Edgar Filing: BIOPHAN TECHNOLOGIES INC

As filed with the Securities and Exchange Commission on March 26, 2004.
Registration No. 333-112678

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.

+-----------------------------------------------------------------------------+
| The information in this prospectus is not complete and may be changed |
| without notice. We and the selling stockholders 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 stockholders are not soliciting |
| offers to buy these securities, in any state where the offer or sale of |
| these securities is not permitted. |
+-----------------------------------------------------------------------------+

Subject to completion, dated March 26, 2004

PROSPECTUS

12,513,000 SHARES

BIOPHAN TECHNOLOGIES, INC.

COMMON STOCK

------------

This prospectus relates to the offer of up to 12,513,000 shares of the
common stock of Biophan Technologies, Inc. by two selling stockholders, SBI
Brightline Consulting, LLC and Biomed Solutions, LLC.

The selling stockholders 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. Up to 6,000,000 of the shares of our
common stock covered by this prospectus may be issued from time to time pursuant
to a 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 either selling
stockholder.

SBI is a statutory "underwriter" within the meaning of the Securities
Act of 1933 in connection with its sales of our common stock covered by this
prospectus.

------------

Our common stock trades on the over-the-counter market under the symbol
"BIPH." The last reported sales price for our common stock on March 24, 2004 was
$1.15 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______________, 2004.

You should rely only on the information contained in this prospectus. We have
not, and the selling stockholders have 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 stockholders are 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.

TABLE OF CONTENTS

Prospectus Summary........................................................... 3
Risk Factors................................................................. 7
Use of Proceeds.............................................................. 17
Nature of Trading Market..................................................... 17
Dividend Policy.............................................................. 17
Capitalization............................................................... 18
SBI Stock Purchase Agreement................................................. 19
Prior Stock Purchase Agreements.............................................. 20
Conversion of Outstanding Debt............................................... 20
Plan of Operation............................................................ 22
Business..................................................................... 26
Legal Proceedings............................................................ 50
Management................................................................... 50
Executive Compensation....................................................... 58
Security Ownership of Certain Beneficial Owners and Management............... 61
Certain Relationships and Related Transactions............................... 64
Description of Securities.................................................... 66
Shares Eligible for Future Sale.............................................. 67
Selling Stockholders......................................................... 68
Plan of Distribution......................................................... 70
Legal Matters................................................................ 72
Experts...................................................................... 72
Where you Can Find Additional Information.................................... 73
Financial Statements......................................................... 1

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 or our licensors have U.S. and
foreign patents pending. Our research efforts are focused on demonstrating the
feasibility of our coating and filtering solutions. We intend to license
medical device manufacturers to use our technology in their existing and
future products and to supply them with coating equipment and critical
components. 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
November 30, 2003, we have had no material revenues from operations and have
incurred cumulative net losses of $10,056,465. Since December 1, 2000, we have
relied almost entirely on sales of our securities and loans to fund our
operations.

STOCK PURCHASE AGREEMENT WITH SELLING STOCKHOLDER

On February 5, 2004, we entered into a stock purchase agreement with SBI
Brightline Consulting, LLC that obligates SBI to purchase, upon our election,
up to 17,750,000 shares of our common stock for an aggregate purchase price of
$25.0 million. At our election, we may sell the shares to SBI in 14 tranches
that must be sold in the following order:

NUMBER OF PURCHASE PRICE
SHARES PER SHARE
--------- --------------
Tranche 1 2,000,000 $.60
Tranche 2 2,000,000 $.65
Tranche 3 2,000,000 $.70
Tranche 4 2,000,000 $.80
Tranche 5 1,000,000 $2.00
Tranche 6 1,000,000 $2.00
Tranche 7 1,000,000 $2.00
Tranche 8 1,000,000 $2.00
Tranche 9 1,000,000 $2.00
Tranche 10 1,000,000 $2.00
Tranche 11 1,000,000 $2.00
Tranche 12 1,000,000 $2.00
Tranche 13 1,000,000 $2.00
Tranche 14 750,000 $2.00

Except for the requirement to sell the tranches in order and the
requirement that the resale of the shares be registered as described below,
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 $1.408 per share.

SBI is not obligated to purchase shares pursuant to the stock purchase
agreement unless the resale of the shares by SBI is registered under the
Securities Act of 1933, as amended. As of the date of this prospectus, only
6,000,000 shares covered by the stock purchase agreement have been registered
for resale by SBI. As a result, SBI will not be obligated to purchase the
remaining shares covered by the stock purchase agreement unless and until we
have registered the resale of such shares by SBI. In addition, we do not
currently have sufficient authorized and unissued shares to issue such
remaining shares to SBI. We intend to seek approval at our next annual meeting
of stockholders, which we expect to be held during July 2004, to amend our
articles of incorporation to increase our number of authorized shares. If such
amendment is approved, we will then decide whether or not to register
additional shares for resale by SBI so that we will have the right to sell
such additional shares to SBI under the stock purchase agreement.

CONVERSION OF OUTSTANDING DEBT

In connection with our acquisition of MRI intellectual property rights
from Biomed Solutions, LLC on December 1, 2000, we owed Biomed $500,000 under
a transfer agreement. Also, in June 2002 we entered into a line of credit with
Biomed that provided for borrowings of up to $250,000. The line of credit was
increased over time to provide for borrowings of up to $350,000. In
consideration of the making of the line of credit, increases to the line of
credit and the extension of the payment obligations under the line of credit
and transfer agreement, the obligations under the transfer agreement and the
line of credit contain provisions making our obligations under them
convertible into shares of our common stock at a conversion price that is
based on a formula. Under the formula, the conversion price under the transfer
agreement and line of credit is $.10 per share. On February 10, 2004, the
following transactions occurred:

o We paid to Biomed all accrued and unpaid interest due under the
transfer agreement and the line of credit; o Biomed assigned its
rights with respect to $300,000 of the $500,000 due under the
transfer agreement to SBI who converted those rights into
3,000,000 shares of our common stock;

o Biomed assigned its rights with respect to $50,000 due under the
line of credit to an independent third party who converted those
rights into 500,000 shares of our common stock;

o Biomed exercised its right to convert the balance of our
obligations under the transfer agreement and the line of credit
into 3,513,000 shares of our common stock;

o Biomed released all of the collateral securing our obligations
under the transfer agreement and line of credit and the line of
credit was terminated; and

o We entered into a registration rights agreement with Biomed and
SBI obligating us to register the resale by Biomed and SBI of the
6,513,000 shares of our common stock issued upon the conversion of
our obligations under the note and line of credit.

THE OFFERING

Securities Offered by SBI Up to 6,000,000 shares of our common stock that
may be acquired by SBI pursuant to the stock
purchase agreement between us and SBI and up to
3,000,000 shares of our common stock that were
acquired by SBI upon the conversion of the note
obligations assigned to SBI by Biomed

Securities Offered by Biomed Up to 3,513,000 shares of our
common stock that were acquired by Biomed upon
the conversion of our note and line of credit
obligations

Use of Proceeds We will not receive any proceeds from the sale
of shares by either selling stockholder in this
offering. We will receive proceeds from the sale
of shares to SBI pursuant to the SBI stock
purchase agreement. We will receive a portion of
the proceeds that Biomed receives from its sale
of debt to SBI because Biomed acquired
additional debt under the line of credit within
six months prior to the sale and, under
applicable securities laws, we are entitled to
the profit realized by Biomed from its purchase
and sale of our debt within six months. We
expect to use any proceeds we receive 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.

SUMMARY HISTORICAL FINANCIAL INFORMATION

The following table presents summarized financial information as of and
for the nine months ended November 30, 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 NINE
MONTHS ENDED FOR THE FISCAL YEAR ENDED FEBRUARY 28,
NOVEMBER 30, -----------------------------------------------
2003 2003 2002 2001
------------ ------------ ------------ -----------
(Unaudited)

Operating Data:

Revenues ................................................ $ 75,000 -- -- --
Salaries and related .................................... 376,874 $ 648,304 $ 461,629 $ 59,861
General & administrative expenses ....................... 423,173 582,174 475,520 16,059
Total expenses .......................................... 1,847,627 3,438,252 3,705,917 729,130
Net (loss) .............................................. (2,083,308) (3,438,252) (3,705,917) (729,130)
Net (loss) per share .................................... (0.05) (0.11) (0.14) (0.08)
Weighted average shares
outstanding ........................................... 40,359,446 31,731,051 27,000,962 9,166,887

AS OF AS OF FEBRUARY 28,
NOVEMBER 30, -----------------------------------------------
2003 2003 2002 2001
------------ ------------ ------------ -----------
(Unaudited)

Balance Sheet Data:

Current assets .......................................... $ 205,280 $ 476,353 $ 672,823 $ 172,092
Total assets ............................................ 345,631 683,056 866,638 343,752
Current liabilities ..................................... 867,092 796,187 645,389 280,992
Long-term liabilities ................................... 333,334 83,333 -- 438,000
Stockholders' equity (deficiency) ....................... (854,795) (196,464) 221,249 (375,240)
Working capital (deficiency) ............................ (661,812) (319,834) 27,434 (108,900)

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 MATERIAL
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 material 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 devoted primarily to the following:

o organizational activities;

o developing a business plan;

o obtaining funding;

o conducting research and working toward the ultimate successful
development of our products; o marketing to major biomedical
manufacturers;

o aggressively patenting our intellectual property; and

o licensing technology from third parties related to our business.

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 MATERIAL 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.

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
nine months ended November 30, 2003 we incurred a net loss of $2,083,308. 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
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 ADDITIONAL 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
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 generated no material 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:

o substantially greater financial, technical and marketing
resources;

o larger customer bases;

o better name recognition;

o related product offerings; and

o 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 can.

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. We have exclusive
licenses to four issued U.S. patents for MRI safety-related technology and
multiple patents pending. Six more patents have been allowed and will issue
within several months. Although 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.

WE MAY NOT BE ABLE TO FULLY UTILIZE OUR ARRANGEMENTS WITH SBI AND, IF SUCH
UTILIZATION IS NECESSARY, WE WILL BE REQUIRED TO , AMEND OUR ARTICLES OF
INCORPORATION AND REGISTER ADDITIONAL SHARES FOR RESALE BY SBI, OR IDENTIFY
ALTERNATIVE SOURCES OF CAPITAL

Our authorized capital currently consists of 80,000,000 shares of common
stock. As of February 29, 2004, we had 65,945,011 outstanding shares, and
outstanding options and warrants to purchase an additional 7,800,529 shares.
Also at that date, we could grant options to purchase an additional 130,007
shares under our stock option plan. As a result, we have only 6,124,453 shares
of common stock available to sell to SBI under our stock purchase agreement
with SBI. Of these shares, 6,000,000 have been registered for resale by SBI.

If our need for capital requires us to sell more than 6,000,000 shares
to SBI under the stock purchase agreement, we will need to amend our articles
of incorporation to increase the number of shares of our authorized common
stock and register additional shares for resale by SBI. In lieu of or in
addition to those actions, we may need to identify alternative sources of
capital.

WE MAY NEED TO RAISE ADDITIONAL CAPITAL. IF WE ARE UNABLE TO RAISE NECESSARY
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 material
revenues, we need to secure adequate funding. The funds that we raise by
selling stock to SBI under the stock purchase agreement 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. 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. We do not have commitments for additional financing. To secure
additional financing, we may need to borrow money or sell more securities,
which may reduce the value of the securities to be sold by the selling
stockholders in this offering. Under these circumstances, we may be unable to
secure additional financing on favorable terms or at all.

Selling additional stock, either privately or publicly, would 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.

BECAUSE TWO OF OUR DIRECTORS ARE EQUITY OWNERS AND MANAGERS OF BIOMED
SOLUTIONS, LLC, A SIGNIFICANT 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, a company engaged in the business of
identifying and acquiring technologies in the biomedical field for
exploitation. 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. 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 entered into a technology license
agreement, and Myotech, LLC, an entity in which Biomed is a 25% owner.

Because of the nature of our business and the business of these other
entities, the relationships of Messrs. Weiner and Kenzie with these other
entities may give rise to conflicts of interest with respect to certain
matters affecting us. 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.

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
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:

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

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

o 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.

THE SALE OF SHARES BY THE SELLING STOCKHOLDERS AS CONTEMPLATED BY THIS
PROSPECTUS MAY ENCOURAGE SHORT SELLING AND HAVE AN ADVERSE IMPACT ON THE
MARKET PRICE OF OUR COMMON STOCK, AND THE SALE TO SBI OF SHARES UNDER THE
STOCK PURCHASE AGREEMENT WILL RESULT IN DILUTION TO OUR EXISTING STOCKHOLDERS.

The resale by the selling stockholders of our common stock as
contemplated by this prospectus will increase the number of our publicly
traded shares, which could depress the market price of our common stock.
Moreover, the mere prospect of resales by the selling stockholders as
contemplated by this prospectus could depress the market price for our common
stock. The issuance of shares to SBI under the stock purchase agreement 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 week period
leading up to February 5, 2004 was generally greater than the price per share
for the first 8,000,000 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

stock purchase agreement. The closing price of our common stock on March 9, 2004
was $1.15 per share and exceeded the purchase price for 8,000,000 of the
17,750,000 shares covered by the stock purchase 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. Also, if we do not sell the shares covered by the later tranches under
the stock purchase agreement, it could adversely affect the trading price of our
common stock because the earlier tranches have a purchase price per share that
is lower than the trading price of our common stock at the time we entered into
the stock purchase agreement.

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 2003, 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. Specifically,
during January 2004 the trading volume of our common stock significantly
exceeded historic levels and the trading price of our common stock increased
substantially. Our average reported trading volume per day during January 2004
was approximately 4.5 million shares, compared to our average reported trading
volume per day of approximately 1.4 million shares during November 2003 and
950,000 shares during December 2003. During February 2004, our average
reported trading volume per day declined to approximately 1.1 million shares.
There can be no assurance that the trading price of our common stock will
remain at recent levels. 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, some
of which are beyond our control, that may cause our share price to fluctuate
significantly include, but are not limited to, the following:

o variations in our quarterly operating results;

o our ability to complete the research and development of our
technologies;

o the development of a market in general for our products;

o changes in market valuations of similar companies;

o announcement by us or our competitors of significant contracts,
acquisitions, strategic partnerships, joint ventures or capital
commitments;

o loss of a major customer or failure to complete significant
transactions;

o additions or departures of key personnel; and

o fluctuations in stock market price and volume.

Additionally, in recent years the stock market in general, and the
Over-the-Counter Bulletin Board 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 necessarily 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 has often 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.

OUR ISSUANCE OF COMMON STOCK AT A PRICE BELOW PREVAILING TRADING PRICES AT THE
TIME OF ISSUANCE MAY CAUSE OUR STOCK PRICE TO DECLINE.

We have, in the past, sold shares of our common stock at a discount to
prevailing market prices. Examples of these transactions include:

o our sale of 3,325,757 shares to Spectrum pursuant to our stock
purchase agreement with Spectrum at a purchase price equal to 80%
of the market price of our common stock for a specified period
preceding the sale;

o our issuance of 1,268,621 shares of common stock upon the
conversion of our outstanding debt at a conversion price of $.145
per share; and

o our issuance of 7,945,000 shares of common stock upon the
conversion of our outstanding debt at a conversion price of $.10
per share; and

o our issuance of shares pursuant to outstanding warrants and stock
options at exercise prices below the trading price of our common
stock at the time of exercise.

As of February 29, 2004, we had an aggregate of 7,800,529 options and warrants
outstanding having a weighted average exercise price of $.45 per share. These
options and warrants, as well as other options and warrants that we issue in the
future, may also result in shares being issued for consideration that is less
than the trading price of our common stock at the time the shares are issued. We
may also issue shares in the future at a discount to the trading price of our
common stock under other circumstances. Any such below market issuances, or the
potential for such issuances, could cause our stock price to decline.

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
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:

o continued development of our technology;

o dependence on key personnel;

o competitive factors;

o the operation of our business; and

o 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 either selling
stockholder of shares in this offering. We will receive proceeds from the sale
of shares to SBI pursuant to the SBI stock purchase agreement. We also will
receive a portion of the proceeds that Biomed receives from its sale of debt
to SBI because Biomed acquired additional debt under the line of credit within
six months of the sale and, under applicable securities laws, we are entitled
to the profit realized by Biomed from its purchase and sale of our debt within
six months. We expect our share of such proceeds to be approximately $835,000.
We expect to use the proceeds we receive from our sale of stock to SBI and
from Biomed for working capital and for other general corporate purposes,
including expansion of our internal research and product development
activities, possible acquisition of complementary intellectual property and
the pro-active protection and enforcement of our intellectual property rights.

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 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.

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
November 30, 2003 $ .49 $ .10
February 29, 2004 $1.65 $ .32
Through March 24, 2004 $1.30 $1.02

As of February 29, 2004, we had outstanding 65,945,011 shares of our
common stock which were held by approximately 360 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
November 30, 2003 and as adjusted to reflect the following transactions which
occurred subsequent to November 30, 2003:

o the issuance of 11,000,000 shares by us to SBI pursuant to a
stock purchase agreement between us and SBI dated October 1,
2003; and

o the conversion of our obligations under the transfer
agreement and line of credit into shares of our common stock
on February 10, 2004.

The "As Adjusted" column does not reflect the issuance to SBI of any shares
covered by this prospectus that may be sold by us to SBI under the stock
purchase agreement. 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.

AS OF
NOVEMBER 30,
2003 AS ADJUSTED
------------ --------------

Long-term debt, less discount of $166,666 $ 333,334 $ -0-
============ ==============

Stockholders' equity (deficiency):
Common stock, $.005 par value
Authorized, 80,000,000 shares
Issued and outstanding, 46,004,071 and
64,949,000 shares as adjusted ..... $ 230,020 $ 324,745

Additional paid-in capital ............. 8,971,650 12,662,523

Accumulated deficit .................... (10,056,465) (10,314,229)
------------ --------------

$ (854,795) $ 2,673,039
============ ==============

SBI STOCK PURCHASE AGREEMENT

On February 5, 2004, we entered into a stock purchase agreement with SBI
that obligates SBI to purchase, upon our election, up to 17,750,000 shares of
our common stock for an aggregate purchase price of $25.0 million. If we sell
all the shares to SBI, the shares will be sold at a weighted average purchase
price of $1.408 per share. At our election, we may sell the shares to SBI in
14 tranches that must be sold in the following order:

NUMBER OF PURCHASE PRICE
SHARES PER SHARE
--------- ---------------
Tranche 1 2,000,000 $.60
Tranche 2 2,000,000 $.65
Tranche 3 2,000,000 $.70
Tranche 4 2,000,000 $.80
Tranche 5 1,000,000 $2.00
Tranche 6 1,000,000 $2.00
Tranche 7 1,000,000 $2.00
Tranche 8 1,000,000 $2.00
Tranche 9 1,000,000 $2.00
Tranche 10 1,000,000 $2.00
Tranche 11 1,000,000 $2.00
Tranche 12 1,000,000 $2.00
Tranche 13 1,000,000 $2.00
Tranche 14 750,000 $2.00

Except for the requirement to sell the tranches in order and the
requirement that the resale of the shares be registered as described below,
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. The agreement permits us to
exercise our right to sell multiple tranches at the same time, and no
particular period of time must elapse between the sale of tranches. We are not
obligated to sell any shares to SBI unless and until we elect to do so.
However, if we want to sell any shares in a tranche we must exercise our right
to sell all of the shares in the tranche.

SBI's obligation to purchase the shares is subject to customary
conditions for transactions of this kind. In particular, SBI's obligation is
contingent on:

o the continued accuracy of our representations and warranties
contained in the stock purchase agreement; and

o our compliance with our agreements contained in the stock purchase
agreement.

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.

PRIOR STOCK PURCHASE AGREEMENTS

Effective November 22, 2002, we entered into a restated common stock
purchase agreement with Spectrum Advisors, Ltd. that established what is
sometimes termed an equity line of credit or an equity draw down facility.
Pursuant to the Spectrum agreement, we had the option to 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 at 80% of the average
daily volume weighted average price of our common stock during the trading
days relating to a particular draw. Spectrum was committed to purchase shares
for consideration of up to $3 million under the agreement. Because of the
stock purchase agreement we entered into with SBI on February 5, 2004, we
determined that our arrangement with Spectrum was no longer necessary. We and
Spectrum mutually agreed to terminate the Spectrum agreement on February 9,
2004.

On October 1, 2003 we entered into a stock purchase agreement with SBI
pursuant to which SBI agreed to purchase up to 11,000,000 shares of our common
stock on terms comparable to those contained in our stock purchase agreement
with SBI described in this prospectus. We registered the 11,000,000 shares
covered by that stock purchase agreement and have sold all of such shares to
SBI pursuant to such agreement for an aggregate purchase price of $2.9
million. SBI has advised us that it has resold all of the shares purchased by
it pursuant to such agreement.

CONVERSION OF OUTSTANDING DEBT

In connection with our acquisition of MRI intellectual property rights
from Biomed Solutions, LLC on December 1, 2000, we owed Biomed $500,000 under
the terms of a transfer agreement between us and Biomed. Also, in June 2002 we
entered into a line of credit with Biomed that provided for borrowings of up
to $250,000. The line of credit was increased over time to provide for
borrowings of up to $350,000. As of February 10, 2004, we owed Biomed $201,300
under the line of credit. The note and the line of credit accrued interest at
a rate of 8% per annum. Our obligations under the transfer agreement were
secured by a security interest in the intellectual property rights we acquired
from Biomed in connection with our reorganization

in December, 2000. If we had defaulted in paying our obligations under the
transfer agreement, Biomed would have been entitled to reclaim those
intellectual property rights.

In consideration of the making of the line of credit, increases to the
line of credit and the extension of the payment obligations under the line of
credit and transfer agreement, the obligations under the transfer agreement
and the line of credit contain provisions making our obligations under them
convertible into shares of our common stock at a conversion price that is
based on a formula. The conversion feature was included in the line of credit
and added to the transfer agreement to induce Biomed to enter into and
increase the line of credit and to extend our payment obligations at times
when we were desperately in need of financing to continue our operations. We
had actively pursued several other avenues of financing with unrelated third
parties which did not result in investments. The conversion price formula was
adopted from a term sheet negotiated with a potential third party lender
which, in the end, decided not to make an investment. The credit and payment
extensions that were made by Biomed enabled us to bridge our financing gap at
a time when no other financing options were available. Additionally, Biomed
made the financing commitment at a time when its likelihood of repayment was
most uncertain. On August 15, 2002, the date that the formula-based conversion
feature was added to the line of credit and transfer agreement, the trading
price of our common stock was $.33 per share. Under the formula, the
conversion price under the transfer agreement and line of credit declined
based on the trading price of our common stock and, as of February 10, 2004,
was $.10 per share.

On February 10, 2004, the following transactions occurred:

o Biomed assigned its rights with respect to $50,000 due under the
line of credit to an independent third party who converted those
rights into 500,000 shares of our common stock;

o Biomed exercised its right to convert the balance of our
obligations under the transfer agreement and the line of credit
into 3,513,000 shares of our common stock;

o Biomed released all of the collateral securing our obligations
under the transfer agreement and line of credit and the line of
credit was terminated; and

Of the $200,300 outstanding under the line of credit as of February 10,
2004, $75,950 was borrowed during the six month period prior to February 10,
2004. Because Biomed effectively acquired $75,950 of convertible debt during
this period, we are entitled under applicable provisions of the securities
laws to recover from Biomed its profit on $75,950 of the $300,000 of our
obligations that it transferred to SBI. This profit amounts to approximately
$835,000. Biomed has agreed in the registration rights agreement to pay this
profit to us pro rata as it receives payment from SBI of the purchase price
for the obligations Biomed sold to SBI.

PLAN OF OPERATION

We are currently in the development stage of operations and expect to be
in that mode for at least the next twelve months. Our primary mission is to
develop and commercially exploit technologies for enabling cardiac pacemakers
and other implantable medical devices and surgical devices to be safe and
compatible with MRI. We believe that we have successfully demonstrated an
effective solution for making pacemakers safe for use with MRI and providing a
meaningful margin of safety. Our solution addresses both the problems of
device heating and induced voltages in pacemakers, the two primary problems
associated with the use of MRI for patients with pacemakers. Today,
approximately 3 million pacemaker recipients are denied access to MRI when
needed, due to safety concerns and FDA contraindications. If manufacturers of
pacemakers incorporated our solution into their products, we believe they
would be safe for use with MRI. We are in ongoing discussions with the major
pacemaker manufacturers, and one or more of these companies is currently
evaluating our technologies and patents. We are also negotiating with a major
research university to undertake a study to demonstrate further the dangers
posed to pacemaker patients by MRI imaging and the effectiveness of our
solution. We believe that pacemaker manufacturers, once provided with further
evidence of the dangers associated with their products in the context of MRI
and the effectiveness of our technology, will wish to incorporate our
technology into their products to avoid potential liabilities from the sale of
devices that could have been made safer.

On October 1, 2003, we entered into a stock purchase agreement with SBI
Brightline Consulting, LLC that obligated 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. The agreement required that the shares be registered with the
SEC and a registration statement for that purpose became effective on November
19, 2003. All 11,000,000 shares have now been purchased by SBI for gross
proceeds of $2.9 million, providing us with a positive net worth and cash on
hand of $2.0 million as of February 29, 2004.

In addition to the stock purchase agreement with SBI, we had been a
party to a restated stock purchase agreement with Spectrum Advisors Ltd. that
became effective on November 22, 2002. Under the Spectrum agreement we sold
Spectrum a total of 3,325,757 shares for aggregate consideration of $491,190.
We used these proceeds to fund a portion of our operating and research and
development expenses during 2003. We and Spectrum mutually agreed to terminate
the Spectrum agreement on February 9, 2004.

On February 5, 2004, we entered into a second stock purchase agreement
with SBI that obligates SBI to purchase, upon our election, up to 17,750,000
shares of our common stock for an aggregate purchase price of $25.0 million.
SBI is not obligated to purchase shares pursuant to this stock purchase
agreement unless the resale of the shares by SBI is registered under the
Securities Act. As of the date of this prospectus, only 6,000,000 shares
covered by the second stock purchase agreement have been registered for resale
by SBI. As a result, SBI will not be obligated to purchase the remaining
shares covered by the stock purchase agreement unless and until we have
registered the resale of such shares by SBI. In addition, we do not currently
have sufficient authorized and unissued shares to issue such remaining shares
to SBI. We intend to seek approval at our next annual meeting of stockholders
to amend our articles of incorporation to increase our number of authorized
shares. If such amendment is approved, we will then decide whether or not to
register additional shares for resale by SBI so that we will have the right

to sell such additional shares to SBI under the stock purchase agreement. No
shares have yet been sold to SBI under the second stock purchase agreement.

We are currently exploring the possibility of listing our common stock
on a national securities exchange. Depending on the number of shares of stock
that we sell to SBI under the stock purchase agreement, the capital provided
by such sales may enable us to satisfy the capital requirements for such a
listing.

During January and February 2004, obligations of $294,500 under our line
of credit and our obligation of $500,000 payable under the transfer agreement,
both owed to Biomed Solutions, LLC and its assignees, were converted according
to their terms into 7,945,000 shares of our common stock, thereby eliminating
these liabilities and increasing our stockholders' equity.

We estimate that the proceeds from the sale of our common stock pursuant
to the previous SBI stock purchase agreement and Spectrum agreement, coupled
with the additional equity financing available under the new SBI stock
purchase agreement, will be more than 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
---------

Total Cash Requirements $2,110,000
=========

In December 2003, we announced three major strategic initiatives for
2004: (1) Acquisition of Intellectual Assets, (2) Market Expansion, and (3)
Strategic Partnerships.

(1) We have four United States patents under license and more than 50
patents pending or issued. The U.S. Patent and Trademark Office
(PTO) recently allowed an additional patent for nanomagnetic
particle coatings, licensed exclusively to us for medical
applications, and six of our pending patents covering photonic
applications for moving biosensor information from inside the body
and for other applications, have also been allowed and will issue
within the next several months. We are aggressively pursuing
internal research and development projects, as well as sourcing
leading-edge providers of related technologies. Intellectual
property, such as technology solutions and patents, may be
developed internally, through joint ventures, or purchased. To
ensure the continuing value of our intellectual assets, we will
aggressively defend our patents and licensed technology, both
domestically and abroad.

(2) We currently enjoy a leadership position in developing
technologies designed to make implanted medical devices, such as
heart pacemakers, safe for use with MRI and other diagnostic
imaging tools. We have also developed technologies that allow

for the use of interventional MRI, without the heating problems
that can cause tissue damage or imaging problems that obscure the
outcome of the procedures. Based on discussions underway with
several biomedical device manufacturers, both in the U.S. and
overseas, we plan to expand the use of the technologies we have
developed to make a wider range of devices compatible with MRI.
These technologies reduce radio frequency interference, heating,
and induced voltages. Since the beginning of 2004 we have
expanded our development and partnering activities related to
these technologies to include guidewires, stents, drug pumps,
biopsy needles and other prosthetic and surgical tool devices,
where the lack of MRI compatibility negatively impacts
investigational and diagnostic procedures. Discussions with these
device manufacturers indicate a need for, and interest in,
solutions to additional problems where we can develop solutions
based on our technology. We have used both surrogate devices
(such as copper rings) and actual manufactured implantable
products, in a gel phantom, to demonstrate our ability to
accurately image devices and their interior spaces in a manner
that could not be done previously. Part of our strategic
initiative for 2004 will include expanding our technology
offerings to the companies with whom we are already in
discussions or collaborating.

Our Photonic MRI Microcoil (PMM) is one example of our expanded
technology. Recent studies indicate up to 85% of heart attacks
and strokes may be caused by vulnerable plaque which may result
in thrombosis, and is not easily detected by other methods. Our
technologies are designed to pinpoint specific sites where
therapies can address the problem. By inserting the PMM directly
into a blood vessel, MRI can provide a detailed look at
vulnerable plaque without injury-causing heating or image
degradation. There are other uses of our photonic catheter for
diagnostics and therapeutic applications. We were recently
notified that the United States Patent and Trademark Office (US
PTO) has allowed six of our pending patent applications for
issuance, and we have paid the fees to allow these patents to
file.

Another example of our expanding on the use of our nanomagnetic
particle coating technology is NanoView. The concept of our
NanoView technology is to utilize nanomagnetic particles, a
specific type of nanotechnology, as contrast agents to
preferentially bind to tissues of diagnostic interest with the
goal of improving detail and contrast in MRI diagnostic image
processes. We expect NanoView to improve performance in terms of
signal intensity and the use of multiple markers, which broadens
the applications of MRI imaging. We have begun discussions with
several manufacturers of contrast agents and others in the
diagnostic materials sector.

(3) Leveraging strategic partnerships is vital to our mission. In
November, 2003 we announced that we had entered into a joint
development agreement with Boston Scientific, a major medical device
manufacturer. We have successfully completed the first phase of a
multi-phase development plan with Boston Scientific, and we are
discussing the next phase of this program, the details of which are
confidential. Relationships such as this one help us validate our
technology and also develop potential sales channels. We have
entered into Non-Disclosure Agreements with a number of major
manufacturers of implanted biomedical and related devices. We are
discussing with these companies potential strategic partnership
arrangements that may include joint development projects, original
equipment manufacturing arrangements and licensing agreements.

We estimate that our ongoing 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
=========

These amounts may increase as customer contracts identify specific tasks
and testing that may be required.

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.

In November 2003, we recorded $75,000 as a development payment from one
of our biomedical device customers for prototype development of a prospective
product adaptation. Additional revenues are expected from this customer for
additional work, which may lead to a license for one or more of our
technologies in the context of one or more product lines.

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.

Our plans do not include funding for FDA approvals, as our strategy is
to supply solutions to the major biomedical device manufacturers, who will
incorporate our technology into their existing and future product lines. It will
be the responsibility of these manufacturers to apply for and receive FDA
approval of their products. Since our technologies are made of known
biocompatible, non-toxic materials, and since we do not change the method by
which the devices conduct diagnostic and/or therapeutic functionality, we
anticipate reasonable timeframes for our customers to obtain FDA approvals of
devices that add our capability for safety and/or image enhancements.

BUSINESS

COMPANY BUSINESS

Our core business is providing technology that will enable both
implantable medical devices such as pacemakers, and interventional devices
such as minimally-invasive surgical tools, to be used safely and effectively
in conjunction with Magnetic Resonance Imaging (MRI), thereby enabling
surgical procedures to be performed under real-time MRI guidance. We recently
expanded our focus in the MRI arena to improve the ability of the healthcare
industry to provide imaging under MRI by reducing the image artifacts caused
by many devices that are otherwise safe to use with MRI, such as stents,
screws, nuts, bolts, wires, spinal supports, and shunts. These devices are
usually difficult if not impossible to view under MRI. We have published
research with scientists from the University of Rochester demonstrating that
our nanomagnetic particle coating technology can alter the signal received by
an MRI device and can help make devices more visible. We have further expanded
our technology offerings to provide materials which we believe will enable
improved contrast agents for use in MRI diagnostics.

We intend to supply our technologies primarily to large, well
established biomedical and biotechnology companies but do not deliver end user
products. FDA testing and approval requirements will be undertaken by our
customers in the context of the approval of their products, although our
product designs and manufacturing processes are designed to facilitate and
enhance FDA approval.

BACKGROUND TERMS, FACTS, AND ASSUMPTIONS:

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

o Superb soft tissue contrast.

o No ionizing (x-ray) radiation that can cause cancer.

o No toxic contrast agents such as those used in some x-ray
procedures to highlight specific tissues that can cause allergic
or other reactions.

o Images are not obstructed by bone.

o Multi-plane images (`slices' having different orientation in the
body) can be obtained without repositioning the patient.

o The ability to use MRI to guide surgical procedures.

Due to these and other 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.

Pacemakers

Exposing pacemaker patients to MRI creates risks and liabilities that
can include fatalities. We have developed a solution that can substantially
reduce these risks for patients with pacemakers, that can be affordably
implemented by pacemaker manufacturers. We are in discussions with several
manufacturers, and have received offers for exclusive licenses for which

we have proposed counteroffers which we believe are more in line with industry
pricing, and providing an equitable return for our shareholders who have
funded our research, given the improvements in product safety and marketing
advantage that we are offering.

We believe that our pacemaker solution can provide our prospective
licensees with the opportunity to increase their market share by offering
safer devices, as well as reduce potential liabilities from continuing to
offer products with known safety risks. Biophan's MRI-safe technology
platforms could make this possible in a way that requires minimal changes to
existing product designs, minimal incremental cost for materials, 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:

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 solution is a combination of a patented radio frequency (RF) filter
which we license from Johns Hopkins University, exclusively for implantable
medical devices. We have demonstrated that this RF Filter, placed at the
distal end of the pacemaker lead near the electrode that paces the heart,
eliminates well over 90% of the heating that occurs in tissue near the
pacemaker electrode. Without the filter, this heating may cause tissue
scarring where the pacemaker electrode connects to the heart tissue, and that
scarring can subsequently cause the pacemaker to have difficulty sensing the
heart signal, and when the heart needs to be paced by the device, the scar
tissue may impede the signal's ability to pace the heart. The RF energy in the
MRI machine is the direct cause of the heating. The Johns Hopkins patented RF
filter permits the high frequency energy that causes tissue heating to be
blocked, while allowing the lower frequencies that monitor the heart and pace
it to pass through. This type of filter is called a low-pass filter.

A second problem in pacemakers exposed to MRI is caused by the gradiant
field, which sweeps across the body rapidly during the MRI procedure, and is
the cause of the loud sound that one hears during an MRI procedure. This
gradiant field produces an energy field which is important in producing the
MRI image. As it passes across a pacemaker lead this energy can cause a small
voltage to be induced in the pacing lead. This voltage can cause the heart to
beat. The gradiant field can cause heartbeats of 200 to 300 beats per minute,
which interferes with proper blood pumping, and can lead to potentially fatal
conditions, including fibrillation. Biophan has developed and filed patents
for a very low cost solution to this problem which we have demonstrated
eliminates the voltage levels that can pace the heart.

These solutions will be used on the lead that connects the implanted
pulse generator, or pacemaker, 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 and
replaced with a new lead. This removal procedure is typically not done due to
associated risks to the patient. As a result of this, our pacemaker technology
is intended primarily for future products, not previously implanted
pacemakers. Approximately 600,000 people receive a pacemaker implant annually,
and our technology could potentially be applied to the majority 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.

Other Devices

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

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

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

o 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 and the treatment of
obesity. 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.

Guidewires

Guidewires are used for 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. 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. MRI
safe and image compatible guidewires would allow certain procedures that today
are conducted using X-Ray, fluoscopy and/or CAT scan to be performed using
MRI. With these imaging devices, the patient and the physician are today
exposed to dangerous ionizing radiation. Because it does not use ionizing
radiation and generally provides improved visibility, MRI will be an
attractive alternative once the MRI limitations we are addressing are
resolved.

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:

o components such as pacemaker leads;

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

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

o MRI diagnostics systems.

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.

We recently completed financing that allows us the ability to continue
developing these solutions in parallel with our efforts to close additional
customers. Our R&D continues to produce know-how and new patent applications,
and helps us demonstrate capabilities that improve our ability to close
additional customers. We are currently in discussions with multiple divisions
of several medical device companies, as well as MRI manufacturers.

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.

o 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.

o 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.

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

o 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.

o 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.

o 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.

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

o 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. We have successfully
paced an animal's heart with our prototype of a photonic pacemaker
lead, and demonstrated that it does not heat up or alter voltages.
Discussions with pacemaker manufacturers regarding this technology
caused us to shift focus to our current solutions, described
earlier. Our photonic technology has potential in other devices,
such as intraluminal catheters, described in the following
paragraph.

o 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
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 $682,671 for the nine months ended November
30, 2003.

We are committed to the development of MRI-safe solutions for pacemakers
and other biomedical devices.

We have also demonstrated that fiber-optic systems can be used to
replace metal wire leads in devices, and that the fiber-optic systems resolve
the problems of heating and induced voltages. We have also created concepts
and filed patent applications dealing with the use of fiber-optic systems to
provide power and signal handling capability to MRI microcoils that can be
used to image within arteries and other body cavities. Initially, we also
planned to develop a photonic temporary pacemaker ourselves, through clinical
trials, FDA approval and into commercial use.

At this time we are not pursuing further development of the fiber-optic
systems until funded by one or more industry partners. We are maintaining the
intellectual property and we remain interested in licensing or development
opportunities. We are continuing to explore other potential uses of
fiber-optic leads as an alternative to metal wire leads in implantable
applications and in minimally invasive surgery. Wilson Greatbatch, the
inventor of the first successful pacemaker, is a co-inventor on several of
these patents, and he developed a fiber-optic pacemaker device which was
successfully tested in animals and was able to successfully pace the animal's
heart.

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. Preliminary results from this activity, while
confidential, are encouraging and moving towards the contractual goals. The
specific 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. These coating and filtering
solutions are significantly less expensive to implement than our fiber-optic
solution. The coating and filtering solutions do not use any additional
battery power, whereas the fiber-optic solution is more energy intensive.

The results of tests regarding pacemaker solutions 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 of many devices. 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, and several
offers from one of the pacemaker companies. We are in discussions with several
guidewire and neurological device companies.

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, catheter, prosthetic
devices, stents, biopsy needles, and neurological devices in addition to
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 additional manufacturers will partner
with us in developing the technology, thereby reducing our capital
requirements.

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.

Nanomagnetic Particle Coatings

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.

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.

Biophan has entered into R&D agreements with Alfred University and
Nanoset, LLC, 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 first three installments were paid
August 15, 2003, October 24, 2003 and December 12, 2003, and a final payment
is due 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 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 $44,051 to date for
these services. We recently expanded our agreement with Nanoset, LLC and
acquired additional technology rights, which are described in the next
section.

The work being done at Alfred has recently extended to demonstrating the use
of nanomagnetic materials in particulate form, as MRI contrast agents,
potentially improving the effectiveness of, and expanding the applications
for, these image-enhancing agents.

Biophan recently entered into an expanded Research and Development and
Licensing Agreement with Nanoset, LLC, the holder of the nanomagnetic particle
coating technology, and other technologies. Under our expanded agreement with
Nanoset, LLC, Biophan has exclusive rights to nanomagnetic particle technology
for any medical application; plus use of any other technologies developed by
Nanoset, LLC for improving MRI safety and/or MRI image compatibility. Biophan
also has exclusive rights to technologies for implanted power systems for
medical devices, including a patent owned by Nanoset, LLC for an implantable
fuel cell device which derives energy from various forms of fat found in
tissue and/or blood. The output of this device design is electrical power for
powering implantable devices, including pacemakers. Under the revised
agreement with Nanoset, LLC Biophan provides minimum royalty payments in
advance of actual royalties, and a minimum R&D agreement, funding research by
Dr. Xingwu Wang, a professor at Alfred University. Under the revised
agreement, Biophan will pay Nanoset, LLC for research services performed at
Alfred University, and Nanoset, LLC will, in turn, pay Alfred. Michael Weiner,
CEO of Biophan, serves as a director on the board of Nanoset, LLC, and is a
co-founder. Nanoset, LLC originally was formed to pursue technologies outside
of the medical field. Dr. Wang subsequently identified an opportunity to use
his nanomagnetic particle coatings to assist Biophan in its mission, which led
to the relationship between Nanoset, LLC and Biophan.

While the objectives of these 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 enables us to apply our technologies to a broader range of products.
It also reduces the potential for third parties to "work around" our
technology. 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, and plan to continue to be aggressive in pursuit of patent
coverage for our innovations. Due to the importance of our patent portfolio,
it may be helpful to provide more detail regarding the patent process:

o 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.

o 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.

o Biophan and its licensor, Nanoset, have collectively filed 50 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. Six of these patents have been allowed by the U.S.
Patent and Trademark Office, and are expected to issue within
approximately six months.

o The inventor of the nanomagnetic shield technology, Dr. Xingwu
Wang, at Alfred University, New York, has been granted a second
issued U.S. patent, and has applied for an additional twelve, one
of which has been allowed. (US patent applications covering
further improvements and extensions to that technology; these will
also be licensed exclusively to Biophan for medical markets.)

o Biophan has recently secured additional technology rights
expanding its exclusive license for use of nanomagnetic particle
and other technology. The technology rights are granted under an
expanded license agreement executed on January 15, 2004 with
Nanoset, LLC that increases Biophan's rights to technology that
may be applied to medical devices and other uses. The expanded
rights include the exclusive right to any technology that affects
magnetic resonance imaging (MRI) safety or image compatibility or
involves an implantable power system.

o Additional patent filings in nanomagnetic materials, and in MRI
microcoil designs, are in process.

The issued patents have remaining lifetimes, as follows:

o U.S. 6,506,972; Magnetically Shielded Conductor; 19 years
o U.S. 6,673,999; Magnetically Shielded Assembly; 19 years
o U.S. 5.827,997; Metal Filaments for Electromagnetic Interference
Shielding; 11 years
o U.S. 5,217,010; ECG Amplifier and Cardiac Pacemaker for Use During
Magnetic Resonance Imaging; six years
o New patent filings incorporate combinations of these inventions in
devices, to extend through the life of our patent coverage.

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

o 17 years from the date of issue; or
o 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, stents, 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:

o MRI shielding for active medical devices;

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

o Photonic and shielding solutions for MRI imaging; and

o MRI contrast agents.

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." Recent activities in this area have
combined shielding technology with filtering technology acquired under license
from Johns Hopkins. The details of the agreement with John Hopkins are discussed
under the heading "Licenses." Progress has been delayed by the current lack of a
commercialization partner, requiring the target dates for some milestones to be
extended. Following recent announcements by Medtronic relating to plans to
commercialize MRI safe devices beginning in 2005 (not in partnership with
Biophan) we have renewed discussions with one or more implantable device
manufacturers.

MILESTONES / ACTIVITIES - MRI SHIELDING FOR ACTIVE DEVICES:

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

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

The table below summarizes current R&D activities being funded by
Biophan and partners. The recently completed financing, and the financing
which will be enabled by this registration, provides adequate working capital
to execute these targeted spending allocations, and to increase them, as may
be needed. Additionally, the company is now positioned to explore additional
technology acquisitions and to retain additional contract research. . As with
plans for active devices, recent activities relating to passive devices have
combined shielding technology with filtering technology acquired under license
from Johns Hopkins. The details of the agreement with John Hopkins are
discussed under the heading "Licenses." Progress has been delayed by the
current lack of a commercialization partner, requiring the target dates for
some milestones to be extended. Following recent announcements by Medtronic
relating to plans to commercialize MRI safe devices beginning in 2005 (not in
partnership with Biophan) we have renewed discussions with one or more other
implantable device manufacturers.

MRI CONTRAST AGENTS

MRI provides excellent soft tissue contrast, and various image analysis
techniques provide the ability to differentiate between fat, muscle, brain,
and other fundamentally different tissue types. Beyond that, however, contrast
agents are used to enhance the contrast between different tissue types,
permitting image analysis software to highlight specific features (e.g.
vascular structures). Typical materials used for traditional MRI contrast
agents are either iron oxides or gadolinium-based compounds; while there are
other materials in commercial use, their performance and breadth of use are
substantially lower. Iron-based and gadolinium-based compounds have
shortcomings in terms of signal strength and toxicity, respectively. They also
are typically used in a serial and highly time-dependent fashion. This means
that typically one target tissue type is image-enhanced per diagnostic
procedure, and the buildup and clearance of contrast agents is highly time
dependent, requiring careful orchestration of the diagnostic imaging
procedure.

As part of our work with nanomagnetic particles, we have licensed
technology from Nanoset, LLC that is the subject of a recently filed patent
application relating to the use of these particles as contrast media for MRI.
We believe that our ability to manipulate the chemical makeup of these
particles, and our ability to use multiple imaging modes in detecting them,
will

permit us to develop MRI contrast agents having substantial advantage over
current materials, including the ability to deliver a `cocktail' contrast
agent that permits MRI to detect multiple disease or tissue injury types
during a single MRI imaging sequence.

Active R&D work is contemplated by the Company, but specific plans have
not yet been formalized; in the meantime the patent application will be
prosecuted aggressively with our support.

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.
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.

The market for devices that have imaging compatibility problems are in
addition to the market opportunity for safer device. We estimate the market
for devices which had imaging limitations to be an additional $5 billion or
greater. These include implantable artificial hips, knees, bones, and other
prosthetics; stents, shunts, screws, wires, shanks, etc.

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. In May, 2003 a patent application
filed by Medtronic was published on web site of the United States
Patent and Trademark Office. This patent teaches a proposed method of
reducing the induced voltage of a pacemaker lead. We do not know how
effective the Medtronic approach will prove to be. It appears to use

more complex electrical components than the Biophan solution. The
entrance of Medtronic into the market with an MRI safe pacemaker
solution, if it should occur, is viewed by us to be a very positive
event that will propel the industry forward, and may result in licenses
for our technology to be sought by the other pacemaker companies
competing with Medtronic.

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. Biophan has announced a joint development agreement
with Boston Scientific to explore the use of our technology to make one
of their products MRI safe and image compatible.

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.

Biotronik is a leading European biomedical technology company; their
2500 people develop and market products focused on cardiac
electrotherapy and vascular intervention.

ELA Medical is an innovative leader in research, development,
manufacturing and marketing of cardiac rhythm management implantable
and diagnostic systems.

The COOK family of companies includes medical device manufacturing
companies that produce products for interventional radiology,
interventional cardiology, urology, neuroradiology, vascular medicine,
critical care, and many other disciplines.

Baxter International is a global health care company providing critical
therapies for people with life-threatening conditions, including
cancer, hemophilia, immune deficiencies, infectious diseases, kidney
disease and trauma. Baxter is a global leader in developing innovative
medical therapies that improve the quality of life for people around
the world.

Arrow International is a leading supplier of disposable critical care
catheterization products used to access the central vascular system for
administration of fluids, drugs and blood products, and for patient
monitoring and diagnosis.

Philips, Siemens, General Electric and Toshiba, are major manufacturers
of MRI imaging devices, are believed to have research and development
initiatives underway, involving MRI safety and image compatibility.

C. R. Bard, Inc. is a leading multinational developer, manufacturer,
and marketer of innovative, life-enhancing medical technologies in the
fields of Vascular, Urology, Oncology, and Surgical Specialty products.

Each of these companies has the potential to be a direct competitor,
and/or a licensee. Each may have or develop future interest in adopting one or
more of our technologies into their products. Additionally, these companies may
wish to enter into licensing agreements with us in the event that one or more of
their prospective solutions under development would infringe our issued patents,
or those of our pending patents when they issue.

Various first and second tier suppliers to these companies may be
directly affected by technologies we are developing, 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
as well as potential competitors.

MANUFACTURING AND COMPONENT STRATEGY

We are developing technology for MRI safety and image compatibility
which will be licensed to leading biomedical device manufacturers. 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:

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

o 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

o 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. We have had discussions with several
companies that has such a product, and we believe that our photonic technology
would permit improvements in performance, due to its inherent immunity to
electromagnetic noise created by the MRI environment. Discussions with these
companies have not yet moved toward a development program, but if we to
develop a photonic intraluminal imaging catheter with one of them, we would
expect it to be responsible for regulatory approval and for marketing and sale
of the product. We do not plan to compete directly in this market--our plan is
to provide technology that improves the market position of another company
already in the marketplace and not to develop a 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
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:

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

o 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 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. During the year ended February 29,
2004, we expended approximately $650,000 on the active and passive device
applications. These expenses were funded from the proceeds of equity financing
from the Spectrum and previous SBI agreements. We will not pursue FDA or other
regulatory approvals of our technology; rather it is intended that our partners
or licensees would pursue the required approvals.

The approach to regulatory approval for nanomagnetic MRI contrast agents
will follow a similar path to that intended for the above product
opportunities; it is expected that the eventual manufacturing/marketing
partner will both direct, and bear the costs, of clinical studies and
regulatory approval for contrast agent products. Cost estimates and timelines
for these activities have not as yet been developed.

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:

o 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.

Alicense agreement for additional shielding technologies from Nanoset,
LLC. This license agreement provides for an initial licensing fee of
$10,000 and a running royalty of 5% of product sales. The license
agreement currently covers 15 patents and/or patent applications. 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 Nanoset. Nanoset 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. This license agreement
was recently expanded to include any inventions relating to MRI safety and
MRI image compatibility, including electrical circuits and filtering
combined with nanotechnology coatings.

o 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% of 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.

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 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:

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

o 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 assignment and the security agreement (i) assigned the rights to the
transferred MRI patents and subsequent improvements, and (ii) provided 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:

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

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

As described elsewhere in this prospectus, all of our obligations under
the transfer agreement have been converted into shares of our common stock and
the security agreement has been terminated.

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 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.

EMPLOYEES

As of February 29, 2004, 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.

RECENT DEVELOPMENTS

Between December 3, 2003 and January 12, 2004 we sold 11,000,000 shares of
our common stock to SBI for aggregate proceeds of $2.9 million. This capital
allowed us to end our fiscal year on February 29, 2004 with cash of
approximately $2.0 million. On January 15, 2004 our license agreement with
Nanoset, LLC was expanded to include any inventions relating to MRI safety and
MRI image compatibility, including electrical circuits and filtering combined
with nanotechnology coatings. On February 10, 2004 our outstanding obligations
of $701,300 owed to Biomed under the transfer agreement and line of credit were
extinguished when such obligations were converted into 7,013,000 shares of our
common stock.

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.

MANAGEMENT

The officers and directors of Biophan are as follows:

Name Age Title
------------------ --- -----
Guenter H. Jaensch 65 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 49 Secretary
Stuart G. MacDonald 55 Vice-President-Research and Development
Jeffrey L. Helfer 51 Vice-President-Engineering
Robert S. Bramson 65 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 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. Effective March 1, 2004
Mr. Wood was appointed Secretary. 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 was employed by Biophan and resigned as Secretary effective March
1, 2004. 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 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.

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.

CONFLICTS OF INTEREST

Messrs. MacDonald, Helfer, Wood and other of our employees from time to
time spend a portion of their time on the business affairs of Biomed or its
affiliates, for which Biomed reimburses us a percentage of their salary and
benefits. Our Board of Directors reviews this arrangement on a regular basis.
Currently, Biomed reimburses us for less than 50% of the payroll costs of
Messrs. MacDonald, Helfer, Wood and others. 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 us requires a majority of his time, allowing him
to attend to certain administrative duties of Technology Innovations, its
subsidiary, Biomed, 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 each of Technology Innovations and Biomed. Biomed is in the
business of identifying and acquiring technologies in the biomedical field for
exploitation.

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 our attention, and we eventually licensed the
technology from Nanoset. Biomed holds a 33% interest in Nanoset. Our 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 is also a 25% investor in Myotech, LLC. Messrs. Weiner, MacDonald
and Helfer serve on the board of managers of Myotech. Myotech is developing a
biomedical device that does not compete with those being developed by us.

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 will be assigned to us. Per this
agreement, MRI Technology means the technology necessary to enable medical
devices to be 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 and its affiliates 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 us
in accordance with their fiduciary duties to us.

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:

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

o 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.

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 29, 2004:

|Michael L. Weiner, CEO | 2/28/02 | $150,600 | -- |
+---------------------------------------+---------------+------------------+--------------------+
|Michael L. Weiner, CEO | 2/28/03 | $175,000 | 250,000 |
+---------------------------------------+---------------+------------------+--------------------+
|Michael L. Weiner, CEO | 2/29/04 | $175,000 | 300,000 |
+---------------------------------------+---------------+------------------+--------------------+
|Robert J. Wood, CFO | 2/28/03 | $109,461 | 50,000 |
+---------------------------------------+---------------+------------------+--------------------+
|Robert J. Wood, CFO | 2/29/04 | $129,000 | 125,000 |
+---------------------------------------+---------------+------------------+--------------------+
|Stuart G. MacDonald, | | | |
|Vice-President-Research | 2/28/03 | $116,057 | 100,000 |
+---------------------------------------+---------------+------------------+--------------------+
|Stuart G. MacDonald, | | | |
|Vice-President-Research | 2/29/04 | $153,846 | 200,000 |
+---------------------------------------+---------------+------------------+--------------------+
|Jeffrey L. Helfer, | | | |
|Vice-President-Engineering | 2/28/03 | $113,461 | 100,000 |
+---------------------------------------+---------------+------------------+--------------------+
|Jeffrey L. Helfer, | | | |
|Vice-President-Engineering | 2/29/04 | $153,846 | 200,000 |
+---------------------------------------+---------------+------------------+--------------------+

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 2002 through 2004.

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 options to
purchase 20,000 shares, vesting on the first anniversary of the grant, and
additional grants of options to purchase 20,000 shares on each succeeding
anniversary of such director's election. On October 31, 2003, the board of
directors made a special, one-time grant of options to purchase 60,000 shares to
each non-employee director. As of February 29, 2004, we had granted options to
purchase 6,869,993 shares of common stock under the option plan and 3,869,993
were outstanding.

The following table summarizes information concerning stock options
granted to the named executive officers during the last completed fiscal year
ended February 29, 2004:

| Michael L. Weiner | 300,000 | 31.58% | $.18 | 10/31/13 |
+----------------------+-------------------+----------------------+----------------+-------------------+
| Robert J. Wood | 125,000 | 13.16% | $.18 | 10/31/13 |
+----------------------+-------------------+----------------------+----------------+-------------------+
| Stuart G. MacDonald | 200,000 | 21.05% | $.18 | 10/31/13 |
+----------------------+-------------------+----------------------+----------------+-------------------+
| Jeffrey L. Helfer | 200,000 | 21.05% | $.18 | 10/31/13 |
+----------------------+-------------------+----------------------+----------------+-------------------+

No named executive officer exercised options in the fiscal year ended
February 29, 2004. The following table presents the number and values of
exercisable and unexercisable options as of February 29, 2004:

| Michael L. Weiner | None | -- | 401,667/308,333 | $384,750/$296,750 |
+-------------------------+----------------+--------------+------------------------------+-----------------------------+
| Robert J. Wood | None | -- | 124,583/150,417 | $100,787 /$137,963 |
+-------------------------+----------------+--------------+------------------------------+-----------------------------+
| Stuart G. MacDonald | None | -- | 176,667/223,333 | $146,100/$208,900 |
+-------------------------+----------------+--------------+------------------------------+-----------------------------+
|Jeffrey L. Helfer | None | -- | 156,667//243,333 | $131,900/$223,100 |
+-------------------------+----------------+--------------+------------------------------+-----------------------------+

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 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
February 29, 2004, 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(2)
----------------------------------------------------------------------------------------------------------------------

(degree)Guenter H. Jaensch (3) 801,667 1.21%
964 Allamanda Drive
Delray Beach, FL 33483

(degree)Michael L. Weiner (4) 7,058,029 10.44%
693 Summit Drive
Webster, NY 14580

Wilson Greatbatch (5) 4,944,461 7.46%
5935 Davison Road
Akron, NY 14001

(degree)Robert S. Bramson (6) 65,000 *
1100 East Hector Street
Suite 410
Consohocken, PA 19428

(degree)Ross B. Kenzie (7) 65,000 *
Cyclorama Bldg. Suite 100
369 Franklin Street
Buffalo, NY 14202

(degree)Steven Katz (8) 120,000 *
20 Rebel Run Drive
East Brunswick, NJ 08816

Robert J. Wood (9) 214,583 *
12 Peachtree Lane
Pittsford, NY 14534

Stuart G. MacDonald (10) 266,667 *
4663 East Lake Road
Pultneyville, NY 14538

Jeffrey H. Helfer (11) 306,667 *
1153 Hidden Valley Trail
Webster, NY 14580

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

Technology Innovations, LLC(12) 5,656,501 8.43%
150 Lucius Gordon Drive
Suite 215
West Henrietta, NY 14586

Biomed Solutions, LLC(13) 5,355,857 7.98%
150 Lucius Gordon Drive
Suite 215
West Henrietta, NY 14586

All Officers and Directors as a 8,998,113 13.05%
group (9 persons)

----------
* Denotes less than one percent.
o 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 65,945,011 shares
outstanding as of February 29, 2004, 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 February 29, 2004 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 stockholder.

(3) Includes 501,667 shares issuable upon exercise of options and warrants
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 4,175,857
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 upon exercise of warrants held by Biomed and 491,667
shares issuable upon exercise of options held by Mr. Weiner.

(5) Includes 4,459,468 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 225,000 shares issuable upon
exercise of options held by Mr. Greatbatch and 150,000 shares issuable
upon exercise of warrants held by Mr. Greatbatch.

(6) Includes 65,000 shares issuable upon exercise of options held by Mr.
Bramson.

(7) Includes 65,000 shares issuable upon exercise of options held by 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 120,000 shares issuable upon exercise of options held by Mr.
Katz.

(9) Includes 154,583 shares issuable upon exercise of options and warrants
held by Mr. Wood.

(10) Includes 206,667 shares issuable upon exercise of options and warrants
held by Mr. MacDonald.

(11) Includes 206,667 shares issuable upon exercise of options and warrants
held by Mr. Helfer.

(12) Includes 4,175,857 shares owned beneficially and of record by Biomed and
1,180,000 shares issuable upon exercise of warrants held by Biomed.
Technology Innovations, LLC is the majority owner of Biomed Solutions,
LLC.

(13) Includes 1,180,000 shares issuable upon exercise of warrants held by
Biomed.

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 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) On December 1, 2000, Biomed transferred its MRI-compatible pacemaker
patent pending and related technology to Biophan for a future payment of
$500,000. This obligation 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. Since
November 30, 2002, this entire obligation has been 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. On February 10, 2004, Biomed transferred
$300,000 of this obligation to SBI Brightline Consulting, LLC and converted the
remaining balance of $200,000 into shares of our common stock common. On the
same date, SBI converted the $300,000 obligation transferred to it into shares
of our common stock.

(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. On February 10, 2004, all outstanding balances under
the line of credit were converted to common stock in accordance with the terms
of the credit agreement.

(5) Biomed 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. 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 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 4,919,509 common shares of our common stock. He also
received consideration from Biomed in connection with 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 per share and on July 16,
2002 was granted additional options to purchase 100,000 shares at an exercise
price of $.43 per share, 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.

(9) All transactions discussed above are considered by the Board of
Directors to have been consummated on terms approximately equivalent to those
that might have prevailed in arms-length transactions with unaffiliated parties
under similar circumstances.

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 February 29, 2004, we had 65,945,011 shares of common stock
outstanding. Each share of our common stock is entitled to one vote at all
meetings of our stockholders. Our stockholders are not permitted to cumulate
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 February 29, 2004, we had outstanding options to purchase an
aggregate of 3,869,993 shares of our common stock pursuant to our 2001 Stock
Option Plan. The exercise prices for these options range from $.10 per share to
$1.00 per share, and the weighted-average exercise price for all of the options
is $.39 per share. These options are held by directors, officers, key employees
and consultants. As of February 29, 2004, options to purchase 2,514,161 shares
were exercisable.

As of February 29, 2004, we also had outstanding warrants to purchase an
additional 3,930,536 shares of our common stock. The exercise prices for these
warrants range from $.10 per share to $1.00 per share, and the weighted-average
exercise price for all of the warrants is $.50 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.

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 FUTURE SALE

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, 4,510,000 represented shares that
were issuable upon the exercise of then outstanding warrants. Through February
29, 2004, warrants to purchase 995,940 of these shares have been exercised. Such
registration also included 8,960,000 shares that may have been issued to
Spectrum under a stock purchase agreement between us and Spectrum Advisors, Ltd.
Of the 8,960,000 shares registered for resale by Spectrum, 3,325,757 shares have
been issued to and resold by Spectrum and 5,634,243 will never be issued because
the Spectrum stock purchase agreement has been terminated. Such registration is
separate from the registration of the 12,513,000 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.

SELLING STOCKHOLDERS

The securities being offered hereunder are being offered by SBI Brightline
Consulting, LLC and Biomed Solutions, LLC, the selling stockholders. The selling
stockholders may from time to time offer and sell pursuant to this prospectus up
to an aggregate of 12,513,000 shares of our common stock.

Each selling stockholder may from time to time offer and sell any or all
of its shares that are registered under this prospectus. Because neither selling
stockholder is obligated to sell its shares, and because the selling
stockholders may also acquire publicly traded shares of our common stock, we
cannot estimate how many shares each selling stockholder will own after the
offering.

Pursuant to the SBI stock purchase agreement between SBI and us and the
registration rights agreement between Biomed, SBI and us, all expenses incurred
with respect to the registration of the common stock covered by this prospectus
will be borne by us, but we will not be obligated to pay any underwriting fees,
discounts, commissions or other expenses incurred by either selling stockholder
in connection with its sale of shares.

The following table sets forth, with respect to each selling stockholder
(i) the number of shares of common stock beneficially owned as of February 10,
2004 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(1)
----------------- -----------------
NAME SHARES PERCENT SHARES OFFERED SHARES PERCENT
---- ------ ------- -------------- ------ -------

Biomed Solutions, LLC(2) 5,355,857(3) 8.0% 3,513,000 1,842,857(3) 2.8%
SBI Brightline Consulting, LLC(4) 3,000,000 4.6% 9,000,000(5) 0 0.0%

------------
(1) For purposes of this table, we have assumed that each selling stockholder
will sell in this offering all shares covered by this prospectus.

(2) For a summary of certain relationships and transactions between us and
Biomed, please refer to items (1) through (6) under the section of this
prospectus titled "Certain Relationships and Related Transactions".
Technology Innovations, LLC and Michael L. Weiner share voting and
dispositive power over shares held by Biomed Solutions, LLC.

(3) Includes 1,180,000 shares issuable upon exercise of warrants held by
Biomed.
(4) 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. On October 1, 2003 we
entered into a stock purchase agreement with SBI pursuant to which SBI
agreed to purchase up to 11,000,000 shares of our common stock at fixed
prices ranging from $.15 to $.40 per share. We sold SBI 11,000,000 shares
pursuant to the stock purchase agreement between December 3, 2003 and
January 12, 2004 for an aggregate purchase price of $2.9 million.
(5) The shares offered includes 6,000,000 shares that may be issued by us to
SBI pursuant to the SBI stock purchase agreement. None of those shares
have been issued as of the date of this prospectus.

PLAN OF DISTRIBUTION

GENERAL

Shares of common stock offered through this prospectus may be sold from
time to time by the selling stockholders, including their transferees, pledgees,
donees or successors. The shares may be sold directly or, alternatively, through
underwriters, broker-dealers or agents. If the shares are sold through
underwriters, broker-dealers or agents, the applicable selling stockholder 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.

The selling stockholders 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. The selling
stockholders 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 has agreed not to directly or indirectly engage in short sales or
otherwise participate in short selling of our common stock prior to August 5,
2005.

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

o a block trade in which a broker-dealer engaged by a selling
stockholder will attempt to sell the shares as agent, but may
position and resell a portion of the block as principal to
facilitate the transaction;

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

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

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

o 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 a selling stockholder effects sales of shares through underwriters,
brokers, dealers or agents, such underwriters, brokers, dealers or agents may
receive compensation in the form of discounts, concessions or commissions from
the selling stockholder 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 a selling stockholder sells shares through an underwriter, broker,
dealer or agent, the selling stockholder 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 each selling stockholder that there are no existing arrangements
between it and any underwriter, broker, dealer or agent relating to the
distribution of the shares.

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 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. Similarly, the difference between the effective price per share
that SBI paid Biomed for the debt that was converted into 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 Regulation 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 SBI stock purchase agreement and a registration rights agreement
between Biomed, SBI and us, we have agreed to register the shares for resale by
SBI and Biomed under the Securities Act and to maintain the effectiveness of
that registration until the earliest date on which:

o all the shares acquired by covered by this prospectus have been
disposed of pursuant to the registration statement,

o all shares acquired by covered by this prospectus that are then held
by the selling stockholders may be sold under the provisions of Rule
144 without limitation as to volume, whether pursuant to Rule 144(k)
or otherwise, or

o we have determined that all shares covered by this prospectus that
are then held by the selling stockholders 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 a statutory underwriter may limit its sale of shares to qualify
for an exemption from applicable securities registration requirements.

The selling stockholders have each agreed to comply with applicable state
and federal securities laws and the rules and regulations promulgated thereunder
in connection with its sale of the shares. Each selling stockholder 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 and registration rights agreement, we have agreed to indemnify the
selling stockholders against certain liabilities including liabilities under the
Securities Act and each selling stockholder has agreed to indemnify us against
certain liabilities including liabilities under the Securities Act.

We will pay the costs of registering the shares as contemplated by the
stock purchase agreement and registration rights agreement, including the
expenses of preparing this prospectus and the related registration statement of
which it is a part. We estimate that our costs associated with such registration
will be approximately $57,000.

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 February 28, 2003 and for each
of the two years in the period then ended, 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.

FINANCIAL STATEMENTS

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

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

AUDITED CONSOLIDATED FINANCIAL STATEMENTS:

Independent Auditor's Report F-2
Consolidated Balance Sheet, February 28, 2003 F-3
Consolidated Statements of Operations, Years Ended F-4
February 28, 2003 and 2002, and from August 1,
1968 (Date of Inception) through February 28, 2003
Consolidated Statement of Stockholders' Deficiency F-5
From August 1, 1968 (Date of Inception) through
February 28, 2003
Consolidated Statements of Cash Flows, Years Ended F-8
February 28, 2003 and 2002 and from August 1, 1968
(Date of Inception) through February 28, 2003
Notes to Consolidated Financial Statements F-10

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:

Independent Accountant's Report F-17
Condensed Consolidated Balance Sheets, November 30, 2003 F-18
and February 28, 2003
Condensed Consolidated Statements of Operations, Three Months and Nine F-19
Months Ended November 30, 2003 and 2002, and from August 1,
1968 (Date of Inception) through November 30, 2003
Condensed Consolidated Statements of Cash Flows, Nine Months Ended F-20
November 30, 2003 and 2002 and from August 1, 1968
(Date of Inception) through November 30, 2003
Notes to Condensed Consolidated Financial Statements F-22

F-1

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

F-2

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

F-3

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

F-4

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

F-5

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

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

F-6

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)
--------------------------------------------------------------------------------------------------------------------------

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

F-7

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

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

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

F-8

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

F-9

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.

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.

F-10

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
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.

F-11

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 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 Website 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 as $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) 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.

F-12

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.

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.

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

F-13

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 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.

F-14

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.

F-15

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-16

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
nine-month periods ended November 30, 2003 and 2002 and the condensed
consolidated statements of cash flows for the nine-month periods ended November
30, 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

January 8, 2004

F-17

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

CONDENSED CONSOLIDATED BALANCE SHEETS

November 30, 2003 February 28,
(Unaudited) 2003
------------------------------------
ASSETS

Current Assets:
Cash $ 68,832 $ 48,935
Investments in marketable securities -- 302,000
Advances receivable -- 10,127
Due from related party 74,889 24,368
Prepaid expenses 61,559 90,923
-----------------------------------------------------------------------------

Total Current Assets 205,280 476,353
-----------------------------------------------------------------------------

Fixed Assets, at cost, net 67,418 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 $2,444,000 and $2,120,000
respectively -- --
-----------------------------------------------------------------------------

72,933 143,471
-----------------------------------------------------------------------------

$ 345,631 $ 683,056
=============================================================================

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current Liabilities:
Accounts payable and accrued expenses 658,836 $ 343,216
Loan payable to stockholder -- 143,570
Payable to related party, less discount 203,402 300,000
Due to related party 4,854 9,401
-----------------------------------------------------------------------------

Total Current Liabilities 867,092 796,187
-----------------------------------------------------------------------------

Long-term payable to related party,
less discount 333,334 83,333
-----------------------------------------------------------------------------

Stockholders' Deficiency:
Common stock, $.005 par value
Authorized, 80,000,000 shares
Issued and outstanding,
46,004,071 shares and
37,634,693 shares, respectively 230,020 188,173
Additional paid-in capital 8,971,650 7,588,520
Deficit accumulated during the
development stage (10,056,465) (7,973,157)
-----------------------------------------------------------------------------

(854,795) (196,464)
-----------------------------------------------------------------------------

$ 345,631 $ 683,056
=============================================================================

See Notes to Condensed Consolidated Financial Statements.

F-18

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

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

Period from
August 1, 1968
Three Months Ended Nine Months Ended (date of inception)
November 30, November 30, to
2003 2002 2003 2002 November 30, 2003
-------------------------------------------------------------------------------------------------------------------
Revenues:

Development payments $ 75,000 $ 75,000 $ 75,000

Operating expenses:

Salaries and related 119,371 146,462 376,874 493,589 1,546,668
Research and development 242,783 195,842 682,671 837,123 3,118,063
Professional fees 109,233 104,784 364,909 374,804 2,136,625
Write-down of intellectual
property rights 530,000
General and administrative 198,727 111,321 423,173 398,930 1,507,427
-------------------------------------------------------------------------------------------------------------------

670,114 558,409 1,847,627 2,104,446 8,938,783
-------------------------------------------------------------------------------------------------------------------

Operating loss (595,114) (558,409) (1,772,627) (2,104,446) (8,863,783)

Other income(expense):
Interest income 113 177 1,377 16,878
46,140
Interest expense (142,886) (162,862) (387,551) (334,422) (1,388,947)
Other income 10,169 47,345 75,493 137,069
304,568
Other expense -- -- (28,805) (65,086)
-------------------------------------------------------------------------------------------------------------------

(132,604) (115,340) (310,681) (209,280) (1,103,325)
-------------------------------------------------------------------------------------------------------------------
Loss from continuing
operations (727,718) (673,749) (2,083,308) (2,313,726) (9,967,108)

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

Net loss $ (727,718) $ (673,749) $ (2,083,308) $ (2,313,726) $(10,056,465)
===================================================================================================================
Loss per common share
Basic and Diluted $ (0.02) $ (0.02) $ (0.05) $ (0.08)
=================================================================================================
Weighted average shares
outstanding 43,946,562 31,902,380 40,359,446 30,359,831
=================================================================================================

See Notes to Condensed Consolidated Financial Statements.

F-19

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

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

Period from
August 1, 1968
Nine Months Ended (date of inception)
November 30, to
2003 2002 November30,2003
--------------------------------------------------------------------------------------------------
Cash flows used for operating activities:

Net loss $ (2,083,308) $ (2,313,726) $(10,056,465)
Adjustments to reconcile net loss to net cash
used for operating activities:
Depreciation 17,439 19,191 57,969
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 337,352 300,000 720,685
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 230,000 138,000 1,417,800
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 (50,521) (16,779) (74,889)
(Increase) decrease in prepaid expenses 29,364 (38,649) (61,559)
Increase in security deposits -- -- (2,933)
Increase in accounts payable and
accrued expenses 315,620 197,740 645,505
Decrease in due to related
parties (4,547) (11,559) (38,642)
--------------------------------------------------------------------------------------------------

(1,186,476) (1,696,977) (6,136,012)

Cash flows used for investing activities:
Purchases of fixed assets (21,625) (7,951) (125,387)
Sales of marketable securities 302,000 540,000 1,219,270
Purchases of marketable securities -- -- (1,286,218)
--------------------------------------------------------------------------------------------------

280,375 532,049 (192,335)

F-20

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 200,950 300,000 500,950
Line of credit payments (55,000) (55,000)
Net proceeds from sales of capital stock 281,663 757,212 4,393,312
Proceeds from exercise of options 427,847 -- 427,847
Deferred equity placement costs 70,538 (20,000) --
--------------------------------------------------------------------------------------------------
925,998 1,180,782 6,397,179
--------------------------------------------------------------------------------------------------

Net increase in cash (19,897) 15,854 68,832

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

Cash, ending $ 68,832 $ 28,053 $ 68,832
==================================================================================================

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.

F-21

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

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 2003

INTERIM FINANCIAL STATEMENTS:

The condensed consolidated financial statements as of November 30, 2003 and for
the three and nine months ended November 30, 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 and compatible 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,
intraluminal imaging coils, interventional catheters and guide wires,
endoscopes, and others. The Company plans to provide intellectual property
licenses and critical components to manufacturers of these biomedical devices.

F-22

ACCOUNTING FOR STOCK OPTIONS:

Three Months Ended Nine Months Ended
November November
2003 2002 2003 2002
-----------------------------------------------------------------------------------------------

Net loss - as reported $ (727,718) $ (673,749) $(2,083,308) $(2,313,726)

Add - stock based employee
compensation expense included
in reported net loss, net of
related tax effects 30,000 47,000 90,000 140,000

Deduct - Total stock based
employee compensation expense
determined under fair
value based method for all awards,
net of related tax effects 65,000 115,000 179,000 345,000
-----------------------------------------------------------------------------------------------

Net loss - pro forma $ (762,454) $ (741,749) $(2,172,308) $(2,518,726)
===============================================================================================
Basic and diluted loss per
share - as reported $ (.02) $ (.02) $ (.05) $ (.08)
===============================================================================================
Basic and diluted loss per
share - pro forma $ (.02) $ (.02) $ (.05) $ (.08)
===============================================================================================

PREPAID EXPENSES:

Prepaid expenses at November 30, 2003 consist of the following:

Prepaid insurance $ 43,434
Prepaid supplies 18,125
--------------------------------------
$ 61,559
======================================

LOAN AGREEMENTS:

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

F-23

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. Since that time, the
Company has drawn additional amounts 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 November 30, 2003, $262,000 was outstanding
under the Line. The stated liability for financial reporting purposes is
$262,000 less an unamortized discount $58,598, or $203,402.

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 November 30, 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 AND SUBSEQUENT EVENT:

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 November 30, 2003, the Company sold and issued 3,325,757
shares of common stock under the agreement for gross proceeds of $491,190.

Also, during the period from August 13 through October 21, 2003, options for
3,000,000 shares were granted to three consultants, exercisable at prices equal
to 80% of the closing price of the stock on the day prior to exercise. These
options were completely exercised for aggregate proceeds of $427,847.

From December 3, 2003 to January 12, 2004, 11,000,000 shares of common stock
were issued to SBI Brightline, LLC pursuant to the Stock Purchase Agreement
between the Company and SBI. Gross proceeds of $2,900,000 were received, or are
in transit, thereby completing the terms of that financing agreement.

F-24

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 24. Indemnification of Directors and Officers.

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

o 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 $1,879.00
Printing and engraving expenses 5,000.00
Legal and accounting fees and expenses 50,000.00
----------
Total $56,879.00
==========

II-1

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

Item 26. Recent Sales of Unregistered Securities.

The securities of Biophan that were issued or sold by Biophan since
December 1, 2000 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 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.

II-2

(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.

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

II-3

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.

II-4

(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
foregoing 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) 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 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.

II-5

(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, we 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 us normally found in a prospectus or in annual and periodic
filings with the SEC; the firm had a prior business relationship with us and our
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, 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.

II-6

(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 an exchange of securities with an existing securityholder where no
commission is payable. The debt was assigned by Biomed to Bellador 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 17, 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 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.

(o) On October 1, 2003 we entered into a stock purchase agreement with SBI
Brightline Consulting, LLC pursuant to which SBI agreed to purchase up to
11,000,000 shares of our common stock at fixed prices ranging from $.15 to $.40
per share. This transaction was treated as completed at the time of the signing
of the stock purchase agreement and was exempt from registration under Section
4(2) of the Securities Act because it did not involve any public offering. We
sold the shares pursuant to the stock purchase agreement between December 3,
2003 and January 12, 2004 for aggregate proceeds of $2.9 million. We have been
advised by SBI that it has sold all of such shares pursuant to our Registration
Statement on Form SB-2 (No. 333-109592) which was declared effective by the
Securities and Exchange Commission on November 17, 2003.

(p) On January 21, 2004 and February 10, 2004, respectively, we issued 932,000
and 500,000 shares of common stock for the conversion of $93,200 and $50,000 of
line of credit obligation payable to Biomed Solutions, LLC. Biomed had
previously sold those portions of its

II-7

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 an exchange of securities with an existing securityholder
where no commission is payable. The debt was assigned by Biomed to Bellador
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.

(q) On February 5, 2004 we entered into a stock purchase agreement with SBI
Brightline Consulting, LLC pursuant to which SBI agreed to purchase up to
17,750,000 shares of our common stock at fixed prices ranging from $.60 to $2.00
per share. This transaction was treated as completed at the time of the signing
of the stock purchase agreement and was exempt from registration under Section
4(2) of the Securities Act because it did not involve any public offering. Of
the shares covered by this registration statement, 6,000,000 shares are shares
that may be issued by us to SBI pursuant to this stock purchase agreement.

(p) On February 10, 2004, we issued 3,000,000 shares of common stock upon the
conversion of $300,000 of the obligations under our obligation payable to Biomed
Solutions, LLC under a transfer agreement. Biomed had previously sold that
portion of its rights to SBI Brightline Consulting, LLC. The shares were issued
to SBI pursuant to the exemption provided by Section 3(a)(9) of the Securities
Act of 1933, involving an exchange of securities with an existing securityholder
where no commission is payable. The debt was assigned by Biomed to SBI in a
transaction that was exempt from registration under Section 4(2) of the
Securities Act because it did not involve any public offering. The resale of
these 3,000,000 shares is being registered pursuant to this registration
statement.

(q) On February 10, 2004, we issued 3,513,000 shares of common stock upon the
conversion of our outstanding debt obligations payable to Biomed ($200,000 under
a transfer agreement and $151,300 under a line of credit). The shares were
issued to Biomed pursuant to the exemption provided by Section 3(a)(9) of the
Securities Act of 1933, involving an exchange of securities with an existing
securityholder where no commission is payable. The resale of these 3,513,000
shares is being registered pursuant to this registration statement.

(r) Between January 15, 2004 and February 29, 2004, we issued 995,940 shares of
our common stock upon the exercise of outstanding warrants for aggregate gross
proceeds of $332,844. The shares were issued pursuant to the exemption provided
by Section 3(a)(9) of the Securities Act of 1933, involving an exchange of
securities with an existing securityholder where no commission is payable.

II-8

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 to
December 1, 2000, by and among Exhibit 2.3 to Biophan's
Biophan, Biomed Solutions, LLC Registration Statement on Form
(formerly Biophan, LLC), and LTR SB-2 (File No. 333-102526) (the
Antisense Technology, Inc. "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 to
Incorporation 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 to
Articles of Incorporation Exhibit 3.1(i) to Biophan's Form
8-K on August 27, 2001.
4.1 Stock Purchase Warrant between Incorporated by reference to
Biophan and Biomed Solutions, LLC Exhibit 4.1 to Biophan's Form
(formerly Biophan, LLC) dated June 10-QSB for the period ended May
4, 2002 31, 2002.
4.2 Stock Purchase Warrant between Incorporated by reference to
Biophan and Bonanza Capital Exhibit 4.2 to Biophan's Form
Masterfund Ltd. 10-QSB for the period ended May
31, 2002.
4.3 Restated Stock Purchase Warrant Incorporated by reference to
between Biophan and Biomed Exhibit 4.3 to Biophan's Form
Solutions, LLC, dated January 8, 10-QSB for the period ended
2003 November 30, 2002.

II-9

Exhibit No. Exhibit Description Location
----------- ------------------- --------
4.4 Stock Purchase Warrant between Incorporated by reference to
Biophan and Biomed Solutions, LLC Exhibit 4.4 to Biophan's Form
dated November 11, 2002 10-QSB for the period ended
November 30, 2002.
4.5 Form of Stock Purchase Warrant Incorporated by reference to
issued to principals of Carolina Exhibit 4.5 to Biophan's Form
Financial Services, for a total of 10-QSB for the period ended
121,572 shares November 30, 2002.

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

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

4.8 Stock Purchase Warrant issued to Incorporated by reference to
SBI USA, LLC Exhibit 4.8 to Biophan's Form
10-QSB for the period ended
November 30, 2002.
4.9 Registration Rights Agreement Filed as an Exhibit to
dated February 10, 2004 by and Registration Statement filed on
among Biophan Technologies, Inc., February 10, 2004.
Biomed Solutions, LLC and SBI
Brightline Consulting, LLC
5.1 Opinion of Nixon Peabody LLP Filed herewith.
10.1 Assignment, dated as of December Incorporated by reference to
1, 2000, by and between Biophan Exhibit 10.1 to Biophan's Form
and Biomed Solutions, LLC 8-K, filed December 15, 2000.
(formerly Biophan, LLC), a New
York limited liability company
10.2 Security Agreement, dated as of Incorporated by reference to
December 1, 2000, by and between Exhibit 10.2 to Biophan's Form
Biophan and Biomed Solutions, LLC 8-K, filed December 15, 2000.
(formerly Biophan, LLC), a New
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.

II-10

Exhibit No. Exhibit Description Location
----------- ------------------- --------
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 to
Biophan and Biomed Solutions, LLC Exhibit 10.1 to Biophan's Form
dated June 4, 2002 10-QSB for the period ended
May 31, 2002.
10.6 Convertible Promissory Note Incorporated by reference to
between Biophan and Biomed Exhibit 10.2 to Biophan's Form
Solutions, LLC dated June 4, 2002 10-QSB for the period ended May
31, 2002.
10.7 Loan Agreement between Biophan and Incorporated by reference to
H. Deworth Williams dated June 18, Exhibit 10.3 to Biophan's Form
2002 10-QSB for the period ended May
31, 2002.
10.8 Stock Purchase Agreement between Incorporated by reference to
Biophan and Bonanza Capital Exhibit 10.4 to Biophan's Form
Masterfund LTD 10-QSB for the period ended May
31, 2002.
10.9 Escrow Agreement between Biophan, Incorporated by reference to
Bonanza Capital Masterfund LTD and Exhibit 10.5 to Biophan's Form
Boylan, Brown, Code, Vigdor & 10-QSB for the period ended May
Wilson LLP 31, 2002.
10.1 Registration Rights Agreement Incorporated by reference to
between Biophan and Bonanza Exhibit 10.6 to Biophan's Form
Capital Masterfund LTD 10-QSB for the period ended May
31, 2002.
10.11 Executive Employment Agreement Incorporated by reference to
between Biophan and Michael L. Exhibit 10.7 to Biophan's Form
Weiner dated December 1, 2000 10-QSB for the period ended May
31, 2002.
10.12 Executive Employment Agreement Incorporated by reference to
between Biophan and Jeffrey L. Exhibit 10.8 to Biophan's Form
Helfer dated June 6, 2002 10-QSB for the period ended May
31, 2002.
10.13 Executive Employment Agreement Incorporated by reference to
between Biophan and Stuart G. Exhibit 10.9 to Biophan's Form
MacDonald dated June 6, 2002 10-QSB for the period ended May
31, 2002.
10.14 Executive Employment Agreement Incorporated by reference to
between Biophan and Robert J. Wood Exhibit 10.10 to Biophan's Form
dated June 6, 2002 10-QSB for the period ended May
31, 2002.
10.15 Financial Accommodations Agreement Incorporated by reference to
between Biophan and Bellador Exhibit 10.11 to Biophan's Form
(Labuan) Ltd dated July 1, 2002 10-QSB for the period ended May
31, 2002.

II-11

Exhibit No. Exhibit Description Location
----------- ------------------- --------
10.16 Stock Purchase Agreement between Incorporated by reference to
Biophan and Spectrum Advisors, Ltd. Exhibit 10.16 to Biophan's Form
10-QSB for the period ended
November 30, 2002.
10.17 Escrow Agreement between Biophan, Incorporated by reference to
Spectrum Advisors, Ltd. and Exhibit 10.17 to Biophan's Form
Boylan, Brown, Code, Vigdor & 10-QSB for the period ended
Wilson LLP. November 30, 2002.
10.18 Registration Rights Agreement Incorporated by reference to
between Biophan and Spectrum Exhibit 10.18 to Biophan's Form
Advisors, Ltd. 10-QSB for the period ended
November 30, 2002.
10.19 Lease Agreement between Biophan Incorporated by reference to
and High Technology of Rochester, Exhibit 10.19 to Biophan's Form
Inc. SB-2a on March 14, 2003.
10.2 Strategic Partnership Agreement Incorporated by reference to
between Biophan and UB Business Exhibit 10.20 to Biophan's Form
Alliance dated December 10, 2001 SB-2a on March 14, 2003.
10.21 License Agreement between Biophan, Filed as Exhibit 10.50 to
Xingwu Wang and Nanoset, LLC dated Biophan's Form SB-2 filed on
January 15, 2004 October 9, 2003.
10.22 Patent License Agreement between Incorporated by reference to
Biophan and Deborah D. L. Chung Exhibit 10.22 to Biophan's Form
dated April 5, 2002 SB-2a on March 14, 2003.
10.23 License Agreement between Biophan Incorporated by reference to
and Johns Hopkins University Exhibit 10.23 to Biophan's Form
SB-2a on March 14, 2003.
10.24 Advisory Agreement between Biophan Incorporated by reference to
and SBI USA, LLC dated December Exhibit 10.24 to Biophan's Form
18, 2002 SB-2a on March 14, 2003.
10.25 Development Agreement between Incorporated by reference to
Biophan and Alfred University Exhibit 10.25 to Biophan's Form
dated February 21, 2002 SB-2a on March 14, 2003.
10.26 Development Agreement between Incorporated by reference to
Biophan and Alfred University Exhibit 10.26 to Biophan's Form
dated January 24, 2003 SB-2a on March 14, 2003.
10.27 First Amendment to Restated Stock Incorporated by reference to
Purchase Agreement between Biophan Exhibit 10.27 to Biophan's Form
and Spectrum Advisors, Ltd. SB-2a on March 14, 2003.
10.28 Development Agreement between Incorporated by reference to
Biophan and Greatbatch Exhibit 10.28 to Biophan's Form
Enterprises, Inc., dated February SB-2a on May 1, 2003.
28, 2001
10.29 Assignment of Patent No: Incorporated by reference to
60,269,817, by and between Biophan Exhibit 10.29 to Biophan's Form
and Michael L. Weiner, Wilson SB-2a on May 1, 2003.
Greatbatch, Patrick R. Connelly,
and Stuart G. MacDonald

II-12

Exhibit No. Exhibit Description Location
----------- ------------------- --------
10.30 Assignment of Patent No: Incorporated by reference to
10,077,988, by and between Biophan Exhibit 10.30 to Biophan's Form
and Patrick R. Connelly, Michael SB-2a on May 1, 2003.
L. Weiner, Stuart G. MacDonald,
Thomas H. Foster, Wilson
Greatbatch, and Victor Miller
10.31 Assignment of Patent No: Incorporated by reference to
10,077,836, by and between Biophan Exhibit 10.31 to Biophan's Form
and Michael L. Weiner, Stuart G. SB-2a on May 1, 2003.
MacDonald, and Patrick R. Connelly
10.32 Assignment of Patent No: Incorporated by reference to
10,077,823, by and between Biophan Exhibit 10.32 to Biophan's Form
and Patrick R. Connelly, Michael SB-2a on May 1, 2003.
L. Weiner, Jeffrey L. Helfer ,
Stuart G. MacDonald, and Victor
Miller
10.33 Assignment of Patent No: Incorporated by reference to
10,077,978, by and between Biophan Exhibit 10.33 to Biophan's Form
and Michael L. Weiner, Jeffrey L. SB-2a on May 1, 2003.
Helfer, Stuart G. MacDonald,
Patrick R. Connelly, and Victor
Miller
10.34 Assignment of Patent No: Incorporated by reference to
10,078,062, by and between Biophan Exhibit 10.34 to Biophan's Form
and Michael L. Weiner, Patrick R. SB-2a on May 1, 2003.
Connelly, Stuart G. MacDonald,
Jeffrey L. Helfer, Victor Miller
10.35 Assignment of Patent No: Incorporated by reference to
10,077,932, by and between Biophan Exhibit 10.35 to Biophan's Form
and Michael L. Weiner, Jeffrey L. SB-2a on May 1, 2003.
Helfer, Patrick R. Connelly,
Stuart G. MacDonald, and Victor
Miller
10.36 Assignment of Patent No: Incorporated by reference to
10,077,887, by and between Biophan Exhibit 10.36 to Biophan's Form
and Michael L. Weiner, Jeffrey L. SB-2a on May 1, 2003.
Helfer, Patrick R. Connelly,
Stuart G. MacDonald, and Victor
Miller
10.37 Assignment of Patent No: Incorporated by reference to
10,077,883, by and between Biophan Exhibit 10.37 to Biophan's Form
and Michael L. Weiner, Jeffrey L. SB-2a on May 1, 2003.
Helfer, Patrick R. Connelly,
Stuart G. MacDonald, and Victor
Miller
10.38 Assignment of Patent No: Incorporated by reference to
10,077,958, by and between Biophan Exhibit 10.38 to Biophan's Form
and Michael L. Weiner, Jeffrey L. SB-2a on May 1, 2003.
Helfer, Patrick R. Connelly,
Stuart G. MacDonald, and Victor
Miller

II-13

Exhibit No. Exhibit Description Location
----------- ------------------- --------
10.39 Assignment of Patent No: Incorporated by reference to
10,077,888, by and between Biophan Exhibit 10.39 to Biophan's Form
and Patrick R. Connelly, Stuart G. SB-2a on May 1, 2003.
MacDonald, and Michael L. Weiner
10.40 Assignment of Patent No: Incorporated by reference to
60,357,935, by and between Biophan Exhibit 10.40 to Biophan's Form
and Jeffrey L. Helfer, Robert W. SB-2a on May 1, 2003.
Gray, and Michael L. Weiner
10.41 Assignment of Patent No: Incorporated by reference to
10,132,457, by and between Biophan Exhibit 10.41 to Biophan's Form
and Stuart G. MacDonald, Jeffrey SB-2a on May 1, 2003.
L. Helfer, and Michael L. Weiner
10.42 Assignment of Patent No: Incorporated by reference to
09,864,944, by and between Biophan Exhibit 10.42 to Biophan's Form
and Wilson Greatbatch, Patrick R. SB-2a on May 1, 2003.
Connelly and Michael L. Weiner
10.43 Assignment of Patent No: Incorporated by reference to
09,865,049, by and between Biophan Exhibit 10.43 to Biophan's to
and Victor Miller, Wilson Form SB-2a on May 1, 2003.
Greatbatch, Patrick R. Connelly
and Michael L. Weiner
10.44 Assignment of Patent No: Incorporated by reference to
09,885,867, by and between Biophan Exhibit 10.44 to Biophan's Form
and Wilson Greatbatch, Patrick R. SB-2a on May 1, 2003.
Connelly and Michael L. Weiner
10.45 Assignment of Patent No: Incorporated by reference to
09,885,868, by and between Biophan Exhibit 10.45 to Biophan's Form
and Victor Miller, Wilson SB-2a on May 1, 2003.
Greatbatch, Patrick R. Connelly
and Michael L. Weiner
10.46 Assignment of Patent No: Incorporated by reference to
10,283,530, by and between Biophan Exhibit 10.46 to Biophan's Form
and Wilson Greatbatch and Michael SB-2a on May 1, 2003.
L. Weiner
10.47 Assignment of Patent No: Incorporated by reference to
10,369,429, by and between Biophan Exhibit 10.47 to Biophan's Form
and Jeffrey L. Helfer, Robert W. SB-2a on May 1, 2003.
Gray, and Michael L. Weiner
10.48 Assignment of Patent No: Incorporated by reference to
10,162,318, by and between Biophan Exhibit 10.48 to Biophan's Form
and Biomed Solutions, LLC SB-2a on May 1, 2003.
10.49 Strategic Partnership Agreement Incorporated by reference to
between Biophan and UB Business Exhibit 10.49 to Biophan's Form
Alliance dated May 27, 2003. SB-2a on July 11, 2003.
10.50 Development Agreement between Filed as Exhibit 10.51 to
Biophan and Alfred University Biophan's Form SB-2 filed on
dated July 17, 2003 October 9, 2003.
10.51 Stock Purchase Agreement dated Filed as Exhibit 10.50 to
October 1, 2003 between Biophan Biophan's Form SB-2 filed on
and SBI Brightline Consulting, LLC. October 9, 2003.
10.52 Stock Purchase Agreement dated Filed as an Exhibit to
February 5, 2004 between Biophan Registration Statement filed on
and SBI Brightline Consulting, LLC. February 10, 2004.

II-14

Exhibit No. Exhibit Description Location
----------- ------------------- --------
10.53 2001 Stock Option Plan Filed as an Exhibit to
Registration Statement filed on
February 10, 2004.
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 to
accountants 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.
23.1 Consent Goldstein Golub Kessler LLP Filed herewith
23.2 Accountant's Awareness Letter - Filed herewith
Goldstein, Golub, Kessler, LLP
23.3 Consent of Nixon Peabody LLP Included in Exhibit 5.1
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

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

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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.

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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 to Form SB-2 and has
authorized this Amendment No. 1 to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Town of West Henrietta, State of New York on
March 26, 2004.

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
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 March 26, 2004
------------------------- (Principal Executive Officer)
Michael L. Weiner

/s/ Robert J. Wood Vice President, Treasurer and CFO March 26, 2004
------------------------- (Principal Financial and
Robert J. Wood Accounting Officer)

* Director March 26, 2004
-------------------------
Guenter H. Jaensch

* Director March 26, 2004
-------------------------
Ross B. Kenzie

* Director March 26, 2004
-------------------------
Steven Katz

* Director March 26, 2004
-------------------------
Robert S. Bramson

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

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