Edgar Filing: BIOPHAN TECHNOLOGIES INC

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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-

FORM 10-KSB
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(Mark One)

|X| Annual Report Under Section 13 or 15(d) of The Securities Exchange Act of
1934 For the fiscal year ended February 28, 2005. or

|_| Transition Report Under Section 13 or 15(d) of The Securities Exchange Act
of 1934 For the transition period from ________to__________.

Commission File Number 0-26057

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

Nevada 82-0507874
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(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)

150 Lucius Gordon Drive, Suite 215 14586
West Henrietta, New York ---------
--------------------------------------- (Zip code)
(Address of principal executive offices)

(585) 214-2441
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Issuer's telephone number

Securities registered under Section 12(b) of the Exchange Act: None

Securities under Section 12(g) of the Exchange Act: Common Stock,
$.005 par value

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.

Yes |X| No |_|

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. |X|

The issuer had no revenues for its most recent fiscal year ended February 28,
2005.

The aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the average bid and asked price of such
common equity, as of May 25, 2005 was $161,159,973.

The number of outstanding shares of the registrant's Common Stock, $.005 par
value, as of May 25, 2005 was 74,471,997 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Not applicable

Transitional Small Business Disclosure Format: Yes |_| No |X|

TABLE OF CONTENTS

Page

PART I

Item 1. Description of Business 4

Item 2. Description of Property 19

Item 3. Legal Proceedings 19

Item 4. Submission of Matters to a Vote of Security Holders 19

PART II

Item 5. Market for Common Equity and Related Stockholder Matters 19

Item 6. Plan of Operation 21

Item 7. Financial Statements 28

Item 8. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure F-19

Item 8A. Controls and Procedures F-19

Item 8B. Other Information F-19

PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act 29

Item 10. Executive Compensation 34

Item 11. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters 37

Item 12. Certain Relationships and Related Transactions 39

Item 13. Exhibits 41

Item 14. Principal Accountant Fees and Services 45

SIGNATURES 46

CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS

This annual report on Form 10-KSB contains statements that are considered
forward-looking statements. Forward-looking statements give the Company's
current expectations and forecasts of future events. All statements other than
statements of current or historical fact contained in this annual report,
including statements regarding the Company's future financial position, business
strategy, budgets, projected costs and plans and objectives of management for
future operations, are forward-looking statements. The words "anticipate,"
"believe," "continue," "estimate," "expect," "intend," "may," "plan," and
similar expressions, as they relate to the Company, are intended to identify
forward-looking statements. These statements are based on the Company's current
plans, and the Company's actual future activities and results of operations may
be materially different from those set forth in the forward-looking statements.
These forward-looking statements are subject to risks and uncertainties that
could cause actual results to differ materially from the statements made. Any or
all of the forward-looking statements in this annual report may turn out to be
inaccurate. The Company has based these forward-looking statements largely on
its current expectations and projections about future events and financial
trends that it believes may affect its financial condition, results of
operations, business strategy and financial needs. The forward-looking
statements can be affected by inaccurate assumptions or by known or unknown
risks, uncertainties and assumptions. The Company undertakes no obligation to
publicly revise these forward-looking statements to reflect events occurring
after the date hereof. All subsequent written and oral forward-looking
statements attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by the cautionary statements contained in
this annual report.

ITEM 1. DESCRIPTION OF BUSINESS

COMPANY BUSINESS

The Company is a technology development company with a strong market focus. We
solve real-world technical challenges and limitations facing the medical device
industry and, when selecting a specific market opportunity to address, generate
a wide range of potential technical solutions. Each of the technical solutions
that we pursue is protected by intellectual property to ensure that solutions
have the capability of being effectively marketed by the Company. Whenever
possible, we attempt to create and patent multiple solutions for any given
technology challenge.

Our multiple solutions for stent imaging and for pacemaker safety are examples
of this approach. These solutions allow us to offer a large manufacturer an
opportunity for a sustainable competitive product advantage, making it much more
attractive for the manufacturer to make the necessary investments in product
development, regulatory approvals, and marketing; as well as pay appropriate
compensation to the Company for access to the technology.

This approach has resulted in the development of a range of core technologies
within the Company, and our presence in a number of different, but closely
related, segments of the medical device market. We are aggressive in our
development and defense of our intellectual property assets and have an
intellectual property portfolio several times the size of many comparably sized
companies.

Over the past year, we have been acquiring and developing:

o Technology to improve vascular stents so they can be imaged with MRI
to detect the presence of restenosis (blockage) after implantation;

o Technology to enable the development of an MRI visible vena cava
filter, which allows MR imaging of blood clots that may be present
prior to removal of the device;

o Technology to enhance the MRI safety and MRI image compatibility of
pacemakers, defibrillators, neurostimulators, pain control devices,
drug pumps, and virtually any implanted or interventional device
which has elongated metal leads or metal components;

o Technologies to improve MRI contrast agents;

o Markets for our MRI safe and image compatible ceramic motor, the
Squiggle(TM) motor;

o A system for generating power for implantable devices from body
heat, in cooperation with NASA; and

o Technology to improve drug elution and drug delivery systems,
including providing "active release" using non-invasive or minimally
invasive activation.

Over the past five years, our work in these technology areas, including
development and accumulation of intellectual property, has allowed us to
demonstrate working solutions for many of the critical MRI safety and imaging
limitations associated with both implantable and interventional medical devices.
Over $12 billion worth of medical devices ship each year with these technical
limitations. We are continually demonstrating these solutions with medical
device manufacturers and are at various stages of discussion and contract
negotiation on the deployment of these solutions into existing and new
generations of medical devices.

TECHNICAL TERMINOLOGY

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 non-conducting 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.

PRODUCTS AND TECHNOLOGIES

Stents and Vena Cava Filters

Stents are one of the fastest growing and most profitable technologies in the
medical device arena. Drug eluting stents have been extremely successful in the
market as a result of their ability to reduce restenosis that can occur after a
stent is placed. Diagnosing restenosis currently requires an interventional
medical procedure, which is usually done under fluoroscopy, combined with the
administration of dyes, which can result in an allergic reaction. These
procedures allow determination of stent blockage, but they do not permit imaging
inside the stent.

Currently marketed stents cannot be imaged non-invasively using MRI due to a
blockage of signals caused by the Faraday Cage effect, in which the stent blocks
transmission of radio frequency (RF) fields necessary for imaging with MRI.
Biophan has developed a series of solutions to this problem by modifying the
stent structure, by adding a secondary structure or by applying a coating to the
stent. In either case, the modification should not affect the physical
performance of the stent but will permit imaging of the stent interior.

Biophan has, through both internal development and acquisition, acquired a broad
range of issued and pending patents protecting these technologies, including
thin film and thick film coatings that generate a resonant circuit to overcome
the Faraday Cage effect. These technology solutions are also applicable to other
medical devices, including vena cava filters, heart valves and many other types
of implantable devices.

Pacemakers, Defibrillators and Neurostimulators

We have successfully demonstrated effective solutions for making devices safe
for use with MRI, which apply to a number of devices which currently are
contraindicated for use with MRI, such as pacemakers, defibrillators and
neurostimulators, guidewires and catheters. Many of these devices can experience
unsafe heating in an MRI field, and can experience induced voltages which also
presents a safety concern. Today, approximately 3 million people have devices
that cause them to be denied access to MRI when needed, due to safety concerns
and FDA contraindications. Our technologies are designed to enable the
manufacture of devices that are safe for use with MRI, in order to eliminate the
need to deny future device recipients access to MRI.

Additionally, there is an evolving multi-billion dollar field of medicine known
as minimally invasive surgery, which uses devices such as guidewires and
catheters to perform many procedures that previously required very invasive
surgery. Many procedures are now done in catheter labs equipped with X-ray or
fluoroscopy for imaging and guiding the procedures. X-ray and fluoroscopy do not
offer the advantages of soft tissue visualization nor the absence of ionizing
radiation provided by MRI. Currently, the combined problems of device safety and
image compatibility of these devices in MRI have limited the use of MRI in this
rapidly growing area of medicine.

The desire and need for MRI is demonstrated by the advent of combined
interventional labs, which integrate X-ray devices for guiding devices into the
body, and MRI machines for evaluating progress and observing tissue and results.
These new operating theaters require the patients to be moved back and forth on
a conveyor belt-like system between the imaging devices and represents an
expensive and inconvenient solution to the limitations of today's devices. For
the past five years, Biophan has been actively engaged in solving the complex
problems associated with device safety and image compatibility with MRI. With
our solutions, the industry will have the opportunity to manufacture devices
that can be used with MRI, obviating the need for combined interventional labs.

Biophan has multiple solutions for resolving the heating of devices under MRI,
including pacemaker leads, defibrillator leads and neurostimulator leads (such
as the deep brain stimulation systems used for the treatment of Parkinson's and
epilepsy). One solution is an RF filter, licensed from Johns Hopkins exclusively
for implantable devices, which can resolve lead heating. Additionally,
"anti-antenna" geometry modifications in these devices, patented by the Company,
alter the way the devices are made to resolve the safety problems associated
with these devices. Together, these solutions allow the manufacture of an MRI
safe lead and device.

Since the recent issue of some of our patents in this area, we have publicly
disclosed our solutions and have demonstrated the success of our approach to
prospective customers and industry experts. We have begun manufacturing
experimental prototypes of devices modified using our solutions, which we
believe will prove to be very cost effective for device manufacturers to
implement.

We recently received an issued U.S. patent, 6,829,509, for anti-antenna
geometries. We believe that this patent, combined with Johns Hopkins' U.S.
patent 5,217,010, for which we hold an exclusive license, gives us a very strong
position in the emergence of MRI safe devices incorporating long wire leads,
such as pacemakers, defibrillators, deep brain stimulators, pain management
devices, and many others. We recently filed nine continuations to our U.S.
patent 6,829,509, applying this innovation to other devices, such as stents,
guidewires and catheters. These technologies address a large segment of the
medical device market worldwide. To the best of our knowledge, no other issued
U.S. patents exist for pacemaker safety. We have in the past declined several
offers for licenses for pacemaker safety which did not meet our minimum royalty
requirements. If an MRI safe pacemaker ships from a manufacturer who is not a
licensee, we will acquire the device and conduct an infringement analysis. In
the event infringement is found we intend to vigorously enforce our patents
rights. We are in discussions with another pacemaker manufacturer regarding a
license, and we have reached an understanding with another company on terms for
a non-exclusive license for pacemaker safety.

Interventional Guidewires and Catheters

In addition to improving the safety of devices such as pacemakers and
neurostimulators, the large markets for interventional guidewires and catheters
are limited both safety and image compatibility issues with MRI. The MRI safety
limitations can be addressed using the same technologies used for pacemakers and
neurostimulators, while image compatibility can be addressed by other
technologies that we have developed or acquired. One technology that we employ
involves thin film nanomagnetic particle coatings, developed by Nanoset, LLC in
collaboration with Biophan. We have produced MRI images showing an aluminum rod,
otherwise invisible under MRI, but seen clearly when an appropriate nanomagnetic
coating was applied. An alternative approach, using a miniature resonant circuit
applied to a catheter, makes it easy to track under MRI. These images are
available on our website at www.biophan.com. This capability is part of the
suite of technologies that can help make MRI a viable solution for
interventional diagnostics and surgery. These technologies are covered by both
issued and pending patents possessed exclusively by Biophan for the medical
device market. The advantage of a coating solution is that a manufacturer with a
product in the market or in development does not have to radically change the
physical design or its manufacturing process. Thus, the coating solutions we are
pursuing have broad applications to many products, including the rapidly growing
stent market.

MRI Contrast Agents

Nanoset, our technology partner, and Biophan are developing a "particle tuning"
technology for making a novel MRI contrast agent capable of providing multiple
MRI signatures. This novel material could be attached to different recognition
molecules, permitting improved specificity and multiple functionality as
compared with existing agents. This work is still in the early stages, but the
market for MRI contrast agents is currently approaching $1 billion and is
expected to grow with the expansion of MRI diagnostics. Our intent is to partner
with other companies making recognition molecules and to license the technology
to a partner or partners with established distribution channels.

Biothermal Power Source

We acquired a 51% interest in TE Bio, LLC, a company developing implantable
power systems that work on heat created by normal body metabolism, and not by
electrochemical means as with traditional batteries. Our feasibility studies and
modeling indicate that the amount of energy needed to power devices such as
pacemakers can be generated by converting body heat to power. Further
development may yield sufficient power for neurostimulators, small drug pumps
and biosensors, or to continuously charge a battery for devices such as
implantable defibrillators. We are working with NASA and several companies to
develop this technology.

Drug Delivery Technologies

As part of our research into nanomagnetic thin film particle coatings for
medical devices, we have initiated a parallel program to develop methods of
"tuning" the particles and coatings for specific responses to externally applied
magnetic fields. Working with Nanoset, we are developing the capability of
reloading the drug within a coated device such as a stent by attaching
nanomagnetic particles to a drug molecule to guide it to a device such as a
stent and to cause the drug to enter the coating for future drug release.

By attaching the nanomagnetic particle to a drug molecule, the drug can be made
non-active, in that it will not bind to tissue until the nanomagnetic particle
is activated by a resonant frequency field and forced to vibrate and lose its
attachment to the drug molecule. This innovation has broad applications in drug
delivery and drug coatings. During 2004, Nanoset and Biophan filed an extensive
patent application on methods of "active" drug elution and improvements on drug
targeting and drug delivery. John Lanzafame was recruited by Biophan and now
heads up Nanolution, our drug delivery division, where he is developing this
technology into solutions which can be licensed to customers.

Additional technical information, audio-visual presentations, white papers and
access to many of our issued and pending patents can be found on our website at
www.biophan.com. For additional information, please contact the Company.

SALES AND MARKETING

The Company's business model consists of developing technologies and licensing
these technologies and/or providing critical components to medical device
manufacturers. We anticipate that products incorporating our technologies will
be developed through collaboration with external companies or partners, and sold
through companies with existing distribution channels. Our business plan
consists of entering into licensing and R&D agreements with our
development/marketing partners, generating revenue through license fees,
milestone payments, annual minimum royalty payments, royalties on sales of
products and providing critical components.

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. However, a typical transaction may include upfront license
fees, milestone payments, and annual minimums.

MARKETS

The global market for medical devices that could benefit from our technology
related to operating safely and effectively in an MRI environment was
approximately U.S.$5 billion in the year 2002 and is growing annually by 15%.

We anticipate that we will license our technology to one or more development
partners who would be responsible for developing commercial products, obtaining
necessary approvals, manufacturing, marketing and distributing the products. Our
search for development partners is global; 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 devices. We estimate the market for devices
which have imaging limitations to be an additional U.S.$5 billion or greater.
These devices include implantable artificial hips, knees, bones, and other
prosthetics, such as stents, shunts, screws, wires, and shanks.

The potential market for additional technologies which we have under development
is even larger. The total estimated market for drug delivery technologies is
estimated to be U.S.$40 billion and the market for MRI contrast agents currently
stands at several hundred million dollars.

LICENSING AND JOINT VENTURE STRATEGY

Our strategy is to license our technologies to companies, segmented by
technology type and market segment. In some cases, we may also offer critical
components, coating machines, and other capabilities needed to put our
innovations into practice.

Our licensing strategy is to segment the market as finely as possible to
maximize the royalty revenue achievable by our technology. The table below
reveals a high level overview of the potential licensing space for our
technologies. Our technologies are shown across the top of the table, and
potential markets are indicated on the left side of the table. Each empty box in
the table is a potential licensing space, indicating a technology/product
intersection. Not every technology shown is pertinent for every market, but this
reveals a high level overview of our market segmentation strategy.

MRI Safety MRI Image Compatibility
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aMRIs
Anti-antenna Nanomagnetic Anti-antenna Resonator Nanomagnetic
Johns Hopkins Technology Coatings Technology Technology Coatings
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Coronary stents
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Peripheral vascular stents
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Non-vascular stents
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Vena cava filters and embolic
protection devices
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Vascular grafts, including
stent grafts
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Aneurism coils
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Heart valves
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Pacemakers
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Other cardiac stimulators
(e.g., ICDs)
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Neurostimulation devices,
including deep brain
stimulation
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Reconstructive orthopedic
implants, including hips and
knees
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Spinal orthopedic implants
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Orthopedic fixation products
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Interventional cardiology
catheters
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Interventional cardiology
guidewires
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Interventional vascular
catheters, short term (less than 2
hours), such as closure devices
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Peripheral vascular catheters,
long term (greater than 2 hours)
such as CVC, PICC
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Auditory implant, e.g.
cochlear implants
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Hearing aids
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Neurointerventional catheters
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Neurointerventional guidewires
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RF ablation probes
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RF ablation media
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Biopsy needles, including
aspiration, cutting and breast
localization needles
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Diagnostic procedure agents
----------------------------------------------------------------------------------------------------------------
Diagnostic procedure auxiliary
devices, such as infusion
pumps for contrast agents
----------------------------------------------------------------------------------------------------------------
Drug pumps
----------------------------------------------------------------------------------------------------------------
Therapeutic drug delivery
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MRI
Contrast MRI-Compatible Biothermal Drug
Agent Motor Power Supply Delivery
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Coronary stents
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Peripheral vascular stents
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Non-vascular stents
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Vena cava filters and embolic
protection devices
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Vascular grafts, including
stent grafts
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Aneurism coils
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Heart valves
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Pacemakers
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Other cardiac stimulators
(e.g., ICDs)
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Neurostimulation devices,
including deep brain
stimulation
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Reconstructive orthopedic
implants, including hips and
knees
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Spinal orthopedic implants
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Orthopedic fixation products
---------------------------------------------------------------------------------------
Interventional cardiology
catheters
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Interventional cardiology
guidewires
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Interventional vascular
catheters, short term (less than 2
hours), such as closure devices
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Peripheral vascular catheters,
long term (greater than 2 hours)
such as CVC, PICC
---------------------------------------------------------------------------------------
Auditory implant, e.g.
cochlear implants
---------------------------------------------------------------------------------------
Hearing aids
---------------------------------------------------------------------------------------
Neurointerventional catheters
---------------------------------------------------------------------------------------
Neurointerventional guidewires
---------------------------------------------------------------------------------------
RF ablation probes
---------------------------------------------------------------------------------------
RF ablation media
---------------------------------------------------------------------------------------
Biopsy needles, including
aspiration, cutting and breast
localization needles
---------------------------------------------------------------------------------------
Diagnostic procedure agents
---------------------------------------------------------------------------------------
Diagnostic procedure auxiliary
devices, such as infusion
pumps for contrast agents
---------------------------------------------------------------------------------------
Drug pumps
---------------------------------------------------------------------------------------
Therapeutic drug delivery
---------------------------------------------------------------------------------------

We believe royalty rates are critical to the determination of our future
potential revenue. The table below indicates the sensitivity of our potential
royalty stream to changes in product sales and royalty percentage. For example,
if our prospective customer has a product line shipping $1 billion in product
per year, each 1% royalty we might negotiate has an annual income potential to
us of $10 million per year. In this example, the difference between a 3% royalty
and a 5% royalty is the difference between $30 million per year and $50 million
per year on the royalties that would accrue to us for that product.

------------------------------------------------------------------------------------------------------------
Product Sales 1% royalty 3% royalty 5% royalty
------------------------------------------------------------------------------------------------------------

$1 billion $10 million in royalties $30 million in royalties $50 million in royalties
------------------------------------------------------------------------------------------------------------
$3 billion $30 million in royalties $90 million in royalties $150 million in royalties
------------------------------------------------------------------------------------------------------------
$5 billion $50 million in royalties $150 million in royalties $250 million in royalties
------------------------------------------------------------------------------------------------------------

Our upfront negotiations with each customer determine royalty rates for each
market segment. Royalty rates are dependent upon the strength of our patent
coverage, the strength of the market advantage provided by our technology, the
availability of other technology options to solve a particular problem, as well
as whether or not we grant an exclusive or non-exclusive license. We believe it
is very important to demonstrate the value that we add to the product, and how
that added value will improve our customer's position in the market, to achieve
an acceptable royalty rate.

In situations where we possess several solutions to a problem, we expect that
the customer will then wish to evaluate all of our technology options to
determine which is the best solution and whether or not it should license all of
our solutions. Those that are not licensed exclusively might be picked up by a
competitor, who can then claim a comparable advantage. Broader license grants
and stronger intellectual property positions can result in higher royalty rates.
To ensure the highest possible royalty rates, resulting in the best long term
benefit to our shareholders, we have aggressively patented and acquired
technology solutions in the multiple markets in which we are active.

For each company with whom we enter into discussions, we identify which market
segments they are interested in and which technologies they wish to license. We
generally wish to see a commitment to ship a product within a certain timeframe,
certain annual minimum commitments, minimum royalty payments, milestone payments
and an attractive royalty rate.

The degree of exclusivity is also a key parameter in determining achievable
license terms and royalty rates; however, the decision to license exclusively or
non-exclusively is dependent upon multiple factors. In some markets, such as the
pacemaker market, we have elected not to pursue an exclusive license and instead
to pursue multiple manufacturers as potential licensees. We have executed a term
sheet which could result in our first non-exclusive license with a manufacturer.
We believe that all pacemakers should be made to operate safely with MRI
equipment, and it is our intent to eventually provide a license to all pacemaker
manufacturers. Ultimately, our strategy related to exclusive versus
non-exclusive licensing will be determined by market segment, and will be
dependent upon market need, market fragmentation, competitive advantage market
position and financial incentives offered by the potential licensees. For
example, while giving one company a non-exclusive license, there remains the
possibility for a second company to negotiate a "co-exclusive" license.

Licensing Transaction in Process with Boston Scientific

In November 2003, we entered into a joint development agreement with Boston
Scientific Corporation for MRI safe and image compatible technology. As part of
the transaction, Boston Scientific received a first right of negotiation on
certain products. The joint development agreement has been expanded to include
multiple products and divisions. The joint development agreement includes a
first right of negotiation for these products, which has been extended through
June 30, 2005. The parties are currently in contract negotiations and anticipate
entering into a definitive agreement in the second fiscal quarter of this year.
The definitive agreement is expected to include a license fee, certain annual
minimums, milestone payments, royalties and an equity investment. Should we be
able to close this transaction, the combined cash from this transaction is
anticipated to be more than adequate to enable Biophan to list on a major stock
exchange within the current fiscal year.

RESEARCH AND PRODUCT DEVELOPMENT

The research and development expenses incurred by us were $1,240,439 for the
year ended February 29, 2004, and $2,629,980 for the year ended February 28,
2005.

R&D Resources

In order to manage the growing R&D and customer interactions in the MRI
technology and biothermal businesses, we have expanded our staff. John
Lanzafame, an experienced medical device executive, joined Biophan in September
as President of Biophan's Nanolution subsidiary, which is focused on leveraging
recent discoveries in nanotechnology, such as Biophan's use of nanomagnetic
particles for the purposes of drug delivery and drug elution from devices. Mr.
Lanzafame has 15 years experience in the medical device industry, most recently
as President of STS Biopolymers, a company specializing in customized surfaces,
including drug eluting coatings for stents and indwelling catheters. STS
Biopolymers was acquired in late 2003 by Angiotech Pharmaceuticals, which
licensed to Boston Scientific the use of paclitaxel on stents. Mr. Lanzafame has
experience in drug delivery, product development and sales and marketing and
will bring this experience both to the newly formed drug delivery division, as
well as in development and marketing of the MRI-related products. Mr. Lanzafame
also serves as Biophan's Vice President of Business Development and oversees
worldwide sales and marketing of all our technologies.

We have also retained Tim Bibens, former Director of Operations for Ortho
Clinical Diagnostics, a J & J company, and prior to that a Supply Chain Manager
at Allied Signal, to oversee our MRI safety and image compatibility projects.

We have also retained additional technical consultants to augment our research
and development efforts on the MRI safety and compatibility projects and the
biothermal battery project. Over 30 professionals, both full time and part time,
now constitute the Biophan scientific and engineering organization, across the
several projects identified above. We deploy a virtual enterprise approach,
which is explained in greater detail in the section on STRATEGIC PARTNERSHIPS.

Dr. Frank Shellock, a world renowned leader in MRI safety testing, has joined
the Scientific Advisory Board and has conducted testing and research with
Biophan's scientists. Dr. Shellock co-authored, with Robert Gray of Biophan, a
paper on MRI heating of pacing leads, and the paper was presented at the
Radiological Society of North America (RSNA) Conference Proceedings in Chicago
in November 2004. Additional joint R&D is underway with several MRI research
groups in the U.S. and Europe.

The technologies allowing visualization of implants have been developed at
Biophan, and with technology partners under exclusive license, including AMP
Patents in Germany (via an exclusive license), Aachen Resonance in Germany (via
a recent term sheet executed for an exclusive license) and Nanoset, LLC in the
U.S. (via an exclusive license).

PATENTS AND INTELLECTUAL PROPERTY
We have been aggressive in filing patent applications on these technologies and
plan to continue to be diligent 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 review of 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 18 issued patents; one each in the areas of
carbon composite shielding, RF (radio frequency) filtering, and
biothermal power sources, and 15 in the area of nanomagnetic
materials used for shielding and MRI image enhancement. The scope of
application of these technologies has expanded to include image
enhancement of devices such as stents and vena cava filters that are
otherwise not internally imageable under MRI.

o An additional 18 issued patents are assigned directly to Biophan and
cover various photonic solutions to MRI safety and image quality, as
well as components to be used in implantable devices.

o In addition to the above issued patents, Biophan (including Biophan
Europe) and its licensors have collectively filed 91 U.S. 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. Nine of
these applications have been allowed by the USPTO and are expected
to issue within approximately six months.

o Additional patent filings in nanomagnetic materials, pacemaker and
ICD lead configurations, stent designs, coating materials and
processes, and manufacturing methods are in process. These will
further extend coverage for Biophan's technologies.

o Thus, the total number of patents and applications assigned or
licensed to Biophan is 127; of these, 36 have issued as U.S.
patents; an additional nine have been allowed and will issue in the
near future; and 82 are patent applications in various stages of
prosecution in the USPTO.

From the perspective of ownership:

o 57 are licensed from Nanoset, LLC, Johns Hopkins University, Dr.
Deborah Chung, and in an exclusive license transaction with aMRIs
Patente GmbH, a companion to the acquisition of Biophan Europe;
collectively, these deal with MRI safety and compatibility, as well
as MRI contrast agents and other nanoparticles technology.
o Four are licensed by TE Bio, LLC, which is in turn majority
controlled by Biophan; these deal with biothermal power technology.
o One is an allowed application soon to be issued to New Scale
Technologies, Inc. covering a miniature ceramic motor. Biophan has
exclusive marketing and distribution rights for medical applications
of this technology.
o 65 are directly assigned to Biophan; these deal with MRI safety and
compatibility and a variety of other medical device opportunities.

In an exclusive license transaction with aMRIs Patente GmbH, a companion to our
acquisition of an interest in aMRIs GmbH, now Biophan Europe, we acquired the
worldwide exclusive rights to a significant patent portfolio totaling 15 issued
and pending patents covering critical capabilities needed by the medical
industry as the use of MRI interventional medicine and MRI diagnostics for
examination of stents and other implants becomes standard medical procedure.
These are represented as three of the issued U.S., both owned by us and
licensed.

On an ongoing basis, we are 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, licensed in, or purchased. To ensure the continuing
value of our intellectual assets, we intend to aggressively defend, both
domestically and abroad, our patents and licensed technology.

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 many medical products, including catheters, cardiac assist devices
(pacemakers and defibrillators), intraluminal imaging coils, stents, patient
monitoring instrumentation, neurostimulators, drug pumps, endoscopes, such as
biopsy needles and guidewires, and other medical devices that need to be made
safe and/or effective in an MRI environment.

STRATEGIC PARTNERSHIPS

Nanoset, LLC

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

TE Bio, LLC

In June 2004, we acquired a 51% interest in TE Bio, LLC, a company which is
developing an implantable biothermal battery using body heat gradients to power
medical devices, such as pacemakers, defibrillators and drug pumps. The
biothermal battery technology is based on a patented innovation in the
utilization of thermoelectric materials, using nanoscale-based, thin-film
materials to convert thermal energy produced naturally by the human body into
electrical energy. The resulting power can be used to charge batteries for
medium-power devices, such as implantable defibrillators, or to directly power
low-energy devices like pacemakers.

Biophan is committed to contribute $300,000 annually for a three-year period and
marketing and management support to TE Bio, in exchange for Biophan's 51%
interest. TE Bio was founded by Biomed Solutions, LLC, an affiliate of the
Company and the company from which Biophan spun out in December 2000. After
conclusion of a third party feasibility study, the independent board members of
Biophan evaluated TE Bio's technology and authorized the acquisition.

New Scale Technologies, Inc.

Also in June 2004, we announced that we had acquired from New Scale
Technologies, Inc. the exclusive worldwide distribution rights for the medical
market for their ceramic SQUIGGLETM motor, including the multi-billion dollar
drug delivery market. Developed to meet the growing demand for high precision,
low cost actuation devices, the motor is currently on the market generating
revenues and is available for OEM integration. The motor uses no metal wire
windings (one of the primary causes of image interference under MRI), is capable
of both linear and rotational movement, and can move forward and backward
several inches at 20 nanometer increments.

As part of the exclusive distribution agreement, Biophan provides sales and
marketing to the medical device industry on behalf of New Scale and has also
made a $100,000 investment, for a 10% interest in the company. The motor offers
several advantages for driving drug pumps and other medical applications. Using
only four parts (other motors can have as many as 100 parts), it provides a
unique combination of high reliability, flexibility, and power consumption
advantages. By using ceramic components and no windings, unlike conventional DC
motors, it is compatible with MRI imaging.

This product also fits in with our strategic plan to be a provider of
proprietary new technologies to our OEM customers and prospects. While we
continue to offer solutions that will one day enable all biomedical devices to
be MRI safe and image compatible, we have expanded our focus to provide
additional, proprietary innovations to our customers. We continue to maintain an
ongoing and in-depth dialogue with executives at many of the largest
manufacturers of biomedical device companies, providing us with a broad view of
the short and long-term product needs of these companies.

We share gross profit equally with New Scale Technologies. Biophan provides
sales and marketing, and a $25,000 quarterly advance, reconcilable against
current year sales, to New Scale, which enables New Scale to further develop
unique capabilities for the medical market. The motor is already on the market
for non-medical applications and evaluation units are being sold to customers
around the world. The motor is currently under review by several biomedical
device manufacturers of drug pumps and other devices.

aMRIs/Biophan Europe

In February 2005, Biophan announced the acquisition of a majority interest in
aMRIs GmbH, a leading German based developer of MRI safe and image compatible
technology solutions and biomedical devices, for a combination of cash,
restricted stock and options payable over a four-year period. In an exclusive
license transaction with aMRIs Patente GmbH, a company owned in part by the
selling shareholders of Biophan Europe, Biophan now holds the exclusive license
to 15 issued and pending patents covering imaging of devices, such as stents and
other vascular implants, which significantly expanded the Company's intellectual
property portfolio.

This acquisition provides Biophan with innovative products, technologies and
scientific expertise that have extended Biophan's intellectual property
portfolio of medical solutions in the fast-growing marketplace of products and
procedures that are compatible with MRI.

Following the acquisition, aMRIs was renamed Biophan Europe, and Michael Friebe,
Ph.D. continues as president. Dr. Friebe has joined the Biophan board of
directors. Andreas Melzer, M.D., formerly aMRIs' Scientific Director and Chief
Technology Officer, joined the Biophan Scientific Advisory Board and will lead
many of Biophan's device developments.

Dr. Friebe is a scientist and entrepreneur who was trained in MRI-related
physics at the University of California at San Francisco, one of the world's
leading biomedical research centers, and at the University of Witten in Germany.
He founded and sold NEUROMED AG, later renamed UMS NEUROMED after being acquired
by United Medical Systems (UMS). Dr. Friebe is a well-regarded
radiology/cardiology oriented entrepreneur with an extensive business and
customer network.

Dr. Melzer is a professor of applied biomedical engineering, Director and
Chairman of the Board at the Institute for Medical Technologies and Management
in Medicine INSITE med. at the University of Applied Sciences in Gelsenkirchen,
Germany. He also holds a clinical position as part-time staff radiologist at the
Department of Diagnostic and Interventional Radiology at St. Mary's Hospital
Buer in Gelsenkirchen, Germany. Dr. Melzer has over 15 years of experience in
the development of medical technology for laparo-endoscopic surgery,
interventional radiology, interventional and intraoperative MRI and MR
compatible Robotics, surgical instrumentation and Nitinol devices. He has
co-invented and patented some of the most exciting and important innovations in
imaging of medical devices under MRI and he continues to develop and invent. As
a practicing physician in radiology, Dr. Melzer has a unique understanding of
the needs of patients, the medical device community, the physicians conducting
procedures under MRI and the scientific solutions that are possible. He has
co-invented more than 30 patents and has authored over 150 publications.
Additionally, Dr. Melzer is engaged as co-organizer, chairman, and invited
speaker of various medical conferences and is a board member of several medical
societies and professional committees.

As a result of the aMRIs acquisition, we acquired patents covering several
exciting technology, including an MRI-visible catheter marker, an MRI-visible
stent, an MRI image compatible vena cava filter which has entered animal testing
this year and a series of MRI-visible medical devices in development. The
Company's management and research staff provide world-class intellectual
expertise in the field of MRI compatibility and have been awarded several
million dollars in upcoming grants from government agencies to develop its
next-generation biomedical technology for MRI. aMRIs and its principals have
contractual and consulting agreements with many of the world's leading
biomedical device and MRI machine manufacturers.

Additionally, as a result of the aMRIs acquisition, we now have access to
additional research grants, which would enable us to further demonstrate the
effectiveness of our products and capabilities. Since the aMRIs acquisition, we
have also expanded the scope of products in discussion for prospective licensing
agreements. In addition, there are licensing discussions underway between aMRIs
and certain device manufacturers.

Industry Partnerships

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. We are
currently in the second and third phases of this program, and are making good
progress. Relationships such as this help us validate our technology while
simultaneously developing 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.

Based on discussions underway with several biomedical device manufacturers and
MRI 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
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 an interest
in, solutions to additional problems based on our technology. We previously 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. The aMRIs technology builds extensively on our base and provides an
additional ten years of expertise. aMRIs, now Biophan Europe has demonstrated
visualization of restenosis and thrombus in both stents and vena cava filters,
using MRI with their technology.

Part of our strategic initiative for the current fiscal year will include
expanding our technology offerings to the companies with whom we are already in
discussions or collaborating. These arrangements may include payments for R&D,
licensing, equipment and materials purchases, milestone payments, as well as
possible strategic investments.

Alfred University

Isoflux, Inc.

We have a consulting relationship with Isoflux in Rochester, New York, a leading
developer of plasma coating equipment, such as that used to coat stents and long
metal wires. Isoflux is headed by Dr. David Glocker, former head of the thin
film R&D Group at Eastman Kodak Company, to assist in our device coatings
experiments, testing, and design. Dr. Glocker is also a member of the Biophan
Scientific Advisory Board.

EXTENDED ENTERPRISE

In addition to the Company's expansion of its staff and management team this
past year, the Company takes advantage of an extended enterprise business model
to draw on a broad array of expertise and backgrounds, both within and outside
of the organization.

This extended enterprise model is a network of affiliate organizations having
experienced staff members with unique skills. Kleiner-Perkins, the well known
venture capital firm, uses the Japanese term "keiretsu" to describe how it has
successfully used this strategy of resource sharing across the many start-up
companies it is invested in. Biophan has adopted this keiretsu strategy in its
business model.

Biophan's has relationships with other consultants and shared resource
arrangements with many contractual suppliers in addition its relationships with
its licensors, including New Scale Technologies, Johns Hopkins and Biophan
Europe.

Additional companies affiliated with Biophan include Biomed Solutions, LLC,
Nanoset, LLC, MYOTECH, LLC and Technology Innovations, LLC.

Nanoset, LLC, is a company formed to commercialize nanomagnetic particle
coatings originally developed for the semi-conductor industry. Biophan learned
that these coatings might have applicability for MRI compatibility and entered
into an R&D contract with Nanoset in 2002, which has led to an extended R&D
relationship and several of Biophan's image artifact and drug delivery
technologies.

In exchange for Biophan providing management time to oversee MYOTECH's
technology development, Biophan has been able to access the significant talent
pool employed by MYOTECH, including Tim Bibens, who is contributing
approximately half his time to project management at Biophan.

This arrangement has provided MYOTECH access to Biophan's experienced management
and engineering team. When expertise from MYOTECH's team is needed by Biophan,
this arrangement allows cross-company talent to be applied as needed, with
appropriate reimbursement. When needed, Biophan can also tap into MYOTECH's
technology suppliers, including Plastech, Astro Instrumentation, Proven Process,
and others. This is done on a cost sharing basis, cash positive to Biophan by
appoximately $162,000 in 2005.

Michael Riedlinger is a consultant to Biophan and is also President of
NaturalNano Inc., a company developing naturally occurring nanotechnologies,
including halloysite, a mineral with a rich nanotube concentration. As
NaturalNano has begun to grow and expand, Mr. Riedlinger now shares his time
equally between Biophan business and NaturalNano business. There is a
cooperative project underway between NaturalNano and Biophan's Nanolution
division, where the two companies are developing a new drug delivery capability.
NaturalNano has secured the mineral rights and is developing the separation
capabilities needed to support the drug delivery application, as well as its
non-medical applications. NaturalNano will fund the R&D for development of the
separation process. Mr. Weiner and Mr. Lanzafame are on the board of
NaturalNano.

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, has successfully demonstrated technology enabling devices
currently not MRI safe or image compatible to become MRI safe and image
compatible.

Currently, the major providers who have medical devices contraindicated for MRI
include the following:

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
the USPTO website. 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. In Feburary 2004 Medtronic reported they would producde an MRI
safe pacemaker. 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 that 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 and potentially 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. Guidant holds an issued patent for
stent visibility which requires breaking the struts of the stent.

St. Jude Medical, Inc. is a global developer, manufacturer and distributor of
medical device products for cardiac rhythm management, cardiology, vascular
access and other products, including 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. They develop and
market products focused on cardiac electrotherapy and vascular intervention.

ELA Medical is a 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 which provides 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, Toshiba and Hitachi are major manufacturers
of MRI imaging devices and are believed to have underway research and
development initiatives that involve 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
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 being potential competitors.

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 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 Device and Radiological Health
(CDRH), is responsible for the approval to market products that would result
from device-related technologies under development by Biophan. Approval to
market may take the form of a 510K Premarket Notificaton or a Premarketing
Approval (PMA) depending on the complexity and patient risks associated with the
product. Before product approval, the FDA requires substantial documentation
relating to safety and efficacy of the product. Prior to Clinical Trials in
humans, an Investigational Device Exemption (IDE) is required, and this in turn
is based on information derived from both engineering design work and from
animal studies.

We, ourselves, do not intend to manufacture 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 various technologies will
depend upon the following factors:

o the FDA's classification of each specific technology in the context
of any expected market application;

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 also previously approved for sale types of active devices (pacemaker
leads) and passive devices (guidewires and catheters) that we would like to
improve by the addition of our MRI shielding and other technologies. 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. These
data will prove:

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

o that the addition of Biophan's shielding technology actually
improves the performance of the existing product during MRI
examinations.

We have entered into a development agreement with Boston Scientific, and we are
also developing relationships with other potential partners; however, we have
not yet entered into any definitive agreements regarding FDA approval. The
approach taken in pre-clinical and clinical studies, and the nature of the
approval (510(k) vs. Pre-Market Approval) will depend heavily on the specific
product and technology.

Our business plan does not include funding for FDA approvals. Rather, 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.

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 the Company, LTR and Biomed. LTR
owns several patents for proprietary HIV antisense gene therapy technology.

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 $175,000 in cash in order to provide initial working
capital.

Also on December 1, 2000, we acquired from Biomed intellectual property rights,
including a pending patent to the MRI compatible pacemaker technology, for a
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.

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 28, 2005, Biophan had 12 full-time employees. The Company
maintains compensation, benefits, equity participation and work environment
policies intended to assist in attracting and retaining qualified personnel. Our
success depends, in significant part, on the ability to attract and retain such
personnel. In addition, where appropriate, we have contracts for the services of
consultants.

EXECUTIVE OFFICERS OF THE REGISTRANT

See Part III, Item 9 of this Report for information about Executive Officers of
the Company.

AVAILABLE INFORMATION

Biophan's web address is www.biophan.com. Biophan's electronic filings with the
SEC (including all Forms 10-KSB, 10-QSB, and 8-K and any amendments to these
reports) are available free of charge on our website as soon as reasonably
practicable after they are electronically filed with or furnished to the SEC.
The public may read and copy any materials Biophan files with the SEC at the
SEC's Public Reference Room at 450 Fifth Street, NW, Washington, DC 20549
(telephone: 800-SEC-0330).

ITEM 2. 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 $5,083 per month and the lease expires in
January 2008. The coordination of our research and development projects and the
administration of our domestic subsidiary companies are directed from this
location. We believe that these facilities are adequate for our current and
anticipated future needs through the lease expiration date.

ITEM 3. 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.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

Our common stock is listed on the OTC Bulletin Board under the symbol BIPH. 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
May 31, 2003 $ .51 $ .27
August 31, 2003 $ .37 $ .12
November 30, 2003 $ .49 $ .10
February 29, 2004 $1.65 $ .32
May 31, 2004 $1.33 $ .94
August 31, 2004 $1.31 $ .46
November 30, 2004 $1.22 $ .67
February 28, 2005 $1.56 $1.05

As of February 28, 2005, we had outstanding 74,317,832 shares of our common
stock which were held by approximately 325 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.

Recent Sales of Unregistered Securities

The securities of Biophan that were issued or sold by Biophan during the year
ended February 29, 2005 and were not registered with the SEC are described
below:

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.
During the year ended February 28, 2005, the Company elected to sell 6,000,000
shares to SBI for an aggregate of $3,900,000, of which $2,850,000 had been
received as of February 28, 2005 and $3,750,000 to date. That agreement has been
cancelled and a new agreement was entered into with SBI Brightline XI, LLC on
May 27, 2005 pursuant to which SBI agreed to purchase up to 10,000,000 shares of
our common stock ranging from $2.00 to $4.00 per share, an average of $3 per
share. There are no warrants associated with this agreement. SBI's obligation to
purchase the shares under the new agreement is conditioned on registration of
such shares under the Securities Act, and the Company has undertaken to file a
registration statement covering such shares as soon as practicable.

Between March 2, 2004 and November 16, 2004, we issued 1,903,774 shares of our
common stock upon the exercise of outstanding warrants for aggregate gross
proceeds of $788,900 and 74,047 shares upon exercise of cashless warrants. 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
security holder where no commission is payable.

On February 24, 2005, we issued 100,000 shares of our common stock to aMRIs
Patent GmbH as partial consideration for the exclusive license of certain
intellectual property. The shares were issued pursuant to the exemption from
registration under Section 4(2) of the Securities Act because it did not involve
any public offering.

On May 27, 2005, we entered into a line of credit agreement with Biomed
Solutions, LLC, an affiliated company for borrowings of up to $2 million with
interest at 8% per annum. The agreement provides for the issuance of up to
500,000 warrants based on actual borrowings and convertibility of the
outstanding debt at the lender's election into shares of our common stock. The
warrants and any shares issued upon exercise of warrants or any election to
convert outstanding debt will be exempt from registration pursuant to Sections
3(a) 9 and 4(2) of the Securities Act.

ITEM 6. PLAN OF OPERATION

General

The Company is in the development stage and is expected to remain so for at
least the next several quarters. Our primary mission is to develop and
commercially exploit technologies for improving the performance, and the
corresponding competitiveness, of biomedical devices manufactured by third party
companies. We possess, and continually develop, technologies designed to enable
biomedical devices, both implantable and those used in diagnostic and
interventional procedures, to be safe (do not harm the patient or physician) and
compatible (allow effective imaging of the device and its surrounding tissue)
with MRI (magnetic resonance imaging). We have expanded our R&D to capabilities
additional to MRI safety and imaging.

Research and Development

Over the past year we have been developing:

o a series of implantable devices including an MRI visible vena cava
filter.
o an MRI safe and image compatible ceramic motor;
o additional technologies for improving MRI contrast agents;
o technology to improve drug elution and drug delivery systems;
o a system for generating power for implantable devices from body
heat; and

We have successfully demonstrated effective solutions for making devices which
use long metal wire leads, such as pacemakers, defibrillators, neurostimulators,
et al, safe for use with MRI and that these solutions provide a meaningful
margin of safety. Our solutions address both the problems of device heating and
induced voltages in pacemakers, defibrillators, and neurostimulators, which are
the two primary problems associated with the use of MRI for patients with these
devices. Today, approximately 3 million people have devices that cause them to
be denied access to MRI when needed, due to safety concerns and regulatory (FDA
and other) contraindications.We believe that if manufacturers of these devices
incorporate our solutions into their products, they can be made safe for use
with MRI.

Additionally, there is a rapidly growing field of medicine known as minimally
invasive surgery, using "interventional" devices such as guidewires and
catheters to do many procedures in cardiology, oncology and other specialties.
The majority of procedures are done in catheter labs equipped with X-ray or
fluoroscopy devices for imaging and guiding the procedures. Many of these
devices do not offer the advantages of tissue visualization and discrimination
provided by MRI. The combined problems of device safety (they heat up and may
induce electrical stimulation), and the image artifacts created by these devices
in MRI, have limited the use of MRI machines in this rapidly growing area of
medicine. The desire and need for MRI is demonstrated by the advent of catheter
labs which have both X-ray devices for guiding devices into the body, and MRI
machines for evaluating progress and observing tissue and results. In these new
operating theaters, the patients are moved back and forth on a conveyor
belt-like system between the imaging devices. For the past five years, Biophan
has been actively engaged in solving the complex problems associated with device
safety and imaging under MRI. With the advent of our solutions, the industry has
the opportunity to develop MRI safe and image compatible devices that can be
used with MRI.

Biophan has two solutions for resolving the heating of wire leads, such as
pacemaker leads (in which we include pacemaker and defibrillator leads) and
neurostimulator leads (including deep brain stimulation, or DBS, systems for
Parkinson's and epilepsy; systems for pain control, etc.). One solution is an RF
filter, licensed from Johns Hopkins exclusively for implantable devices, and
co-exclusively for non-implantable catheters) which can resolve lead heating (it
is the metal wire lead connecting a device to the body that is the cause of most
of the MRI safety problems). Additionally, to resolve the problems associated
with very long metal wires such as surgical guidewires and catheters, we have
been engaged in previously secret work developing "anti-antenna geometries" in
these leads. By slightly altering the way the leads are made, we can create
self-canceling attributes that resolve the radio frequency related problems that
cause heating and induced voltages in the lead. Together, these solutions allow
making an MRI-safe lead and device. Several broad patents for this innovation
were filed several years ago, and one recently issued. As a result, we have now
publicly disclosed our solutions, and we have demonstrated the success of our
approach to prospective customers and industry experts. We have begun
manufacturing samples of devices modified with our solution, which is extremely
cost effective. We have modified a pacemaker lead for a pacemaker company
concerned with pacemaker safety, which is currently being evaluated by that
company.

During the past year, we received an issued patent, U.S. 6,829,509 for
anti-antenna geometries, which we believe, along with Johns Hopkins patent U.S.
5,217,010, for which we hold an exclusive license for implanted medical devices,
gives us a dominant position in the emergence of MRI safe devices using long
wire leads, such as pacemakers, defibrillators, deep brain stimulators, pain
devices, and many others. This modification of a metal device has broad
application. It can also address a significant limitation associated with
virtually all stents, medical devices used to keep vessels open. It is very
difficult to see inside the stent to determine if blockage is occurring, once
the stent is installed in the body. Currently, no diagnostic systems such as
X-ray or fluoroscopy are effectively able to see inside of a stent.

We have demonstrated that we can make stents visible within an MRI machine using
this anti-antenna method. It works. Researchers in Europe have also demonstrated
at conferences that this approach works, and there are some stents shipping in
Europe using this approach. The solution requires a change in the way most
stents are made. We recently filed nine continuations of our original patent
application, applying this innovation to other devices, such as stents,
guidewires and catheters. The stent, guidewire and catheter businesses are very
large and have many players who compete with one another for competitive
advantage. This solution to both heating and stent imaging has broad
implications

Additionally, we can resolve image artifacts that occur when imaging devices in
the body with MRI uses thin film nanomagnetic particle coatings, developed by
Nanoset, LLC, in collaboration with Biophan. We have demonstrated MRI images
showing an aluminum rod which could not be seen in the MRI image, and next to it
showed two identical rods which were quite visible, as a result of having our
thin film coating applied. Additionally, the tip of these rods had a bright
"glow", making it easy to spot in the MRI image. This image is available on our
web site at www.biophan.com. This capability is part of the suite of
technologies that can help make MRI a viable solution for interventional
diagnostics and surgery. Once again , we have a solution that works, covered by
both issued and pending patents. We are also working on coatings that can
improve visibility under MRI using thin film coatings described above. The
advantage of a coating solution is that a manufacturer with a product in the
market or in development does not have to radically change the physical design
manufacturing process. Thus, the coating solution, which we are pursuing, has
broad applications for the rapidly growing stent market.

There is increasing industry interest in these approaches to making devices
imageable under MRI. The solution has to be applied to the device itself, and is
not something that can be incorporated in the MRI machine. However, the solution
is of interest to MRI manufacturers we have met with, all of whom benefit from
seeing the aforementioned expansion in the use of MRI for interventional
medicine and expanded diagnostics (as with stents, and other applications). MRI
is also used extensively in oncology, due to its ability to discriminate tissue
types.

Image compatibility also has benefits to the pacemaker device manufacturers. The
goal of making pacemakers safe for MRI is to allow a pacemaker patient to
receive an MRI scan for staging a cancer operation, and subsequent follow-up, or
to diagnose a brain tumor, or back or knee problem, etc. However, a device made
safe may still cause a significant image artifact. By adding "image
compatibility" to a pacemaker made safe, it may be possible to enable a
pacemaker patient to one day have an MRI angiogram, and avoid having an invasive
procedure. Similarly, a patient with a Deep Brain Stimulator (DBS) device can
undergo a full power MRI of the brain if their lead is not only safe, but also
image compatible.

To manage the growing R&D and customer interactions in the MRI technology
business and the biothermal business, we have expanded our staff to support
these projects. John Lanzafame, an experienced medical device executive, joined
Biophan in September as President of Biophan's Nanolution subsidiary and as Vice
President of Business Development. He has focused on leveraging recent
discoveries in nanotechnology such as Biophan's use of nanomagnetic particles
for the purposes of drug delivery and drug elution from devices. Mr. Lanzafame
has 15 years experience in the medical device industry, most recently as
President of STS Biopolymers, a company specializing in customized surfaces,
including drug eluting coatings for stents and indwelling catheters. STS
Biopolymers was acquired in late 2003 by Angiotech Pharmaceuticals, which
licensed the use of paclitaxel on stents to Boston Scientific. Mr. Lanzafame has
experience in drug delivery, product development and sales and marketing, and
has brought this breadth of experience both to the newly formed drug delivery
division, as well as to assist in development and marketing of our other Biophan
technologies.

We have retained Tim Bibens, formerly Director of Operations for the Ortho
Clinical Diagnostics, a J & J company, and prior to that a Supply Chain Manager
at Allied Signal, to oversee our MRI safety and image compatibility projects,
reporting to Jeff Helfer, our VP- Engineering.

Sarah Cooper, formerly a research fellow and chemical engineer at NASA's Ames
Center for Nanotechnology, has been an active participant in the biothermal
battery project. Ms. Cooper's fellowship ended in September 2004, and she has
joined us as a consultant, based in Menlo Park, working on the biothermal
battery project we have underway with NASA's Ames Center for Nanotechnology. As
part of this arrangement, we have jointly designed with NASA a new nanomaterial
reactor which is under contract to be built. The reactor will be based at NASA
and utilized for experiments with proprietary new biothermal materials under the
direction of Ms. Cooper and NASA personnel. Ms. Cooper is also involved in our
joint initiative with NaturalNano, Inc. a newly formed affiliate company which
is pursuing certain materials of interest to Biophan for the medical market.

We have retained additional technical consultants to augment our staff's
research and development efforts on the MRI safety and compatibility project and
the biothermal battery project. Over thirty professionals, both full time and
part time, now constitute the Biophan scientific and engineering organization.

We conduct our thin film coating research and development at Alfred University,
in coordination with Nanoset, LLC. To facilitate this, we have helped Alfred
construct a clean room facility to be used for our coating experiments and
sample preparation. We have also entered into a consulting contract with Isoflux
in Rochester, New York, a leading developer of plasma coating equipment, such as
that used to coat stents and long metal wires. Isoflux is headed by Dr. David
Glocker, formerly head of the thin film R&D Group at Eastman Kokak Company, to
assist in our device coatings experiments, testing, and design. Dr. Glocker is
also a member of the Biophan Scientific Advisory Board.

Dr. Frank Shellock, a world renowned leader in MRI safety testing, has also
joined the Scientific Advisory Board, and has conducted testing and research
with Biophan' scientists. Dr. Shellock co-authored a paper on MRI lead heating
of pacing leads with Robert Gray of Biophan, and the paper was accepted and
presented at the Radiological Society of North America (RSNA) Conference
Proceedings in Chicago, in November, 2004.

As a result of the growing awareness of the problems outlined here and our broad
patent portfolio, we are seeing an increased interest from the medical device
industry in our solutions. We are in various stages of discussions and
negotiations with an expanded group of companies, both in the United States, and
abroad, regarding the utilization of our technology. The value to our
prospective customers is competitive advantage with the potential to gain
increased market share.

Strategic Relationships

Leveraging strategic relationships is vital to our mission. These relationships
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 relationships that may include joint development
projects, original equipment manufacturing arrangements and licensing
agreements.

In November 2003, we entered into a joint development agreement with Boston
Scientific Corporation for MRI safe and image compatible technology. As part of
the transaction, Boston Scientific received a first right of negotiation on
certain products. The joint development agreement has been expanded to include
multiple products and divisions. The joint development agreement includes a
first right of negotiation for these products, extended through June 30, 2005,
by which time the parties anticipate entering into a definitive agreement which
is expected to include a license fee, certain annual minimums, milestone
payments, royalties, and an equity interest. Should we be able to close this
transaction, the combined cash from this transaction is anticipated to be more
than adequate to enable Biophan to list on a major stock exchange within the
current fiscal year.

In June 2004, we acquired a 51% interest in TE Bio LLC, a company developing an
implantable biothermal battery using body heat gradients to power medical
devices such as pacemakers, defibrillators, and drug pumps. The biothermal
battery technology is based on a patented innovation in the utilization of
thermoelectric materials, using nanoscale-based, thin-film materials to convert
thermal energy produced naturally by the human body into electrical energy. The
resulting power can be used to "trickle charge" batteries for medium-power
devices such as defibrillators, or directly power low-energy devices like
pacemakers. It is enabled by nanotechnology which provides the ability to put
thousands and thousands of small semi-conductor nodes that convert heat to
electricity in a space about the size of one or two postage stamps. Biophan is
committed to contribute $300,000 annually for a three-year period, and marketing
and management support to TE Bio, in exchange for Biophan's 51% interest. TE Bio
was founded by Biomed Solutions, LLC, an affiliate and the company from which
Biophan spun out in December 2000. The independent board members of Biophan
evaluated the technology and authorized the acquisition, after conclusion of a
third party feasibility study.

Also in June 2004, we announced that we had acquired from New Scale
Technologies, Inc. the exclusive worldwide distribution rights for the medical
market for New Scale's ceramic "SQUIGGLE(TM) motor", including the multi-billion
dollar drug delivery market. Developed to meet the growing demand for high
precision, low cost actuation devices, the motor is currently on the market
generating revenues and is available for OEM integration today. The motor uses
no metal wire windings (one of the primary causes of image interference under
MRI), is capable of both linear and rotational movement, and can move forward
and backwards several inches at nanometer increments, thereby providing a
controllable drug release environment.

As part of the exclusive distribution agreement, Biophan will provide sales and
marketing to the medical device industry on behalf of New Scale and has also
made a $100,000 investment in the company for a 10% interest. The motor offers
several advantages for driving drug pumps, and other medical applications. Using
only four parts (other motors can have as many as 100 parts), it provides a
unique combination of high reliability, flexibility, and power consumption
advantages. By using ceramic components and no windings, it is very compatible
with MRI imaging. The motor also has applications in MRI robotics and
cryogenics.

This product also fits in with our strategic plan to be a provider of
proprietary new technologies to our OEM customers and prospects. While we
continue to offer solutions that will one day enable all biomedical devices to
be MRI-safe and image compatible, we have expanded our focus to provide
additional, proprietary innovations to our customers. We continue to maintain an
ongoing and in-depth dialogue with both research and development and business
development executives at many of the largest manufacturers of biomedical device
companies. This interaction gives us a broad view of the short- and long-term
needs of these companies for support of both their current and future product
lines.

We share gross profit equally with New Scale Technologies, the inventor and
manufacturer of the ceramic motor. Biophan provides sales and marketing, and a
$25,000 quarterly advance, reconcilable against current year sales, to New
Scale, which enables New Scale to further develop unique capabilities for the
medical market. The motor is already on the market for non-medical applications
and evaluation units are being sold to customers around the world. The motor is
currently under review by several biomedical device manufacturers of drug pumps
and other devices.

On February 24, 2005, we acquired a 51% ownership interest in aMRIs GmbH (later
renamed Biophan Europe), a leading German-based developer of MRI-safe and
image-compatible technology solutions and biomedical devices. In connection with
that acquisition, we also acquired the exclusive license to fifteen issued and
pending patents covering imaging of devices such as stents and other vascular
implants, significantly expanding the Company's intellectual property portfolio.
The purchase of the subsidiary and the patents was made for total consideration
of $927,330 consisting of cash, a promissory note and restricted stock.

The acquisition of provides Biophan with innovative products, technologies, and
scientific expertise that extend Biophan's intellectual property portfolio of
medical solutions in the fast-growing marketplace of products and procedures
that are compatible with Magnetic Resonance Imaging (MRI).

Following the acquisition, Michael Friebe, Ph.D., was elected to our Board of
Directors and will serve as Chief Executive Officer of Biophan Europe. Andreas
Melzer, M.D., joins our Scientific Advisory Board and will serve as Biophan
Europe's Research Physician and Chief Research Officer leading many of our
medical device developments.

Dr. Friebe is a scientist and entrepreneur trained in MRI related physics at the
University of California at San Francisco, one of the world's leading biomedical
research centers, and at the University of Witten in Germany. He later started
and then sold NEUROMED AG, later renamed UMS NEUROMED after being acquired by
United Medical Systems (UMS), a publicly-traded German company. Dr. Friebe is a
well-regarded radiology/cardiology oriented entrepreneur with an extensive
business and customer network.

Dr. Melzer is a professor of applied biomedical engineering, Director and
Chairman of the Board at the Institute for Medical Technologies and Management
in Medicine INSITE med. at the University of Applied Sciences in Gelsenkirchen,
Germany. He also holds a clinical position as part-time staff radiologist at the
Department of Diagnostic and Interventional Radiology at St. Mary's Hospital
Buer in Gelsenkirchen, Germany. Dr. Melzer has over 15 years of experience in
the development of medical technology for laparo-endoscopic surgery,
interventional radiology, Interventional and Intraoperative MRI and MR
compatible Robotics, surgical instrumentation, and Nitinol devices. He has
co-invented and patented some of the most exciting and important innovations in
imaging of medical devices under MRI and he continues to develop and invent. As
a practicing physician in radiology, Dr. Melzer has a unique understanding of
the needs of patients, the medical device community, the physicians conducting
procedures under MRI, and the scientific solutions that are possible. He has
co-invented more than 30 patents and has authored over 150 publications.
Additionally, Dr. Melzer is engaged as co-organizer, chairman, and invited
speaker of various medical conferences and is a board member of several medical
societies, as well as professional committees.

Among the Biophan Europe technology assets are an MRI-visible catheter marker,
an MRI-visible stent, a vena cava filter which is in late-stage development, and
a series of MRI-visible medical devices in development. The Company's management
and research staff provide world-class intellectual expertise in the field of
MRI compatibility, and have been awarded several grants from government agencies
to develop its next-generation biomedical technology for MRI. Biophan Europe and
its principals have contractual and consulting agreements with many of the
world's leading biomedical device and MRI machine manufacturers.

Based on discussions underway with several biomedical device manufacturers, and
MRI 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 fiscal 2005, 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 an interest
in, solutions to additional problems based on our technology. We previously 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. The Biophan Europe technology builds extensively on our base and
provides an additional ten years of expertise.

Additionally, as part of the Biophan Europe acquisition, we will have access to
additional research grants which will enable us to further demonstrate the
effectiveness of our products and capabilities. Moreover, we will increase the
scope of products in discussion for prospective licensing agreements, in
addition to licensing discussions underway between Biophan Europe and certain
device manufacturers.

Acquisition of Intellectual Assets

We currently have an overall estate of 127 patents, inclusive of those assigned
and licensed, and including filed applications and allowed and issued patents.
This represents an increase of 67 over the number at this time last year.

The technologies allowing visualization of implants have been developed at
Biophan, and with technology partners under exclusive license, including aMRIs
Patents GmbH in Germany (via an exclusive license); Aachen Resonance in Germany
(via a recent term sheet executed for an exclusive license); and Nanoset, LLC in
the U.S. (via an exclusive license). The patents include those licensed from
Nanoset, LLC. Nanoset's technology can be used to reduce image artifacts on
implantable and interventional medical devices and for a new class of
applications to enhance the uptake, release and monitoring of drugs in medical
device coatings.

The patents total also includes those licensed as part of the Biophan Europe
acquisition whereby we obtained worldwide exclusive rights to a significant
patent portfolio totaling fifteen issued and pending patents covering critical
capabilities needed by the medical industry as the use of MRI interventional
medicine and MRI diagnostics for examination of stents and other implants
becomes standard medical procedure.

On an ongoing basis, 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, licensed in, or purchased.
To ensure the continuing value of our intellectual assets, we intend to
aggressively defend our patents and licensed technology, both domestically and
abroad.

Investor Relations

We expend a great deal of effort to keep our shareholders informed, and to bring
the Company to the attention of new shareholders, institutional investors, and
potential strategic partners. Additionally, our efforts at widespread press
exposure have helped elevate the issue of MRI safety to national prominence, and
have helped increase the awareness of Biophan as an innovative small public
company. The over-the-counter market is generally not supported by the nation's
broker-dealer network, and it is essential for us to be visible so that
prospective shareholders can hear about us and review our public filings,
website, and company investor materials.

Additionally, because we provide technical solutions to several complex
limitations of medical devices, we find that attending conferences and issuing
press releases produces over time a wealth of information that we can then point
to, when a shareholder has a question, and stay in full compliance with the full
disclosure requirements of the SEC's regulations. Our high visibility and
healthy trading volume have brought several institutional investors into the
Company, a trend we expect to continue as we move forward with our plans to list
on a major U.S. stock exchange.

Financing Activities

On February 5, 2004, we entered into a second stock purchase agreement with SBI
Brightline Consulting, LLC that obligated SBI to purchase, upon our election, up
to 17,750,000 shares of our common stock for an aggregate purchase price of $25
million. SBI was not obligated to purchase shares pursuant to this stock
purchase agreement unless the resale of the shares by SBI was registered under
the Securities Act. Only 6,000,000 shares covered by this stock purchase
agreement were registered and during the year these share were sold to SBI
making $3,900,000 available to fund ongoing operations. The remaining tranches
under the agreement, if exercised, could have been sold for an average price of
$1.80 per share. However, that agreement has been cancelled and a new agreement
executed with SBI Brightline XI, LLC providing a $30 million fixed price
financing for 10,000,000 shares at an average price of $3 per share, if we take
the full facility, and with a range from $2 a share to $4 a share, which must be
taken in sequential tranches of 1 million shares each. There are no warrants or
fees associated with this agreement. The financing requires the shares to be
registered for sale, a process which can take several months.

The Company anticipates closure of the transaction with Boston Scientific to
occur in June 2005, prior to the expiration of the first right of negotiation.
To ensure that the Company has adequate cash on hand for operations, Biomed
Solutions LLC, an affiliate of Biophan managed by Biophan CEO Michael Weiner,
has agreed to provide Biophan with a line of credit facility of up to $2
million. Borrowings under the line bear interest at 8% per annum and are
convertible at 90% of the average closing price for the 20 trading days
preceding the date of the borrowing. Biomed will receive pro-rata warrant
coverage of up to 500,000 shares, in the event that the facility is fully
utilized, with the warrants priced at 110% of the average closing price for the
20 trading days preceding the date of execution of the credit agreement.

Ross Kenzie, a director of Biophan, is also a director of Biomed Solutions, LLC.
The independent board of Biophan negotiated and approved this credit facility.
The terms of this credit facility are considered to be better than are available
from commercial lending sources.

Biomed Solutions is a Company which invests in early stage companies and
projects with promising intellectual property advantage. Biomed Solutions was
the owner of HIV Antisense LLC, which merged with Biophan (then known as
GreatBio), and Biomed Solutions was the source of the acquisition of the MRI
Safety technology acquired by Biophan in 2000 and the 51% interest in TE-Bio,
the developer of the Biothermal battery technology acquired by Biophan in 2004.

We believe that this credit facility, the revised SBI stock purchase agreement,
and the pending transaction with Boston Scientific, provide the Company with
more than adequate capital resources for the upcoming 12 month timeframe;
including the ability to fund, as needed, potential additional acquisition and
expansion of operations.

Our estimate of our cash requirements for the next 12 months is as follows:

Research and product development expenses, including $500,000 to
fund Biophan Europe research and development $ 3,400,000

General and administrative expenses, including administrative
salaries and benefits, office expenses, rent expense, legal and
accounting, publicity, and investor relations 3,700,000

Cash payments for Biophan Europe acquisition 292,500
-----------

Total estimated cash requirements for next twelve months $ 7,392,500
===========

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 twelve full-time individuals.

ITEM 7. FINANCIAL STATEMENTS

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

CONSOLIDATED FINANCIAL STATEMENTS

FEBRUARY 28, 2005

CONTENTS

Report of Independent Registered Public Accounting Firm F-1

Consolidated Financial Statements:

Balance Sheet F-2

Statement of Operations F-3

Statement of Stockholders' Equity F-4 - F-7

Statement of Cash Flows F-8 - F-9

Notes to Consolidated Financial Statements F-10 - F-17

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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, 2005, and the related consolidated statements of operations, stockholders'
equity, 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' equity, and cash flows for the period from March 1,
2000 to February 28, 2005. The amounts in the cumulative column in the
consolidated statements of operations and cash flows for the period from August
1, 1968 (date of inception) to February 29, 2000 were audited by other auditors.
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 the standards of the Public Company
Accounting Oversight Board (United States). 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, 2005 and the results of
their operations and their cash flows for each of the two years in the period
then ended. Additionally, the amounts included in the cumulative column in the
consolidated statements of operations and cash flows for the period from March
1, 2000 to February 28, 2005 are fairly presented, in all material respects, in
conformity with United States generally accepted accounting principles.

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

April 6, 2005, except for Note 13 as to which the date is May 27, 2005

F-1

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

CONSOLIDATED BALANCE SHEET
--------------------------------------------------------------------------------
February 28, 2005
--------------------------------------------------------------------------------

ASSETS

Current assets:
Cash and cash equivalents $ 753,288
Stock subscription receivable 900,000
Due from related parties 220,959
Prepaid expenses 91,596
Other current assets 41,338
----------------------------------------------------------------------------------
Total current assets 2,007,181
----------------------------------------------------------------------------------
Property and equipment, net 73,518
----------------------------------------------------------------------------------
Other assets:
Intellectual property rights 997,738
Investment 100,000
Security deposit 2,933
Deferred tax asset, net of valuation allowance of $4,787,000
----------------------------------------------------------------------------------
1,100,671
----------------------------------------------------------------------------------
$ 3,181,370
============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable and accrued expenses $ 1,037,103
Note payable 200,000
Deferred revenue 225,000
----------------------------------------------------------------------------------
Total current liabilities 1,462,103
----------------------------------------------------------------------------------
Stockholders' equity:
Common stock - $.005 par value:
Authorized, 125,000,000 shares
Issued and outstanding, 74,317,832 shares 371,589
Additional paid-in capital 18,982,952
Stock subscription receivable (150,000)
Deficit accumulated during the development stage (17,485,274)
----------------------------------------------------------------------------------
1,719,267
----------------------------------------------------------------------------------
$ 3,181,370
============

See notes to consolidated financial statements

F-2

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

CONSOLIDATED STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
Period from
August 1,
1968 (date of
Year ended Year ended inception) to
February 28, February 29, February 28,
2005 2004 2005
----------------------------------------------------------------------------------------------------

Revenues:
Development payments $ -- $ 75,000 $ 75,000
----------------------------------------------------------------------------------------------------

Operating expenses:
Research and development 2,629,980 1,240,439 6,305,811
General and administrative 3,337,185 1,911,003 9,373,952
Write-down of intellectual property rights -- -- 530,000
----------------------------------------------------------------------------------------------------
5,967,165 3,151,442 16,209,763
----------------------------------------------------------------------------------------------------
Operating loss (5,967,165) (3,076,442) (16,134,763)
----------------------------------------------------------------------------------------------------
Other income (expense):
Interest expense -- (729,527) (1,730,923)
Interest income 11,869 1,815 58,447
Other income 161,749 85,584 476,408
Other expense -- -- (65,086)
----------------------------------------------------------------------------------------------------
Total other income(expense), net 173,618 (642,128) (1,261,154)
----------------------------------------------------------------------------------------------------

Loss from continuing operations (5,793,547) (3,718,570) (17,395,917)

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

Net loss $ (5,793,547) $ (3,718,570) $(17,485,274)
====================================================================================================
Loss per common share - basic and diluted $ (0.08) $ (0.08)
==================================================================================
Weighted average shares outstanding 69,263,893 44,017,010
==================================================================================

See notes to consolidated financial statements

F-3

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

Deficit
Accumulated
Additional Stock During the Stockholders'
Number Common Paid-in Subscription Development Equity
of Shares Stock Capital Receivable 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

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

CONTINUED ON FOLLOWING PAGE

F-4

BIOPHAN TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------
Period from August 1, 1968 (Date of inception) to February 28, 2005
--------------------------------------------------------------------------------

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

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

CONTINUED ON FOLLOWING PAGE

F-5

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

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------
Period from August 1, 1968 (date of inception) to February 28, 2005
--------------------------------------------------------------------------------
Deficit
Accumulated
Additional Stock During the Stockholders'
Number Common Paid-in Subscription Development Equity
of Shares Stock Capital Receivable Stage (Deficiency)
------------------------------------------------------------------------------------------------------------------------------------

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)

2003 - Shares issued upon conversion of
related party loans at $.14 per share 1,268,621 6,343 177,607 183,950

2003 - Shares issued upon conversion of
stockholder loan plus accrued interest
at $.20 per share 775,000 3,875 151,693 155,568

2003 - Shares issued for cash pursuant to
equity line of credit at prices from
$.11 to $.23 per share 3,325,757 16,629 474,561 491,190

2003 - Shares issued for option exercises
at $.14 per share 3,000,000 15,000 412,847 427,847

2004 - Shares issued for warrant exercises
at $.25 and $.50 per share 995,940 4,980 327,864 332,844

2004 - Shares issued for cash pursuant to
stock purchase agreement at prices from
$.15 to $.40 per share 11,000,000 55,000 2,845,000 2,900,000

2004 - Shares issued upon conversion of
related party loans at $.10 per share 7,945,000 39,725 754,775 794,500

Offering costs (209,528) (209,528)

CONTINUED ON FOLLOWING PAGE

F-6

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

Grant of stock options for services 565,000 565,000

Intrinsic value of beneficial conversion feature
of line of credit loans 250,950 250,950

Net loss for the year ended February 29, 2004 (3,718,570) (3,718,570)
------------------------------------------------------------------------------------------------------------------------------------
Balance at February 29, 2004 65,945,011 329,725 13,339,289 (11,691,727) 1,977,287

2004 - Shares issued for option exercise
at $.32 per share 70,000 350 22,050 22,400

2004 - Shares issued for option exercise
at $.50 per share 24,999 125 12,375 12,500

2004 -Shares issued upon exercise of
warrants at $.25 per share 868,700 4,343 212,832 217,175

2004 - Shares issued upon exercise of
warrants at $.50 per share 926,700 4,634 458,716 463,350

2004 - Shares issued upon exercise of
warrants at $1.00 per share 108,375 542 107,833 108,375

2004 - Shares issued upon cashless exercise
of warrants 74,047 370 (370) --

2004 - 2005 - Shares issued for cash pursuant to
stock purchase agreement at prices from
$.60 to $.70 per share 6,000,000 30,000 3,870,000 3,900,000

2005 - Restricted shares issued in connection
with employment agreements at
$1.34 per share 200,000 1,000 267,000 268,000

2005 - Restricted shares issued in connection
with acquisition of Biophan Europe at
$1.34 per share 100,000 500 133,500 134,000

Offering costs (41,998) (41,998)

Grant of stock options for services 201,000 201,000

Section 16(b) short swing profits 400,725 400,725

Stock subscription receivable (150,000) (150,000)

Net loss for the year ended February 28, 2005 (5,793,547) (5,793,547)
------------------------------------------------------------------------------------------------------------------------------------
Balance at February 28, 2005 74,317,832 $ 371,589 $ 18,982,952 $ (150,000) $(17,485,274) $ 1,719,267
====================================================================================================================================

See notes to consolidated financial statements

F-7

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

CONSOLIDATED STATEMENT OF CASH FLOWS
--------------------------------------------------------------------------------
Period from
August 1,
1968 (date of
Year ended Year ended inception) to
February 28, February 29, February 28,
2005 2004 2005
------------------------------------------------------------------------------------------------------------------

Cash flows from operating activities:

Net loss $ (5,793,547) $ (3,718,570) $(17,485,274)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 28,020 23,643 92,193
Realized and unrealized losses on marketable securities -- -- 66,948
Accrued interest on note payable converted to common
stock -- 11,998 11,998
Amortization of interest on convertible notes payable -- 667,617 1,050,950
Write-down of intellectual property rights -- -- 530,000
Amortization of discount on payable to related party -- -- 75,000
Issuance of common stock for services 268,000 -- 369,108
Issuance of common stock for interest -- -- 468,823
Grant of stock options for services 201,000 565,000 1,953,800
Expenses paid by stockholder -- -- 2,640
Changes in operating assets and liabilities, net of
effect of acquisition:
(Increase) decrease in advances receivable -- 10,127 --
(Increase) decrease in due from related parties (186,737) (9,854) (220,959)
(Increase) decrease in prepaid expenses (22,411) 21,738 (91,596)
(Increase) decrease in security deposits -- -- (2,933)
Increase (decrease) in accounts payable and
accrued expenses 405,821 (89,158) 646,548
Increase (decrease) in due to related parties -- (9,401) (43,496)
Increase (decrease) in deferred revenues 225,000 -- 225,000
------------------------------------------------------------------------------------------------------------------
Net cash used in operating activities (4,874,854) (2,526,860) (12,351,250)
------------------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
Purchases of property and equipment (39,302) (21,625) (164,689)
Sales of marketable securities 1,150,000 302,000 2,369,270
Purchase of investment (100,000) -- (100,000)
Cash paid for acquisition of Biophan Europe,
net of cash received of $107,956 (258,874) -- (258,874)
Purchases of marketable securities -- (1,150,000) (2,436,218)
------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities 751,824 (869,625) (590,511)
------------------------------------------------------------------------------------------------------------------

CONTINUED ON FOLLOWING PAGE

F-8

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

Cash flows from financing activities:
Proceeds of bridge loans -- -- 986,500
Loan from stockholder -- -- 143,570
Line of credit borrowing from related party -- 250,950 550,950
Line of credit payments -- (72,500) (72,500)
Net proceeds from sales of capital stock 2,850,000 3,252,200 10,213,849
Proceeds from exercise of options 34,900 427,847 462,747
Proceeds from exercise of warrants 788,900 332,844 1,121,744
Short swing profits 400,725 -- 400,725
Equity placement costs (22,107) (19,891) (112,536)
----------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 4,052,418 4,171,450 13,659,049
----------------------------------------------------------------------------------------------------------------

Net increase in cash and cash equivalents (70,612) 774,965 753,288

Cash and cash equivalents at beginning of period 823,900 48,935 --
----------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 753,288 $ 823,900 $ 753,288

Supplemental schedule of noncash investing and
financing activities:

Common stock issued for subscription receivable $ 1,050,000 $ -- $ 1,050,000

Liabilities assumed in conjunction with acquisition
of a 51% interest in Biophan Europe and certain
intellectual property rights:
Fair value of assets acquired $ 1,105,714
Cash paid (366,830)
Promissory note issued (200,000)
Restricted stock issued (134,000)
Payables incurred (226,500)
------------
Liabilities assumed $ 178,384 $ -- $ 178,384
================================================================================================================
Acquisition of intellectual property rights $ -- $ -- $ 425,000
================================================================================================================
Issuance of common stock upon conversion of
bridge loans $ -- $ 155,568 $ 1,142,068
================================================================================================================
Issuance of common stock upon conversion of
related party loans $ -- $ 978,450 $ 978,450
================================================================================================================

See notes to consolidated financial statements

F-9

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
February 28, 2005
--------------------------------------------------------------------------------
1. PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Basis of Consolidation

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

Company History

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
biomedical devices safe and compatible for use in an MRI (Magnetic Resonance
Imaging) machine.

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

Revenue Recognition

The Company earns and recognizes revenue under development agreements when the
phase of the agreement to which amounts relate is completed and the Company has
no further performance obligation. Completion is determined by the attainment of
specified milestones including a written progress report. Advance fees received
on such agreements are deferred until recognized.

Cash and Cash Equivalents

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.

F-10

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
February 28, 2005
--------------------------------------------------------------------------------

Concentration of Credit Risk

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.

Depreciation

Depreciation of property and equipment is provided by the double declining
balance and straight-line methods over the estimated useful lives of the related
assets. Costs for internally developed intellectual property rights with
indeterminate lives are expensed as incurred.

Intangible Assets

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

Deferred Taxes

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.

Loss Per Share

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.

Stock Options

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:

F-11

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
February 28, 2005
--------------------------------------------------------------------------------

Year ended February 28 2005 2004
-----------------------------------------------------------------------
Net loss - as reported $(5,793,547) $(3,718,570)

Add: Stock-based employee compensation
expense included in reported net loss,
net of related tax effects 201,000 118,000

Deduct: Total stock-based employee
compensation expense determined
under fair value based method for
all awards, net of related tax effect (342,000) (241,000)
-----------------------------------------------------------------------

Net loss - pro forma $(5,934,547) $(3,841,570)

=======================================================================
Basic and diluted loss
per share - as reported $ (.08) $ (.08)
=======================================================================
Basic and diluted loss
per share - pro forma $ (.08) $ (.08)
=======================================================================

The Company's assumptions used to calculate the fair values of options issued
during the year ended February 28, 2005 were (i) risk-free interest rates of
4.04% through 4.50%, (ii) expected lives of 5 to 10 years, (iii) expected
volatility of 88% through 150%, and (iv) expected dividends of zero.

The Company's assumptions used to calculate the fair values of options issued
during the year ended February 29, 2004 were (i) risk-free interest rates of
3.17% through 4.38%, (ii) expected lives of 5 to 10 years, (iii) expected
volatility of 160%, and (iv) expected dividends of zero.

Estimates

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.

Reclassification

For comparative purposes, certain amounts in the accompanying statement of
operations for fiscal 2004 have been reclassified to conform to the presentation
used for fiscal 2005.

Recent Accounting Pronouncements

In December 2004, the FASB issued SFAS No. 123 (revised 2004), "Share-Based
Payment" ("SFAS No. 123R"), which replaces SFAS No. 123 and supersedes APB No.
25. SFAS No. 123R requires that the compensation cost relating to share-based
payment transactions be recognized in financial statements based on alternative
fair value models. The share-based compensation cost will be measured based on
the fair value of the equity or liability instruments issued. Per APB No. 25,
compensation expense was recognized only to the extent the fair value of common
stock exceeded the stock option exercise price at the measurement date. In
addition, the pro forma disclosures previously permitted under SFAS No. 123 no
longer will be an alternative to financial statement recognition. SFAS No. 123R
also requires the benefits of tax deductions in excess of recognized
compensation cost to be reported as a financing cash flow rather than as an
operating cash flow as required under current literature. Under the effective
date provisions included in SFAS No. 123R, the Company would have been required
to implement SFAS No. 123R as of the first interim or annual period that begins
after June 15, 2005. On April 14, 2005, the SEC delayed the effective date which
allows companies to implement SFAS No. 123R at the beginning of the first fiscal
year after June 15, 2005, which would be March 1, 2006 for the Company. The
Company is evaluating the requirements of SFAS No. 123R and expects that the
adoption will have a material impact on the consolidated results of operations
and earnings per share similar to the current pro-forma disclosures under SFAS
No. 123. (see "Stock Options " above).

F-12

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
February 28, 2005
--------------------------------------------------------------------------------
2. BUSINESS COMBINATIONS

Effective June 3, 2004, the Company executed final agreements for the
acquisition of a 51% ownership interest in TE Bio, LLC ("TE Bio"), a newly
formed limited liability company that acquired an exclusive license to certain
technology from Biomed Solutions, LLC ("Biomed"). TE Bio is also owned 46.5% by
Biomed, a related company, and 2.5% by Stuart G. MacDonald, Vice-President of
Research and Development for the Company. The primary reason for the acquisition
was the development of an implantable biothermal battery using body heat
gradients to power medical devices. The Payment Agreement (the "Agreement")
provides for the investment in TE Bio of $300,000 per year for three years from
the Company's working capital. In addition, the Company will provide certain
administrative, marketing, and research and development services to TE Bio. The
results of operations of TE Bio from June 3, 2004 to February 28, 2005 are
included in the accompanying consolidated statement of operations. TE Bio had no
significant assets, liabilities or operations at time of acquisition.

On February 24, 2005, the Company entered into an agreement for the purchase of
a 51% ownership interest in aMRIs GmbH, a German company formed November 2004.
Concurrently, aMRIs acquired a 58.4% interest in MR:comp GmbH. The name of aMRIs
was subsequently changed to Biophan Europe GmbH. For accounting purposes, the
acquisition is treated as a purchase as of February 28, 2005. Operating results
of the subsidiary for the period from February 25 through February 28, 2005 were
not material and are not included.

The principal reasons for the acquisition, in addition to obtaining a European
market presence, were to add complementary intellectual property to the
Company's existing technologies, further expertise to its management team, and
additional research and development capabilities. Accordingly, in connection
with the purchase, the Company executed an exclusive license agreement for
certain patents related to the Company's own proprietary technologies in the
area of MRI safety and compatibility, employment agreements with key executives
of aMRIs and agreed to contribute to aMRIs $2,000,000 over four years for
funding specific salaries and research and development expenses.

Total consideration for the 51% interest in aMRIs and for intellectual property
rights was $1,105,714, consisting of the following:

Cash paid $ 132,500
Promissory note issued 200,000
Amount payable in cash 92,500
Amount payable in restricted stock 134,000
Restricted stock issued (100,000 shares) 134,000
Direct acquisition costs 234,330
Liabilities assumed 178,384
----------
Total purchase price $ 1,105,714
==========

The allocation of the purchase price is as follows:

Intellectual property rights (estimated useful life
of 17 years) $ 927,738
Current assets 176,954
Equipment 1,022
-----------
Total $ 1,105,714

F-13

The following summarized pro forma consolidated statement of operations
(unaudited) for the year ended February 28, 2005, assumes the acquisition of
aMRIs as if it had occurred on March 1, 2004:

Operating expenses:
Research and development $ 2,737,038
General and administrative 3,505,300
------------
6,242,338
------------
Operating loss (6,242,338)
Other income 246,745
------------
Net loss $ (5,995,593)
============
Loss per common share-basic
and diluted $ (0.09)
============
Weighted average shares outstanding 69,263,893
============

3. PREPAID EXPENSES:

Prepaid expenses at February 28, 2005 consist of the following:

Prepaid royalties $ 25,000
Prepaid legal fees 20,000
Prepaid insurance 23,071
Prepaid supplies 18,125
Other 5,400
---------------------------------------------------------------------
$ 91,596
=====================================================================

4. PROPERTY AND EQUIPMENT:

Property and equipment, at cost, consists of the following:

Depreciation/
Amortization
Period
-----------------------------------------------------------------------
Furniture & Equipment $ 66,346 5-7 years
Computers 45,205 5 years
Internet Web site 54,159 7 years
-----------------------------------------------------------------------
165,710
Less accumulated depreciation (92,192)
------------------------------------------------------
$ 73,518
======================================================

Depreciation expense for the years ended February 28, 2005 and February 29, 2004
amounted to $28,020 and $23,643, respectively. Depreciation expense for the
period from August 1, 1968 (date of inception) to February 28, 2005 was $92,193.

F-14

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
February 28, 2005
--------------------------------------------------------------------------------
5. INTELLECTUAL PROPERTY RIGHTS:

Certain intellectual property rights were acquired on December 1, 2000 in
connection with the merger that established the Company in its present form .
Additional intellectual property rights were acquired on February 24, 2005 in
connection with the acquisition of aMRIs GmbH. All such rights encompass 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. Estimated amortization expense
for the next five years is as follows:

Fiscal year ending February, Amount
---------------------------- -------
2006 $48,000
2007 48,000
2008 48,000
2009 48,000
2010 48,000

6. INVESTMENT:

Represents a 10% investment in common stock of New Scale Technologies, Inc.,
stated at cost.

7. NOTE PAYABLE:

The note payable in the amount of $200,000, bearing interest at 2.74% per annum,
is payable on June 1, 2005 to the previous owners of Biophan Europe GmbH
(formerly aMRIs GmbH). The note was issued on February 24, 2005 as part of the
consideration for the acquisition of a 51% ownership interest in Biophan Europe
GmbH. The carrying amount for the note payable approximates its fair value due
to the short-term nature of the note.

F-15

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
February 28, 2005
--------------------------------------------------------------------------------

8. STOCKHOLDERS' EQUITY:

On February 5, 2004, the Company entered into a second stock purchase agreement
with SBI Brightline Consulting, LLC ("SBI") that obligates SBI to purchase, upon
the Company's election, up to 17,750,000 shares of common stock for an aggregate
purchase price of $25.0 million. Currently, only 6,000,000 shares covered by the
stock purchase agreement have been registered for resale by SBI under the
Security Act. SBI will not be obligated to purchase the remaining shares covered
by the stock purchase agreement unless and until the Company has registered the
resale of such shares by SBI. During the year ended February 28, 2005, the
Company elected to sell the 6,000,000 shares to SBI for an aggregate of
$3,900,000, of which $2,850,000 had been received as of February 28, 2005 and
$3,750,000 to date.

On February 24, 2005, in connection with the acquisition of Biophan Europe (see
Note 2), 100,000 shares of restricted stock, valued at $134,000, were issued and
fully charged to intellectual property rights in the accompanying consolidated
balance sheet; and in connection with Employment Agreements of the same date,
200,000 shares of restricted stock valued at $268,000 were issued to two key
executives of the German subsidiary company aMRIs GmbH and fully charged to
operating expenses in the accompanying consolidated statement of operations.

During the year ended February 28, 2005, the Company issued 1,903,775 shares of
stock upon the exercise of warrants for total proceeds of $788,900 and issued
74,047 shares upon exercise of cashless warrants. As of February 28, 2005,
warrants to purchase 1,525,029 shares of our common stock were outstanding. 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 outstanding warrants is
$.32 per share. In addition, during the year, 94,999 shares of stock were issued
upon the exercise of options for total proceeds of $34,900.

Additional paid-in capital was further increased by $201,000 of expense related
to stock options issued during the year for services and by $400,725 of profits
from a related company owed pursuant to the "short swing profit" rules of the
Securities Exchange Act of 1934.

9. COMMITMENTS:

Lease Obligation
The Company is obligated under an operating lease for office space expiring
January 30, 2008. The Company may terminate the lease upon ninety days prior
written notice to the landlord. Following are the minimum future payments under
this lease for the years ending February 28:

2006 $ 60,996
2007 60,996
2008 55,913
------------
$ 177,905
============

Rent expense charged to operations under this operating lease aggregated $58,546
and $57,899 for the years ended February 28, 2005 and February 29, 2004,
respectively. Rent expense charged to operations for the period from August 1,
1968 (Date of Inception) to February 28, 2005 was $182,433.

Cooperation Agreement
The Company's subsidiary, Biophan Europe, has a cooperation agreement with a
German university to test and further develop coronary stents whereby the
parties provide personnel and know-how. The agreement is for a term of one year
ending May 31, 2006. Biophan Europe is committed to assume costs of the project
up to an amount of approximately $133,000.

F-16

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
February 28, 2005
--------------------------------------------------------------------------------
License Agreements
The Company is obligated under five license or royalty agreements for patents
that expire at various dates through 2024. These agreements may be terminated by
the Company with 60 days written notice. Aggregate minimum future payments over
the remaining life of the patents under these agreements total $5,777,500.
License/royalty expense charged to operations was $89,880 and $15,000 for the
years ended February 28, 2005 and February 29, 2004, respectively.

Employment Agreements
Biophan has employment agreements with its executive officers that renew
annually unless terminated by either party. Such agreements, which have been
revised from time to time, provide for minimum salary levels, adjusted annually
for cost-of-living changes, as well as for incentive bonuses that are payable if
specified management goals are attained. Biophan Europe has employment
agreements with two key employees that expire on February 24, 2009. These
agreements provide for base salaries, bonuses based on attaining certain
milestones, a restricted stock grant and stock options. The aggregate commitment
for future base salaries at February 28, 2005, excluding bonuses and other
awards, was $520,000.

10. RELATED PARTY TRANSACTIONS:

The Company has affiliations with three entities, Biomed Solutions, LLC
("Biomed"), Technology Innovations, LLC ("TI") and Myotech, LLC ("Myotech"),
that are related by virtue of common management personnel and stock ownership.
During the current year, the Company charged Biomed and Myotech for services of
certain Company personnel and charged Biomed, TI and Myotech for expenses
allocable to and paid on their behalf. The total of these charges was $404,754.
During the year ended February 29, 2004 the Company paid expenses on behalf of
Biomed and TI aggregating $120,081. At February 28, 2005, the combined balances
due from these related parties was $ 220,959. The amounts do not bear interest
and the Company received payment within forty-five days.

During the year ended February 28, 2005, the Company was billed $9,000 for legal
services provided by Bramson & Pressman of which Robert S. Bramson, a director
of the Company, is a partner.

11. 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 13,000,000 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.

The following table summarizes activity in stock options:

Weighted-
average
Exercise
Options Price
-------------------------------------------------------------------------------
Outstanding at February 28, 2003 2,489,995 .48
Granted 4,469,998 .17
Forfeited (90,000) .30
Exercised (3,000,000) .14
-------------------------------------------------------------------------------
Outstanding at February 29, 2004 3,869,993 .39
Granted 4,149,859 .96
Forfeited -- --
Exercised (94,999) .37
-------------------------------------------------------------------------------
Outstanding at February 28, 2005 7,924,853 $ .69
===============================================================================
Weighted-average fair value of
options granted during the year
ended February 28, 2005 and
February 29, 2004,respectively $ .61 $ .16
===============================================================================

F-17

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
February 28, 2005
--------------------------------------------------------------------------------

The following table summarizes information about stock options outstanding and
exercisable at February 28, 2005:

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

$ .10 - $.18 1,440,000 8.67 years $ .17 845,000 $ .16

$ .30 - $.43 735,000 6.95 years $ .41 735,000 $ .41

$ .50 - $.95 2,009,994 6.61 years $ .57 1,483,994 $ .54

$ .97- $1.00 3,255,000 8.97 years $ .97 245,000 $1.00

$1.18- $1.26 484,859 9.38 years $1.21 67,359 $1.19
---------------------------------------------------------------------------------------
$.10 - $1.26 7,924,853 7.94 years $ .69 3,376,353 $ .46
=======================================================================================

At February 28, 2005, 5,075,147 shares of common stock were reserved for future
issuance of stock options.

12. INCOME TAXES:

As of February 28, 2005, the Company had net operating loss carryforwards of
approximately $14,080,000 for federal income tax purposes, which expire through
2025.

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 and 29, 2005 2004
------------------------------------------------------------------------------
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, 2005

------------------------------------------------------------------------------
Net operating loss carryforwards $4,627,000
Write-down of intellectual
property rights 160,000
------------------------------------------------------------------------------
Total deferred tax asset 4,787,000
Valuation allowance (4,787,000)
------------------------------------------------------------------------------
Net deferred tax asset $ -0-
==============================================================================

13. SUBSEQUENT EVENTS:

On May 27, 2005, the previous financing agreement the Company had with SBI
Brightline Consulting , LLC was cancelled and a new agreement was executed with
SBI Brightline XI, LLC. The new agreement provides a $30 million fixed price
financing for up to 10,000,000 shares at prices ranging from $2 to $4 a share.
The sales of stock must be taken in sequential tranches of 1 million shares each
and the financing requires the shares to be registered for sale.

Also on May 27, 2005, the Company entered into an unsecured loan agreement with
Biomed Solutions LLC, a related company, whereby Biomed has agreed to provide a
line of credit facility of up to $2 million. Borrowings under the line bear
interest at 8% per annum and are convertible at 90% of the average closing price
for the 20 trading days preceding the date of borrowings under the line.
Additionally, Biomed will receive pro-rata warrant coverage of up to 500,000
shares, in the event that the facility is fully utilized, with the warrants
priced at 110% of the average closing price for the 20 trading days preceding
the date of execution of the credit agreement.

F-18

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

Not applicable.

ITEM 8A. CONTROLS AND PROCEDURES.

Based on their evaluation as of the end of the period covered by this annual
report on Form 10-KSB, our principal executive officer and principal financial
officer, with the participation and assistance of our management, concluded that
our disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated
under the Securities Exchange Act of 1934, were effective in design and
operation. There have been no changes in our system of internal control over
financial reporting in connection with the evaluation by our principal executive
officer and principal financial officer during our fiscal quarter ended February
28, 2005 that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.

ITEM 8B. OTHER INFORMATION

On May 27, 2004, we terminated the stock purchase agreement between the Company
and SBI Brightline Consulting, LLC that obligated SBI to purchase, upon our
election, up to 17,750,000 shares of our common stock for an aggregate purchase
price of $25 million. SBI was not obligated to purchase shares pursuant to this
stock purchase agreement unless the resale of the shares by SBI was registered
under the Securities Act. Only 6,000,000 shares covered by this stock purchase
agreement were registered and during the year these share were sold to SBI
resulting in aggregate proceeds of $3,900,000. On May 27, 2005, a new agreement
executed with SBI Brightline XI, LLC providing for a $30 million fixed price
financing for up to 10,000,000 shares, in tranches of 1,000,000 shares, at
prices ranging from $2.00 to $4.00 per share at our election. The new agreement
also requires registration under the Securities Act before purchase of shares by
SBI. There are no warrants associated with this agreement.

On May 27, 2005, we executed a line of credit facility of up to $2 million with
Biomed Solutions LLC, an affiliate of Biophan managed by Biophan CEO Michael
Weiner. Any borrowings under the line bear interest at 8% per annum and are
convertible into shares of our common stock at 90% of the average closing price
for the 20 trading days preceding the date of the borrowing. In addition, Biomed
will receive pro-rata warrant coverage of up to 500,000 shares, in the event
that the facility is fully utilized, with the warrants priced at 110% of the
average closing price for the 20 trading days preceding the date of execution of
the credit agreement.

F-19

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTORS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT

The officers and directors of Biophan are as follows:

Name Age Title
---- --- -----

Guenter H. Jaensch 66 Chairman of the Board
Michael L. Weiner 57 Director, Chief Executive Officer, President
Robert J. Wood 65 Vice-President, Treasurer, Secretary,
Chief Financial Officer
Stuart G. MacDonald 56 Vice-President-Research and Development
Jeffrey L. Helfer 52 Vice-President-Engineering
John F. Lanzafame 37 Vice-President-Business Development
Robert S. Bramson 66 Director
Steven Katz 56 Director
Ross B. Kenzie 73 Director
Michael Friebe 40 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, Ph.D 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 1982, he
received the President's Award, the top honor at Xerox for an invention
benefiting a major product line. In 1985, Weiner founded Microlytics, a Xerox
spin-off company which developed technology from the Xerox Palo Alto Research
Center into a suite of products, including the award winning Word Finder
thesaurus, with licenses out to over 150 companies, including Apple, Microsoft,
and Sony. Microlytics was acquired by a merger with a public company in 1990,
which Weiner then headed up through 1993. In January, 1993 Weiner co-founded
TextWise, a company developing natural language search technologies for the
intelligence community. In 1995, Weiner co-founded and served as CEO of Manning
& Napier Information Services (MNIS), a Rochester-based company providing patent
analytics, prior art searches, and other services, for the U.S. Patent and
Trademark Office and many large corporations, and which subsequently acquired
TextWise. He held this position until January of 1999. MNIS remains private, and
has generated several spin-off companies (Talavara and IP.COM). TextWise won the
Department of Commerce Tibbet's Award for SBIR research in 1998. In February
1999, Weiner founded Technology Innovations, LLC, to develop intellectual
property assets. In August 2000, Technology Innovations created a subsidiary,
Biomed Solutions, LLC, to pursue biomedical and nanotechnology opportunities,
investing in embryonic-to-seed stage innovations which generate new ventures
and/or licenses. These companies are holding companies for intellectual property
assets and equities in other ventures.

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) OncoVista, Inc.,
NaturalNano, Inc., Myotech, LLC, TE Bio, LLC and Nanoset, LLC. Mr. Weiner holds
seventeen U.S. patents. 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.

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 has a background that 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.

John F. Lanzafame has fifteen years experience in the medical device industry,
with a background that includes education in chemical and industrial
engineering. Until early 2004, Mr. Lanzafame was employed by STS Biopolymers,
Inc., a privately held medical device company that marketed high performance
polymer-based coatings for the medical device industry, including drug eluting
surfaces for devices such as coronary stents and indwelling catheters. Mr.
Lanzafame held a variety of positions with STS Biopolymers, including positions
in research, product development, and sales and marketing, ultimately leading to
his assuming the position of President of STS Biopolymers beginning in 2003. In
2004, Mr. Lanzafame left STS Biopolymers following sale of the company to
Angiotech Pharmaceuticals, and is currently Vice President, Business Development
for Biophan, and President of Nanolution, Biophan's drug delivery division. This
newly formed division was created to leverage new discoveries in the field of
nanotechnology for the purposes of targeted drug delivery and highly controlled
drug elution from medical devices.

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. 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.

Michael H. Friebe, Ph.D. is Chief Executive Officer and President of Tomovation
GmbH and BIOPHAN Europe GmbH. Tomovation is a German company that owns and
operates imaging centers in Germany and makes investments in early stage
European medical technology companies. Prior to forming Tomovation, Dr. Friebe
was the founder of Neuromed AG and the president of UMS-Neuromed. These
companies operated mobile MRI, CT and PET systems in a number of European
Countries. Dr. Friebe received his degrees in Electrical Engineering from the
University of Stuttgart in Germany, and a PhD in medical engineering from the
University of Witten in Germany. He also holds a Masters degree in Management
from Golden Gate University in San Francisco. He is a member of several
professional engineering and medical societies. Dr. Friebe is also a member of
the board of INTRAOPMEDICAL, Inc., Santa Clara, CA and was elected to Biophan's
board in February 2005.

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 responsibilities of the Audit Committe include appointing,
retaining, replacing, compensating and overseeing the work of the independent
accountants, who report to, and are directly accountable to, the Committee. The
Audit Committee 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 Board of Directors has determined that
Messrs. Katz and Kenzie, both independent directors, meet the qualifications as
an "audit committee financial expert".

The Compensation Committee makes recommendations to the Board regarding
executive and employee compensation and benefits.

Code of Ethics

The Company has adopted a Code of Ethics for Senior Financial Officers that is
applicable to our principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions.

Potential 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 the majority of his 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 full 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.

David A. Glocker, Ph.D. - Dr. Glocker is president of Isoflux Incorporated, a
manufacturer of sputter coating equipment. Prior to founding Isoflux in 1993 he
led a group at the Eastman Kodak Company that was responsible for the
development of coating processes for many Kodak products. He has published
numerous articles on coating technology and holds more than 25 patents in the
field.

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.

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. He is a renowned best-selling author and lecturer.

Andreas Melzer, M.D. - Dr. Melzer is Professor of applied biomedical
engineering, Director and Chairman of the Board at the Institute for Medical
Technologies and Management in Medicine INSITE med. at the University of Applied
Sciences in Gelsenkirchen, Germany. He also holds a clinical position as
part-time staff radiologist at the Department of Diagnostic and Interventional
Radiology at St. Mary's Hospital Buer in Gelsenkirchen, Germany. He has
co-invented more than 30 patents and has authored over 150 publications.
Additionally, Dr. Melzer is engaged as co-organizer, chairman, and invited
speaker of various medical conferences, and is a board member of several medical
societies, as well as professional committees.

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.

Frank G. Shellock, Ph.D. - Dr. Shellock is Adjunct Clinical Professor of
Radiology and Medicine at the Keck School of Medicine, University of Southern
California and the Founder of the Institute for Magnetic Resonance Safety,
Education, and Research (www.IMRSER.org); Dr. Shellock is a world-renowned
expert on MRI safety. He created the internationally popular web site,
www.MRIsafety.com. Dr. Shellock has authored five medical textbooks, over 60
book chapters, and more than 190 peer-reviewed articles. In 2004, the
International Society for Magnetic Resonance in Medicine recognized the
significant contributions Dr. Shellock has made to the scientific and
educational mission of the ISMRM by designating him a Fellow of the Society.

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.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") requires our executive officers and directors and persons who own more
than ten percent of our common stock to file reports of ownership and changes in
ownership with the SEC. Such executive officers, directors and greater than ten
percent stockholders are also required by SEC rules to furnish us with copies of
all Section 16(a) forms they file. Based solely on representations from certain
reporting persons, we believe that, with respect to the year ended February 28,
2005, the following transactions applicable to our executive officers, directors
and ten percent stockholders required by Section 16(a) were not made timely. On
July 13, 2004, the date of our Annual Shareholders Meeting, each non-management
director was granted 210,000 options. On the same date, executive officers
Messrs. Weiner, Wood, MacDonald and Helfer were granted 1,000,000, 425,000,
425,000 and 400,000 options, respectively. On February 24, 2005, Dr. Friebe was
elected a Director and was issued 100,000 shares of restricted stock as a direct
owner and on April 1, 2005 100,000 shares were issued as an indirect owner. In
addition, on February 24, 2005, Dr. Friebe was granted 115,000 options. We have
further been informed that executive officer Mr. Weiner did not file timely a
Form 5 for the year ended February 29, 2004 and executive officer Mr. Lanzafame
did not file timely a Form 3 upon qualifying as a filer.

ITEM 10. EXECUTIVE COMPENSATION

The following table summarizes the annual compensation paid to our named
executive officers during each of the last three fiscal years:

Securities
Underlying
Name and Principal Position Year Salary options/SARs
--------------------------- ---- ------ ------------

Michael L. Weiner, CEO 2/28/05 $198,269 1,000,000
Michael L. Weiner, CEO 2/29/04 $175,000 300,000
Michael L. Weiner, CEO 2/28/03 $175,000 250,000

Robert J. Wood, CFO 2/28/05 $134,654 400,000
Robert J. Wood, CFO 2/29/04 $129,000 125,000
Robert J. Wood, CFO 2/28/03 $109,461 50,000

Stuart G. MacDonald,
Vice-President-Research 2/28/05 $149,711 425,000
Stuart G. MacDonald,
Vice-President-Research 2/29/04 $153,846 200,000
Stuart G. MacDonald,
Vice-President-Research 2/28/03 $116,057 100,000

Jeffrey L. Helfer,
Vice-President-Engineering 2/28/05 $149,711 425,000
Jeffrey L. Helfer,
Vice-President-Engineering 2/29/04 $153,846 200,000
Jeffrey L. Helfer,
Vice-President-Engineering 2/28/03 $113,461* 100,000

John F. Lanzafame,
Vice-President-Business
Development 2/28/05 $ 53,308* 250,000

* Partial year.

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 2003 through 2005.

Stock Options

On June 22, 2001, the Board of Directors adopted the Biophan Technologies, Inc.
2001 Stock Option Plan. The Option Plan was last amended on July 13, 2004. 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 13,000,000 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. As of February 28, 2005, we
had granted options to purchase 11,019,852 shares of common stock under the
option plan and 7,924,853 were outstanding.

The following table summarizes information concerning stock options granted to
the named executive officers during the last completed fiscal year ended
February 28, 2005:

Percent of
Number of total
securities options/SARs Exercise
underlying granted to or base
options/SARs employees in price Expiration
Name granted (#) fiscal year ($/Sh) date
------------------ ------------ ------------- ---------- -------------

Michael L. Weiner 1,000,000 24.10% $.97 10/31/13
Robert J. Wood 400,000 9.64% $.97 10/31/13
Stuart G. MacDonald 425,000 10.24% $.97 10/31/13
Jeffrey L. Helfer 425,000 10.24% $.97 10/31/13
John F. Lanzafame 250,000 6.02% $.67 -$.74 7/19 - 9/3/14

No named executive officer exercised options in the fiscal year ended February
28, 2005. The following table presents the number and values of exercisable and
unexercisable options as of February 28, 2005:

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

Michael L. Weiner None -- 650,000/1,150,000 $748,000/$205,500
Robert J. Wood None -- 192,500/482,500 $225,625/$106,625
Stuart G. MacDonald None -- 280,000/545,000 $333,000/$158,000
Jeffrey L. Helfer None -- 280,000/545,000 $333,000/$158,000
John F. Lanzafame None -- 62,500/187,500 $ 52,375/$157,125

Employment Agreements

Each of Michael L. Weiner, President and Chief Executive Officer; Robert J.
Wood, Treasurer, Secretary and Chief Financial Officer; Stuart G. MacDonald,
Vice President of Research and Development; Jeffrey L. Helfer, Vice President of
Engineering; and John F. Lanzafame, Vice President of Business Development, 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, Mr.
Weiner's vested warrants and options remain exercisable for the life of the
applicable agreement but he will not be eligible for severance payments.

The employment agreements for each of Messrs. Wood, MacDonald, Helfer and
Lanzafame 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, Wood, MacDonald, Helfer
and Lanzafame "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 vested warrants and options remain exercisable for the life of
the applicable agreement.

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 $8,000. Dr. Jaensch
receives an additional $1,500 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.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.

The table below lists the beneficial ownership of our common stock, as of May
25, 2005, 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 Percent of Class(2)
(1)(2)
----------------------- -------------------- -------------------

+Guenter H. Jaensch (3) 870,000 1.16%
964 Allamanda Drive
Delray Beach, FL 33483

+Michael L. Weiner (4) 6,916,362 9.06%
693 Summit Drive
Webster, NY 14580

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

+Robert S. Bramson (5) 100,000 *
1100 East Hector Street
Suite 410
Consohocken, PA 19428

+Ross B. Kenzie (6) 100,000 *
Cyclorama Bldg. Suite 100
369 Franklin Street
Buffalo, NY 14202

+Steven Katz (7) 155,000 *
20 Rebel Run Drive
East Brunswick, NJ 08816

+Michael Friebe(8) 200,000 *
Paul-Schuerholz-Str. 7
D-45657 Recklinhausen
Germany

Robert J. Wood (9) 282,500 *
12 Peachtree Lane
Pittsford, NY 14534

Stuart G. MacDonald (10) 370,000 *
4663 East Lake Road
Pultneyville, NY 14538

Jeffrey H. Helfer (11) 410,700 *
1153 Hidden Valley Trail
Webster, NY 14580

John F. Lanzafame (12) 62,500 *
1500 Malone Road
Victor, NY 14564

Technology Innovations, 5,656,501 7.08%
LLC(13)
150 Lucius Gordon Drive
Suite 215
West Henrietta, NY 14586

Biomed Solutions, LLC(14) 5,355,857 7.48%
150 Lucius Gordon Drive
Suite 215
West Henrietta, NY 14586

All Officers and Directors as 9,467,062 12.15%
a group (10 persons)

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

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

2) Applicable percentage of ownership is based on 74,471,997 shares
outstanding as of May 25, 2005, 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 28, 2005 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 420,000 shares issuable upon exercise of options 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 650,000
shares issuable upon exercise of options held by Mr. Weiner.

5) Includes 100,000 shares issuable upon exercise of options held by Mr.
Bramson.

6) Includes 100,000 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.

7) Includes 155,000 shares issuable upon exercise of options held by Mr.
Katz.

8) Includes 100,000 shares owned beneficially and of record by aMRIs Patent
GmbH, of which Dr. Friebe is a 50% owner.

9) Includes 192,500 shares issuable upon exercise of options held by Mr.
Wood.

10) Includes 280,000 shares issuable upon exercise of options held by Mr.
MacDonald.

11) Includes 280,000 shares issuable upon exercise of options held by Mr.
Helfer.

12) Includes 62,500 shares issuable upon exercise of options held by Mr.
Lanzafame.

13) 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.

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

Securities Authorized for Issuance Under Equity Compensation Plans

----------------------------------------------------------------------------------------------------------------------
Plan Category Number of securities to be Weighted average exercise Number of securities
issued upon exercise of price of outstanding remaining available for
outstanding options, options, warrants and future issuance under
warrants and rights rights equity compensation plans
(excluding securities
reflected in column (a))
(a) (b) (c)
----------------------------------------------------------------------------------------------------------------------

Equity compensation plans
approved by security holders 7,924,853 $.69 1,980,148
----------------------------------------------------------------------------------------------------------------------
Equity compensation plans not
approved by security holders -0- -0- -0-
----------------------------------------------------------------------------------------------------------------------
Total 7,924,853 $.69 1,980,148
----------------------------------------------------------------------------------------------------------------------

ITEM 12. 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 4,175,857 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) The Company has affiliations with three entities, Biomed Solutions, LLC
("Biomed"), Technology Innovations, LLC ("TI") and Myotech, LLC
("Myotech"), that are related by virtue of common management personnel and
stock ownership. During the current year ended February 28, 2005, the
Company charged Biomed and Myotech for services of certain Company
personnel and charged Biomed, TI and Myotech for expenses allocable to and
paid on their behalf. The total of these charges was $404,754. During the
year ended February 29, 2004 the Company paid expenses on behalf of Biomed
and TI aggregating $120,081. At February 28, 2005, the combined balances
due from these related parties was $220,959. The amounts do not bear
interest and the Company received payment within forty-five days.

7) During the year ended February 28, 2005, the Company was billed $9,000 for
legal services provided by Bramson & Pressman of which Robert S. Bramson,
a director of the Company, is a partner.

8) 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.

ITEM 13. 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 December 1, 2000, Incorporated by reference to Exhibit
by and among Biophan, Biomed Solutions, LLC 2.3 to Biophan's Registration Statement
(formerly Biophan, LLC), and LTR Antisense on Form SB-2 (File No. 333-102526) (the
Technology, Inc. "Prior Registration")

2.4 Agreement dated as of February 24, 2005 among Filed herewith
Biophan, aMRIs GmbH, Dr. Michael Friebe,
Tomovation GmbH, Prof. Dr. Andreas Melzer,
Dipl-Ing. Gregor Schaefers, and Dipl. Betriebsw.
Andreas Pieper

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

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

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

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

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

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

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

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

4.6 Form of Stock Purchase Warrant to be issued to Incorporated by reference to Exhibit
Carolina Financial services in connection with the 4.6 to Biophan's Form 10-QSB for the
Stock Purchase Agreement with Spectrum Advisors, period ended November 30, 2002.
Ltd
4.7 Form of Stock Purchase Warrant issued to investors Incorporated by reference to Exhibit
in private placement of securities, for a total of 4.7 to Biophan's Form 10-QSB for the
2,770,550 shares period ended November 30, 2002.

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

4.9 Registration Rights Agreement dated February 10, Filed as an Exhibit to Registration
2004 by and among Biophan Technologies, Inc., Statement filed on February 10, 2004.
Biomed Solutions, LLC and SBI Brightline
Consulting, LLC

4.10 Note and Pledge Agreement dated November 24, 2005 Filed herewith
between Biophan, Tomovation GmbH and Prof. Dr.
Andreas Melzer

4.11 Convertible Promissory Note of Biophan payable Incorporated by reference to Exhibit
to the order of Biomed Solutions, LLC dated June 10.2 to Biophan's Form 10-QSB for the
4, 2002 period ended May 31, 2002

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

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

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

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

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

4.17 Stock Purchase Agreement dated October 1, 2003 Filed as Exhibit 10.50 to Biophan's
between Biophan and SBI Brightline Consulting, LLC. Form SB-2 filed on October 9, 2003.

4.18 Stock Purchase Agreement dated February 5, 2004 Filed as Exhibit 10.52 to Registration
between Biophan and SBI Brightline Consulting, LLC. Statement filed on February 10, 2004.

4.19 2001 Stock Option Plan Filed as Exhibit 10.53 to Registration
Statement filed on February 10, 2004.

4.20 Termination of Stock Purchase Filed herewith
Agreement between Biophan and SBI
Brightline Consulting, LLC

4.21 Stock Purchase Agreement dated May Filed herewith
27, 2005 between Biophan and SBI
Brightline XI, LLC

4.22 Convertible Promissory Note of Filed herewith
Biophan payable to the order of
Biomed Solutions, LLC dated May 27,
2005

4.23 Stock Purchase Warrant issued to Filed herewith
Biomed Solutions, LLC dated May 27,
2005

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

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

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

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

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

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

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

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

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

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

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

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

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

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

10.15 License Agreement between Biophan, Xingwu Wang and Filed as Exhibit 10.50 to Biophan's
Nanoset, LLC dated January 15, 2004 Form SB-2 filed on October 9, 2003.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

10.43 Development Agreement between Biophan and Alfred Filed as Exhibit 10.51 to Biophan's
University dated July 17, 2003 Form SB-2 filed on October 9, 2003.

10.44 Letter Agreement dated August 19, 2002 between Filed as Exhibit 10.54 to Amendment No.
Biomed Solutions, LLC and Biophan 2 to Registration Statement filed on
April 9, 2004.

10.45 Payment Agreement dated June 3, 2004 between Incorporated by reference to Exhibit
Biophan and TE Bio LLC 99.1 to Form 8-K dated June 3, 2004.

10.46 AMP-Biophan License Agreement dated February 24, Filed herewith
2005 between Biophan and aMRIs Patent GmbH
(Biophan has requested confidential treatment of
certain confidential portions of this Agreement
and has filed this Agreement separately with the
SEC)

10.47 Employment Agreement dated February 24, 2005 among Filed herewith
aMRIs GmbH, Dr. Michael Friebe and Biophan

10.48 Capital Pledge Agreement dated February 24, 2005 Filed herewith
among Biophan, TomoVation GmbH, and Prof. Dr.
Andreas Melzer

10.49 Executive Employment Agreement between Biophan Filed herewith
and John F. Lanzafame effective as of September 9,
2004

10.50 Line of Credit Agreement dated May 27, 2005 Filed herewith
between Biophan and Biomed Solutions, LLC

14.1 Code of Ethics for Senior Financial Officers Filed herewith

21 Subsidiaries Filed herewith

23.2 Consent of Goldstein Golub Kessler LLP Filed herewith

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

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

31.1 Certification of C.E.O. pursuant to Rule 13a-14(a) Filed herewith

31.2 Certification of C.F.O. pursuant to Rule 13a-14(a) Filed herewith

32.1 Certification of C.E.O. pursuant to Rule Filed herewith
13a-14(b) and 18 U.S.C. Section 1350

32.2 Certification of C.F.O. pursuant to Rule 13a-14(b) Filed herewith
and 18 U.S.C. Section 1350

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Our principal accountant is Goldstein Golub Kessler LLP (the Firm) which has a
continuing relationship with American Express Tax and Business Services Inc.
(TBS) from which it leases auditing staff who are full time, permanent employees
of TBS and through which its partners provide non-audit services. As a result of
this arrangement, the Firm has no full time employees and therefore, none of the
audit services performed for us were provided by permanent full-time employees
of the Firm. The Firm manages and supervises the audit and audit staff, and is
exclusively responsible for the opinion rendered in connection with its
examination.

1) Audit Fees

The aggregate fees billed by Goldstein Golub Kessler LLP for
professional services rendered for the audits of the Company's
annual financial statements for the last two fiscal years and for
the reviews of the financial statements included in the Company's
quarterly reports on Form 10-QSB and for services in connection with
SEC registration statements during the last two fiscal years ended
February 28, 2005 and February 29, 2004 was $50,584 and $69,386,
respectively.

2) Audit-Related Fees

The Company did not engage its principal accountants to provide
assurance and related services during the last two fiscal years.

3) Tax Fees

The Company did not engage its principal accountants to provide tax
compliance, tax advice and tax planning services during the last two
fiscal years.

4) All Other Fees

The Company did not engage its principal accountants to render
services to the Company during the last two fiscal years, other than
as reported above.

5) Pre-approval Policies and Procedures

In accordance with its charter, the Audit Committee is required to
approve all audit and non-audit services provided by the independent
auditors and shall not engage the independent auditors to perform
the specific non-audit services proscribed by law or regulation.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

BIOPHAN TECHNOLOGIES, INC.

By: \s\ Michael L. Weiner
-----------------------
Name: Michael L. Weiner
Title: President, CEO and Director

Dated: May 27, 2005

In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

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

\s\ Michael L. Weiner President, CEO and Director May 27, 2005
--------------------- (Principal Executive Officer)
Michael L. Weiner

\s\ Robert J. Wood Vice President, Secretary, May 27, 2005
------------------ Treasurer and CFO
Robert J. Wood (Principal Financial Officer
and Principal Accounting Officer)

\s\ Guenter H. Jaensch Chairman May 27, 2005
---------------------
Guenter H. Jaensch

\s\ Ross B. Kenzie Director May 27, 2005
---------------------
Ross B. Kenzie

\s\ Steven Katz Director May 27, 2005
---------------------
Steven Katz

\s\ Robert S. Bramson Director May 27, 2005
---------------------
Robert S. Bramson

\s\ Michael Friebe Director May 27, 2005
----------------------
Michael Friebe