Edgar Filing: BIOPHAN TECHNOLOGIES INC

As filed with the Securities and Exchange
Commission on November 7, 2003.
Registration No. 333-109592

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

PRE-EFFECTIVE AMENDMENT NO. 1
TO

FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

BIOPHAN TECHNOLOGIES, INC.
(Name of small business issuer in its charter)

Nevada 8700 82-0507874
(State or other jurisdiction of (Primary Standard Industrial (IRS Employer
corporation or organization) Classification Code Number) Identification
Number)

150 Lucius Gordon Drive, Suite 215
West Henrietta, New York 14586
(585) 214-2441
(Address and telephone number of registrant's principal executive offices)

Michael L. Weiner
Chief Executive Officer
150 Lucius Gordon Drive, Suite 215
West Henrietta, New York 14586
Ph. (585) 214-2441
Fax:(585) 427-2433
(Name, address and telephone number of agent for service)

Copy of all communications to:

Melissa A. Mahler, Esq.
Nixon Peabody LLP
Clinton Square
P.O. Box 31051
Rochester, New York 14603-1051
Ph. (585) 263-1000
Fax: (585) 263-1600

Approximate date of commencement of proposed sale to the public: as soon as
practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act,
check the following box: [X]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462 (b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box: [ ]

The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.

Page i

Subject to completion, dated November 7, 2003

PROSPECTUS

11,000,000 SHARES

BIOPHAN TECHNOLOGIES, INC.

COMMON STOCK

_________________

This prospectus relates to the offer of up to 11,000,000 shares of the
common stock of Biophan Technologies, Inc. by a selling shareholder, SBI
Brightline Consulting, LLC.

SBI may sell the shares at fixed prices, prevailing market prices at the
time of sale, varying prices determined at the time of sale or at negotiated
prices. The shares of our common stock covered by this prospectus may be
issued from time to time pursuant to a common stock purchase agreement
between us and SBI, as further described in this prospectus. We will receive
consideration from SBI in connection with our sale of shares to SBI as
contemplated by the stock purchase agreement, but we will not receive any of
the proceeds from the resale of shares by SBI.

SBI is an "underwriter" within the meaning of the Securities Act of 1933
in connection with its sales of our common stock.

_________________

Our common stock trades on the over-the-counter market under the symbol
"BIPH." The last reported sales price for our common stock on November 5,
2003 was $.43 per share.

_________________

Investment in the common stock offered by this prospectus involves a high
degree of risk. You may lose your entire investment. Consider carefully the
"risk factors" beginning on page 7 of this prospectus before investing.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is accurate or complete. It is illegal for anyone to tell you
otherwise.

The date of this prospectus is ___________ 2003.

The information in this prospectus is not complete and may be changed
without notice. We and the selling stockholder may not sell these securities
until the registration statement filed with the Securities and Exchange
Commission is effective. This prospectus is not an offer to sell these
securities, and we and the selling stockholder are not soliciting offers to
buy these securities, in any state where the offer or sale of these securities
is not permitted.

You should rely only on the information contained in this prospectus. We
have not, and the selling stockholder has not, authorized anyone to provide
you with different information. If anyone provides you with different
information, you should not rely on it. We are not, and the selling
stockholder is not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information contained in this prospectus is accurate only as of the date
on the front cover of this prospectus. Our business, financial condition,
results of operations and prospects may have changed since that date.

Page 1

TABLE OF CONTENTS

Page

Prospectus Summary 3
Summary Historical Financial Information 6
Risk Factors 7
Use of Proceeds 16
Nature of Trading Market 16
Dividend Policy 18
Capitalization 18
SBI Stock Purchase Agreement 19
Spectrum Stock Purchase Agreement 20
Plan of Operation 21
Business 23
Legal Proceedings 48
Management 48
Executive Compensation 54
Security Ownership of Certain Beneficial Owners and Management 57
Certain Relationships and Related Transactions 60
Description of Securities 62
Shares Eligible for Resale 63
Selling Stockholder 64
Plan of Distribution 65
Legal Matters 67
Experts 67
Where You Can Find Additional Information 67
Financial Statements 68

Page 2

PROSPECTUS SUMMARY

This summary is not complete and does not contain all of the information that
you should consider before investing in our common stock. You should read the
entire prospectus carefully, including the more detailed information
regarding our company, the risks of purchasing our common stock discussed
under "risk factors," and our financial statements and the accompanying
notes.

Biophan Technologies, Inc.

Biophan is an early-stage research and development company focusing on
technology that will enable certain medical procedures and biomedical
devices, including cardiac pacemakers, defibrillators, guidewires, stents,
prosthetic devices and others, to become safe and compatible with magnetic
resonance imaging (MRI) diagnostics. Our approach is based on multiple
technologies, some that are patented and others for which we have U.S. and
foreign patents pending. Our research efforts are focused on demonstrating
the feasibility of our coating and filtering solutions which we intend to
license to medical device manufacturers for use in their existing and future
products. We incorporated on August 1, 1968 and began our current line of
business on December 1, 2000. From that date through our fiscal quarter ended
August 31, 2003, we have had no revenues from operations and have incurred
cumulative net losses of $9,328,746. Since December 1, 2000, we have relied
entirely on sales of our securities and loans to fund our operations.

Stock Purchase Agreement with Selling Stockholder

On October 1, 2003, we entered into a stock purchase agreement with SBI
Brightline Consulting, LLC that obligates SBI to purchase, upon our election,
up to 11,000,000 shares of our common stock for an aggregate purchase price
of $2.9 million. At our election, we may sell the shares to SBI in six
tranches that must be sold in the following order:

Number of Purchase Price
Shares Per Share
--------- --------------
Tranche 1 2,000,000 $.15
Tranche 2 2,000,000 $.20
Tranche 3 2,000,000 $.25
Tranche 4 2,000,000 $.30
Tranche 5 2,000,000 $.35
Tranche 6 1,000,000 $.40

Except for the requirement to sell the tranches in order, there is no
limitation on when we may require SBI to purchase the shares included in any
tranche. We are not obligated to sell any shares to SBI unless and until we
make an election to do so. If we sell all the shares to SBI, the shares will
be sold at a weighted average purchase price of $.264 per share.

This prospectus relates to shares of common stock that may be purchased
by SBI pursuant to the SBI stock purchase agreement.

Page 3

Existing Restated Stock Purchase Agreement with Spectrum

In addition to our stock purchase agreement with SBI, we are a party to
a restated stock purchase agreement with Spectrum Advisors, Ltd. Pursuant to
the Spectrum agreement, we may require Spectrum to purchase shares of our
common stock at our sole discretion and from time to time over a period of 24
months ending July 11, 2005. The purchase price for shares purchased
under the Spectrum agreement is 80% of the average daily volume weighted
average price of our common stock for the three trading days preceding the
applicable date.

Under the Spectrum agreement, Spectrum is currently committed to purchase
shares for consideration of up to $3,000,000. Under certain circumstances,
however, we are entitled to increase Spectrum's obligation under the Spectrum
agreement to purchase common stock for up to 50% of our market capitalization
but no more than $10,000,000. We have registered for resale by Spectrum
8,960,000 shares of common stock that we may sell to Spectrum pursuant to the
Spectrum agreement. Through the date of this prospectus, we have sold
Spectrum 3,325,757 shares for aggregate consideration of $491,190. If we were
to sell to Spectrum the remaining shares that we have already registered at
the closing price of our common stock on November 5, 2003 at $.43 per share,
we would receive additional consideration of $1,938,180. If that were to
occur, it would leave $570,630 available for sale under the current Spectrum
commitment if we were to choose < to register additional shares for resale by
Spectrum.

Page 4

The Offering

Securities Offered by SBI Up to 11,000,000 shares that may be
acquired by SBI pursuant to the stock
purchase agreement between us and SBI

Use of Proceeds We will not receive any proceeds from
the sale by SBI of shares in this
offering. We will receive proceeds
from the sale of shares to SBI pursuant
to the SBI stock purchase agreement.
We expect to use such proceeds for
working capital and for other general
corporate purposes, including research
and product development.

Risk Factors An investment in our common stock
involves a high degree of risk and
could result in a loss of your entire
investment.

OTC Symbol BIPH

Executive Offices

Our executive offices are located at 150 Lucius Gordon Drive, Suite 215,
West Henrietta, New York 14586. Our telephone number is (585) 214-2441 and
our website is: www.biophan.com. The information on our website is not part
of this prospectus.

Page 5

SUMMARY HISTORICAL FINANCIAL INFORMATION

The following table presents summarized financial information as of and
for the six months ended August 31, 2003 and as of and for the fiscal years
ended February 28, 2003, 2002 and 2001. The information is extracted from
the consolidated financial statements presented elsewhere in this prospectus
and in previous filings and should be read in conjunction therewith.

For the Six For the Fiscal Year Ended
Months Ended February 28,
------------- ---------------------------------
August 31, 2003 2003 2002 2001
------------ ---- ---- ----
(Unaudited)
Operating Data:
Revenue 0 0 0 0
Salaries and related $ 257,503 $ 648,304 $ 461,629 59,861
General &
administrative
expenses 224,445 582,174 475,520 16,059
Total expenses 1,355,589 3,438,252 3,705,917 729,130
Net (loss) (1,355,589) (3,438,252) (3,705,917) (729,130)
Net (loss) per share (0.04) (0.11) (0.14) (0.08)
Weighted average
shares outstanding 38,532,599 31,731,051 27,000,962 9,166,887

As of February 28,
As of ----------------------------------
August 31, 2003 2003 2002 2001
--------------- ---- ---- ----
(Unaudited)
Balance Sheet Data:
Current assets $ 142,843 $ 476,353 $ 672,823 172,092
Total assets 286,170 683,056 866,638 343,75
Current liabilities 927,726 796,187 645,389 280,992
Long-term liabilities 190,000 83,333 - 438,000
Stockholders' equity
(deficiency) (831,556) (196,464) 221,249 (375,240)
Working capital
(deficiency) (784,883) (319,834) 27,434 (108,900)

Page 6

RISK FACTORS

Please consider the following risk factors together with the other
information presented in this prospectus, including the financial statements
and the notes thereto, before investing in our common stock. The trading
price of our common stock could decline due to any of the following risks,
and you might lose all or part of your investment.

We Are A New Business With A Limited Operating History And No Revenues To
Date And Are Not Likely To Succeed Unless We Can Overcome The Many Obstacles
We Face.

We are a development-stage company with limited prior business
operations and no revenues. We are presently engaged in the early stage
development of certain medical procedures and biomedical devices. Because of
our limited operating history, you may not have adequate information on which
you can base an evaluation of our business and prospects. To date, our
efforts have been allocated primarily to the following:

* organizational activities;
* developing a business plan;
* obtaining interim funding;
* conducting research and working toward the ultimate successful
development of our products;
* marketing to major biomedical manufacturers; and
* aggressively patenting our intellectual property.

In order to establish ourselves in the medical device market, we are
dependent upon continued funding and the successful development and marketing
of our products. You should be aware of the increased risks, uncertainties,
difficulties and expenses we face as a research and development company and
that an investment in our common stock may be worthless if our business
fails.

We Have Generated No Revenues And If We Are Unable To Generate Sufficient
Revenues In The Future, We May Not Be Able To Continue Our Business.

We are still in our formative and development stage. As an investor,
you should be aware of the difficulties, delays and expenses normally
encountered by an enterprise in its development stage, many of which are
beyond our control, including unanticipated research and developmental
expenses, employment costs, and administrative expenses. We cannot assure
our investors that our proposed business plans as described in this
prospectus will materialize or prove successful, or that we will ever be able
to finalize development of our products or operate profitably. If we cannot
operate profitably, you could lose your entire investment. As a result of the
start-up nature of our business, initially we expect to sustain substantial
operating expenses without generating significant revenues.

Page 7

We Are Dependent On Raising Additional Capital. If We Are Unable To Raise
Additional Capital, Our Business May Fail Or Our Operating Results And Our
Stock Price May Be Materially Adversely Affected.

Because we are a development stage company and have no revenues, we need
to secure adequate funding. If we are unable to obtain adequate funding, we
may not be able to successfully develop and market our products and our
business will most likely fail. The funds that we raise by selling stock to
SBI and Spectrum under the stock purchase agreements may not be sufficient to
carry out all of the plans described in this prospectus or to fund our
operating losses until we are able to generate enough revenues to sustain our
business. We do not have commitments for additional financing. To secure
additional financing, we may have to borrow money or sell more securities,
which may reduce the value of the securities to be sold by SBI in this
offering. We may be unable to secure additional financing on favorable terms
or at all.

Selling additional stock, either privately or publicly, could dilute the
equity interests of our stockholders. If we borrow more money, we will have
to pay interest and may also have to agree to restrictions that limit our
operating flexibility. If we are unable to obtain adequate financing, we may
have to curtail business operations which would have a material negative
effect on operating results and most likely result in a lower stock price.

We Have A History Of Losses And A Large Accumulated Deficit And We Expect
Future Losses That May Cause Our Stock Price To Decline.

For the fiscal years ended February 28, 2003, 2002 and 2001, we incurred
net losses of $3,438,252, $3,705,917 and $729,130, respectively, and for the
six months ended August 31, 2003 we incurred a net loss of $1,355,589. We
expect to continue to incur losses as we spend additional capital to develop
and market our technologies and establish our infrastructure and organization
to support anticipated operations. We cannot be certain whether we will ever
earn a significant amount of revenues or profit, or, if we do, that we will
be able to continue earning such revenues or profit. Also, the current
economic weakness may limit our ability to develop and ultimately market our
technologies. Any of these factors could cause our stock price to decline
and result in you losing a portion or all of your investment.

Our Inability To Retain And Attract Key Personnel Could Adversely Affect Our
Business.

We believe that our future success will depend on the abilities and
continued service of certain of our senior management and executive officers,
particularly our president and CEO and those persons involved in the research
and development of our products. If we are unable to retain the services of
these persons, or if we are unable to attract additional qualified employees,
researchers and consultants, we may be unable to successfully finalize and
eventually market our medical devices and other products being developed,
which will have a material adverse effect on our business.

Our Research And Development Efforts May Not Result In Commercially Viable
Products Which Could Result In A Decline Of Our Stock Price And A Loss Of
Your Investment.

Our technologies are in the development stage. Further research and
development efforts will be required to develop these technologies to the

Page 8

point where they can be incorporated into commercially viable or salable
products. We have set forth in this prospectus our proposed research and
development program as it is currently conceived. We cannot assure you,
however, that this program will be accomplished in the order or in the time
frame set forth. We reserve the right to modify the research and development
program. We may not succeed in developing commercially viable products from
our technologies. Also, our research and development efforts are aimed at
technology that will enable certain medical procedures and biomedical devices
to become safe and compatible with MRI diagnostics. If MRI diagnostics are
replaced by the healthcare industry, our technology and products, if any, may
become obsolete. If we are not successful in developing commercially viable
products or if such products become obsolete, our ability to generate
revenues from our technologies will be severely limited. This would result
in the loss of all or part of your investment.

We May Not Have Opportunities To Enter Into Strategic Partnerships For The
Commercialization Of Our Technologies Which Could Have A Severe Negative
Impact On Our Ability To Market Our Products.

We intend to enter into strategic partnerships or other relationships
with established biomedical, pharmaceutical and bio-pharmaceutical companies
to obtain necessary regulatory approvals and to undertake the manufacturing
and marketing efforts required to commercialize our products. On September 25,
2003, we entered into a development agreement with Boston Scientific Corp., a
biomedical device company. We are also developing relationships with other
potential partners; however, we have not yet entered into any definitive
agreements with them. If we are unable to enter into any new partnerships,
or if our relationship with Boston Scientific is not successful, then we may
be unable to commence the commercialization of our products.

We May Not Be Able To Develop A Market For Our Technology Which Will Most
Likely Cause Our Stock Price To Decline.

The demand and price for our technology and related products will be
based upon the existence of markets for the technology and products and the
markets for products of others, which may utilize our technology. The extent
to which we may gain a share of our intended markets will depend, in part,
upon the cost effectiveness and performance of our technology and products
when compared to alternative technologies, which may be conventional or
heretofore unknown. If the technology or products of other companies provide
more cost-effective alternatives or otherwise outperform our technology or
products, the demand for our technology or products maybe adversely affected.
Our success will be dependent upon market acceptance of our technology and
related products. Failure of our technology to achieve and maintain
meaningful levels of market acceptance would materially and adversely affect
our business, financial condition, results of operations and market
penetration. This would likely cause our stock price to decline.

If We Are Not Able To Compete Effectively In The Competitive Medical Device
Industry, Our Future Growth And Operating Results Will Suffer.

Our future success depends on our ability to compete effectively with
other manufacturers of medical devices, including major manufacturers of
pacemakers and other implantable devices that may have internal development

Page 9

programs. We are an early-stage research and development company engaged
exclusively in developing our initial products. We have not yet completed our
first product and have no revenue from operations. As a result, we may have
difficulty competing with larger, established medical device companies. Most
of our potential competitors will be established, well-known companies that
have:

* substantially greater financial, technical and marketing
resources;
* larger customer bases;
* better name recognition;
* related product offerings; and
* larger marketing areas.

Companies such as Medtronic Incorporated, Guidant Corporation, St. Jude
Medical, Boston Scientific and Johnson & Johnson are major, international
providers of active medical devices currently contraindicated for MRI.
Because these companies may possibly develop MRI safe solutions for their own
product lines, they may ultimately be in competition with us. These
companies represent a wide array of medical devices and products,
technologies and approaches. Most of these companies have more resources
than we do and, therefore, a greater opportunity to develop comparable
products and bring those products to market more efficiently than we. If we
do not compete effectively with current and future competitors, our future
growth and operating results will be adversely affected.

We May Not Be Able To Obtain Necessary Government Approval To Market Our
Technology Which Will Most Likely Cause Our Stock Price To Decline And Our
Business To Fail.

Our marketing partners must obtain the approval of the U.S. Food and
Drug Administration in order to market our MRI-safe technology. If these
approvals are not obtained, or are significantly delayed, our ability to
generate revenues may be adversely affected and our development and marketing
efforts inhibited. This would most likely cause our stock price to decline
and result in the loss of all or part of your investment.

We May Not Be Able To Protect Our Proprietary Rights And We May Infringe The
Proprietary Rights Of Others. Our Inability To Protect Our Rights Could
Impair Our Business And Cause Us To Incur Substantial Expense To Enforce Our
Rights.

Proprietary rights are critically important to us. Although we have
exclusive licenses to three issued U.S. patents for MRI safety-related
technology and we intend to aggressively pursue additional patent protection
for our technologies as we continue to develop them, we cannot assure you
that any additional patents will be issued. Although we will seek to defend
our patents and to protect our other proprietary rights, our actions may be
inadequate to protect our patents and other proprietary rights from
infringement by others, or to prevent others from claiming infringement of
their patents and other proprietary rights.

Policing unauthorized use of our technology is difficult and some
foreign laws do not provide the same level of protection as U.S. laws.
Litigation may be necessary in the future to enforce our intellectual
property rights, to protect our trade secrets or patents that we may obtain,
or to determine the validity and scope of the proprietary rights of others.
Such litigation could result in substantial costs and diversion of resources
and have a material adverse effect on our future operating results.

Page 10

Because Two Of Our Directors Are Equity Owners And Managers Of Biomed
Solutions, LLC, A Creditor And Shareholder Of Biophan, There May Be Conflicts
Of Interest.

Michael L. Weiner, our President, CEO and director, is the Manager and a
24.3% beneficial equity member of Biomed. Mr. Weiner, and Ross Kenzie, also
a director of Biophan, make up the Biomed Board of Members. Biomed and its
members own a significant amount of our outstanding common stock and we owe
Biomed $500,000 plus interest for the transfer to us of its MRI-compatible
pacemaker patents pending. We have also executed a line of credit with
Biomed pursuant to which we owe Biomed $266,000 plus accrued interest as of
the date hereof. We have issued to Biomed 1,180,000 warrants for the
purchase of our common stock. Mr. Weiner is also the Manager and 42.3%
equity member of Technology Innovations, LLC, which is a 57% equity member of
Biomed. Further, Mr. Weiner is on the board of Nanoset, LLC, an entity owned
in part by Biomed and with which we have negotiated a technology license
agreement and are exploring acquiring additional rights to Nanoset's
technology.

Because of their relationships with these other entities, Messrs. Weiner
and Kenzie may have conflicts of interest with respect to certain matters
affecting us. Biomed is a creditor of Biophan and has the right to reacquire
the MRI-compatible technology that it sold to us if payments are not made on
a timely basis. Thus, a potential conflict could arise as to the enforcement
of Biomed's rights to the MRI-compatible technology under its agreement with
us. Also, a conflict could arise among the entities in the determination of
which entity might acquire a particular technology. All potential conflicts
may not be resolved in a manner that is favorable to us. We believe it is
impossible to predict the precise circumstances under which future potential
conflicts may arise and therefore intend to address potential conflicts on a
case-by-case basis. Under Nevada law, directors have a fiduciary duty to act
in good faith and with a view to the interests of the corporation.

If We Fail To Pay The Purchase Price For Our Technology, That Technology Will
Revert To Biomed, Which Will Significantly And Negatively Impact Our Business
And Your Investment.

Under the Transfer Agreement with Biomed in connection with our
acquisition of the MRI intellectual property rights, Biomed maintains a
security interest in the underlying patents until the amount of $500,000,
plus interest at 8% per annum, is paid to Biomed. Biomed has the right to
take back these intellectual property rights if we do not satisfy the
liability which is payable in 12 equal installments commencing June 1, 2004.
In the event we are unable to satisfy this condition, and we lose our rights
to the technology, we will suffer significant harm to our business and
financial condition which would most likely cause the price of our stock to
decline.

The So Called "Penny Stock Rule" Could Make It Cumbersome For Brokers And
Dealers To Trade In Our Common Stock, Making The Market For Our Common Stock
Less Liquid Which Could Cause The Price Of Our Stock To Decline.

Trading of our common stock on the OTC Bulletin Board may be subject to
certain provisions of the Securities Exchange Act of 1934, commonly referred
to as the "penny stock" rule. A penny stock is generally defined to be any
equity security that has a market price less than $5.00 per share, subject to

Page 11

certain exceptions. If our stock is deemed to be a penny stock, trading in
our stock will be subject to additional sales practice requirements on
broker-dealers. These may require a broker dealer to:

* make a special suitability determination for purchasers of our
shares;

* receive the purchaser's written consent to the transaction prior
to the purchase; and

* deliver to a prospective purchaser of our stock, prior to the
first transaction, a risk disclosure document relating to the
penny stock market.

Consequently, penny stock rules may restrict the ability of broker-
dealers to trade and/or maintain a market in our common stock. Also,
prospective investors may not want to get involved with the additional
administrative requirements, which may have a material adverse effect on the
trading of our shares.

We May Not Be Able To Fully Utilize Our Arrangements With SBI And Spectrum
And, If Such Utilization Is Necessary, We May Be Required To Register
Additional Shares For Resale By Spectrum, Amend Our Articles Of Incorporation
or Identify Alternative Sources Of Capital

Our authorized capital currently consists of 80,000,000 shares of common
stock. As of October 31, 2003, we had 46,006,074 outstanding shares and
outstanding options and warrants to purchase an additional 7,415,989 shares.
We may grant options to purchase an additional 1,520,005 shares under our
stock option plan and may be required to issue 5,282,759 shares upon the
conversion of our outstanding debt that is convertible into our common stock.
This leaves an aggregate of 19,775,173 shares of common stock available for
sale to SBI and Spectrum under our existing arrangements with them. If we
sell to SBI all 11,000,000 shares that we have the right to sell to it, we
would have 8,775,173 shares available to sell to Spectrum. Of these shares,
5,634,243 have been registered for resale by Spectrum.

In order to raise the balance of $2,508,810 currently committed by
Spectrum by selling only those shares which are currently registered for
resale, we would need to sell those shares to Spectrum at an average purchase
price of $.468 per share. To raise the currently committed amount by selling
to Spectrum all shares available for sale to Spectrum assuming that we sell
11,000,000 shares to SBI, we would need to register an additional 3,140,930
shares for resale by Spectrum and sell the shares to Spectrum at an average
purchase price of $.30 per share. If we are not able to sell shares to
Spectrum at these prices, we may not be able to fully utilize our capital
arrangements with both SBI and Spectrum.

If our need for capital requires us to fully utilize our arrangements
with SBI and Spectrum and if we are unable to sell shares to Spectrum at
adequate prices, we may need to register additional shares for resale by
Spectrum, amend our articles of incorporation to increase the number of shares
of our authorized common stock, identify alternative sources of capital, or
undertake a combination of those actions.

Page 12

Our Stock Purchase Agreements With SBI And Spectrum And The Issuance Of
Shares To SBI And Spectrum Thereunder May Cause Significant Dilution To Our
Stockholders, Encourage Short Selling and < Have An Adverse Impact On The
Market Price Of Our Common Stock.

The resale by SBI and Spectrum of our common stock that they purchase
from us will increase the number of our publicly traded shares, which could
depress the market price of our common stock. Moreover, as all the shares we
sell to SBI and Spectrum will be available for immediate resale, the mere
prospect of our sales under the stock purchase agreements could depress the
market price for our common stock. If we were to require Spectrum to purchase
our common stock at a time when our stock price is low, our existing common
stockholders will experience substantial dilution. The issuance of shares to
SBI and Spectrum will dilute the equity interest of existing stockholders and
could have an adverse effect on the market price of our common stock.

The perceived risk of dilution may cause our stockholders to sell their
shares, which would contribute to a decline in the price of our common stock.
Moreover, the perceived risk of dilution and the resulting downward pressure
on our stock price could encourage investors to engage in short sales of our
common stock. By increasing the number of shares offered for sale, material
amounts of short selling could further contribute to progressive price
declines in our common stock.

The trading price of our common stock during the several month period
leading up to November 5, 2003 was generally greater than the price per share
for the first 4,000,000 shares that would be sold under our stock purchase
agreement with SBI; however, our trading price during this period was less
than the weighted-average purchase price of all shares covered by the SBI
agreement. The closing price of our common stock on November 5, 2003 was
$.43 per share and exceeded the purchase price for all shares covered by the
SBI agreement. If we sell shares to SBI at prices less than the current
trading price of our common stock at the time of the sale, SBI may have an
incentive to immediately resell such shares in the market which may, in turn,
cause the trading price of our common stock to decline.

Our Common Stock Has Experienced In The Past, And Is Expected To Experience
In The Future, Significant Price And Volume Volatility, Which Substantially
Increases The Risk That You May Not Be Able To Sell Your Shares At Or Above
The Price That You Pay For The Shares.

Because of the limited trading market for our common stock, and because
of the possible price volatility, you may not be able to sell your shares of
common stock when you desire to do so. During 2002, and through the date of
this prospectus, our common stock was sold and purchased at prices that ranged
from a high of $6.45 to a low of $.10 per share. The inability to sell your
shares in a rapidly declining market may substantially increase your risk of
loss because of such illiquidity and because the price for our common stock
may suffer greater declines because of its price volatility.

The price of our common stock that will prevail in the market after this
offering may be higher or lower than the price you pay. Certain factors,

Page 13

some of which are beyond our control, that may cause our share price to
fluctuate significantly include, but are not limited to, the following:

* variations in our quarterly operating results;
* our ability to complete the research and development of our
technologies;
* the development of a market in general for our products;
* changes in market valuations of similar companies;
* announcement by us or our competitors of significant contracts,
acquisitions, strategic partnerships, joint ventures or capital
commitments;
* loss of a major customer or failure to complete significant
transactions;
* additions or departures of key personnel; and
* fluctuations in stock market price and volume.

Additionally, in recent years the stock market in general, and the Over-
the-Counter Bulletin Board OTC-BB and technology stocks in particular, have
experienced extreme price and volume fluctuations. In some cases, these
fluctuations are unrelated or disproportionate to the operating performance
of the underlying company. These market and industry factors may materially
and adversely affect our stock price, regardless of our operating
performance.

Over the past few months, there have been periods of significant
increases in trading volume of our common stock during which the price of our
stock has both increased and decreased. The historical trading of our common
stock is not an indicator of how it will trade in the future and our trading
price as of the date of this prospectus is not necessarily an indicator of
what the trading price of our common stock might be in the future.

In the past, class action litigation often has been brought against
companies following periods of volatility in the market price of those
companies' common stock. If we become involved in this type of litigation in
the future, it could result in substantial costs and diversion of management
attention and resources, which could have a further negative effect on your
investment in our stock.

The Spectrum Stock Purchase Agreement Limits Our Ability To Draw Down Amounts
If The Draw Down Would Cause Spectrum To Hold More Than 9.9% Of Our
Outstanding Common Stock. This Restriction May Limit Our Access To Capital
When We Need It.

The Spectrum stock purchase agreement provides that we may not sell
shares of our common stock pursuant to our draw down right under such
agreement if the sale would cause Spectrum to beneficially own more than 9.9%
of our issued and outstanding common stock at any one time. As of the date
hereof, 9.9% of our outstanding common stock would be 5,055,051 shares. To
draw down the remaining commitment under the Spectrum agreement without

Page 14

exceeding the 9.9% limitation would require us to sell these shares at a price
of $4.69 per share, a price that exceeds the recent trading price for our
common stock. < If we are unable to sell our stock to Spectrum at that price
and Spectrum does not re-sell our stock, the 9.9% limitation may prevent us
from raising the full amount of capital represented by Spectrum's current
commitment. Accordingly, we may have to significantly curtail the scope of
our operations and alter our business plan if we are relying solely on a draw
down under the Spectrum stock purchase agreement. < Of course, any resale of
our common stock by Spectrum would reduce their beneficial ownership, reducing
the effect of the 9.9% provision on our ability to exercise draw downs.

Because Spectrum Is A Resident Of A Foreign Country, It May Be Difficult Or
Impossible To Obtain Or Enforce Judgments Against Spectrum.

Spectrum is a Nevis corporation with offices in London, England, and a
substantial portion of its assets are located outside of the United States.
As a result, it may be difficult or impossible to effect service of process
on Spectrum within the United States. It may also be difficult or impossible
to enforce judgments entered against Spectrum in courts in the United States
based on civil liability provisions of the securities laws of the United
States. In addition, judgments obtained in the United States, especially
those awarding punitive damages, may not be enforceable in foreign countries.

A Finder That We Engaged In A Private Placement Had Previously Been Convicted
Of Securities Law Violations And May Have Been Required To Be Registered As A
Broker Dealer As A Result Of Its Activities In Our Private Placement. We May
Suffer Adverse Consequences As A Result Of Such Finder's Participation In Our
Private Placement.

Westbay Consulting, Inc., a Nevada corporation beneficially owned by
Jason Cope, acted as finder and consultant to Biophan in connection with a
private placement of our common stock that we conducted from September 2002
through January 2003. On August 14, 2001, the SEC obtained a final judgment
against Jason Cope and three other defendants. Mr. Cope and the other
defendants were ordered by the U.S. District Court for the Southern District
of New York to pay a total of $19.4 million in disgorgement, interest and
civil penalties. Mr. Cope was also enjoined from committing any further
violation of the antifraud provisions of the federal securities laws These
orders were based on allegations that Mr. Cope unlawfully offered and sold
securities without being registered as a broker-dealer. Until after the
completion of the private placement we were unaware that Mr. Cope had
previously been convicted of violations of the securities laws. If we had
been aware of Mr. Cope's prior violations of the securities laws we would not
have hired Westbay to assist in our private placement.

The SEC has informed us that in the opinion of the Division of Market
Regulation, Westbay acted as an unregistered broker-dealer in connection with
our private placement. The SEC further alleges that the shareholders that
acquired our shares in the private placement may have acquired their shares
in violation of federal securities laws. Although we believe that Westbay
acted as a finder and not a broker-dealer in connection with our private
placement, there can be no assurance that the SEC will not find otherwise.
We also believe that the private placement complied with the provisions of
Regulation D and Rule 506 of the Securities Act of 1933, and was exempt from
the registration provisions of the Securities Act. However, there can be no
assurance that the SEC will not conclude that the private placement was
defective or that the exemption from registration was not available. Without

Page 15

further information from the SEC, we are unable to predict the possible
consequences to us should an adverse finding against Westbay or us be made by
the SEC.

Special Note Regarding Forward-Looking Statements

This prospectus contains forward-looking statements that involve risks
and uncertainties. These include statements about our expectations, plans,
objectives, assumptions or future events. In some cases, you can identify
forward-looking statements by terminology such as "anticipate," "estimate,"
"plans," "potential," "projects," "continuing," "ongoing," "expects,"
"management believes," "we believe," "we intend" and similar expressions.
These statements involve estimates, assumptions and uncertainties that could
cause actual results to differ materially from those expressed for the
reasons described in this prospectus. You should not place undue reliance on
these forward-looking statements.

You should be aware that our actual results could differ materially from
those contained in the forward-looking statements due to a number of factors
such as:

* continued development of our technology;
* dependence on key personnel;
* competitive factors;
* the operation of our business; and
* general economic conditions.

The forward-looking statements speak only as of the date on which they
are made, and, except to the extent required by federal securities laws, we
undertake no obligation to update any forward-looking statement to reflect
events or circumstances after the date on which the statement is made or to
reflect the occurrence of unanticipated events. In addition, we cannot assess
the impact of each factor on our business or the extent to which any factor,
or combination of factors, may cause actual results to differ materially from
those contained in any forward-looking statements.

USE OF PROCEEDS

We will not receive any proceeds from the sale by SBI of shares in this
offering. We will receive proceeds from the sale of shares to SBI pursuant
to the SBI stock purchase agreement. We expect to use such proceeds for
working capital, repay outstanding debts and for other general corporate
purposes, including research and product development.

NATURE OF TRADING MARKET

Our common stock is listed on the OTC Bulletin Board under the symbol
BIPH. The stock was not actively traded until October 2001, and the

Page 16

following table sets forth, for the fiscal quarters indicated, the high and
low bid prices. These quotations reflect inter-dealer prices, without mark-
up, mark-down or commission, and may not represent actual transactions.

Page 17

Quarter Ended High Low
----------------- ----- -----
November 30, 2001 $6.50 $5.50

February 28, 2002 $7.25 $2.37

May 31, 2002 $2.65 $ .75

August 31, 2002 $1.13 $ .30

November 30, 2002 $ .38 $ .18

February 28, 2003 $1.15 $ .29

May 31, 2003 $ .51 $ .27

August 31, 2003 $ .37 $ .12

Through November 5, $ .49 $ .10
2003

We currently have outstanding 46,006,074 shares of our common stock.
Our shares of common stock are held by approximately 400 stockholders of
record.

DIVIDEND POLICY

We have never paid cash dividends and have no plans to do so in the
foreseeable future. Our future dividend policy will be determined by our
Board of Directors and will depend upon a number of factors, including our
financial condition and performance, our cash needs and expansion plans,
income tax consequences, and the restrictions that applicable laws and our
credit arrangements then impose.

CAPITALIZATION

The following table sets forth our capitalization (unaudited) as of
August 31, 2003. You should read this information in conjunction with our
financial statements and the accompanying notes, and the other financial
information appearing elsewhere in this prospectus.

Long-term debt $190,000
-----------
Stockholders' equity (deficiency):
Common stock, $.005 par value
Authorized, 80,000,000 shares
Issued and outstanding, 40,951,317 $ 204,757
Additional paid-in capital 8,292,433
Accumulated deficit (9,328,746)
------------
$ (831,556)
============

Page 18

SBI STOCK PURCHASE AGREEMENT

On October 1, 2003, we entered into a Stock Purchase Agreement with SBI
Brightline, LLC obligating SBI to purchase, upon our election, up to
11,000,000 shares of our common stock for an aggregate purchase price of $2.9
million. At our election, we may sell the shares to SBI in six tranches
that must be sold in the following order:

Except for the requirement to sell the tranches in order, there is no
limitation on when we may require SBI to purchase the shares included in any
tranche. In particular, there is no specified expiration date for SBI's
obligation to purchase the shares and no particular period of time must elapse
between the sale of each tranche. We are not obligated to sell any shares to
SBI unless and until we elect to do so. This prospectus relates to shares of
common stock that may be purchased by SBI pursuant to the SBI stock purchase
agreement.

SBI's obligation to purchase the shares is subject to the shares
continuing to be registered for resale by SBI and to other customary
conditions for transactions of this kind. < In particular, SBI's obligation is
contingent on:

* the continued accuracy of our representations and warranties
contained in the agreement;
* our compliance with our agreements contained in the agreement; and
* our delivery of an opinion of our counsel that the shares being
purchased are duly authorized, validly issued, fully-paid and non-
assessable.

If we have exercised our right to sell a particular tranche of shares and
the closing of the sale of such shares does not occur for any reason, we will
have the right to exercise our right with respect to those shares again;
however, SBI's obligation to purchase the shares remains contingent on our
ability to satisfy the closing conditions at the time we seek to sell the
shares.

Our obligation to sell a tranche of shares to SBI once we have made an
election is contingent on SBI's satisfaction of corresponding closing
conditions which we may waive in our discretion.

Page 19

SPECTRUM STOCK PURCHASE AGREEMENT

Effective November 22, 2002, we entered into a restated common stock
purchase agreement with Spectrum Advisors, Ltd., for the future issuance and
purchase of shares of our common stock. This agreement restates and
supersedes the common stock purchase agreement that we entered into on June
6, 2002 with Bonanza Capital, upon essentially the same terms and conditions.
The Spectrum stock purchase agreement establishes what is sometimes termed an
equity line of credit or an equity draw down facility.

In general, the draw down facility established by the Spectrum stock
purchase agreement operates as follows: at our sole discretion and from time
to time over the course of 24 months ending July 11, 2005, we may make
unlimited draw down requests pursuant to which Spectrum is obligated to
purchase up to an aggregate of $3.0 million of our common stock. However, at
our option we may increase Spectrum's commitment to up to 50% of our market
capitalization at the time we exercise this option, not to exceed $10.0
million. Using our market capitalization based on our closing stock price of
$.43 on November 5, 2003, and subject to the limits on daily draw-down
amount, we could increase Spectrum's commitment to approximately
$9,891,000. We are under no obligation to request a draw down during
any period or, in the absence of such a request, to issue any shares to
Spectrum. Spectrum's obligation to purchase the shares is subject to the
shares being registered for resale by Spectrum and to other customary
conditions for transactions of this kind.

Each draw down request relates to a settlement period of three
consecutive trading days. We must make the request prior to the beginning of
the settlement period. The maximum amount we can draw in connection with a
settlement period is 30% of the volume weighted average price of our common
stock during the settlement period multiplied by our total trading volume
during the settlement period. The minimum amount that we must draw when we
make a draw request is $37,500. If, on any day during the settlement period,
the average volume weighted price of our common stock drops below the minimum
threshold price of $.18 or the trading of our stock on the OTC Bulletin Board
is suspended for at least three hours, then:

* that day will be excluded from the relevant settlement;
* the aggregate amount of our draw down request will be reduced
accordingly;
* the minimum amount that we must draw for that settlement period
will be reduced by $12,500; and
* the volume weighted average price for that trading day will have
no effect on the pricing of the shares purchased during that draw
down period.

After each settlement period, the final draw down amount for that
settlement period is determined. The price per share that Spectrum pays for
the shares is equal to 80% of the average of the daily volume weighted
average price of our common stock for each of the trading days included in
the settlement period (without taking into account the price for any trading
day excluded as described above). The number of shares of common stock that
we will issue to Spectrum is equal to the final draw down amount divided by
the applicable purchase price for the shares. The closing of our sale of the
shares to Spectrum and our receipt of the proceeds from the sale generally
occurs two trading days after the end of the applicable settlement period.

Page 20

The common stock purchase agreement does not permit us to draw funds if
the issuance of shares of common stock to Spectrum pursuant to the draw down
would cause Spectrum to beneficially own more than 9.9% of our issued and
outstanding common stock at the time of issuance. In such cases, we will not
be permitted to issue the shares otherwise issuable pursuant to the draw down
and Spectrum will not be obligated to purchase those shares. Of course, any
of Spectrum's resales of shares would reduce the number of shares it
beneficially owns, and would enable us to issue additional shares to Spectrum
subject once again to the 9.9% limitation.

In connection with each draw down, we must pay to Carolina Financial
Services, LLC a fee equal to 10% of the amount of the draw down. We must
also issue to Carolina warrants to purchase 5% of the shares sold to Spectrum
(up to 448,000 shares of our common stock) at a price equal to 110% of the
selling price to Spectrum. Carolina is not obligated to purchase any of our
shares pursuant to the common stock purchase agreement. We have paid $25,000
to Spectrum to cover the fees and expenses of its counsel in connection with
the restated stock purchase agreement.

Spectrum is entitled to customary indemnification from us for any losses
or liabilities suffered by it based upon material misstatements or omissions
from the registration statement and the prospectus, except as they relate to
information supplied by Spectrum to us for inclusion in the registration
statement and prospectus. We are entitled to customary indemnification from
Spectrum for any losses or liabilities suffered by us based upon material
misstatements or omissions from the registration statement and the prospectus
to the extent that they relate to information supplied by Spectrum to us for
inclusion in the registration statement and prospectus. Each party to the
restated stock purchase agreement is obligated to indemnify the other for
losses or liabilities arising from such party's breach of its
representations, warranties or covenants contained in the restated stock
purchase agreement.

PLAN OF OPERATION

We are currently in the development stage of operations and expect to be
in that mode for at least the next 12 months. Our primary mission is to
develop and commercially exploit technologies for enabling cardiac pacemakers
and other life sustaining medical devices to be safe and compatible with MRI
and other equipment that generates powerful magnetic and radio frequency
signals.

On October 1, 2003, we entered into a stock purchase agreement with SBI
Brightline Consulting, LLC that obligates SBI to purchase, upon our election,
up to 11,000,000 shares of our common stock for an aggregate purchase price
of $2.9 million. There is no limitation on when we may require SBI to
purchase the shares except that the shares are divided into six tranches that
must be purchased in a particular order.

In addition to agreement with SBI, we are a party to a restated stock
purchase agreement with Spectrum Advisors LTD. Pursuant to the Spectrum
agreement, we may require Spectrum to purchase shares of our common stock
at our sole discretion and from time to time over a period of 24 months
ending July 11, 2005. The purchase price for shares purchased under the
Spectrum agreement is 80% of the average daily volume weighted average

Page 21

price of our common stock during the trading days relating to a particular
draw. Spectrum is currently committed to purchase shares for consideration of
up to $3 million under the Spectrum agreement. We have registered for resale
by Spectrum 8,960,000 shares of common stock that we may sell to Spectrum
pursuant to the Spectrum agreement. Through the date of this prospectus, we
have sold Spectrum 3,325,757 shares for aggregate consideration of
$491,190. If we were to sell to Spectrum the remaining shares that we have
already registered at the closing price of our common stock on November 5,
2003 of $.43 per share, we would receive additional consideration of
$2,422,725. If that were to occur, it would leave $86,085 available for sale
under the Spectrum agreement if we were to choose to register 1,744,610
additional shares for resale by Spectrum. <

We estimate that a combination of the equity financing from the sale of
our common stock pursuant to the SBI and Spectrum stock purchase agreements
will be sufficient to satisfy our projected cash requirements over the next
12 months. Our estimate of these cash requirements is as follows:

Research and product development.................. $ 973,000
Operating expenses, including
administrative salaries and benefits,
office expenses, rent expense, legal
and accounting, publicity, investor
relations....................................... 1,137,000
Repay related party loan plus interest............ 330,000
Pay down past-due accounts payable................ 260,000
----------
Total Cash Requirements........................... $2,700,000
==========

Our estimate of operating expenses represents the expenditures we
anticipate incurring in the operation of our business, and includes our
estimated costs associated with the preparation of this prospectus and the
filing of the registration statement of which it forms a part, including
legal, accounting and printing expenses and filing fees.

We intend to pursue our research and product development activities,
concentrating the major portion of our available resources on the shielding
and filtering technologies for achieving MRI safe solutions. We have
identified a core group of potential customers/development partners for our
technology and continue to meet with these companies on a regular basis. We
are obligated by confidentiality and nondisclosure agreements with the
companies we are speaking with concerning potential relationships. Consistent
with our business strategy, on September 25, 2003, we entered into a
development agreement with Boston Scientific Corp., a medical device
manufacturer, to develop MRI capability for one of their products. The terms
of this development agreement are confidential. Additionally, our
negotiations with other biomedical device manufacturers and our evaluation of
their proposals is continuing.

Our goal is to enter into a development arrangement with several or more
of these entities whereby each entity would provide financial and research
support to further the commercialization of our technologies. In addition to
seeking development arrangements with potential partners, we will continue to

Page 22

expand our technology portfolio by seeking to acquire complementary
technologies through licensing arrangements with other third parties. Key
members of our management team have and will continue to attend and present
technical papers at industry trade conferences and to leaders in the pacing
and medical device arena.

We estimate that our research and development plan will require
approximately $973,000 of our funds over the next 12 months, dedicated to the
following activities:

MRI Shielding for Active Medical Devices.......... $ 563,000
MRI Shielding for Passive Medical Devices......... 410,000
----------
Total........................................... $ 973,000
==========
The MRI Shielding project entails the development of technology that
may be applied to active medical devices and passive medical devices to allow
patients to undergo MRI diagnostics. Active medical devices include such
items as pacemakers and drug pumps, and passive medical devices include such
items as biopsy needles, stents and guidewires.

Our current strategic plan does not indicate a need for material capital
expenditures in the conduct of research and development activities, nor does
the plan contemplate any significant change in the number of employees. We
currently employ eleven full-time individuals.

BUSINESS

Company History

We incorporated in the State of Idaho on August 1, 1968 under the name
Idaho Copper and Gold, Inc. On February 9, 1999, we amended our Articles of
Incorporation to change our name from Idaho Copper and Gold, Inc. to Idaho
Technical, Inc. On January 12, 2000 we formed a corporation in Nevada with
the intent to move our domicile to Nevada. On January 24, 2000, we
implemented the change of domicile to Nevada by filing Articles of Merger
between the Idaho and Nevada Corporations. On December 1, 2000, we amended
our Articles of Incorporation to change our name from Idaho Technical, Inc.
to GreatBio Technologies, Inc. and on July 19, 2001, we amended our Articles
of Incorporation to change our name from GreatBio Technologies, Inc. to
Biophan Technologies, Inc.

On December 1, 2000, we acquired LTR Antisense Technology, Inc., a New
York corporation, from Biomed Solutions, LLC (formerly Biophan, LLC), a New
York limited liability company, in a share for share exchange. As a result of
the exchange, LTR became a wholly owned subsidiary. The exchange was
consummated pursuant to and in accordance with an Exchange Agreement, dated
December 1, 2000 and amended as of June 8, 2001, by and among our company,
LTR and Biomed. LTR owns several patents for proprietary HIV antisense gene
therapy technology.

Just prior to the acquisition of LTR, our Board of Directors consisted of
Geoff Williams (President), David A. Miller (Vice President/Secretary/
Treasurer), Dale F. Miller and Ed Cowle. There were 4,047,330 shares of stock
outstanding including shares owned by the following control persons. Geoff
Williams owned 351,000 shares (8.7%), David A. Miller owned 90,500 shares
(2.2%), Dale F. Miller owned 91,500 shares (2.2%), Ed Cowle owned 851,000
shares (21%), H. Deworth Williams owned 1,398,200 shares (34.5%), and Biomed

Page 23

owned 718,000 shares (17.7%). There were no other control persons prior to
the acquisition. The terms of the transaction were established by arms-length
negotiations between Messrs. Cowle, Miller and H. Deworth Williams on
behalf of our company, and Michael Weiner on behalf of Biomed, and were
approved by our Board of Directors and the Board of Members of Biomed. In
connection with the transaction, 250,000 shares were issued to Walter Keay,
an individual who acted as a financial consultant for us in connection with
the transaction.

Immediately following the acquisition, the same control persons owned
collectively 97.9% of Biophan.

In connection with the exchange, we:

* issued 10,759,101 shares of common stock to Biomed in exchange for
all the issued shares of LTR; and

* issued an additional 10,759,101 shares of common stock to a group
of investors, consisting of Ed Cowle, H. Deworth Williams and
Geoff Williams, for cash of $175,000 in order to provide initial
working capital.

Also on December 1, 2000, we acquired intellectual property rights,
including a pending patent to the MRI-compatible pacemaker technology from
Biomed, for future consideration of $500,000. The assignment was consummated
pursuant to, and in accordance with, a Transfer Agreement, and a related
Assignment and Security Agreement, dated December 1, 2000 and subsequently
amended, by and between us and Biomed. The due date of this payment has been
extended to be payable in 12 equal monthly installments commencing on June 1,
2004. The obligation bears interest at 8% per annum from February 28, 2002.

The Assignment and Security Agreement (i) assigns the rights to the
transferred MRI patents and subsequent improvements, and (ii) provides the
same as collateral for the payment of the $500,000 liability under the
Transfer Agreement. Both the Exchange Agreement and the Assignment and
Security Agreement contain provisions for the reversion of the technology to
Biomed if:

* we become bankrupt or otherwise seek protection from creditors; or

* in the case of the MRI-compatible technology, we fail to pay the
consideration therefor when due.

During 2001, we entered into a Commercial Research and Development
Agreement (CRADA) with the National Institutes of Health and the University
of Rochester Cancer Center, wherein these organizations conduct research and
development associated with the antisense technology. This allowed us to put
our full resources into the development of the MRI safety improvements to
biomedical products. In 2002, we decided to discontinue research and

Page 24

development of the HIV antisense technology and the CRADA was terminated.
While the technology holds promise and has issued patents, we feel our most
promising opportunity is in the MRI safe solutions we have developed and we
intend to focus our research and development activities on that technology.
We may sell the HIV antisense patents if an appropriate buyer can be
identified.

Company Business

Our core business is providing technology that will enable both
implantable medical devices such as pacemakers, and interventional devices
such as tools used inside the body during surgery, to be used safely and
effectively in conjunction with MRI diagnosis, and will enable surgical
procedures to be performed under real-time MRI guidance.

Background Terms, Facts, and Assumptions:

MRI is widely considered to be the premiere non-invasive imaging method
due to the following capabilities:

* Superb soft tissue contrast
* No ionizing (x-ray) radiation that can cause cancer.
* No toxic contrast agents such as those used in some x-ray
procedures to highlight specific tissues that can cause allergic
or other reactions.
* Images are not obstructed by bone
* Multi-plane images can be obtained without repositioning the
patient
* The ability to use MRI to guide surgical procedures.

Due to these advantages, we believe the use of MRI will continue to
increase and our technologies will be attractive to commercial partners. As
the technology continues to evolve, MRI systems using higher power levels
will provide better image quality. However, these advances may create
greater risks to more patients and institutions that use MRI, exposing
pacemaker patients to MRI creates risks and liabilities that are likely to
endure for some time. We believe that a solution that can be shown to
substantially reduce these risks would be readily accepted by the market.
Such a solution may provide prospective licensees with the opportunity to
increase their market share by offering safer devices, as well as reduce
potential liabilities. Biophan's MRI-safe technology platforms could make
this possible in a way that requires no changes to existing product designs,
and requires very minor modifications to existing product manufacturing
processes.

FDA regulations and manufacturer labeling for pacemaker devices include
strict contraindications against use in an MRI environment(See Achenbach S,
et al Am Heart J 1997;134:467-473; ECRI, Health Devices Alert, May 27,1988,
pp.1; Shellock FG, Reference Manual for Magnetic Resonance Safety: 2002
edition, Amirsys, Inc., Salt Lake City, 2001; Zaremba L. FDA guidance for MR
system safety and patient exposures: current status and future considerations
/ Magnetic resonance procedures: health effects and safety. CRC Press, Boca
Raton Fl, pp.183-196, 2001). Contraindication means that a particular action
or procedure, in this case, use in an MRI environment, is inadvisable. This
pacemaker contraindication is based on evidence that induced electrical
currents in the pacemaker lead can falsely pace the heart rapidly, can damage
the device itself, and can create localized heating that causes tissue damage
that may degrade the effectiveness of the pacing system. Independent
description of these problems can be found in the following references:

Page 25

1. Experimental studies showing that pacemaker electrodes could heat
up to 100 C (increase of 63.1 C) within 90 seconds of MRI scanning: S.
Achenbach, et. al. "Effects of MRI on Cardiac Pacemakers and Electrodes,
American Heart Journal, 1997, 134, 467-473.

2. Professional opinion that "In practice, it is not possible to
design a device for use in an MR environment, incorporating long metallic
parts such as guidewires, mechanical cables, or electrical leads, and be
completely sure of safety." Conclusions from experimental studies showing 74
C (and higher) temperature increases in guidewires after 30 seconds of MR
scanning. M. Konings, et.al. MEDICA MUNDI, 45/1, March 2001, page 35.

3. Experimental data indicating a maximum temperature of almost 90 C
and myocardial necrosis (that) could be demonstrated in histological studies.
F. Duru, et.al. Pacing in MRI environment: Clinical and technical
considerations on compatibility. Eur Heart J, 2001, 22: 113-124.

A conservative estimate of pacemaker population worldwide is 2.5 million
(See Barbaro, V.; Bartolini, P., and Bernarducci, R. Biomedical Engineering
Laboratory, Istituto Superiore di Sanita, Rome, Italy. ingbio:net.iss.it 2.5
million in 1997 and growing annually). Another reference ("Interference in
Implanted Cardiac Devices, Part II" by Sergio L. Pinski and Richard G.
Trohman, October 2002, PACE, Vol. 25, No. 10) cites a Japanese survey in
which 17% of Japanese pacemaker patients stated that they presented
conditions for which MRI would have been recommended if the device
(pacemaker) had not been present. Since the practice of medicine in Japan
reflects standards of care in the US and other countries where the use of
pacemakers is widespread, it is reasonable to use the 17% figure across the
worldwide population of pacemaker patients (2,500,000) to reach a number of
425,000 people who have at some time in the past been denied access to MRI
diagnosis as a result of their pacemaker implant. Biophan has taken a
conservative approach to these numbers and estimated that at least 300,000
pacemaker patients have been denied an MRI. However, currently no pacemaker
patient can safely undergo an MRI, and FDA regulations and manufacturer
labeling for pacemaker devices include strict contraindication against use in
an MRI environment.

Our shielding technology is intended for use on the lead that connects
the implanted pulse generator to the electrodes that are placed in the
internal heart wall. In order to eliminate risks associated with MRI for
current pacemaker patients, the existing lead would need to be removed. This
removal procedure is typically not done due to associated risks to the
patient. As a result of this our shielding technology is intended only for
future products, not previously implanted pacemakers. 600,000 people receive
a pacemaker implant annually, and our technology could potentially be applied
to all of these devices if it were adopted by all pacemaker and lead
manufacturers worldwide. See
http://biomed.brown.edu/Courses/BI108/BI108_1999_Groups/
Cardiapacing_Team/economics.html. In addition, the shielding technology, if
successfully developed, could be used as an alternative to our photonic
technology for use in temporary pacing for patients with existing implanted
pacemakers who need an MRI procedure.

Other medical devices also contraindicated for use with MRI could be
made safe with Biophan's technologies. (See "The Reference Manual for

Page 26

Magnetic Resonance Safety, by Dr. Frank G. Shellock, 2002 edition, Amirsys
Inc., ISBN 1-931-884-00-5.). Technologies currently under development by us
for MRI safety and compatibility, provide the following advantages to devices
that use them:

* Reduction of heating to long metallic components resulting from
radio frequency energy and pulsed magnetic fields used in MRI;

* Reduction of electrical currents induced in metallic components
resulting from radio frequency energy used in MRI; and

* Reduction of MRI distortion resulting from metallic or other
conductive components in or near the body area being imaged.

Pacemakers are one example of implanted devices used to control organ
function. Other cardiac-related devices, such as implantable cardioverter
defibrillators, are used to not only pace, but also to help the heart recover
from episodes of dangerously high pulse rate (cardioversion) and from random
chaotic behavior (defibrillation). Other stimulation devices are used to
help organize the contraction of the four heart chambers to reverse the
effects of congestive heart failure (CHF). Neurostimulators are being used to
stimulate brain tissue and eliminate symptoms of Parkinson's disease.
Electrical stimulators are also being used for bladder dysfunction. All of
these devices use electrical leads similar to those in pacemakers. These
devices are subject to the same heating and electrical currents and can
benefit from the technologies being developed by Biophan.

Surgical placement of leads used with pacemakers and other implantable
devices, placement of catheters for short-term use, and placement of more
permanent devices such as stents within the circulatory system, is done by
use of guidewires. These guidewires typically use long metal wires for
reasons of strength, flexibility, and reliability. The use of guidewires
benefits from direct, real-time visualization. MRI is preferred in many
cases due in part to the fact that x-ray imaging exposes patients and
physicians to radiation, and due to the improved soft-tissue imaging
available with MRI. However, guidewires and long wire components in
catheters are subject to the same problems associated with pacemaker leads
when used in MRI. Thus, our technologies being developed can also provide
benefits to these devices.

We are presently in the process of establishing one or more partnerships
to complete the development process for our technologies. These partnerships
may be with one or more companies involved in the manufacture and sale of:

* components such as pacemaker leads,

* active devices such as pacemakers that make active use of wires to
conduct data and stimulating pulses,

* passive devices such as guidewires that only make use of the
physical properties of the wire elements in them, and

* MRI diagnostics systems.

Page 27

All of these potential business relationships are being pursued with the
interest of funding the remaining development work, supporting necessary
clinical trials and approvals, and ultimately resulting in a license for
manufactured products with royalties coming to Biophan. Consistent with our
business strategy, on September 25, 2003, we entered into a development
agreement with Boston Scientific Corp., a medical device manufacturer, to
develop MRI capability for one of their products. The nature and terms of
this development agreement are confidential. Additionally, our negotiations
with other biomedical device manufacturers and our evaluation of their
proposals is continuing. If we do not enter into additional development or
licensing arrangements with any third parties then we may need to obtain
additional financing to continue our development efforts. In this situation,
if we are unable to obtain additional financing or sell or license our
technology we would have to discontinue our development efforts which may
force a dissolution of the business. We do not have plans to create separate
business units to pursue these opportunities.

An MRI procedure may be crucial to diagnosing colon cancer, a brain
tumor, or a host of other serious, life threatening problems. The existence
of a medical device that is not MRI safe and compatible requires physicians
and patients to make a very difficult decision to either forego the MRI, or
risk serious injury and potential death from undergoing MRI with a pacemaker,
neurostimulator, or other implantable device installed. See the following
references for information relating to patient deaths:

1. FDA Medical Device Report (MDR) records of pacemaker patient
deaths during or shortly after an MR exam. FDA Medical Device Records (MDRs)
# 351516, 748838, 175218, and 1259381.

2. Pacemaker patient who died 15 minutes after MRI scan of the brain.
"Fiber Optics May Allow Pacemaker Users To Undergo MRIs Without Health
Threat." The Wall Street Journal, Feb 22, 2002. D. Pennell, M.D. Imperial
College, London.

3. Pacemaker patient who suffered severe brain damage and death
following an MRI exam. Loss prevention case of the month. "Not my
responsibility!" Journal of the Tennessee Medical Association. 1988;81(8):
523, J. K. Avery, M.D. St. Thomas Hospital, Nashville, TN.

Technology

A brief description of the terms used to describe our technologies may
be helpful and is presented below.

* The term "MRI safe" refers to a situation in which MRI testing
will cause no harm to the patient or to any implantable or
interventional device within them.

* The term "MRI compatible" refers to a situation in which image
interference is minor, and the resulting MRI image is useful in
diagnosing the patient's state of health.

* The term "active" refers to an implantable device or surgical
implement that uses optical, electrical, and/or other energy to
sense or transmit information, and/or modify or treat diseased

Page 28

tissue. Examples include pacemakers and related devices, catheter
imaging devices, and drug pumps, all of which may be affected
during MRI.

* The term "passive" refers to an implantable device or surgical
implement that does not transmit information but serves to move,
secure or modify tissue or another device, and does so via its
mechanical action or presence only.

* Carbon composite materials consist of ultra-fine whiskers of
carbon dispersed in a plastic material. The resulting material
has the ability to absorb and/or reflect electromagnetic energy at
frequencies that relate to the size of the whiskers. This
material can be extruded and molded to make components.

* Nanomagnetic materials consist of ultra-fine particles of magnetic
material (such as iron) embedded in a ceramic material. These
particles are so small that they behave differently than they
would in a continuous layer or solid. The choice of magnetic and
ceramic materials, particle sizes, and layer thickness permit
'tuning' the nanomagnetic layer to reflect and/or absorb specific
frequencies of energy. They are also so thin that they can flex
without breaking and are extremely tough.

* Filtering technology that essentially blocks unwanted induced
currents at both ends of a catheter or other device.

* Photonic technology that uses miniature diode lasers and
photocells at each end of a catheter or pacemaker lead or surgical
device to transmit energy and information without any electrical
conductors. Diode lasers are semiconductor devices that can be as
small as the size of a grain of salt that convert an electrical
pulse to light at a single frequency or color. Photocells reverse
this process and can also be very small. By integrating these
elements carefully at each end of an optical fiber, we can send
power and information without the use of wires. This technology
has been made very reliable and cost effective by development in
support of the telecommunications industry.

* A further application of photonics is in intraluminal imaging.
This is an extension of MRI imaging where the MRI receiver coil
that is traditionally outside the body, is reduced to a very small
size (microcoil) so that it can be placed inside (intra) a body
cavity or blood vessel (lumen). This can provide significant
improvements in resolution. We believe the performance and safety
of these microcoils can be greatly improved by using our photonic
technology to replace the wires currently being used by
researchers to connect them to the external MRI system.

Research and Product Development Activities

We are developing technology that will enable patients with implanted
biomedical devices to safely undergo MRI. The research and development

Page 29

expenses incurred by us were $113,144 for the fiscal year ended February 28,
2001; $949,124 for the fiscal year ended February 28, 2002, $1,373,124 for the
year ended February 28, 2003, and $439,889 for the six months ended August 31,
2003.

We are committed to the development of MRI-safe solutions for pacemakers
and other biomedical devices. Specifically, we have been developing an MRI
safe temporary pacemaker and recently conducted animal tests demonstrating
that this temporary pacemaker can safely pace an animal's heart. The details
of this testing are discussed below. The current design of the temporary
pacemaker utilizes a photonic, or fiber-optic based catheter which could be
inserted into a patient prior to an MRI procedure to ensure that if their
implanted device fails or malfunctions, the temporary device will keep their
heart safely paced. Based on our testing and research we believe the technical
and clinical feasibility of a photonic approach has already been demonstrated.

Initially, we planned to develop the photonic temporary pacemaker
ourselves through clinical trials, FDA approval and into commercial use.
However, we do not intend to take the device through FDA approval on our own.
Instead we are offering the temporary pacemaker, along with our other MRI safe
solutions, to prospective licensees for licensing and further development. To
date we have received licensing interest in a fiber-optic catheter for an
imaging application using MRI scans, called "intraluminal imaging" however, we
have not yet entered into any licensing or development contracts for the
technology.

Our current research efforts are focused on demonstrating the feasibility
of our coating and filtering solutions that we intend to license to medical
device manufacturers. Initial tests of these solutions have been promising
enabling us to have discussions with several companies regarding potential
development arrangements. Consistent with our business strategy, on September
25, 2003, we entered into a development agreement with Boston Scientific Corp.,
a medical device manufacturer, to develop MRI capability for one of their
products. The nature and terms of this development agreement are
confidential. Additionally, our negotiations with other biomedical device
manufacturers and our evaluation of their proposals is continuing.

The results of these tests are discussed below. Until these tests were
recently completed, it was not clear if these solutions could solve the MRI
safety issues of pacemakers and other devices. With the initial results we
have achieved, it appears that these solutions can significantly reduce the
heating and other problems that have caused the MRI contraindications. Our
discussions with major manufacturers of pacemakers and other devices have
indicated a strong preference for coating/filtering solutions versus photonic
solutions for several reasons including battery life and ease of engineering
redesign. To date, we have received licensing interest in our technology
from pacemaker, guidewire and neurological device companies, but we have not
yet entered into any licenses for the technology.

Our original focus was solely on pacing technology. However, following
the testing of our coating and filtering technologies and the corresponding
positive feedback from medical device manufactures, both inside and outside
the pacing industry, we believe our potential market has been significantly
increased. This increase is a result of developing technology that could be
utilized by medical devices, including guidewire and neurological devices in
addition to the pacemakers. As the coating/filtering technology does not
require a complete product redesign and manufacturers have indicated a
preference for this technology, we believe the time to commercialize our
technology has been reduced. Further, we anticipate that one or more
manufacturers will partner with us in developing the technology, thereby

Page 30

reducing our capital requirements. If we do not enter into a development or
licensing arrangement with a third party for our coating/filtering
technologies then we will have to obtain additional third party financing to
fund these development efforts or discontinue further development of our
coating/filtering technologies.

We have completed two evaluations of the fiber-optic based temporary
pacemaker. Tests were performed in an active MRI environment conducted in a
"phantom" (a plastic box with gel material that mimics the body) proved
operability of the device and lack of heating. An animal study
demonstrated that the device can effectively pace the heart. No clinical
tests on humans have been conducted and there are currently no plans to do so
unless a development partner is identified and unless they assume
responsibility for conducting these tests. However, animal studies such as
those conducted have a good correlation to human clinical trials, since the
cardiac pacing mechanisms and their similarities across species are well
understood.

We believe that the combination of these tests demonstrates that a
photonic pacemaker can effectively pace a heart, while eliminating the
serious problems related to induced electrical currents and heating of the
lead/tissue interface. In the test, the photonic catheter and pacemaker
provided cardiac stimulation equivalent to that of a traditional electronic
pacemaker. The in vitro test demonstrated that this stimulation is safely
provided in the presence of electromagnetic fields associated with MRI.
Additionally, the photonic catheter was found to have handling
characteristics similar to traditional catheters.

The fiber-optic lead has been tested in an MRI machine and does not heat
up as do existing catheters that contain metal wires. We are exploring the
use of this technology with third parties, under license, for use in deep
brain stimulation applications, such as treating movement related disorders
like Parkinson's disease and epilepsy. We have also received OEM licensing
interest from several companies wishing to use the fiber-optic lead to power
intraluminal coils. We are anticipating one or more R&D contracts to help
finance the development of this product that is based upon Biophan's photonic
technology platform.

We have licensed, on an exclusive basis, issued patents for shielding and
electromagnetic interference (EMI) filtering technologies that include the
use of carbon composite and nanomagnetic particle technologies.

We have obtained a license from Johns Hopkins University for an issued
patent for an MRI-safe electrocardiogram and pacemaker lead. The license is
exclusive to us for implantable devices and also covers other market
segments. This technology provides a low-pass radio frequency ("RF") filter
at the electrode tip in the heart that permits conduction of pacemaker
signals but blocks high-frequency MRI electromagnetic signals that cause
problems in implanted devices.

Two tests of our technologies were recently conducted in active MRI
imaging systems at imaging centers located in Western New York. The first
test, showed a reduction of thermal heating caused by an MRI machine on a
metal wire similar to a pacing lead that is protected by one of our MRI
technologies. The control sample heated over 22 degrees Centigrade in less
than one minute. With the Biophan technology added, the heating was reduced
to about 1 degree Centigrade, below the level that can cause tissue damage
and well within FDA safety guidelines. The second test showed a reduction of
89% in the electrical energy induced in a metal object by the MRI radio
frequency field after our MRI safety technology is added to the sample.

Page 31

The two tests of Biophan's coating and filtering technology were
conducted on November 11, 2002 and February 13, 2003. These tests were
performed in an actual MRI chamber at the University Medical Imaging Center
(UMI), located at 4901 Lac de Ville Boulevard, Rochester, New York. Both
tests were run by Biophan and UMI personnel.

We have also filed patents for reducing the energy output of an MRI
machine in order to minimize the energy that causes lead heating. The
combination of shielding, filtering, and MRI output reduction could possibly
result in solving the MRI heating problem in both active medical devices
(e.g., pacemakers, defibrillators), and passive medical devices (e.g.,
catheters and guidewires).

We conduct our R&D and prototype development through sub-contract
arrangements with third parties. Greatbatch Enterprises Corporation, a
company in Clarence, New York founded and managed by Wilson Greatbatch, has
developed the fiber-optic prototype temporary pacemaker for us under
contract, and has assigned the related patent applications to Biophan. Any
future prototype work on the photonic catheter will be conducted with FDA
approved manufacturers. Biophan has entered into R&D agreements with Alfred
University to develop nanomagnetic shield technology, and with the University
of Buffalo for carbon composite polymers (extremely fine carbon fibers in a
polymer, or plastic base material). These arrangements are discussed below
in more detail.

Biophan has entered into a development agreement with the UB Business
Alliance (at the University of Buffalo). The objective of the first phase of
this collaboration focused on developing the means to shield implanted
medical devices, such as a catheter, from the harmful effects of MRI. The
second phase of this collaboration is focusing on improving the shielding
technology developed in phase one by optimizing the formulation through the
use of a magnetic additive. The technology being developed by this
collaboration consists of small carbon materials manufactured in a flexible
polymer support. Major activities include development of optimally performing
mixtures of carbon and polymer materials and the application of these optimal
formulations to medical devices. Under the terms of the agreement for phase
one of the collaboration, we paid $23,375 toward the total project cost of
$42,994. All aspects and obligations of phase one have been completed and
satisfied. Biophan will pay $31,922 toward the total phase two project cost
of $50,539 in four equal installments of $7,980.50. The initial amounts were
paid August 15, 2003 and October 24, 2003, and subsequent installments are due
and payable < as follows: January 31, 2004 and a final payment within 30
days of the receipt of the final project report. Phase two of this
collaboration is expected to be completed in August of 2004.

Biophan has also entered into agreements with Alfred University. The
objective of this collaboration is to develop the means to shield implanted
medical devices, such as pacemaker leads, from the harmful effects of MRI and
to resolve image artifacts in medical devices such as guidewires, stents,
pacing leads and other medical devices. The technology being developed by
this collaboration consists of nano-magnetic materials and the processes used
to apply these materials as uniform, thin-film coatings. Major activities
include the development of optimal nano-magnetic coating formulations,
delivery of coated pacemaker leads, the delivery of coated guidewires and

Page 32

other devices suitable for testing, processes for applying these formulations
to medical devices, and the testing of these devices in an MRI system. This
collaboration also provides Biophan with access to expensive, thin-film
coating equipment considered essential to the development of effective nano-
magnetic MRI shielding materials. Biophan has paid Alfred University
$127,200 to date for these services.

While the objectives of the two collaborations are similar (i.e. the
development and evaluation of MRI shielding materials), it should be
understood that each collaboration is developing a different technology. The
success of these collaborations would provide Biophan with multiple solutions
to the MRI safety problem. Biophan considers this to be very important,
since the MRI shielding requirements differ by product type, and having
multiple solutions would enable us to apply our technologies to a broader
range of products. Specific product technology development activities along
with timelines and estimated costs, can be found in the section "Products and
Markets" below in this document.

Patents and Intellectual Property

We have been aggressive in filing patent applications on these
technologies. Due to the importance of our patent portfolio it may be
helpful to provide more detail regarding the patent process:

* Once a patent application is filed, the United States Patent &
Trademark Office (USPTO) examines it over a period that may range
from a year to two or more. USPTO Office Action is a challenge to
the content or scope of the patent, and may require one or more
iterative responses to the Examiner's questions or challenges.
During this process, typically after 18 months from filing, the
USPTO will publish the application, making it available on the
USPTO database so that it is publicly available. Once negotiation
over the Office Action is complete the USPTO may allow the patent,
essentially informing the inventor(s) that they may pay fees and
the patent will then issue, or become a formal patent.

* As previously discussed, we have exclusive licenses, for medical
device applications, to three issued patents; one each in the
areas of carbon composite shielding, nanomagnetic shielding, and
RF (radio frequency) filtering. RF filters are commonly used in
communications equipment to block unwanted signals.

* We have filed 42 US patent applications covering various aspects
of photonic and other technologies providing improvements in MRI
safety and compatibility, as well as other aspects of implantable
device performance. None of these applications has yet been
allowed, approximately 80% of these have been published by the
USPTO, and initial Office Actions have commenced.

* The inventor of the nanomagnetic shield technology, Dr. Xingwu
Wang, at Alfred University, New York, has applied for an
additional nine US patent applications covering further
improvements extensions to that technology; these will also be
licensed exclusively to Biophan for medical markets.

* Additional patent filings in nanomagnetic materials, and in MRI
microcoil designs, are in process or contemplated.

Page 33

The issued patents have remaining lifetimes, as follows:

* U.S. 6,506,972; Magnetically Shielded Conductor; 19 years
* U.S. 5.827,997; Metal Filaments for Electromagnetic Interference
Shielding; 11 years
* U.S. 5,217,010; ECG Amplifier and Cardiac Pacemaker for Use During
Magnetic Resonance Imaging; six years

Lifetimes for any additional patent applications that are granted as
patents by the USPTO will be the greater of:

* 17 years from the date of issue, or
* 20 years from the date of filing.

The patent strategy being pursued by us is based on both broad coverage
at the system level and focused coverage at the component level. This
strategy is being applied to active medical devices such as cardiac assist
devices (pacemakers and defibrillators), intraluminal imaging coils, patient
monitoring instrumentation, neurostimulators, drug pumps, endoscopes; and to
passive medical devices such as biopsy needles, guidewires, and to other
medical devices that need to be made safe and effective in an MRI
environment.

Michael L. Weiner, our President and CEO, has participated as inventor
or co-inventor in a number of the patent applications currently being pursued
by Biophan, each of which has been assigned to us. Throughout his employment,
Mr. Weiner has assigned and will continue to assign to us rights to patents
that deal with MRI safety, image compatibility and HIV antisense. Biophan
does not have proprietary rights in six unrelated patents, of which Mr.
Weiner is the inventor or co-inventor, in areas of technology outside of
Biophan's business interests. One of the six patents was the basis for an
infringement suit against LeapFrog Enterprises, which was recently settled.
The terms of the settlement agreement are confidential. This infringement
suit was unrelated to the business of Biophan as is the patent upon which it
is based. Of the patents, for which Mr. Weiner is an inventor of co-
inventor, assigned to entities other than Biophan, none will be directly or
indirectly competitive with Biophan. All material assignments of patent
applications from Mr. Weiner to Biophan have been filed as exhibits to the
registration statement, of which this prospectus is a part.

Products and Markets

We are addressing three basic areas of technology and product
development that apply across several market segments:

* MRI shielding for active medical devices.

* MRI shielding for passive medical devices, such as guidewires and
biopsy needles, enabling surgery be done under MRI guidance.

* Photonic and shielding solutions for MRI imaging

Page 34

We do not intend to produce by ourselves a product for sale, but rather
to make our technologies available to other companies or partners that would
like to include in their own product portfolio a new product(s) containing
our technology. We anticipate that any such product(s) would be developed
through collaboration with external companies or partners. Most likely, we
would enter into licensing and R&D agreements with these partners, which
ultimately could be potential sources of funding. Although we would consider
lump-sum license payments, if offered, we anticipate licensing income in
advance of product sales to tie up rights for each market segment, and then
ongoing royalties once these products are in the market. Potential revenue
streams above any negotiated minimum license payments would likely commence
six to nine months following approval by the FDA for product shipments.

Following are brief descriptions of the planned development activities,
each with a set of milestones with timeline and estimated Biophan cost net of
any revenues. In each case, we are assuming that a commercialization partner
will be identified and provide revenues, in the form of development payments,
to assist us in the further development of the particular technology. The
milestone projections comprehend receiving such development revenues, in each
case, at the milestone/activity stage denoted as "3. Complete a Detailed
Product Design", generally, during the first half of calendar year 2004.

MRI shielding for active medical devices

We have licensed, developed, and patented technology in both carbon
composite shielding and nanomagnetic shielding. For certain devices, this
approach has the potential to provide a more cost-effective path to MRI
safety and compatibility than the photonic approach. Results of direct
testing in an MRI device to date have been quite promising, and further work
is underway to refine the designs of materials and coating methods. This MRI
shielding technology may be applied to active medical devices such as
pacemakers and related devices, drug pumps, and the like. We are currently
having discussions, under confidentiality agreements, with manufacturers of
primary device components such as pacemaker leads, as well as manufacturers
of complete systems, concerning their use of this technology. Ongoing
research, test, and evaluation activities in nanomagnetic shielding are being
done internally, and in conjunction with Dr. Wang (the inventor of the
technology) at Alfred University, and Dr. Chung at the University of Buffalo.
The material terms of these contracts are discussed under the heading
"Research and Product Development Activities."

Milestones / Activities - MRI Shielding for Active Devices:

MILESTONE/ACTIVITY TIME PERIOD REQUIRED
FUNDING
(000s)
----------------------------------------------------------------------------------

1. Demonstrate Technical Feasibility

a. Demonstrate the ability to minimize or Done
eliminate device heating and electrical
problems caused by MRI

Page 35

b. Demonstrate the ability to meet December 30 - June 04 $ 80
secondary product performance
requirements (e.g. biocompatibility,
flexibility, etc)

c. Demonstrate that the technology can be December 30 - June 04 $ 60
manufactured at acceptable costs and
quality

d. Continue to file related patent Done
applications

2. Identify a commercialization March to June 2003 $ 33
partner(s)

3. Complete a Detailed Product Design December 03 - June 04 $180
a. Further optimize the technology's
performance and manufacturability

b. Develop detailed Product Design and
Manufacturing Process Specifications

4. Complete Design Verification May 04 - October 04 $210

a. Demonstrate that a product
manufactured to the Product Design
Specifications will satisfy the
Product Performance Requirements

b. Develop documentation required to
initiate clinical testing

Spending through $563
October 2004

5. Complete Design Validation November 04 - June 05 $150

Page 36

a. Demonstrate that a product
manufactured to the Product Design
Specifications is clinically effective
and safe when used as intended

b. Develop documentation required for
regulatory body approval to distribute
and sell the product
Total Project Spending $713
======

Biophan intends to identify a
commercialization partner(s) to help
prioritize and financially support
activities (3), (4), and (5).

MRI shielding for passive medical devices

The same MRI shielding technology may be applied to a wide variety of
passive devices that are used in implantable medical devices and in surgery,
such as biopsy needles, guidewires, endoscopes, etc. We believe that our MRI
shielding will eliminate the problems of patient risks and image degradation
for passive devices and surgical implements which incorporate the technology.
We are currently having discussions with a variety of manufacturers of passive
devices, and are involving them in test procedures we are conducting. Ongoing
research, testing, and evaluation of this technology is also being done with
Dr. Wang (the inventor of the technology) at Alfred University, and Dr. Chung
at the University of Buffalo.

Milestones / Activities - MRI Shielding for Passive Devices

MILESTONE/ACTIVITY TIME PERIOD REQUIRED
FUNDING
(000s)
-----------------------------------------------------------------------------------

1. Demonstrate Technical Feasibility

a. Demonstrate the ability to minimize or Done
eliminate device heating and electrical
problems caused by MRI

b. Demonstrate the ability to meet December 03 - June 04 $ 50
secondary product performance
requirements (e.g. biocompatibility,
flexibility, etc)

c. Demonstrate that the technology can be December 03 - June 04 $ 40
manufactured at acceptable costs and
quality

d. Continue to file related patent October 03 - February 04 $ 40
applications

2. Identify a commercialization October 03 - December 04 $ 30
partner(s)

Page 37

3. Complete a Detailed Product Design December 03 - May 04 $ 80

a. Further optimize the technology's
performance and manufacturability

b. Develop detailed Product Design and
Manufacturing Process Specifications

4. Complete Design Verification April 04 - August 04 $150

a. Demonstrate that a product
manufactured to the Product Design
Specifications will satisfy the
Product Performance Requirements

b. Develop documentation required to
initiate clinical testing

5. Complete Design Validation September 04 - October 04 $ 20

a. Demonstrate that a product Spending through $410
manufactured to the Product Design October 04

Specifications is clinically effective
and safe when used as intended

b. Develop documentation required for November 04 - $100
regulatory body approval to distribute April 05
and sell the product

Total Project Spending $510
=====

Once again, Biophan intends to
identify a commercialization
partner(s) to help prioritize and
financially support activities (3),
(4), and (5).

Photonic technology applied to a temporary pacemaker

We subcontracted the development and testing of a photonic temporary
pacemaker device to Greatbatch Enterprises. This phase of the development
work has been completed. The photonic temporary pacemaker is intended as a
backup for patients who need MRI diagnosis but who already have an
implanted pacemaker or implantable cardioverter defibrillator (ICD).
This device consists of:

* An external handheld controller that is MRI safe.

Page 38

* A fiber-optic lead that is biocompatible and physically similar to
typical electrical pacemaker leads. This lead is temporarily
inserted through a puncture and run through blood vessels to the
heart.

* The photonic electrodes at the end of the lead reconvert light to
electrical signals that pace the heart in the same manner as
traditional pacemakers.

* The controller is designed to be reusable, and the lead/electrode
is single use. The temporary pacemaker is available if the
implanted device encounters any type of malfunction during or after
the MRI procedure.

As previously noted, while the technical and clinical feasibility of a
photonic approach to cardiac pacing has already been demonstrated, the results
of recent Biophan research and development activities in shielding and
filtering technologies have enabled a change in direction of product
development. A coated temporary pacing lead is anticipated to be considerably
less expensive than a photonically powered temporary pacing device. Now that
we have demonstrated the feasibility of shielding and filtering of metal wire
leads, we are not currently conducting, directly or indirectly, any research
or development of our photonically based temporary pacing program until an
agreement is reached with a development partner. It should, however, be noted
that additional attributes of photonic technology relating to information
bandwidth are applicable to the emerging market of internally-placed micro-
sized MRI receiver coils (intraluminal MRI microcoils). The project is
described in the next section of this document.

The initial prototype of an externally powered photonic pacemaker being
developed by us was recently tested in an MRI system. The test used a
"phantom" or plastic and liquid model of a human torso to permit tests for
displacement due to the magnetic field, and for heating due to the RF energy.
The results of this test, conducted by Dr. Frank Shellock, concluded that "the
lead of the Photonic Temporary Pacemaker will not present an additional hazard
or risk to a patient undergoing an MRI procedure using an MR system operating
with a static magnetic field of 1.5 Tesla or less. (The term static magnetic
field refers to a field similar to one from a permanent magnet or the Earth's
natural field. A 1.5 Tesla field is approximately 30,000 times as powerful as
the Earth's field.) As such the lead of the Photonic Temporary Pacemaker that
underwent evaluation should be considered "MR safe" according to the specific
conditions used for testing." (See Shellock, F. G. "Magnetic Resonance Safety
Testing of a Fiber-Optic Lead Used for the Photonic Temporary Pacemaker.")

Photonic technology for intraluminal MR imaging

Our patent coverage includes the use of photonics in medical devices
unrelated to implants or to cardiac pacing. One example is in a relatively
new branch of MRI referred to as intraluminal MRI. Image quality and
resolution are directly related to proximity of the MRI receiver coil to
tissue being diagnosed. Traditional full-body receiver coils are large enough
for the patient and support device to pass through. Smaller coils placed on
the patient, near the area of interest, can provide improved images.

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Intraluminal (within a body opening or vessel) and intraparenchymal (within
tissue, e.g., brain) MRI microcoils provide performance advantages that
include improved image quality, reduced scan time, and the ability to utilize
lower strength MRI coils. However, current MRI microcoil techniques are
limited by problems similar to those that exist for pacemakers. A photonic
coil interface and use of optical fiber transmission eliminate these problems,
provide for other optical tissue measurements, and provide the ability to
handle huge amounts of data easily. One very exciting opportunity is in the
area of "vulnerable plaque". It is believed that up to 85% of heart attacks
and strokes may be caused by rapid formation of clots at places in the artery
walls that are missed by other diagnostic methods. A feature article from
Scientific American, May 2002; vol.286; no.5 by Peter Libby, entitled
"Atherosclerosis: The New View", describes in detail the new thinking
regarding the genesis of the vast majority of heart attacks and strokes. We
are currently seeking a licensee interested in developing and marketing the
photonic MRI and microcoil markets. The following cost projections are only
to be expended in the event of a licensee willing to fund a portion of
these phases and agree to take the product to market.

We are not currently conducting, directly or indirectly, any research or
development of our photonic technology and have no plans to further such
efforts until an agreement is reached with a development partner. The
necessary future product research, testing, and evaluation of these
improvements will be done as a part of a development partnership with this
partner, if and when such an agreement is reached.

Milestones / Activities - Photonic Technology for Intraluminal MR Imaging

MILESTONE/ACTIVITY TIME PERIOD REQUIRED
FUNDING
(000s)

1. Demonstrate Technical Feasibility Months 1-4 $ 50

a. Demonstrate the ability to minimize or
eliminate device heating and electrical
problems caused by MRI

b. Demonstrate the ability to meet
secondary product performance
requirements (e.g. biocompatibility,
flexibility, etc)

c. Demonstrate that the technology can be
manufactured at acceptable costs and
quality

d. Continue to file related patent
applications

2. Identify a commercialization Months 2-7 $250
partner(s)

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3. Complete a Detailed Product Design Months 8-16 $410

a. Further optimize the technology's
performance and manufacturability

b. Develop detailed Product Design and
Manufacturing Process Specifications

4. Complete Design Verification Months 17-19 $160

a. Demonstrate that a product
manufactured to the Product Design
Specifications will satisfy the
Product Performance Requirements

b. Develop documentation required to
initiate clinical testing

5. Complete Design Validation Months 20.31 $500

a. Demonstrate that a product
manufactured to the Product Design
Specifications is clinically effective
and safe when used as intended

b. Develop documentation required for
regulatory body approval to distribute
and sell the product

*Note: Project contingent on Total Project $1,370
Partnership; not in R&D Spending* ======
Spending Plan for 2003/2004

Markets

The global market for medical devices that could benefit from technology
that will enable those devices to operate safely and effectively in an MRI
environment was approximately $5 billion in the year 2002 and is growing
annually by 15%. (See Wedbush Morgan Securities' Equity Research Report 13
Mar. 2002 on NYSE-GB.)

We anticipate that we will license our technology to one or more
development partners who would be responsible to develop commercial products,
obtain necessary approvals, manufacture, market and distribute the products.

Page 41

We expect our search for development partners will be global, although our
current efforts are focused on the U.S. operations of certain multi-national
companies. However, we can not presently identify or predict the precise
target markets, distribution methods or other marketing efforts of our
potential development partners.

Competition

There are a number of major companies engaged in the development of
medical devices some of which may be investigating MRI safe options.
However, to the best of our knowledge none of these companies, nor other
companies that serve as their suppliers, have successfully developed
technology enabling implantable medical devices to be operated in the
presence of MRI equipment. We believe that in order to commercialize our
technologies we will have to enter into a development or licensing agreement
with one or more of the companies engaged in the development of medical
devices.

Currently, the major providers of active medical devices contraindicated
for MRI include the following companies:

Medtronic Incorporated is a leading manufacturer of cardiac rhythm
management, cardiovascular and other medical devices. The company has a
dominant position in cardiac pacemakers, is the leading manufacturer of
implantable cardiac defibrillators, and is a major player in most other
device markets in which it competes.

Guidant Corporation is also a leading manufacturer of cardiac rhythm
management devices such as cardiac pacemakers, implantable cardiac
defibrillators, interventional cardiology devices (including coronary
stents), and other cardiac and vascular surgery devices and instruments.

St. Jude Medical, Inc. is a global developer, manufacturer, and
distributor of medical device products for cardiac rhythm management,
cardiology and vascular access. Other products include mechanical and
tissue heart valves and vascular closure devices.

Boston Scientific Corporation is the world's largest medical device
company dedicated to less-invasive therapies. The Company's products and
technologies are designed to improve surgical procedures and improve
patient response, and involve a range of interventional tools and
procedures.

Johnson & Johnson is the world's largest healthcare company. In
addition to OTC and home healthcare products, they provide a wide
variety of pharmaceutical, diagnostic, and surgical products.

We do not consider the above companies to be direct competitors,
although they may possibly be developing MRI safe solutions for their own
product lines. Rather, they may have interest in adopting one or more of our

Page 42

technologies into their products. Various first and second tier suppliers to
these companies may be directly affected by either the photonic or shielding
technologies we plan to commercialize, and since to the best of our knowledge
none of them has satisfactory solutions to MRI issues, they are potential
additional or alternative prospects for commercializing our technology.

Manufacturing and Component Strategy

We are developing technology for MRI safety and image compatibility
which will be licensed to leading biomedical device manufacturers. We do not
plan to manufacture any product or component on our own. We may provide
critical components and coating devices sourced from third parties and resold
to our customers.

Regulatory Approval

We believe that our technology will be incorporated into various medical
devices by major manufacturers and that these manufacturers will be
responsible for obtaining Food and Drug Administration (FDA) and other
regulatory approvals required for clinical studies and marketing of their
products. The time and cost of these activities can be substantial,
especially for Class III implantable products, and could delay the
introduction to the marketplace of products utilizing our technology.

Currently, the FDA, specifically The Center for Drug Evaluation and
Research (CDER), is responsible for the approval to market products resulting
from the technology currently being developed by Biophan. Approval to market
may take the form of a New Drug Application (NDA). An NDA is sought by a
company prior to the commencement of clinical testing in humans. Before
approving an NDA, the FDA will seek substantial documentation demonstrating
that the product candidate technology is safe and effective. Once the NDA
has been approved, clinical trials are conducted in three sequential phases
which may overlap. Phase I clinical trials are performed in healthy human
subjects to establish initial data about the safety and efficacy of the
product. In Phase II clinical trials, in addition to accumulating safety and
efficacy data, the product is evaluated in a limited number of patients with
the targeted disease condition. Phase III clinical trials typically involve
continued testing for safety and efficacy, as well as other criteria, in
expanded, large-scale, multi-center studies of patients with the targeted
disease condition.

We do not intend to produce by ourselves a product for sale, rather we
intend to make our technologies available to other companies or partners that
would like to include the technology in their own product. We believe that
these companies will be willing to share a portion of the costs required to
obtain FDA approval. In certain instances, the FDA may require a partner's
participation if approval is being sought for modification of a partner's
existing product to include our technology, a product that uses the partner's
existing manufacturing processes, or a situation where a partner requires
that Biophan use the partner's quality system.

We believe that the timeframe for FDA approval of our photonic
technology for intra-luminal MR imaging, enabling us to make, use, and sell
the product, will depend upon the following factors:

* the FDA's classification of the photonic intra-luminal MR imaging
catheter;

Page 43

* the specific ways in which a partner plans to use the product,
such as the specific parts of the body they would like to image
with the product (e.g. cardiovascular system, brain, etc.); and

* the level of urgency placed on the activities required to obtain
product regulatory approval.

The FDA has already approved for sale intra-luminal imaging catheters
that utilize electrical leads to provide power to the microcoil and to carry
received signals back to the MRI system. Biophan is in discussions with one
company that has such a product, and we believe that our photonic technology
will permit improvements in performance due to its inherent immunity to
electromagnetic noise created by the MRI environment. We are under a non-
disclosure agreement with this other company and it is our expectation that
if we move forward to develop a photonic intraluminal imaging catheter, they
will be responsible for regulatory approval and for marketing and sale of the
product. There will be no competition between Biophan and any other company
based on an intraluminal imaging catheter. We plan to provide technology
that improves the market position of another company already in the
marketplace and not to develop a Biophan stand-alone product. In the event
that this program moves forward, our plans provide for a contribution of
$500,000 toward regulatory approval efforts costing approximately $1,500,000.
However, the partner company will be responsible for oversight and conduct of
clinical trials, and for applying to the FDA for approval.

Because sufficient information exists from already-approved products to
assure the safety and efficacy of these devices in the applications we
envision, we anticipate, but cannot guarantee, that the FDA will require a
Pre-Market Notification, or 510(k) approval. This would be in place of a
Pre-Market Approval, a more involved process usually reserved for devices
that sustain human life and for which there is insufficient information to
assure patient safety. A 510(k) approval will require that we demonstrate to
the FDA data that the product design and intended uses of the product are
substantially equivalent to a product(s) already approved by the FDA for
commercial distribution in the U.S.

In the event the FDA considers the Biophan product to be a Class II
Medical Device subject to 510(k) approval, we would work with a partner to
collect or develop the product performance data the FDA requires to prove
that the our product is substantially equivalent to intra-luminal catheters
already on the market. We anticipate that collecting or developing this data
would be at least a moderately high priority by a partner, and would take
approximately three to six months to complete. Biophan and its partner would
include this data in an application to the FDA for 510(k) approval, 90 days
before selling the device. The FDA can refuse to allow this approval to be
granted by responding with questions during the 90 day review period. Based
upon this possibility, we estimate that the approval process will require a
total of 180 days. Accordingly, the total time for product regulatory
approval would be approximately 12 months.

The FDA has also previously approved for sale the types of active
devices (pacemaker leads) and passive devices (guidewires and catheters) that

Page 44

we would like to improve by the addition of our MRI (MRI) shielding
technologies. We believe that the technology would improve the performance
of these existing products during MRI examinations. The FDA considers these
devices to be Class II Medical Devices, and historically they have been
subject to Pre-Market Notification or 510(k) approval requirements.

We anticipate working with a partner to collect or develop the product
performance data required for FDA approval of our shielding technologies.
This data will include proof of the following:

* that the product modified to include Biophan's shielding technology
is still substantially equivalent to products already approved for
sale by the FDA; and

* that the addition of Biophan's shielding technology actually does
improve the performance of the existing product during MRI
examinations.

The addition of Biophan's shielding technology to an existing product
requires that we apply a proprietary coating to the product. Because the
coating process does not require any significant changes to the product
design or to its manufacturing process and therefore little risk to the
safety of its operation, we anticipate that a minimal amount of data will be
required. We feel that it is reasonable to expect that the FDA will consider
the 510(k) approval process they required to approve the original device, as
sufficient to approve the minor modifications to a partner's device required
to integrate Biophan's technology. We anticipate that collecting or
developing this data would be at least a moderately high priority by a
partner, and would take approximately three to six months to complete.
Biophan and its partner would include this data in an application to the FDA
for 510(k) approval, 90 days before selling the device, as is required by the
510(k) approval process. The FDA can refuse to grant 510(k) approval by
responding with questions during the stipulated 90 day review period. Based
upon this possibility, we conservatively estimate that the approval process
will require a total of 180 days. Accordingly, the total time for product
regulatory approval for planning purposes is 12 months for both active and
passive devices.

During the 510(k) approval process, it will be necessary to collect
biocompatibility and toxicity data, to establish that the modified product is
safe. The FDA provides specific guidelines for evaluating the
biocompatibility and toxicity risk associated with medical devices in their
document entitled "Guidance for the Submission of Research and Marketing
Applications for Permanent Pacemaker Leads and for Pacemaker Lead Adapter
510(k) Submissions," issued on 1 November 2000. This guidance document
clearly states (Attachment C - "Biocompatibility Flow Chart for the Selection
of Toxicity Tests for 510(k)s") that device materials that do not contain
toxic substances (as is the case with Biophan's shielding material) satisfy
biocompatibility requirements. Biophan can collect this toxicity data from
available toxicology literature without the need for human studies. We
believe that the FDA will support this procedure and not require human
studies to demonstrate biocompatibility and the absence of any toxicity risk.
However, if this proves not to be the case, then we expect the FDA would
follow the guidelines it recommends for determining the biocompatibility and
toxicity of unknown substances. These are also outlined in their guidance
document entitled "Guidance for the Submission of Research and Marketing
Applications for Permanent Pacemaker Leads and for Pacemaker Lead Adapter
510(k) Submissions," issued on 1 November 2000. These guidelines stipulate
the use of in-vitro (out of the body) extraction methods. This testing is

Page 45

relatively minor in nature, and has already been included in the proposed
regulatory approval timeline and budget requirements.

Demonstrating that Biophan's shielding technologies improve the products
performance during MRI examinations will require evaluating the performance
of the product in an MRI coil. Given the perceived low level of patient risk
associated with our shielding technologies, we anticipate that these data can
be obtained through testing that also does not involve human subjects and
only a limited number of animals.

We anticipate that the collection and development of these data will
require $450,000 for each of the limited number of active device applications
and passive device applications initially envisioned, and $1,500,000 for the
intra-luminal imaging catheter. We also anticipate that a partner or
licensee would fund at least 67% of these expenses. We anticipate our
contribution to come from the sale of stock to SBI, the Spectrum equity line
of credit or, if necessary, other equity investors. If we are unable to
establish the partnerships or licenses that would provide a portion of the
funds necessary to pursue regulatory approval then our submission of
applications for regulatory approval to the FDA would be delayed, in whole or
part, and our development efforts may also have to be delayed, in whole or
part, until alternative funding was obtained.

Licenses

We have entered into licenses for issued, allowed and pending patents.
These licenses require annual minimum royalties up to $10,000 each, some of
which escalate in future years, and provide for ongoing royalties of 4-5% of
product sales. Each license is for the life of the patent(s) and each is
exclusive for the medical market or segments thereof, and permit sub-
licensing:

* A license from Johns Hopkins University for an issued patent for an
MRI safe electrocardiogram and pacemaker lead. This agreement
provides for an initial licensing fee of $10,000 and a running
royalty of 4% on product sales. This agreement remains in effect
for the life of the patents underlying the license. The license
may be terminated earlier, at Biophan's election, upon 60 days
written notice to Johns Hopkins. Johns Hopkins may only terminate
the agreement early if there is a breach by Biophan which is not
cured within 30 days following written notice of such breach or
default.

* A license agreement for additional shielding technologies from
Nanoset, LLC. This license agreement provides for a one time
licensing fee of $10,000, which is nonrefundable, and an additional
payment of $5,000 upon the issuance of the patent application(s).
The seven patent applications covered by this license agreement
have been assigned the following numbers by the U.S. Patent and
Trademark Office:

10/090,553 Magnetically Shielded Conductor
10/229,183 Magnetically Shielded Conductor
10/242,969 Magnetically Shielded Conductor
10/260,247 Magnetically Shielded Assembly

Page 46

10/303,264 Magnetically Shielded Assembly
10/313,738 Magnetically Shielded Assembly
10/273,847 Magnetically Shielded Medical Device

The term of the license for each of the seven covered patent
applications is for the life of the applicable patent. There are no
termination provisions contained in the license. However, the
prevailing legal case law supports the following conclusions (i)
Nanoset could not terminate the license unless Biophan failed to
pay the required consideration; and (ii) Biophan could not
terminate the license unless it provided reasonable prior notice to
Nanoset. Biophan and Nanoset are discussing granting additional
technology rights to Biophan under an expanded agreement, but to
date no definitive agreement has been reached.

* A license from Deborah D. L. Chung for an issued patent entitled
Metal Filament for Electromagnetic Shielding. This agreement
provides for an initial licensing fee of $10,000 and a running
royalty of 5% on product sales. This agreement remains in effect
for the life of the patents underlying the license. The license
may be terminated earlier, at Biophan's election, upon 60 days'
written notice to Chung. Chung may only terminate the agreement
early if there is a breach by Biophan which is not cured within 60
days following notice of such breach or default.

Employees

As of October 31, 2003, we had eleven full-time employees.

Description of Property

Our headquarters are located at 150 Lucius Gordon Drive, Suite 215, West
Henrietta, NY 14586, in 4,000 square feet of office space leased from an
unrelated party. Current rentals are $4,846 per month and the lease expires
in September 2004. The coordination of our research and development projects
and the administration of our two wholly owned subsidiary companies,
currently inactive, are directed from this location.

LEGAL PROCEEDINGS

We are not a party to any material legal proceedings and there are no
material legal proceedings pending with respect to our property. We are not
aware of any legal proceedings contemplated by any governmental authorities
involving either us or our property. None of our directors, officers or
affiliates is an adverse party in any legal proceedings involving us or our
subsidiaries, or has an interest in any proceeding which is adverse to us or
our subsidiaries.

Page 47

MANAGEMENT

The officers and directors of Biophan are as follows:

Name Age Title

Guenter H. Jaensch 64 Chairman of the Board
Michael L. Weiner 56 Director, Chief Executive Officer, President
Robert J. Wood 64 Vice-President, Treasurer, Chief Financial
Officer
David A. Miller 48 Secretary
Stuart G. MacDonald 54 Vice-President-Research and Development
Jeffrey L. Helfer 50 Vice-President-Engineering
Robert S. Bramson 64 Director
Steven Katz 55 Director
Ross B. Kenzie 72 Director

The above listed officers and directors will serve until the next annual
meeting of the shareholders or until their death, resignation, retirement,
removal, or disqualification, or until their successors have been duly
elected and qualified. Vacancies in the existing Board of Directors may be
filled by majority vote of the remaining directors. Officers serve at the
will of the Board of Directors.

Guenter H. Jaensch, PhD is the former Chairman and CEO of Siemens
Pacesetter, Inc., a manufacturer of pacemakers. During his more than twenty-
five years at Siemens, Dr. Jaensch held various senior executive positions
prior to running Siemens Pacesetter, including President of Siemens
Communications Systems, Inc. from August 1983 to March 1985, Chairman and
President of Siemens Corporate Research and Support, Inc., from April 1982 to
September 1991 and Chairman and CEO of Siemens Pacesetter, Inc. and Head of
the Cardiac Systems Division of Siemens AG Medical Engineering Group from
October 1991 to September 1994. Dr. Jaensch holds a Masters Degree in
Business Administration and a Ph.D. in Business and Finance from the
University of Frankfurt and taught business and statistics at the University
prior to joining Siemens in 1969. In 1994, he joined St. Jude Medical as
Chairman and CEO of Pacesetter, Inc., a St. Jude Medical Company, and retired
in 1995 to manage his personal investments. Since December 1997 he has been
a director of MRV Communications, a publicly traded company which is a
leading company in the fiber optic technology business. Dr. Jaensch has been
a director of Biophan since March 2002.

Michael L. Weiner began his career at Xerox Corporation in 1975, where he
served in a variety of capacities in sales and marketing, including manager
of software market expansion and manager of sales compensation planning. In
1985, after a ten year career at Xerox, Mr. Weiner founded Microlytics, a
Xerox spin-off company which developed technology from the Xerox Palo Alto
Research Center into a suite of products with licenses to many companies. In
January 1995, Weiner co-founded and became CEO of Manning & Napier
Information Services, a Rochester-based company providing patent analytics,
prior art searches, and other services. He held this position until January
of 1999. In February 1999 he formed Technology Innovations, LLC, to develop
and expand certain intellectual property assets. In August, 2000, Technology
Innovations, LLC created a subsidiary, Biomed Solutions, LLC, to pursue
certain biomedical and nanotechnology opportunities. Mr. Weiner serves on the
Boards of Biomed Solutions, LLC, Technology Innovations, LLC, Speech
Compression Technologies, LP (an R&D partnership commenced in 1989 to pursue
compression technologies), Nanoset, LLC, and Nanocomp, LLC. Mr. Weiner holds

Page 48

six issued patents invented prior to the formation of Biophan which are owned
by other companies that employed Mr. Weiner prior to the formation of
Biophan. These patents do not involve technology that is competing or will
compete with Biophan. Mr. Weiner has been CEO and a director of Biophan
since December 2000.

Robert J. Wood is a Certified Public Accountant with extensive
experience in public accounting and business consulting. He began his career
at Price Waterhouse & Co. in 1962 after graduating from St. John Fisher
College with a B.B.A. in Accounting. From 1973 to 2000, he was consecutively
owner/partner of Metzger, Wood & Sokolski, CPAs (through December 1985),
Mengel, Metzger, Barr & Co., LLP (through December 1990), and Wood & Company,
CPAs, P.C. (through November 2000), all in Rochester, New York. In December
2000, his practice was acquired by a regional CPA firm, Eldredge, Fox and
Porretti, LLP and he was engaged in business consulting until joining Biophan
as full-time Chief Financial Officer in August 2001. He is a member of the
New York State Society of Certified Public Accountants. A portion of Mr.
Wood's time is spent assisting with the fiscal management of Biomed
Solutions, LLC, a related company, for which Biophan is reimbursed.

David A. Miller was self employed from January 1998 until June 2001.
Since June 2001 he has been employed by Biophan. From January 1998 through
June 2000 Mr. Miller managed a retail outlet for his family's antique, gold
and jewelry business. Additionally, from January 1998 until June 2001 he
operated a business providing office support services. Mr. Miller has been
an SEC Edgar system filing agent since November 1999. Mr. Miller has been
associated with us since 1996. He has held the office of Corporate Secretary
since January 30, 1999. During the period from April 22, 1998 until December
1, 2000 we were inactive. Mr. Miller provided office space for us and
performed duties associated with maintaining our corporate existence. His
duties included preparing and filing documents with applicable governmental
agencies, maintaining stock records, stockholder relations, keeping minutes
of Board of Directors and stockholder meetings and electronically filing
periodic and special reports with the SEC. Since December 1, 2000 Mr. Miller
has served in a similar manner consistent with the requirements of the office
of Corporate Secretary. He served on the Board of Directors from April 22,
1998 until February 1, 2001 and held the offices of Vice-President and
Treasurer from April 22, 1998 until December 1, 2000.

Stuart G. MacDonald is experienced in research and development with a
broad engineering and science background, emphasizing a systems approach to
developing complex technology. From January 1995 through December 2000, Mr.
MacDonald was employed at Ortho-Clinical Diagnostics, a Johnson & Johnson
company, in Rochester, New York, holding the position of Director-Engineering
from 1996 to mid-1997 and Vice-president, Clinical Lab Instrumentation R&D
from mid-1997 through December 2000. He was responsible for overall
management of the R&D group, including personnel, administration and
financial performance. He worked at Eastman Kodak Company from 1971 to 1994,
rising to the position of Assistant Director, Clinical Diagnostic Research
Labs. Mr. MacDonald has a B.S. in Mechanical Engineering and Masters of
Engineering degree from Cornell University. He is also licensed as a
professional engineer by the State of New York. Mr. MacDonald was employed
by Biophan as Vice-President-Research and Development in January 2001. A
portion of Mr. McDonald's time is spent assisting with the research program
of Biomed Solutions, LLC, a related company, for which Biophan is reimbursed.

Jeffrey L. Helfer's background includes 28 years in new product and
technology development, systems management, new business development, and
regulatory affairs, having served in a number of positions at Eastman Kodak
Company for 19 years until November 1994 and from December 1994 to September
2001 at Ortho-Clinical Diagnostics (OCD) in Rochester, New York, a Johnson &
Johnson company. Most recently, he was program director within OCD's Product
Development and Program Management Center of Excellence, where he was
responsible for systems management of OCD's next-generation clinical
chemistry platform. He also held positions as Program Director and Director
of Regulatory Affairs from April 2000 to September 2001, Director of
Engineering from January 1997 to March 2000, Director of New Business
Development from February 1995 to December 1996, and headed up multiple
international and corporate initiatives to improve product performance and
business processes. He holds a B.S. from Rochester Institute of Technology
and an M.S. from the University of Rochester, both in Mechanical Engineering.
Mr. Helfer is a Johnson & Johnson certified Design for Six Sigma Black Belt

Page 49

and a New York State Professional Engineer. Mr. Helfer was employed by
Biophan as Vice-President-Engineering in October 2001. A portion of Mr.
Helfer's time is spent assisting with the research program of Biomed
Solutions, LLC, a related company, for which Biophan is reimbursed.

Robert S. Bramson is an engineer and patent attorney and since 1996 has
been a partner in Bramson & Pressman, a law firm that focuses on patent and
technology licensing matters. Since 1996 he has also been President of VAI
Management Corp., a consulting firm that specializes in patent and technology
licensing. He is former head of the Computer and Technology law group of
Schnader, Harrison, Segal & Lewis (where he worked from 1968 to 1989); former
Vice President and General Patent and Technology Counsel for Unisys (from
1989 to 1990); founder and former CEO of InterDigital Patents Corporation, a
patent licensing company (from 1992 to 1995); former Licensing Counsel for
Abbott Laboratories (from 1963 to 1966); and has been Adjunct Professor of
Patent Law, Computer Law and (presently) Licensing Law at Temple Law School,
Rutgers Law School and Villanova Law School at different times (from 1980 to
date). Mr. Bramson has been a director of Biophan since July 2001.

Steven Katz is President of Steven Katz & Associates, Inc., a
technology-based management consulting firm specializing in strategic
planning, corporate development, new product planning, technology licensing,
and structuring and securing various forms of financing since 1982. From
January 2000 until October 2001, Mr. Katz was President and Chief Operating
Officer of Senesco Technologies, Inc., a public company engaged in the
development of proprietary genes with application to agro-biotechnology.
From 1983 to 1984 he was the co-founder and Executive Vice President of
S.K.Y. Polymers, Inc., a biomaterials company. Prior to S.K.Y. Polymers,
Inc., Mr. Katz was Vice President and General Manager of a non-banking
division of Citicorp. From 1976 to 1980 he held various senior management
positions at National Patent Development Corporation, including President of
three subsidiaries. Prior positions were with Revlon, Inc. (1975) and Price
Waterhouse & Co. (1969 to 1974). Mr. Katz received a Bachelor of Business
Administration degree in Accounting from the City College of New York in
1969. He is presently a member of the Board of Directors of USA
Technologies, Inc., a publicly held corporation, and several other private
companies. Mr. Katz has been a director of Biophan since July 2001.

Page 50

Ross B. Kenzie is a former Chairman and Chief Executive Officer of
Goldome Bank, from which he retired in June 1989. He was previously
Executive Vice President of Merrill Lynch & Co., in the New York worldwide
headquarters, and is a former member of the Merrill Lynch & Co. Board of
Directors. He is a former Director of the Federal Home Loan Bank of New York
(from 1984 to 1988) and served on the boards of the National Council of
Savings Institutions (from 1982 to 1986), the Federal Reserve Bank of New
York, Buffalo Branch (from 1985 to 1987), and the Savings Banks Association
of New York State (from 1984 to 1987). Mr. Kenzie was a Director of Millard
Fillmore Hospitals (from 1982 to 1995)and is currently Past Chairman
Emeritus. He served on the Board of the Kaleida Health, Education and
Research Foundation (from 1998 to 2000) and is currently on its Investment
Committee. He was a Director of the Health Systems Agency of Western New
York (from 1988 to 1991), and was a member of the Western New York Commission
on Health Care Reform (from 1987 to 1990). Mr. Kenzie was a member of the
College Council of the State University College at Buffalo (from 1981 to
1998) and served as Chairman. He was a Director of the College's Foundation
and a member of its Finance Committee (from 1984 to 1998) and is currently on
its Investment Committee. He served on the Council of the Burchfield-Penney
Art Center (from 1990 to 2001) and the Albright Knox Art Gallery (from 1983
to 1985). He is also a member of the Board, and the Chairman of the
Investment Committee of the State University at Buffalo Foundation. Mr.
Kenzie currently serves on the boards of several companies including the
publicly held Rand Capital Corporation and many entrepreneurial ventures that
are privately held, including the Boards of Members of Biomed Solutions LLC
and Technology Innovations, LLC. Mr. Kenzie has been a director of Biophan
since December 2000.

Committees

The Board of Directors has an Audit Committee consisting of Messrs.
Bramson, Katz and Kenzie and a Compensation Committee consisting of Messrs.
Bramson, Katz and Kenzie. The Audit Committee makes recommendations
concerning the engagement of independent public accountants, reviews with the
independent accountants the results of the audit engagement, approves
professional services provided by the accountants including the scope of non-
audit services, if any, and reviews the adequacy of our internal accounting
controls. The Compensation Committee makes recommendations to the Board
regarding executive and employee compensation and benefits.

Compensation of the Board of Directors

Directors who are also our employees do not receive additional
compensation for serving on the Board or its committees. Non-employee
directors, for their services as directors, are paid an annual cash fee of
$3,500 and a per-meeting fee of $1,000. Dr. Jaensch receives an additional
$1,000 per month for serving as Chairman of the Board. In addition, non-
employee directors receive options under our Stock Option Plan. All
directors are reimbursed for their reasonable expenses incurred in attending
Board meetings. Steven Katz receives an additional $3,000 per year for
serving as Chairman of the Audit Committee. Otherwise, no additional
compensation is paid to any director for serving as a member of any committee
of the Board. We maintain directors and officers liability insurance.

Page 51

Conflicts of Interest

Messrs. MacDonald, Helfer and Wood each spends a portion of his time on
the business affairs of Biomed for which Biomed reimburses Biophan a
percentage of their salary and benefits. Our Board of Directors periodically
reviews this arrangement on a regular basis. Currently, Biomed reimburses
Biophan for approximately 20% of the time of Messrs. MacDonald, Helfer and
Wood. The Board of Directors does not believe that any conflicts of
interest arise as a result of this policy, but it monitors the relationship
on an ongoing basis.

Michael Weiner devotes essentially his full business time to our
company. His employment agreement with Biophan requires a majority of his
time, allowing him to attend to certain administrative duties of Technology
Innovations, its subsidiary, Biomed Solutions, and Speech Compression
Technologies, LP, an R&D partnership holding certain assets. Mr. Weiner is a
member and the manager of Biomed and of Technology Innovations. Ross Kenzie,
one of the Biophan directors, is on the Board of Members of Technology
Innovations and Biomed. Biomed is in the business of identifying and
acquiring technologies in the biomedical field for exploitation. Biomed is a
creditor of our company pursuant to the Line of Credit Note; and it has the
right to reacquire the MRI-compatible technology which it sold to us if
payments are not made when due. Due to these opposing roles, conflicts of
interest could arise as to the enforcement of Biomed's rights under the Line
of Credit Note, the determination of which entity will acquire a particular
technology and the enforcement of its rights to the MRI-compatible technology
under the Transfer Agreement.

Biomed is an investor in Nanoset, and Mr. Weiner serves on the board of
Nanoset. Subsequent to the formation of Nanoset and Mr. Weiner's joining
their board, Mr. Weiner learned that the nanomagnetic particle technology
held by Nanoset might be applicable to the MRI safety goals of Biophan. Mr.
Weiner brought this technology to the attention of Biophan which eventually
licensed the technology from Nanoset. Biomed holds a 33% interest in
Nanoset. Biophan's license agreement with Nanoset was negotiated based on
arms-length negotiations. Mr. Weiner and Mr. Kenzie each abstained from
voting on whether to approve the license agreement.

Biomed has agreed that all intellectual property developed by the
employees of Biomed that is in the area of MRI Safe and/or Image Compatible
Technology (MRI Technology) and HIV Antisense shall be assigned to Biophan.
Per this agreement, MRI Technology means the technology necessary to enable
medical devices resistant to radio frequency and static and gradient
electromagnetic fields produced by MRI machines. HIV Antisense is a method
of treating HIV.

Our independent directors will make all determinations and decisions
relating to the issue involving Biomed described above, without the vote of
either Mr. Weiner or Mr. Kenzie. In addition, the Board will act to ensure
that Mr. Weiner and Mr. Kenzie discharge their obligations to Biophan in
accordance with their fiduciary duties to Biophan.

Page 52

Limitation on Liability and Indemnification of Directors and Officers

Under Nevada Revised Statutes Section 78.138, a director or officer is
generally not individually liable to the corporation or its shareholders for
any damages as a result of any act or failure to act in his capacity as a
director or officer, unless it is proven that:

* his act or failure to act constituted a breach of his fiduciary
duties as a director or officer; and

* his breach of those duties involved intentional misconduct, fraud
or a knowing violation of law.

This provision is intended to afford directors and officers protection
against and to limit their potential liability for monetary damages resulting
from suits alleging a breach of the duty of care by a director or officer. As
a consequence of this provision, stockholders of Biophan will be unable to
recover monetary damages against directors or officers for action taken by
them that may constitute negligence or gross negligence in performance of
their duties unless such conduct falls within one of the foregoing
exceptions. The provision, however, does not alter the applicable standards
governing a director's or officer's fiduciary duty and does not eliminate or
limit the right of Biophan or any stockholder to obtain an injunction or any
other type of non-monetary relief in the event of a breach of fiduciary duty.

As permitted by Nevada law, Biophan's By-Laws include a provision which
provides for indemnification of a director or officer by us against expenses,
judgments, fines and amounts paid in settlement of claims against the
director or officer arising from the fact that he was an officer or director,
provided that the director or officer acted in good faith and in a manner he
or she believed to be in or not opposed to our best interests. Biophan has
purchased insurance under a policy that insures both Biophan and its officers
and directors against exposure and liability normally insured against under
such policies, including exposure on the indemnities described above. Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons pursuant to the
foregoing provisions, or otherwise, we have been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.

Scientific Advisory Board

From time to time, we call upon the advice of members of our Scientific
Advisory Board who currently serve without fixed cash compensation but are
each entitled to receive 8,333 options upon completion of each year of
membership. The members of our Board are:

Bradford C. Berk, M.D., Ph.D.- Since 1998, Dr. Berk has been Director,
Center of Cardiovascular Research; Paul N. Yu Professor and Chief of
Cardiology; Charles A. Dewey Professor and Chairman of Medicine, University
of Rochester Medical Center. Dr. Berk has clinical expertise in adult
cardiology and scientific expertise in cardiovascular medicine, particularly
vascular biology.

Page 53

Herbert A. Hauptman, Ph.D.- In 1970, Dr. Hauptman joined the
crystallographic group of the Hauptman-Woodward Medical Research Institute
(formerly the Medical Foundation of Buffalo) of which he became Research
Director in 1972. He currently serves as President of the Hauptman-Woodward
Medical Research Institute as well as Research Professor in the Department of
Biophysical Sciences and Adjunct Professor in the Department of Computer
Science at the University of Buffalo. He was awarded the 1985 Nobel Prize in
Chemistry and was elected to the National Academy of Sciences in 1988.

Kevin Parker, M.S., Ph.D.- Dean Parker is a Professor of Electrical and
Computer Engineering, Radiology, and Bioengineering at the University of
Rochester. In 1998, Dr. Parker was named Dean of the School of Engineering
and Applied Sciences.

Henry M. Spotnitz, M.D.- Since 1994, Dr. Spotnitz has been Vice-
Chairman, Research and Information Systems Department of Surgery at Columbia
Presbyterian Medical Center.

Jianhui Zhong, Ph.D.- Professor Zhong joined the University of Rochester
in 1997 and is currently an Associate Professor of Radiology, Physics, and
Biomedical Engineering, and Director of the MRI Research Group at the
University Medical Center.

Special Consultant to the Scientific Advisory Board

Ray Kurzweil, B.S.- Founder, Chairman, and CEO of Kurzweil Technologies,
Inc., a technology development company, since 1995. President Clinton
awarded Mr. Kurzweil the National Medal of Technology in 1999, for his
invention of the Kurzweil Reading Machine for the Blind. Mr. Kurzweil was
inducted into the National Inventor's Hall of Fame in 2002, and received the
Lemelson-MIT Prize in 2001. Mr. Kurzweil also developed Kurzweil Voice
Recognition System, and Kurzweil Music Synthesizer.

EXECUTIVE COMPENSATION

The following table summarizes the annual compensation paid to our named
executive officers during the three years ended February 28, 2003:

Name
and Year Salary Securities
principal underlying
position options/SARs
----------------------------------------------------------------
Michael L. Weiner, 2/28/01 $ -0- 250,000
CEO
Michael L. Weiner, 2/28/02 $150,600 -0-
CEO
Michael L. Weiner, 2/28/03 $175,000 250,000
CEO
Robert J. Wood 2/28/03 $109,461 50,000
CFO
Stuart G. MacDonald 2/28/03 $116,057 100,000
Vice-President-Research
Jeffrey L. Helfer 2/28/03 $113,461 100,000
Vice-President-Engineering

Page 54

Columnar information required by Item 402(a)(2) of Regulation SB has
been omitted for categories where there has been no compensation awarded to,
earned by, or paid to, the named executive officers required to be reported
in the table during fiscal years 2001 through 2003.

Stock Options

On June 22, 2001, the Board of Directors adopted the Biophan
Technologies, Inc. 2001 Stock Option Plan. The Option Plan was amended on
August 20, 2003. The Option Plan provides for the grant of incentive and non-
qualified stock options to selected employees, the grant of non-qualified
options to selected consultants and to directors and advisory board members.
The Option Plan is administered by the Compensation Committee of the Board of
Directors and authorizes the grant of options for 7,000,000 shares. The
Compensation Committee determines the individual employees and consultants
who participate under the Plan, the terms and conditions of options, the
option price, the vesting schedule of options and other terms and conditions
of the options granted pursuant thereto. Non-employee directors participate
pursuant to the formula set forth in the Option Plan. Each Director receives
an initial grant of 30,000 options, vesting equally on the first, second and
third anniversaries of grant and annual grants of 10,000 options thereafter.

As of February 28, 2003, we had granted options to purchase 5,479,995 shares
of Common Stock under the Option Plan. As of October 31, 2003, options to
purchase 3,000,000 shares of common stock had been exercised..

The following table summarizes information concerning stock options
granted to the named executive officers during the last completed fiscal year
ended February 28, 2003:

Percent of
Total
Number of options/SARs
Securities granted
underlying to Exercise
options/SARs employees or base
granted in fiscal price Expiration
Name (#) year ($/Sh) date
----------------------------------------------------------------------
Michael L. 250,000 25.25% $.43 7/16/12
Weiner, CEO
Robert J. 50,000 5.05% $.43 7/16/12
Wood, CFO
Stuart G. 100,000 10.10% $.43 7/16/12
MacDonald, Vice-
President-Research

Page 47

Jeffrey L. Helfer, 100,000 10.10% $.43 7/16/12
Vice-President-
Engineering

No named executive officer exercised options in the fiscal year ended February
28, 2003. The following table presents the number and values of exercisable
and unexercisable options as of February 28, 2003:

Number of
securities Value of
underlying unexercised in-
Shares unexercised the-money
acquired Value options/SARS at options/SARs at
Name on realized FY-end (#) FY-end ($)
exercise Exercisable/Unexer- Exercisable/Unexer-
cisable cisable
-----------------------------------------------------------------------------

Michael L. None $-0- 266,668/233,332 $4,167/$8,333
Weiner, CEO
Robert J. None $-0- 56,667/93,333 $833 /$1,667
Wood
CFO

Page 55

Stuart G. None $-0- 73,334/126,666 $1,667/$3,333
MacDonald
Vice-President-R&D
Jeffrey L. None $-0- 73,334/126,666 $1,667/$3,333
Helfer
Vice-President-Eng.

Employment Agreements

Each of Michael L. Weiner, President and Chief Executive Officer; Stuart
G. MacDonald, Vice President of Research and Development; Robert J. Wood,
Treasurer and Chief Financial Officer; and Jeffrey L. Helfer, Vice President
of Engineering has entered into employment agreements with Biophan.

Mr. Weiner's employment agreement has an initial term of three years with
subsequent one-year renewal periods. His employment agreement may be
terminated by us for cause or upon his death or disability. In the event of
the disability of Mr. Weiner, termination of his employment agreement by us
following a change in control or termination of his employment agreement by
him for good reason, Mr. Weiner is entitled to receive (i) the unpaid amount
of his base salary earned through the date of termination; (ii) any bonus
compensation earned but not yet paid; and (iii) a severance payment equal to
one (1) year of his then current salary. In addition, Mr. Weiner will be
immediately vested in any options, warrants, retirement plan or agreements
then in effect. Good Reason means (i) a material change of Mr. Weiner's
duties, (ii) a material breach by us under the employment agreement, or (iii)
a termination of Mr. Weiner's employment in connection with a change in
control.

As used in Mr. Weiner's employment agreement, "change in control" means
(1) our merger or consolidation with another entity where the members of our
Board, do not, immediately after the merger or consolidation, constitute a
majority of the Board of Directors of the entity issuing cash or securities in
the merger or consolidation immediately prior to the merger or consolidation,
or (2) the sale or other disposition of all or substantially all of our assets.

In the event of termination for cause, all of Mr. Weiner's unexercised
warrants and options, whether or not vested, will be canceled, and Mr. Weiner
will not be eligible for severance payments. In the event of voluntary
termination, all of Mr. Weiner's unvested warrants and options will be
canceled and he will have three (3) months from the date of termination to
exercise his rights with respect to the unexercised but vested options. He
will not be eligible for severance payments.

The employment agreements for each of Messrs. MacDonald, Wood and Helfer
are terminable by either us or the employee upon 30 days' notice or by us
for cause (as defined in their employment agreements) or upon the death or
disability of the employee. However, each of them is entitled to receive
severance equal to six months' base salary, payable in six equal consecutive
monthly installments in the event that the employee is terminated by us within
ninety (90) days following a change in control. In addition, under such
circumstances each of them will be immediately vested in any options,
warrants, retirement plan or agreements then in effect.

For purposes of the employment agreements for Messrs. MacDonald, Wood and
Helfer, "change in control" means (1) on the date of the merger or
consolidation of Biophan with another entity where the members of the Board of
Directors, immediately prior to the merger or consolidation, would not,
immediately after the merger or consolidation, constitute a majority of the

Page 56

Board of Directors of the entity issuing cash or securities in the merger or
consolidation; (2) on the date Michael L. Weiner is terminated as CEO of the
Company; or (3) on the date of the sale or other disposition of all or
substantially all of the assets of Biophan.

In the event of termination for cause, all unexercised warrants and
options held by the applicable employee, whether or not vested, will be
canceled and the employee will not be eligible for severance payments. In the
event of voluntary termination, all unvested warrants and options will be
canceled and the employee will have three (3) months from the date of
termination to exercise his rights with respect to the unexercised but vested
options.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT

The table below lists the beneficial ownership of our common stock, as
of October 31, 2003, by each person known by us to be the beneficial owner
of more than 5% of our common stock, by each of our directors and officers
and by all of our directors and officers as a group.

Name and Address of Number of Shares
Beneficial Owner Beneficially Owned(1)(2) Percent of Class
--------------------------------------------------------------------------

**Guenter H. Jaensch (3)
964 Allamanda Drive
Delray Beach, FL 33483 733,334 1.58%

**Michael L. Weiner (4)
693 Summit Drive
Webster, NY 14580 8,750,834 18.43%

Edward F. Cowle
99 Park Avenue
Suite 2230
New York, NY 10016 2,898,600 6.30%

Geoffrey Williams
56 West 400 Street
Suite 200
Salt Lake City, UT 84101 2,389,701 5.19%

Wilson Greatbatch (5)
5935 Davison Road
Akron, NY 14001 5,856,210 12.63%

Page 57

**Robert S. Bramson (6)
1100 East Hector Street
Suite 410
Consohocken, PA 19428 40,000 *

**Ross B. Kenzie (7)
Cyclorama Bldg. Suite 100
369 Franklin Street
Buffalo, NY 14202 40,000 *

**Steven Katz (8)
20 Rebel Run Drive
East Brunswick NJ 08816 90,000 *

Robert J. Wood (9)
12 Peachtree Lane
Pittsford, NY 14534 146,667 *

Stuart G. MacDonald (10)
4663 East Lake Road
Pultneyville, NY 14538 163,334 *

Jeffrey H. Helfer (11)
1153 Hidden Valley Trail
Webster, NY 14580 223,334 *

David A. Miller
4004 Sunnyside Road
Sandpoint, ID 83864 100,500 *

All Officers and Directors as a
group (9 persons) 10, 288,003 21.28%

* Denotes less than one percent.
** Denotes Member of the Board of Directors.

(1) Except as may be set forth below, the persons named in the table have
sole voting and investment power with respect to all shares shown as
beneficially owned by them.

(2) Applicable percentage of ownership is based on 46,006,074 shares
outstanding as of October 31, 2003, together with applicable options
for such shareholder. Beneficial ownership is determined in accordance
with the rules of the SEC and includes voting and investment power with
respect to shares. Shares subject to options or warrants currently
exercisable or exercisable within 60 days after October 31, 2003 are
included in the number of shares beneficially owned and are deemed
outstanding for purposes of computing the percentage ownership of the
person holding such options or warrants, but are not deemed outstanding
for computing the percentage of any other shareholder.

(3) Includes 433,334 shares issuable upon exercise of options and warrants

Page 58

granted to Dr. Jaensch.

(4) Michael L. Weiner is a member and the manager of Technology
Innovations, LLC, which is the majority owner of Biomed Solutions,
LLC . Mr. Weiner is also the Manager of Biomed. Mr. Weiner's
calculation includes 662,857 shares owned beneficially and of record by
Biomed and 300,644 shares owned beneficially and of record by
Technology Innovations. Includes 1,180,000 shares issuable to Biomed
upon exercise of warrants issued to Biomed, 1,875,862 shares issuable
to Biomed upon conversion of $272,000 outstanding as of October 31,
2003 on the line of credit described in Note 4 under Certain
Transactions, and 3,448,276 shares issuable to Biomed upon conversion
of the $500,000 transfer agreement payment, as described in Note 5
under Certain Transactions. It also includes 283,334 shares issuable
upon exercise of options granted to Mr. Weiner.

(5) Includes 5,379,550 shares owned of record and beneficially by
Greatbatch Gen-Aid, Ltd., an entity owned by Wilson Greatbatch, and
109,993 shares owned by E. & W.G. Foundation, a private foundation of
which Mr. Greatbatch is co-trustee. Also includes 216,667 shares
issuable upon exercise of options granted to Mr. Greatbatch and 150,000
shares issuable upon exercise of warrants issued in connection with the
Transfer Agreement with Biomed.

(6) Includes 40,000 shares issuable upon exercise of options granted to Mr.
Bramson.

(7) Includes 40,000 shares issuable upon exercise of options granted to Mr.
Kenzie. Does not include shares owned beneficially or of record by
Biomed or by Technology Innovations. Mr. Kenzie is the Manager and an
equity member of Biophan Ventures, LLC, which is the 43% equity member
in Biomed; he is also the Manager of Patent Ventures LLC, which is the
Class A Member of Technology Innovations. Mr. Kenzie and Mr. Weiner
comprise the Board of Members of Biomed; Mr. Kenzie serves on the
Board of Members of Technology Innovations.

(8) Includes 40,000 shares issuable upon exercise of options held by Mr.
Katz.

(9) Includes 86,667 shares issuable upon exercise of options and warrants
held by Mr. Wood.

(10) Includes 103,334 shares issuable upon exercise of options and warrants
held by Mr. MacDonald.

(11) Includes 123,334 shares issuable upon exercise of options and warrants
held by Mr. Helfer.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

(1) Michael L. Weiner, President and Chief Executive Officer of Biophan,
is the Manager and a 42.7% equity member of Technology Innovations,
LLC., a 57% equity member of Biomed Solutions, LLC (formerly
Biophan, LLC). Mr. Weiner is also the Manager of Biomed. He and
Ross Kenzie make up the Board of Members of Biomed. Biomed is the
record owner of 662,857 shares of common stock of Biophan;
Technology Innovations is the record owner of 300,644 shares of
common stock of Biophan. As Manager of Technology Innovations and
Biomed, Mr. Weiner has control over these entities. Mr. Weiner is
also on the board of Nanoset, LLC, an entity owned in part by Biomed
Solutions, and with which the we have entered into a technology
license agreement.

(2) On December 1, 2000, Biomed received 10,759,101 shares of Biophan's
common stock in exchange for its shares of LTR Antisense Technology,
Inc. Most of those shares have been distributed to the members of
Biomed and their members.

(3) Also on December 1, 2000, Biomed transferred its MRI-compatible
pacemaker patent pending and related technology to Biophan for a

Page 59

future payment of $500,000. This payment bears interest at 8% per
annum from February 28, 2002, and has been extended several times,
to June 1, 2004. After June 1, 2004, principal and interest are
payable in 12 equal monthly installments. After November 30, 2002,
this entire obligation is convertible into common shares of Biophan
at a conversion price equal to the lowest of (i) the closing bid
price on June 4, 2002; (ii) the closing bid price on the date of
exercise; or (iii) the lowest per share purchase price paid by any
third party between June 4, 2002 and the exercise date.

(4) On June 4, 2002, we executed a line of credit agreement with Biomed
providing for borrowings up to $250,000. On August 19, 2002, the
line was increased by $100,000 and the expiration date thereof for
that portion of the line was set at August 19, 2003. The payment
date of amounts borrowed under the original line was extended to
December 1, 2002. On November 7, 2002, the maturity date of the
line was extended until such time as the financing contemplated by
the Spectrum stock purchase agreement commenced. < It was later
extended to June 1, 2004.

(5) Biomed also holds warrants to purchase a total of 1,180,000 shares
of our common stock. On March 1, 2001, it received warrants to
purchase 200,000 shares at an exercise price of $1.00 in
consideration of management effort and expense incurred on our
behalf. On June 4, 2002, it received warrants to purchase 100,000
shares at an exercise price of $1.00 in consideration of the
extension of the due date for the Transfer Agreement payment, and
warrants to purchase 75,000 shares at an exercise price of $1.00 in
consideration of the grant of the line of credit. (Wilson Greatbatch
also received 150,000 warrants in consideration of the extension of
the due date of the Transfer Agreement payment). On August 19,
2002, Biomed received warrants to purchase 30,000 shares in
consideration of the increase in the line of credit commitment, and
warrants to purchase 275,000 shares for additional extensions of the
payment terms of the Transfer Agreement payment. On that date, the
exercise price for all 680,000 warrants then held by Biomed was set
at the lowest of (i) the closing bid price on June 4, 2002; (ii) the
closing bid price on the date of exercise; or (iii) the lowest per
share purchase price paid by any third party between June 4, 2002
and the exercise date. On November 7, 2002, Biomed was granted
warrants to purchase an additional 500,000 shares at an exercise
price of $.50 per share in consideration of another extension of
the Transfer Agreement payment. The number of warrants will be
reduced by 16,667 for each month prior to June 1, 2005 that the
Transfer Agreement obligation is paid in full. Each extension of the
Transfer Agreement payment enabled us to retain the MRI-compatible
technology that we acquired under the Transfer Agreement. In
connection with each issuance of warrants to Biomed, our board of
directors determined, without the vote of Mr. Weiner or Mr. Kenzie,
that the consideration received by us was fair and adequate
consideration for the warrants issued.

(6) During the years ended February 28, 2003 and 2002, Biomed and
Technology Innovations paid expenses on our behalf aggregating
$128,411 and $253,014, respectively. These advances did not bear
interest and were subsequently repaid.

(7) On January 1, 2001, Wilson Greatbatch was granted 250,000 options
at an exercise price of $.50 for his consulting services to us and

Page 60

8,333 options at an exercise price of $.50 as former Chairman of the
Scientific Advisory Board. As a consultant Mr. Greatbatch assisted
us in the development of our photonic pacemaker by providing design
and engineering services. The board of directors determined that
the value of the consulting services was fair and adequate
consideration for the options issued. We recorded compensation
expense of $9,200 with respect to those options. Through his
ownership of Greatbatch Gen-Aid, Ltd. and his co-trusteeship of a
private foundation, E.& W.G. Foundation, he is the beneficial owner
of 5,489,543 common shares of our common stock. He is also entitled
to receive 60% of the consideration payable to Biomed ($500,000) for
transfer of the MRI-compatible pacemaker technology to Biophan. On
June 4, 2002, he received warrants to purchase 150,000 shares of our
common stock with an exercise price of $1.00 in consideration of the
extension of the payment due under the Transfer Agreement.
Greatbatch Gen-Aid holds a 3.5% membership interest (11 Units) in
Technology Innovations.

On February 28, 2001, we entered into a research and development
agreement with Greatbatch Enterprises Corporation. Mr. Greatbatch
is the CEO and majority stockholder of Greatbatch Enterprises.
Under the agreement, Greatbatch Enterprises undertook certain
technology development and testing, for which we paid Greatbatch
Enterprises an aggregate of $297,000. The agreement terminated in
December 2002 with the completion of animal testing by Greatbatch
Enterprises.

(8) On March 1, 2002, Dr. Guenter H. Jaensch was granted options to
purchase 250,000 shares at an exercise price of $.10 and on July 16,
2002 was granted an additional options to purchase 100,000 shares at
an exercise price of $.43, in each case for consulting services he
provided to us. As a consultant, Dr. Jaensch assisted us in
developing our strategic plan, attended trade shows, and arranged
and met with potential customers and strategic partners. The Board
of Directors determined that the value of the consulting services
was fair and adequate consideration for the options issued. We
valued the options at $36,900 and $592,500, respectively.

DESCRIPTION OF SECURITIES

The following summary is a description of our common stock and certain
provisions of our Articles of Incorporation, Bylaws and Nevada law.

General

Our authorized capital consists of 80,000,000 shares of common stock, par
value $.005 per share.

Common Stock

As of October 31, 2003, we had 46,006,074 shares of common stock
outstanding. Each share of our common stock is entitled to one vote at all
meetings of our shareholders. Our shareholders are not permitted to cumulate

Page 61

votes in the election of directors. All shares of our common stock are equal
to each other with respect to liquidation rights and dividend rights. There
are no preemptive rights to purchase any additional shares of our common
stock. In the event of our liquidation, dissolution or winding up, holders of
our common stock will be entitled to receive, on a pro rata basis, all of our
assets remaining after satisfaction of all liabilities and preferences of
outstanding preferred stock, if any. Neither our Articles of Incorporation
nor our Bylaws contain any provisions which limit or restrict the ability of
another person to take over our company; however, our Bylaws do permit our
Board of Directors to be classified.

Options and Warrants

As of October 31, 2003, we had outstanding options to purchase an
aggregate of 2,479,995 shares of our common stock pursuant to our 2001 Stock
Option Plan at a weighted-average exercise price of $.49 per share. These
options are held by directors, officers, key employees and consultants, and as
of October 31, 2003, options to purchase 1,651,665 shares were exercisable.

We also have outstanding warrants to purchase an additional 4,935,994
shares of our common stock having a weighted-average exercise price of $.41
per share. Certain Statutory Provisions Of The Nevada Revised Statutes

Sections 78.411 through 78.444 of the Nevada Revised Statutes provide, in
general, that a stockholder acquiring more than 10% of the outstanding voting
shares of a publicly-held Nevada corporation subject to the statutes
(Interested Stockholder) may not engage in certain "Combinations" with the
corporation for a period of three years subsequent to the date on which the
stockholder became an Interested Stockholder.

Section 78.416 defines the term "Combination" to encompass a wide
variety of transactions with or caused by an Interested Stockholder in which
the Interested Stockholder receives or could receive a benefit on other than
a pro rata basis with other stockholders, including mergers, certain asset
sales, certain issuances of additional shares to the Interested Stockholder
or transactions in which the Interested Stockholder receives certain other
benefits.

These provisions could have the effect of delaying, deferring or
preventing a change of control of our company. Our stockholders, by adopting
an amendment to our Articles of Incorporation or Bylaws, may elect not to be
governed by these provisions. Neither our Articles of Incorporation nor
Bylaws currently excludes us from these restrictions.

The Nevada Revised Statutes permit a corporation to indemnify its
directors and officers against expenses, judgments, fines and amounts paid in
settlement in cases brought against the director or officer in his capacity
as such, provided the director or officer acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation. The exceptions include a breach of the director's duty of
loyalty, acts or omissions not in good faith or which involve intentional
misconduct or knowing a violation of law, and improper personal benefit. Our
Bylaws contain a provision implementing this statute.

Page 62

Transfer Agent

The transfer agent for our common stock is Continental Stock Transfer &
Trust Company, 17 Battery Place, New York, NY 10004-1123.

SHARES ELIGIBLE FOR RESALE

Future sales of a substantial number of shares of our common stock in
the public market could adversely affect market prices prevailing from time
to time. Under the terms of this offering, the shares of common stock
offered may be resold without restriction or further registration under the
Securities Act of 1933, except that any shares purchased by our "affiliates,"
as that term is defined under the Securities Act, may generally only be sold
in compliance with Rule 144 under the Securities Act.

Concurrent Registration

We have registered under the Securities Act the resale by the holders
thereof of 18,991,222 shares of our common stock that were or may be issued
and sold by us in private transactions in reliance upon exemptions from
registration under the Securities Act. Of these shares 8,960,000 shares
represent shares that have or may be issued to Spectrum under the Spectrum
stock purchase agreement and 4,510,000 represent shares that may be issued
upon the exercise of outstanding warrants. Such registration is separate
from the registration of the 11,000,000 shares of our common stock covered by
this prospectus.

Sale of Restricted Shares

Certain shares of our outstanding common stock were issued and sold by
us in private transactions in reliance upon exemptions from registration
under the Securities Act and have not been registered for resale. Additional
shares may be issued pursuant to outstanding warrants and options. Such
shares may be sold only pursuant to an effective registration statement filed
by us or an applicable exemption, including the exemption contained in Rule
144 promulgated under the Securities Act.

In general, under Rule 144 as currently in effect, a shareholder,
including one of our affiliates, may sell shares of common stock after at
least one year has elapsed since such shares were acquired from us or our
affiliate. The number of shares of common stock which may be sold within any
three-month period is limited to the greater of: (i) one percent of our then
outstanding common stock, or (ii) the average weekly trading volume in our
common stock during the four calendar weeks preceding the date on which
notice of such sale was filed under Rule 144. Certain other requirements of
Rule 144 concerning availability of public information, manner of sale and
notice of sale must also be satisfied. In addition, a shareholder who is not
our affiliate, who has not been our affiliate for 90 days prior to the sale,
and who has beneficially owned shares acquired from us or our affiliate for
over two years may resell the shares of common stock without compliance with
many of the foregoing requirements under Rule 144.

Page 63

SELLING STOCKHOLDER

All of the securities being offered hereunder are being offered by SBI
Brightline Consulting, LLC, the selling shareholder. SBI may from time to
time offer and sell pursuant to this prospectus up to an aggregate of
11,000,000 shares of our common stock that may be acquired by SBI pursuant to
the SBI stock purchase agreement in transactions that are exempt from the
registration requirements of the Securities Act of 1933. The selling
stockholder is not one of our officers or directors.

The selling stockholder may from time to time offer and sell any or all
of its shares that are registered under this prospectus. Because the selling
stockholder is not obligated to sell its shares, and because the selling
stockholder may also acquire publicly traded shares of our common stock, we
cannot estimate how many shares the selling stockholder will own after the
offering.

Pursuant to the SBI stock purchase agreement between SBI and us, all
expenses incurred with respect to the registration of the common stock issued
to SBI will be borne by us, but we will not be obligated to pay any
underwriting fees, discounts, commissions or other expenses incurred by SBI
in connection with the sale of such shares.

The following table sets forth, with respect to SBI (i) the number of
shares of common stock beneficially owned as of September 30, 2003 and prior
to the offering contemplated hereby, (ii) the maximum number of shares of
common stock which may be sold by the selling stockholder under this
prospectus, and (iii) the number of shares of common stock which will be
owned after the offering by the selling stockholder.

Prior to Offering After Offering(2)
------------------------------------------------------------------------------
Name Shares Percent Shares Offered(1) Shares Percent
------------------------------------------------------------------------------
SBI Brightline Consulting,
LLC(3) 0 0% 11,000,000 0 0.0%
____________
(1) The shares offered represent the maximum number of shares that may be
issued by us to SBI pursuant to the SBI stock purchase agreement. No
such shares have been issued as of the date of this prospectus.

(2) For purposes of this table, we have assumed that SBI will sell in this
offering all shares which it purchases under the SBI stock purchase
agreement.

<
(3) SBI is controlled by SBI USA, LLC, which is in turn controlled by Shelly
Singhal and John Wong. SBI USA and Messrs. Singhal and Wong may be deemed
to share the beneficial ownership of securities owned by SBI. SBI-USA is
associated with, but is not owned or controlled by First Securities USA,
LLC, a registered broker-dealer. First Securities USA, LLC has agreed to
exercise regulatory supervision over SBI-USA with respect to matters
related to securities regulation. On December 18, 2002, we issued
warrants to purchase 2,000,000 shares at $1.00 per share and 1,000,000
shares at $1.50 per share, to SBI USA as consideration for the execution
of an agreement to provide financial advisory services with an estimated
fair value of $20,000. On April 25, 2003, we terminated the financial
advisory agreement with the agreement of SBI USA, and SBI USA surrendered
the warrants to us without additional consideration.

PLAN OF DISTRIBUTION

General

Page 64

Shares of common stock offered through this prospectus may be sold from
time to time directly by SBI or, alternatively, through underwriters, broker-
dealers or agents. If the shares are sold through underwriters, broker-
dealers or agents, SBI will be responsible for underwriting discounts or
commissions or agents' commissions. Shares may be sold in one or more
transactions at fixed prices, at prevailing market prices at the time of
sale, at varying prices determined at the time of sale or at negotiated
prices. Sales may be effected in transactions (which may involve block
transactions) (i) in the over-the-counter market, (ii) on any securities
exchange or quotation service on which the shares may be listed or quoted at
the time of sale, (iii) in transactions otherwise than in the over-the-
counter market or on such exchanges or services, or (iv) through the writing
of options.

SBI has agreed not to directly or indirectly engage in short sales or
otherwise participate in short selling of our common stock prior to April 1,
2005. After this period expires, SBI may enter into hedging transactions with
respect to our shares with broker-dealers, which may in turn engage in short
sales of the shares in the course of hedging positions they assume. At that
time SBI may also sell our common stock short and deliver shares to close out
short positions, or loan or pledge shares to broker-dealers that in turn may
sell such securities. Material amounts of short selling of our common stock
could contribute to progressive declines in the trading price of our common
stock.

SBI will act independently from us in making decisions with respect to
the manner, timing, price and size of each sale. SBI may sell the shares in
any manner permitted by law, including one or more of the following:

* a block trade in which a broker-dealer engaged by a Selling
Shareholder will attempt to sell the Shares as agent, but may
position and resell a portion of the block as principal to
facilitate the transaction;

* purchases by a broker-dealer as principal and resale by such broker-
dealer for its account under this prospectus;

* an over-the-counter distribution in accordance with the rules of
the OTC Bulletin Board;

* ordinary brokerage transactions in which the broker solicits
purchasers; and

* privately negotiated transactions.

In the event that the sale of any shares covered by this prospectus
qualifies for an exemption from the registration requirements of the
Securities Act, such shares may be sold pursuant to that exemption rather
than pursuant to this prospectus.

Use of Underwriters, Brokers, Dealers or Agents

If SBI effects sales of shares through underwriters, brokers, dealers or
agents, such underwriters, brokers, dealers or agents may receive

Page 65

compensation in the form of discounts, concessions or commissions from SBI or
commissions from purchasers of common stock for whom they may act as agent
(which discounts, concessions or commissions as to particular underwriters,
brokers, dealers or agents may be in excess of those customary in the types
of transactions involved). Any brokers, dealers or agents that participate in
the distribution of the shares may be deemed to be underwriters, and any
profit on the sale of common stock by them and any discounts, concessions or
commissions received by any such underwriters, brokers, dealers or agents may
be deemed to be underwriting discounts and commissions under the Securities
Act.

If SBI sells shares through an underwriter, broker, dealer or agent, SBI
may agree to indemnify such underwriter, broker, dealer or agent against
certain liabilities arising from such sale, including liabilities arising
under the Securities Act. We have been informed by SBI that there are no
existing arrangements between it and any underwriter, broker, dealer or agent
relating to the distribution of the shares.

Page 66

Treatment of SBI as Statutory Underwriter

SBI is a statutory underwriter within the meaning of the Securities Act
of 1933 in connection with its resale of shares pursuant to this prospectus.
We will not receive any of the proceeds from the resale of shares, although
we will receive the consideration payable by SBI for the shares at the time
we sell the shares to SBI pursuant to the stock purchase agreement. SBI has
agreed that it will comply with applicable state and federal securities laws
and the rules and regulations promulgated thereunder in connection with its
sale of the shares. SBI will pay all commissions and its own expenses, if
any, associated with the sale of the shares, other than the expenses
associated with preparing this prospectus and the registration statement of
which it is a part. Pursuant to the stock purchase agreement, we have agreed
to indemnify SBI against certain liabilities including liabilities under the
Securities Act and SBI has agreed to indemnify us against certain liabilities
including liabilities under the Securities Act.

SBI will purchase shares from us under the stock purchase agreement at
fixed prices. The difference between what SBI pays to us for the shares and
the amount for which SBI sells the shares may be viewed as underwriting
discounts or commissions. Because we do not know when or the price at which
SBI will sell the shares, it is not possible to quantify these potential
discounts or commissions.

We have advised SBI that it is subject to the applicable provisions of
the Securities Exchange Act of 1934, including without limitation, Rule 10b-5
and Regulation M thereunder. Under Registration M, SBI, its affiliates and
anyone participating in a distribution of the shares may not bid for,
purchase, or attempt to induce any person to bid for or purchase, shares of
our common stock while SBI is distributing shares covered by this prospectus.

Registration Obligations

Under the stock purchase agreement, we have agreed to register the
shares for resale by SBI under the Securities Act and to maintain the
effectiveness of that registration until the earliest date, after the date on
which all of the shares have been purchased pursuant to the stock purchase
agreement or SBI's obligation to purchase shares pursuant to the stock
purchase agreement has been terminated, on which:

* all the shares acquired by SBI under the stock purchase agreement
have been disposed of pursuant to the registration statement,

* all shares acquired by SBI under the stock purchase agreement that
are then held by SBI may be sold under the provisions of Rule 144
without limitation as to volume, whether pursuant to Rule 144(k) or
otherwise, or

* we have determined that all shares acquired by SBI under the stock
purchase agreement that are then held by SBI may be sold without
restriction under the Securities Act and we have removed any stop
transfer instructions relating to such shares.

SBI's status as an underwriter may limit its sale of shares to qualify for an
exemption from applicable securities registration requirements.

We will pay the costs of registering the shares as contemplated by the
stock purchase agreement, including the expenses of preparing this prospectus
and the related registration statement of which it is a part. We estimate

Page 67

that our costs associated with such registration will be approximately
$55,000.

LEGAL MATTERS

The validity of the issuance of the common stock offered hereby will be
passed upon for us by Nixon Peabody LLP, Rochester, New York.

EXPERTS

The financial statements of Biophan as of and for the years ended
February 28, 2003 and 2002, appearing in this prospectus have been audited by
Goldstein Golub Kessler LLP, Certified Public Accountants, as set forth in
their report thereon appearing elsewhere herein, and are included in reliance
upon such reports given upon the authority of such firm as experts in
accounting and auditing.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

Biophan files current, quarterly and annual reports with the SEC on forms
8-K, 10-QSB and 10-KSB. Biophan has filed with the SEC under the Securities
Act of 1933 a registration statement on Form SB-2 with respect to the shares
being offered in this offering. This prospectus does not contain all of the
information set forth in the registration statement, certain items of which
are omitted in accordance with the rules and regulations of the SEC. The
omitted information may be inspected and copied at the Public Reference Room
maintained by the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549. You can obtain information about operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains
an Internet site that contains reports, proxy and information statements, and
other information regarding issuers that file electronically with the SEC at
http://www.sec.gov. Copies of such material can be obtained from the public
reference section of the SEC at prescribed rates. Statements contained in
this prospectus as to the contents of any contract or other document filed as
an exhibit to the registration statement are not necessarily complete and in
each instance reference is made to the copy of the document filed as an
exhibit to the registration statement, each statement made in this prospectus
relating to such documents being qualified in all respect by such reference.

For further information with respect to Biophan and the securities being
offered hereby, reference is hereby made to the registration statement,
including the exhibits thereto and the financial statements, notes, and
schedules filed as a part thereof.

Page 68

FINANCIAL STATEMENTS

BIOPHAN TECHNOLOGIES, INC.
AND SUBSIDIARIES
(A Development Stage Company)

CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2003

BIOPHAN TECHNOLOGIES, INC.AND SUBSIDIARIES
(A Development Stage Company)

CONTENTS
FEBRUARY 28, 2003
-----------------------------------------------------------------------------

Independent Auditor's Report F-1

Consolidated Financial Statements:

Balance Sheet F-2
Statement of Operations F-3
Statement of Stockholders' Deficiency F-4
Statement of Cash Flows F-7
Notes to Consolidated Financial Statements F-9

INDEPENDENT AUDITOR'S REPORT
------------------------------

To the Board of Directors
Biophan Technologies, Inc.

We have audited the accompanying consolidated balance sheet of Biophan
Technologies, Inc. and Subsidiaries (a development stage company) as of
February 28, 2003, and the related consolidated statements of operations,
stockholders' deficiency, and cash flows for each of the two years in the
period then ended, and the amounts in the cumulative column in the
consolidated statements of operations, stockholders' deficiency, and cash
flows for the period from August 1, 1968 (date of inception) to 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 auditing standards generally
accepted in the United States of America. 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 Biophan
Technologies, Inc. and Subsidiaries as of February 28, 2003 and the results of
their operations and their cash flows for each of the two years in the period
then ended and the amounts included in the cumulative column in the
consolidated statements of operations and cash flows for the period from
August 1, 1968 to February 28, 2003 in conformity with accounting principles
generally accepted in the United States of America.

/s/GOLDSTEIN GOLUB KESSLER LLP
New York, New York

April 10, 2003

Pg. F-1

BIOPHAN TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)

CONSOLIDATED BALANCE SHEET
------------------------------------------------------------------------------
February 28, 2003
------------------------------------------------------------------------------

ASSETS

Current assets:
Cash $ 48,935
Investments in marketable securities 302,000
Advances receivable 10,127
Due from related party 24,368
Prepaid expenses 90,923
------------------------------------------------------------------------------
Total current assets 476,353
------------------------------------------------------------------------------

Fixed assets - at cost, net 63,232
------------------------------------------------------------------------------

Other assets:
Intellectual property rights 70,000
Security deposit 2,933
Deferred equity placement costs 70,538
Deferred tax asset, net of valuation allowance of $2,120,000 -
------------------------------------------------------------------------------
143,471
------------------------------------------------------------------------------
$ 683,056
==============================================================================

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current liabilities:
Accounts payable and accrued expenses $ 343,216
Loan payable to stockholder 143,570
Payable to related party 300,000
Due to related party 9,401
------------------------------------------------------------------------------
Total current liabilities 796,187
------------------------------------------------------------------------------

Long-term payable to related party, less discount 83,333
------------------------------------------------------------------------------

Stockholders' deficiency:
Common stock - $.005 par value:
Authorized, 60,000,000 shares
Issued and outstanding, 37,634,693 shares 188,173
Additional paid-in capital 7,588,520
Deficit accumulated during the development stage (7,973,157)
------------------------------------------------------------------------------
(196,464)
------------------------------------------------------------------------------
$ 683,056
==============================================================================

See notes to consolidated financial statements

Pg. F-2

BIOPHAN TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)

CONSOLIDATED STATEMENT OF OPERATIONS
----------------------------------------------------------------------------------------

Period from
August 1,
1968 (date of
Year ended Year ended inception) to
February 28, February 28, February 28,
2003 2002 2003
----------------------------------------------------------------------------------------

Operating expenses:
Salaries and related $ 648,304 $ 461,629 $ 1,169,794
Research and development 1,373,124 949,124 2,435,292
Professional fees 522,115 1,310,916 1,871,716
Write-down of intellectual property rights 40,000 530,000
General and administrative 582,174 475,520 1,084,254
----------------------------------------------------------------------------------------

Operating loss (3,165,717) (3,197,189) (7,091,156)
----------------------------------------------------------------------------------------

Other income (expense):
Interest expense (447,853) (540,543) (1,001,396)
Interest income 17,083 26,061 44,763
Other income 187,040 42,035 229,075
Other expense (28,805) (36,281) (65,086)
----------------------------------------------------------------------------------------

Total other expenses, net (272,535) (508,728) (792,644)
----------------------------------------------------------------------------------------

Loss from continuing operations (3,438,252) (3,705,917) (7,883,800)

Loss from discontinued operations (89,357)
----------------------------------------------------------------------------------------

Net loss $ (3,438,252) $ (3,705,917) $ (7,973,157)
========================================================================================
Loss per common share - basic and diluted $ (0.11) $ (0.14)
========================================================================================
Weighted average shares outstanding 31,731,051 27,000,962
========================================================================================

See notes to consolidated financial statements

Pg. F-3

BIOPHAN TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)

CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
-------------------------------------------------------------------------------------------------
Period from August 1, 1968 (date of inception) to February 28, 2003
-------------------------------------------------------------------------------------------------
Deficit
Accumulated
Additional During the Stockholders'
Number Common Paid-in Development Equity
of Shares Stock Capital Stage (Deficiency)
-------------------------------------------------------------------------------------------------

1969 - 14,130 shares issued for services
for $.05 per share 14,130 $ 70 $ 637 $ 707

1970 - 1,405,000 shares issued for mining
rights for $.05 per share 1,405,000 7,025 63,225 70,250

1970 - 55,500 shares issued for services
for $.05 per share 55,500 278 2,497 2,775

1973 - 10,000 shares issued for services
for $.05 per share
10,000 50 450 500

1976 - 500 shares issued for services
for $.05 per share
500 3 22 25

1978 - 12,000 shares issued for services
for $.05 per share
12,000 60 540 600

1980 - 225,000 shares issued for services
for $.05 per share
225,000 1,125 10,125 11,250

1984 - 20,000 shares issued for services
for $.05 per share
20,000 100 900 1,000

1986 - 10,000 shares issued for services
for $.05 per share
10,000 50 450 500

1990 - 10,000 shares issued for services
for $.05 per share 10,000 50 450 500

1993 - 25,000 shares issued for services
for $.05 per share
25,000 125 1,125 1,250

Net loss from inception through
February 28, 1998 (89,357) (89,357)
-------------------------------------------------------------------------------------------------

Balance at February 28, 1998 1,787,130 8,936 80,421 (89,357) -

1999 - 10,000 shares issued for services
for $.05 per share 10,000 50 450 $ 500

See notes to consolidated financial statements

Pg. F-4

BIOPHAN TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)

Deficit
Accumulated
Additional During the Stockholders'
Number Common Paid-in Development Equity
of Shares Stock Capital Stage (Deficiency)
-------------------------------------------------------------------------------------------------

1999 - 1,000,000 shares issued for services
for $.005 per share 1,000,000 5,000 5,000

Net loss for the year ended
February 28, 1999 (5,500) (5,500)
-------------------------------------------------------------------------------------------------

Balance at February 28, 1999 2,797,130 13,986 80,871 (94,857) -

2000 - 1,000,200 shares issued
for services for $.005 per share
1,000,200 5,001 5,001

Net loss for the year ended
February 29, 2000 (5,001) (5,001)
-------------------------------------------------------------------------------------------------

Balance at February 29, 2000 3,797,330 18,987 80,871 (99,858) -

2000 - 250,000 shares issued for services
for $.005 per share
250,000 1,250 1,250

2000 - Expenses paid by stockholder 2,640 2,640

2000 - 10,759,101 shares issued for
acquisition of Antisense Technology,
Inc. 10,759,101 53,795 121,205 175,000

2000 - 10,759,101 shares issued for cash
for $.005 per share 10,759,101 53,796 121,204 175,000

Net loss for the year ended
February 28, 2001 (729,130) (729,130)
-------------------------------------------------------------------------------------------------

Balance at February 28, 2001 25,565,532 127,828 325,920 (828,988) (375,240)

2001 - 2,399,750 shares issued for cash
for $1.00 per share 2,399,750 11,999 2,387,751 2,399,750

2001 - 468,823 shares issued for interest 468,823 2,344 466,479 468,823

See notes to consolidated financial statements

Pg. F-5

BIOPHAN TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)

2001 - Redemption of 200,000 shares (200,000) (1,000) (1,000)

2001 - 1,315,334 shares issued upon
conversion of bridge loans at $.75
per share 1,315,334 6,576 979,924 986,500

2001 - Offering costs associated with
share issuances for cash (254,467) (254,467)

2002 - Grant of stock options for services 702,800 702,800

Net loss for the year ended
February 28, 2002 (3,705,917)(3,705,917)
-------------------------------------------------------------------------------------------------

Balance at February 28, 2002 29,549,439 147,747 4,608,407 (4,534,905) 221,249

2002 - Shares issued for cash for
$.34 per share 993,886 4,969 337,461 342,430
2002 - Shares issued for cash for
$.15 per share 1,192,874 5,964 167,002 172,966
2002 to 2003 - Shares issued for cash for
$.25 per share 5,541,100 27,706 1,357,569 1,385,275
2002 to 2003 - Shares issued as commissions
on offerings 357,394 1,787 (1,787) -
2002 to 2003 Cash commissions on offerings (119,488) (119,488)
Offering costs (45,644) (45,644)
Grant of stock options for services 485,000 485,000
Intrinsic value of beneficial conversion feature
of note payable and MRI liability 800,000 800,000
Net loss for the year ended
February 28,2003 (3,438,252)(3,438,252)
------------------------------------------------------------------------------------------------
Balance at February 28, 2003 37,634,693 $ 188,173 $7,588,520 $(7,973,157) $(196,464)
=================================================================================================

See notes to consolidated financial statements

Pg. F-6

BIOPHAN TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)

CONSOLIDATED STATEMENT OF CASH FLOWS
----------------------------------------------------------------------------------------

Cash flows from operating activities:
Net loss $(3,438,252) $(3,705,917) $(7,973,157)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 25,601 14,762 40,530
Realized and unrealized losses on marketable securities 28,805 38,143 66,948
Amortization of interest on convertible notes payable 383,333 - 383,333
Write-down of intellectual property rights 40,000 - 530,000
Amortization of discount on payable to related party - 62,000 75,000
Issuance of common stock for services - 101,108
Issuance of common stock for interest 468,823 468,823
Grant of stock options for services 485,000 702,800 1,187,800
Expenses paid by stockholder - - 2,640
Changes in operating assets and liabilities:
Increase in advances receivable (10,127) - (10,127)
Increase in due from related parties (24,368) - (24,368)
(Increase) decrease in prepaid expenses 896 (91,819) (90,923)
Increase in security deposits - (2,933) (2,933)
Increase in accounts payable and accrued expenses 214,176 18,184 329,885
Decrease in due to related parties (6,948) (153,787) (34,095)
-------------------------------------------------------------------------------------------------
Net cash used in operating activities (2,301,884) (2,649,744) (4,949,536)
-------------------------------------------------------------------------------------------------

Cash flows from investing activities:
Purchases of fixed assets (7,951) (90,811) (103,762)
Sales of marketable securities 540,000 377,270 917,270
Purchases of marketable securities (302,000) (984,218) (1,286,218)
-------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities 230,049 (697,759) (472,710)
-------------------------------------------------------------------------------------------------

Cash flows from financing activities:
Proceeds of bridge loans - 986,500 986,500
Loan from stockholder 143,570 - 143,570
Line of credit borrowing from related party 300,000 300,000
Net proceeds from sales of capital stock 1,735,539 2,201,110 4,111,649
Deferred equity placement costs (70,538) - (70,538)
-------------------------------------------------------------------------------------------------
Net cash provided by financing activities 2,108,571 3,187,610 5,471,181
-------------------------------------------------------------------------------------------------

See notes to consolidated financial statements

Pg. F-7

BIOPHAN TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)

CONSOLIDATED STATEMENT OF CASH FLOWS
----------------------------------------------------------------------------------------

Net increase (decrease) in cash and cash equivalents 36,736 (159,893) 48,935

Cash and cash equivalents at beginning of period 12,199 172,092 -
-------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 48,935 $ 12,199 $ 48,935
=================================================================================================

Supplemental schedule of noncash investing and
financing activities:

Intellectual property acquired through issuance of common
stock and assumption of related party payable $ 175,000
=================================================================================================

Acquisition of intellectual property rights $ 425,000
=================================================================================================
Issuance of common stock upon conversion of bridge loans $ 986,500 $ 986,500
=================================================================================================

See notes to consolidated financial statements

Pg. F-8

BIOPHAN TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
February 28, 2003
-------------------------------------------------------------------------------

1. PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES:

The consolidated financial statements include the accounts of Biophan
Technologies, Inc. ("Biophan") and its wholly owned subsidiaries, LTR
Antisense Technology, Inc. ("Antisense")and MRIC Drug Delivery Systems, LLC
("MRIC") (collectively referred to as the "Company"). All significant
intercompany accounts and transactions have been eliminated in consolidation.

The Company is in the development stage and is expected to remain so for at
least the next 12 months. The Company is developing technologies that make
biomedical devices safe for use in an MRI (Magnetic Resonance Imaging)
machine.

The Company has not generated any revenue throughout its history. The
Company's ability to continue in business is dependent upon obtaining
sufficient financing or attaining future profitable operations.

On December 1, 2000, the Company acquired LTR Antisense Technology, Inc., a
New York corporation ("LTR"), from Biomed Solutions, LLC (formerly Biophan,
LLC), a New York limited liability company ("Biomed"), in a share for share
exchange. As a result of the exchange, LTR became a wholly owned subsidiary of
the Company. The exchange was consummated pursuant to and in accordance with
an Exchange Agreement, originally dated December 1, 2000 and subsequently
amended, by and among the Company, LTR and Biomed. LTR owns multiple patents
for proprietary HIV antisense gene therapy technology.

In connection with the exchange, the Company (i) issued an aggregate of
10,759,101 shares of common stock to Biomed in exchange for all the issued
shares of LTR and (ii) issued an aggregate of 10,759,101 shares of common
stock to a group of investors for $175,000. Also on December 1, 2000, the
Company acquired intellectual property rights, including a pending patent to
the MRI-compatible pacemaker technology from Biomed (the "Assignment"), for
future consideration of $500,000 ("MRI technology purchase liability payable")
The Assignment was consummated pursuant to, and in accordance with, an
Assignment and Security Agreement, originally dated December 1, 2000 and
subsequently amended, by and between the Company and Biomed.

For purposes of the statement of cash flows, the Company considers all highly
liquid instruments with an original maturity of three months or less to be
cash equivalents.

The Company maintains cash in bank deposit accounts which, at times, exceed
federally insured limits. The Company has not experienced any losses on these
accounts.

Marketable securities that are bought and held principally for the purpose of
selling them in the near term are classified as trading securities. Trading
securities are recorded at fair value, with the change in fair value during
the period included in operations.

Depreciation of fixed assets is provided by the straight- line method over the
estimated useful lives of the related assets. Amortization of acquired
intellectual property rights is provided by the straight-line method over 17
years. Costs for internally developed intellectual property rights with
indeterminate lives are expensed as incurred.

Pg. F-9

BIOPHAN TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
February 28, 2003
-------------------------------------------------------------------------------

At each balance sheet date, the Company evaluates the period of amortization
of intangible assets. The factors used in evaluating the period of
amortization include: (i) current operating results, (ii) projected future
operating results, and (iii) any other material factors that affect continuity
of the business.

Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted rates
expected to apply when the differences are expected to be realized. A
valuation allowance is recognized if it is anticipated that some or all of the
deferred tax asset may not be realized.

Basic loss per common share is computed by dividing net loss by the weighted-
average number of shares of common stock outstanding during the period.
Diluted loss per common share gives effect to dilutive options, warrants and
other potential common stock outstanding during the period. Potential common
stock has not been included in the computation of diluted loss per share, as
the effect would be antidilutive.

The Company has elected to apply Accounting Principles Board ("APB") Opinion
No. 25, Accounting for Stock Issued to Employees, and related interpretations
in accounting for its stock options issued to employees (intrinsic value) and
has adopted the disclosure-only provisions of Statement of Financial
Accounting Standards ("SFAS") No. 123, Accounting for Stock-Based
Compensation. Had the Company elected to recognize compensation cost based on
the fair value of the options granted at the grant date as prescribed by SFAS
No. 123, the Company's net loss and loss per common share would have been as
follows:

Year ended February 28, 2003 2002
-----------------------------------------------------------------------
Net loss - as reported $3,438,252 $3,705,917

Add: Stock-based employee compensation
Expense included in reported net loss,
net of related tax effects 458,000 268,000

Deduct: Total stock-based employee
compensation expense determined
under fair value based method for
all awards, net of related tax effects 524,000 280,000
-----------------------------------------------------------------------
Net loss - pro forma $3,372,252 $3,693,917
=======================================================================
Basic and diluted loss
per share - as reported $ .11 $ .14
=======================================================================
Basic and diluted loss
per share - pro forma $ .11 $ .14
=======================================================================

The Company's assumptions used to calculate the fair values of options issued
during the year ended February 28, 2003 were (i) risk-free interest rates of
3.05% through 4.75%, (ii) expected lives of 5 to 10 years, (iii) expected
volatility of 90%, and (iv) expected dividends of zero.

The Company's assumptions used to calculate the fair values of options issued
during the year ended February 28, 2002 were (i) risk-free interest rates of
4.27% and 4.87%, (ii) expected life of nine years, (iii) expected volatility
of 90.%, and (iv) expected dividends of zero.

The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of estimates by management. Actual

Pg. F-10

results could differ from these estimates.

Management does not believe that any recently issued, but not yet effective,
accounting standards, if currently adopted, would have a material effect on
the accompanying financial statements.

2. INVESTMENTS IN MARKETABLE SECURITIES:

Investments in trading securities are summarized as follows at February
28, 2003:

Gross
Unrealized Fair
Cost Gain/Loss Value
-------------------------------------------------------------------------
Corporate debt securities $302,000 $ - $302,000
==========================================================================
There were no unrealized holding losses on trading securities for the year
ended February 28, 2003.

3. PREPAID EXPENSES:

Prepaid expenses at February 28, 2003 consist of the following:

Prepaid consulting fees $ 53,933
Prepaid insurance 18,865
Prepaid supplies 18,125
--------
$ 90,923
========

4. FIXED ASSETS:

Fixed assets, at cost, consist of the following:

Depreciation/
Amortization
Period
-----------------------------------------------------------
Furniture & Equipment $39,320 5-7 years
Computers 10,283 5 years
Internet Web site 54,159 7 years
-----------------------------------------------------------
103,762
Less accumulated depreciation (40,530)
-----------------------------------------------------------
$63,232
===========================================================

Depreciation expense for the years ended February 28, 2003 and 2002 amounted
to $25,601 and $14,762, respectively. Depreciation expense for the period
from August 1, 1968 (Date of Inception) to February 28, 2003 was $40,530.

5. INTELLECTUAL PROPERTY RIGHTS:

Intellectual property rights were acquired on December 1, 2000 and encompass
two areas: (1) The utilization of new proprietary technology to prevent
implantable cardiac pacemakers and other critical and life-sustaining medical
devices from being affected by MRI and other equipment using magnetic fields,
radio waves and similar forms of electromagnetic interference ("EMI"), and (2)

Pg. F-11

the use of proprietary antisense gene therapy technology to inhibit the spread
of human immunodeficiency virus (HIV-1) infection in conjunction with the use
of lentiviral vectors. In the current year ended February 28, 2003, the
stated cost value of the gene technology rights in the amount of $40,000 was
written off. The Company has discontinued its development efforts in this
area.

6. LOAN AGREEMENTS:

In June 2002, the Company signed a Loan Agreement with a shareholder
providing for borrowings of up to $400,000 with interest payable at 8% per
annum. Principal and accrued interest become due and payable on December 31,
2003. At February 28, 2003, $143,570 had been borrowed under this Agreement.

In June 2002, the Company executed a line-of-credit agreement (the "Line")
with Biomed that provided for borrowings up to $250,000. Interest accrues at
8% per annum. Upon execution of the Line, Biomed received warrants to
purchase 325,000 shares of restricted common stock at $1.00 per share. The
warrants were valued at approximately $234,000 which was recorded as a
discount against the Convertible Promissory Note (the "Note") supporting the
Line. At issuance, the Note was convertible into shares of the Company's
common stock, at a price below the market value of such stock. The intrinsic
value of the beneficial conversion feature of the Note was recorded as an
additional discount, such that the full $250,000 issued was discounted, with
a corresponding increase to additional paid-in capital.

On August 19, 2002, the Line was increased by $100,000 and the expiration date
thereof was extended to August 19, 2003. The payment date of amounts borrowed
under the original Line was extended to December 1, 2002. In consideration
for the increase in the Line, Biomed received 30,000 additional warrants to
purchase shares of restricted common stock at a price dependent on the selling
price of the Company's stock, as defined. The exercise price of the warrants
issued to Biomed in exchange for the increase in the line of credit to
$350,000 and the extension of the payment date to December 1, 2002 is the
lowest of (i) the closing bid price on June 4, 2002; (ii) the closing bid
price on the date of exercise; or (iii) the lowest per share purchase price
paid by any third party between June 4, 2002 and the exercise date. The fair
value of the warrants - in accordance with guidance provided by Statement of
Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation - was estimated at the date of grant using the Black-Scholes
option pricing model with the following assumptions: risk-free interest rate
of 5.25; no dividend yield; volatility factor of the expected market price of
the company's common stock of 0.0%, and an expected life of 2.8 years. The
value attributed to the warrants was insignificant. As a result, these
warrants have been allocated no value. The Company has drawn an additional
$50,000 under the Line, which was also fully discounted as a result of the
beneficial conversion feature, which was recorded as additional paid-in
capital. At February 28,2003, the Company has borrowed $300,000 in aggregate
under the Line.

Under the Transfer Agreement dated December 1, 2000, the Company incurred a
liability ("MRI technology purchase liability payable") of $500,000 (including
interest of $75,000) to Biomed in connection with the acquisition of the MRI
intellectual property rights described in Note 4. Biomed maintains a security
interest in the underlying patents until the liability is satisfied. The
intellectual property rights will revert to Biomed if the Company does not
satisfy the liability by June 1, 2004. The stated liability bears interest at
an annual rate of 8%. The balance of the MRI technology purchase liability
payable at February 28, 2002 is $500,000.

At February 28, 2003, the principal amounts of the Company's obligations
approximated their estimated fair values based upon current borrowing rates
for similar issues.

In December 2002, in consideration for extending the maturity date to June 1,
2004 and for prior extensions, the Company and Biomed agreed to make the
$500,000 MRI technology purchase liability payable to Biomed convertible at
Biomed's election into shares of the Company's common stock at a price
dependent on the selling price of the Company's stock, as defined, but below
market. Consequently, the intrinsic value of the beneficial conversion
feature of the liability was recorded as a discount, such that the full
$500,000 was discounted, with a corresponding increase to additional paid-in
capital.

Pg. F-12

7. STOCKHOLDERS' EQUITY:

In July and August 2002, the Company entered into finder's agreements for the
sale of restricted common stock to foreign investors pursuant to the exemption
from registration provided in Regulation S of the 1933 Securities Act. The
Company issued a total of 2,186,760 shares of stock for aggregate net proceeds
of $491,034 under these agreements.

Effective August 22, 2002, the Company entered into a finder's agreement with
a domestic consulting firm providing for the sale of restricted shares of
common stock pursuant to Regulation D under the Securities Act. The finder
receives a cash fee of 10% plus stock. The Company issued a total of 5,541,100
shares of stock for aggregate net proceeds of $1,244,505.

During November 2002, the Company entered into a Stock Purchase Agreement with
an institutional investor whereby the Company agreed to sell up to $3,000,000
of the Company's common stock. The agreement requires the Company to file
with the Securities and Exchange Commission ("SEC") a Registration Statement
covering the shares issuable under this agreement. The Company can begin
selling shares to the purchaser immediately after the SEC declares the above-
mentioned Registration Statement effective. The Company is in the process of
filing for registration.

8. COMMITMENTS:

The Company is obligated under an operating lease for office space expiring
September 30, 2004. The Company may terminate the lease upon ninety days prior
written notice to the landlord. The aggregate minimum future payments under
this lease are payable as follows:

Year ending February 28,
2004 $ 46,783
2005 25,083
--------------------------------------------------------
$ 71,866
========================================================

Rent expense charged to operations under this operating lease aggregated
$51,321 and $14,667 for the years ended February 28, 2003 and 2002,
respectively. Rent expense charged to operations for the period from August
1, 1968 (Date of Inception) to February 28,2003 was $65,988.

9. RELATED PARTY TRANSACTIONS:

Biomed and another related party paid expenses on behalf of the Company
aggregating $128,411 and $253,014 during the years ended February 28, 2003 and
2002, respectively, and $551,561 for the period August 1, 1968 through
February 28, 2003. At February 28, 2003, the balance due from a related party
is $24,368 and the balance due to a separate related party is $9,401. The
amounts due from and to the related parties do not bear interest, and the
Company expects to collect and repay these respective balances during the next
12 months.

10. STOCK-BASED COMPENSATION PLAN:

The Company has a stock option plan (the "Plan") which provides for the
granting of nonqualified or incentive stock options ("ISO") to officers, key
employees, non-employee directors and consultants. The Plan authorizes the
granting of options to acquire up to 2,500,000 common shares. ISO grants
under the Plan are exercisable at the market value of the Company's stock on
the date of such grant. Nonqualified option grants under the Plan are
exercisable at amounts determined by the board of directors. All options

Pg. F-13

under the Plan are exercisable at times as determined by the board of
directors, not to exceed 10 years from the date of grant. Additionally, the
Plan provides for the granting of restricted stock to officers and key
employees.

The following table summarizes activity in stock options:

Weighted-
average
Exercise
Options Price
-----------------------------------------------------------
Outstanding at March 1, 2001 - -

Granted 1,779,997 $ .51

Forfeited - -

Exercised - -
-----------------------------------------------------------
Outstanding at February 28, 2002 1,779,997 $ .51

Granted 739,998 .42

Forfeited 30,000 .50

Exercised - -
-----------------------------------------------------------
Outstanding at February 28, 2003 2,489,995 $ .48
===========================================================

Weighted-average fair value of
options granted during the year
ended February 28, 2003 and 2002,
respectively $ .33 $ .90
===========================================================

The following table summarizes information about stock
options outstanding and exercisable at February 28, 2003:

Options Outstanding Options Exercisable
----------------------------------- ----------------------
Weighted
Average Weighted- Weighted-
Remaining Average Average
Range of Number Contractual Exercise Number Exercise
Exercise Price Outstanding Life Price Exercisable Price
----------------------------------------------------------------------------

$.10 - $.43 940,000 7.50 years $.33 546,666 $.27

$.50 - $1.00 1,549,995 7.64 years $.58 1,017,995 $.62
----------------------------------------------------------------------------
$.10 - $1.00 2,489,995 7.58 years $.48 1,564,661 $.50

At February 28, 2003, 10,005 shares of common stock were reserved for future
issuance of stock options.

11. INCOME TAXES:

As of February 28, 2003, the Company had net operating loss carryforwards of
approximately $5,706,000 for federal income tax purposes, which expire through
2023.

Pg. F-14

The reconciliation of income tax computed at the U.S. federal statutory tax
rates to income tax expense is as follows:

Year Ended February 28, 2003 2002
-----------------------------------------------------------
Tax benefit at U.S. statutory rates 34 % 34 %
Increase in valuation allowance (34)% (34)%
-----------------------------------------------------------
-0-% -0-%
===========================================================

Deferred tax asset is comprised of the following:

February 28, 2003
-----------------------------------------------------------
Net operating loss carryforwards $1,940,000
Write-down of intellectual property rights 180,000
-----------------------------------------------------------

Total deferred tax asset 2,120,000
Valuation allowance (2,120,000)
-----------------------------------------------------------

Net deferred tax asset $ -0-
==========================================================

F-15

BIOPHAN TECHNOLOGIES, INC.
AND SUBSIDIARIES
(A Development Stage Company)

CONSOLIDATED FINANCIAL STATEMENTS

AUGUST 31, 2003

BIOPHAN TECHNOLOGIES, INC.AND SUBSIDIARIES
(A Development Stage Company)

CONTENTS
AUGUST 31, 2003
______________________________________________________________________________

Condensed Consolidated Financial Statements:

Independent Accountant's Report F-1

Condensed Consolidated Balance Sheets, August 31, 2003 (Unaudited)
and February 28, 2003 F-2

Condensed Consolidated Statements of Operations, Three Months and Six
Months Ended August 31, 2003 and 2002 (Unaudited), and from August 1,
1968 (Date of Inception) through August 31, 2003 (Unaudited) F-3

Condensed Consolidated Statements of Cash Flows, Six Months Ended
August 31, 2003 and 2002 (Unaudited) and from August 1, 1968
(Date of Inception) through August 31, 2003 (Unaudited) F-4

Notes to Condensed Consolidated Financial Statements F-5 - F-8

INDEPENDENT ACCOUNTANT'S REPORT
-------------------------------

To the Board of Directors
Biophan Technologies, Inc.

We have reviewed the accompanying condensed consolidated balance sheet of
Biophan Technologies, Inc. and Subsidiaries as of August 31, 2003, and the
related condensed consolidated statements of operations for the three-month
and six-month periods ended August 31, 2003 and 2002 and the condensed
consolidated statements of cash flows for the six-month periods ended August
31, 2003 and 2002. These financial statements are the responsibility of the
Company's management.

We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the consolidated
financial statements taken as a whole. Accordingly, we do not express such an
opinion.

Based on our reviews, we are not aware of any material modifications that
should be made to the condensed consolidated financial statements referred
to above for them to be in conformity with accounting principles generally
accepted in the United States of America.

We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the consolidated balance sheet as of
February 28, 2003, and the related consolidated statements of operations,
stockholders' deficiency, and cash flows for the year then ended (not
presented herein); and in our report dated April 10, 2003, we expressed an
unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying condensed consolidated
balance sheet as of February 28, 2003, is fairly stated, in all material
respects, in relation to the consolidated balance sheet from which it has been
derived.

GOLDSTEIN GOLUB KESSLER LLP
New York, New York

October 7, 2003

Pg. F-1

BIOPHAN TECHNOLOGIES, INC.
AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

CONDENSED CONSOLIDATED BALANCE SHEETS

August 31, 2003
(Unaudited) February 28, 2003
------------------------------------
ASSETS

Current Assets:
Cash $ 5,350 $ 48,935
Investments in marketable securities - 302,000
Advances receivable - 10,127
Due from related party 58,561 24,368
Prepaid expenses 78,932 90,923
--------------------------------
Total Current Assets 142,843 476,353
--------------------------------

Fixed Assets, at cost, net 70,394 63,232

Other Assets:
Intellectual property rights 70,000 70,000
Security deposit 2,933 2,933
Deferred equity placement costs - 70,538
Deferred tax asset, net of valuation
allowance of $2,477,000 and $2,120,000
respectively - -
--------------------------------
72,933 143,471
--------------------------------
$ 286,170 $ 683,056
================================

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current Liabilities:
Accounts payable and accrued expenses 696,782 $ 343,216
Loan payable to stockholder - 143,570
Payable to related party, less discount 219,501 300,000
Due to related party 11,443 9,401
--------------------------------
Total Current Liabilities 927,726 796,187
--------------------------------

Long-term payable to related party,
less discount 190,000 83,333

Stockholders' Deficiency:
Common stock, $.005 par value
Authorized, 80,000,000 shares
Issued and outstanding,
40,951,317 shares, and
37,634,693 shares, respectively 204,757 188,173
Additional paid-in capital 8,292,433 7,588,520
Deficit accumulated during the
development stage (9,328,746) (7,973,157)
--------------------------------
(831,556) (196,464)
--------------------------------
$ 286,170 $ 683,056
================================

See Notes to Condensed Consolidated Financial Statements.

Pg. F-2

BIOPHAN TECHNOLOGIES, INC.
AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

Period from August
Three Months Ended Six Months Ended 1, 1968 (date of
August 31, August 31, inception) to
2003 2002 2003 2002 August 31, 2003
-----------------------------------------------------------------

Operating expenses:

Salaries and related $ 129,861 $ 175,914 $ 257,503 $ 347,127 $ 1,427,297
Research and development 201,786 189,466 439,889 641,281 2,875,281
Professional fees 149,567 129,527 255,676 270,020 2,127,392
Write-down of intellectual
property rights - - - - 530,000
General and administrative 119,709 122,300 224,445 287,609 1,308,699
----------------------------------------------------------------
Operating loss (600,923) (617,207) (1,177,513) (1,546,037) (8,268,669)

Other income(expense):
Interest income 362 93 1,264 16,701 46,027
Interest expense (134,413) (161,260) (244,664) (171,560) (1,246,060)
Other income 37,520 76,226 65,324 89,724 294,399
Other expense - - (28,805) (65,086)
----------------------------------------------------------------
(96,531) (84,941) (178,076) (93,940) (970,720)
----------------------------------------------------------------
Loss from continuing
operations (697,454) (702,148) (1,355,589) (1,639,997) (9,239,389)

Loss from discontinued
operations - - - - (89,357)
----------------------------------------------------------------
Net loss $ (697,454) $ (702,148) $(1,355,589) $(1,639,997) $(9,328,746)
================================================================
Loss per common share-
basic and diluted $ (0.02) $ (0.02) $ (0.04) $ (0.06)
==================================================
Weighted average shares
outstanding 39,070,506 29,652,082 38,532,599 29,600,761
==================================================

See Notes to Condensed Consolidated Financial Statements.

Pg. F-3

BIOPHAN TECHNOLOGIES, INC.
AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Period from
August 1, 1968
Six Months Ended (date of inception)
August 31, to
2003 2002 August 31, 2003
-------------------------------------------

Cash flows used for operating activities:
Net loss $(1,355,589) $(1,639,977) $(9,328,746)
Adjustments to reconcile net loss to net cash
provided(used) by operating activities:
Depreciation 11,528 12,780 52,058
Realized and unrealized losses on
marketable securities - 28,805 66,948
Accrued interest on note payable
converted to common stock 11,998 11,998
Amortization of interest on convertible
notes payable 210,118 150,000 593,451
Write-down of intellectual property rights - - 530,000
Amortization of discount on payable to
related party - - 75,000
Issuance of common stock for services - - 101,108
Issuance of common stock for interest - - 468,823
Grant of stock options for services 116,000 94,000 1,303,800
Expenses paid by stockholder - - 2,640
Changes in operating assets and liabilities:
(Increase)decrease in advances receivable 10,127 - -
Increase in due from related
parties (34,193) - (58,561)
(Increase) decrease in prepaid expenses 11,991 (78,193) (78,932)
Increase in security deposits - - (2,933)
Increase in accounts payable and
accrued expenses 353,566 203,974 683,451
Increase(decrease) in due to related
parties 2,042 (7,421) (32,053)
----------------------------------------
(662,412) (1,236,032) (5,611,948)

Cash flows used for investing activities:
Purchases of fixed assets (18,690) (7,951) (122,452)
Sales of marketable securities 302,000 540,000 1,219,270
Purchases of marketable securities - - (1,286,218)
----------------------------------------
283,310 532,049 (189,400)

Cash flows provided by financing activities:
Proceeds of bridge loans - - 986,500
Loan from stockholder - 143,570 143,570
Line of credit borrowing from related party 175,000 300,000 475,000
Net proceeds from sales of capital stock 69,979 391,345 4,181,628
Deferred equity placement costs 70,538 (20,000) -
Proceeds from exercise of options 20,000 20,000
----------------------------------------
335,517 814,915 5,806,698
----------------------------------------
Net increase(decrease)in cash (43,585) 110,932 5,350

Cash, beginning 48,935 12,199 -
----------------------------------------

Cash, ending $ 5,350 $ 123,131 $ 5,350
========================================
Supplemental schedule of noncash investing
and financing activities:
Intellectual property acquired through
issuance of capital stock and
assumption of related party payable $ - $ - $ 175,000
========================================
Acquisition of intellectual property $ - $ - $ 425,000
========================================
Issuance of common stock upon conversion
of bridge loans $ 143,570 $ - $ 1,130,070
========================================
Issuance of common stock upon partial
conversion of line of credit loans $ 183,950 $ - $ 183,950
========================================

See Notes to Condensed Consolidated Financial Statements.

Pg. F-4

BIOPHAN TECHNOLOGIES, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2003

INTERIM FINANCIAL STATEMENTS:

The condensed consolidated financial statements as of August 31, 2003 and for
the three and six months ended August 31, 2003 and 2002 are unaudited.
However, in the opinion of management of the Company, these financial
statements reflect all adjustments, consisting solely of normal recurring
adjustments, necessary to present fairly the financial position and results
of operations for such interim periods. The results of operations for the
interim periods presented are not necessarily indicative of the results to be
obtained for a full year.

BASIS OF CONSOLIDATION:

The condensed consolidated financial statements include the accounts of
Biophan Technologies, Inc. ("Biophan")and its wholly owned subsidiaries, LTR
Antisense Technology, Inc. ("Antisense") and MRIC Drug Delivery Systems, LLC
("MRIC") (collectively referred to as the "Company"). All significant
intercompany accounts and transactions have been eliminated in consolidation.

ORGANIZATIONAL HISTORY:

The Company was incorporated under the laws of the State of Idaho on August 1,
1968. On January 12, 2000, the Company changed its domicile to Nevada by
merging into a Nevada corporation, and on July 19, 2001, changed its name to
Biophan Technologies, Inc. The Company's stock currently trades over-the-
counter under the symbol BIPH. Our corporate headquarters are located at 150
Lucius Gordon Drive, Suite 215, West Henrietta, New York 14586; Tel.
(585) 214-2441; website: www.biophan.com.

In connection with the exchange, the Company (i) issued an aggregate of
10,759,101 shares of common stock to Biomed in exchange for all the issued
shares of LTR and (ii) issued an aggregate of 10,759,101 shares of common
stock to a group of investors for $175,000. Also on December 1, 2000, the
Company acquired intellectual property rights, including a pending patent to
the MRI-compatible pacemaker technology from Biomed (the "Assignment"), for
future consideration of $500,000 ("MRI technology purchase liability
payable"). The Assignment was consummated pursuant to, and in accordance
with, an Assignment and Security Agreement, originally dated December 1, 2000
and subsequently amended, by and between the Company and Biomed.

PRINCIPAL BUSINESS ACTIVITIES:

The Company is in the development stage and is expected to remain so for at
least the next twelve months.

The Company is developing technologies that make implantable biomedical
devices safe for use in an MRI (Magnetic Resonance Imaging) machine. Many
implanted biomedical devices are prohibited for use in an MRI machine,
including pacemakers, cardioverter-defibrillators, neurostimulators, bladder
control devices, insulin pumps with wire connected sensors, pain control
devices, interluminal imaging coils, interventional catheters and guide wires,
endoscopes, and others. The Company plans to provide intellectual property
licenses to manufacturers of these biomedical devices.

ACCOUNTING FOR STOCK OPTIONS:

Three Months Ended Six Months Ended
August 31, August 31,
2003 2002 2003 2002
------------------------------------------------------------------------------------------

Net loss - as reported $ (697,454) $ (702,148) $ (1,355,589) $ (1,639,997)

Add - stock based employee
compensation expense included
in reported net loss, net of
related tax effects 30,000 47,000 60,000 94,000

Deduct - Total stock based
employee compensation expense
determined under fair value
based method for all awards,
net of related tax effects 64,000 115,000 114,000 230,034
------------------------------------------------------------------------------------------
Net loss - pro forma $ (731,454) $ (770,148) $ (1,409,589) $ (1,776,031)
==========================================================================================
Basic and diluted loss per
share - as reported $ (.02) $ (.03) $ (.04) $ (.06)
==========================================================================================
Basic and diluted loss per
share - pro forma $ (.02) $ (.03) $ (.04) $ (.06)
==========================================================================================

PREPAID EXPENSES:

Prepaid expenses at August 31, 2003 consist of the following:

Prepaid insurance $ 60,807
Prepaid supplies 18,125
--------
$ 78,932
========

LOAN AGREEMENTS:

In June 2002, the Company signed a Loan Agreement with a stockholder providing
for borrowings of up to $400,000 with interest payable at 8% per annum.

Principal and accrued interest become due and payable on December 31, 2003.
On July 28, 2003, the Company issued 775,000 shares of common stock for the
conversion of the entire principal amount of the loan of $143,570 plus accrued
interest of $11,998.

In June 2002, the Company executed a line-of-credit agreement (the "Line")
with Biomed that provided for borrowings up to $250,000. Interest accrues at
8% per annum. Upon execution of the Line, Biomed received warrants to
purchase 325,000 shares of restricted common stock at $1.00 per share. The
warrants were valued at approximately $234,000 which was recorded as a
discount against the Convertible Promissory Note (the "Note") supporting the
Line. At issuance, the Note was convertible into shares of the Company's
common stock, at a price below the market value of such stock. The intrinsic
value of the beneficial conversion feature of the Note was recorded as an
additional discount, such that the full $250,000 issued was discounted, with a
corresponding increase to additional paid-in capital.

On August 19, 2002, the Line was increased by $100,000 and the expiration date
thereof was extended to August 19, 2003. The payment date of amounts borrowed
under the original Line was extended to December 1, 2002. The entire line now
expires on June 1, 2004. In consideration for the increase in the Line,
Biomed received 30,000 additional warrants to purchase shares of restricted
common stock at a price dependent on the selling price of the Company's stock,
as defined. The exercise price of the warrants issued to Biomed in exchange
for the increase in the line of credit to $350,000 and the extension of the
payment date to December 1, 2002 is the lowest of (i) the closing bid price on
June 4, 2002; (ii) the closing bid price on the date of exercise; or (iii) the
lowest per share purchase price paid by any third party between June 4, 2002
and the exercise date. The fair value of the warrants - in accordance with
guidance provided by Statement of Financial Accounting Standards No. 123,
Accounting for Stock-Based Compensation - was estimated at the date of grant
using the Black-Scholes option pricing model with the following assumptions:
risk-free interest rate of 5.25; no dividend yield; volatility factor of the
expected market price of the company's common stock of 0.0%, and an expected
life of 2.8 years. The value attributed to the warrants was insignificant.
As a result, these warrants have been allocated no value.

On June 30, 2003, we issued 1,268,621 shares of common stock for the
conversion of $183,950 of the $350,000 Line of Credit obligation. The Company
has drawn additional amounts totaling $175,000 under the Line, which amounts
were also fully discounted as a result of the beneficial conversion feature,
and recorded as additional paid-in capital. At August 31, 2003, $291,050 was
outstanding under the Line. The stated liability for financial reporting
purposes is $291,050 less an unamortized discount $131,549, or $159,501.

Under the Transfer Agreement dated December 1, 2000, the Company incurred a
liability ("MRI technology purchase liability payable") of $500,000 (including
interest of $75,000) to Biomed in connection with the acquisition of the MRI
intellectual property rights described above. Biomed maintains a security
interest in the underlying patents until the liability is satisfied. The
intellectual property rights will revert to Biomed if the Company does not
satisfy the liability by June 1, 2004. The stated liability bears interest at
an annual rate of 8%.

At August 31, 2003, the principal amounts of the Company's obligations
approximated their estimated fair values based upon current borrowing rates
for similar issues.

CHANGES IN EQUITY:

During November 2002, the Company entered into a Stock Purchase Agreement with
an institutional investor whereby the Company agreed to sell up to $3,000,000
of the Company's common stock. The agreement required the Company to file
with the Securities and Exchange Commission ("SEC") a Registration Statement
covering the shares issuable under this agreement. The registration became
effective on July 11, 2003. Through August 31, 2003, the Company sold and
issued 1,119,348 shares of common stock under the agreement for gross proceeds
of $192,625. Also, during the quarter, $122,646 of related offering expenses
were charged against the additional paid-in capital account.

On August 13, 2003, 2,000,000 options were granted to two consultants,
exercisable at prices equal to 80% of the closing price of the stock on the
day prior to exercise. During the month of August, options for 153,655 shares
were exercised for an aggregate of $20,000.

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 24. Indemnification of Directors and Officers.

* his act or failure to act constituted a breach of his fiduciary
duties as a director or officer; and

* his breach of those duties involved intentional misconduct, fraud
or a knowing violation of law.

This provision is intended to afford directors and officers protection
against and to limit their potential liability for monetary damages resulting
from suits alleging a breach of the duty of care by a director or officer. As
a consequence of this provision, stockholders of Biophan will be unable to
recover monetary damages against directors or officers for action taken by
them that may constitute negligence or gross negligence in the performance of
their duties unless such conduct falls within one of the foregoing
exceptions. The provision, however, does not alter the applicable standards
governing a director's or officer's fiduciary duty and does not eliminate or
limit the right of Biophan or any stockholder to obtain an injunction or any
other type of non-monetary relief in the event of a breach of fiduciary duty.

As permitted by Nevada law, Biophan's By-Laws include a provision which
provides for indemnification of a director or officer by Biophan against
expenses, judgments, fines and amounts paid in settlement of claims against
the director or officer arising from the fact that he was a director or
officer, provided that the director or officer acted in good faith and in a
manner he believed to be in or not opposed to the best interests of Biophan.
Biophan has purchased insurance under a policy that insures both Biophan and
its officers and directors against exposure and liability normally insured
against under such policies, including exposure on the indemnities described
above.

Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons pursuant
to the foregoing provisions, or otherwise, we have been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.

Item 25. Other Expenses of Issuance and Distribution.

SEC registration fee $ 201.00
Printing and engraving expenses $ 5,000.00
Legal and accounting fees and expenses $ 50,000.00
------------
TOTAL $ 55,201.00
============

Page 99

All amounts in the above table are estimated except the SEC registration
fee. None of the expenses will be paid by the selling shareholder.

Item 26. Recent Sales of Unregistered Securities.

The securities of Biophan that were issued or sold by Biophan within the
past three years and were not registered with the SEC are described below.

(a) On December 1, 2000, we acquired LTR Antisense Technology, Inc., a
New York corporation, from Biomed Solutions, LLC (formerly Biophan, LLC), a
New York limited liability company, in a share for share exchange. As a
result of the exchange, LTR became a wholly owned subsidiary. The exchange
was consummated pursuant to and in accordance with an Exchange Agreement,
dated December 1, 2000 and amended as of June 8, 2001, by and among Biophan,
LTR and Biomed.

In connection with the exchange, we (i) issued an aggregate of 10,759,101
shares of common stock to Biomed in exchange for all the issued shares of LTR,
and (ii) issued an aggregate of 10,759,101 shares of common stock to an
investor group consisting solely of three accredited investors for $175,000 in
cash and the undertaking to assist us in additional capital raising.

In transaction (i), the value of the consideration received (the LTR
shares) was established at $175,000 in arms-length negotiation and approved
by Biophan's board of directors. In transaction (ii), the value of the
consideration received ($175,000) was established in arms-length negotiations
and approved by Biophan's Board of Directors.

The transactions were exempt from registration under Section 4(2) of the
Securities Act of 1933 because the shares were issued to a limited number of
accredited investors in a private, negotiated transaction in which the issuer
gave full representations and warranties and the recipients of the securities
did extensive due diligence and had access to all relevant information about
Biophan, including annual and periodic filings with the SEC, necessary to
evaluate their investment. The shares were all issued with restrictive
legends. The shares issued to Biomed in exchange for the shares of LTR were
issued to Biomed for its own account, for investment, and not with a view to
distribution, and were received pursuant to the Exchange Agreement wherein
the issuer provided full representations and warranties, various documents
and other information about the issuer, including financial statements and
SEC filings, and Biomed did extensive due diligence. A restrictive legend
was placed on the certificate issued to Biomed. There was no solicitation
involved in this issuance of securities, rather the securities were issued
pursuant to a contractual relationship.

In September 2001, the bulk of the shares received by Biomed were then
distributed to its members and the members of its members (the "ultimate
investors"). No consideration was provided by the members or the ultimate
investors for the redistributed shares; the shares were distributed pro rata

Page 100

to the members and ultimate investors; the members and ultimate investors
received information about the ratio used to calculate their distribution and
the expected tax consequences of the transaction; the members and ultimate
investors were accredited investors; and all the redistributed shares were
issued with a restrictive legend.

(b) Between January 1, 2001 and February 1, 2003, Biophan issued options
to purchase a total of 2,489,995 options under its 2001 Stock Option Plan to
directors, officers, key employees and consultants. These include the
following:

* On January 1, 2001, Wilson Greatbatch was granted 250,000 options
for his consulting services to us, and 8,333 options as former
Chairman of the Scientific Advisory Board. The board of directors
determined that the value of the consulting services was fair and
adequate consideration for the options issued and Biophan recorded
compensation expense of $9,200 with respect to those options.

* On March 1, 2002, Dr. Guenter H. Jaensch was granted options to
purchase 250,000 shares and on 7/16/02 was granted an additional
100,000 options, for his consulting services to us. The board of
directors determined that the value of the consulting services was
fair and adequate consideration for the options issued; Biophan
valued the options at $36,900 and $592,500, respectively.

* On January 1, 2001, Biophan issued to Boylan, Brown, Code, Vigdor
& Wilson, LLP options to purchase 40,000 shares of common stock at
an exercise price of $.50 per share, in consideration of the
firm's agreement to defer payment of legal fees incurred in the
transaction of the Exchange Agreement and Transfer Agreement dated
December 1, 2000. Biophan recorded an expense of $1,600 with
respect to the issuance of these options.

The issuances of the above options were exempt under Section 4(2) of the
Securities Act as the options were offered and issued to three persons were
knowledgeable of Biophan's business; were either an accredited or
sophisticated investor; and had access to all relevant information about
Biophan, including annual and periodic filings with the SEC, necessary to
evaluate their investment. Each recipient represented to Biophan that the
options were being acquired for investment purposes without a view to
distribution. There was no solicitation involved in this issuance of
securities, rather the securities were issued pursuant to a contractual
relationship for which the recipient of the securities provided services.

(c) In June 2001, we entered into bridge loan agreements providing gross
proceeds of $986,500. Loans of $400,000 from one lender provided for a
maturity date of December 15, 2001 and interest payable by issuance of
100,000 shares of stock on the due date. As additional consideration, the
noteholder received 100,000 shares of stock and warrants to purchase an
additional 100,000 shares at $1.00 per share. The noteholder had the right
to convert the principal amounts into stock at $.75 per share at any time
prior to maturity. We also received proceeds from a series of bridge loans
to 15 accredited investors aggregating $586,500 upon the same general terms
as above except that interest was payable by issuance of 73,324 shares of
stock at the maturity date of October 29, 2001 (extended to November 29,
2001). Warrants to purchase 146,627 at $1.00 per share were issued to these
lenders. All bridge lenders exercised their conversion options on November
29, 2001, at which time the Company issued 1,315,334 shares of common stock
to convert the loans in the aggregate amount of $986,500 to equity.

Page 101

These transactions were exempt from registration under Regulation D,
Rule 506 under the Securities Act of 1933 because the securities were offered
and sold only to accredited investors and/or persons with knowledge of
business, there was no general solicitation or general advertising related to
the transactions, purchasers represented that they were acquiring securities
for their own account and for investment, and the securities were issued with
restrictive legends.

(d) Pursuant to a Private Placement Memorandum dated July 2, 2001, we
offered to sell 3,000,000 shares of common stock at $1.00 per share, solely
to accredited investors. The offering was concluded in January 2002. Gross
proceeds of $2,399,750 were received, less offering costs of $254,467. The
private offering was made pursuant to Regulation D, Rule 506 under the
Securities Act. In accordance with Rule 506, (i) no general solicitation or
general advertising was conducted in connection with the offering of the
shares, (ii) all of the purchasers in the offering represented to Biophan
that they were accredited investors, (iii) each purchaser was given the
opportunity to ask questions and receive answers concerning the terms and
conditions of the offering and to obtain additional information, (iv) each
purchaser represented that he had purchased the shares for his own account,
for investment, and (v) the shares were issued with restrictive legends. In
connection with this offering, we issued a total of 99,667 warrants at an
exercise price of $1.00 per share, to three individuals for their services
valued nominally at $10,000 in placing a portion of the offering.

Prospective investors were identified and contacted through existing
relationships and personal contacts of Biophan's directors, officers and
consultants. A total of 43 accredited investors purchased securities in the
private placement. Prospective investors were provided with a private
placement memorandum, subscription agreement and detailed investor
questionnaire. Also, Biophan's annual, quarterly and other periodic reports
filed with the SEC were made available to prospective investors. An
individual's status as an accredited investor was determined by
representations made in the subscription agreement and responses to the
questionnaire regarding the person's income and net worth.

(e) Biomed has received a total of 1,180,000 warrants to purchase shares
of Biophan common stock as follows:

(i) On March 1, 2001, it received options to purchase 200,000 shares at
an exercise price of $1.00, in consideration of management effort
and expense, with an estimated fair value of $47,000, incurred on
behalf of Biophan.

(ii) On June 4, 2002, it received 100,000 warrants at an exercise price
of $1.00 in consideration of the extension of the due date for the
Transfer Agreement payment (for which Biophan recorded an expense of
$72,000) and 75,000 warrants with an exercise price of $1.00 for the
grant of the line of credit (for which Biophan recorded an expense
of $54,000).

(iii) On August 19, 2002, Biomed received 30,000 warrants in consideration
of the increase in the line of credit commitment, and 275,000
warrants for additional extensions of the payment terms of the
Transfer Agreement payment, together valued at $71,500. On that
date, the exercise price for all 680,000 warrants then outstanding
to Biomed was set at the lowest of (x) the closing bid price on June
4, 2002; (y) the closing bid price on the date of exercise; or (z)
the lowest per share purchase price paid by any third party between
June 4, 2002 and the exercise date.

Page 102

(iv) On November 7, 2002, Biomed received warrants to purchase an
additional 500,000 shares at an exercise price of $.50 per share, in
consideration of the final extension of the Transfer Agreement
payment, with an estimated fair value of $117,000, approved that
day.

The number of warrants will be reduced by 16,667 for each month prior to
June 1, 2005 that the Transfer Agreement obligation is paid in full. Each
extension of the Transfer Agreement payment enabled us to retain the MRI-
compatible technology that we acquired under the Transfer Agreement. In each
forgoing case, the Board of directors determined, without the vote of Messrs.
Weiner and Kenzie, that the consideration received by the company was fair
and adequate consideration for the warrants issued.

These warrant issuances were exempt from registration under Section 4(2)
of the Securities Act. The warrants were issued in private transactions to
one accredited investor that had access to all relevant information about
Biophan, including annual and periodic filings with the SEC, necessary to
evaluate its investment and who represented that it acquired the warrants
without a view to distribution. There was no solicitation involved in this
issuance of securities, rather the securities were issued pursuant to a
contractual relationship.

(f) On June 4, 2002, Wilson Greatbatch received 150,000 warrants with an
exercise price of $1.00 in consideration of the extension of the payment due
under the Transfer Agreement(for which Biophan recorded an expense of
$108,000). This issuance was exempt from registration under Section 4(2) of
the Securities Act as it was made in a private transaction to one accredited
investor who had access to all relevant information about Biophan, including
annual and periodic filings with the SEC, necessary to evaluate his
investment, and who acquired the warrants without a view to distribution.
There was no solicitation involved in this issuance of securities, rather the
securities were issued pursuant to a contractual relationship.

(g) Also in July, 2002, we issued warrants to purchase a total of 50,000
shares at an exercise price of $.39 per share to four individuals in
consideration of certain investment banking services with an estimated fair
value of $2,000. In November 2002, we issued an additional 71,572 warrants
at $.16 to $.41 per share to three of those four individuals in consideration
of services, with an estimated fair value of $18,000, in the nature of a
finder in connection with a portion of the Regulation S offering and other
loans to us. We relied on exemptions from Registration under Section 4(2) of
the Securities Act of 1933 because the issuances were in private transactions
to a limited number of accredited or sophisticated persons who had access to
all relevant information about Biophan, including annual and periodic filings
with the SEC, necessary to evaluate their investment, and who represented
they acquired the warrants without a view to distribution. There was no
solicitation involved in this issuance of securities, rather the securities
were issued pursuant to a contractual relationship for which the recipient of
the securities provided services.

(h) During August and September 2002, we issued a total of 2,186,760
shares of common stock for gross cash proceeds of $515,397, less commissions
and offering costs of $11,985. In connection with these transactions, we

Page 103

also issued 99,388 shares of common stock as additional commission with a
value of $34,243. These shares were issued solely to nonaffiliated, non U.S.
persons in offshore transactions exempt from registration under the
Securities Act of 1933 pursuant to Regulation S.

(i) From September 2002 through January 6, 2003, we raised $1,385,275 by
selling 5,541,100 shares at a per share price of $.25 to 117 accredited
investors. Those investors also received warrants to purchase an additional
2,770,550 shares, half at an exercise price of $.25 per share and half at
$.50 per share. In connection with this offering, we paid cash commissions
of $107,503 and issued 258,006, valued at $.25 per share, shares to finders
in consideration of their placement of shares. This offering was exempt from
registration under Regulation D, Rule 506 of the Securities Act of 1933,
based upon the following facts:

(i) the shares and warrants were sold only to accredited investors with
whom Biophan or Westbay, its finder, had a pre-existing
relationship;

(ii) neither Biophan nor Westbay offered to sell the securities by any
form of general solicitation or general advertising;

(iii) no Regulation D offering took place within the six months prior to
the commencement of the offering;

(iv) each purchaser represented that he had purchased the securities
for his own account, for investment; and

(v) the securities were issued with restrictive legends.

(j) On January 7, 2003, Biophan issued warrants to purchase 161,290
shares at $.31 per share to Boylan, Brown, Code, Vigdor & Wilson LLP, in
consideration of the firm reducing by $25,000 its fees billed to Biophan for
the preparation of the registration statement relating to the resale of our
shares by Spectrum. The board of directors determined that this was fair and
adequate consideration. We relied on an exemption under Section 4(2) of the
Securities Act for this issuance as it did not constitute a public offering
and because there was only one offeree; there was no general solicitation or
advertising; the firm is considered a sophisticated investor and had access
to the same kind of information about Biophan normally found in a prospectus
or in annual and periodic filings with the SEC; the firm had a prior business
relationship with Biophan and its officers and directors; the firm agreed to
and received the options with the intent to hold the options and the shares
underlying the options for investment and not with a view to distribution;
and the options contained a restrictive legend.

(k) On December 18, 2002, we issued warrants to purchase 2,000,000 shares
at $1.00 per share and 1,000,000 shares at $1.50 per share, to SBI USA, LLC
as consideration for the execution of an agreement to provide financial
advisory services with an estimated fair value of $20,000. We relied on an
exemption from registration under Section 4(2) of the Securities Act. SBI was
the only offeree; the terms of the issuance were negotiated at arms length;
SBI is the U.S. investment banking arm of Softbank Investment Group, Japan,

Page 104

and as such, is a sophisticated investor; SBI was provided with Biophan's
public filings, including its most recent 10-KSB and 10-QSB. There was no
solicitation involved in this issuance of securities, rather the securities
were issued pursuant to a contractual relationship for which the recipient of
the securities provided services. On April 25, 2003, Biophan and SBI
terminated the financial advisory agreement, and SBI surrendered the warrants
to Biophan without additional consideration.

(l) On June 30, 2003, we issued 1,268,621 shares of common stock for the
conversion of $183,950 of the $350,000 Line of Credit obligation payable to
Biomed Solutions, LLC. Biomed had previously sold that portion of its
receivable to a single purchaser, Bellador Advisory Services (Labuan) Ltd., a
Kuala Lumpur, Malaysia company. The shares were issued to Bellador and its
assigns pursuant to the exemption provided by Section 3(a)(9) of the
Securities Act of 1933, involving a private transaction in exchange for debt,
and pursuant to the provisions of Regulation S of the Securities Act. All
recipients of the shares were nonaffiliated, non U.S. persons deemed to be
accredited investors and/or persons with knowledge of business. There was no
general solicitation or general advertising related to the transaction, and
the recipients were required to represent that they were non U.S. persons and
that they were not acquiring the shares for the account or benefit of any
U.S. Person. The offer to purchase the shares was not made to a person in
the United States and, at the time of the transaction, the purchasers were
outside the United States. All securities representing the shares were
issued with appropriate restrictive legends.

(m) On July 28, 2003, we issued 775,000 shares of common stock for the
conversion of a debt obligation payable to a single investor in the aggregate
amount of $155,568 ($143,570 principal, plus $11,998 interest). The shares
were issued to the investor pursuant to the exemptions provided by Sections
3(a)(9) and 4(2) of the Securities Act, involving a private transaction in
exchange for debt. The shares were exchanged by Biophan with a single
existing security holder who is a non-affiliated accredited investor. No
commission or other remuneration was paid or given directly or indirectly for
soliciting the exchange. All securities representing the shares were issued
with appropriate restrictive legends.

(n) Between July 12, 2003 and November 5, 2003 we issued an aggregate of
3,325,757 shares of our common stock to Spectrum Advisors, Ltd. in connection
with the restated stock purchase agreement dated as of November 22, 2002
between us and Spectrum. We received aggregate proceeds of $491,190 from
our sale of these shares to Spectrum. In connection with such sales, we are
obligated to issue to Carolina Financial Services, LLC warrants to purchase
166,288 shares of our common stock at an average exercise price of
approximately $.16. These transactions were exempt from registration under
Section 4(2) of the Securities Act because they did not involve any public
offering.

Page 105

Item 27. Exhibits.

Exhibit No. Exhibit Description Location
------------------------------------------------------------------------------
2.1 Articles of Merger Incorporated by reference
to Exhibit 3.2 to Biophan's
Form 10-KSB for the year
ended February 29, 2000
(the "2000 10-KSB")

2.2 Articles of Dissolution Incorporated by reference
to Exhibit 3.3 to the 2000
10-KSB

2.3 Exchange Agreement, dated as of Incorporated by reference
December 1, 2000, by and among to Exhibit 2.3 to Biophan's
Biophan, Biomed Solutions, LLC Registration Statement on
(formerly Biophan, LLC), and LTR Form SB-2 (File No. 333-
Antisense Technology, Inc. 102526) (the "Prior
Registration")

3.1 Articles of Incorporation (Nevada) Incorporated by reference
to Exhibit 3.1 to the 2000
10-KSB

3.2 Bylaws (Nevada) Incorporated by reference
to Exhibit 3.2 to Biophan's
Form 10-SB filed on May 13,
1999.

3.3 Amendment to the Articles of Incorporated by reference
Incorporation to Exhibit 3.1(i) to
Biophan's Form 8-K, filed
December 15, 2000.

3.4 Amendment to Exchange Agreement Incorporated by reference
to Exhibit 2 to Biophan's
Form 10-KSB for the year
ended February 28, 2001 and
filed as an exhibit to Form
SB-2a on May 1, 2003.

3.5 Certificate of Amendment to Incorporated by reference
Articles of Incorporation to Exhibit 3.1(i) to
Biophan's Form 8-K on
August 27, 2001.

4.1 Stock Purchase Warrant between Incorporated by reference
Biophan and Biomed Solutions, LLC to Exhibit 4.1 to
(formerly Biophan, LLC) dated June Biophan's Form 10-QSB for
4, 2002 the period ended May 31,
2002.

4.2 Restated Stock Purchase Warrant Incorporated by reference
Biophan and Bonanza Capital to Exhibit 4.2 to
Masterfund LTD Biophan's Form 10-QSB for
the period ended May 31,
2002.

4.3 Restated Stock Purchase Warrant Incorporated by reference
between Biophan and Biomed to Exhibit 4.3 to
Solutions, LLC, dated January 8, Biophan's Form 10-QSB for
2003 the period ended November
30, 2002.

4.4 Stock Purchase Warrant between Incorporated by reference
Biophan and Biomed Solutions, LLC to Exhibit 4.4 to Biophan's
dated November 11, 2002 Form 10-QSB for the period
ended November 30, 2002.

4.5 Form of Stock Purchase Warrant Incorporated by reference
issued to principals of Carolina to Exhibit 4.5 to Biophan's
Financial Services, for a total of Form 10-QSB for the period
121,572 shares ended November 30, 2002.

4.6 Form of Stock Purchase Warrant to Incorporated by reference
be issued to Carolina Financial to Exhibit 4.6 to Biophan's
services in connection with the Form 10-QSB for the period
Stock Purchase Agreement with ended November 30, 2002.
Spectrum Advisors, Ltd

4.7 Form of Stock Purchase Warrant Incorporated by reference
issued to investors in private to Exhibit 4.7 to Biophan's
placement of securities, for a Form 10-QSB for the period
total of 2,770,550 shares ended November 30, 2002.

4.8 Stock Purchase Warrant issued to Incorporated by reference
SBI USA, LLC to Exhibit 4.8 to Biophan's
Form 10-QSB for the period
ended November 30, 2002.

5.1 Opinion of Nixon Peabody LLP Filed as an Exhibit to
Registration Statement filed
on October 9, 2003.

10.1 Assignment, dated as of December Incorporated by reference
1, 2000, by and between Biophan to Exhibit 10.1 to
and Biomed Solutions, LLC Biophan's Form 8-K, filed
(formerly Biophan, LLC), a New December 15, 2000.
York limited liability company

10.2 Security Agreement, dated as of Incorporated by reference
December 1, 2000, by and between to Exhibit 10.2 to
Biophan and Biomed Solutions, LLC Biophan's Form 8-K, filed
(formerly Biophan, LLC), a New December 15, 2000.
York limited liability company

10.3 Transfer Agreement Incorporated by reference
to Exhibit 99.1 to
Biophan's Form 10-KSB for
the year ended February
28, 2001.

10.4 Amendment to Transfer Agreement Incorporated by reference
to Exhibit 99.2 to
Biophan's Form 10-KSB for
the year ended February 28,
2001.

10.5 Line of Credit Agreement between Incorporated by reference
Biophan and Biomed Solutions, LLC to Exhibit 10.1 to
dated June 4, 2002 Biophan's Form 10-QSB for
the period ended May 31,
2002.

10.6 Convertible Promissory Note Incorporated by reference
between Biophan and Biomed to Exhibit 10.2 to
Solutions, LLC dated June 4 Biophan's Form 10-QSB for
2002 the period ended May 31,
2002.

10.7 Loan Agreement between Biophan Incorporated by reference
and H. Deworth Williams dated to Exhibit 10.3 to
June 18, 2002 Biophan's Form 10-QSB for
the period ended May 31,
2002.

10.8 Stock Purchase Agreement between Incorporated by reference
Biophan and Bonanza Capital to Exhibit 10.4 to
Masterfund LTD Biophan's Form 10-QSB for
the period ended May 31,
2002.

10.9 Escrow Agreement between Biophan, Incorporated by reference
Bonanza Capital Masterfund LTD to Exhibit 10.5 to
and Boylan, Brown, Code, Vigdor & Biophan's Form 10-QSB for
Wilson LLP the period ended May 31,
2002.

10.10 Registration Rights Agreement Incorporated by reference
between Biophan and Bonanza to Exhibit 10.6 to
Capital Masterfund LTD Biophan's Form 10-QSB for
the period ended May 31,
2002.

10.11 Executive Employment Agreement Incorporated by reference
between Biophan and Michael L. to Exhibit 10.7 to
Weiner dated December 1, 2000 Biophan's Form 10-QSB for
the period ended May 31,
2002.

10.12 Executive Employment Agreement Incorporated by refer
between Biophan and Jeffrey L. to Exhibit 10.8 to
Helfer dated June 6, 2002 Biophan's Form 10-QSB for
the period ended May 31,
2002.

10.13 Executive Employment Agreement Incorporated by reference
between Biophan and Stuart G. to Exhibit 10.9 to
MacDonald dated June 6, 2002 Biophan's Form 10-QSB for
the period ended May 31,
2002.

10.14 Executive Employment Agreement Incorporated by reference
between Biophan and Robert J. to Exhibit 10.10 to
Wood dated June 6, 2002 Biophan's Form 10-QSB for
the period ended May 31,
2002.

10.15 Financial Accommodations Agreement Incorporated by reference
between Biophan and Bellador to Exhibit 10.11 to
(Labuan) Ltd dated July 1, 2002 Biophan's Form 10-QSB for
the period ended May 31,
2002.

10.16 Stock Purchase Agreement between Incorporated by reference
Biophan and Spectrum Advisors, to Exhibit 10.16 to
LTD. Biophan's Form 10-QSB for
the period ended November
30, 2002.

10.17 Escrow Agreement between Biophan, Incorporated by reference
Spectrum Advisors, Ltd. and to Exhibit 10.17 to
Boylan, Brown, Code, Vigdor & Biophan's Form 10-QSB for
Wilson LLP. the period ended November
30, 2002.

10.18 Registration Rights Agreement Incorporated by reference
between Biophan and Spectrum to Exhibit 10.18 to
Advisors, Ltd. Biophan's Form 10-QSB for
the period ended November
30, 2002.

10.19 Lease Agreement between Biophan Incorporated by reference
and High Technology of Rochester, to Exhibit 10.19 to
Inc. Biophan's Form SB-2a on
March 14, 2003.

10.20 Strategic Partnership Agreement Incorporated by reference
between Biophan and UB Business to Exhibit 10.20 to
Alliance dated December 10, 2001 Biophan's Form SB-2a on
March 14, 2003.

10.21 License Agreement between Biophan Incorporated by reference
and Xingwu Wang and Nanoset, LLC to Exhibit 10.21 to
dated February 7, 2002 Biophan's Form SB-2a on
March 14, 2003.

10.22 Patent License Agreement between Incorporated by reference
Biophan and Deborah D. L. Chung to Exhibit 10.22 to
dated April 5, 2002 Biophan's Form SB-2a on
March 14, 2003.

10.23 License Agreement between Biophan Incorporated by reference
and Johns Hopkins University to Exhibit 10.23 to
Biophan's Form SB-2a on
March 14, 2003.

10.24 Advisory Agreement between Biophan Incorporated by reference
and SBI USA, LLC dated December to Exhibit 10.24 to
18, 2002 Biophan's Form SB-2a on
March 14, 2003.

10.25 Development Agreement between Incorporated by reference
Biophan and Alfred University to Exhibit 10.25 to
dated February 21, 2002 Biophan's Form SB-2a on
March 14, 2003.

10.26 Development Agreement between Incorporated by reference
Biophan and Alfred University to Exhibit 10.26 to
dated January 24, 2003 Biophan's Form SB-2a on
March 14, 2003.

10.27 First Amendment to Restated Stock Incorporated by reference
Purchase Agreement between Biophan to Exhibit 10.27 to
and Spectrum Advisors, Ltd. Biophan's Form SB-2a on
March 14, 2003.

10.28 Development Agreement between Incorporated by reference
Biophan and Greatbatch to Exhibit 10.28 to
Enterprises, Inc., dated February Biophan's Form SB-2a on May
28, 2001 1, 2003.

10.29 Assignment of Patent No: Incorporated by reference
60,269,817, by and between to Exhibit 10.29 to
Biophan and Michael L. Weiner, Biophan's Form SB-2a on May
Wilson Greatbatch, Patrick R. 1, 2003.
Connelly, and Stuart G.
MacDonald

10.30 Assignment of Patent No: Incorporated by reference
10,077,988, by and between Biophan to Exhibit 10.30 to
and Patrick R. Connelly, Michael Biophan's Form SB-2a on May
L. Weiner, Stuart G. MacDonald, 1, 2003.
Thomas H. Foster, Wilson
Greatbatch, and Victor Miller

10.31 Assignment of Patent No: Incorporated by reference
10,077,836, by and between Biophan to Exhibit 10.31 to
and Michael L. Weiner, Stuart G. Biophan's Form SB-2a on May
MacDonald, and Patrick R. Connelly 1, 2003.

10.32 Assignment of Patent No: Incorporated by reference
10,077,823, by and between Biophan to Exhibit 10.32 to
and Patrick R. Connelly, Michael Biophan's Form SB-2a on May
L. Weiner, Jeffrey L. Helfer , 1, 2003.
Stuart G. MacDonald, and Victor
Miller

10.33 Assignment of Patent No: Incorporated by reference
10,077,978, by and between Biophan to Exhibit 10.33 to
and Michael L. Weiner, Jeffrey L. Biophan's Form SB-2a on May
Helfer, Stuart G. MacDonald, 1, 2003.
Patrick R. Connelly, and Victor
Miller

10.34 Assignment of Patent No: Incorporated by reference
10,078,062, by and between Biophan to Exhibit 10.34 to
and Michael L. Weiner, Patrick R. Biophan's Form SB-2a on May
Connelly, Stuart G. MacDonald, 1, 2003.
Jeffrey L. Helfer, Victor Miller

10.35 Assignment of Patent No: Incorporated by reference
10,077,932, by and between Biophan to Exhibit 10.35 to
and Michael L. Weiner, Jeffrey L. Biophan's Form SB-2a on May
Helfer, Patrick R. Connelly, 1, 2003.
Stuart G. MacDonald, and Victor
Miller

10.36 Assignment of Patent No: Incorporated by reference
10,077,887, by and between Biophan to Exhibit 10.36 to
and Michael L. Weiner, Jeffrey L. Biophan's Form SB-2a on May
Helfer, Patrick R. Connelly, 1, 2003.
Stuart G. MacDonald, and Victor
Miller

10.37 Assignment of Patent No: Incorporated by reference
10,077,883, by and between Biophan to Exhibit 10.37 to
and Michael L. Weiner, Jeffrey L. Biophan's Form SB-2a on May
Helfer, Patrick R. Connelly, 1, 2003.
Stuart G. MacDonald, and Victor
Miller

10.38 Assignment of Patent No: Incorporated by reference
10,077,958, by and between Biophan to Exhibit 10.38 to
and Michael L. Weiner, Jeffrey L. Biophan's Form SB-2a on May
Helfer, Patrick R. Connelly, 1, 2003.
Stuart G. MacDonald, and Victor
Miller

10.39 Assignment of Patent No: Incorporated by reference
10,077,888, by and between Biophan to Exhibit 10.39 to
and Patrick R. Connelly, Stuart G. Biophan's Form SB-2a on May
MacDonald, and Michael L. Weiner 1, 2003.

10.40 Assignment of Patent No: Incorporated by reference
60,357,935, by and between Biophan to Exhibit 10.40 to
and Jeffrey L. Helfer, Robert W. Biophan's Form SB-2a on May
Gray, and Michael L. Weiner 1, 2003.

10.41 Assignment of Patent No: Incorporated by reference
10,132,457, by and between Biophan to Exhibit 10.41 to
and Stuart G. MacDonald, Jeffrey L. Biophan's Form SB-2a on May
Helfer, and Michael L. Weiner 1, 2003.

10.42 Assignment of Patent No: Incorporated by reference
09,864,944, by and between Biophan to Exhibit 10.42 to
and Wilson Greatbatch, Patrick R. Biophan's Form SB-2a on May
Connelly and Michael L. Weiner 1, 2003.

10.43 Assignment of Patent No: Incorporated by reference
09,865,049, by and between Biophan to Exhibit 10.43 to
and Victor Miller, Wilson Biophan's to Form SB-2a on
Greatbatch, Patrick R. Connelly May 1, 2003.
and Michael L. Weiner

10.44 Assignment of Patent No: Incorporated by reference
09,885,867, by and between Biophan to Exhibit 10.44 to
and Wilson Greatbatch, Patrick R. Biophan's Form SB-2a on May
Connelly and Michael L. Weiner 1, 2003.

10.45 Assignment of Patent No: Incorporated by reference
09,885,868, by and between Biophan to Exhibit 10.45 to
and Victor Miller, Wilson Biophan's Form SB-2a on May
Greatbatch, Patrick R. Connelly 1, 2003.
and Michael L. Weiner

10.46 Assignment of Patent No: Incorporated by reference
10,283,530, by and between Biophan to Exhibit 10.46 to
and Wilson Greatbatch and Michael Biophan's Form SB-2a on May
L. Weiner 1, 2003.

10.47 Assignment of Patent No: Incorporated by reference
10,369,429, by and between Biophan to Exhibit 10.47 to
and Jeffrey L. Helfer, Robert W. Biophan's Form SB-2a on May
Gray, and Michael L. Weiner 1, 2003.

10.48 Assignment of Patent No: Incorporated by reference
10,162,318, by and between Biophan to Exhibit 10.48 to
and Biomed Solutions, LLC Biophan's Form SB-2a on May
1, 2003.

10.49 Strategic Partnership Agreement Incorporated by reference
between Biophan and UB Business to Exhibit 10.49 to
Alliance dated May 27, 2003. Biophan's Form SB-2a on
July 11, 2003.

10.50 Stock Purchase Agreement dated Filed as an Exhibit to
October 1, 2003 between Biophan Registration Statement filed
and SBI Brightline Consulting, on October 9, 2003
LLC.

10.51 Development Agreement between Filed as an Exhibit to
Biophan and Alfred University Registration Statement filed
dated July 17, 2003 October 9, 2003.

16.1 Letter on change of accountants Incorporated by reference
to Exhibit 16 to Biophan's
Form 10-KSB for the year
ended February 28, 2001.

16.2 Appointment of independent public Incorporated by reference
accountants to Exhibit 16 to Biophan's
Form 8-K on May 7, 2001.

21 Subsidiaries Incorporated by reference
to Exhibit 21 to Biophan's
Form 10-KSB for the year
ended February 28, 2001.

22.1 Definitive Proxy Statement Filed with the Securities
and Exchange Commission on
January 10, 2000

22.2 Definitive Proxy Statement Filed with the Securities
and Exchange Commission on
June 3, 2001.

23.1 Consent Goldstein Golub Kessler Filed herewith
LLP

23.2 Accountant's Awareness Letter -
Goldstein, Golub, Kessler, LLP Filed herewith

23.3 Consent of Nixon Peabody LLP Filed as an Exhibit to
Registration Statement filed
October 9, 2003.

23.4 Consent of Frank G. Shellock Incorporated by reference
to Exhibit 23.2 to
Biophan's Form SB-2a on
May 22, 2003.

23.5 Consent of Robert Rubin M.D. Incorporated by reference
to Exhibit 23.3 to
Biophan's Form SB-2a on
May 1, 2003.

24.1 Power of Attorney Included on Signature Page
of the Registration
Statement filed on October
9, 2003.

99.1 2001 Stock Option Plan Incorporated by reference
to Exhibit 99.(i) to
Biophan's Form 8-K on
August 27, 2001.

Item 28. Undertakings.

The undersigned registrant hereby undertakes that:

(1) It will file, during any period in which it offers or sells
securities, a post-effective amendment to this Registration Statement to:

(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) Reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement which,
individually or in the aggregate, represent a fundamental change in
the information set forth in the Registration Statement; and

(iii) Include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;

(2) For the purpose of determining any liability under the Securities
Act of 1933, treat each such post-effective amendment as a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time to be the initial bona fide offering thereof; and

(3) It will remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.

Page 112

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing this Amendment No. 1 on Form SB-2 and has
authorized this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Town of West Henrietta, State
of New York on November 7, 2003.

BIOPHAN TECHNOLOGIES, INC.

By: /s/ Michael L. Weiner
----------------------------------------
Michael L. Weiner,
President and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.

Signature Title Date
--------------------- --------------------------- ---------------

/s/ Michael L. Weiner President, CEO and Director November 7, 2003
--------------------- (Principal Executive Officer)
Michael L. Weiner

/s/ Robert J. Wood Vice President, Treasurer and CFO November 7, 2003
--------------------- (Principal Financial and Accounting
Robert J. Wood Officer)

/s/ * Secretary November 7, 2003
---------------------
David A. Miller

/s/ * Director November 7, 2003
---------------------
Guenter H. Jaensch

/s/ * Director November 7, 2003
---------------------
Ross B. Kenzie

/s/ * Director November 7, 2003
---------------------
Steven Katz

/s/ * Director November 7, 2003
---------------------
Robert S. Bramson

* By: /s/ Robert J. Wood
Robert J. Wood
Attorney-in-Fact

Page 113