the net proceeds of the Offering are intended to be generally applied toward consummating a business combination with an operating business ("Business Combination"). There is no assurance that the Company will be able to successfully effect a Business Combination. An amount of $23,736,000 of the net proceeds was placed in an interest-bearing trust account ("Trust Account") until the earlier of (i) the consummation of a Business Combination or (ii) liquidation of the Company. Under the agreement governing the Trust Account, funds will be invested only in United States government securities (Treasury Bills) with a maturity of 180 days or less. This amount has been invested in United States Treasury Bills, which have been accounted for as trading securities (see Note 4). The remaining net proceeds (not held in the Trust Account) may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses.

The Company, after signing a definitive agreement for the acquisition of a target business, will submit such transaction for stockholder approval. In the event that stockholders owning 20% or more of the shares sold in the Offering vote against the Business Combination and exercise their conversion rights described below, the Business Combination will not be consummated. All of the Company’s stockholders prior to the Offering, including all of the officers and directors of the Company ("Initial Stockholders"), have agreed to vote their 1,000,000 founding shares of common stock in accordance with the vote of the majority of all other stockholders of the Company ("Public Stockholders") with respect to any Business Combination. After consummation of a Business Combination, these voting safeguards will no longer be applicable.

With respect to a Business Combination that is approved and consummated, any Public Stockholder who voted against the Business Combination may demand that the Company convert his or her shares to cash. The per share conversion price will equal the amount in the Trust Account, calculated as of two business days prior to the consummation of the Business Combination, divided by the number of shares of common stock held by Public Stockholders at the consummation of the Offering. Accordingly, Public Stockholders holding 19.99% of the aggregate number of shares owned by all Public Stockholders may seek conversion of their shares in the event of a Business Combination. Such Public Stockholders are entitled to receive their per share interest in the Trust Account computed without regard to the shares held by Initial Stockholders. Accordingly, a portion of the net proceeds from the Offering (19.99% of the amount held in the Trust Account) has been classified as common stock subject to possible conversion in the accompanying balance sheets and 19.99% of the related interest earned has been recorded as deferred interest.

The Company’s Certificate of Incorporation, as amended, provides for mandatory liquidation of the Company in the event that the Company does not consummate a Business Combination within 18 months from the date of the consummation of the Offering (June 23, 2006), or 24 months from the consummation of the Offering (December 23, 2006) if certain extension criteria have been satisfied. There is no assurance that the Company will be able to successfully effect a Business Combination during this period. This factor raises substantial doubt about the Company's ability to continue as a going concern. The accompanying financial statements are prepared assuming the Company will continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. In the event of liquidation, it is likely that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the initial public offering price per share in the Offering due to costs related to the Offering, general and administrative expenses incurred prior to the liquidation event and since no value would be attributed to the Warrants contained in the Units sold (see Note 6).

In June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes,” an interpretation of FASB Statement No. 109 (“FIN 48”), which provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax positions. A tax benefit from an uncertain position may be recognized only if it is “more likely than not” that the position is sustainable based on its technical merits. The provisions of FIN 48 are effective for fiscal years beginning after December 15, 2006. The Company does not expect FIN 48 will have a material effect on its consolidated financial condition or results of operations.

	Quarter Ended September 30, 2006		Quarter Ended September 30, 2005		Nine Months Ended September 30, 2006		Nine Months Ended September 30, 2005		September 24, 2004 (Inception) to September 30, 2006

Numerator: Net income	$	184,560	$	9,926	$	338,029	$	65,207	$	396,636

Denominator: Average common Shares outstanding		5,600,000		5,600,000		5,600,000		5,600,000		5,079,918

Basic and diluted earnings per share	$	.03	$	.00	$	.06	$	.01	$	.08

No computation for diluted earnings per share was prepared for the Redeemable Common Stock Purchase Warrants (see Note 6) to purchase an aggregate of 9,200,000 shares of common stock at $5.00 per share and the underwriters’ option (see Note 6) to purchase 300,000 Units at an exercise price of $9.90 per Unit (with underlying warrants at $6.25 per share), respectively, that were outstanding at September 30, 2006 and 2005 because the shares underlying the conversion of the warrants are contingently issuable and the exercise price of the underwriters’ option is in excess of the related market value of the Units.

The Company sold 4,600,000 units ("Units") in the Offering, which included all of the 600,000 Units subject to the underwriters’ over-allotment option. Each Unit consists of one share of the Company’s common stock, $.0001 par value, and two Redeemable Common Stock Purchase Warrants ("Warrants"). Each Warrant entitles the holder to purchase from the Company one share of common stock at an exercise price of $5.00 commencing the later of the completion of a Business Combination with a target business or December 17, 2005 and expiring December 16, 2008. The Warrants will be redeemable at a price of $.01 per Warrant upon 30 days notice after the Warrants become exercisable, only in the event that the last sale price of the common stock is at least $8.50 per share for any 20 trading days within a 30 trading day period ending on the third day prior to the date on which notice of redemption is given. In connection with this Offering, the Company issued an option, for $100, to the representative of the underwriters of its IPO to purchase 300,000 Units at an exercise price of $9.90 per Unit (see Common Stock Commitments below). The Company may be unable to deliver any securities upon exercise of the Warrants, including Warrants underlying the underwriter’s option, if a registration statement is not effective with respect to the common stock underlying such warrants at the time of the exercise. If the Company is unable to deliver any securities pursuant to the exercise of the warrants, including the warrants underlying the underwriter’s option, the Company will have no obligation to pay registered warrant holders any cash or otherwise “net cash settle” the warrants. As a result, the warrants may expire worthless.

The Company accounted for the fair value of the option, inclusive of the receipt of the $100 cash payment, as an expense of the Offering resulting in a charge directly to stockholders’ equity. The Company estimated that the fair value of this option was approximately $621,000 ($2.07 per Unit) using a Black-Scholes option-pricing model. The fair value of the option granted to the underwriter was estimated as of the date of grant using the following assumptions: (1) expected volatility of 51.45%, (2) risk-free interest rate of 3.59% and (3) expected life of five years. The option may be exercised for cash or on a ‘‘cashless’’ basis, at the holder’s option, such that the holder may use the appreciated value of the option (the difference between the exercise prices of the option and the underlying Warrants and the market price of the Units and underlying securities) to exercise the option without the payment of any cash. The warrants underlying such Units are exercisable at $6.25 per share, but otherwise have the same terms and conditions as the Warrants. Separate trading of the Common Stock and Warrants underlying the Company’s Units commenced in January 2005.

The Company’s Initial Stockholders purchased 347,500 common shares for $24,947 and 527,500 common shares for $53 on September 29, 2004. On December 7, 2004, the Board of Directors authorized a stock dividend of 0.1428571 shares of common stock for each share of common stock outstanding, bringing the initial outstanding shares to 1,000,000. All references in the accompanying financial statements to the number of shares of common stock outstanding for the Initial Stockholders have been retroactively restated to reflect this transaction.

The Company has 10,100,000 shares of common stock commitments in the form of Warrants and the underwriters’ option, which are currently not exercisable. Only 9,400,000 common shares are available for issuance under the current amount of authorized shares. The Company intends to increase its number of authorized shares in connection with a business combination and prior to the date in which the Warrants and the underwriters’ option become exercisable. The Company’s underwriters have committed that the Company will not be obligated to issue 240,000 of the Units described in The Offering above if the Company is unable to increase its number of authorized shares. These 240,000 Units represent 720,000 shares of common stock commitments.

On August 11, 2006, the Company entered into a definitive merger agreement with Specialty Surfaces International, Inc. t/a Sprinturf (“Sprinturf”), a privately held company based in Wayne, Pennsylvania that is a leading developer, marketer and installer of synthetic turf systems for athletic fields and other related products for residential and commercial landscaping applications. Upon consummation of the merger, the Company will change its name to Sprinturf Corporation. On November 15, 2006, certain terms of the definitive merger

agreement were amended. As a result of the merger, the shareholder of Sprinturf will receive (i) $8,000,000 in cash, (ii) 1,500,000 shares of the common stock of the Company, representing 21.1% of the common shares of the combined entity, (iii) an amount of delayed consideration not to exceed $2,000,000 and 2,000,000 common shares if certain financial targets are met in 2007 and 2008 as defined in the merger agreement, (iv) an amount of delayed consideration to be paid in cash equal to 2% of the increase in Sprinturf’s annual net sales for the fiscal years ended December 31, 2007, 2008 and 2009 over Sprinturf’s net sales for the immediately preceding fiscal year not to exceed $600,000 per annum, and (v) an amount of delayed consideration of cash equal to $0.50 for each $1.00 collected with respect to certain accounts receivable at any time prior to the two year anniversary of the closing date. The consummation of the merger is subject to customary closing conditions, including the approval of the merger agreement by the Company’s stockholders. In addition, as the merger will constitute a Business Combination, in order for the Company to consummate the merger, holders of less than 20% of the shares of the Company’s common stock may vote against the merger and elect to convert their shares of common stock into a pro rata share of the Trust Account.

On August 23, 2006, the Company filed a Preliminary Proxy Statement on Schedule 14A with the Securities and Exchange Commission. The Proxy Statement is for a special meeting of the Company’s stockholders at which the stockholders will vote on the merger, the amendment and restatement of the Company’s certificate of incorporation and the adoption of a stock incentive plan. Assuming that the Company receives the requisite vote of its stockholders, the Company anticipates consummating the merger promptly after the date of this special meeting of stockholders. Amendments to the Preliminary Proxy Statement on Schedule 14A were filed on October 10, 2006, November 17, 2006 and November 29, 2006.

Should the Company be unable to effect the merger within the appropriate timetable and the Company liquidates, cash on the balance sheet would first be used to liquidate any outstanding payable amounts. If such funds are insufficient, the Company anticipates that assets held in the Trust Account will be used to pay for the expenses of the dissolution and liquidation. An officer and initial stockholder has agreed to indemnify the Company for losses it may suffer to the extent that the proceeds from the Trust Account are reduced by the claims of various vendors that are owed money by the Company for services rendered or products sold to it, however, should the individual be unable to satisfy those obligations, the Trust Account would be further reduced.

The Company presently occupies office space provided by an affiliate of an Initial Stockholder, who is also an officer. Such affiliate has agreed that, until the acquisition of a target business by the Company, it will make such office space, as well as certain office and secretarial services, available to the Company, as may be required by the Company from time to time. The Company has agreed to pay the affiliate $7,500 per month for such services commencing December 17, 2004. Effective October 1, 2006, payment for these services has ceased but will continue to accrue. Payment will not be made until the merger is successfully consummated.

This Quarterly Report on Form 10-QSB includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other Securities and Exchange Commission filings, including our report on Form 10-KSB as filed on March 30, 2006. The following discussion should be read in conjunction with our Financial Statements and related Notes thereto included elsewhere in this report.

We were formed on September 24, 2004 to serve as a vehicle to effect a merger, capital stock exchange, asset acquisition or other similar business combination with a currently unidentified operating business that we believe has growth potential. We intend to utilize the proceeds of our initial public offering (“IPO”), our capital stock, debt or a combination of cash, capital stock and debt, in effecting a business combination.

Net income of $184,560 reported for the quarter ended September 30, 2006 consists primarily of $14,763 for director and officer liability insurance, $22,500 for a monthly administrative services agreement, $5,000 for franchise and state capital stock taxes, $7,200 for legal and accounting fees, $95,100 for federal income taxes and $5,459 for other expenses. A franchise tax refund of $61,543 was recorded as a credit in expense following completion of the tax returns and the determination that too much was paid in prior years, and $18,000 of 2006 overpayments and $10,000 of accruals expensed in prior quarters were reversed in the current quarter. Interest on the trust fund investment was $243,596, excluding $60,861 of deferred interest, and interest earned on the money market account was $1,443.

Net income of $9,926 reported for the quarter ended September 30, 2005 consists primarily of $14,250 for director and officer liability insurance, $22,500 for a monthly administrative services agreement, $10,500 for franchise and state capital stock taxes, $5,096 for legal and accounting fees, $7,950 for federal and state income taxes, $64,082 for failed acquisition costs and $23,895 for other expenses. Interest on the trust fund investment was $155,699, excluding $38,801 of deferred interest, and interest earned on the money market account was $2,500.

Net income of $338,029 reported for the nine months ended September 30, 2006 consists primarily of $43,349 for director and officer liability insurance, $67,500 for a monthly administrative services agreement, $17,000 for franchise and state capital stock taxes, $75,441 for legal and accounting fees, $174,600 for federal income taxes, and $23,729 for other expenses. In addition, a credit of $61,543 was recorded for refunds of state franchise tax for amounts paid in prior years in excess of amounts due on completed returns. Interest on the trust fund investment was $671,731, excluding $167,828 of deferred interest, and interest earned on the money market account was $6,374.

Net income of $65,207 reported for the nine months ended September 30, 2005 consists primarily of $42,750 for director and officer liability insurance, $67,500 for a monthly administrative services agreement, $44,928 for franchise and state capital stock taxes, $24,147 for legal and accounting fees, $42,950 for federal and state income taxes, $64,082 for failed acquisition costs and $49,213 for other expenses. Interest on the trust fund investment was $390,412, excluding $97,542 of deferred interest, and interest earned on the money market account was $10,365.

Net income of $396,636 reported for the period from September 24, 2004 (inception) to September 30, 2006 consists primarily of $102,724 for director and officer liability insurance, $161,250 for a monthly administrative services agreement, $41,596 for franchise and state capital stock taxes, $159,886 for legal and accounting fees, $204,150 for federal income taxes, $114,220 for failed acquisition costs and $76,793 for other expenses. Interest on the trust fund investment was $1,237,747, excluding $309,243 of deferred interest, and interest earned on the money market account was $19,508.

Through November 14, 2006, we paid $107,900 of costs relating to the merger. As of November 14, 2006, we have $107,172 in cash and cash equivalents, excluding the trust fund. As of November 14, 2006, we had accounts payable and accrued expenses of approximately $516,000, including legal fees payable to Broad and Cassel, accounting fees due to Goldstein Golub Kessler LLP, trustee fees due to Continental Stock Transfer and Trust Company, printing and edgarizing fees related to the proxy statement and other quarterly and current reports payable to St. Ives Financial Printers and The Scullin Group, Inc., our consultants’ fees payable to Renthon LLC and Delaware franchise tax and Federal income tax. The funds outside the trust are insufficient to cover our current accounts payable and accrued expenses. Except for accrued liabilities for Delaware franchise tax and Federal income tax of approximately $64,000, we currently believe all the accounts payable and accrued expenses reflected on our balance sheet would be considered vendor claims for the purpose of the indemnification provided by Mr. Arthur Spector. The trust assets will be reduced to the extent of the Delaware franchise tax and the Federal income tax amounts due. There can be no assurances that Mr. Spector will be able to satisfy his indemnification obligations. If Mr. Spector is unable to satisfy his obligations under the indemnification agreement, the trust fund will be reduced by the amount of these accounts payable and accrued expenses and stockholders will receive less in the liquidation of the Company.

Estimated proceeds not held in trust on the registration statement were $853,000. Actual net proceeds not held in trust were $954,054. The difference related primarily to legal fees being less than estimated by approximately $95,000 and actual other expenses approximately $6,000 less than estimated. The use of proceeds as estimated in the registration statement is fairly accurate except legal and accounting fees related to SEC reporting obligations are expected to total approximately $60,000, or $20,000 higher than originally expected. We also expect working capital needs to be approximately $20,000 higher than expected, primarily due to higher federal taxes as a result of higher interest earnings on the trust fund assets than expected. In addition, professional fees in the table above include $62,763 of legal and accounting fees and $50,000 of consulting fees relating to failed acquisitions.

We are obligated, commencing December 17, 2004, to pay to 400 Building LLC, an affiliate of Arthur Spector, our chairman of the board, chief executive officer and president, a monthly fee of $7,500 for general and administrative services. In addition, on September 29, 2004, Mr. Spector advanced $35,000 to us, on a non-interest bearing basis, for payment on our behalf of offering expenses. This loan was repaid in December 2004 out of proceeds of the Offering.

In connection with the Offering, we issued to the underwriters, for $100, an option to purchase up to a total of 300,000 units exercisable at $9.90 per unit. The units issuable upon exercise of this purchase option are identical to the units we sold in the Offering except that the warrants included in the option have an exercise price of $6.25. We estimated that the fair value of this option was approximately $621,000 ($2.07 per unit underlying such option) using a Black-Scholes option-pricing model. The fair value of the option granted to the underwriter was estimated as of the date of grant using the following assumptions: (1) expected volatility of 51.45%, (2) risk-free interest rate of 3.59% and (3) expected life of five years.

Options and warrants issued in conjunction with our initial public offering are equity-linked derivatives and, accordingly, represent off-balance sheet arrangements. The options and warrants meet the scope exception in paragraph 11(a) of FAS 133 and are accordingly not accounted for as derivatives for purposes of FAS 133, but instead are accounted for as equity. See Note 6 to the financial statements for more information.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in company reports filed or submitted under the Securities Exchange Act of 1934 (the “Exchange Act”) is 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 limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our chief executive officer, as appropriate to allow timely decisions regarding required disclosure.

Our internal control over financial reporting is a process designed by, or under the supervision of, our chief executive officer and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles (United States). Internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of our financial statements in accordance with generally accepted accounting principles (United States), and that our receipts and expenditures are being made only in accordance with the authorization of our board of directors and management; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

On December 23, 2004, we consummated the Offering of 4,000,000 Units, with each Unit consisting of one share of our common stock and two warrants, each to purchase one share of our common stock at an exercise price of $5.00 per share. On December 30, 2004, we closed on an additional 600,000 Units that were subject to the underwriters’ over-allotment option. The Units were sold at an offering price of $6.00 per unit, generating total gross proceeds of $27,600,000. EarlyBirdCapital, Inc. acted as lead underwriter. The securities sold in the Offering were registered under the Securities Act of 1933 on a registration statement on Form S-1 (No. 333-119937). The Securities and Exchange Commission declared the registration statement effective on December 17, 2004.

We paid a total of $2,909,000 in underwriting discounts and commissions and offering expenses. After deducting the underwriting discounts and commissions and the offering expenses, the total net proceeds to us from the Offering were approximately $24,691,000, of which $23,736,000 was deposited into the trust account (or $5.16 per share sold in the Offering) and the remaining proceeds are available to be used to provide for business, legal and accounting due diligence on prospective business combinations and continuing general and administrative expenses.

Exhibit No.	Description

4.1	Warrant Clarification Agreement dated October 2, 2006 between Millstream II Acquisition Corporation and Continental Stock Transfer & Trust Company

4.2	Amendment to Unit Purchase Option dated October 4, 2006 between Millstream II Acquisition Corporation and the holders designated on the signature page of the agreement.

31	Certification of Chairman, Chief Executive Officer and President pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32	Certification of Chairman, Chief Executive Officer and President pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

MILLSTREAM II ACQUISITION CORPORATION
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware	20-1665695
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Merger-related costs	$	107,900
Directors and officers insurance policy for two years		115,026
Professional fees (attorneys, accountants, consultants)		219,650
Federal and state taxes, including franchise/capital stock taxes		209,983
Administrative services fee		161,250
Other operational costs, net of interest income earned on cash balance		33,073
Remaining cash at November 14, 2006		107,172


	MILLSTREAM II ACQUISITION CORPORATION
	By: /s/ Arthur Spector
	Arthur Spector
	Chairman of the Board, President and Chief Executive Officer
	(Principal executive, financial and accounting officer)