S-1/A

       As filed with the Securities and Exchange Commission on May 24, 2007



                           Registration No. 333-138632


                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549



                               Amendment No. 4 to



                                    FORM S-1

                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933

                           BIOPHAN TECHNOLOGIES, INC.
             (Exact Name of Registrant as Specified in Its Charter)

                                                           
             Nevada                        3841                        82-0507874
(State or Other Jurisdiction of   (Primary Standard Industrial      (I.R.S. Employer
 Incorporation or Organization)   Classification Code Number)    Identification Number)




                                 15 Schoen Place
                            Pittsford, New York 14534
                                 (585) 267-4800
               (Address, Including Zip Code, and Telephone Number,
        Including Area Code, of Registrant's Principal Executive Offices)



                                Michael L. Weiner
                                    President
                           Biophan Technologies, Inc.
                                 15 Schoen Place
                            Pittsford, New York 14534
                                 (585) 267-4800
            (Name, Address, Including Zip Code, and Telephone Number,
                   Including Area Code, of Agent for Service)


                                    Copy to:


                             Gregory Sichenzia, Esq.
                              Yoel Goldfeder, Esq.
                       Sichenzia Ross Friedman Ference LLP
                             61 Broadway, 32nd Floor
                            New York, New York 10006
                                 (212) 930-9700





      Approximate date of commencement of proposed sale to the public: From time
to time after this registration statement becomes effective.

      If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. |X|

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

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

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

                         CALCULATION OF REGISTRATION FEE




Title of Each Class                     Proposed Maximum     Proposed Maximum
of Securities to be    Amount to be    Offering Price per   Aggregate Offering         Amount of
     Registered       Registered (1)        Share (2)            Price (2)       Registration Fee (3)(4)
- -------------------   --------------   ------------------   ------------------   --------------------
                                                                     
Common Stock, par
  value $0.005          24,591,491           $0.57             $14,017,149              $1,500



(1)   This Registration Statement shall also cover any additional shares of
      Common Stock which become issuable by reason of any stock dividend, stock
      split, recapitalization or other similar transaction effected without the
      receipt of consideration which results in an increase in the number of the
      outstanding shares of Common Stock of the Registrant.

(2)   Computed in accordance with Rule 457(c) under the Securities Act of 1933
      (the "Securities Act"), solely for the purpose of calculating the
      registration fee, and based on the average of the high and low prices of
      the Common Stock of the Registrant as reported on November 7, 2006 on the
      NASDAQ OTC Bulletin Board.

(3)   Computed in accordance with Section 6(b) under the Securities Act, solely
      for the purpose of calculating the registration fee.

(4)   Previously paid.

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



================================================================================
The information contained in this prospectus is not complete and may be changed.
Neither we nor the selling stockholders may sell these securities until the
registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities and it is
not soliciting offers to buy these securities in any state where the offer or
sale is not permitted.
================================================================================

                       PROSPECTUS (Subject to Completion)


                                  May 24, 2007



                                24,591,491 Shares

                           BIOPHAN TECHNOLOGIES, INC.

                                  COMMON STOCK

      This prospectus relates to 24,591,491 shares of our common stock that may
be sold from time to time by the selling stockholders named herein.



      This offering is not being underwritten. The selling stockholders may
offer the shares through public or private transactions at the market price for
our common stock at the time of the sale, a price related to the market price, a
negotiated price or such other prices as the selling stockholders determine from
time to time. See "Plan of Distribution" beginning on page 68.



      All of the net proceeds from the sale of these shares of common stock will
go to the selling stockholders. We will not receive any proceeds from sales of
these shares. We will bear the costs relating to the registration of these
shares.



      Our common stock is quoted on the OTC Bulletin Board under the symbol
"BIPH". On May 18, 2007, the last reported sale price on the OTC Bulletin
Board for our common stock was $0.27 per share.



      You should read this prospectus carefully before you invest.


      Investing in our common stock involves substantial risks. See "Risk
Factors" beginning on page 4.


      Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or determined if
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.



                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----


Prospectus Summary ............................................................1

Risk Factors ..................................................................4

Forward-Looking Statements ....................................................9

Use of Proceeds ...............................................................9

Dividend Policy ...............................................................9

Selected Consolidated Financial Data .........................................10

Management's Discussion and Analysis of Financial Condition and
  Results of Operations ......................................................11

Business .....................................................................26

Management ...................................................................42

Beneficial Ownership of Common Stock by Directors, Officers and
   Principal Stockholders ....................................................62

Certain Relationships and Related Party Transactions .........................64

Tranactions with Selling Stockholders ........................................65

Selling Stockholders .........................................................66

Plan of Distribution .........................................................68

Description of Capital Stock .................................................70

Legal Matters ................................................................71

Experts ......................................................................71

Where You Can Find More Information ..........................................71

Index to Consolidated Financial Statements ..................................F-1


      You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. We and the selling stockholders are offering to
sell, and seeking offers to buy, shares of our common stock only in
jurisdictions where offers and sales are permitted. The information in this
prospectus is accurate only as of the date of this prospectus, regardless of the
time of delivery of this prospectus or any sale of shares of our common stock.


                                      -ii-



                               PROSPECTUS SUMMARY

      This summary highlights information contained elsewhere in this
prospectus. This summary does not contain all of the information you should
consider before investing in our common stock. You should read this entire
prospectus carefully, especially the risks of investing in our common stock
discussed under "Risk Factors" beginning on page 4, and the consolidated
financial statements and notes to those consolidated financial statements,
before making an investment decision.


                           BIOPHAN TECHNOLOGIES, INC.


Our Corporate Information

      We were incorporated in the State of Idaho on August 1, 1968, under the
name Idaho Copper and Gold, Inc. On February 9, 1999, we changed our name to
Idaho Technical, Inc. On January 24, 2000, we changed our domicile to Nevada by
merging into our wholly-owned Nevada subsidiary. We began our current line of
business on December 1, 2000. On December 1, 2000, we changed our name to
GreatBio Technologies, Inc. and on July 19, 2001, we changed our name to Biophan
Technologies, Inc.



      From inception through February 28, 2007, we have incurred cumulative net
losses of $49,692,069. Since December 1, 2000, we have relied almost entirely on
sales of our securities and loans to fund our operations.


      Our principal executive offices are located at 15 Schoen Place, Pittsford,
New York 14534 and our telephone number is (585) 267-4800.






                                  THE OFFERING

Common stock offered by the
selling stockholders                 24,591,491 shares



Common stock to be outstanding
after this offering                  108,023,190*



Use of proceeds                      We will not receive any proceeds from the
                                     sale of shares by the selling stockholders.

Risk factors                         You should read the "Risk Factors" section
                                     of this prospectus for a discussion of
                                     factors that you should consider carefully
                                     before deciding to invest in shares of our
                                     common stock.

OTC Bulletin Board symbol            "BIPH"



      The number of shares of our common stock to be outstanding following this
offering is based on 83,431,699 shares of our common stock outstanding as of
May 18, 2007, and assumes (i) the conversion of an aggregate face amount of
$7,250,000 of our outstanding Senior Secured Convertible Notes due October 11,
2009 into an aggregate of 10,820,896 shares of common stock to be sold by
selling stockholders in this offering, (ii) the exercise of warrants to purchase
an aggregate of 11,686,568 shares of common stock to be sold by selling
stockholders in this offering, and (iii) the issuance of an aggregate of
2,084,027 shares of common stock in payment of interest to accrue under the
Notes during their term, and to be sold by the selling stockholders in this
offering, and excludes (i) the exercise of outstanding options under our
incentive stock compensation plans, (ii) the issuance of any shares of our
common stock to SBI Brightline XI, LLC pursuant to the Stock Purchase Agreement
dated as of May 27, 2005 (as amended), and (iii) the exercise of any other
options, warrants or other rights to acquire shares of our common stock by any
person or entity (including the selling stockholders).

      * Includes 4,923,080 shares of our common stock held by Myotech, LLC, an
entity of which we are a 43.7% beneficial owner. Because we consolidate our
financial statements with those of Myotech in accordance with FASB
Interpretation No. 46 (Revised December 2003), "Consolidation of Variable
Interest Entities" ("FIN 46(R)"), these shares are carried as treasury shares on
our Consolidated Balance Sheets and Consolidated Statements of Stockholders'
Equity. However, because we do not have direct control over the voting or
disposition of the shares held by Myotech, these shares are treated as issued
and outstanding shares throughout this prospectus except (i) in the section
entitled "Selected Financial Data" on page 10 and (ii) in the Financial
Statements beginning on page F-1.




                                       2



                      SUMMARY CONSOLIDATED FINANCIAL DATA

The tables below, which summarize our consolidated statements of operations data
for the years ended February 28, 2007, 2006 and 2005 have been derived from our
audited consolidated financial statements and related notes, which are included
elsewhere in this prospectus. You should read the following information together
with the more detailed information contained in "Selected Consolidated Financial
Data," "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and our consolidated financial statements and the accompanying
notes included in this prospectus.

CONSOLIDATED STATEMENTS OF OPERATIONS DATA:





                                                            Year Ended February 28,
                                                   -----------------------------------------
                                                       2007           2006          2005
                                                   ------------   ------------   -----------
                                                                        


Revenues:
  Development payments                             $         --   $    225,000   $        --
  License Fees                                          562,500        479,166            --
  Testing services and consulting fees                  427,029        340,695            --
                                                   ------------   ------------   -----------
                                                        989,529      1,044,861            --

Operating expenses:
  Research and development                            7,190,975      6,829,142     2,629,980
  General and administrative                          6,824,945      8,451,886     3,337,185
                                                   ------------   ------------   -----------
                                                     14,015,920     15,281,028     5,967,165
                                                   ------------   ------------   -----------

Operating loss                                      (13,026,391)   (14,236,167)   (5,967,165)

Other income(expense):
  Interest income                                        82,224         70,701        11,869
  Interest expense                                   (4,303,543)    (1,140,866)           --
  Additional expense related to warrants             (7,304,105)            --            --
  Change in fair value of warrant liability           5,318,064             --            --
  Loss on extinguishment of debt-related party         (670,053)            --            --
  Other expense                                          (5,442)            --            --
  Other income                                          161,196        215,789       161,749
                                                   ------------   ------------   -----------
                                                     (6,721,659)      (854,376)      173,618
                                                   ------------   ------------   -----------
Loss from continuing operations before
minority interest in Myotech, LLC                   (19,748,050)   (15,090,543)   (5,793,547)
Minority interest in Myotech, LLC                     2,025,639        606,159            --
                                                   ------------   ------------   -----------
Net loss                                           $(17,722,411)  $(14,484,384)  $(5,793,547)
                                                   ============   ============   ===========

Loss per common share - basic and diluted          $      (0.23)  $      (0.19)  $     (0.08)
                                                   ============   ============   ===========

Weighted average shares outstanding                  77,864,738     75,787,052    69,263,893
                                                   ============   ============   ===========




CONSOLIDATED BALANCE SHEET DATA:

                                              As of February 28,
                                          -------------------------
                                              2007          2006
                                          -----------   -----------
Cash and cash equivalents                 $ 2,418,551   $ 1,477,716

Intangible assets, net                    $24,396,805   $25,854,850

Total assets                              $28,896,251   $27,968,066

Total liabilities                         $18,966,774   $ 3,231,158

Minority interest                         $13,139,882   $15,189,109

Total stockholders' equity (deficiency)   $(3,210,405)  $ 9,547,799


                                       3




                                  RISK FACTORS

      Investing in our common stock involves a high degree of risk. You should
carefully consider the following risk factors, as well as the other information
in this prospectus, before deciding whether to invest in our common stock. If
any of the following risks actually materializes, our business, financial
condition and results of operations would suffer. The trading price of our
common stock could decline as a result of any of these risks, and you might lose
all or part of your investment in our common stock. You should read the section
entitled "Forward-Looking Statements" immediately following these risk factors
for a discussion of what types of statements are forward-looking statements, as
well as the significance of such statements in the context of this prospectus.

      WE MAY BE SUBJECT TO LIABILITY IN THE FORM OF A CLAIM FOR RESCISSION BY
CERTAIN SHAREHOLDERS.

As a result of our Forbearance Agreement with certain investors dated February
16, 2007, the Securities and Exchange Commission may take the position that the
sale of the $7,250,000 of senior secured convertible notes had not been
completed before we filed the registration statement of which this prospectus is
a part and as such we may have issued securities without a valid exemption in
violation of Section 5 of the Securities Act of 1933, as amended, for such
placement. The $7,250,000 of senior secured convertible notes are convertible by
the investors into 10,820,896 shares of common stock. As additional
consideration for the senior secured convertible notes we issued the investors
warrants to purchase 10,820,896 shares of our common stock and in connection
with the execution of the Forbearance Agreement we issued the investors addition
warrants to purchase an aggregate of 60,000 shares of our common stock.

If the Securities and Exchange Commission takes the position that the foregoing
was a violation of Section 5 of the Securities Act of 1933, as amended, the
investors may be entitled to, among other penalties or fines which may be
assessed against us and the right to demand rescission of the offering. In that
case, we would be required to pay each investor the amount we received as
consideration for the securities issued under an invalid exemption, plus any
interest accrued with respect to such amount at the applicable rate, and the
securities would be cancelled.

      WE MAY BE REQUIRED TO PAY LIQUIDATED DAMAGES AND/OR PENALTIES TO THE
HOLDERS OF THE $7,250,000 OF SENIOR SECURED CONVERTIBLE NOTES DUE TO THE FACT
THAT WE ARE IN DEFAULT UNDER THE TERMS THEREOF.

In connection with our Securities Purchase Agreement dated October 11, 2006 with
Iroquois Master Fund Ltd and other private investors since our registration
statement with respect to the shares underlying the $7,250,000 of Senior Secured
Convertible Notes has not yet been declared effective by the Securities and
Exchange Commission we are obligated to pay liquidated damages in the amount of
1.0% of the face amount of the issued and outstanding Senior Secured Convertible
Notes. In addition, pursuant to the terms of the Senior Secured Convertible
Notes we are required to make scheduled payments of principal and interest.
Beginning on February 1, 2007 we were obligated to make monthly payments of
$219,696.97 principal and we were obligated to make interest payments quarterly.
While we made an initial interest payment of $165,081, we have failed to make
any subsequent payments. In the event of a default of our obligations under the
Senior Secured Convertible Notes the investors are entitled to, among other
remedies, demand that we repurchase the outstanding principal at a repurchase
price equal to 110%.

Although we entered into a Forbearance Agreement with the investors dated
February 16, 2007 to postpone the foregoing obligations, the Forbearance
Agreement has since expired. Accordingly, we are still obligated to make
payments of liquidated damages and principal and interest payments under the
Senior Secured Convertible Notes, which had been postponed, but not waived under
the Forbearance Agreement. As of the date hereof, we are in default of our
obligations to make any payments to the investors of liquidated damages and
principal and interest payments under the Senior Secured Convertible Notes, but
the investors have not demanded payment. We are currently unable to make any
payments due and owing to the investors and since the Senior Secured Convertible
Notes are secured by all of our assets any demand from the investors would
result in a foreclosure on our assets and a resulting termination of our
operations.

      WE ARE A BUSINESS WITH A LIMITED OPERATING HISTORY AND ARE NOT LIKELY TO
SUCCEED UNLESS WE CAN OVERCOME THE MANY OBSTACLES WE FACE.

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

o     organizational activities;

o     developing a business plan;

o     obtaining funding;

o     conducting research and working toward the ultimate successful development
      of our technologies;

o     aggressively patenting our intellectual property;

o     licensing technology from third parties related to our business; and

o     marketing to major biomedical device manufacturers.

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



                                        4



      IF WE ARE UNABLE TO GENERATE SUFFICIENT REVENUES IN THE FUTURE, WE MAY NOT
BE ABLE TO CONTINUE OUR BUSINESS.

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

      WE HAVE A HISTORY OF LOSSES AND A LARGE ACCUMULATED DEFICIT AND WE EXPECT
FUTURE LOSSES THAT MAY CAUSE OUR STOCK PRICE TO DECLINE.


      For the fiscal years ended February 28, 2007, 2006 and 2005, we incurred
net losses of $17,722,411, $14,484,384, $5,793,547, respectively. We have
incurred cumulative net losses from inception through February 28, 2007 of
$49,692,069. We expect to continue to incur losses as we spend additional
capital to develop and market our technologies and establish our infrastructure
and organization to support anticipated operations. We cannot be certain whether
we will ever earn a significant amount of revenues or profit, or, if we do, that
we will be able to continue earning such revenues or profit. Also, our current
financial condition may limit our ability to develop and ultimately market our
technologies. Any of these factors could cause our stock price to decline and
result in you losing a portion or all of your investment.


      THE INABILITY TO RETAIN AND ATTRACT KEY PERSONNEL COULD ADVERSELY AFFECT
OUR BUSINESS AND PLAN OF OPERATIONS.

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

      OUR RESEARCH AND DEVELOPMENT EFFORTS MAY NOT RESULT IN COMMERCIALLY VIABLE
PRODUCTS, WHICH COULD RESULT IN A DECLINE OF OUR STOCK PRICE AND A LOSS OF YOUR
INVESTMENT.

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



                                        5



      WE MAY NOT BE ABLE TO DEVELOP A MARKET FOR OUR TECHNOLOGY, WHICH WILL
LIKELY CAUSE OUR STOCK PRICE TO DECLINE.

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

      IF WE ARE NOT ABLE TO COMPETE EFFECTIVELY IN THE COMPETITIVE MEDICAL
DEVICE INDUSTRY, OUR FUTURE GROWTH AND OPERATING RESULTS WILL SUFFER.

      Our future success depends on our ability to compete effectively with
manufacturers of medical devices, including major manufacturers of pacemakers
and other implantable devices that may have internal development programs. We
are an early-stage research and development company engaged exclusively in
developing our initial technologies. Products using our technologies have not
yet been commercialized and we have generated no material revenue from
operations. As a result, we may have difficulty competing with larger,
established medical device companies. Most of our potential competitors will be
established, well-known companies that have:

o     substantially greater financial, technical and marketing resources;

o     larger customer bases;

o     better name recognition;

o     related product offerings; and

o     larger marketing areas.

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

      WE MAY NOT BE ABLE TO OBTAIN NECESSARY GOVERNMENT APPROVAL TO MARKET
OUR TECHNOLOGY WHICH WILL LIKELY CAUSE OUR STOCK PRICE TO DECLINE AND OUR
BUSINESS TO FAIL.

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



                                        6



      WE MAY NOT BE ABLE TO PROTECT OUR PROPRIETARY RIGHTS AND WE MAY INFRINGE
THE PROPRIETARY RIGHTS OF OTHERS. OUR INABILITY TO PROTECT OUR RIGHTS COULD
IMPAIR OUR BUSINESS AND CAUSE US TO INCUR SUBSTANTIAL EXPENSE TO ENFORCE OUR
RIGHTS.

      Proprietary rights are critically important to us. We currently have 61
issued U.S. patents and over 60 U.S. and international patents pending. Although
we intend to aggressively pursue additional patent protection for our
technologies as we continue to develop them, we cannot assure you that any
additional patents will be issued. Although we will seek to defend our patents
and to protect our other proprietary rights, our actions may be inadequate to
protect our patents and other proprietary rights from infringement by others, or
to prevent others from claiming infringement by us of their patents and other
proprietary rights.

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

      FUTURE SALES OF OUR COMMON STOCK WOULD HAVE A DILUTIVE EFFECT ON CURRENT
STOCKHOLDERS AND COULD ADVERSELY IMPACT THE MARKET PRICE FOR OUR COMMON STOCK.



      Sales of a substantial number of shares of our common stock, or the
perception that sales could occur, whether at the then current market price or
below the then current market price, could adversely affect prevailing market
prices for our common stock. For example, in connection with our issuance of
$7,250,000 of senior secured amortizing convertible notes on October 12, 2006,
the holders of the notes may elect to convert the notes at any time into shares
of our common stock at a price of $0.67 per share (the "Conversion Price").
Payments of interest and principal on the notes may be made, at our option, in
cash or shares of our common stock registered for resale under the Securities
Act, and if we elect to make payments on the notes in shares, those payments
will be based on the lower of (i) the Conversion Price or (ii) 90% of the volume
weighted trailing average price per share of our common stock for the 20 trading
days ending 23 trading days prior to the date we make a payment. As additional
consideration to the purchasers of the notes, we issued five-year warrants that
currently permit the investors to purchase an aggregate of 18,034,830 shares of
our common stock at an exercise price of $0.51 per share. As further
consideration to the purchasers of the notes, we issued one-year warrants to
purchase up to 10,820,896 shares of our common stock at a price of $0.67 per
share. If the purchasers elect to exercise this one-year warrant, they will also
receive additional five-year warrants to purchase our common stock equal to the
number of shares purchased under this one-year warrant, with 50% of the
additional warrants having an exercise price of 115% of the per share purchase
price ($0.77 per share), and the remaining 50% of the additional five-year
warrants having an exercise price of 125% of the per share purchase price ($0.84
per share). In addition, if we issue additional shares of our common stock for
sale in future financings, our stockholders would experience additional
dilution.



                                        7



      BECAUSE OUR PRESIDENT IS AN EQUITY OWNER AND MANAGER OF BIOMED SOLUTIONS,
LLC, A SIGNIFICANT CREDITOR OF BIOPHAN, AND BECAUSE A FEW OF OUR DIRECTORS AND
OFFICERS ARE AFFILIATES OF OTHER ENTITIES WITH WHOM BIOPHAN HAS SIGNIFICANT
BUSINESS RELATIONSHIPS, THERE MAY BE CONFLICTS OF INTEREST THAT YOU SHOULD
CONSIDER BEFORE INVESTING IN OUR COMMON STOCK.


      Michael L. Weiner, our President and director, is the Manager and a 24.3%
beneficial owner of Biomed Solutions LLC, a company engaged in the business of
identifying and acquiring technologies in the biomedical field for exploitation.
Biomed is a beneficial owner of 9.65% of our outstanding common stock and holds
on aggregate of $4,430,000 face amount of our convertible promissory notes. Mr.
Weiner is also the Manager and 42.3% equity member of Technology Innovations,
LLC, which is a 57% equity member of Biomed. Further, Mr. Weiner is on the board
of Myotech, LLC, an entity in which Biomed is a 13% owner. Mr. Weiner, as well
John Lanzafame, our COO, are also on the Board of NaturalNano, Inc., the largest
shareholder of which is Technology Innovations, LLC. NaturalNano has entered
into a research and development agreement with us for drug eluting technology.


Because of the nature of our business and the business of these other entities,
the relationships of Messrs. Weiner and Lanzafame with these other entities may
give rise to conflicts of interest with respect to certain matters affecting us.
Potential conflicts may not always be resolved in a manner that is favorable to
us. We believe it is impossible to predict the precise circumstances under which
future potential conflicts may arise and therefore intend to address potential
conflicts on a case-by-case basis. Under Nevada law, directors have a fiduciary
duty to act in good faith and with a view to the best interests of the
corporation.



                                       8


                           FORWARD-LOOKING STATEMENTS

      This prospectus contains forward-looking statements. All statements other
than statements of historical facts contained in this prospectus, including
statements regarding our future results of operations and financial position,
business strategy and plans and objectives of management for future operations,
are forward-looking statements. These statements involve known and unknown
risks, uncertainties and other factors that may cause our actual results,
performance or achievements to be materially different from any future results,
performance or achievements expressed or implied by the forward-looking
statements.

      In some cases, you can identify forward-looking statements by terms such
as "may," "will," "should," "expects," "plans," "anticipates," "could,"
"intends," "target," "projects," "contemplates," "believes," "estimates,"
"predicts," "potential" or "continue" or the negative of these terms or other
similar words. These statements are only predictions. We have based these
forward-looking statements largely on our current expectations and projections
about future events and financial trends that we believe may affect our
business, financial condition and results of operations. We discuss many of the
risks in greater detail under the heading "Risk Factors." Also, these
forward-looking statements represent our estimates and assumptions only as of
the date of this prospectus. Except as required by law, we assume no obligation
to update any forward-looking statements after the date of this prospectus.

      This prospectus also contains estimates and other statistical data made by
independent parties and by us relating to market size and growth and other
industry data. This data involves a number of assumptions and limitations, and
you are cautioned not to give undue weight to such estimates. We have not
independently verified the statistical and other industry data generated by
independent parties and contained in this prospectus and, accordingly, we cannot
guarantee their accuracy or completeness. In addition, projections, assumptions
and estimates of our future performance and the future performance of the
industries in which we operate are necessarily subject to a high degree of
uncertainty and risk due to a variety of factors, including those described in
"Risk Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operation" and elsewhere in this prospectus. These and other factors
could cause results to differ materially from those expressed in the estimates
made by the independent parties and by us.

                                 USE OF PROCEEDS

      We will not receive any of the proceeds of the sale of shares of common
stock by the selling stockholders.

                                 DIVIDEND POLICY

      We have never declared or paid any cash dividends on our capital stock and
do not expect to pay any cash dividends for the foreseeable future. We intend to
use future earnings, if any, in the operation and expansion of our business. In
addition, the terms of our credit facility restrict our ability to pay
dividends, and any future indebtedness that we may incur could preclude us from
paying dividends.


                                        9




                      SELECTED CONSOLIDATED FINANCIAL DATA

The following consolidated statements of operations data for the years ended
February 28, 2007, 2006 and 2005 and the consolidated balance sheet data as of
February 28, 2007 and 2006 have been derived from our audited consolidated
financial statements and related notes, which are included elsewhere in this
Annual Report on Form 10-K. The statements of operations data for the years
ended February 29, 2004 and February 28, 2003 and the balance sheet data as of
February 28, 2005, February 29, 2004 and February 28, 2003 have been derived
from our audited consolidated financial statements that do not appear in this
prospectus. The consolidated selected financial data set forth below should be
read in conjunction with our consolidated financial statements, the related
notes, and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included elsewhere in this prospectus. The historical
results are not necessarily indicative of the results to be expected for any
future period.





                                    Year ended    Year ended    Year ended    Year ended    Year ended
                                   February 28,  February 28,  February 28,  February 29,  February 28,
Operating Data:                        2007          2006          2005          2004          2003
- ---------------------------------   ------------  ------------  ------------  ------------  ------------
                                                                             
Revenues                           $    989,529  $  1,044,861   $       -0-   $    75,000   $       -0-
Research and development expenses     7,190,975     6,829,142     2,629,980     1,240,430     1,373,124
General and administrative
  expenses                            6,824,945     8,451,886     3,337,185     1,911,003     1,792,593
Other Income (expense)               (6,721,659)     (854,376)      173,618      (642,128)     (272,535)
Minority interest in
  Myotech, LLC                        2,025,639       606,159           -0-           -0-           -0-
                                   ------------  ------------   -----------   -----------   -----------

Net loss                           $(17,722,411) $(14,484,384)  $(5,793,547)  $(3,718,570)  $(3,438,252)
                                   ------------  ------------   -----------   -----------   -----------
Loss per common share - basic
  and diluted                      $       (.23) $       (.19)  $      (.08)  $      (.08)  $      (.11)
                                   ------------  ------------   -----------   -----------   -----------
Weighted average shares
  outstanding                        77,864,738    75,787,052    69,263,893    44,017,010    31,731,051
                                   ------------  ------------   -----------   -----------   -----------






                                   February 28,  February 28,  February 28,  February 29,  February 28,
Balance Sheet Data:                    2007          2006          2005          2004          2003
- ---------------------------------  ------------  ------------  ------------  ------------  ------------
                                                                             
Current assets                      $ 2,631,520   $ 1,880,826   $2,007,181    $2,077,307    $ 476,353
Intagible assets, net                24,396,805    25,854,850          -0-           -0-          -0-
Total assets                         28,896,251    27,968,066    3,181,370     2,231,345      683,056
Current liabilities                   7,418,579     3,231,158    1,462,103       254,058      796,187
Long-term liabilities                11,548,195           -0-          -0-           -0-       83,333
Minority interest                    13,139,882    15,189,109          -0-           -0-          -0-
Stockholder' equity(deficiency)      (3,210,405)    9,547,799    1,719,267     1,977,287     (196,464)
Working capital (deficiency)         (4,787,059)   (1,350,332)     545,078     1,823,249     (319,834)



                                       10




                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our consolidated financial
statements and related notes that appear elsewhere in this prospectus. In
addition to historical consolidated financial information, the following
discussion contains forward-looking statements that reflect our plans, estimates
and beliefs. Our actual results could differ materially from those discussed in
the forward-looking statements. Factors that could cause or contribute to these
differences include those discussed below and elsewhere in this prospectus,
particularly in "Risk Factors."

Overview


      We are a technology development company with a strong focus on solving
real-world technical challenges facing the medical device industry. We currently
have 61 issued U.S. patents and over 60 U.S. and international patents pending.
We believe that a strong intellectual property portfolio is vital to our ability
to achieve and maintain royalties and product sales to major industrial partners
across our product lines.


      When selecting a market opportunity to address, we generate a wide range
of potential technical solutions. We strive to assure that each technical
solution we pursue is well-protected by intellectual property to ensure that we
have the capability to effectively market our technologies. Whenever practical,
we attempt to develop and patent multiple solutions for any given technology
requirement. This is done both to strengthen our position against competitors,
and to be in a position to offer multiple manufacturers alternative solutions,
such as for MRI safety of pacemakers, or MRI visibility of vascular stents, as
we introduce our technologies to the market. This approach has resulted in the
development of a range of core technologies, in various related segments of the
medical device market. We are aggressive in development and defense of our
intellectual property.

      We also continue development of a new cardiac assist device, the MYO-VAD,
through our relationship with Myotech, LLC. The MYO-VAD is a life-saving device
that provides benefits and competitive advantages not possible with other
cardiac assist devices. In the past, this technology has saved human lives and
holds the potential for the treatment of multiple forms of acute and chronic
heart failure.



                                       11



Revenue

      We currently derive revenue from development contract payments and license
fees from Boston Scientific Scimed and operating revenues from our European
subsidiary, consisting primarily of MRI-related testing and consulting services
to medical device manufacturers.

Research and Development Expenses

Research and development expenses consist primarily of:

      o     salaries and related costs for our research and development
            employees at our U.S. and European sites;

      o     funding for various research projects, often employing the use of
            consulting scientists and engineers;

      o     legal fees to file, renew, and defend our patent estate; and

      o     license fees for access to certain patent technologies developed by
            others.

General and Administrative Expenses

General and administrative expenses consist primarily of:

      o     salaries and related costs of executives, administrative and
            marketing personnel;

      o     professional service costs;

      o     public / investor relations;

      o     travel and related costs; and

      o     occupancy and other overhead costs.



                                       12



Stock-Based Compensation Expenses

      Effective March 1, 2006, the Company adopted SFAS No. 123 (revised),
"Share-Based Payment" (SFAS 123(R)) utilizing the modified prospective approach.
Prior to the adoption of SFAS 123(R), stock option grants to employees and
directors were accounted for in accordance with APB Opinion No. 25, "Accounting
for Stock Issued to Employees" (the intrinsic value method) and the
disclosure-only provisions of SFAS 123, "Accounting for Stock-Based
Compensation." Accordingly, employee compensation expense was recognized only to
the extent that the fair value of our common stock on the date of grant exceeded
the stock option exercise price.


      Under the modified prospective approach, SFAS 123(R) applies to new grants
and to grants that were outstanding on February 28, 2006 that are subsequently
modified, repurchased or cancelled. Under the modified prospective approach,
compensation cost recognized in fiscal 2007 includes compensation cost for all
share-based payments granted prior to, but not yet vested as of February 28,
2006, based on the grant-date fair value estimated in accordance with the
original provisions of SFAS 123, and compensation cost for all share-based
payments granted subsequent to February 28, 2006, based on the grant-date fair
value estimated in accordance with the provisions of SFAS 123(R). Prior periods
were not restated to reflect the impact of adopting the new standard.


Critical Accounting Policies and Estimates


RECENT ACCOUNTING PRONOUNCEMENTS

In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an
interpretation of FASB Statement No. 109" ("FIN 46"). FIN 46 clarifies the
accounting for uncertainty in income taxes recognized in a company's financial
statements in accordance with SFAS No. 109, "Accounting for Income Taxes." FIN
48 prescribes a recognition threshold and measurement attribute for the
financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. FIN 46 is effective for fiscal years
beginning after December 15, 2006. The Company is currently evaluating the
effect, if any, that FIN 46 will have on its consolidated financial position or
results of operations.

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements"
("SFAS No. 157"). SFAS No. 157 defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles, and expands
disclosures about fair value measurements. SFAS No. 157 applies under other
accounting standards that require or permit fair value measurements.
Accordingly, SFAS No. 157 does not require any new fair value measurement. SFAS
No. 157 emphasizes that fair value is a market-based measurement that should be
determined based on the assumptions that market participants would use in
pricing an asset or liability. Companies will be required to disclose the extent
to which fair value is used to measure assets and liabilities, the inputs used
to develop the measurements and the effect of certain of the measurements on
earnings (or changes in net assets) for the period. SFAS No. 157 is effective
for financial statements issued for fiscal years beginning after November 15,
2007, and interim periods within those fiscal years. The Company is currently
evaluating the effect, if any, that SFAS No. 157 will have on its consolidated
financial position or results of operations.


                                       13




In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities". SFAS No. 159 permits entities to
choose to measure many financial instruments and certain other items at fair
value. Most of the provisions of SFAS No. 159 apply only to entities that elect
the fair value option. We do not believe the adoption of this standard will have
a material impact on our Consolidated Financial Statements. This standard will
become effective for us in the first quarter of fiscal 2008.

In September 2006, the SEC issued Staff Accounting Bulletin No. 108 "Considering
the Effects of Prior Year Misstatements when Quantifying Misstatements in
Current Year Financial Statements" ("SAB No. 108"). SAB No. 108 provides
guidance on the consideration of the effects of prior year misstatements in
quantifying current year misstatements for the purpose of determining whether
the current year's financial statements are materially misstated. SAB No. 108 is
effective as of the end of the Company's 2006 fiscal year, allowing a one-time
transitional cumulative effect adjustment to beginning retained earnings as of
January 1, 2006, for errors that were not previously deemed material, but are
material under the guidance in SAB No. 108. The Company does not believe that
SAB No. 108 had a material effect on its consolidated financial position or
results of operations for the year ended February 28, 2007.

In December 2006, the FASB issued Staff Position No. EITF 00-19-2. This FSP
addresses an issuer's accounting for registration payment arrangements and
specifies that the contingent obligation to make future payments or otherwise
transfer consideration under a registration payment arrangement should be
separately recognized and measured in accordance with FASB No. 5. The guidance
in this FSP amends FASB Statements 133 and 150 and FASB Interpretation No. 45 to
include scope exceptions for registration payment arrangements. This FSP further
clarifies that a financial instrument subject to a registration payment
arrangement should be accounted for without regard to the contingent obligation
to transfer consideration pursuant to the registration payment arrangement. This
guidance is effective for financial statements issued for fiscal years beginning
after December 15, 2006. The Company will adopt this EITF in the first quarter
of 2007 in connection with the issuance of the Senior Secured Convertible Notes
and related warrants. See Note 11, "Senior Secured Convertible Notes" in the
accompanying financial statements.

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


Revenue Recognition

      We earn and recognize revenue under development agreements when the phase
of the agreement to which amounts relate is completed and we have 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.

      We recognize initial license fees over the term of the related agreement.
Revenue related to a performance milestone is recognized upon the achievement of
the milestone, as defined in the respective agreements.

      We also recognize revenues from testing services and consulting fees as
services are performed.

Liquidity and Capital Resources


      Our affiliate Biomed Solutions, LLC, has provided us with a $5 million
line of credit. Under the line of credit agreement, advances may be drawn down
in such amounts and at such times as we determine upon 15 days prior notice to
Biomed, except that we may not draw down more than $1,500,000 in any 30-day
period. Amounts borrowed will bear interest at the rate of 8% per annum and were
convertible into shares of our common stock at the rate of $1.46 per share.
Biomed's obligation to lend to us under the line of credit agreement expires on
June 30, 2007, on which date the entire amount borrowed by us (and not converted
into shares of our common stock) becomes due and payable. The balance of
borrowings on the line was $3,930,000 at February 28, 2007. Biomed is headed by
our President, Michael Weiner, who is also a substantial beneficial owner of
Biomed. The Biomed line of credit is on terms we believe to be competitive with
comparable transactions involving unaffiliated parties and was approved
unanimously by the disinterested members of our Board of Directors.


                                       14



      On May 27, 2005, we entered into a Line of Credit Agreement with Biomed,
whereby Biomed agreed to provide a line of credit facility of up to $2 million.
Borrowings under the line bear interest at 8% per annum, are payable on demand
after August 31, 2006 and are convertible, at Biomed's election into the
Company's common stock at 90% of the average closing price for the 20 trading
days preceding the date of borrowings under the line. In June 2005, we borrowed
the entire $2 million under the line in two separate draws of $1 million each,
in accordance with the agreement. On August 31, 2005, Biomed elected to convert
$1 million of the note plus accrued interest into 480,899 shares of common stock
at which time, the remaining discount related to the $1 million portion of the
loan was fully expensed. On October 7, 2005, we repaid $500,000 of principal and
all accrued interest on the loan. The balance of borrowings on the line was
$500,000 at February 28, 2007.


On October 11, 2006, in connection with our Securities Purchase Agreement dated
October 11, 2006 with Iroquois Master Fund Ltd and other private investors (the
"Purchase Agreement"), we amended our January 24, 2006 Line of Credit Agreement
(the "Biomed Line of Credit Agreement") with Biomed and the Convertible
Promissory Note in the original principal amount of $5,000,000 issued by us to
Biomed on January 24, 2006 pursuant to the Biomed Line of Credit Agreement (the
"$5,000,000 Biomed Note"). The amendments reduce the price at which the
$5,000,000 Biomed Note is convertible into shares of our common stock from $1.46
per share to a conversion price of $0.67. The amendments also eliminate our
obligation to draw down the entire credit facility. In connection with the
Purchase Agreement, we also entered into a Subordination and Standstill
Agreement (the "Subordination Agreement") with Biomed and the investors who are
parties to the Purchase Agreement, pursuant to which Biomed agreed (i) to
subordinate its rights to payment under the $5,000,000 Biomed Note and the
Convertible Promissory Note in the original principal amount of $2,000,000
issued by us to Biomed on May 27, 2005 to the rights of the investors under the
Notes and (ii) to convert the entire outstanding amount of principal and
interest due under the $5,000,000 Biomed Note in excess of $700,000 into shares
of our common stock upon the effectiveness of an amendment to our Articles of
Incorporation to increase the number of our authorized shares which we have
agreed, in the Purchase Agreement, to propose to our shareholders.

      As described in greater detail in Note 13 under the heading "Stockholders'
Equity" in the "Notes to the Consolidated Financial Statements", we are a party
to a Securities Purchase Agreement dated May 27, 2005 (the "SBI Agreement") with
SBI Brightline XI, LLC for a $30 million fixed price financing involving the
sale to SBI of up to 10,000,000 shares of our common stock. We elected to sell
the first tranche of 1 million shares at $2 per share on May 23, 2006; the funds
from the sale of this first tranche have been received. We elected to sell the
second tranche of 1 million shares at $2 per share on July 21, 2006. To date
$1,175,000 of the funds from the sale of this tranche has been received and
587,500 additional shares have been issued. On October 11, 2006, we elected to
exercise all of our remaining put rights, requiring SBI to purchase the
remaining tranches at a price of $26,000,000. SBI has failed to meet its
obligation to purchase these shares.


      We believe that SBI's failure to purchase all of the shares which we
elected to sell to them on July 21, 2006 or any of the shares which we elected
to sell to them on October 11, 2006 constitutes a breach of SBI's contractual
obligations under the SBI Agreement. Under the SBI Agreement, SBI is irrevocably
bound to purchase the shares in the amounts and at the times determined by us.
We have been engaged in discussions with SBI in an effort to address SBI's
default. In our Purchase Agreement with Iroquois Master Fund Ltd and other
investors (described above) we agreed (i) to enforce all of our rights and
remedies under the SBI Agreement in connection with the breach by SBI, and (ii)
not to agree to any settlement, amendment, waiver or consent under the SBI
Agreement without the prior written consent of Iroquois. On April 5, 2007, SBI
brought suit against us in Orange County, California, alleging that in September
2006 we entered into an oral settlement agreement pursuant to which the SBI
Agreement was terminated and SBI's obligation to purchase shares was
extinguished. We believe that SBI's claim is without basis in fact and we intend
to defend the lawsuit vigorously.


                                       15




      Effective November 30, 2005, we entered into a Securities Purchase
Agreement for the acquisition of an initial 35% interest in Myotech, LLC
("Myotech"), a New York limited liability company, whereby we exchanged
4,923,080 shares of our common stock for 3,768,488 Class A (voting) units of
Myotech. Based upon the terms of the Securities Purchase Agreement, we were
obligated to purchase for cash consideration of $2,225,000 an additional 811,037
Class A units. We may also elect to acquire up to an additional 3,563,097 Class
A units for further cash consideration of up to $9,775,000 over a 24-month
period, which may result in our owning a majority interest in Myotech. During
the three month period ended February 28, 2006, we provided $1,185,000 of
additional funding to Myotech in exchange for 431,946 Class A units, which
increased our ownership to 38%. During the year ended February 28, 2007, we
provided $1,040,000 of additional funding, satisfying the mandatory $2,225,000
cash contribution, and received in exchange 379,091 Class A units of Myotech. We
also provided an additional $1,994,349 to Myotech against Milestone 2 during the
year ended February 28, 2007 for 726,963 issued Class A units, which increased
our ownership to 43.7%. Additional investments of $105,175 against Milestone 2
have been made since February 28, 2007 for 38,337 additional issued Class A
units, which raised our ownership percentage to 43.8% to date.


      We have determined that Myotech is a Variable Interest Entity within the
meaning of FIN 46(R) and that we are the primary beneficiary (as defined in FIN
46(R)). Consequently, the financial statements of Myotech have been consolidated
with our consolidated financial statements for all periods ending on or after
November 30, 2005, the date of our initial investment in Myotech.


      On October 11, 2006, we entered into a Securities Purchase Agreement (the
"Purchase Agreement") with 10 private investors led by Iroquois Master Fund Ltd
("Iroquois"). Pursuant to the Purchase Agreement, on October 12, 2006 we issued
$7,250,000 of Senior Secured Convertible Notes (the "Notes") to the investors
and received proceeds of $6,219,880 after paying estimated fees and expenses of
$1,030,120 related to the transaction. The holders of the Notes may elect to
convert the Notes at any time into shares of our common stock based upon a price
of $0.67 per share (the "Conversion Price"). Interest on the outstanding
principal amount under the Notes is payable quarterly at a rate equal to the
six-month London InterBank Overnight Rate plus 500 basis points, with a minimum
rate of 10% per annum and a maximum rate of 12% per annum, payable at our option
in cash or shares of our common stock registered for resale under the Securities
Act of 1933, as amended (the "Securities Act"). If we elect to make an interest
payment in common stock, the number of shares issuable by us will be based upon
the lower of (i) 90% of the 20-day trailing average volume weighted average
price per share as reported on Bloomberg LP (the "VWAPS") or (ii) the Conversion
Price. Principal on the Notes amortizes and payments are due in 33 equal monthly
installments commencing four months following issuance of the Notes, and may be
made at our option in cash or shares of our common stock registered for resale
under the Securities Act. If we elect to make a principal payment in common
stock, the number of shares issuable by us will be based upon the lower of (i)
87.5% of the 15-day trailing VWAPS prior to the principal payment date or (ii)
the Conversion Price. Our obligations under the Notes are secured by a first
priority security interest in substantially all of our assets pursuant to a
Security Agreement dated as of October 11, 2006 among us, the investors and
Iroquois, as agent for the investors (the "Security Agreement").

      As further consideration to the investors, we issued to the investors
one-year warrants to purchase an aggregate of 10,820,896 shares of our common
stock at a price of $0.67 per share. If the investors elect to exercise these
one-year warrants, they will also receive additional five-year warrants to
purchase the shares of our common stock equal to the number of shares purchased
under the one-year warrants, with 50% of the additional warrants having an
exercise price of 115% of the per share purchase price, and the remaining 50% of
the additional five-year warrants having an exercise price of 125% of the per
share purchase price. We also issued to the investors five-year warrants to
purchase an aggregate of 10,820,896 shares of our common stock. The first
five-year warrants allow for the purchase of 5,410,448 shares of our common
stock at an exercise price of $0.81 per share, and the second five-year warrants
allow for the purchase of 5,410,448 shares of our common stock at an exercise
price of $0.89 per share. The warrants contain anti-dilution protection that,
should we issue equity or equity-linked securities at a price per common share
below the exercise price of the five-year warrants, will automatically adjust
the exercise price of the warrants to the price at which we issue such equity or
equity-linked securities.


                                       16




      We further agreed to register for resale under the Securities Act the
common stock issuable upon the exercise of the warrants and any shares of common
stock we may issue to the holders of the Notes in connection with payments of
interest and principal, or which we are obligated to issue upon any conversion
of the Notes at the option of the holders.


      On February 21, 2007, we entered into a Forbearance Agreement (the
"Forbearance Agreement") with the investors pursuant to which the investors
agreed that, during the period commencing on February 16, 2007 and ending on the
earlier of (i) March 31, 2007 or (ii) the date on which any Termination Event
(as defined in the Forbearance Agreement) first occurs (the "Forbearance
Period"), they agreed to forbear from exercising any and all of the rights and
remedies which they may have against us or any of our assets under the Notes or
the Purchase Agreement or at law or in equity as a result of any default under
the Notes or as a result of the occurrence of certain events with respect to the
Purchase Agreement. In exchange for entering into the Forbearance Agreement, we
issued pro rata to the investors three-year warrants for the purchase of an
aggregate of 60,000 shares of our common stock at an exercise price of $0.51 per
share (the "Fee Warrants").

Upon the issuance of the Fee Warrants, the exercise prices of the five-year
warrants issued to the investors pursuant to the Purchase Agreement (the
"Original Warrants") for the purchase of an aggregate of 10,820,896 shares of
our common stock were automatically adjusted from $0.81 per share and $0.89 per
share, respectively, to $0.51 per share, and the number of shares of our common
stock issuable upon exercise of the Original Warrants was automatically
adjusted, proportionately, to an aggregate of 18,034,830 shares. In the
Forbearance Agreement, the investors waived, with respect to the issuance of the
Fee Warrants, application of similar anti-dilution adjustments contained in the
Notes and in a third series of warrants for the purchase, on or before October
12, 2007, of an aggregate of 10,820,896 additional shares of our common stock at
an exercise price of $0.67 per share (the "One Year Warrants"). C.E. Unterberg
Towbin, which holds a warrant for the purchase of 865,672 shares of our common
stock at an exercise price of $0.67 per share, issued to it in connection with
its services as exclusive placement agent under the Purchase Agreement,
separately agreed to waive, with respect to the issuance of the Fee Warrants,
application of the anti-dilution provisions set forth in that warrant. Because
the anti-dilution adjustment to the Original Warrants was accounted for as a
modification of the Original Warrants, we recorded an expense in the period
ended February 28, 2007 which is included in the caption "Change in fair value
of warrant liabity" in the statement of operations for the year ended February
28, 2007. In accordance with the guidance provided by EITF 00-19, Accounting for
Derivative Financial Instruments Indexed to, and Potentially Settled in, a
Company's Own Stock, we recorded a liability in the period ended February 28,
2007 relating to the issuance of the Fee Warrants and the increase in the number
of shares of our common stock issuable upon exercise of the Original Warrants.
The fair value of these instruments are included in "Fair value of warrant
liability" on the February 28, 2007 balance sheet.

      Based on our current cash, anticipated licensing revenues and anticipated
expenditures, we believe that we have adequate working capital resources for the
upcoming two to three months of operation.

As presented in the accompanying financial statements, we have been in the
development stage since inception, incurring recurring losses from operations,
and as of February 28, 2007, our current liabilities exceeded its current assets
by $4,787,059 and the Company has a stockholders' deficiency of $3,210,405.
These factors raise potential doubt about the our ability to continue as a going
concern.


                                       17




In order to address the current situation, management has instituted a cost
reduction program that included a reduction in monthly costs from approximately
$1,100,000 at this time last year to under $500,000 per month currently. In
addition, we have reduced our investments in several product lines and pursued
alternative funding vehicles. For example, the Company has reorganized its
efforts on the Myotech cardiac assist device development program while keeping
core functions operational and maintaining intellectual property and designs.
Other actions that are being implemented are:

      o     We have reoriented our development path to address the large unmet
            market of acute heart failure. The standard of care, CPR,
            defibrillation and drugs, often does not revive the patient, and
            there are no known alternatives that can be implanted in time and
            restore full cardiac output. The Myotech technology represents a
            market opportunity for in hospital cardiac arrest plus acute
            myocardial infarction with cardiogenic shock, of over 300,000
            patients per year, with a reimbursement potential of up to $40,000
            per unit. We anticipate transactions with U.S. and offshore
            distributors to gain distribution rights before we are approved.

      o     We have also developed solutions for making medical devices
            including pacemakers, defibrillators and neurostimulators safe for
            MRI. In addition to offering solutions to the heating problem, we
            have been granted two patents for solutions to the the induced
            voltage problem which can cause potentially fatal induced voltages
            to rapidly pace the heart, or throw it into fibrillation.

      o     We continue development work on non-invasive detection of in-stent
            restenosis and clotting, for which we have the potential to generate
            $3 million in milestone payments and a royalty of 3% on drug coated
            stents under out agreement with Boston Scientific. In the fourth
            quarter Boston Scientific renewed its license by making its annual
            payment of $250,000.

      o     Development of the biothermal battery with NASA was curtailed during
            the fourth quarter of fiscal 2007 but we pursued an SBIR grant for
            $100,000 for a Homeland Security application and we were successful
            in winning the award. The grant leverages the biothermal battery
            core technology into an application for powering ground sensors. We
            have filed grant applications for additional funding.

      o     We are in discussions with a major biomedical device company
            regarding a potential business arrangement for the Myotech
            technology, which could take the form of an exclusive license or a
            possible acquisition, either of which has the potential to provide
            working capital.

      o     We are also expanding our pursuit of grant funding for the Myotech
            device. We were approved for $1.4 million in funding from Congress
            in 2006. $1 million was funded and $400,000 was not funded when
            Congress reviewed the overall budget and cut back certain funding.

      o     We have applied for several grants with several leading medical
            centers and anticipate additional funds from those sources.

We believe these factors and actions will contribute toward obtaining sufficient
financing for the near term and ultimate profitability.


Accounting Requirements Resulting from the Securities Purchase Agreement dated
October 11, 2006


                                       18





      The accounting treatment for the $7,250,000 in Senior Secured Convertible
Notes and related warrants issued pursuant to the Securities Purchase Agreement
dated October 11, 2006 among Biophan and the Investors named therein (the
"Purchase Agreement") must be in accordance with EITF 00-19, Accounting for
Derivative Financial Instruments Indexed to, and Potentially Settled in, a
Company's Own Stock and EITF 00-27 Application of Issue No. 98-5 to Certain
Convertible Instruments. EITF 00-19 requires freestanding contracts that are
settled in a company's own stock to be designated as an equity instrument, an
asset or a liability. A contract designated as a liability must be carried at
fair value with any changes in fair value recorded in results of operations for
the current period. We have determined that the warrants issued pursuant to the
Purchase Agreement, due to the registration rights requirements contained
therein, as well as other outstanding warrants, due to the insufficiency of the
Company's current number of authorized and unissued shares of common stock,
should be designated as a liability. Accordingly, using the Black-Scholes method
to compute the fair value, we recorded a fair value of warrant liability of
$10.5 million. Further, we recognized the allocation of value to the warrants by
recording a $7,250,000 discount against the Notes. The discount will be
amortized to Interest Expense over the term of the Note, using the effective
interest method.

      In addition, on October 11, 2006, in connection with our Securities
Purchase Agreement dated October 11, 2006 with Iroquois Master Fund Ltd and
other private investors (the "Purchase Agreement"), we amended our January 24,
2006 Line of Credit Agreement (the "Biomed Line of Credit Agreement") with
Biomed and the Convertible Promissory Note in the original principal amount of
$5,000,000 issued by us to Biomed on January 24, 2006 pursuant to the Biomed
Line of Credit Agreement (the "$5,000,000 Biomed Note"). The amendment reduced
the price at which the $5,000,000 Biomed Note is convertible into shares of our
Common Stock from $1.46 per share to a conversion price of $0.67. In connection
with the Purchase Agreement, we also entered into a Subordination and Standstill
Agreement (the "Subordination Agreement") with Biomed and the investors who are
parties to the Purchase Agreement, pursuant to which Biomed agreed (i) to
subordinate its rights to payment under the $5,000,000 Biomed Note and the
Convertible Promissory Note in the original principal amount of $2,000,000
issued by us to Biomed on May 27, 2005 to the rights of the investors under the
Notes and (ii) to convert the entire outstanding amount of principal and
interest due under the $5,000,000 Biomed Note in excess of $700,000 into shares
of our common stock upon the effectiveness of an amendment to our Articles of
Incorporation to increase the number of our authorized shares which we have
agreed, in the Purchase Agreement, to propose to our stockholders. For
accounting purposes, these amendments have been treated, in substance, as an
extinguishment of the old debt. Accordingly, the remaining unamortized discount
on the old debt of $1,098,442 was written off, a loss on extinguishment of
$670,053 on the old debt was recognized, and a discount of $175,970 was recorded
on the new debt and fully amortized during the year ended February 28, 2007.


      The warrants subject to the Subordination Agreement were not reclassified
because Biomed agreed not to exercise them until the proposed increase in the
number of authorized shares is effective, and Biomed has agreed not to require a
cash settlement in the event the number of authorized shares is not increased.

Accounting for Income Taxes


      We are a development stage company with accumulated deficits through
February 28, 2007 of $49,692,069. We plan to use our net operating loss
carryforwards to offset our future taxable net income until the accumulated net
operating losses are exhausted.



                                       19



Overview of Results of Operations

The following table sets forth our results of operations for the periods shown:



                                             Year Ended February 28,
                                      ---------------------------------------
                                          2007          2006          2005
                                      ------------  ------------  -----------
Revenues:
    Development payments              $         --  $    225,000  $        --
    License fees                           562,600       479,166           --
    Testing services and
      consulting fees                      427,029       340,695           --
                                      ------------  ------------  -----------
                                           989,529     1,044,861           --
Operating expenses:
    Research and development             7,190,975     6,829,142    2,629,980
    General and administrative           6,824,945     8,451,886    3,337,185
    Write-down of intellectual
      property rights                           --            --           --
                                      ------------  ------------  -----------
                                        14,015,920    15,281,028    5,967,165
                                      ------------  ------------  -----------
Operating loss                         (13,026,391)  (14,236,167)  (5,967,165)
Other income(expense):
    Interest income                         82,224        70,701       11,869
    Interest expense                    (4,303,543)   (1,140,866)          --
    Additional expense related to
      warrants                          (7,304,105)           --           --
    Change in fair value of warrant
      liability                          5,318,064            --           --
    Loss on extinguishment of debt -
      related party                       (670,053)           --           --
    Other income                           161,196       215,789      161,749
    Other expense                           (5,442)           --           --
                                      ------------  ------------  -----------
                                        (6,721,659)     (854,376)     173,618
Loss from continuing operations
  before minority interest
  in Myotech, LLC                      (19,748,050)  (15,090,543)  (5,793,547)
Minority interest in
  Myotech, LLC                           2,025,639       606,159           --
                                      ------------  ------------  -----------
Loss from continuing operations        (17,722,411)  (14,484,384)  (5,793,547)
Loss from discontinued operations               --            --           --
                                      ------------  ------------  -----------
Net loss                              $(17,722,411) $(14,484,384) $(5,793,547)
                                      ============  ============  ===========
Loss per common share - basic
  and diluted                         $      (0.23) $      (0.19) $     (0.08)
                                      ============  ============  ===========
Weighted average shares
  outstanding                           77,864,738    75,787,052   69,263,893
                                      ============  ============  ===========


                                       20



Tabular Disclosure of Contractual Obligations

The following table sets forth information, as of February 28, 2007, our most
recent fiscal year end, with respect to our known contractual obligations
reflected on our Balance Sheet as of such date:





                                                         Payment Due By Period
                                       -----------------------------------------------------------
                                                    Less Than      1 - 3       3 - 5    More Than
                                          Total      1 Year        Years       Years     5 Years
                                       -----------  ----------  ----------  ----------  ----------
                                                                         
Contractual Obligations:
Long-Term Debt                         $ 7,250,000  $2,856,061  $4,393,939  $      -0-  $      -0-
Capital Lease Obligations                   27,049       7,445      19,604         -0-         -0-
Operating Lease Obligations              2,301,550     102,891     286,094     311,626   1,600,939
Cooperative Research and Development
  Agreement (CRADA)                        112,500      75,000      37,500         -0-         -0-
License Agreements                       5,447,500     337,500     737,500     690,000   3,682,500
Employment Agreements                      313,750     218,750      95,000          --          --
                                       -----------  ----------  ----------  ----------  ----------
      Total                            $15,452,349  $3,597,647  $5,569,637  $1,001,626  $5,283,439
                                       ===========  ==========  ==========  ==========  ==========



                                       21



Lease Obligation

The Company was obligated under operating leases for office space originally
expiring January 30, 2008, which the Company had the right to terminate upon
ninety days prior written notice to the landlord. The notice of termination was
given to the landlord and we occupied the premises on a month-to-month basis
until February 9, 2007. The Company has entered into new operating leases for
office space commencing March 2007 and expiring April 30, 2022, subject to our
right to terminate at any time after December 31, 2008 upon 90 days' notice.

The following is a schedule of future minimum rental payments, included annual
increases, required under the operating lease agreements:



Year Ending
February 28,     Amount
- -------------  ----------
    2008       $  102,891
    2009          139,558
    2010          146,536
    2011          153,636
    2012          157,990
Thereafter      1,600,939
               ----------
               $2,301,550
               ==========



Rent expense, net of subrentals, charged to operations under these operating
lease aggregated $113,161, $70,775 and $58,546 for the years ended February 28,
2007, 2006, and 2005, respectively. Rent expense, net of subrentals, charged to
operations for the period from August 1, 1968 (Date of Inception) to February
28, 2006 was $368,626.

License Agreements

We are obligated under seven license or royalty agreements for patents that
expire at various dates through 2025. These agreements may be terminated by us
with 60 days written notice. Aggregate minimum future payments over the
remaining life of the patents under these agreements total $5,447,500.
License/royalty expense charged to operations was $152,410, $594,890, and
$89,880 for the years ended February 28, 2007, 2006 and 2005 respectively.

Employment Agreements

We have employment agreements with our 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.

Also, we have an employment contract with an officer that expires November 9,
2007, and Biophan Europe has an employment agreement with a key employee that
expires 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,
2007, excluding bonuses and other awards approximates $313,750.

Investment in Myotech, LLC

Effective November 30, 2005, we entered into a Securities Purchase Agreement for
the acquisition of an initial 35% interest in Myotech, LLC ("Myotech"), a New
York limited liability company, whereby we exchanged 4,923,080 shares of our
common stock for 3,768,488 Class A (voting) units of Myotech.


                                       22



Based upon the terms of the Securities Purchase Agreement, we were obligated to
purchase for cash consideration of $2,225,000 an additional 811,037 Class A
units. We may also elect to acquire up to an additional 3,563,097 Class A units
for further cash consideration of up to $9,775,000, over a 24-month period,
which may result in our owning a majority interest in Myotech. During the three
month period ended February 28, 2006, we provided $1,185,000 of additional
funding for 431,946 additional Class A units of Myotech. During 2007, we
provided $1,040,000 of additional funding satisfying the mandatory $2,225,000
cash contribution, and received in exchange 379,091 additional Class A units of
Myotech. In addition, Biophan has also provided an additional investment of
$1,994,349 to Myotech against milestone 2 in the year ended February 28, 2007
for 726,963 newly issued Class A units, which increased our ownership to 43.7%.
Additional investments of $105,175 against milestone 2 have been made since
February 28, 2007 for 38,337 additional newly issued Class A units, which raised
our ownership percentage to 43.8% to date.

We have determined that Myotech is a Variable Interest Entity within the meaning
of FIN 46(R) and that we are the primary beneficiary (as defined in FIN 46(R)).
Consequently, the financial statements of Myotech have been consolidated with
our consolidated financial statements for all periods ending on or after
November 30, 2005, the date of our initial investment in Myotech.

Additional Expense Related to Warrants.

In accordance with the guidance provided by EITF 00-19, Accounting for
Derivative Financial Instruments Indexed to and Potentially Settled in, a
Company's Own Stock, we incurred this expense in connection with the issuance of
convertible notes and warrants on October 12, 2006 to record the total fair
value of derivative liability, originally recorded at $15,309,980. This amount
is adjusted quarterly. The adjustment is recorded under a separate caption
"Change in Fair Value of Warrant Liability".

Fair Value of Warrant Liability.

In accordance with the guidance provided by EITF 00-19, Accounting for
Derivative Financial Instruments Indexed to and Potentially Settled in, a
Company's Own Stock, we have recorded a liability of $10,157,937 for the fair
value of the warrants related to the Senior Secured Convertible Notes at
February 28, 2007 in order to provide for the possibility that we may be unable
to comply with the registration rights of the lenders as contained in the
Securities Purchase Agreement and we currently do not have sufficient available
authorized shares to execute a potential conversion of the Notes and related
warrants and thus we would be required to settle the contract in cash. In
addition, since we currently do not have sufficient available authorized shares
to execute a potential conversion of other outstanding warrants if requested to
do so by the grantees, we could be required to settle any conversion requests in
cash. Therefore, we reclassified warrants with an approximate value of $756,000
from equity to the warrant liability. The fair value of this amount was $336,069
at February 28, 2007. The Company has obtained stockholder approval to increase
the authorized shares at a Special Meeting held on May 8, 2007. The total fair
value of derivative liability, originally recorded at $15,309,980 on October 12,
2006, was adjusted by $4,815,974 to $10,494,006 at February 28, 2007. The fair
value of the derivative liability pertaining to the warrants is volatile. For a
further explanation on the factors and assumptions included in the Black-Scholes
model to derive the fair values, please refer to the notes to the consolidated
financial statements under the heading 'Fair Value of Warrant Liability'.



                                       23



Comparison of the Years Ended February 28, 2007 and 2006

Revenues

Revenues for the year ended February 28, 2007 were $0.990 million compared to
$1.045 in 2006. Our 2007 revenues pertain to $0.563 million in license fees from
our licensing agreement with Boston Scientific Scimed, Inc. and $0.427 million
from our MRI testing services and consulting fees in Biophan Europe. Our 2006
revenues pertain to $0.704 million in development payments and license fees from
our licensing agreement with Boston Scientific Scimed, Inc. and $0.341 million
from our MRI testing services and consulting fees in Biophan Europe.

Operating Expenses

Research and Development. These expenses primarily consist of the
personnel-related, technical consulting, professional fees for patent attorneys,
and license fees. For the year ended February 28, 2007, these expenses increased
by 5.3%, or $0.362 million, to $7.191 million compared to $6.829 million for
2006. Because we consolidated Myotech, LLC at November 30, 2005, the fourth
quarter of 2006 included $0.443 million of Myotech operational expenses and
$0.344 of Myotech intangible assets amortization. We consolidated Myotech LLC
for the fiscal year.The most significant changes in this category of expenses
include a decrease in non-cash stock option compensation expense of $1.5 million
due primarily to a 2006 expense of $ 1.948 million of non-cash expense from the
vesting of contingent stock options that vested upon the achievement of
specified performance-based milestones, which was partially offset by 0.1
million for additional professional staff and salary increases. In addition, we
increased our funding of various research and development projects by $1.3
million and we incurred $1.0 million of increased noncash patent amortization
expense related to the Myotech intangible assets, which was partially offset by
$0.6 million of decreased spending for outside professional services related to
licenses and patent maintenance.

General and Administrative.

General and administrative expenses include the costs of personnel-related
expenses for the administrative, legal, finance, information technology, and
communications functions. For the year ended February 28, 2007, these expenses
declined by 19%, or $1.627 million to $6.825 million compared to $8.452 million
for 2006. Because we consolidated Myotech LLC at November 30, 2005, the fourth
quarter of 2006 included $0.165 million of Myotech operational expenses. We
consolidated Myotech LLC for the fiscal year 2007. The most significant changes
in this category of expenses include a decrease in non-cash stock option
compensation expense of $1.7 million due primarily to a 2006 expense of $ 2.296
million of non-cash expense from the vesting of contingent stock options that
vested upon the achievement of specified performance-based milestones, which was
partially offset by 0.5 million for additional professional staff and salary
increases; increased outside professional services of $0.6 million primarily
related to audit, first-year Sarbanes Oxley compliance, and financial
consulting. These cost increases were offset by decreased spending by $1.0
million for other expenses.



                                       24



Other Income (Expense)

Interest Expense. We incurred interest expense amounting to approximately $4.304
million for the year February 28, 2007 compared to $1.141 million of expense for
the year ended February 28, 2006. The increased expense (noncash) is attributed
to $2.3 million in interest under provisions of the $7.25 million Senior Secured
Convertible Notes held by Iroquois Master Fund Ltd and other investors; the
write-off of $1.1 million of the remaining unamortized discount on a note to
Biomed Solutions, LLC; and approximately $0.9 million of interest payable on
borrowings under lines of credit with Biomed Solutions, LLC.

Change in Fair Value of Warrant Liability. We adjusted this liability of $10.494
million primarily related to the Senior Secured Convertible Notes at February
28, 2007, or a decrease in expense of $5.318 million from our initial recording
of this derivative liability of $15.309 million at the closing date of October
12, 2006.

Loss on Extinguishment of Debt. We incurred a loss on the extinguishment of the
note (noncash) to Biomed Solutions, LLC due to the substantial amendment to the
note to Biomed, amounting to $0.670 million.

Minority Interest in Myotech LLC. The loss of $2.026 million is a pro rata share
of the loss incurred by Myotech, LLC attributable to minority interests for the
year ended February 28, 2007. The loss of $0.606 million is the pro rata share
of the loss incurred by Myotech from November 30, 2005 (date of acquisition)
through February 28, 2006. As further described under the heading "Business
Combinations" in the "Notes to Consolidated Financial Statements" the Company
holds a 43.7% interest in Myotech LLC, valued on our balance sheet at February
28, 2007 at $12.687 million, which we must consolidate as a variable interest
entity since the Company is deemed to be the primary beneficiary in the
relationship with Myotech.


Comparison of the Years Ended February 28, 2006 and 2005

Revenues

Revenues for the year ended February 28, 2006 were $1.045 million compared to no
revenues in 2005. Our 2006 revenues pertain to $0.704 million in development
payments and license fees from our licensing agreement with Boston Scientific
Scimed, Inc. and $0.341 million from our MRI testing services and consulting
fees in Biophan Europe.

Operating Expenses

Research and Development. These expenses primarily consist of the
personnel-related, technical consulting, professional fees for patent attorneys,
and license fees. For the year ended February 28, 2006, these expenses increased
by 160%, or $4.199 million, to $6.829 million compared to $2.630 million for
2005. Because we consolidated Myotech, LLC at November 30, 2005, the fourth
quarter included $0.443 million of Myotech operational expenses and $0.344 of
Myotech intangible assets amortization. Excluding these expenses, the
year-to-year comparison would have reflected an increase of 130%,or $3.411
million The most significant increase was caused by $1.948 million in non-cash
contingent stock option expense due to the vesting of contingent options that
vested upon the achievement of specified performance-based milestones. With the
inclusion of the Myotech expenses, we also increased funding of various research
and development projects by $0.846 million; we incurred increased licensing fees
by $0.515 million, and increased expenses for additional professional staff and
salary increases for current staff of $0.538 million.

General and Administrative. General and administrative expenses include the
costs of personnel-related expenses for the administrative, legal, finance,
information technology, and communications functions. For the year ended
February 28, 2006, these expenses rose by 153%, or $5.115 million to $8.452
million compared to $3.337 million for 2005. Because we consolidated Myotech LLC
at November 30, 2005, the fourth quarter included $0.165 million of Myotech
operational expenses. The most significant increase in expense was caused by
approximately $2.296 million in non-cash contingent stock option expense due to
the vesting of contingent options that vested upon the achievement of specified
performance-based milestones. With the inclusion of the Myotech expenses,
outside services increased by $1.666 million, consisting primarily of additional
legal and financial consulting and communications expenses, combined with $0.358
million in added costs for new staff and increased salaries, and $0.518 million
for travel and other administrative expenses.

Other Income (Expense)

Interest Expense. We incurred interest expense amounting to approximately $1.141
million primarily related to a $5 million line of credit from Biomed Solutions,
LLC ("Biomed"), which included a beneficial conversion feature of approximately
$1.0 million. The discount is being amortized over the term of the line of
credit. The Company incurred no interest expense in 2005.

Minority Interest. This amount is the pro rata share of the loss incurred by
Myotech LLC for the 4th quarter of fiscal 2006 at which time Myotech is
consolidated with the Company. For further information regarding the basis of
consolidation of Myotech, please refer to Footnote 3 in the Notes to the
Consolidated Financial Statements.



                                       25



                                    BUSINESS

OVERVIEW

      Biophan Technologies, Inc. is a technology development company with a
strong market focus. We were co-founded by current President Michael Weiner and
Wilson Greatbatch, inventor of the first successfully implanted cardiac
pacemaker, which he licensed to Medtronic. We went public in December 2000. We
have assembled a veteran management team, with extensive experience in
technology development, product development, intellectual property management
and business-to-business technology licensing. We were formed to enable all
medical devices to be capable of safely and successfully working with Magnetic
Resonance Imaging (MRI).

MRI Related Technologies

      Our technologies for MRI safety and image compatibility apply to a broad
segment of the medical device marketplace. The limitations of existing devices
are becoming increasingly significant as MRI continues to grow as a premier
imaging modality due to its exceptional soft tissue contrast, ability to provide
functional data and its lack of ionizing radiation, which separates MRI from
fluoroscopy and CT imaging.

      The limitations of existing medical devices with MRI are two-fold. Some
devices have safety limitations - patients with these types of implants would be
in danger if they were placed in an MRI machine. These devices are currently
contraindicated for use with MRI, preventing patients with these implants from
having potentially life saving diagnostic MRI procedures performed. Devices that
are currently contraindicated for use with MRI include pacemakers, implantable
cardioverter defibrillators (ICDs) and neurostimulators.

      Other types of medical devices are safe for use with MRI, but interfere
with the MRI image, creating an image artifact (distortion) when viewed under
MRI. This limited MRI image compatibility prevents imaging either within the
implant or in the area immediately around the implant. Devices that have limited
MRI image compatibility include stents, heart valves, vena cava filters,
occluders and certain types of catheters and guidewires.

      Biophan has solutions to the problems of MRI safety and image
compatibility that enable:

            Removal of the MRI contraindications from an important category of
            implants, including pacemakers, ICDs and neurostimulators, allowing
            millions of patients with these implants to receive potentially life
            saving diagnostic MRI procedures;

            MRI image compatible stents which allow for the detection of
            in-stent restenosis and thrombus detection with a non-invasive MRI
            procedure rather than a much more invasive angiogram or intravenous
            ultrasound procedure;

            MRI image compatible vena cava filters, which allow for
            visualization within the filter for the detection of thrombi caught
            in the filter, enabling the physician to determine when it is safe
            to remove the device;

            MRI image compatible stent-based heart valves, which can be placed
            under MRI guidance and enable non-invasive follow up and evaluation
            of the function of the valve; and

            Catheters and guidewires designed to operate in an MRI environment
            safely and effectively, enabling much broader adoption of MRI guided
            interventional procedures which benefit from improved soft tissue
            contrast and reduce the exposure of both the patient and physician
            to the radiation associated with fluoroscopy and CT imaging.

      We believe that Biophan's suite of technology solutions solves all of the
MRI limitations associated with these products, enabling the development of
products with significant competitive advantages. The market for devices that
currently have either safety or image compatibility limitations with MRI is
currently in excess of $15.8 billion, with strong historic growth rates.


      Biophan has aggressively protected its technologies with broad patent
protection. Our total U.S. portfolio of patents owned as well as exclusively
licensed inclusive 61 issued patents and over 60 applications at various stages
of examination at the U.S. Patent and Trademark Office.


      Biophan is well positioned to take advantage of this market opportunity,
with proven technologies and broad intellectual property protection. We employ
internal research facilities, combined with outsourcing to contract laboratories
and universities with appropriate expertise, leveraging our core competencies
with a network of strategic partnerships. This approach eliminates the need to
build unnecessary infrastructure.


                                       26



      Biophan's marketing efforts are focused on business-to-business sales of
our technology. Since we are focused on working with the leaders in each market
segment, the number of prospective partners is approximately 25 medical device
companies. Biophan's marketing and sales efforts rely on a select group of
experienced business development and technology licensing executives.

      Biophan entered into its first significant license agreement with Boston
Scientific Scimed Corporation in 2005 covering a range of products in exclusive
and non-exclusive product segments. Boston Scientific renewed its license in
January 2007, with a $250,000 payment.

MYOTECH MYO-VAD (in the future, Biophan will refer to this product as the
Myotech Circulatory Support System (CSS)).

      Biophan has also taken a minority equity position in Myotech, LLC, with an
option to take a majority position, to help Myotech develop and market a novel
cardiac support system. The Company has determined that Myotech is a variable
interest entity in accordance with FIN 46(R). The Company has further concluded
that it is the primary beneficiary as defined by FIN 46(R) and, as a result, the
Company is required to consolidate Myotech as of the date of acquisition of
November 30, 2005. Therefore, the consolidated financial statements of the
Company include the accounts of Myotech, LLC.

      Myotech was formed in July 2003 to commercialize a new mechanical cardiac
support system called the MYO-VAD(TM) which is based upon a family of
technologies known as Direct Mechanical Ventricular Actuation (DMVA). The
MYO-VAD is aimed at one of the largest and fastest growing medical market
segments, the treatment of heart failure. ABN-AMRO Morgan Stanley has forecast
worldwide sales of ventricular assist devices (VAD) to grow from its 2003 level
of $400 million to $7.1 billion by 2009, reflecting an anticipated compounded
annual growth rate of 61%.


      Existing cardiac assist devices, such as VADs, have serious limitations
that include clotting and stroke, infection, bleeding, repeat major surgery, and
high mortality rates. The devices are available only at a limited number of
transplant and specialized cardiac centers and are very expensive to use, often
costing in excess of $200,000 per procedure.

      The MYO-VAD is a comprehensive cardiac support system that
has features designed to provide safer and more effective support to a wide
array of acute and chronic heart failure conditions. As shown in trials of early
prototypes at Duke University in the 1990s, such a device can be installed
quickly to stabilize and provide short term support to patients suffering from
acute heart failure (in order to minimize ischemic damage) as well as remain in
the body for extended periods to provide longer-term support for chronic heart
failure patients to help the heart to recover and ultimately allow the device to
be removed. The MYO-VAD offers the following additional competitive advantages:

           No contact with circulating blood which reduces the problems of
           clotting and stroke, bleeding, repeat surgery, and infection -
           problems that plague existing VADs;

           Technically simple, rapid installation (approximately three minutes)
           that does not require highly specialized cardiothoracic surgeons; and

           The ability to completely restore blood flow from the diseased or
           failed heart. The MYO-VAD provides systolic (emptying) and diastolic
           (filling) support to both ventricles. Current VADs typically provide
           only systolic support to one ventricle.

      Future versions are expected to include designs with therapeutic
capabilities, such as drug delivery designed to enable the MYO-VAD to treat a
wide variety of acute and chronic heart failure conditions. We also plan to make
the MYO-VAD available in multiple sizes to treat more heart failure patients,
including women.

      Healthcare leaders in the U.S. government and private sector also
recognize this resulting in an allocation of $1 million in 2007 to accelerate
the availability of the MYO-VAD in forward combat treatment stations as well as
suburban and rural hospitals.

      The short term goal is to develop and introduce a first generation (Gen-1)
product. We will initially focus on the commercialization of the Gen-1 MYO-VAD
product, which is designed to address the Bridge-to-Bridge / Bridge-to-Recovery,
Acute Resuscitation and Bridge-to-Transplant market segments. Additional R&D
will be conducted in parallel to develop the technological capabilities required
for the Company to expand the use of the Gen-1 product.

      It is anticipated that the Gen-1 MYO-VAD will enter into clinical studies
in fiscal year 2008. The clinical study is planned to include fifty to sixty
patients at 6 to 10 centers. It is anticipated that it will take approximately
six months to complete the clinical study. The MYO-VAD is targeted to be
marketed and distributed by entering into a strategic relationship with a major
medical device company.



                                       27



MARKET OPPORTUNITY

MRI Related Technologies

      Some medical devices have limitations related to MRI safety, and may be
contraindicated for use with MRI (such as pacemakers and neurostimulators).
Patients with these types of implants cannot have MRI exams performed even if
the exams are needed for life threatening conditions, such as cancer detection
or diagnosis of aneurysms.

      Biophan has developed a "toolbox" of solutions to enable implants such as
pacemakers, ICDs and neurostimulators to be manufactured to be MRI safe. Biophan
has also in-licensed some complementary technologies to provide a full range of
technology solutions. Devices made incorporating Biophan's patented technologies
have the capability to have their contraindication removed, allowing patients to
be free to have critical MRI examinations performed. We believe that this
capability can provide a competitive advantage in the marketplace.

      Many devices are already safe for use with MRI, but have limited MRI image
compatibility. This includes devices such as stents, vena cava filters, and some
types of catheters and guidewires. Some of these devices are simply not well
imaged under MRI, while other devices have properties that interfere with the
MRI image by causing an image artifact (distortion) in the area in and around
the device, limiting the effectiveness of MRI for placement or diagnostic
follow-up on these implants.

      Biophan has solutions to these problems as well. Biophan's internally
developed technology and patents, in combination with exclusive in-licensed
technologies provide comprehensive intellectual property coverage for Biophan's
MRI image compatibility solutions. Our solutions include an MRI-safe motor that
can be used in implantable devices such as drug pumps.

      The total market for all cardiac rhythm management products, including
pacemakers, implantable cardioverter defibrillators and cardiac
resynchronization therapy is estimated by Paumanok Publications, Inc. in its
2005 Implantable Defibrillator Markets Report to exceed $10 billion in 2006.
This represents the largest single segment of the potential market for MRI-safe
implants.


      Management believes that the most significant product opportunity in MRI
image compatibility is the coronary stent market, which is dominated by drug
eluting stents. This market was estimated by Lehman Brothers Equity Research in
its 2006 Medical Device Outlook to exceed $5.5 billion in 2006.



                                       28



STRATEGY

MRI Related Technologies


      Management believes that the target market for Biophan's MRI related
technologies, represented by the number of medical devices and implants that
have limitations related to MRI safety or image compatibility, is in excess of
$15.8 billion.


      The FDA's position on MRI-safe devices has become increasingly clear, as
the FDA has presented data recently (including at the Society for Medical
Innovations and Technology, May 2006) which has validated the MRI safety
problems, and the difficulties of testing, associated with implants such as
pacemakers, implantable cardioverter defibrillators, and cardiac
resynchronization therapy devices provides for technology to improve the MRI
safety and image compatibility of medical devices. Our primary competition comes
from in-house research and development efforts by the major medical device
manufacturers.

      Management is not aware of any other integrated solutions.

      Based upon the above, and management's knowledge of this market, Biophan
has developed the following strategy and operating philosophy:

      o     Position Biophan as the leading innovator in applying technologies
            for MRI safety and image compatibility to medical implants and
            interventional devices;

                  Continue to focus on developing and marketing solutions to
                  enable MRI safe and image compatible products and implants;
                  and

                  Seek new and novel market applications for the Company's
                  primary technologies;

      o     Utilize an experienced business-to-business sales and technology
            licensing team to market the Company's technologies;

      o     Protect current and future technology developments by establishing
            and maintaining a strong patent position; and

      o     Continue to call on development and marketing partners to bring
            these technologies to the market in a broad range of products,
            focusing on the leading 20 to 25 medical device manufacturers, with
            specific targeting of the top three in each major product category.



                                       29



      MYOTECH MYO-VAD(TM)

      With regard to the MYO-VAD(TM) technology, we recognize the following:

            Mechanical cardiac assist devices provide many benefits for heart
            failure patients relative to existing treatment procedures;

            The potential of the VAD market alone is estimated to be
            approximately $7 to $8 billion and growing at a rate of 50-60%
            annually;

            Conventional VADs have distinct disadvantages including invasiveness
            to the patient, clotting and stroke, bleeding, repeat surgery, and
            infection;

            There are currently no other equally capable solutions on the market
            and none are anticipated. This position is based upon the following:

                        Searches of the medical market;

                        Review of U.S. and foreign patents and patent activity;

                        Review of the literature and activity within the
                        scientific community;

                        Our Scientific Advisory Board's knowledge of relevant
                        industry activities; and

                        Participation in relevant tradeshows;

            We possess a substantial intellectual property portfolio which
            protects current and future developments of its technology in the
            U.S. and other major international markets; and

            The expertise, depth, and experience of its management team.

      Based on the above and management's knowledge of its markets, Biophan,
along with MYOTECH, has developed the following strategy and operating
philosophy:

      o     Initially focus on the development and approval of a Gen-1 product
            for the Bridge-to-Bridge, Bridge-to-Recovery, and Acute
            Resuscitation market segments;

      o     On an intermediate basis, focus on next-generation products for the
            Therapeutic Recovery and Destination Therapy market segments;

      o     Enhance awareness of the MYO-VAD by:

                        Utilizing the Scientific Advisory Board;

                        Engaging industry thought leaders;

                        Publication of the results of pre-clinical and clinical
                        activities; and

                        Participation at major medical and scientific forums;

      o     Interface with the FDA on a pre-approval basis to help ensure rapid
            approval of MYO-VAD Gen-1 product;

      o     Market and distribute the MYO-VAD by entering into a strategic
            relationship with a leading medical device company with an
            appropriate sales and marketing infrastructure;

      o     Utilize well-recognized manufacturing companies currently producing
            products for the major medical device companies, to minimize entry
            costs and shorten time to market. Utilize this manufacturing
            capacity until such time as product manufacturing is brought in
            house or taken over by the strategic partner;



                                       30



      o     Protect current and future technology developments by establishing a
            strong trademark and patent position;

      o     Recruit additional, expert-level subject matter expertise where it
            compliments core team capabilities; and

      o     Rapidly develop and introduce a first generation product to
            establish an early revenue stream, while conducting parallel R&D to
            demonstrate the ability of the technologies to meet the needs of
            additional market segments.



                                       31



TECHNOLOGY

Technologies for MRI Safety

      Biophan has created a portfolio of technologies for MRI safety, to enable
broad patent coverage and different solutions customized to work with different
types of products. Below is a description of four of the key technologies that
Biophan has which enable devices such as pacemakers, ICDs and neurostimulators
to be made safe for use in an MRI environment.

      1. Discrete Resonant Circuit - Resonant circuit that blocks RF induced
currents to minimize heating. The Company has demonstrated the effectiveness of
this solution in laboratory tests.

      2. Lead Wire Winding - Tuning the lead by modifying the windings to reduce
energy transfer, thereby minimizing induced heating. We have demonstrated the
effectiveness of this solution in laboratory tests.

      3. Low Pass Filter - Inductor-capacitor circuit to form a low pass filter
to minimize heating.

      4. Wire Looping - Opposing loops minimize induced voltages.

Technologies for MRI Image Compatibility

      Biophan has developed and in licensed a number of technologies for
improving MRI image compatibility of interventional devices and implants. These
technologies fall into two main categories:

      o     Resonator Technology

                  o     Incorporating a resonant circuit, tuned to the resonant
                        frequency of the MRI machine, to enhance the MRI signal
                        and overcome the image artifact (distortion).

      o     Novel Device Designs

                  o     Our other approach to overcoming the limitations with
                        MRI is a combination of novel designs and materials
                        which effectively cancel out the artifacts that
                        interfere with the image. There are two types of
                        artifacts:

                              o     The Faraday Cage effect is formed from the
                                    distribution of electromagnetic signals on a
                                    conducting form such as a stent or vena cava
                                    filter. This artifact source can be overcome
                                    by modifying the geometry of the device.

                              o     The second source of image artifact is a
                                    magnetic susceptibility artifact, resulting
                                    from the materials of construction of the
                                    device and their magnetic properties.
                                    Modifying the material that the device is
                                    made from will overcome this artifact
                                    source.

                  o     Biophan has licensed a patent covering the combination
                        of anti-Faraday Cage geometries combined with materials
                        designed to reduce the magnetic susceptibility artifact.

Products That Can Benefit From Improved MRI Safety

      Patients with implanted devices such as pacemakers, defibrillators, and
neurostimulators are currently denied the benefits of MRI due to the risks posed
by their implants. Implanted leads (wire-like devices) and other metallic
devices, acting as antennas, adsorb radio-frequency energy from an MRI machine.

      The effect can cause the leads to heat up and generate induced voltages,
contributing to the current contraindication of devices for use with MRI -
patients with these implants are not permitted to have MRI procedures performed.
These contraindications apply to any device with a long, conductive lead or
wire. This includes the following:



                                       32



      o     Pacemakers

      o     Implantable cardioverter defibrillators (ICDs)

      o     Cardiac resynchronization therapy (CRT) devices

      o     Neurostimulators, including deep brain stimulators

Product Opportunities for Improved MRI Imaging

These product opportunities include the following:

      o     MRI visible stents

      o     MRI visible vena cava filters

      o     MRI visible stent based heart valve

      o     Guidewires

      o     Catheters

                               MRI Visible Stents

      A stent is a device that is implanted to hold open a blood vessel that has
become too narrow due to atherosclerosis. When imaged under MRI, stents act as a
Faraday cage, and create a large image artifact which prevents viewing of
blockages or clotting within the stent. Biophan has developed a solution to this
problem.

      The image artifact (a large dark area on the MRI image in the area where
the stent is located) prevents the physician from seeing the critical area in
and around the stent. This is caused by the fact that a metallic stent behaves
as a Faraday Cage due to its geometry and material, and the stent additionally
creates a magnetic susceptibility artifact due to the material of manufacture of
the stent.

      To overcome this limitation, Biophan has developed a resonator technology,
which uses tuned circuits to increase the RF signal, and overcome the Faraday
Cage effect, making it possible to image within and around a stent.

      Biophan's technology allows imaging of a blood clot or restenosis within a
stent. Currently, measuring restenosis within a stent requires either
angiography or intravenous ultrasound, both of which involve complex and
invasive catheterization procedures and have a higher chance of complications to
the patient than a simple, non-invasive MRI scan.

                          MRI Visible Vena Cava Filters

      A vena cava filter is a device inserted into a major vein to prevent a
thrombus (blood clot) from entering the lungs, which could cause a pulmonary
embolism. This device will trap the blood clot in a "cage" before it reaches the
lungs.

      Similar to the problems associated with imaging a stent, vena cava filters
create an image artifact when imaged by MRI. Biophan's resonator technology
allows for overcoming this interference. This technology has significant
implications for the future of medical imaging. The ability to effectively
visualize would allow a physician to determine the degree of clotting within the
filter and to know when it is safe to remove the device, or if it is necessary
to take other actions.



                                       33



                       MRI Visible Stent-Based Heart Valve

      A stent based heart valve enables replacement of the aortic valve without
the requirement of an open-heart surgery. In cases of calcification of the
aortic valve, the function of the valve is no longer efficient. The standard
clinical procedure would be to replace the valve in an open-heart surgery. This
is a complicated, risky and expensive procedure.

      Our technology allows the procedure to be performed via percutaneous
access through a peripheral vessel, with the procedure performed over a guide
wire for placement. The procedure may be performed under fluoroscopy using
contrast media injections, or under MRI guidance. For this procedure, there is
no need to stop the heart, and no need to put the patient on a heart-lung bypass
machine during the operation.

      With an MRI visible stent-based heart valve, the physician can utilize MRI
imaging, with its 3D-orientation and excellent image quality. It is possible to
perform the planning and the implementation of the interventions without the
side effects of exposure to x-rays, including harmful radiation exposure for
both the patients and the physician, and the need for nephrotoxic contrast
media. In addition, the ability to accurately visualize the function of the
valve under MRI with Biophan's resonator technology can allow less invasive
follow up to assess valve function on a regular basis.


                            Guidewires and Catheters

      Viewing interventional devices, such as catheters and guidewires, under
MRI is a challenge if the objects are smaller or thinner than the resolution of
the MRI system or if the objects are made of materials that are less well
contrasted under MRI. Biophan's patented technologies overcome this, enabling
surgical procedures under MRI that would have been difficult or impossible
previously.



                                       34



SALES AND MARKETING

MRI Related Technologies

These technologies are applicable to a broad array of products, including:

      For MRI safety - pacemakers, implantable cardioverter defibrillators,
      cardiac resynchronization therapy, neurostimulators, and guidewires; and

      For MRI image compatibility - stents, vena cava filters, heart valves,
      occluders, and catheters.

      Biophan's technology supplies an important feature for these devices, but
the devices and systems are complex and have a significant hurdles in terms of
design, development, manufacturing and regulatory approval. As a result, Biophan
plans to license these technologies to leading medical device manufacturers who
have the experience, capabilities and sales force to market products with these
features and benefits.

      Biophan's marketing efforts are focused on business-to-business sales of
our technology. Since we are focused on working with the leaders in each market
segment (which we define as the top three in terms of market share for each
target product), the number of prospective partners is approximately 25 medical
device companies.



                                       35



RESEARCH AND DEVELOPMENT

      Biophan's technology development plan is based upon identifying specific
market opportunities and pursuing multiple approaches to provide different
technology solutions for these specific problems. As an example, in the area of
MRI safety Biophan has four basic core technologies and a number of additional
technology options. In the area of MRI image compatibility of stents, Biophan
has two basic technologies platforms, as described in detail above.

      This multi-prong approach to technology development has numerous
advantages compared with the typical approach of technology development
companies that focus on one basic technology platform. Biophan's approach allows
comparison of multiple approaches to determine the optimal solution for any
given combination of a desired feature with a specific product. In addition, for
a given feature (such as MRI safety), different products may have different
requirements, so one technology approach may work better for one product, while
a different approach may work better for another.

      As an example, pacemakers and ICDs are similar products in physical
design, but ICDs operate at a much higher voltage than pacemakers. As a result,
some of the discrete circuit components that will work well for pacemakers may
be sized incorrectly for ICDs. A non-discrete circuit approach, such as the
Company's lead wire winding approach (described above) could provide a more
robust solution for ICDs.

      Also, since we patent multiple solutions, our patent portfolio is much
stronger than if we focused exclusively on a single technology platform.



                                       36



COMPETITION

In the area of MRI Safety, the Company has developed and filed numerous patents
on solutions to solve the two critical problems that are the cause of devices
being contraindicated. At this time Medtronic has announced that they are
testing a solution to the heating problem, and other manufacturers are in a
competitive race to get MRI safe devices to market. Biophan has pending patents
dating back to 2001 on its solutions for resonant circuits and filters for
solving the heating problem, and for an "anti-antenna" solution for induced
voltages which can cause arrythmias, which can potentially be fatal. Biophan
holds the exclusive rights to implantable uses of a technology for pacemakers
and ECG lead safety, licensed from Johns Hopkins. This patent was issued in
1993, and pre-dates all other known solutions.

Companies thought to be working on solutions for MRI safe implantable devices
include Medtronic, St. Jude, Biotronik, Cyberonics, ANS, and others, as well as
Biophan's licensee, Boston Scientific, and their divisions Guidant and Advanced
Bionics. In addition, Greatbatch, Inc. and Surgivision, Inc. have limited
solutions available to improve the MRI safety of devices including pacemakers
and ICDs.

Biophan is in a Collaborative Research and Development Agreement (CRADA) with
the U.S. FDA to establish recommended guidelines and methods for measuring
heating and induced voltages. Multiple manufacturers have participated in the
workshops held by Biophan and the FDA, indicating industry wide interest in
bringing solutions to market. Biophan believes that each company is in the
process of understanding the problems and potential solutions and that each
company represents both competition and a prospective licensee as the companies
design solutions to allow them to bring MRI safe products to market. The
strength of the Biophan patent portfolio may influence whether each company
becomes a competitor or a customer.



                                       37



In the area of devices that can be imaged non-invasively under MRI, such as
imaging restenosis inside stents, or visualizing blood flow in heart valves, the
Company holds fundamental issued patents on its solutions, including resonant
circuits (which overcome Faraday cage effects of stents). Other companies have
filed patents on alternative designs, but Biophan and its licensors have the
only known solutions demonstrated to enable visualizing inside stents and heart
valves under MRI.


In the area of cardiovascular support, there are several manufacturers of
circulatory support systems, including Abiomed, Thoratec, World Heart, and
others. In the area of acute heart failure, where restoration of cardiac output
is needed for an arrested heart, there are no circulatory systems known to the
Company that can provide full systolic and diastolic support to an arrested
heart, without blood contact, as quickly as the Myotech circulatory support
system. PPA Technologies AG, in Germany, is developing a device that provides
non-blood contacting support, their patents are not widely filed outside of
Germany and do not cover many of the features and full range of capabilities of
the Myotech CSS.


In the area of power systems powered by body heat, vs. chemical batteries, the
Company knows of at least one competitor, Research Technologies Institute in
North Carolina, which has spun off a company to develop materials with improved
energy conversion properties, and has identified implantable medical devices as
a target market. There are other research activities in this area underway at
several research organizations within universities.
Biophan's TE-Bio subsidiary holds exclusive licenses to several implantable
biothermal battery patents. The TE-Bio subsidiary was co-founded with the
original patent owner, Biomed Solutions, prior to Biophan entering the power
systems business. NASA is also working in the area, and is collaborating with
Biophan under the Space Act program. Biophan recently won an SBIR grant for
using the technology for Homeland Security, which is helping to further the
collaboration and development. Biophan has certain rights to NASA related
developments.



                                       38



INTELLECTUAL PROPERTY

MRI Related Technologies


      Biophan controls, directly or through exclusive licenses, 61 issued U.S.
patents, and over 60 pending applications at various stages of examination.
Presented below are summaries of some of the key technology areas and a brief
summary of the technology covered.


Photonics

      These patents cover components, subsystems, and systems for implanted
devices that use optical fiber technology to eliminate the need for electrically
conductive leads that are the cause of thermal damage and other risks to implant
patients being imaged under MRI.

Discrete Components and Circuits

      These patents cover the use of miniature electronic circuits, or
individual electronic components similar to those in cell phones or computers,
to create internal resonance that can block induced energy, or actively
compensate for it, eliminating risk to an implant patient being imaged under
MRI.

Anti-Antenna Geometries

      Leads and electrodes can be configured in a way that make them very poor
antennae; these patents and a number of others currently being examined by the
United States Patent and Trademark Office cover this technology.

Other Shield Materials, Structures, and Methods

      Shields that are effective in eliminating unwanted induced currents can be
created from non-nanomagnetic materials, and can be improved with larger-scale
structure.

Resonant Circuit Structures

      Secondary resonant circuit structures can be used to overcome the
shielding or "Faraday Cage" effect created by implants such as stent, and that
prevents effective MRI imaging of the volume inside the stent.

Nanomagnetic Thin-Film Coatings


Nanomagnetic coatings applied to stents and other implants in the form of thin
film circuits, or coatings having similar behavior, that create resonant effects
that offset or eliminate unwanted MRI-induced effects.



                                       39



Biothermal Power Source

      The small temperature gradients in the body may be used to create
electrical power. The intent of the technology in these patents is to eliminate
the need to remove pacemakers or other implants simply to replace their aging
batteries. We are working with NASA's Ames Center for Nanotechnology on new
coatings to improve the efficiency of thermoelectric devices.

Pulse-width Cardiac Pacing

      Pulse-width modulation techniques used in many types of electrical control
systems. Our patent teaches the stimulation of nerve tissue with less electrical
power than is currently used in implantable devices.

Lead and Electrode Components

      These patents cover details of materials and construction for cardiac
pacing leads and specifically the end electrodes that directly contact the
heart.

Trademarks

      The name "Biophan" is a registered trademark of the Company. We have
filed for registration of the following trademarks: Nanolution, Nanolute and
Nanoview.


      Myotech's intangible assets currently consist primarily of trademarks and
patent applications.


      Myotech has filed for registration of the following trademarks: Myotech,
MYO-VAD, Your Heart Your Life, and We take therapy to heart.

      Myotech's first patent application "Sensor-Equipped and
Algorithm-Controlled Direct Mechanical Ventricular Assist Device" has published
worldwide; national filing has begun in Europe, Canada, Japan, China, and India.
The second patent application "Therapeutic Agent Delivery Apparatus with Direct
Mechanical Ventricular Assist Capability" has published in the US, and has been
filed worldwide as a PCT. These applications are being followed by five
divisionals and CIP applications. A provisional application "Method and
Apparatus for Minimally Invasive Direct Mechanical Ventricular Actuation" has
been filed. Utility and foreign applications will follow. Work has begun on a
comprehensive application focused on the biochemical and physiological aspects
of the treatment of acute and chronic heart.


Employees


      As of May 1, 2007, we had 22 full-time employees, 20 of whom are in the US
and two of whom are in Europe. We anticipate some reduction in personnel as we
refocus our business over the next six months of the fiscal year beginning March
1, 2007. We believe that we have a good relationship with our employees.



                                       40



Facilities



      Our headquarters are located at 15 Schoen Place, Pittsford, New York 14534
with approximately 4,470 square feet of office space and approximately 1,000
square feet of laboratory space. Our lease for this facility extends to April
30, 2022, subject to our right to terminate at any time after January 31, 2009
upon 90 days' notice. For the lease years commencing May 1, 2007 and 2008, we
will pay an annual base rent of $89,558. For each year commencing on May 1, 2009
and continuing through April 30, 2011, the base rent will increase by 5% over
the previous year's rent. For each year commencing on May 1, 2011 and continuing
through April 30, 2017, the base rent will increase by 3% over the previous
year's rent. The landlord will be responsible for all real property taxes for
the first 38 months of the lease term; thereafter, the landlord will absorb the
first 3% of any increase in the real property taxes on the premises in which our
facility is located and two-thirds of the remaining 97% of any such increase,
while we will reimburse the landlord for our proportionate share (48%) of the
remaining one-third of such 97%. We will bear our own gas, electric, water and
other utility charges and our proportionate share of utility charges for the
premises' interior common areas. We belive that this facility will be adequate
for our current and anticipated future needs through the lease expiration date.

Legal Proceedings


      Except as noted below, we are not a party to any material legal
proceedings and there are no material legal proceedings pending with respect to
our property, except as noted below. 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.

      The Company is pursuing legal claims against one of its former law firms
and certain of its attorneys. Review of the firm's work product and bills
recently revealed questions about the firm's billing practices and other
activities. The amount of potential damages has not yet been quantified. Also,
the law firm has asserted claims seeking payment of additional legal fees, which
claims the Company has denied. The litigation is in an early stage. While, as
with any legal proceedings, no assurance can be given as to ultimate outcome,
management believes that the outcome of the litigation will not have a material
adverse effect upon the Company's financial condition. Accordingly, adjustments,
if any that might result from the resolution of this matter have not been
reflected in the financial statements.

      On April 5, 2007, SBI Brightline LLC and SBI Brightline XI, LLC brought
suit against us and Biomed Solutions, LLC in the Superior Court of Orange
County, California. The suit alleges, among other things, that in September 2006
we entered into an oral agreement to terminate the Stock Purchase Agreement
dated as of May 27, 2005 and amended on January 8, 2006, between us and SBI
Brightline XI, LLC, and seeks unspecified monetary damages and an order by the
Court deeming the Stock Purchase Agreement to be terminated. We believe the
allegations made by SBI are without basis in fact and we intend to defend the
lawsuit vigorously. Because of the potential costs of litigation and the
anticipated demands that our defense may place on the time and attention of our
management our defense of this matter, regardless of the outcome, could have a
material adverse effect on our business and operations.



                                       41




                                   MANAGEMENT

Executive Officers and Directors

      The following table sets forth information regarding our executive
officers and directors. Each of our executive officers has been elected by our
board of directors and serves until his or her successor is duly elected and
qualified.



         Name           Age   Position
- ---------------------   ---   ------------------------------------------------
Guenter H. Jaensch       68   Director and Chairman of the Board
Michael L. Weiner        59   Director and President
Theodore A. Greenberg    47   Director
Bonita L. Labosky        64   Director
Stan Yakatan             63   Director
John F. Lanzafame        39   Chief Operating Officer and Vice-President -
                              Business Development
Darryl L. Canfield       60   Vice-President, Treasurer, Secretary and Chief
                              Financial Officer
Stuart G. MacDonald      58   Vice-President -- Research and Development



      The principal occupations and business experience for at least the past
five years of each director and executive officer is as follows.

      Guenter H. Jaensch, Ph.D. is the former Chairman and CEO of Siemens
Pacesetter, Inc., a manufacturer of cardiac 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. In 1994, upon the acquisition of Pacesetter by St. Jude
Medical, Inc., he joined St. Jude Medical as Chairman and CEO of Pacesetter,
Inc. and retired in 1995 to manage his personal investments. Since December 1997
he has been a director of MRV Communications, a publicly traded company in the
fiber optic technology business. Dr. Jaensch has been a director of Biophan
since March 2002.


      Michael L. Weiner is President and co-founder of Biophan, and has served
as the Company's CEO since its inception in 2000. From 1975 to 1985 Mr. Weiner
worked at Xerox Corporation in sales and marketing positions. In 1985 he left
Xerox to head Microlytics, a Xerox PARC spin-off company, which subsequently
merged with another company. In 1992 Mr. Weiner co-founded TextWise, a company
developing natural language technologies, which was acquired by Manning and
Napier Information Services (MNIS), a company offering patent analytics and
natural language search and translation technologies, where Mr. Weiner served as
CEO through 1999. In 1999 Mr. Weiner co-founded Technology Innovations, LLC, and
serves on the board and as managing member, and its affiliate, Biomed Solutions,
LLC, which together hold equity interests in several companies, including
Biophan. Mr. Weiner serves on the boards of NaturalNano, Inc. and several
privately-held technology companies.



                                       42



      Theodore A. Greenberg is Chief Investment Officer, Chief Financial
Officer, Secretary, and is a member of the Board of Directors of Infinity
Capital Group, Inc., a business development company which he joined in 2005.
Since 2004 he has been, and continues to be, a project consultant and advisor
and has provided services to various companies. In 1999, Mr. Greenberg
co-founded Park Avenue Equity Partners, LP, a $100 million middle market private
equity fund and he was a general partner until 2003. From 1998 to 1999, Mr.
Greenberg was the Chief Financial Officer of Development Capital, LLC. Mr.
Greenberg has been a director of Biophan since April 2006.


      Bonita L. Labosky has, since December 2006, been President and CEO of
Cardiac Concepts, Inc., a Minneapolis-based company developing new medical
device technologies. From 2000 until December 2006, she was Group Vice President
and member of the Executive Committee of Welch Allyn, Inc., a provider of
innovative medical diagnostic devices, patient monitoring systems, and external
defibrillators. During her tenure at Welch Allyn, Inc., Ms. Labosky also served
as a member of the firm's Executive Committee. From 1993 until 2000, she was a
Vice President of Medtronic, Inc., serving as General Manager for Heart Failure
Management from 1997 through 2000, General Manager for Micro Interventional
Systems from 1996 through 1997, and General Manager of the Promeon Division from
1993 through 1997. From 1989 through 1993, she was a research and development
director at Medtronic and from 1978 through 1988 she held various management
positions (including Vice President and General Manager) with SPSS, Inc. Ms.
Labosky joined our Board of Directors in March 2007.


      Stan Yakatan is Chairman and Chief Executive Officer of Katan Associates,
a private company which he founded in May 1989 that provides advisory services
and strategic planning for companies in the life sciences industry. From June
2003 to August 2005, Mr. Yakatan was Chairman and Chief Executive Officer of
Grant Life Sciences, a publicly-traded company engaged in the research,
development, marketing, and sale of diagnostic kits for the screening,
monitoring, and diagnosis of diseases with emphasis on women's health,
infectious diseases, and cancers. Mr. Yakatan continues to serve as a Director
of Grant Life Sciences. He is also a Director of Response Biomedical Corp. and
LifePoint, Inc. and of several privately-held companies in the life sciences
industry. From 1968 until he founded Katan Associates in 1989, Mr. Yakatan held
various senior executive positions with New England Nuclear Corporation (a
division of E.I. DuPont), ICN Pharmaceuticals, Inc., New Brunswick Scientific
Co., Inc. and Biosearch. Mr. Yakatan is the Chairman of Biocomm Inc., a venture
capital firm, and has founded and served as Chief Executive Officer of numerous
entrepreneurial ventures in the biomedical and healthcare sectors. He has served
as a strategic advisor to government agencies in Canada and Australia.



                                       43



      John F. Lanzafame joined Biophan in 2004 and has served as Vice President
- - Business Development and President of Nanolution, LLC, the drug delivery
division of Biophan. In 2006, Mr. Lanzafame was promoted to Chief Operating
Officer of Biophan and currently leads operations and business development for
the Company. From 1989 to 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, serving
in a variety of positions from 1989 to 2003 and as President beginning in 2003.
Mr. Lanzafame left STS Biopolymers in 2004, following sale of the company to
Angiotech Pharmaceuticals. Mr. Lanzafame is a member of the Board of Directors
of NaturalNano, Inc.

      Darryl L. Canfield has been Chief Financial Officer, Vice President,
Treasurer, and Secretary of Biophan since January 2006. For five years prior to
joining Biophan in November 2005, Mr. Canfield was Vice President, Corporate
Controller, and Chief Accounting Officer at Genencor International, Inc., a
company engaged in the development and manufacturing of innovative diversified
products for the biotechnology industry. From 1988 to 1994 Mr. Canfield held
senior financial positions in several food and beverage companies, serving from
1994 to 2000 as CFO of SALOV North America Corp., from 1989 to 1994 as Vice
President and Corporate Controller for Curtice Burns Foods, and from 1988 to
1989 as CFO of Genesee Corporation. From 1986 to 1988, he was CFO of The Systems
Company, a captive high technology division of Fidelity Investments. From 1977
to 1987, he held several financial positions for Sybron Corp, including Group
Controller for the Laboratory Group, and Vice President, Finance, of Brinkmann
Instruments. From 1972 to 1977, he worked as an auditor for Price Waterhouse.



                                       44



      Stuart G. MacDonald has been Biophan's Vice-President-Research and
Development since January 2001. From January 1995 through December 2000, Mr.
MacDonald was employed at Ortho-Clinical Diagnostics, a Johnson & Johnson
company, 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 worked at Eastman Kodak Company from 1971 to 1994, rising to the
position of Assistant Director, Clinical Diagnostic Research Labs. A portion of
Mr. MacDonald's time is spent assisting with the research programs of Biomed
Solutions, LLC and Myotech, LLC, related companies, for which Biophan is
reimbursed.

      There are no family relationships among any of our directors or executive
officers.

Corporate Governance Guidelines

      Our Board has long believed that good corporate governance is important to
ensure that we are managed for the long-term benefit of our stockholders. Our
common stock is currently quoted on the OTC Bulletin Board. The OTC Bulletin
Board currently does not have any corporate governance rules similar to the
NASDAQ Stock Market, Inc., the American Stock Exchange, Inc. or any other
national securities exchange or national securities association. However, our
Board believes that the corporate governance rules of NASDAQ and AMEX represent
good governance standards and, accordingly, during the past year, our Board has
continued to review our governance practices in light of the Sarbanes-Oxley Act
of 2002, the new rules and regulations of the Securities and Exchange Commission
and the new listing standards of NASDAQ and AMEX, and it has implemented certain
of the foregoing rules and listing standards during this past fiscal year.
Biophan has also 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. Our Board is also considering adopting during this current fiscal
year additional corporate governance guidelines to assist it in the exercise of
its duties and responsibilities and to serve the best interests of Biophan and
its stockholders.

Board Determination of Independence

      Under NASDAQ and AMEX rules, generally speaking, a director will only
qualify as an "independent director" if, in the opinion of our Board, that
person does not have a relationship which would interfere with the exercise of
independent judgment in carrying out the responsibilities of a director. Our
Board has determined that each of Dr. Jaensch, Mr. Greenberg, Mr. Yakatan, and
Ms. Labosky does not have a relationship which would interfere with the exercise
of independent judgment in carrying out the responsibilities of a director and
that, consequently, each of these directors is an "independent director" as
defined under Rule 4200(a)(15) of the NASDAQ Marketplace Rules and similar AMEX
rules.



                                       45



The Board held nine (9) meetings during our fiscal year ended February 28, 2007.
The standing committees of the Board are the Audit Committee and the
Compensation Committee. The Board does not currently have a nominating committee
and has not established any specific procedure for selecting candidates for
director. Directors are currently nominated by a majority vote of the Board.
There is also no established procedure for stockholder communications with
members of the Board or the Board as a whole. However, stockholders may
communicate with our investor relations department, and such communications are
either responded to immediately or are referred to the president or chief
financial officer for a response. During fiscal 2007, each of the incumbent
directors, during his period of service, attended at least 75% of the total
number of meetings held by the Board.

Executive Committee.

On May 7, 2007, our President and Chief Executive Officer, Michael L. Weiner,
relinquished the title of Chief Executive Officer, effective as of the close of
business on Wednesday, May 9, 2007. Mr. Weiner will remain as our President and
a member of our Board of Directors. Our Board of Directors has appointed an
Executive Committee, consisting of Mr. Weiner, Guenter Jaensch, the Chairman of
the Board, and a third director, Stan Yakatan, which will assume all of the
responsibilities of the chief executive officer. Under its Charter, which was
approved by our Board of Directors on May 7, 2007, the Executive Committee is
charged with making all decisions which are normally the CEO's responsibility.
The Executive Committee will exercise the full power and authority of the Board
of Directors in the management of our business and affairs during the interim
between meetings of the Board, subject to (i) the direction of the Board
generally or on specific matters, (ii) the restrictions set forth in the
Executive Committee Charter and (iii) limitations provided under the Nevada
General Corporation Law and applicable federal and state law.

Audit Committee.

The Audit Committee is composed of Dr. Jaensch and Mr. Greenberg. The
responsibilities of the Audit Committee as more fully set forth in the Audit
Committee Charter adopted in July 2003 and posted on our website at
www.biophan.com, 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 Audit Committee met formally five (5) times during our fiscal year
ended February 28, 2007. During that fiscal year, the Audit Committee was
composed at various times of Dr. Jaensch, Mr. Bramson, Mr. Kenzie, Mr.
Greenberg, Mr. Yakatan and Mr. Katz. On the occasion of two of the four meetings
held by the Committee during his tenure, Mr. Yakatan was absent. Otherwise, each
member of the Audit Committee attended all of the meetings. The Board has
determined that each of Dr. Jaensch and Mr. Greenberg meets the qualifications
as an "audit committee financial expert". Each member of the Audit Committee is
"independent" as such term is used in Section 10A(m)(3) of the Securities and
Exchange Act of 1934, as amended.

Compensation Committee.

The Compensation Committee is composed of Ms. Labosky and Mr. Yakatan. The
responsibilities of the Compensation Committee as more fully set forth in the
Compensation Committee Charter adopted in June 2005 and posted on our website at
www.biophan.com, include reviewing our compensation policies, establishing
executive officer compensation, and administering our stock option plans. The
Compensation Committee met informally several times during our fiscal year ended
February 28, 2007. During that fiscal year, the Compensation Committee was
composed at various times of Dr. Jaensch, Mr. Kenzie, Mr. Bramson, Mr. Yakatan
and Mr. Katz. Each member of the Compensation Committee attended all of the
meetings during his or her tenure on the Committee. All of the members of the
Committee are deemed to be non-employee directors for purposes of Section 162(m)
and Rule 16b-3 of the Exchange Act. None of our executive officers serves as a
member of the Board or Compensation Committee, or other committee serving an
equivalent function, of any other entity that has one or more of its executive
officers serving as a member of our Board or Compensation Committee. None of the
members of our Compensation Committee has ever been our employee.



                                       46



Director Compensation

      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, receive an annual cash fee of $8,000. Dr.
Jaensch receives an additional $30,000 for serving as Chairman of the Board. In
addition, non-employee directors receive options under our 2006 Incentive Stock
Plan. All directors receive reimbursement for their reasonable expenses incurred
in attending Board meetings. An additional $3,000 per year is paid to the
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.

The following table shows compensation to directors for the fiscal year ended
February 28, 2007:



                            DIRECTOR COMPENSATION (1)


- -------------------------------------------------------------------------------------------------------------
                               Fees Earned or     Option Awards ($)        All Other
           Name               Paid in Cash ($)           (2)           Compensation ($)        Total ($)
- ---------------------------- ------------------- -------------------- -------------------- ------------------
                                                                                   
Guenter H. Jaensch               $38,000  (3)           $24,834  (9)  $           0                  $62,834
- ---------------------------- ------------ ------ --------------- ---- -------------- ----- ------------------
Steven Katz                        8,000  (4)            24,834  (10)       183,500   (16)           216,334
- ---------------------------- ------------ ------ --------------- ---- -------------- ----- ------------------
Theodore A. Greenberg              6,000  (5)            24,834  (11)             0                   30,834
- ---------------------------- ------------ ------ --------------- ---- -------------- ----- ------------------
Stan Yakatan                       2,000  (6)             5,165  (12)             0                    7,165
- ---------------------------- ------------ ------ --------------- ---- -------------- ----- ------------------
Michael Friebe                         0  (7)                 0  (13)        27,984   (17)            27,984
- ---------------------------- ------------ ------ --------------- ---- -------------- ----- ------------------
Robert S. Bramson                  2,000  (7)                 0  (14)        34,607   (18)            36,607
- ---------------------------- ------------ ------ --------------- ---- -------------- ----- ------------------
Ross B. Kenzie                     6,000  (8)            24,834  (15)             0                   30,834
- ---------------------------- ------------ ------ --------------- ---- -------------- ----- ------------------




(1)   Certain columnar information required by Item 402(k)(2) of Regulation S-K
      has been omitted for categories where there was no compensation awarded
      to, or paid to, the named directors during the fiscal year ended February
      28, 2007.

(2)   The reported amounts reflect the dollar amounts recognized for financial
      statement reporting purposes for the fiscal year ended February 28, 2007,
      in accordance with FAS 123R, of awards pursuant to our Stock Incentive
      Plan and may include amounts from awards granted both in and prior to the
      fiscal year ended February 28, 2007. As required, the amounts shown
      exclude the impact of any forfeitures related to service-based vesting
      conditions. The actual amount realized by the director will likely vary
      based on a number of factors, including the Company's performance, stock
      price fluctuations and applicable vesting.

(3)   Includes a $30,000 fee for service as Chairman of the Board and an $8,000
      fee for service on the Board.


(4)   Resigned in March 2007.

(5)   Elected to the Board in April 2006.

(6)   Elected to the Board in December 2006.

(7)   Term expired in July 2006.

(8)   Resigned in October 2006.



                                       47



(9)   An option for the purchase of 40,000 shares of common stock at an exercise
      price of $1.06 per share was granted to Dr. Jaensch on July 18, 2006. This
      option becomes fully vested and exercisable on the earlier of (i)
      completion of one year of service as a director measured from the date of
      grant or (ii) continuation of such service through the day immediately
      preceding the first annual shareholders meeting following the date of
      grant. This option has a termination date of July 18, 2016. At February
      28, 2007, Dr. Jaensch held options for the purchase of an aggregate of
      715,000 shares of common stock, of which options for the purchase of
      627,500 shares were exercisable.

(10)  An option for the purchase of 40,000 shares of common stock at an exercise
      price of $1.06 per share was granted to Mr. Katz on July 18, 2006. This
      option becomes fully vested and exercisable on the earlier of (i)
      completion of one year of service as a director measured from the date of
      grant or (ii) continuation of such service through the day immediately
      preceding the first annual shareholders meeting following the date of
      grant. This option has a termination date of July 18, 2016. At February
      28, 2007, Mr. Katz held options for the purchase of an aggregate of
      420,000 shares of common stock, of which options for the purchase of
      332,500 shares were exercisable.

(11)  An option for the purchase of 40,000 shares of common stock at an exercise
      price of $1.06 per share was granted to Mr. Greenberg on July 18, 2006.
      This option becomes fully vested and exercisable on the earlier of (i)
      completion of one year of service as a director measured from the date of
      grant or (ii) continuation of such service through the day immediately
      preceding the first annual shareholders meeting following the date of
      grant. This option has a termination date of July 18, 2016. At February
      28, 2007, Mr. Greenberg held options for the purchase of an aggregate of
      40,000 shares of common stock, none of which were exercisable.

(12)  An option for the purchase of 40,000 shares of common stock at an exercise
      price of $0.45 per share was granted to Mr. Yakatan on December 1, 2006.
      This option becomes fully vested and exercisable on the earlier of (i)
      completion of one year of service as a director measured from the date of
      grant or (ii) continuation of such service through the day immediately
      preceding the first annual shareholders meeting following the date of
      grant. This option has a termination date of December 1, 2016. At February
      28, 2007, Mr. Yakatan held options for the purchase of an aggregate of
      40,000 shares of common stock, none of which were exercisable.

(13)  Dr. Friebe held no options at February 28, 2007.

(14)  At February 28, 2007, Mr. Bramson held options for the purchase of an
      aggregate of 365,000 shares, of which options for the purchase of 277,500
      shares were exercisable.

(15)  An option for the purchase of 40,000 shares of common stock at an exercise
      price of $1.06 per share was granted to Mr. Kenzie on July 18, 2006. This
      option required (i) completion of one year of service as a director
      measured from the date of grant or (ii) continuation of such service
      through the day immediately preceding the first annual shareholders
      meeting following the date of grant. Because Mr. Kenzie resigned on
      October 31, 2006 before satisfaction of the vesting requirements, this
      option terminated without becoming exercisable. At February 28, 2007, Mr.
      Kenzie held options for the purchase of an aggregate of 245,000 shares of
      common stock, of which options for the purchase of 197,500 shares were
      exercisable.

(16)  Other compensation consists of fees for consulting services performed by
      Mr. Katz.

(17)  Other compensation consists of salary as an employee of our subsidiary,
      Biophan Europe GmbH, through May 2006 and fees for consulting services
      through September 2006.

(18)  Other compensation consists of fees for legal services provided by Bramson
      & Pressman, of which Mr. Bramson is a partner.



                                       48



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, Canfield 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, Canfield 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. Biomed is in the business of identifying and acquiring technologies
in the biomedical field for exploitation.

Further, Mr. Weiner is on the board of Nanoset, LLC, an entity owned in part by
Biomed and with which we have entered into a technology license agreement, and
Myotech, LLC, an entity in which Biomed is a 12.53% owner and Biophan is a
43.7% owner. Messrs. MacDonald and Helfer also serve on the board of managers
of Myotech. Myotech is developing a biomedical device that does not compete with
those being developed by us.

Messrs Weiner and Lanzafame, are also on the Board of NaturalNano, Inc., the
principal owner of which is Technology Innovations, LLC. NaturalNano has entered
into a research and development agreement with us for drug eluting technology.

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 Mr. Weiner. In addition, the Board will act to ensure that Mr. Weiner
discharge their obligations to us in accordance with their fiduciary duties to
us.



                                       49



LIMITATION OF LIABILITY AND INDEMNIFICATION

      As permitted by the Nevada General Corporation Law, we have adopted
provisions in our certificate of incorporation and by-laws to be in effect at
the closing of this offering that limit or eliminate the personal liability of
our directors. Consequently, a director will not be personally liable to us or
our stockholders for monetary damages or breach of fiduciary duty as a director,
except for liability for:

      o     any breach of the director's duty of loyalty to us or our
            stockholders;

      o     any act or omission not in good faith or that involves intentional
            misconduct or a knowing violation of law;

      o     any unlawful payments related to dividends or unlawful stock
            repurchases, redemptions or other distributions; or

      o     any transaction from which the director derived an improper personal
            benefit.

      These limitations of liability do not alter director liability under the
federal securities laws and do not affect the availability of equitable remedies
such as an injunction or rescission.

In addition, our by-laws provide that:

      o     we will indemnify our directors, officers and, in the discretion of
            our board of directors, certain employees to the fullest extent
            permitted by the Nevada General Corporation Law; and

      o     we will advance expenses, including attorneys' fees, to our
            directors and, in the discretion of our board of directors, to our
            officers and certain employees, in connection with legal
            proceedings, subject to limited exceptions.

      We also maintain general liability insurance that covers certain
liabilities of our directors and officers arising out of claims based on acts or
omissions in their capacities as directors or officers, including liabilities
under the Securities Act of 1933, as amended. Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to directors,
officers, or persons controlling the registrant pursuant to the foregoing
provisions, we have been informed 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.

      These provisions may discourage stockholders from bringing a lawsuit
against our directors for breach of their fiduciary duty. These provisions may
also have the effect of reducing the likelihood of derivative litigation against
directors and officers, even though such an action, if successful, might
otherwise benefit us and our stockholders. Furthermore, a stockholder's
investment may be adversely affected to the extent we pay the costs of
settlement and damage awards against directors and officers pursuant to these
indemnification provisions. We believe that these provisions, the
indemnification agreements and the insurance are necessary to attract and retain
talented and experienced directors and officers.

      At present, there is no pending litigation or proceeding involving any of
our directors or officers where indemnification will be required or permitted.
We are not aware of any threatened litigation or proceeding that might result in
a claim for such indemnification.



                                       50



COMPENSATION DISCUSSION AND ANALYSIS

      General Compensation Philosophy


      The objectives of the Company's executive compensation policies are (i) to
be competitive with pay practices of other companies of comparable size and
status, including those in the biotechnology industry and (ii) to attract,
motivate and retain key executives who are vital to the long-term success of the
Company. The Company's executive compensation currently consists of both fixed
annual salary and stock based compensation which align the interests of the
Company's executives with the interests of its stockholders.


      Executive Compensation Guiding Principles

      Our general compensation philosophy is further guided by the following
principles specific to our executives:

      o     A strong link between pay and Company performance

      o     Executives aligned with stockholders and managing from the
            perspective of owners with a meaningful equity stake in Biophan in
            the form of grants of stock options and restricted stock.

      o     A competitive compensation package that will enable the Company to
            attract and motivate high-performing talent and that is strongly
            competitive with other biotechnology companies in our industry.

      o     A simple and cost-efficient program design


      The Compensation Committee of our Board of Directors determines the base
salary (and any bonus and equity-based compensation) for each executive officer
annually. Michael Weiner, our president, confers with members of the
Compensation Committee, and makes recommendations, regarding the compensation of
all executive officers other than himself. He does not participate in the
Compensation Committee's deliberations regarding his own compensation. In
determining the compensation of our executive officers, the Compensation
Committee consults the annual Bioworld Executive Compensation Report, but does
not engage in any benchmarking of total compensation or any material element of
compensation.

      The Compensation Committee believes that it is important that the
interests of our executive officers be aligned as closely as possible with those
of our shareholders, and in that regard reviews on an annual basis the number of
stock options and other equity interests held by each of our executive officers.



                                       51



      Components of Biophan's Compensation Program

      The compensation program for our Named Executive Officers consists of:

(1)   Base salary;
(2)   Long-term incentive compensation, including:
      (i)   Stock Options, Restricted Stock, and Restricted Stock Units,
      (ii)  Stock Appreciation Rights, and Other Stock-Based Awards,
      (iii) Broad-based Employee Benefits

(1)   Base Salary

      With respect to annual compensation, the fundamental objective in setting
base salary levels for the Company's senior management is to pay competitive
rates to attract and retain high quality, competent executives. Competitive pay
levels are determined based upon proxy disclosures, individual leadership, level
of responsibility, management skills and industry activities. The Company does
not currently have a bonus program for its executives.

(2)   Long Term Incentive Compensation

      (i) Stock Options, Restricted Stock, and Restricted Stock Units.


      The Company has two equity-based compensation plans, entitled Biophan
Technologies, Inc. 2001 Stock Option Plan and Biophan Technologies, Inc. 2006
Incentive Stock Plan (the "Plans"), which are stockholder approved. The Plans
provide for the grant of incentive and non-qualified stock options to employees,
and the grant of non-qualified options to consultants and to directors and
advisory board members. In addition, various other types of stock-based awards,
such a stock appreciation rights, may be granted under the Plans. The Plans are
administered by the Compensation Committee of our Board of Directors, which
determines the individuals eligible to receive options or other awards under the
Plans, the terms and conditions of those awards, the applicable vesting
schedule, the option price and term for any granted options, and all other terms
and conditions governing the option grants and other awards made under the
Plans. Under the 2006 Plan, non-employee directors receive automatic grants of
options for the purchase of 40,000 shares of common stock (i) upon the initial
election to the Board of Directors and (ii) at each successive Annual Meeting at
which they are re-elected to the Board. Under the 2001 Plan, 13,000,000 shares
of our common stock were reserved for issuance pursuant to options or restricted
stock awards; at February 28, 2007, 597,981 shares were available for future
option grants and awards. Under the 2006 Plan, 7,500,000 shares of our common
stock were reserved for issuance pursuant to options or restricted stock awards;
at February 28, 2007, 7,265,003 shares were available for future option grants
and awards.

      To date, awards have been solely in the form of non-qualified stock
options granted under the Plans. The Compensation Committee grant these
stock-based incentive awards from time to time for the purpose of attracting and
retaining key executives, motivating them to attain the Company's long-range
financial objectives, and closely aligning their financial interests with
long-term stockholder interests and share value.

      Restricted stock awards entitle recipients to acquire shares of common
stock, subject to our right to repurchase all or part of such shares from the
recipient in the event that the conditions specified in the applicable award are
not satisfied prior to the end of the applicable restriction period established
for such award. Restricted stock unit awards entitle the recipient to receive
shares of common stock to be delivered in the future subject to such terms and
conditions on the delivery of the shares as the Board of Directors may
determine.

      Restricted stock and restricted stock unit awards granted under the 2006
Plan may vest (a) solely on the basis of passage of time, (b) solely based on
achievement of specified performance criteria or (c) upon the passage of time,
subject to accelerated vesting if specified performance criteria are met. The
Board of Directors may determine, at the time of grant, that restricted stock or
restricted stock unit award being made to an officer will vest solely upon
achievement of specified performance criteria designed to qualify for deduction
under Section 162(m) of the Code. The performance criteria for each restricted
stock or restricted stock unit award intended to so qualify



                                       52



for purposes of Section 162(m) of the Code will be based on one or more of the
following measures: sales, earnings per share, return on net assets, return on
equity, and customer service levels.

      Except as noted below, (a) restricted stock and restricted stock units
that vest solely on the basis of passage of time may vest no faster than ratably
over three years; and (b) restricted stock and restricted stock units that vest
based on achievement of specified performance criteria, or provide for
accelerated vesting based upon achievement of specified performance criteria,
may not vest earlier than the first anniversary of the date of grant. These
vesting restrictions do not apply to restricted stock and restricted stock unit
awards collectively with respect to up to 5% of the total number of shares of
common stock covered by the 2006 Plan. In addition, the Board of Directors may
make exceptions to the vesting limitations described above in the event of the
recipient's death, a change in control or other extraordinary circumstances
specified in the 2006 Plan.

(ii)  Stock Appreciation Rights and Other Stock-Based Awards

      A stock appreciation right, or SAR, is an award entitling the holder on
exercise to receive, at the election of the Board of Directors, an amount in
cash or common stock or a combination thereof determined in whole or in part by
reference to appreciation, from and after the date of grant, in the fair market
value of a share of common stock. SARs may be based solely on appreciation in
the fair market value of common stock or on a comparison of such appreciation
with some other measure of market growth such as (but not limited to)
appreciation in a recognized market index. Under the 2006 Plan, the Board of
Directors has the right to grant other awards of common stock or awards
otherwise based upon common stock or other property, including without
limitation rights to purchase shares of common stock, having such terms and
conditions as the board may determine.

      The Company believes that, through the use of stock options, restricted
stock, restricted stock units, stock appreciation rights, and other stock-based
awards, executives' interests are directly tied to enhanced stockholder value.
The Compensation Committee has the flexibility of awarding any of these
incentives to executives. This flexibility enables the Company to fine-tune its
grants in order to maximize the alignment of the interests of the stockholders
and management.

(iii) Broad-based Employee Benefits

      As employees, our Named Executive Officers have the opportunity to
participate in a number of benefits programs that are generally available to all
eligible employees. These benefits include:

      o     Healthcare Plans-- includes medical benefits, dental benefits,
            behavioral health program, vision and hearing care program, and
            wellness programs.

      o     Disability Plans-- includes short-term and long-term disability
            income plans.

      o     Investing Plans-- includes a 401(k) plan.

Qualified Retirement Plan

      We maintain a tax-qualified retirement plan that provides all eligible
employees with an opportunity to save for retirement on a tax-advantaged basis.
Under the 401(k) Plan, participants may elect to defer a portion of their
compensation on a pre-tax basis and have it contributed to the Plan subject to
applicable annual Internal Revenue Code limits. Pre-tax contributions are
allocated to each participant's individual account and are then invested in
selected investment alternatives according to the participants' directions.
Employee elective deferrals are 100% vested at all times. The 401(k) Plan allows
for matching contributions to be made by us. As a tax-qualified retirement plan,
contributions to the 401(k) Plan and earnings on those contributions are not
taxable to the employees until distributed from the 401(k) Plan and all
contributions are deductible by us when made.


      For eligible employees, our Investing Plans likewise use base and lump-sum
merit pay as components of "eligible compensation" under the applicable plans
(incentive plan awards are not part of "eligible compensation"). In addition,
our "qualified" plans are subject to applicale IRS limits.



                                       53



                           SUMMARY COMPENSATION TABLE (1)

      The table set forth below summarizes the compensation paid to our named
executive officers during the year ended February 28, 2007.






        Name and                                                                           All
       Principal                                                    Stock      Option     Other
        Position            Year        Salary      Bonus(2)      Awards(3)   Awards(4) Compensation   Total
- ---------------------------------------------------------------------------------------------------------------
                                                                               
Michael L. Weiner
President                    2007      $260,000          0            0           0      $11,758      $271,758

Darryl L. Canfield
CFO                          2007      $180,000          0            0           0         0         $180,000

John F. Lanzafame
Vice-President and COO       2007      $188,077          0            0           0         0         $188,077

Stuart G. MacDonald
Vice-President  -
Research                     2007      $175,000          0            0           0         0         $175,000

Jeffrey L. Helfer
Vice-President
- -Engineering                 2007      $180,000          0            0           0         0         $180,000
- ---------------------------------------------------------------------------------------------------------------




- ----------
(1)   Certain columnar information required by Item 402(c)(2) of Regulation S-K
      has been omitted for categories where there has been no compensation
      awarded to, or paid to, the named executive officers required to be
      reported in the table during fiscal year ended February 28, 2007.
(2)   No bonus was paid to any named executive officer. The Company does not
      have a formal bonus plan, but the Compensation Committee has, from time to
      time on the recommendation of management, awarded cash bonuses to
      employees in recognition of exceptional service.
(3)   The Company did not issue any stock awards to named executive officers in
      the fiscal year ended February 28, 2007.
(4)   The Company did not issue any options awards to named executive officers
      in the fiscal year ended February 28, 2007.
(5)   Unless otherwise indicated, the aggregate amount of perquisites and other
      personal benefits given to each of the named executive officers valued at
      the actual cost to the Company was less than $10,000. These amounts
      consist of contributions made by the Company to the 401(k) Plan and
      premiums for long-term disability for each of the officers.



                                       54



Grants of Plan Based Awards

      The Company did not grant stock options or stock awards to the named
executive officers during the fiscal year ended February 28, 2007.

Outstanding Equity Awards at Fiscal Year End

      The following table presents the number and values of exercisable and
unexercisable options at February 28, 2007:





- --------------------------------------------------------------------------------------------------------------
                                               Option Awards (1)
- --------------------------------------------------------------------------------------------------------------

                                   Number of       Number of
                                  Securities      Securities
                                  underlying      underlying
                                 Unexercised     Unexercised
                                   Options     Unearned Options      Option
                                     (#)              (#)           Exercise        Option
                                 Exercisable    Unexercisable         Price       Expiration
           Name                   (Vested)        (Unvested)           ($)           Date
- ----------------------------     -----------   ---------------     -----------   -------------
                                                                      
Michael L. Weiner                    250,000  (2)           0         $ 0.50      01/01/2011
                                     250,000  (3)           0           0.43      07/16/2012
                                     300,000  (4)           0           0.18      10/31/2013
                                     800,000          200,000 (5)       0.97      05/10/2014

Darryl L. Canfield                   300,000          300,000 (6)       1.87      11/09/2015

John F. Lanzafame                     75,000           25,000 (7)       0.67      07/19/2014
                                     112,500           37,500 (8)       0.74      09/03/2014
                                     240,000           60,000 (9)       1.80       3/15/2015
                                      91,667          183,333 (10)      1.56      01/06/2016

Stuart G. MacDonald                  100,000  (11)          0           0.50      01/01/2011
                                     100,000  (12)          0           0.43      07/16/2012
                                     200,000  (4)           0           0.18      10/31/2013
                                     340,000           85,000 (13)      0.97      05/10/2014
                                      25,000  (14)          0           2.60      05/27/2015

Jeffrey L. Helfer                    100,000  (15)          0           0.50      10/15/2011
                                     100,000  (3)           0           0.43      07/16/2012
                                     200,000  (4)           0           0.18      10/31/2013
                                     340,000           85,000 (13)      0.97      05/10/2014
                                      25,000  (14)          0           2.60      05/27/2015




- ----------
(1)   Certain columnar information required by Item 402(f) (2) of Regulation S-K
      has been omitted for categories where there has been no compensation
      awarded to, or paid to, the named executive officers required to be
      reported in the table during fiscal year ended February 28, 2007.

(2)   These stock options were granted on January 1, 2001, with 100,000 vesting
      and becoming exercisable immediately. The remaining options vested and
      became exercisable in three equal annual installments with the first
      installment vesting on January 1, 2002.

(3)   These stock options were granted on July 16, 2002. This option vested and
      became exercisable in three equal annual installments with the first
      installment vesting on December 31, 2002.

(4)   These stock options were granted on October 31, 2003. This option vested
      and became exercisable in four equal annual installments with the first
      installment vesting on October 31, 2003.

(5)   These stock options were granted on May 10, 2004. This option becomes
      vested and exercisable after the following contingencies are met.
      a.    400,000 options upon completion of a financing deal,
      b.    400,000 options upon completion of a substantial licensing and/or
            strategic transaction, and



                                       55



      c.    200,000 options upon completion of a listing on a major exchange.

(6)   These stock options were granted on November 9, 2005. This option becomes
      vested and exercisable in six equal annual installments with the first
      installment vesting on November 9, 2005.

(7)   These stock options were granted on July 19, 2004. This option becomes
      vested and exercisable in four equal annual installments with the first
      installment vesting July 19, 2004.

(8)   These stock options were granted September 3, 2004. This option becomes
      vested and exercisable in four equal annual installments with the first
      installment vesting September 3, 2004.

(9)   These stock options were granted on March 10, 2005. This option becomes
      vested and exercisable after the following contingencies are met.

      a.    90,000 options upon completion of a financing deal vest and become
            exercisable in three equal semi-annual installments with the first
            installment vesting March 15, 2005,
      b.    150,000 options upon completion of a substantial licensing and/or
            strategic transaction vest and become exercisable in three equal
            semi-annual installments with the first installment vesting March
            15, 2005, and
      c.    60,000 options upon completion of a listing on a major exchange vest
            and become exercisable in three equal semi-annual installments with
            the first installment vesting on the date of completion.

(10)  These stock options were granted on January 6, 2006. This option becomes
      vested and exercisable in three equal annual installments with the first
      installment vesting on January 6, 2007.

(11)  These stock options were granted January 1, 2001. This option vested and
      became exercisable in five equal annual installments with the first
      installment vesting January 1, 2002.

(12)  These stock options were granted July 16, 2002. This option vested and
      became exercisable on December 31, 2002.

(13)  These stock options were granted on May 10, 2004. This option becomes
      vested and exercisable after the following contingencies are met.

      a.    127,500 options upon completion of a financing deal,
      b.    212,500 options upon completion of a substantial licensing and/or
            strategic transaction, and
      c.    85,000 options upon completion of a listing on a major exchange.

(14)  These stock options were granted May 27, 2005. This option vested and
      became exercisable on May 27, 2005.

(15)  These stock options were granted October 15, 2001. This option vested and
      became exercisable in five equal annual installments with the first
      installment vesting October 15, 2002.



                                       56



Options Exercised and Stock Vested


      No named executive officer exercised options in the fiscal year ended
February 28, 2007. Options held by the following named executive officer vested
during the year ended February 28, 2007 as follows:

      Darryl L. Canfield    200,000
      John F. Lanzafame     154,127
      Stuart G. MacDonald    50,000
      Jeffrey L. Helfer      50,000


Employment Agreements

      Each of Michael L. Weiner, President; Darryl L. Canfield, Vice-President,
Treasurer, Secretary and Chief Financial Officer; Stuart G. MacDonald, Vice
President of Research and Development; Jeffrey L. Helfer, Vice President and
General Manager of Cardiovascular Products; and John F. Lanzafame, Chief
Operating Officer and Vice President of Business Development, has entered into
an employment agreement 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 Messrs. Canfield, MacDonald, Helfer and
Lanzafame are terminable by either us or the employee upon 30 days' notice or
immediately by us for cause (as defined in their employment agreements) or upon
the death or disability of the employee. However, Messrs. Canfield, MacDonald
and Lanzafame are entitled to receive severance equal to six months' base
salary, payable in three equal installments within fifteen (15), thirty (30) and
sixty (60) days following termination 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. Mr. Helfer
is entitled to receive severance equal to six months' base salary, payable in
six equal monthly installments for Voluntary Termination with Good Reason. Each
will receive benefit continuation for the period equal to their severance.



                                       57



      For purposes of the employment agreements for Messrs. Canfield, 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 President 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.

Termination and Change in Control Tables

      The tables below outline the potential payments to our President and other
Named Executive Officers upon the occurrence of certain termination triggering
events. For the purposes of the table, below are the standard definitions for
the various types of termination, although exact definitions may vary by
agreement and by person.

      "Voluntary termination" means a termination initiated by the executive
officer.

      "Voluntary termination for Good Reason" generally means termination
initiated by the executive officer (i) following a change in control as defined
above (ii) due to a material breach by the Company under the employment
agreement or (iii) a significant change in the executive officer's duties.

      "Involuntary Termination--Disability" means entitlement to long-term
disability benefits under the Company Disability Income Plan, as amended and any
successor plan, or a determination of a permanent and total disability under a
state workers compensation statute.

      "Involuntary Termination-- For Cause" means the occurrence of one or more
of the following events (i) the Executive willfully refuses to obey reasonable
and lawful orders of the President or the Board of Directors; (ii) the Executive
has willfully breached or habitually neglected his duty and has failed to
correct his behavior within five (5) days following receipt of written notice of
such concerns; (iii) the Executive has been convicted in a court of law of a
crime or offense which involves dishonesty or fraud; (iv) the Executive has
breached any of the Executive's obligations pursuant to this Agreement; or (v)
the Executive has committed an intentional tort against the Company or its
Executives.

      "Involuntary Termination-- Not for Cause" means an involuntary termination
for reasons other than "For Cause" as defined above.



                                       58



      "Involuntary Termination for Change-in-Control" occurs when a named
executive is terminated after the completion of change in control as described
above in Employment Contracts.

      No Named Executive Officer is entitled to a payment in connection with
Involuntary Termination--For Cause.

      Only Mr. Helfer is entitled to a payment in connection with a Voluntary
Termination for Good Reason.





Michael L. Weiner
President, Director
- ---------------------------------------------------------------------------------------------------------------------
                                             Voluntary
                                            Termination                     Involuntary Termination
- ---------------------------------------------------------------------------------------------------------------------
Executive Benefits and Payments Upon      Good Reason or   Disability or                                  Change in
Termination(1)                              Retirement         Death        For Cause    Not For Cause     Control
- ---------------------------------------------------------------------------------------------------------------------
                                                                                          
Compensation
   Severance(2)                                        0        $260,000            0         $260,000       $260,000
Benefits and Perquisites(3)
   401(k) Match(4)                                     0           9,000            0            9,000          9,000
   Health Insurance(5)                                 0          10,200            0           10,200         10,200
   Long-Term Disability premiums(5)                    0           1,360            0            1,360          1,360
- ---------------------------------------------------------------------------------------------------------------------

Darryl L. Canfield
Vice-President, Treasurer, Secretary, Chief Financial Officer
- ---------------------------------------------------------------------------------------------------------------------
                                             Voluntary
                                            Termination                     Involuntary Termination
- ---------------------------------------------------------------------------------------------------------------------
Executive Benefits and Payments Upon      Good Reason or   Disability or                                  Change in
Termination(1)                              Retirement         Death        For Cause    Not For Cause     Control
- ---------------------------------------------------------------------------------------------------------------------
Compensation
   Severance(2)                                        0               0            0                0        $90,000
Benefits and Perquisites(3)
   401(k) Match(4)                                     0               0            0                0          3,600
   Health Insurance(5)                                 0               0            0                0          1,930
   Long-Term Disability premiums(5)                    0               0            0                0            810
- ---------------------------------------------------------------------------------------------------------------------

John F. Lanzafame
Vice-President - Business Development, Chief Operating Officer
- ---------------------------------------------------------------------------------------------------------------------
                                             Voluntary
                                            Termination                     Involuntary Termination
- ---------------------------------------------------------------------------------------------------------------------
Executive Benefits and Payments Upon      Good Reason or   Disability or                                  Change in
Termination(1)                              Retirement         Death        For Cause    Not For Cause     Control
- ---------------------------------------------------------------------------------------------------------------------
Compensation
   Severance(2)                                        0               0            0                0        $90,000
Benefits and Perquisites(3)
   401(k) Match(4)                                     0               0            0                0          3,600
   Health Insurance(5)                                 0               0            0                0          4,500
   Long-Term Disability premiums(5)                    0               0            0                0            240
- ---------------------------------------------------------------------------------------------------------------------

Stuart G. MacDonald
Vice-President - Research and Development
- ---------------------------------------------------------------------------------------------------------------------
                                             Voluntary
                                            Termination                     Involuntary Termination
- ---------------------------------------------------------------------------------------------------------------------
Executive Benefits and Payments Upon      Good Reason or   Disability or                                  Change in
Termination(1)                              Retirement         Death        For Cause    Not For Cause     Control
- ---------------------------------------------------------------------------------------------------------------------
Compensation
   Severance(2)                                        0               0            0                0        $87,500


                                       59





                                                                                          
Benefits and Perquisites(3)
   401(k) Match(4)                                     0               0            0                0          3,500
   Health Insurance(5)                                 0               0            0                0          1,600
   Long-Term Disability premiums(5)                    0               0            0                0            640
- ---------------------------------------------------------------------------------------------------------------------

Jeffrey L. Helfer
Vice-President and General Manager-Cardiovascular Products
- ---------------------------------------------------------------------------------------------------------------------
                                             Voluntary
                                            Termination                     Involuntary Termination
- ---------------------------------------------------------------------------------------------------------------------
Executive Benefits and Payments Upon      Good Reason or   Disability or                                  Change in
Termination(1)                              Retirement         Death        For Cause    Not For Cause     Control
- ---------------------------------------------------------------------------------------------------------------------
Compensation
   Severance(2)                                   90,000               0            0                0              0
Benefits and Perquisites(3)
   401(k) Match(4)                                 3,600               0            0                0              0
   Health Insurance(5)                             4,500               0            0                0              0
   Long-Term Disability premiums(5)                  550               0            0                0              0
- ---------------------------------------------------------------------------------------------------------------------




- --------------
(1)   For purposes of this analysis, we assume that the named Executive
      Officer's compensation is as follows: Michael Weiner's current base salary
      is $260,000; Darryl Canfield, John Lanzafame and Jeffrey Helfer's current
      base salaries are $180,000; Stuart MacDonald's current base salary is
      $175,000.
(2)   Severance is calculated as follows: Michael Weiner receives one (1) year
      of base salary for Involuntary Termination-Disability or Death,
      Involuntary Termination-Not for Cause and Involuntary Termination-Change
      in Control; Darryl Canfield, John Lanzafame and Stuart MacDonald receive
      six (6) months of base salary for Involuntary Termination-Change in
      Control; Jeffrey Helfer receives six (6) months for Voluntary
      Termination-Good Reason.
(3)   Payments associated with benefits and perquisites are limited to the items
      listed. No other continuation of benefits or perquisites occurs under the
      termination scenarios listed.
(4)   401(k) Employer Match is calculated on salary paid as per Safe Harbor
      provision of the 401(k) Plan up to the maximum allowable contribution.
(5)   Health Insurance and Long-Term Disability continuation is calculated as
      follows: Michael Weiner at one (1) year; each of Darryl Canfield, John
      Lanzafame, Stuart MacDonald, and Jeffrey Helfer at six (6) months.



                                       60



LIMITATION OF LIABILITY AND INDEMNIFICATION

      As permitted by the Nevada General Corporation Law, we have adopted
provisions in our certificate of incorporation and by-laws to be in effect at
the closing of this offering that limit or eliminate the personal liability of
our directors. Consequently, a director will not be personally liable to us or
our stockholders for monetary damages or breach of fiduciary duty as a director,
except for liability for:

      o     any breach of the director's duty of loyalty to us or our
            stockholders;

      o     any act or omission not in good faith or that involves intentional
            misconduct or a knowing violation of law;

      o     any unlawful payments related to dividends or unlawful stock
            repurchases, redemptions or other distributions; or

      o     any transaction from which the director derived an improper personal
            benefit.

      These limitations of liability do not alter director liability under the
federal securities laws and do not affect the availability of equitable remedies
such as an injunction or rescission.

In addition, our by-laws provide that:

      o     we will indemnify our directors, officers and, in the discretion of
            our board of directors, certain employees to the fullest extent
            permitted by the Nevada General Corporation Law; and

      o     we will advance expenses, including attorneys' fees, to our
            directors and, in the discretion of our board of directors, to our
            officers and certain employees, in connection with legal
            proceedings, subject to limited exceptions.

      We also maintain general liability insurance that covers certain
liabilities of our directors and officers arising out of claims based on acts or
omissions in their capacities as directors or officers, including liabilities
under the Securities Act of 1933, as amended. Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to directors,
officers, or persons controlling the registrant pursuant to the foregoing
provisions, we have been informed 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.

      These provisions may discourage stockholders from bringing a lawsuit
against our directors for breach of their fiduciary duty. These provisions may
also have the effect of reducing the likelihood of derivative litigation against
directors and officers, even though such an action, if successful, might
otherwise benefit us and our stockholders. Furthermore, a stockholder's
investment may be adversely affected to the extent we pay the costs of
settlement and damage awards against directors and officers pursuant to these
indemnification provisions. We believe that these provisions, the
indemnification agreements and the insurance are necessary to attract and retain
talented and experienced directors and officers.

      At present, there is no pending litigation or proceeding involving any of
our directors or officers where indemnification will be required or permitted.
We are not aware of any threatened litigation or proceeding that might result in
a claim for such indemnification.



                                       61



               BENEFICIAL OWNERSHIP OF COMMON STOCK BY DIRECTORS,
                       OFFICERS AND PRINCIPAL STOCKHOLDERS



      The following table sets forth the beneficial ownership information of our
common stock at May 18, 2007, for:

      o     each person known to us to be the beneficial owner of more than 5%
            of our common stock (other than selling stockholders, whose
            beneficial ownership is disclosed on page 56);


      o     each named executive officer;

      o     each of our directors; and

      o     all of our executive officers and directors as a group.


      We have determined beneficial ownership in accordance with the rules of
the SEC. Except as indicated by the footnotes below, we believe, based on the
information furnished to us, that the persons and entities named in the table
below have sole voting and investment power with respect to all shares of common
stock reflected as beneficially owned. We have based our calculation of the
percentage of beneficial ownership on 83,431,699 shares of common stock
outstanding on May 18, 2007.

      In computing the number of shares of common stock beneficially owned by a
person and the percentage ownership of that person, we deemed outstanding shares
of common stock subject to options or warrants held by that person that are
currently exercisable or exercisable within 60 days of May 18, 2007. We did
not deem these shares outstanding, however, for the purpose of computing the
percentage ownership of any other person. Beneficial ownership representing less
than 1% is denoted with an asterisk (*).



                                                           Shares Beneficially
                                                                  Owned
Beneficial Owner                                           Number       Percent
- -----------------------------------------------------   ----------     ---------
Guenter H. Jaensch                                       1,077,500 (1)     1.28%
16065 Bristol Isle Way
Delray Beach, FL 33446


Michael L. Weiner                                       15,970,522 (2)    17.14%
693 Summit Drive
Webster, NY 14580


Theodore A. Greenberg                                            0            *
530 F Grand Street
New York, NY 10002

Bonita L. Labosky                                                0            *
3067 East Lake Road
Skaneateles, NY 13152


Stan Yakatan                                                     0            *
155 Lyndon Street - First Court
Hermosa Beach, CA 90524


Jeffrey H. Helfer                                        5,818,780 (4)     6.91%
4 Highland Green
Victor, NY 14564

Stuart G. MacDonald                                      5,778,080 (5)     6.86%
4663 East Lake Road
Pultneyville, NY 14538

John F. Lanzafame                                          519,500 (3)        *
10 Alameda Drive
Fairport, NY 14450

Darryl L. Canfield                                         300,000 (3)        *
32 Merryhill Lane
Pittsford, NY 14534


Biomed Solutions, LLC                                    8,839,437 (6)     9.65%
15 Schoen Place
Pittsford, NY 14534

Myotech, LLC                                             4,923,080         5.90%
15 Schoen Place
Pittsford, NY 14534

Technology Innovations, LLC                              9,140,081 (7)     9.98%
15 Schoen Place
Pittsford, NY 14534


All Directors and Executive Officers as a Group (9 persons)
                                                        19,618,222 (8)    20.73%


                                       62



(1)   Includes 627,000 shares issuable upon exercise of currently-exercisable
      options. Also includes 225,000 shares owned by Dr. Jaensch's wife; Dr.
      Jaensch disclaims beneficial ownership of the shares held by his wife.

(2)   Includes (i) 656,756 shares owned by Biomed Solutions, LLC and an
      aggregate of 8,449,369 shares issuable to Biomed Solutions, LLC upon
      exercise of currently-exercisable warrants and conversion of outstanding
      convertible promissory notes, (ii) 4,923,080 shares owned by Myotech, LLC,
      and (iii) 300,644 shares owned by Technology Innovations, LLC. Mr. Weiner
      is deemed to have voting and investment control over these shares by
      reason of his status as Manager of Biomed Solutions, LLC and Technology
      Innovations LLC and as a member of the Board of Directors of Myotech, LLC;
      he disclaims beneficial ownership of these shares except to the extent of
      his pecuniary interest in Biomed Solutions, LLC, Technology Innovations
      LLC and Myotech, LLC. Also includes 1,600,000 shares issuable upon
      exercise of currently-exercisable options held by Mr. Weiner.

(3)   Issuable upon exercise of currently-exercisable options.

(4)   Includes 4,923,080 shares owned by Myotech, LLC. Mr. Helfer is deemed to
      have voting and investment control over these shares by reason of his
      status as a member of the Board of Directors of Myotech, LLC; he disclaims
      beneficial ownership of these shares except to the extent of his pecuniary
      interest in Myotech, LLC. Also includes 765,000 shares issuable upon
      exercise of currently-exercisable options held by Mr. Helfer.

(5)   Includes 4,923,080 shares owned by Myotech, LLC. Mr. MacDonald is deemed
      to have voting and investment control over these shares by reason of his
      status as a member of the Board of Directors of Myotech, LLC; he disclaims
      beneficial ownership of these shares except to the extent of his pecuniary
      interest in Myotech, LLC. Also includes 765,000 shares issuable upon
      exercise of currently-exercisable options held by Mr. MacDonald.

(6)   Includes 6,434,403 shares issuable upon exercise of currently-exercisable
      warrants and conversion of outstanding convertible promissory notes.

(7)   Includes (i) 656,756 shares owned by Biomed Solutions, LLC and (ii)
      8,449,369 shares issuable to Biomed Solutions, LLC upon exercise of
      currently-exercisable warrants and conversion of outstanding convertible
      promissory notes. Technology Innovations, LLC is the beneficial owner of
      approximately 57% of the outstanding membership interests of Biomed
      Solutions, LLC; it disclaims ownership of these shares except to the
      extent of its pecuniary interest in Biomed Solutions, LLC.

(8)   Includes shares issuable upon exercise of options and warrants and
      conversion of convertible promissory notes, as described in notes 1
      through 7 above. Also includes shares as to which beneficial ownership is
      disclaimed, as described in notes 1, 2, 4, 5 and 7 above



- ------------------------------- ---------------------------- ---------------------------- -------------------------
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             9,428,062                      $.96                       7,862,984
- ------------------------------- ---------------------------- ---------------------------- -------------------------
Equity compensation plans not
approved by security holders                   -0-                       -0-                             -0-
- ------------------------------- ---------------------------- ---------------------------- -------------------------
Total                                    9,428,062                      $.96                       7,862,984
- ------------------------------- ---------------------------- ---------------------------- -------------------------



                                       63



              CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS


      Michael L. Weiner, our President, is the Manager and a 42.7% equity member
of Technology Innovations, LLC., a 57% equity member of Biomed Solutions, LLC.
Mr. Weiner is also the Manager of Biomed. Biomed is the record owner of 656,756
shares of our common stock and Technology Innovations is the record owner of
300,644 shares of our common stock. 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. Mr. Weiner is also on
the Board of Myotech, LLC which is the owner of 4,923,080 shares of our common
stock. We beneficially own 43.7% of Myotech, LLC.


      On December 1, 2000, we issued to Biomed Solutions, LLC 10,759,101 shares
of our common stock in exchange for Biomed's shares of LTR Antisense Technology,
Inc.

      On December 1, 2000, Biomed Solutions transferred its MRI-compatible
pacemaker patent pending and related technology to Biophan for a future payment
of $500,000. This obligation bore interest at 8% per annum from February 28,
2002. 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. On the same date, SBI converted the $300,000
obligation transferred to it into 3,000,000 shares of our common stock.

      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. 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.

      On May 27, 2005, we entered into an unsecured loan agreement with Biomed,
whereby Biomed agreed to provide us with a line of credit facility of up to $2
million. Borrowings under the line bear interest at 8% per annum (compounded
monthly) and are payable on demand on or after November 27, 2005. In June 2005
the entire facility was drawn down. The outstanding principal and interest are
convertible into shares of our Common Stock at 90% of the average market closing
price per share of our Common Stock for the 20 trading days preceding the date
of borrowings under the line ($2.12 per share for the first $1 million and $2.19
per share for the second $1 million). Additionally, Biomed received warrant
coverage of 500,000 shares, with the warrants priced at 110% of the average
market closing price per share of our Common Stock for the 20 trading days
preceding the date of execution of the loan agreement ($2.49 per share). On
August 31, 2005, Biomed elected to convert $1,000,000 of the outstanding debt
plus accrued interest into 480,899 shares of our Common Stock. On October 7,
2005, we repaid $500,000 of the outstanding debt plus the entire accrued
interest to date, leaving an outstanding principal balance of $500,000. The loan
agreement requires us to use our best efforts to include the shares issued and
issuable upon conversion of the loan in any registration statement we file
covering resale of shares of our Common Stock.



      On January 24, 2006, we entered into a Line of Credit Agreement (the "Line
of Credit Agreement") with Biomed pursuant to which Biomed has committed to make
advances to us, in an aggregate amount of up to $5,000,000. Our obligations with
respect to borrowings under the credit facility are governed by a Convertible
Promissory Note issued by us to Biomed on January 24, 2006. Under the Line of
Credit Agreement, advances may be drawn down in such amounts and at such times
as we determine upon 15 days' prior notice to Biomed, except that we may not
draw down more than $1,500,000 in any 30-day period. As of February 28, 2007, we
had borrowed an aggregate of $3,930,000 under the Line of Credit Agreement.
Amounts borrowed bear interest at the rate of 8% per annum and were originally
convertible into shares of our Common Stock at the rate of $1.46 per share. On
October 11, 2006, in connection with Biomed's agreement to subordinate its
rights under the Convertible Promissory Note to the interests of the investors
acquiring the Notes described under the heading "Transactions with Selling
Stockholders" on Page 47, we amended the Line of Credit Agreement to reduce the
conversion price to $0.67 per share. Any amounts drawn down and repaid may be
reborrowed at any time (subject to a requirement of 15 days' notice and the
limitation that not more than $1,500,000 may be drawn down during any 30-day
period). Biomed's obligation to lend to us under the Line of Credit Agreement
expires on June 30, 2007, on which date the entire amount borrowed by us (and
not converted into shares of our Common Stock) becomes due and payable. In
connection with the establishment of the credit facility under the Line of
Credit Agreement, on January 24, 2006 we issued to Biomed a Stock Purchase
Warrant (the "Warrant") entitling Biomed to purchase up to 1,198,630 shares of
our Common Stock at an exercise price of $1.89 per share. Biomed's purchase
rights under the Warrant expire on January 23, 2011.



                                       64




      We have affiliations with three entities, Biomed, Technology Innovations,
and Myotech (through November 30, 2005) that are related by virtue of common
senior management personnel and stock ownership. During the years ended February
28, 2007, 2006, and 2005, the Company charged Biomed and Myotech (through
November 30, 2005) for services of certain Company personnel. The total of these
charges was $197,362, $156,647 and $161,014, respectively. We also charge
Biomed, TI and Myotech (through November 30, 2005) for expenses allocable to and
paid on their behalf. During the years ended February 28, 2007, 2006, and 2005,
expenses paid by the Company on their behalf were approximately $175,220,
$647,000 and $240,000, respectively. At February 28, 2007, the combined balances
due from these related parties was $16,301. The amounts do not bear interest and
the Company received payment within forty-five days.

      During the years ended February 28, 2007, 2006 and 2005, we were billed
$35,290, $93,000 and $9,000 respectively, for legal services provided by Bramson
& Pressman. Robert S. Bramson, at the time a member of our Board of Directors,
is a partner in Bramson & Pressman.

      During the year ended February 28, 2006, we were billed $110,500 for
consulting services provided by Steven Katz, at the time a member of our Board
of Directors. During the year ended February 28, 2007, we were billed $183,500
for consulting services provided by Mr. Katz. These services, and the amount of
fees billed by Mr. Katz for each, are described below:


Service                                                                    Fee
- -------------------------------------------------------------------    ---------
Assistance with audit of Biophan Europe GmbH                           $   7,500
Assistance with acquisition of interest in Myotech LLC                    32,500
Assistance with October 2006 convertible note and warrant financing      131,000
General management assistance                                             12,500


      Pursuant to a policy adopted by resolution of our Board of Directors, all
transactions with affiliates must be approved by the disinterested members of
our Board of Directors, based on a determination that such transactions are on
terms no less favorable to us than would prevail in arms-length transactions
with unaffiliated parties under similar circumstances. All transactions with our
affiliates during the fiscal year ended February 28, 2007 were approved in
accordance with this policy.

                     TRANSACTIONS WITH SELLING STOCKHOLDERS

      On October 11, 2006, we entered into a Securities Purchase Agreement (the
"Purchase Agreement") with ten private investors led by Iroquois Master Fund Ltd
("Iroquois"). The investors party to the Purchase Agreement are selling
stockholders in this offering.


      Pursuant to the Purchase Agreement, on October 12, 2006 we issued
$7,250,000 of Senior Secured Convertible Notes (the "Notes") to the investors
and received proceeds of $6,219,880 after paying estimated fees and expenses of
$1,030,120 related to the transaction. The holders of the Notes may elect to
convert the Notes at any time into shares of our common stock based upon a price
of $0.67 per share (the "Conversion Price"). Interest on the outstanding
principal amount under the Notes is payable quarterly at a rate equal to the
six-month London InterBank Overnight Rate plus 500 basis points, with a minimum
rate of 10% per annum and a maximum rate of 12% per annum, payable at our option
in cash or shares of our common stock registered for resale under the Securities
Act of 1933, as amended (the "Securities Act"). If we elect to make an interest
payment in common stock, the number of shares issuable by us will be based upon
the lower of (i) 90% of the 20-day trailing average volume weighted average
price per share as reported on Bloomberg LP (the "VWAPS") or (ii) the Conversion
Price. Principal on the Notes amortizes and payments are due in 33 equal monthly
installments commencing four months following issuance of the Notes, and may be
made at our option in cash or shares of our common stock registered for resale
under the Securities Act. If we elect to make a principal payment in common
stock, the number of shares issuable by us will be based upon the lower of (i)
87.5% of the 15-day trailing VWAPS prior to the principal payment date or (ii)
the Conversion Price. Our obligations under the Notes are secured by a first
priority security interest in substantially all of our assets pursuant to a
Security Agreement dated as of October 11, 2006 among us, the investors and
Iroquois, as agent for the investors (the "Security Agreement").


                                       65



      As further consideration to the investors, we issued one-year warrants to
purchase an aggregate of 10,820,896 shares of our common stock at a price of
$0.67 per share. If the investors elect to exercise these one-year warrants,
they will also receive additional five-year warrants to purchase shares of our
common stock equal to the number of shares purchased under the one-year
warrants, with 50% of the additional warrants having an exercise price of 115%
of the per share purchase price, and the remaining 50% of the additional
five-year warrants having an exercise price of 125% of the per share purchase
price. We also issued to the investors two series of five-year warrants to
purchase an aggregate of 10,820,896 shares of our common stock. The first
five-year warrants allow for the purchase of 5,410,448 shares of our common
stock at an exercise price of $0.81 per share, and the second five-year warrants
allow for the purchase of 5,410,448 shares of our common stock at an exercise
price of $0.89 per share. The warrants contain anti-dilution protection that,
should we issue equity or equity-linked securities at a price per common share
below the exercise price of the five-year warrants, will automatically adjust
the exercise price of the warrants to the price at which we issue such equity or
equity-linked securities.


      On February 21, 2007, we entered into a Forbearance Agreement (the
"Forbearance Agreement") with the selling investors pursuant to which the
investors agreed that, during the period commencing on February 16, 2007 and
ending on the earlier of (i) March 31, 2007 or (ii) the date on which any
Termination Event (as defined in the Forbearance Agreement) first occurs (the
"Forbearance Period"), they will forbear from exercising any and all of the
rights and remedies which they may have against us or any of our assets under
the Notes or the Purchase Agreement or at law or in equity as a result of any
default under the Notes or as a result of the occurrence of certain events with
respect to the Purchase Agreement. In exchange for entering into the Forbearance
Agreement, we issued pro rata to the investors three-year warrants for the
purchase of an aggregate of 60,000 shares of our common stock at an exercise
price of $0.51 per share (the "Fee Warrants").

      Upon the issuance of the Fee Warrants, the exercise prices of five-year
warrants issued to the investors pursuant to the Purchase Agreement to the Note
Holders (the "Original Warrants") for the purchase of an aggregate of 10,820,896
shares of our common stock were automatically adjusted from $0.81 per share and
$0.89 per share, respectively, to $0.51 per share, and the number of shares of
Common Stock issuable upon exercise of the Original Warrants was automatically
adjusted, proportionately, to an aggregate of 18,034,830 shares. In the
Forbearance Agreement, the investors waived, with respect to the issuance of the
Fee Warrants, application of similar anti-dilution adjustments contained in the
Notes and in a third series of warrants for the purchase, on or before October
12, 2007, of an aggregate of 10,820,896 additional shares of our common stock at
an exercise price of $0.67 per share (the "One Year Warrants").

      Pursuant to the Forbearance Agreement, we also agreed that we would not,
without the prior written consent of investors then holding Notes representing,
in the aggregate, at least sixty percent (60%) of the face amount of all
outstanding Notes, incur expenses (other than the accrual of interest, penalties
and liquidated damages on the Notes or under the Purchase Agreement) in excess
of $500,000 during any thirty-day period commencing on February 16, 2007 and
terminating on the date on which the Registration Statement to which this
prospectus relates was declared effective by the Securities and Exchange
Commission.


      C.E. Unterberg, Towbin acted as the exclusive placement agent in the
offering. We paid the placement agent a cash fee of $580,000 and issued to it a
five-year warrant to purchase an aggregate of 865,672 shares of our common stock
at a price of $0.67 per share. The placement agent is a selling stockholder in
this offering.


      In connection with the Forbearance Agreement, C.E. Unterberg Towbin
separately agreed to waive, with respect to the issuance of the Fee Warrants,
application of the anti-dilution provisions set forth in its warrant.


      The Registration Statement to which this prospectus relates was filed by
us pursuant to an agreement with the selling stockholders to register for resale
under the Securities Act the common stock issuable upon the exercise of all of
the warrants and any shares of common stock that we may issue at our option to
the holders of the Notes in connection with payments of interest and principal,
or that we are obligated to issue upon any conversion of the Notes at the option
of the holders. We further agreed to propose to our shareholders an amendment to
our Articles of Incorporation in order to increase to at least 250,000,000 the
number of authorized shares of our common stock (the "Charter Amendment") in
order to make available a sufficient number of shares to permit the exercise in
full of the warrants issued to the investors under the Purchase Agreement and
the conversion in full of the Notes. Following approval of the Charter Amendment
by our stockholders, which was approved at a Special Stockholders Meeting held
on May 8, 2007, we intend to file another registration statement covering the
resale by the selling stockholders of the remaining shares of our common stock
issuable upon exercise of the warrants.

                              SELLING STOCKHOLDERS

      The following table sets forth the beneficial ownership information of our
common stock at May 18, 2007, and as adjusted to reflect the sale of the shares
of common stock in this offering, for each selling stockholder.


      Certain selling stockholders may be affiliates of broker-dealers. To our
knowledge, each selling stockholder purchased the shares of our stock in the
ordinary course of business and, at the time of acquiring the securities to be
resold, the selling stockholder had no agreements or understandings, directly or
indirectly, with any person to distribute the securities.


      We have determined beneficial ownership in accordance with the rules of
the SEC. Except as indicated by the footnotes below, we believe, based on the
information furnished to us, that the persons and entities named in the table
below have sole voting and investment power with respect to all shares of common
stock reflected as beneficially owned. We have based our calculation of the
percentage of beneficial ownership on 83,431,699 shares of common stock
outstanding on May 4, 2007, assuming (i) the conversion of an aggregate face
amount of $7,250,000 of our outstanding Senior Secured Convertible Notes due
October 11, 2009 into an aggregate of 10,820,896 shares of common stock to be
sold by selling stockholders in this offering, (ii) the exercise of warrants to
purchase an aggregate of 11,686,568 shares of common stock to be sold by selling
stockholders in this offering, (iii) the issuance of an aggregate of 2,084,027
shares of common stock (at an assumed price of $0.67 per share) in payment of
interest accruing under the Notes through October 11, 2009, to be sold by
selling stockholders in this offering, and (iv) the issuance to the selling
stockholders of additional warrants to purchase an aggregate of 36,069,660
shares of common stock. Our calculation does not include an aggregate of 60,000
of common stock issuable to the selling stockholders upon exercise of warrants
which may not be exercised.



                                       66




      In computing the number of shares of common stock beneficially owned by a
person and the percentage ownership of that person, we deemed outstanding shares
of common stock subject to options or warrants held by that person that are
currently exercisable or exercisable within 60 days of May 18, 2007. We did not
deem these shares outstanding, however, for the purpose of computing the
percentage ownership of any other person. Beneficial ownership representing less
than 1% is denoted with an asterisk (*).





                                                  Shares Beneficially                                   Shares Beneficially
                                                      Owned Prior                                         Owned After the
                                                    to the Offering                                          Offering
                                           ----------------------------------    Shares          ----------------------------------
Beneficial Owner                               Number             Percent        Offered             Number           Percent
- ----------------------------------------   ---------------     --------------  -------------     ---------------    --------------
                                                                                                             
BridgePointe Master Fund Ltd (2)             6,185,733(1)          4.99%(1)       2,454,389           3,731,344             3.34%
1125 Sanctuary Parkway, Suite 275
Alpharetta, GA 30004

CAMOFI Master LDC (3)                        8,247,654(1)          4.99%(1)       3,272,532           4,975,122             4.40%
c/o Centrecourt Asset Management LLC
550 Madison Avenue, 8th Floor
New York, New York 10017

Castlerigg Master Investments LTD (4)        8,247,654(1)          4.99%(1)       3,272,532           4,975,122             4.40%
c/o Sandell Asset Management Corp.
40 W. 57th Street, 26th Floor
New York, New York 10019

Cranshire Capital, L.P. (5)                  6,185,733(1)          4.99%(1)       2,454,389           3,731,344             3.34%
3100 Dundee Rd., Suite 703
Northbrook, IL 60062

Crescent International Ltd. (6)              4,123,831             3.73%          1,636,267           2,487,564             2.25%
c/o Cantara (Switzerland) S.A.
84 Avenue Louis-Casai
CH-1216 Cointrin/Geneva, Switzerland

Harborview Master Fund LP  (7)               4,123,831             3.73%          1,636,267           2,487,564             2.25%
Harbour House, Second Floor
Waterfront Drive, Road Town
Tortola, British Virgin Islands

Highbridge International LLC (8)             4,123,831             3.73%          1,636,267           2,487,564             2.25%
c/o Highbridge Capital Management, LLC
9 West 57th Street, 27th Floor
New York, NY 10019

Iroquois Master Fund Ltd. (9)               10,309,550(1)          4.99%(1)       4,090,642           6,218,908(1)          4.99%(1)
641 Lexington Avenue, 28th Floor
New York, NY 10022

Rockmore Investment Master Fund Ltd. (10)    4,123,831             3.73%          1,636,267           2,487,564             2.25%
150 East 58th Street, 28th Floor
New York, NY 10155

Truk Opportunity Fund, LLC (11)              4,123,831             3.73%          1,636,267           2,487,564             2.25%
One East 52nd Street, 6th Floor
New York, NY 10022

C.E. Unterberg, Towbin (12)                    865,672                *             865,672                   0                *
350 Madison Avenue
New York, NY 10017



(1)   Includes shares of common stock issuable upon exercise of warrants which,
      by their terms, may not be exercised if and to the extent that the total
      number of shares of our common stock then beneficially owned by the holder
      of such warrants and its affiliates and any other persons whose beneficial
      ownership of common stock would be aggregated with such holder's for
      purposes of Section 13(d) of the Exchange Act, would exceed 4.999% of the
      total number of shares of our common stock then outstanding.

(2)   Eric S. Swartz, in his capacity as manager of Roswell Capital Partners,
      LLC, the investment advisor to BridgePointe Master Fund Ltd., has voting
      control and investment discretion over the shares owned by BridgePointe
      Master Fund Ltd. Mr. Swartz disclaims beneficial ownership of such shares.

(3)   Richard Smithline exercises investment and voting control over the
      securities owned by CAMOFI Master LDC. Mr. Smithline disclaims beneficial
      ownership of the securities owned by CAMOFI Master LDC.

(4)   Sandell Asset Management Corp.("SAMC"), is the investment manager of
      Castlerigg Master Investments Ltd ("Master"). Thomas Sandell is the
      controlling person of SAMC and may be deemed to share beneficial ownership
      of the shares beneficially owned by Master. Castlerigg International Ltd.
      ("Castlerigg International") is the controlling shareholder of Castlerigg
      International Holdings Limited ("Holdings"). Holdings is the controlling
      shareholder of Master. Each of Holdings and Castlerigg International may
      be deemed to share beneficial ownership of the shares beneficially owned
      by Castlerigg Master Investments. SAMC, Mr. Sandell, Holdings and
      Castlerigg International each disclaims beneficial ownership of the
      securities with respect to which indirect beneficial ownership is
      described.

(5)   Mitchell P. Kopin, the president of Downview Capital, Inc., the general
      partner of Cranshire Capital, L.P, has sole voting control and investment
      discretion over securities held by Cranshire Capital, L.P. Each of
      Mitchell P. Kopin and Downview Capital, Inc. disclaims beneficial
      ownership of the shares held by Cranshire Capital, L.P.

(6)   Maxi Brezzi and Bachir Taleb-Ibrahimi, in their capacity as managers of
      Cantara (Switzerland) SA, the investment advisor to Crescent International
      Ltd., have voting control and investment discretion over the shares owned
      by Crescent International Ltd. Messrs. Brezzi and Taleb-Ibrahimi disclaim
      beneficial ownership of such shares.

(7)   Harborview Master Fund L.P. is a master fund in a master-feeder structure
      whose general partner is Harborview Advisors LLC. Richard Rosenblum and
      David Stefansky are the managers of Harborview Advisors LLC and have
      ultimate responsibility for trading with respect to Harborview Master Fund
      L.P. Messrs. Rosenblum and Stefansky disclaim beneficial ownership of the
      shares being registered hereunder.

(8)   Highbridge Capital Management, LLC is the trading manager of Highbridge
      International LLC and consequently has voting control and investment
      discretion over securities held by Highbridge International LLC. Glenn
      Dubin and Henry Swieca control Highbridge Capital Management, LLC and have
      voting control and investment discretion over the securities held by
      Highbridge International LLC. Each of Highbridge Capital Management, LLC,
      Glenn Dubin and Henry Swieca disclaims beneficial ownership of the
      securities held by Highbridge International LLC.

(9)   Joshua Silverman has voting control and investment decision over
      securities held by Iroquois Capital, LP. Mr. Silverman disclaims
      beneficial ownership of the shares held by Iroquois Capital, LP.

(10)  Rockmore Capital, LLC ("Rockmore Capital") and Rockmore Partners, LLC
      ("Rockmore Partners"), each a limited liability company formed under the
      laws of the State of Delaware, serve as the investment manager and general
      partner, respectively, to Rockmore Investments (US) LP, a Delaware limited
      partnership, which invests all of its assets through Rockmore Investment
      Master Fund Ltd., an exempted company formed under the laws of Bermuda
      ("Rockmore Master Fund"). By reason of such relationships, Rockmore
      Capital and Rockmore Partners may be deemed to share dispositive power
      over the shares of our common stock owned by Rockmore Master Fund.
      Rockmore Capital and Rockmore Partners disclaim beneficial ownership of
      such shares of our common stock. Rockmore Partners has delegated authority
      to Rockmore Capital regarding the portfolio management decisions with
      respect to the shares of common stock owned by Rockmore Master Fund and,
      as of December 8, 2006, Bruce T. Bernstein and Brian Daly, as officers of
      Rockmore Capital, are responsible for the portfolio management decisions
      of the shares of common stock owned by Rockmore Master Fund. By reason of
      such authority, Messrs. Bernstein and Daly may be deemed to share
      dispositive power over the shares of our common stock owned by Rockmore
      Master Fund. Messrs. Bernstein and Daly disclaim beneficial ownership of
      such shares and neither of such persons has any legal right to maintain
      such authority. No other person has sole or shared voting or dispositive
      power with respect to the shares of our common stock owned by Rockmore
      Master Fund (as those terms are used for purposes under Regulation 13D-G
      of the Securities Exchange Act of 1934, as amended). No person or "group"
      (as that term is used in Section 13(d) of the Securities Exchange Act of
      1934, as amended, or the SEC's Regulation 13D-G) controls Rockmore Master
      Fund.

(11)  Michael E. Fein and Stephen E. Saltzstein, as principals of Atoll Asset
      Management, LLC, the Managing Member of Truk Opportunity Fund, LLC,
      exercise investment and voting control over the securities owned by Truk
      Opportunity Fund, LLC. Both Mr. Fein and Mr. Saltzstein disclaim
      beneficial ownership of the securities owned by Truk Opportunity Fund,
      LLC.

(12)  Andrew Arno, in his capacity as Chief Executive Officer of C.E. Unterberg,
      Towbin LLC, has voting control and investment discretion over the shares
      owned by C.E. Unterberg, Towbin LLC. Mr. Arno disclaims beneficial
      ownership of such shares.


                                       67



                              PLAN OF DISTRIBUTION

      The selling stockholders may, from time to time, sell any or all of their
shares of common stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These sales may be at
fixed or negotiated prices. The selling stockholders may use any one or more of
the following methods when selling shares:

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

o     block trades in which the broker-dealer will attempt to sell the shares as
      agent but may position and resell a portion of the block as principal to
      facilitate the transaction;

o     purchases by broker-dealer as principal and resale by the broker-dealer
      for its account;

o     an exchange distribution in accordance with the rules of the applicable
      exchange;

o     privately negotiated transactions;

o     settlement of short sales;

o     broker-dealer may agree with the selling stockholders to sell a specified
      number of such shares at a stipulated price per share;

o     a combination of any such methods of sale; and

o     any other method permitted pursuant to applicable law.

      The selling stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.

      The selling stockholders may also engage in short sales against the box,
puts and calls and other transactions in our securities or derivatives of our
securities and may sell or deliver shares in connection with these trades.

      Broker-dealers engaged by the selling stockholders may arrange for other
broker-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling stockholders do not expect these commissions or
discounts to exceed what is customary in the types of transactions involved. Any
profits on the resale of shares of common stock by the broker-dealer acting as
principal might be deemed to be underwriting discounts or commissions under the
Securities Act. Discounts, concessions, commissions and similar selling
expenses, if any, attributable to the sale of shares will be borne by a selling
stockholder. The selling stockholders may agree to indemnify any agent, dealer
or broker-dealer that participates in transactions involving sales of the shares
if liabilities are imposed on that person under the Securities Act.

      The selling stockholders may from time to time pledge or grant a security
interest in some or all of the shares of common stock owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell the shares of common stock from time to time under
this prospectus after we have filed an amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act of 1933 amending
the list of selling stockholders to include the pledgee, transferee or other
successors in interest as selling stockholders under this prospectus.

      The selling stockholders also may transfer the shares of common stock in
other circumstances, in which case the transferees, pledgees or other successors
in interest will be the selling beneficial owners for purposes of this
prospectus and may sell the shares of common stock from time to time under this
prospectus after we have filed an amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act of 1933 amending
the list of selling stockholders to include the pledgee, transferee or other
successors in interest as selling stockholders under this prospectus.


                                       68



      The selling stockholders and any broker-dealer or agents that are involved
in selling the shares of common stock may be deemed to be "underwriters" within
the meaning of the Securities Act in connection with such sales. In such event,
any commissions received by such broker-dealers or agents and any profit on the
resale of common stock purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.

      We are required to pay all fees and expenses incident to the registration
of the shares of common stock. We have agreed to indemnify the selling
stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.

      The selling stockholders have advised us that they have not entered into
any agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares of common stock, nor is there
an underwriter or coordinating broker acting in connection with a proposed sale
of shares of common stock by any selling stockholder. If we are notified by any
selling stockholder that any material arrangement has been entered into with a
broker-dealer for the sale of shares of common stock, if required, we will file
a supplement to this prospectus.

      The anti-manipulation rules of Regulation M under the Securities Exchange
Act of 1934 may apply to sales of our common stock and activities of the selling
stockholders.

      Because the selling stockholders may be deemed underwriters, they will be
subject to the prospectus delivery requirements of the Securities Act.


                                       69



                          DESCRIPTION OF CAPITAL STOCK

General


      As of May 18, 2007, our authorized capital consists of 250,000,000 shares
of common stock, par value $.005 per share.


Common Stock


      As of May 18, 2007, we had 83,431,699 shares of common stock outstanding.
Each share of our common stock is entitled to one vote at all meetings of our
stockholders. Our stockholders are not permitted to cumulate votes in the
election of directors. All shares of our common stock are equal to each other
with respect to liquidation rights and dividend rights. There are no preemptive
rights to purchase any additional shares of our common stock. In the event of
our liquidation, dissolution or winding up, holders of our common stock will be
entitled to receive, on a pro rata basis, all of our assets remaining after
satisfaction of all liabilities and preferences of outstanding preferred stock,
if any. Neither our Articles of Incorporation nor our Bylaws contain any
provisions which limit or restrict the ability of another person to take over
our company; however, our Bylaws do permit our Board of Directors to be
classified.


Options and Warrants


      As of May 18, 2007, we had outstanding options to purchase an aggregate of
9,193,065 shares of our common stock pursuant to our 2001 Stock Option Plan (as
amended) and outstanding options to purchase an aggregate of 314,997 shares of
our common stock pursuant to our 2006 Incentive Stock Plan. The exercise prices
for these options range from $.10 per share to $2.97 per share, and the
weighted-average exercise price for all of the options is $.96 per share. These
options are held by directors, officers, key employees and consultants. As of
April 20, 2007, options to purchase 7,433,479 shares were exercisable.

      As of May 18, 2007, we also had outstanding warrants to purchase
33,229,318 shares of our common stock. The exercise prices for these warrants
range from $.10 per share to $2.49 per share, and the weighted-average exercise
price for all of the warrants is $0.64 share.


Certain Statutory Provisions of the Nevada Revised Statutes

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

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

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

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


                                       70



Nasdaq Trading Symbol

      Our common stock is traded in the over-the-counter markets and is reported
on the Nasdaq OTC Bulletin Board under the trading symbol "BIPH."

Transfer Agent and Registrar

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

                                  LEGAL MATTERS


      Sichenzia Ross Friedman Ference LLP has passed upon the validity of the
shares of common stock offered hereby.


                                     EXPERTS

      The consolidated financial statements as of February 28, 2007 and 2006 and
for each of the three years in the period ended February 28, 2007 included in
this prospectus have been so included in reliance on the report of Goldstein
Golub Kessler LLP, an independent registered public accounting firm, given on
the authority of that firm as experts in auditing and accounting.

                       WHERE YOU CAN FIND MORE INFORMATION


      We have filed with the SEC a registration statement on Form S-1 (File
Number 333-138632) under the Securities Act with respect to the shares of
common stock we and the selling stockholders are offering by this prospectus.
This prospectus does not contain all of the information included in the
registration statement. For further information pertaining to us and our common
stock, you should refer to the registration statement and to its exhibits.
Whenever we make reference in this prospectus to any of our contracts,
agreements or other documents, the references are not necessarily complete, and
you should refer to the exhibits attached to the registration statement for
copies of the actual contract, agreement or other document.


      We are subject to the informational requirements of the Securities
Exchange Act of 1934 and file annual, quarterly and current reports, proxy
statements and other information with the SEC. You can read our SEC filings,
including the registration statement, over the Internet at the SEC's website at
www.sec.gov. You may also read and copy any document we file with the SEC at its
public reference facility at 100 F Street, N.E., Room 1580, Washington, D.C.
20549.

      You may also obtain copies of the documents at prescribed rates by writing
to the Public Reference Section of the SEC at 100 F Street, N.E., Washington,
D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the
operation of the public reference facilities.


                                       71



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                          BIOPHAN TECHNOLOGIES, INC.


                              FINANCIAL STATEMENTS



CONTENTS

Report of Independent Registered Public Accounting Firm                      F-2

Consolidated Financial Statements:
  Balance Sheet                                                              F-3
  Statement of Operations                                                    F-4
  Statement of Stockholders' Equity (Deficiency)                             F-5
  Statement of Cash Flows                                                    F-9

Notes to Consolidated Financial Statements                                  F-12


                                       F-1




REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
Biophan Technologies, Inc.

We have audited the accompanying consolidated balance sheets of Biophan
Technologies, Inc. and Subsidiaries (a development stage company) as of February
28, 2007 and 2006 and the related consolidated statements of operations,
stockholders' equity (deficiency), and cash flows for each of the three years in
the period ended February 28, 2007, and the amounts in the cumulative column in
the consolidated statements of operations, stockholders' equity (deficiency),
and cash flows for the period from March 1, 2000 to February 28, 2007. 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, 2007 and 2006 and the
results of its operations and its cash flows for each of the three years in the
period ended February 28, 2007 in conformity with United States generally
accepted accounting principles. 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, 2007 are fairly presented, in
all material respects, in conformity with United States generally accepted
accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered recurring losses from operations
and has a net capital deficiency that raise substantial doubt about its ability
to continue as a going concern. Management's plan in regard to these matters is
also described in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

As discussed in Notes 1 and 17 to the consolidated financial statements,
effective March 1, 2006, the Company adopted the fair value method of accounting
for stock-based compensation as required by Statement of Financial Accounting
Standards No. 123(R), Share-Based Payment.

We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the effectiveness of the Company's
internal control over financial reporting as of February 28, 2007, based on
criteria established in Internal Control - Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission and our report
dated May 4, 2007 expressed an unqualified opinion thereon.


                              /S/ Goldstein Golub Kessler LLP
                              GOLDSTEIN GOLUB KESSLER LLP
                              New York, New York
                              May 4, 2007



                                       F-2




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

                           CONSOLIDATED BALANCE SHEET





                                                                February 28,
                                                        ---------------------------
                                                            2007           2006
                                                        ------------   ------------
                                                                 
                        ASSETS

Current assets:
  Cash and cash equivalents                             $  2,418,551   $  1,477,716
  Accounts receivable                                         21,448        170,058
  Due from related parties                                        --          4,801
  Prepaid expenses                                           166,171        147,203
  Other current assets                                        25,350         81,048
                                                        ------------   ------------
    Total current assets                                   2,631,520      1,880,826
Property and equipment, net                                  418,362        126,341
Other assets:
  Intangible assets, net of amortization:
    Myotech, LLC                                          23,074,028     24,451,580
    Other                                                  1,322,777      1,403,270
  Deferred financing costs, net of amortization
    of $186,350                                            1,345,860             --
  Investment in New Scale Technologies, Inc.                 100,000        100,000
  Deposits                                                     3,704          6,049
  Deferred tax asset, net of valuation allowance
    of $12,784,000 and $7,560,000, respectively                   --             --
                                                        ------------   ------------
                                                          25,846,369     25,960,899
                                                        ------------   ------------
Total Assets                                            $ 28,896,251   $ 27,968,066
                                                        ============   ============
  LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)

Current liabilities:
  Current portion of capital lease obligation           $      7,445   $         --
  Current portion of senior secured convertible notes
    payable, net of discount of $2,183,580                   672,481             --
  Accounts payable and accrued expenses                    1,942,033      1,191,812
  Note payable                                                78,007         15,886
  Line of credit - related party, net of discount
    of $-0- and $1,323,921, respectively                   4,430,000      1,476,079
  Due to related parties                                      80,280         26,548
  Deferred revenue                                           208,333        520,833
                                                        ------------   ------------
      Total current liabilities                            7,418,579      3,231,158
Long-term debt:
  Capital lease obligation                                    19,604             --
  Senior secured convertible notes payable, less
    discount of $3,359,354                                 1,034,585             --
  Fair value of warrant liability                         10,494,006             --
                                                        ------------   ------------
    Total liabilities                                     18,966,774      3,231,158

Minority interest                                         13,139,882     15,189,109

Stockholders' equity (deficiency):
Common stock, $.005 par value:
  Authorized, 125,000,000 shares
  Issued, 83,431,699 and
    81,805,243 shares, respectively                          417,158        409,026
Additional paid-in capital                                54,532,204     49,576,129
                                                        ------------   ------------
                                                          54,949,362     49,985,155
Less treasury stock, 4,923,080 shares                     (8,467,698)    (8,467,698)
                                                        ------------   ------------
                                                          46,481,664     41,517,457
Deficit accumulated during the development stage         (49,692,069)   (31,969,658)
                                                        ------------   ------------
Total stockholders' equity (deficiency)                   (3,210,405)     9,547,799
                                                        ------------   ------------
Total liabilities and stockholders'
  equity (deficiency)                                   $ 28,896,251   $ 27,968,066
                                                        ============   ============




The accompanying notes should be read in conjunction with the consolidated
financial statements



                                       F-3




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

                      CONSOLIDATED STATEMENT OF OPERATIONS





                                                                                   Period from August
                                                Year Ended February 28,             1, 1968 (date of
                                       -----------------------------------------      inception) to
                                           2007           2006          2005        February 28, 2007
                                       ------------   ------------   -----------   ------------------
                                                                          
Revenues:
    Development payments               $         --   $    225,000   $        --      $    300,000
    License fees                            562,500        479,166            --         1,041,666
    Testing services and
      consulting fees                       427,029        340,695            --           767,724
                                       ------------   ------------   -----------      ------------
                                            989,529      1,044,861            --         2,109,390
Operating expenses:
    Research and development              7,190,975      6,829,142     2,629,980        20,210,394
    General and administrative            6,824,945      8,451,886     3,337,185        24,766,317
    Write-down of intellectual
      property rights                            --             --            --           530,000
                                       ------------   ------------   -----------      ------------
                                         14,015,920     15,281,028     5,967,165        45,506,711
                                       ------------   ------------   -----------      ------------
Operating loss                          (13,026,391)   (14,236,167)   (5,967,165)      (43,397,321)
                                       ------------   ------------   -----------      ------------
Other income(expense):
    Interest income                          82,224         70,701        11,869           211,372
    Interest expense                     (4,303,543)    (1,140,866)           --        (7,175,332)
    Additional expense related to
      warrants                           (7,304,105)            --            --        (7,304,105)
    Change in fair value of warrant
      liability                           5,318,064             --            --         5,318,064
    Loss on extinguishment of debt -
      related party                        (670,053)            --            --          (670,053)
    Other income                            161,196        215,789       161,749           853,393
    Other expense                            (5,442)            --            --           (70,528)
                                       ------------   ------------   -----------      ------------
                                         (6,721,659)      (854,376)      173,618        (8,837,189)
                                       ------------   ------------   -----------      ------------
Loss from continuing operations
  before minority interest in
  Myotech, LLC                          (19,748,050)   (15,090,543)   (5,793,547)      (52,234,510)
Minority interest in
  Myotech, LLC                            2,025,639        606,159            --         2,631,798
                                       ------------   ------------   -----------      ------------
Loss from continuing operations         (17,722,411)   (14,484,384)   (5,793,547)      (49,602,712)
Loss from discontinued operations                --             --            --           (89,357)
                                       ------------   ------------   -----------      ------------
Net loss                               $(17,722,411)  $(14,484,384)  $(5,793,547)     $(49,692,069)
                                       ============   ============   ===========      ============
Loss per common share - basic
  and diluted                          $      (0.23)  $      (0.19)  $     (0.08)
                                       ============   ============   ===========
Weighted average shares
  outstanding                            77,864,738     75,787,052    69,263,893
                                       ============   ============   ===========




The accompanying notes should be read in conjunction with the consolidated
financial statements



                                       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, 2007





                                                                                                         Deficit
                                                                                                       Accumulated
                                               Number              Additional                Stock      During the  Stockholders'
                                             of Shares    Common     Paid-in   Treasury  Subscription  Development      Equity
                                            Outstanding    Stock     Capital    Stock     Receivable      Stage      (Deficiency)
                                            -----------  --------  ----------  --------  ------------  -----------  -------------
                                                                                                 
1969-1993 - 382,130 shares issued for
  services for $.05 per share                  382,130   $  1,911  $   17,196                                         $   19,107
1970 - 1,405,000 shares issued for
  mining rights for $.05 per share           1,405,000      7,025      63,225                                             70,250
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
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)



                           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, 2007





                                                                                                         Deficit
                                                                                                       Accumulated
                                                Number             Additional                Stock      During the  Stockholders'
                                              of Shares    Common    Paid-in   Treasury  Subscription  Development      Equity
                                             Outstanding   Stock     Capital    Stock     Receivable      Stage      (Deficiency)
                                             ----------   -------  ----------  --------  ------------  -----------  -------------
                                                                                                 
2001 - 1,315,334 shares issued upon
  conversion of bridge loans at $.75
  per share                                    1,315,334    6,576     979,924                                           986,500
2001 - Offering costs associated with
  share issuances for cash                                           (254,467)                                         (254,467)
2002 - Grant of stock options for services                            702,800                                           702,800
  Net loss for the year ended
    February 28, 2002                                                                                   (3,705,917)  (3,705,917)
                                              ----------  -------   ---------                           ----------   ----------
Balance at February 28, 2002                  29,549,439  147,747   4,608,407                           (4,534,905)     221,249
2002 - Shares issued for cash for
  $.34 per share                                 993,886    4,969     337,461                                           342,430
2002 - Shares issued for cash for
  $.15 per share                               1,192,874    5,964     167,002                                           172,966
2002 to 2003 - Shares issued for cash for
  $.25 per share                               5,541,100   27,706   1,357,569                                         1,385,275
2002 to 2003 - Shares issued as commissions
  on offerings                                   357,394    1,787      (1,787)                                               --
2002 to 2003 Cash commissions on offerings                           (119,488)                                         (119,488)
Offering costs                                                        (45,644)                                          (45,644)
Grant of stock options for services                                   485,000                                           485,000
Intrinsic value of beneficial conversion
  feature of note payable and MRI liability                           800,000                                           800,000
Net loss for the year ended
  February 28, 2003                                                                                     (3,438,252)  (3,438,252)
                                              ----------  -------   ---------                           ----------   ----------
Balance at February 28, 2003                  37,634,693  188,173   7,588,520                           (7,973,157)    (196,464)
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



                           CONTINUED ON FOLLOWING PAGE


                                       F-6




                   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, 2007





                                                                                                           Deficit
                                                                                                         Accumulated
                                                  Number             Additional               Stock       During the  Stockholders'
                                                of Shares    Common    Paid-in   Treasury  Subscription  Development      Equity
                                               Outstanding   Stock     Capital     Stock    Receivable      Stage      (Deficiency)
                                               -----------  -------  ----------  --------  ------------  -----------  -------------
                                                                                                   
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)
Grant of stock options for the year                                     565,000                                           565,000
Intrinsic value of beneficial conversion
  feature of note payable                                               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)



                           CONTINUED ON FOLLOWING PAGE


                                       F-7




                   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, 2007





                                                                                                          Deficit
                                                                                                         Accumulated
                                           Number of             Additional                  Stock       During the   Stockholders'
                                            Shares     Common     Paid-in      Treasury   Subscription   Development      Equity
                                         Outstanding    Stock     Capital       Stock      Receivable       Stage     (Deficiency)
                                         -----------  --------  -----------  -----------  ------------  ------------  -------------
                                                                                                 
  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
  2005 - Shares issued for option
    exercise at $.50 per share                74,998       375       66,206                                                 66,581
  2005 - Shares issued for option
    exercise at $.67 per share                12,500        63        8,312                                                  8,375
  2005 - Shares issued for option
    exercise at $1.00 per share              136,667       683      106,901                                                107,584
  2005 - Shares issued upon exercise of
    warrants at $.16 per share                54,054       270        8,379                                                  8,649
  2005 - Shares issued upon exercise of
    warrants at $.39 per share                12,500        62        4,813                                                  4,875
  2005 - Shares issued upon exercise of
    warrants at $.41 per share                17,520        88        7,095                                                  7,183
  2006 - Restricted shares issued in
    connection with acquisition of
    Biophan Europe at $1.34 per share        100,000       500      133,500                                                134,000
  2005 - Shares issued for acquisition
    of minority interest in Myotech,
    LLC at $1.72 per share                 4,923,080    24,615    8,443,083                                              8,467,698
  2005 - Treasury shares                  (4,923,080)       --    8,467,698   (8,467,698)                                       --
  2006 - Shares issued pursuant to
    investment agreement with Boston
    Scientific at $3.02 per share          1,653,193     8,266    4,991,734                                              5,000,000
  2006 - 22,000 Restricted shares
    issued for services at $1.72 per
    share                                     22,000       110       37,730                                                 37,840
  2006 - Shares issued upon conversion
    of related party loans at $2.12 per
    share                                    480,899     2,405    1,017,101                                              1,019,506
  Beneficial conversion feature of
    note payable                                                  2,395,485                                              2,395,485
  Stock options issued for services                               4,609,778                                              4,609,778
  Section 16(b) short swing profits                                 295,362                                                295,362
  Stock subscription receivable                                                              150,000                       150,000
  Net loss for the year ended
    February 28, 2006                                                                                    (14,484,384)  (14,484,384)
                                          ----------   -------  -----------  -----------    --------    ------------  ------------
  Balance at February 28, 2006            76,882,163   409,026   49,576,129   (8,467,698)         --     (31,969,658)    9,547,799

Shares issued for option exercises
  in the range of $.18 to $.67 per
  share                                       38,956       195       12,984           --          --              --        13,179
Shares issued for cash pursuant to
  stock purchase agreement with SBI at
  $2.00 per share                          1,587,500     7,937    3,167,063           --          --              --     3,175,000
Extinguishment of debt on related
  party notes payable                             --        --      670,053           --          --              --       670,053
Allocation of beneficial conversion
  feature of related party notes
  payable                                         --        --      417,070           --          --              --       417,070
Allocation of proceeds to warrants                --        --    7,250,000           --          --              --     7,250,000
Reclassification of warrants                      --        --   (8,005,875)          --          --              --    (8,005,875)
Stock options expense                             --        --    1,444,780           --          --              --     1,444,780
Net loss for the year ended
  February 28, 2007                               --        --           --           --          --     (17,722,411)  (17,722,411)
                                          ----------  --------  -----------  -----------    --------    ------------  ------------
Balance at February 28, 2007              78,508,619  $417,158  $54,532,204  $(8,467,698)         --    $(49,692,069) $ (3,210,405)
                                          ==========  ========  ===========  ===========    ========    ============  ============




The accompanying notes should be read in conjunction with the consolidated
financial statements



                                       F-8




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

                      CONSOLIDATED STATEMENT OF CASH FLOWS





                                                                                                        Period from
                                                                                                         August 1,
                                                                                                      1968 (date of
                                                                    Year Ended February 28,            inception) to,
                                                          -----------------------------------------     February 28,
                                                              2007          2006          2005              2007
                                                          ------------   ------------   -----------   ---------------
                                                                                            
Cash flows used for operating activities:
  Net loss                                                $(17,722,411)  $(14,484,384)  $(5,793,547)    $(49,692,069)
  Adjustments to reconcile net loss to net cash
    used in operating activities:
      Amortization of intangible assets                      1,458,045        405,441            --        1,863,486
      Amortization of deferred financing costs                 186,350             --            --          186,350
      Depreciation and amortization                             95,368         47,241        28,020          234,802
      Loss on disposal of equipment                              9,094          1,505            --           10,599
      Additional expenses related to warrants                7,304,105             --            --        7,304,105
      Change in fair value of derivative liability          (5,318,064)            --            --       (5,318,064)
      Realized and unrealized losses on marketable
        securities                                                  --             --            --           66,948
      Loss on debt extinguishment of debt-related party        670,053             --            --          670,053
      Accrued interest on note converted to common
        stock                                                       --         19,506            --           31,504
      Amortization of discount on convertible notes
        payable                                              1,707,066             --            --        2,758,016
      Write-down of intellectual property rights                    --             --            --          530,000
      Amortization of discount on payable to related
        party                                                1,740,991      1,071,564            --        2,887,555
      Issuance of common stock for services                         --         37,840       268,000          406,948
      Issuance of common stock for interest                         --             --            --          468,823
      Grant of stock options for services                    1,444,780      4,609,778       201,000        8,008,358
      Expenses paid by stockholder                                  --             --            --            2,640
      Minority interest                                     (2,049,227)      (536,616)           --       (2,585,843)
  Changes in operating assets and liabilities:
    (Increase) decrease in accounts receivable                 148,610       (162,558)           --          (13,948)
    (Increase) decrease in due from related parties              4,801        156,858      (186,737)         (59,300)
    (Increase) decrease in prepaid expenses                    (18,968)       (55,607)      (22,411)        (166,171)
    (Increase) decrease in other current assets                 55,698        (39,710)           --           15,988
    (Increase) decrease in deposits                              2,345           (867)          --            (1,455)
    Increase (decrease) in accounts payable and
      accrued expenses                                         750,221        (14,742)      405,821        1,382,027
    Increase (decrease) in due to related parties               53,732         26,548            --           36,784
    Increase (decrease) in deferred revenues                  (312,500)       295,833       225,000          208,333
                                                          ------------   ------------   -----------     ------------
Net cash used in operating activities                       (9,789,911)    (8,622,370)   (4,874,854)     (30,763,531)



                           CONTINUED ON FOLLOWING PAGE


                                       F-9




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

                CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)





                                                                                                 Period from
                                                                                                  August 1,
                                                                                                1968 (date of
                                                              Year Ended February 28,           inception) to,
                                                      --------------------------------------     February 28,
                                                          2007          2006          2005          2007
                                                      -----------   -----------   ----------   ---------------
                                                                                     
Cash flows used for investing activities:
  Purchases of property and equipment                    (369,434)      (70,521)     (39,302)       (604,644)
  Sales of marketable securities                               --            --    1,150,000       2,369,270
  Purchase of investment                                       --            --     (100,000)       (100,000)
  Acquisition costs of intangible assets                       --      (466,583)          --        (466,583)
  Cash paid for investment in Myotech,
    net of cash received of $19,408                            --      (280,594)          --        (280,594)
  Cash paid for acquisition of Biophan Europe,
    net of cash received of $107,956                           --            --     (258,874)       (258,874)
  Purchases of marketable securities                           --            --           --      (2,436,218)
                                                      -----------   -----------   ----------     -----------
Net cash provided by (used in) investing activities      (369,434)     (817,698)     751,824      (1,777,643)

Cash flows provided by financing activities:
  Proceeds of bridge loans                                     --            --           --         986,500
  Loan from stockholder                                        --            --           --         143,570
  Line of credit borrowing from related party           3,130,000     4,300,000           --       7,980,950
  Line of credit payments                              (1,500,000)     (500,000)          --      (2,072,500)
  Proceeds of convertible notes payable                 7,250,000            --           --       7,250,000
  Notes payable                                            62,121      (184,114)          --        (121,993)
  Proceeds from sales of capital stock                  3,175,000     6,050,000    2,850,000      19,438,849
  Exercise of options                                      13,179       182,541       34,900         658,467
  Exercise of warrants                                         --        20,707      788,900       1,142,451
  Swing profits                                                --       295,362      400,725         696,087
  Deferred financing costs                             (1,030,120)           --           --      (1,030,120)
  Deferred equity placement costs                              --            --      (22,107)       (112,536)
                                                      -----------   -----------   ----------     -----------
Net cash provided by financing activities              11,100,180    10,164,496    4,052,418      34,959,725
                                                      -----------   -----------   ----------     -----------
Net increase (decrease) in cash and equivalents           940,835       724,428      (70,612)      2,418,551
Cash and equivalents, beginning                         1,477,716       753,288      823,900              --
                                                      -----------   -----------   ----------     -----------
Cash and equivalents, ending                          $ 2,418,551   $ 1,477,716   $  753,288     $ 2,418,551
                                                      ===========   ===========   ==========     ===========
Supplemental schedule of cash paid for:
    Interest                                          $    30,000   $     9,800   $       --     $    39,800
                                                      ===========   ===========   ==========     ===========



                           CONTINUED ON FOLLOWING PAGE


                                      F-10




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

                CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)





                                                                                                        Period from
                                                                                                         August 1,
                                                                                                       1968 (date of
                                                                       Year Ended February 28,        inception) to,
                                                               ------------------------------------    February 28,
                                                                  2007         2006         2005           2007
                                                               ----------   ----------   ----------   --------------
                                                                                            
Supplemental schedule of non-cash investing and
  financing activities:
  Allocation of proceeds from line of credit - related party
    to beneficial conversion feature and warrants              $  417,070   $ 2,395,485   $       --     $2,812,555
                                                               ==========   ===========   ==========     ==========
  Allocation of proceeds from notes payable and warrants       $7,250,000   $        --   $       --     $7,250,000
                                                               ==========   ===========   ==========     ==========
  Change in fair value of warrants reclassified from equity
    to warrants liability                                      $  755,876   $        --   $       --     $  755,876
                                                               ==========   ===========   ==========     ==========
  Capital lease obligation                                     $   27,049   $        --   $       --     $   27,049
                                                               ==========   ===========   ==========     ==========
  Issuance of common stock upon conversion
    of  LOC loans                                              $       --   $ 1,000,000   $       --     $1,978,450
                                                               ==========   ===========   ==========     ==========
  Issuance of common stock for the acquisition of
    initial 35% interest in Myotech, LLC                       $       --   $ 8,467,698   $       --     $8,467,698
                                                               ==========   ===========   ==========     ==========
  Issuance of common stock in satisfaction
    of accounts payable                                        $       --   $   134,000   $       --     $  134,000
                                                               ==========   ===========   ==========     ==========
  Common stock issued for subscription receivable              $       --   $(1,050,000)  $1,050,000     $       --
                                                               ==========   ===========   ==========     ==========
  Liabilities assumed in conjunction with acquisition of 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
                                                               ==========   ===========   ==========     ==========
  Issuance of common stock upon conversion
    of bridge loans                                            $       --   $        --   $       --     $1,142,068
                                                               ==========   ===========   ==========     ==========
  Acquisition of intellectual property                         $       --   $        --   $       --     $  425,000
                                                               ==========   ===========   ==========     ==========
  Intellectual property acquired through issuance of
    capital stock and assumption of related party payable      $       --   $        --   $       --     $  175,000
                                                               ==========   ===========   ==========     ==========




The accompanying notes should be read in conjunction with the consolidated
financial statements



                                      F-11




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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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"), its majority owned subsidiaries Biophan Europe
GmbH ("Biophan Europe"), formerly aMRIs GmbH, and TE Bio LLC ("TE Bio"), and
Myotech, LLC ("Myotech"), a variable interest entity, collectively referred to
as the "Company". All significant inter-company accounts and transactions have
been eliminated in consolidation.

COMPANY HISTORY:

The Company was incorporated under the laws of the State of Idaho on August 1,
1968 and on January 12, 2000, changed its domicile to Nevada by merging into a
Nevada corporation, and on July 19, 2001, changed its name to Biophan
Technologies, Inc. From the inception of the current line of business on
December 1, 2000, the Company has not generated any material revenues and
operating profits. Therefore, the Company is in the development stage and will
remain so until the realization of significant revenues and operating profits.
The Company's ability to continue in business is dependent upon maintaining
sufficient financing or attaining future profitable operations.

PRINCIPAL BUSINESS ACTIVITIES:

The primary mission is to develop and commercially exploit technologies for
improving the performance, and as a result, the competitiveness of biomedical
devices manufactured by third party companies. The Company possesses
technologies for enabling biomedical devices, both implantable and those used in
diagnostic and interventional procedures, to be safe (do not harm the patient or
physician) and image compatible (allow effective imaging of the device and its
surrounding tissue) with MRI (magnetic resonance imaging). The Company is also
developing and marketing an image compatible ceramic motor; a system for
generating power for implantable devices from body heat, and a series of
implantable devices including MRI-visible vascular implants such as a vena cava
filter, a heart valve and an occluder for the treatment of atrial septal
defects, a hole in the wall separating the left and right chambers of the heart.
The Company's first licensee for several of these technologies is Boston
Scientific (NYSE: BSX). The Company is also an owner of a substantial minority
interest, with rights to take a majority interest, in Myotech,(accounted for as
a variable interest entity) developer of the MYO-VAD, a cardiac assist device
that does not contact circulating blood and utilizes technology that has the
potential to become a standard of care in the device market for treating
multiple types of acute and chronic heart failure including congestive heart
failure and sudden cardiac arrest.

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. The Company places its temporary cash investments with high credit
quality financial institutions. At times such investments may be in excess of
the Federal Deposit Insurance Corporation (FDIC) insurance limit.

CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to concentrations of
credit risk consist principally of cash deposits. Accounts are insured by the
Federal Deposit Insurance Corporation (FDIC) up to $100,000. At times throughout
the year, the Company has balances on account in excess of insured limits.



                                      F-12




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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ACCOUNTS RECEIVABLE

Accounts receivable are reported at their outstanding unpaid principal balances.
The Company writes off accounts receivable when they are deemed uncollectible.
The Company has historically experienced insignificant amounts of bad debts.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Expenditures for major additions
and improvements are capitalized, and minor replacements, maintenance, and
repairs are charged to expense as incurred. When property and equipment are
retired or otherwise disposed of, the cost and accumulated depreciation are
removed from the accounts and any resulting gain or loss is included in the
results of operations for the respective period. Depreciation is provided over
the estimated useful lives of the related assets using the straight-line method.
Leasehold improvements are amortized over the lesser of the assets' useful lives
or the remaining term of the lease.

The estimated useful lives for significant property and equipment categories are
as follows:

Computers                 5 year
Furniture and equipment   5 to 7 years
Internet website          7 years
Leasehold improvements    15 years

INTANGIBLE ASSETS

The Company evaluates the recoverability of identifiable intangible assets
whenever events or changes in circumstances indicate that an intangible asset's
carrying amount may not be recoverable. Such circumstances could include, but
are not limited to: (1) a significant decrease in the market value of an asset,
(2) a significant adverse change in the extent or manner in which an asset is
used, or (3) an accumulation of costs significantly in excess of the amount
originally expected for the acquisition of an asset. The Company measures the
carrying amount of the asset against the estimated undiscounted future cash
flows associated with it. Should the sum of the expected future net cash flows
be less than the carrying value of the asset being evaluated, an impairment loss
would be recognized. The impairment loss would be calculated as the amount by
which the carrying value of the asset exceeds its fair value. The fair value is
measured based on quoted market prices, if available. If quoted market prices
are not available, the estimate of fair value is based on various valuation
techniques, including the discounted value of estimated future cash flows. The
evaluation of asset impairment requires the Company to make assumptions about
future cash flows over the life of the asset being evaluated. These assumptions
require significant judgment and actual results may differ from assumed and
estimated amounts. Also, at each balance sheet date, the Company evaluates the
period of amortization of intangible assets.

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.



                                      F-13




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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

STOCK OPTION PLANS

On March 1, 2006 the Company adopted the fair value based method of accounting
prescribed in FASB Statement of Financial Accounting Standards No. 123R
(Share-Based Payment) for its employee stock option plans.

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, such as a written progress report. Advance fees received
on such agreements are deferred until recognized.

The Company recognizes initial license fees over the term of the related
agreement. Revenue related to a performance milestone is recognized upon the
achievement of the milestone, as defined in the respective agreements.

The Company recognizes revenues from testing services and consulting fees as
services are performed.

ESTIMATES

Preparing the Company's financial statements in conformity with accounting
principles generally accepted in the United States of America ("GAAP") requires
management to make estimates and assumptions that affect reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

RECLASSIFICATION

For comparative purposes, certain amounts in the accompanying statement of
operations for fiscal 2005 have been reclassified to conform to the presentation
used for fiscal 2007 and 2006. These reclassifications had no effect on
previously reported results of operations or accumulated deficit.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an
interpretation of FASB Statement No. 109" ("FIN 46"). FIN 46 clarifies the
accounting for uncertainty in income taxes recognized in a company's financial
statements in accordance with SFAS No. 109, "Accounting for Income Taxes." FIN
48 prescribes a recognition threshold and measurement attribute for the
financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. FIN 46 is effective for fiscal years
beginning after December 15, 2006. The Company is currently evaluating the
effect, if any, that FIN 46 will have on its consolidated financial position or
results of operations.

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements"
("SFAS No. 157"). SFAS No. 157 defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles, and expands
disclosures about fair value measurements. SFAS No. 157 applies under other
accounting standards that require or permit fair value measurements.
Accordingly, SFAS No. 157 does not require any new fair value measurement. SFAS
No. 157 emphasizes that fair value is a market-based measurement that should be
determined based on the assumptions that market participants would use in
pricing an asset or liability. Companies will be required to disclose the extent
to which fair value is used to measure assets and liabilities, the inputs used
to develop the measurements and the effect of certain of the measurements on
earnings (or changes in net assets) for the period. SFAS No. 157 is effective
for financial statements issued for fiscal years beginning after November 15,
2007, and interim periods within those fiscal years. The Company is currently
evaluating the effect, if any, that SFAS No. 157 will have on its consolidated
financial position or results of operations.

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities". SFAS No. 159 permits entities to
choose to measure many financial instruments and certain other items at fair
value. Most of the provisions of SFAS No. 159 apply only to entities that elect
the fair value option. We do not believe the adoption of this standard will have
a material impact on our Consolidated Financial Statements. This standard will
become effective for us in the first fiscal quarter of 2008.

In September 2006, the SEC issued Staff Accounting Bulletin No. 108 "Considering
the Effects of Prior Year Misstatements when Quantifying Misstatements in
Current Year Financial Statements" ("SAB No. 108"). SAB No. 108 provides
guidance on the consideration of the effects of prior year misstatements in
quantifying current year misstatements for the purpose of determining whether
the current year's financial statements are materially misstated. SAB No. 108 is
effective as of the end of the Company's 2006 fiscal year, allowing a one-time
transitional cumulative effect adjustment to beginning retained earnings as of
January 1, 2006, for errors that were not previously deemed material, but are
material under the guidance in SAB No. 108. The Company does not believe that
SAB No. 108 had a material effect on its consolidated financial position or
results of operations for the year ended February 28, 2007.

In December 2006, the FASB issued Staff Position No. EITF 00-19-2. This FSP
addresses an issuer's accounting for registration payment arrangements and
specifies that the contingent obligation to make future payments or otherwise
transfer consideration under a registration payment arrangement should be
separately recognized and measured in accordance with FASB No. 5. The guidance
in this FSP amends FASB Statements 133 and 150 and FASB Interpretation No. 45 to
include scope exceptions for registration payment arrangements. This FSP further
clarifies that a financial instrument subject to a registration payment
arrangement should be accounted for without regard to the contingent obligation
to transfer consideration pursuant to the registration payment arrangement. This
guidance is effective for financial statements issued for fiscal years beginning
after December 15, 2006. The Company will adopt this FSP in the first quarter of
fiscal 2008 in connection with the issuance of the Senior Secured Convertible
Notes and related warrants. See Note 11, "Senior Secured Convertible Notes."

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

2. GOING CONCERN:

As presented in the accompanying financial statements, the Company has been in
the development stage since inception, incurring recurring losses from
operations, and as of February 28, 2007, the Company's current liabilities
exceeded its current assets by $4,787,059 and the Company has a stockholders'
deficiency of $3,210,045. These factors raise potential doubt about the
Company's ability to continue as a going concern. Management is taking several
actions to ensure that the Company will continue as a going concern.

The Company is in regular contact with its current investors and prospective new
investors, and believes that it will be able to raise additional capital on the
warrants that are currently being registered with the Securities and Exchange
Commission and that it will be able to service its debt using the warrant shares
that are being registered for this purpose.

Further, in order to address the current situation, management has instituted a
cost reduction program that included a reduction in monthly costs from
approximately $1,100,000 at this time last year to under $500,000 per month
currently. In addition, the Company has reduced its investments in several
product lines and pursued alternative funding vehicles. The Company has
reorganized its efforts on the Myotech cardiac assist device development while
keeping core functions operational and maintaining intellectual property and
designs.

Management believes these factors and actions will contribute toward obtaining
sufficient financing for the near term and ultimate profitability. The
accompanying financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going concern.

3. 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"), a related party. 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 beginning June 3, 2004 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.



                                      F-14




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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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



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
                                           ===========



Effective November 30, 2005, we entered into a Securities Purchase Agreement for
the acquisition of an initial 35% interest in Myotech, LLC ("Myotech"), a New
York limited liability company, whereby we exchanged 4,923,080 shares of our
common stock, par value $.005, for 3,768,488 Class A (voting) units of Myotech.

Based upon the terms of the Securities Purchase Agreement, we were obligated to
purchase for cash consideration of $2.225 million an additional 811,037 Class A
units. We may elect to acquire up to an additional 3,563,097 Class A units for
further cash consideration of up to $9.775 million, over a 24-month period,
which may result in the Company owning a majority interest in Myotech. During
the three month period ended February 28, 2006, Biophan provided $1,185,000 of
additional funding for 431,946 newly issued Class A units of Myotech. During the
year ended February 28, 2007, Biophan has provided $1,040,000 of additional
funding satisfying the cash consideration of $2.225 million cited above, for
379,091 newly issued Class A units of Myotech. In addition, Biophan has also
provided an additional investment of $1,994,349 to Myotech against milestone 2
in the year ended February 28, 2007 for 726,963 newly issued Class A units,
which increased our ownership to 43.7%. Additional investments of $105,175
against milestone 2 have been made since February 28, 2007 for 38,337 additional
newly issued Class A units, which raised our ownership percentage to 43.8% to
date.



                                      F-15




We have determined that Myotech is a Variable Interest Entity within the meaning
of FIN 46(R) and that we are the primary beneficiary (as defined in FIN 46(R)).
Consequently, the financial statements of Myotech have been consolidated with
our consolidated financial statements for all periods ending on or after
November 30, 2005, the date of our initial investment in Myotech.

The following is selected financial data for Myotech, LLC at February 28, 2007
and 2006, respectively:



                                              For the           For the Three
                                            Year Ended           Months Ended
                                         February 28, 2007    February 28, 2006
                                         -----------------    -----------------
Total current assets                     $         338,548    $          59,608
Intangible assets, net of amortization          23,074,028           24,451,580
Other assets                                       196,915               37,156
                                         -----------------    -----------------
Total assets                             $      23,609,491    $      24,548,344
                                         =================    =================
Current liabilities                      $         352,072    $         169,948
Equity                                          23,257,419           24,378,396
                                         -----------------    -----------------
                                         $      23,609,491    $      24,548,344
                                         =================    =================
Net loss from operations                 $      (4,163,326)   $        (992,026)
                                         =================    =================



                                      F-16




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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. PREPAID EXPENSES:

Prepaid expenses consist of the following:



                                             February 28,
                                         -------------------
                                           2007       2006
                                         --------   --------
Prepaid insurance                        $ 36,812   $ 33,403
Prepaid license fees - related company     10,000     15,000
Prepaid legal fees                         30,000     30,000
Prepaid rent                               22,492         --
Prepaid royalties - related company        35,000     35,000
Prepaid conference fees                        --     29,400
Other                                      31,867      4,400
                                         --------   --------
                                         $166,171   $147,203
                                         ========   ========



5. PROPERTY AND EQUIPMENT:

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



                                              February 28,
                                         ---------------------
                                            2007        2006
                                         ---------   ---------
Furniture and Equipment                  $ 349,298   $ 123,664
Computers                                  143,543      85,843
Internet Website                            54,159      54,159
Leasehold Improvements                      75,700          --
                                         ---------   ---------
                                           622,700     263,666
Less accumulated depreciation             (204,338)   (137,325)
                                         ---------   ---------
                                         $ 418,362   $ 126,341
                                         =========   =========

Property and equipment includes amounts acquired under capital leases of $27,049
and $0 at February 28, 2007 and 2006, respectively, with accumulated
depreciation of approximately $5,400 and $0, respectively.

Depreciation and amortization expense for the years ended February 28, 2007,
2006, and 2005 amounted to $95,368, $47,241 and $28,020, respectively.
Depreciation expense for the period from August 1, 1968 (date of inception) to
February 28, 2007 was $234,802.

6. INTANGIBLE ASSETS:

Certain intellectual property rights were acquired on December 1, 2000 in
connection with the merger that established the Company in its present form.
Additional intangible assets were acquired on February 24, 2005 in connection
with the acquisition of Biophan-Europe and on November 30, 2005 in connection
with the investment in Myotech, LLC. 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 and the development of a cardiac assist device.
These assets are amortized over the estimated 17 to 18 year economic lives of
the underlying patents and core technology. Estimated amortization expense for
the next five years is as follows:



Fiscal year ending February,     Amount
- ----------------------------   ----------
2008                           $1,458,045
2009                            1,458,045
2010                            1,458,045
2011                            1,458,045
2012                            1,458,045



Amortization expense for the year ended February 28, 2007 and 2006 was
$1,458,045 and $405,441, respectively. Amortization expense for the period from
August 1, 1968 (date of inception) to February 28, 2007 was $1,863,486.



                                      F-17




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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. INVESTMENT:

The investment in New Scale Technologies, Inc. represents a 10% investment in
it's common stock, a non-public company, stated at cost.

8. LINE OF CREDIT AGREEMENTS:

On May 27, 2005, we entered into a Line of Credit Agreement with Biomed
Solutions, LLC, a related party, whereby Biomed agreed to provide a line of
credit facility of up to $2 million. Borrowings under the line, bear interest at
8% per annum, are payable on demand and are convertible at Biomed's election,
into the Company's common stock at 90% of the average closing price for the 20
trading days preceding the date of borrowings under the line. In June 2005, the
Company borrowed the entire $2 million under the line in two separate draws of
$1 million each. In accordance with the agreement, Biomed received warrants to
purchase 500,000 shares of the Company's common stock at an exercise price of
110% of the average closing price for the 20 trading days preceding the date of
execution of the credit agreement. The Company recorded a discount on the
borrowings of $958,160 due to the beneficial conversion feature of the note as
well as for the value of the warrants. The discount was amortized as additional
interest expense over the term of the note. In August 2005, Biomed elected to
convert $1 million of the note plus accrued interest into 480,899 shares of
common stock at which time, the remaining discount related to the $1 million
portion of the loan was fully expensed. On October 7, 2005, we repaid $500,000
of principal and all accrued interest on the loan. The balance of borrowings on
the line was $500,000 at February 28, 2007.

On January 24, 2006, we entered into an additional Line of Credit Agreement (the
"Line of Credit Agreement") with Biomed Solutions, LLC, pursuant to which Biomed
committed to make advances to us, in an aggregate amount of up to $5,000,000.
Under the Line of Credit Agreement, advances may be drawn down in such amounts
and at such times as we determine upon 15 days prior notice to Biomed, except
that we may not draw down more than $1,500,000 in any 30-day period. Amounts
borrowed bear interest at the rate of 8% per annum and were convertible into
shares of our Common Stock at the rate of $1.46 per share. Biomed's obligation
to lend to us under the Line of Credit Agreement expires on June 30, 2007, on
which date the entire amount borrowed by us (and not converted into shares of
our Common Stock) becomes due and payable. In connection with the establishment
of the credit facility, we issued to Biomed a warrant to purchase up to
1,198,630 shares of our Common Stock at an exercise price of $1.89 per share.
The Company recorded a discount on the borrowings of $1,678,425 due to the
beneficial conversion feature of the note as well as for the value of the
warrant.

On October 11, 2006, in connection with our Securities Purchase Agreement dated
October 11, 2006 with Iroquois Master Fund Ltd and other private investors (the
"Purchase Agreement"), we amended our January 24, 2006 Line of Credit Agreement
(the "Biomed Line of Credit Agreement") with Biomed and the Convertible
Promissory Note in the original principal amount of $5,000,000 issued by us to
Biomed on January 24, 2006 pursuant to the Biomed Line of Credit Agreement (the
"$5,000,000 Biomed Note"). The amendment reduced the price at which the
$5,000,000 Biomed Note is convertible into shares of our Common Stock from $1.46
per share to a conversion price of $0.67. In connection with the Purchase
Agreement, we also entered into a Subordination and Standstill Agreement (the
"Subordination Agreement") with Biomed and the investors who are parties to the
Purchase Agreement, pursuant to which Biomed agreed (i) to subordinate its
rights to payment under the $5,000,000 Biomed Note and the Convertible
Promissory Note in the original principal amount of $2,000,000 issued by us to
Biomed on May 27, 2005 to the rights of the investors under the Notes and (ii)
to convert the entire outstanding amount of principal and interest due under the
$5,000,000 Biomed Note in excess of $700,000 into shares of our common stock
upon the effectiveness of an amendment to our Articles of Incorporation to
increase the number of our authorized shares which we have agreed, in the
Purchase Agreement, to propose to our stockholders. For accounting purposes,
these amendments have been treated, in substance, as an extinguishment of the
old debt. Accordingly, the remaining unamortized discount on the old debt of
$1,098,442 was written off, a loss on extinguishment of $670,053 on the old debt
was recognized, and a discount was recorded and fully amortized on the new debt
of $175,970 during the year ended February 28, 2007. The balance of the
borrowings of the line was $3,930,000 at February 28, 2007. The fair value of
the note is not readily determinable as there is a limited market for such
related party debt.


                                      F-18




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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:

Accounts payable and accrued expenses consist of the following:



                                             February 28,
                                       -----------------------
                                          2007         2006
                                       ----------   ----------
Accounts payable                       $1,010,060   $  793,873
Bonuses - Biophan-Europe                   75,000      150,000
Accrued payroll and related expenses      152,395       76,977
Accounting fees                            75,000           --
Consulting fees                            30,000           --
Interest payable                          504,078       34,112
License fees                                   --       70,000
Other                                      95,500       66,850
                                       ----------   ----------
                                       $1,942,033   $1,191,812
                                       ==========   ==========



10. CAPITAL LEASE OBLIGATION:

The Company leases equipment under a capital lease that expires in 2010. The
lease requires monthly payments of $934 including interest at 14.75% per annum.

Future minimum lease payments required under the capital lease are as follows:



Year Ending
February 28,                         Amount
- ------------                        --------
    2008                            $ 11,212
    2009                              11,212
    2010                              11,212
                                    --------
                                      33,636
Less amount representing interest     (6,587)
                                    --------
                                      27,049
Less current maturities               (7,445)
                                    --------
Long-term debt, less maturities     $ 19,604
                                    ========



11. SENIOR SECURED CONVERTIBLE NOTES:

On October 11, 2006, we entered into a Securities Purchase Agreement (the
"Purchase Agreement") with 10 private investors led by Iroquois Master Fund Ltd
("Iroquois"). Pursuant to the Purchase Agreement, on October 12, 2006 we issued
$7,250,000 of Senior Secured Convertible Notes (the "Notes") to the investors
and received proceeds of $6,219,880 after paying estimated fees and expenses of
$1,030,120 related to the transaction. The holders of the Notes may elect to
convert the Notes at any time into shares of our common stock based upon a price
of $0.67 per share (the "Conversion Price"). Interest on the outstanding
principal amount under the Notes is payable quarterly at a rate equal to the
six-month London InterBank Overnight Rate plus 500 basis points, with a minimum
rate of 10% per annum and a maximum rate of 12% per annum, payable at our option
in cash or shares of our common stock registered for resale under the Securities
Act of 1933, as amended (the "Securities Act"). If we elect to make an interest
payment in common stock, the number of shares issuable by us will be based upon
the lower of (i) 90% of the 20-day trailing average volume weighted average
price per share as reported on Bloomberg LP (the "VWAPS") or (ii) the Conversion
Price. Principal on the Notes amortizes and payments are due in 33 equal monthly
installments commencing four months following issuance of the Notes, and may be
made at our option in cash or shares of our common stock registered for resale
under the Securities Act. If we elect to make a principal payment in common
stock, the number of shares issuable by us will be based upon the lower of (i)
87.5% of the 15-day trailing VWAPS prior to the principal payment date or (ii)
the Conversion Price. Our obligations under the Notes are secured by a first
priority security interest in substantially all of our assets pursuant to a
Security Agreement dated as of October 11, 2006 among us, the investors and
Iroquois, as agent for the investors (the "Security Agreement").



                                      F-19




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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As further consideration to the investors, we issued to the investors one-year
warrants to purchase an aggregate of 10,820,896 shares of our common stock at a
price of $0.67 per share. If the investors elect to exercise these one-year
warrants, they will also receive additional five-year warrants to purchase the
shares of our common stock equal to the number of shares purchased under the
one-year warrants, with 50% of the additional warrants having an exercise price
of 115% of the per share purchase price, and the remaining 50% of the additional
five-year warrants having an exercise price of 125% of the per share purchase
price. We also issued to the investors five-year warrants to purchase an
aggregate of 10,820,896 shares of our common stock. The first five-year warrants
allow for the purchase of 5,410,448 shares of our common stock at an exercise
price of $0.81 per share, and the second five-year warrants allow for the
purchase of 5,410,448 shares of our common stock at an exercise price of $0.89
per share. The warrants contain anti-dilution protection that, should we issue
equity or equity-linked securities at a price per common share below the
exercise price of the five-year warrants, it will automatically adjust the
exercise price of the warrants to the price at which we issue such equity or
equity-linked securities. The total fair value of the warrants was $14,554,105.
The Company recorded a discount on the Notes of $7,250,000 for the fair value of
the related warrants. This discount on the Notes is being amortized over the
life of the Notes using the effective interest method. The discount amortization
through February 28, 2007 amounted to $1,707,066 and has been included in
interest expense. In addition, the excess of the fair value of the warrants over
the carrying value of the notes, which amounted to $7,304,105, was recognized as
additional expense related to warrants in the accompanying 2007 statement of
operations.

We further agreed to register for resale under the Securities Act the common
stock issuable upon the exercise of the warrants and any shares of common stock
we may issue to the holders of the Notes in connection with payments of interest
and principal, or which we are obligated to issue upon any conversion of the
Notes at the option of the holders.

On February 21, 2007, we entered into a Forbearance Agreement (the "Forbearance
Agreement") with the investors pursuant to which the investors agreed that,
during the period commencing on February 16, 2007 and ending on the earlier of
(i) March 31, 2007 or (ii) the date on which any Termination Event (as defined
in the Forbearance Agreement) first occurs (the "Forbearance Period"), they will
forbear from exercising any and all of the rights and remedies which they may
have against us or any of our assets under the Notes or the Purchase Agreement
or at law or in equity as a result of any default under the Notes or as a result
of the occurrence of certain events with respect to the Purchase Agreement. In
exchange for entering into the Forbearance Agreement, we issued pro rata to the
investors three-year warrants for the purchase of an aggregate of 60,000 shares
of our common stock at an exercise price of $0.51 per share (the "Fee
Warrants").

Upon the issuance of the Fee Warrants, the exercise prices of the five-year
warrants issued to the investors pursuant to the Purchase Agreement (the
"Original Warrants") for the purchase of an aggregate of 10,820,896 shares of
our common stock were automatically adjusted from $0.81 per share and $0.89 per
share, respectively, to $0.51 per share, and the number of shares of our common
stock issuable upon exercise of the Original Warrants was automatically
adjusted, proportionately, to an aggregate of 18,034,830 shares. In the
Forbearance Agreement, the investors waived, with respect to the issuance of the
Fee Warrants, application of similar anti-dilution adjustments contained in the
Notes and in a third series of warrants for the purchase, on or before October
12, 2007, of an aggregate of 10,820,896 additional shares of our common stock at
an exercise price of $0.67 per share (the "One Year Warrants"). C.E. Unterberg
Towbin, which holds a warrant for the purchase of 865,672 shares of our common
stock at an exercise price of $0.67 per share, issued to it in connection with
its services as exclusive placement agent under the Purchase Agreement,
separately agreed to waive, with respect to the issuance of the Fee Warrants,
application of the anti-dilution provisions set forth in that warrant. Because
the anti-dilution adjustment to the Original Warrants is accounted for as a
modification of the Original Warrants, we recorded an expense for this
modification in the period ended February 28, 2007 of which is included in the
caption "Change in fair value of warrant liability" in the statement of
operations for the year ended February 28, 2007.

12. FAIR VALUE OF WARRANT LIABILITY

In accordance with the guidance provided by EITF 00-19, Accounting for
Derivative Financial Instruments Indexed to and Potentially Settled in, a
Company's Own Stock, we have recorded a liability of $10,157,937 for the fair
value of the warrants related to the Senior Secured Convertible Notes at
February 28, 2007 in order to provide for the possibility that we may be unable
to comply with the registration rights of the lenders as contained in the
Securities Purchase Agreement and we currently do not have sufficient available
authorized shares to execute a potential conversion of the Notes and related
warrants and thus we would be required to settle the contract in cash. In
addition, since we currently do not have sufficient available authorized shares
to execute a potential conversion of other outstanding warrants if requested to
do so by the grantees, we could be required to settle any conversion requests in
cash. Therefore, we reclassified warrants with an approximate value of $756,000
from equity to the warrant liability. The fair value of this amount was $336,069
at February 28, 2007. The Company expects to seek stockholder approval to
increase the authorized shares at a Special Meeting to be scheduled on May 8,
2007. The total fair value of derivative liability, originally recorded at
$15,309,980 on October 12, 2006, was adjusted by $4,815,974 to $10,494,006 at
February 28, 2007 resulting in a net non-cash income adjustment of $1,986,041
during the year ended February 28, 2007.



                                      F-20




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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The warrants subject to the Stand-Still Agreement were not reclassified because
they are not exercisable until the increase in the number of authorized shares
and the investors have agreed not to require a cash settlement in the event the
number of authorized shares is not increased.

As noted above, the fair value of the derivative liability pertaining to the
warrants related to the Senior Secured Convertible Notes is volatile. Several
factors and underlying assumptions are included in the Black-Scholes model to
derive the fair value of the warrants. The factors and the assumptions are as
follows:

1. Number of warrants: varies from time to time dependent upon current period
grants, conversions, forfeitures, and expirations,

2. Term to expiration: expiration dates vary by grant and currently range from
1-5 years,

3. Market price at the valuation date: $0.70/share at October 12, 2006;
$0.41/share at February 28, 2007,

4. Exercise price of the warrants: varies by grant,

5. Dividend yield - assumed to be zero,

6. Interest rate - we use the US Federal Reserve - "Treasury constant maturities
rates" at the measurement date matched to the maturities of the warrants. The
rates change over time and the maturities of the warrants change over time.

7. Company stock price volatility on a look-back basis as a proxy for expected
future volatility in stock price. We use the look-back approach because the
stock has a relatively short trading history as a publicly traded security.

While most of these factors changed during the period of October 12, 2006 to
February 28, 2007, the most significant factor impacting the change in fair
value were the change in stock price and the repricing of the original warrants
to $0.51 per share as further described in Note 11.

13. STOCKHOLDERS' EQUITY:

On February 5, 2004 the Company entered into a stock purchase agreement with SBI
Brightline Consulting, LLC ("SBI") that obligated SBI to purchase, upon the
Company's election, up to 17,750,000 shares of common stock for an aggregate
purchase price of $25 million. Only 6,000,000 shares covered by this stock
purchase agreement were registered for resale. SBI was not obligated to purchase
the remaining shares covered by the stock purchase agreement unless and until
the Company had 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. On May 27, 2005, this stock purchase agreement
was cancelled and a new agreement was executed with SBI. The 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 tranches of 1
million shares each and the financing agreement requires the shares to be
registered for resale by SBI. There are no resets, warrants, finder's fees or
commissions associated with this financing transaction. Registration of the
shares for resale by SBI was effective on May 18, 2006. The Company elected to
put the first tranche of 1 million shares at $2 per share on May 23, 2006 and
received the entire proceeds. The Company elected to put the second tranche of 1
million shares at $2 per share on July 21, 2006. Under this second tranche, only
$1,175,000 has been received to date and only 587,500 additional shares have
been issued to SBI. On October 11, 2006, the Company elected to put the entire
remaining tranches, at a weighted average price of $2.60 per share, to SBI. To
date, SBI has failed to meet its obligation to purchase these shares and the
Company has not issued the shares.

We believe that SBI's failure to purchase all of the shares which we elected to
sell to them on July 21, 2006 or any of the shares which we elected to sell to
them on October 11, 2006 constitutes a breach of SBI's contractual obligations
under the SBI Agreement. Under the SBI Agreement, SBI is irrevocably bound to
purchase the shares in the amounts and at the times determined by us. We have
been engaged in discussions with SBI in an effort to address SBI's default. In
our Purchase Agreement with Iroquois Master Fund Ltd and other investors
(See Note 11) we agreed (i) to enforce all of our rights and remedies under
the SBI Agreement in connection with the breach by SBI, and (ii) not to agree to
any settlement, amendment, waiver or consent under the SBI Agreement without the
prior written consent of Iroquois.

SBI has alleged that in September 2006 the Company and SBI entered into an oral
settlement agreement pursuant to which the Stock Purchase Agreement was
terminated and SBI's obligation to purchase the shares was extinguished. The
Company believes that SBI's claim is without basis in fact.

On February 24, 2005, in connection with the acquisition of Biophan Europe (see
Note 3), 100,000 shares of restricted stock, valued at $134,000, were issued,
fully charged and accrued to intellectual property rights; 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 year ended
February 28, 2005.



                                      F-21




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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On August 2, 2005, the Company entered into an investment agreement with Boston
Scientific Scimed. At that time, 1,653,193 shares of common stock were issued
for $5,000,000.

On November 30, 2005, the Company issued 4,923,080 shares of common stock,
valued at $8,467,698 for the acquisition of a 35% minority ownership in Myotech,
LLC. Under EITF 98-2, Accounting by a Subsidiary or Joint Venture for an
Investment in the Stock of its Parent Company, these shares are accounted for as
treasury stock.

On December 6, 2005, in connection with the acquisition of Biophan Europe (see
Note 3), 100,000 shares of restricted stock, valued at $134,000, were issued in
satisfaction of accounts payable in the accompanying consolidated balance sheet
at February 28, 2006.

Also, on December 6, 2005, the Company issued 22,000 restricted shares of common
stock valued at $37,840 for certain services.

During the years ended February 28, 2007, 2006 and 2005, the Company issued no
shares, 84,074 and 1,903,775 shares of stock upon the exercise of warrants for
total proceeds of $0, $20,707 and $788,900, respectively. As of February 28,
2007 and 2006, warrants to purchase 33,229,318 and 3,247,920 shares of our
common stock were outstanding, respectively. The exercise prices for these
warrants range from $.15 per share to $2.49 per share, and the weighted-average
exercise price for all of the outstanding warrants is $.64 per share. In
addition, during the years ended February 28, 2007, 2006 and 2005, 38,956,
224,165 and 94,999 shares of stock were issued upon the exercise of options for
total proceeds of $13,179, $182,541 and $34,900, respectively.

Additional paid-in capital was further increased by $1,444,780, $4,609,778 and
$201,000 of expense related to stock options issued for services during the
years ended February 28, 2007, 2006 and 2005, respectively. Also, $-0-, $295,362
and $400,725 of profits were received during the years ended February 28, 2007,
2006 and 2005, respectively, from a related company owed pursuant to the "short
swing profit" rules of the Securities Exchange Act of 1934.

14. RESEARCH AND DEVELOPMENT COSTS:

Expenditures for research activities relating to intellectual property
development and improvement are charged to expense as incurred. Such
expenditures amounted to $7,190,975, $6,829,142, and $2,629,980 for the years
ended February 28, 2007, 2006, and 2005, respectively.

15. COMMITMENTS:

Lease Obligation

The Company was obligated under operating leases for office space originally
expiring January 30, 2008, which the Company had the right to terminate upon
ninety days prior written notice to the landlord. The notice of termination was
given to the landlord and the Company continued on a month-to-month basis until
it vacated the premises on February 9, 2007. The Company has entered into new
operating leases for office space commencing March 2007 and expiring April 30,
2022, subject to our right to terminate at any time after December 31, 2008 upon
90 days' notice.

The following is a schedule of future minimum rental payments, included annual
increases, required under the operating lease agreements:



Year Ending
February 28,     Amount
- ------------   ----------
    2008       $  102,891
    2009          139,558
    2010          146,536
    2011          153,636
    2012          157,990
 Thereafter     1,600,939
               ----------
               $2,301,550
               ==========



Rent expense, net of subrentals, charged to operations under these operating
lease aggregated $113,161, $70,775 and $58,546 for the years ended February 28,
2007, 2006, and 2005, respectively. Rent expense, net of subrentals, charged to
operations for the period from August 1, 1968 (Date of Inception) to February
28, 2006 was $368,626.

Cooperative Research and Development Agreement (CRADA):

In March 2006, the Company entered into a Cooperative Research and Development
Agreement (CRADA) with the Food and Drug Administration to evaluate the safety
of medical implants in the presence of electromagnetic fields from magnetic
resonance imaging for a term of 2.5 years. Pursuant to the Agreement, the
Company is committed to a total of $187,500 of which $75,000 has been paid at
February 28, 2007.



                                      F-22




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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

License Agreements

The Company is obligated under seven license or royalty agreements for patents
that expire at various dates through 2025. 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 $5,447,500.
License/royalty expense charged to operations was $152,410, $594,890 and $89,880
for the years ended February 28, 2007, 2006 and 2005, 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.

Also, Biophan has an employment contract with an officer that expires November
9, 2007, and Biophan Europe has an employment agreement with a key employee that
expires 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,
2007, excluding bonuses and other awards approximates $313,750.

16. RELATED PARTY TRANSACTIONS:

The Company has affiliations with three entities, Biomed, Technology
Innovations, and Myotech (through November 30, 2005) that are related by virtue
of common senior management personnel and stock ownership. During the years
ended February 28, 2007, 2006, and 2005, the Company charged Biomed and Myotech
(through November 30, 2005) for services of certain Company personnel. The total
of these charges was $197,362, $156,647 and $161,014, respectively. The Company
also charges Biomed, TI and Myotech (through November 30, 2005) for expenses
allocable to and paid on their behalf. During the years ended February 28, 2007,
2006, and 2005, expenses paid by the Company on their behalf was approximately
$175,220, $647,000, and $240,000, respectively. At February 28, 2007, the
combined balances due from these related parties was $16,301. The amounts do not
bear interest and the Company received payment within forty-five days.

During the years ended February 28, 2007, 2006 and 2005, the Company was billed
$35,290, $93,000 and $9,000, respectively, for legal services provided by
Bramson & Pressman of which Robert S. Bramson, a former director of the Company,
is a partner. Mr. Bramson resigned July 18, 2006.

Steven Katz & Associates, Inc. of which Steven Katz, a former director of the
Company is an owner, billed the Company $183,500 and $110,500 during the years
ended February 28, 2007 and 2006, respectively, for consulting services. The
firm did not bill us for services during the year ended February 28, 2005. Mr.
Katz resigned March 9, 2007.

17. SHARE-BASED COMPENSATION PLAN:

The Company has two stock-based compensation plans, entitled Biophan
Technologies, Inc. 2001 Stock Option Plan and Biophan Technologies, Inc. 2006
Incentive Stock Plan (the "Plans") which are stockholder approved. The Plans
provide for the grant of incentive and non-qualified stock options to selected
employees, and the grant of non-qualified options to selected consultants and to
directors and advisory board members. In addition, various other types of
stock-based awards may be granted. The Plans are administered by the
Compensation Committee of the Board and authorizes the grant of options or
restricted stock awards for 13,000,000 shares under the 2001 Plan and 7,500,000
shares under the 2006 Plan. The Compensation Committee determines which eligible
individuals are to receive options or other awards under the Plans, the terms
and conditions of those awards, the applicable vesting schedule, the option
price and term for any granted options, and all other terms and conditions
governing the option grants and other awards made under the Option Plan.
Non-employee directors also receive periodic option grants pursuant to the
automatic grant program in effect for them under the 2006 Plan.



                                      F-23




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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Effective March 1, 2006, the Company adopted SFAS No. 123 (revised),
"Share-Based Payment" (SFAS 123(R)) utilizing the modified prospective approach.
Prior to the adoption of SFAS 123(R), stock option grants to employees and
directors were accounted for in accordance with APB Opinion No. 25, "Accounting
for Stock Issued to Employees" (the intrinsic value method) and the
disclosure-only provisions of SFAS 123, "Accounting for Stock-Based
Compensation". Accordingly, employee compensation expense was recognized only to
the extent that the fair value of our common stock on the date of grant exceeded
the stock option exercise price.

Under the modified prospective approach, SFAS 123(R) applies to new grants and
to grants that were outstanding on February 28, 2006 that are subsequently
modified, repurchased or cancelled. Under the modified prospective approach,
compensation cost recognized in fiscal 2007 includes compensation cost for all
share-based payments granted prior to, but not yet vested as of February 28,
2006, based on the grant-date fair value estimated in accordance with the
original provisions of SFAS 123, and compensation cost for all share-based
payments granted subsequent to February 28, 2006, based on the grant-date fair
value estimated in accordance with the provisions of SFAS 123(R). Prior periods
were not restated to reflect the impact of adopting the new standard.

As a result of adopting SFAS 123(R) on March 1, 2006, our net loss and basic and
diluted loss per share for the year ended February 28, 2007 were $1,206,640
($.015 per share) higher than if we had continued to account for stock-based
compensation under APB Opinion No. 25 for our stock option grants.

The following table illustrates the effect on operating results and per share
information had the Company accounted for stock-based compensation in accordance
with SFAS 123(R) for the years ended February 28:



                                                      2006          2005
                                                 ------------   -----------
Net loss - as reported                           $(14,484,384)  $(5,793,547)
Add: Stock-based employee compensation
  expense included in reported net loss,
  net of related tax effects                        4,384,530       201,000
Deduct: Total stock-based employee
  compensation expense determined
  under fair value based method for
  all awards, net of related tax effects           (6,520,862)     (342,000)
                                                 ------------   -----------
Net loss - pro forma                             $(16,620,716)  $(5,934,547)
                                                 ============   ===========
Basic and diluted loss per share - as reported   $      (0.19)  $     (0.08)
                                                 ============   ===========
Basic and diluted loss per share - pro forma     $      (0.22)  $     (0.08)
                                                 ============   ===========



We use the Black-Scholes option pricing model to estimate the fair value of
stock-based awards with the following weighted-average assumptions for the years
ended February 28:



                                       2007           2006          2005
                                   ------------   -----------   -----------
Expected volatility                  71%-122%       60%-103%      88%-150%
Risk-free interest rate             4.54%-5.35%   4.50%-4.60%   4.04%-4.50%
Expected life of options (years)   3.75-8 years    5-10 years    5-10 years
Expected dividends                      -0-           -0-           -0-



                                      F-24




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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The assumptions above are based on multiple factors, including historical
exercise patterns of employees in relatively homogeneous groups with respect to
exercise and post-vesting employment termination behaviors, expected future
exercising patterns for these same homogeneous groups and the implied volatility
of our stock price.

At February 28, 2007, there was $1,249,419 of unrecognized compensation cost
related to stock-based payments which is expected to be recognized over a
weighted-average period of 1.23 years.

The following table represents stock option activity for the years ended
February 28, 2005 through 2007:



                                                               Weighted-
                                                 Weighted-      Average
                                       Number     Average      Remaining
                                        of       Exercise      Contract
                                       Shares      Price     Life (years)
                                     ---------   ---------   ------------
Outstanding options at 2/28/04       3,869,993     $ .39
Granted                              4,149,859     $ .96
Exercised                              (94,999)    $ .37
                                     ---------
Outstanding options at 2/28/05       7,924,853     $ .69
Granted                              1,968,331     $1.88
Forfeited                              (74,999)    $ .83
Exercised                             (224,165)    $ .81
                                     ---------
Outstanding options at 2/28/06       9,594,020     $ .95
Granted                                354,997     $ .96
Exercised                              (38,956)    $ .34
Forfeited                             (367,000)    $ .47
Expired                               (114,999)    $ .50
                                     ---------
Outstanding options at 2/28/07       9,428,062     $ .96         6.74
                                     =========     =====         ====
Outstanding exercisable at 2/28/07   7,433,479     $ .86         6.39
                                     =========     =====         ====



At February 28, 2007, shares available for future stock option grants to
employees and others under our 2001 Stock Option Plan were 597,981 and shares
available for future stock option grants to employees and others under our 2006
Incentive Stock Plan were 7,265,003.

At February 28, 2007, the aggregate intrinsic value of shares outstanding was
$302,550, and the aggregate intrinsic value of options exercisable was $302,550.
Total intrinsic value of options exercised was $ 17,223 for the year ended
February 28, 2007.

The following table summarizes our non-vested stock option activity for the year
ended February 28, 2007:



                                                   Weighted-Average
                                       Number of    Grant-Date Fair
                                        Shares           Value
                                      ----------   ----------------
Non-vested stock options at 2/28/06    3,048,750         $1.31
Granted                                  160,000         $ .86
Vested                                (1,032,167)        $1.09
Forfeited/Expired                       (182,000)        $ .93
                                      ----------
Non-vested stock options at 2/28/07    1,994,583         $ .62
                                      ==========



18. 401(K) SAVINGS PLAN

The Company maintains a tax-qualified retirement plan that provides all eligible
employees with an opportunity to save for retirement on a tax-advantaged basis.
Under the 401(k) Plan, participants may elect to defer a portion of their
compensation on a pre-tax basis and have it contributed to the Plan subject to
applicable annual Internal Revenue Code limits. Pre-tax contributions are
allocated to each participant's individual account and are then invested in
selected investment alternatives according to the participants' directions.
Employee elective deferrals are 100% vested at all times. The 401(k) Plan allows
for matching contributions to be made by the Company. As a tax-qualified
retirement plan, contributions to the 401(k) Plan and earnings on those
contributions are not taxable to the employees until distributed from the 401(k)
Plan and all contributions are deductible by the Company when made.



                                      F-25




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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For eligible employees, our Investing Plans likewise use base and lump-sum merit
pay as components of "eligible compensation" under the applicable plans
(incentive plan awards are not part of "eligible compensation"). In addition,
our "qualified" plans are subject to applicable IRS limits.

Company matching contributions to the Plan totaled $51,892, $53,242 and $6,240
for the years ended February 28, 2007, 2006, and 2005, respectively. No
discretionary contributions were made in 2007, 2006 or 2005.

19. INCOME TAXES:

As of February 28, 2007, the Company had net operating loss carryforwards of
approximately $22,124,000 for federal income tax purposes, which expire through
2027.

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



                                       For the Years Ended
                                      --------------------
                                          February 28,
                                      -------------------
                                      2007    2006    2005
                                      ----    ----    ----
Tax benefit at U.S. statutory rates   (34%)   (34%)   (34%)
Increase in valuation allowance        34%     34%     34%
                                      ---     ---     ---
                                        0%      0%      0%
                                      ===     ===     ===



                                                            February 28,
                                                    ---------------------------
                                                         2007           2006
                                                    ------------    -----------
Deferred tax asset is comprised of the following:
  Net operating loss carryforwards                  $ 10,224,000    $ 7,400,000
  Write-down of intellectual property rights             160,000        160,000
  Stock option expense                                 2,400,000             --
                                                    ------------    -----------
  Total deferred tax asset                            12,784,000      7,560,000
  Valuation allowance                               $(12,784,000)   $(7,560,000)
                                                    ============    ===========



20. CONTINGENCIES:

We are not a party to any material legal proceedings and there are no material
legal proceedings pending with respect to our property, except as noted below.
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.

The Company is pursuing legal claims against one of its former law firms and
certain of its attorneys. Review of the firm's work product and bills recently
revealed questions about the firm's billing practices and other activities. The
amount of potential damages has not yet been quantified. Also, the law firm has
asserted claims seeking payment of additional legal fees, which claims the
Company has denied. The litigation is in an early stage. While, as with any
legal proceedings, no assurance can be given as to ultimate outcome, management
believes that the outcome of the litigation will not have a material adverse
effect upon the Company's financial condition. Accordingly, adjustments, if any
that might result from the resolution of this matter have not been reflected in
the financial statements.

On April 5, 2007, SBI Brightline LLC and SBI Brightline XI, LLC brought suit
against us and Biomed Solutions, LLC in the Superior Court of Orange County,
California. The suit alleges, among other things, that in September 2006 we
entered into an oral agreement to terminate the Stock Purchase Agreement dated
as of May 27, 2005 and amended on January 8, 2006, between us and SBI Brightline
XI, LLC, and seeks unspecified monetary damages and an order by the Court
deeming the Stock Purchase Agreement to be terminated. We believe the
allegations made by SBI are without basis in fact and we intend to defend the
lawsuit vigorously. Because of the potential costs of litigation and the
anticipated demands that our defense may place on the time and attention of our
management our defense of this matter, regardless of the outcome, could have a
material adverse effect on our business and operations.



                                      F-26




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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

21. QUARTERLY STATEMENTS OF OPERATIONS (UNAUDITED)





                                                         Year Ended February 28, 2007*
                                            -----------------------------------------------------
                                               May 31      August 31    November 30   February 28
                                            -----------   -----------   -----------   -----------
                                                                          
Quarter ended:
Revenues                                    $   344,922   $   310,099   $   226,094   $   108,414
Research and development expenses             2,588,408     1,941,513     1,737,351       923,703
General and administrative expenses           2,086,191     1,573,434     1,264,228     1,901,092
Other income (expense)                         (249,592)     (329,508)   (3,061,966)   (3,080,593)
Minority interest in Myotech, LLC               695,825       520,095       470,674       339,045
                                            -----------   -----------   -----------   -----------
Net loss                                    $(3,883,444)  $(3,014,261)  $(5,366,777)  $(5,457,929)
                                            ===========   ===========   ===========   ===========
Loss per common share - basic and diluted   $      (.05)  $      (.04)  $      (.07)  $      (.07)
Weighted average shares outstanding          76,893,764    77,893,673    77,654,013    77,864,738






                                                         Year Ended February 28, 2006*
                                            -----------------------------------------------------
                                               May 31      August 31    November 30   February 28
                                            -----------   -----------   -----------   -----------
                                                                          
Quarter ended:
Revenues                                    $        --   $    62,500   $   466,935   $   515,426
Research and development expenses             1,599,742     2,291,762     1,212,239     1,725,399
General and administrative expenses           1,895,984     3,123,641     1,548,299     1,883,962
Other income (expense)                           85,887      (670,575)      (81,098)     (188,590)
Minority interest in Myotech, LLC                    --            --            --       606,159
                                            -----------   -----------   -----------   -----------
Net loss                                    $(3,409,839)  $(6,023,478)  $(2,374,701)  $(2,676,366)
                                            ===========   ===========   ===========   ===========
Loss per common share - basic and diluted   $      (.05)  $      (.08)  $      (.03)  $      (.03)
Weighted average shares outstanding          74,417,378    75,129,518    76,760,163    76,874,030




22. VALUATION AND QUALIFYING ACCOUNTS





                                                    Years ended February 28, 2007, 2006 and 2005
                                          ----------------------------------------------------------------
                                              Balance at      Additions charged                 Balance at
Description                               beginning of year     to expense (*)    Deductions   end of year
- ---------------------------------------   -----------------   -----------------   ----------   -----------
                                                                                   
Year ended February 28, 2007:
Valuation allowance- deferred tax asset       $7,560,000          $5,224,000         $-0-      $12,784,000
Year ended February 28, 2006:
Valuation allowance- deferred tax asset       $4,787,000          $2,773,000         $-0-      $ 7,560,000
Year ended February 28, 2005:
Valuation allowance-deferred tax asset        $2,926,000          $1,861,000         $-0-      $ 4,787,000




(*) Offset to tax benefit of net operating losses.



                                      F-27



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

                                24,591,491 Shares

                           BIOPHAN TECHNOLOGIES, INC.

                                  Common Stock

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


                                   Prospectus
                                 _________, 2007


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




                                     PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

      The following table sets forth the estimated costs and expenses to be
incurred in connection with the issuance and distribution of the securities
registered under this Registration Statement. All amounts are estimates except
the Securities and Exchange Commission registration fee. The following expenses
will be borne solely by the registrant.



Securities and Exchange Commission registration fee  $  1,500
Printing and engraving expenses                         2,000
Legal fees and expenses                               120,000
Accounting fees                                        40,000
                                                     --------
Total                                                $163,500
                                                     ========



Item 14. 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 the performance of their duties
unless such conduct falls within one of the foregoing exceptions. The provision,
however, does not alter the applicable standards governing a director's or
officer's fiduciary duty and does not eliminate or limit the right of Biophan or
any stockholder to obtain an injunction or any other type of non-monetary relief
in the event of a breach of fiduciary duty.

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

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


                                      II-1



Item 15. Recent Sales of Unregistered Securities.


      The following sets forth information regarding unregistered securities
sold by the registrant since October 2003.

      (a) On February 21, 2007, we issued to ten holders of our Senior Secured
Convertible Notes, all of whom are qualified institutional buyers (as such term
is defined in Rule 144A under the Securities Act) or accredited investors (as
such term is defined in Rule 501 (a) under the Securities Act) three-year
warrants for the purchase of an aggregate of 60,000 shares of our common stock
at an exercise price of $0.51 per share. The warrants were issued in
consideration for the Note holders' execution of a Forbearance Agreement
relating to certain payment due, or to come due, under the Notes. The issuance
of the warrants was made without registration under the Securities Act pursuant
to the exemption provided in Section 4(2) thereof in as much as it did not
involve any public offering.

      (b) On October 18, 2006, we issued and sold 587,500 shares of our common
stock, at a price of $2.00 per share, to SBI Brightline XI, LLC ("SBI"). The
sale was made pursuant to the Stock Purchase Agreement dated as of May 27, 2005
between us and SBI (as amended by Amendment No. 1 thereto dated January 9, 2006,
the "Stock Purchase Agreement"). The shares sold on October 18 constitute a
portion of the second of ten tranches of shares which we may require SBI to
purchase under the Stock Purchase Agreement. The issuance and sale of the shares
was made without registration under the Securities Act of 1933 pursuant to the
exemption provided in Section 4(2) thereof. We have been advised by SBI that it
intends to sell all such shares pursuant to our Registration Statement on Form
S-3 (No. 333-130920) which was declared effective by the Securities and Exchange
Commission on May 18, 2006.

      (c) On October 11, 2006, we entered into a Securities Purchase Agreement
(the "Purchase Agreement"). Pursuant to the Purchase Agreement, on October 12,
2006, we issued to ten qualified institutional buyers (as such term is defined
in Rule 144A under the Securities Act) and/or accredited investors (as such term
is defined in Rule 501(a) under the Securities Act) the following securities
(the "Securities"):


      (i)   an aggregate of $7,250,000 principal amount of our Senior Secured
            Convertible Notes due October 11, 2009 (the "Notes");


      (ii)  five-year warrants for the purchase of an aggregate of 5,410,498
            shares of our common stock at an exercise price of $0.81 per share
            (the "$0.81 Warrants");

      (iii) five-year warrants for the purchase of an aggregate of 5,410,498
            shares of our common stock at an exercise price of $0.89 per share;
            (the "$0.89 Warrants");and


      (iv)  one-year warrants for the purchase of an aggregate of 10,820,896
            shares of our common stock at an exercise price of $0.67 per share.



      The Notes are convertible, at any time at the election of the holders,
into shares of our common stock at a conversion price of $0.67 per share. If the
entire principal amount of the Notes were converted, we would issue to the
holders an aggregate of 10,820,896 shares of our common stock. The Securities
were issued in a private placement not involving any public offering and exempt
from registration under the Securities Act pursuant to the exemptions provided
by Section 4(2) of such Act and by Regulation D and Regulation S promulgated
under such Act. The Securities were sold for cash at an aggregate offering price
of $7,250,000. C.E. Unterberg, Towbin acted as the exclusive placement agent in
the offering. We paid the placement agent a cash fee of $580,000 and issued to
it a five-year warrant to purchase an aggregate of 865,672 shares of our common
stock at a price of $0.67 per share. Pursuant to anti-dilution provisions
contained in the $0.81 Warrants and the $0.89 Warrants, the exercise prices of
those warrants were subsequently adjusted to $0.51 and the number of the shares
of our common stock issuable upon exercise thereof was adjusted,
proportionately, to 8,543,079 and 9,441,751, respectively.


      (d) On May 23, 2006, we issued and sold 1,000,000 shares of our common
stock, at a price of $2.00 per share, to SBI Brightline XI, LLC ("SBI"). The
sale was made pursuant to the Stock Purchase Agreement dated as of May 27, 2005
between us and SBI (as amended by Amendment No. 1 thereto dated January 9, 2006,
the "Stock Purchase Agreement"). The shares sold on May 23 constitute the first
of ten tranches of shares which we may require SBI to purchase under the Stock
Purchase Agreement. The issuance and sale of the shares was made without
registration under the Securities Act of 1933 pursuant to the exemption provided
in Section 4(2) thereof. We were advised by SBI that it has sold all such shares
pursuant to our Registration Statement on Form S-3 (No. 333-130920) which was
declared effective by the Securities and Exchange Commission on May 18, 2006.

      (e) On January 24, 2006, we entered into a Line of Credit Agreement (the
"Line of Credit Agreement") with Biomed Solutions, LLC, a New York limited
liability company ("Biomed"), pursuant to which Biomed has committed to make
advances to us, in an aggregate amount of up to $5,000,000. Under the Line of
Credit Agreement, advances may be drawn down in such amounts and at such times
as we determine upon 15 days' prior notice to Biomed, except that we may not
draw down more than $1,500,000 in any 30-day period. We are obligated to utilize
the entire credit facility. Amounts borrowed will bear interest at the rate of
8% per annum and are convertible into shares of our common stock at the rate of
$0.67 per share. Any amounts drawn down and repaid may be reborrowed at any time
(subject to a requirement of 15 days' notice and the limitation that not more
than $1,500,000 may be drawn down during any 30-day period). Biomed's obligation
to lend to us under the Line of Credit Agreement expires on June 30, 2007, on
which date the entire amount borrowed by us (and not converted into shares of
our common stock) becomes due and payable. Our obligations with respect to
borrowings under the credit facility are governed by a Convertible Promissory
Note issued by us to Biomed on January 24, 2006. In connection with the
establishment of the credit facility under the Line of Credit Agreement, on
January 24, 2006, we issued to Biomed a Stock Purchase Warrant (the "Warrant")
entitling Biomed to purchase up to 1,198,630 shares of our common stock at an
exercise price of $1.89 per share. Biomed's purchase rights under the Warrant
expire on January 23, 2011. The Note and the Warrant were, and any shares
issuable upon conversion of the Note or exercise of the Warrant will be, issued
in a private placement exempt from the registration requirements of the
Securities Act of 1933 pursuant to the exemption set forth in Section 4(2) of
such Act and Regulation D promulgated thereunder.


                                      II-2




      (f) On November 30, 2005, we entered into a Securities Purchase Agreement
for the acquisition of an initial 35% interest in Myotech, LLC ("Myotech"), a
New York limited liability company, whereby we exchanged 4,923,020 shares of our
common stock, par value $.005, for 3,687,719 Class A (voting) units of Myotech.
The shares issuable to Myotech under the Securities Purchase Agreement are
subject to a Rights Agreement between us and Myotech entered into on November
30, 2005. Under the Rights Agreement, we agreed among other things, to register
the Biophan shares issued to Myotech. The shares were offered and issued
pursuant to an exemption from the registration requirements of the Securities
Act of 1933 under Section 4(2) of such Act.

      (g) On June 30, 2005, we entered into a license agreement and an
investment agreement with Boston Scientific Scimed, Inc., an affiliate of Boston
Scientific Corporation ("BSS") in connection with the licensing of our
technology to BSS. The investment agreement called for the purchase by BSS of
shares of our common stock for a total purchase price of $5 million, the shares
to be priced at 110% of the average of the closing prices of our common stock on
the OTC Bulletin Board for the 30 calendar-day period prior to the closing. Upon
the satisfaction of certain conditions to the agreement, on August 2, 2005, BSS
paid us the $5 million purchase price and we issued to BSS 1,653,193 shares of
our common stock at a price per share of $3.024 (representing a 10% premium over
the average closing price of $2.75 on the OTC Bulletin Board over the period
July 3, 2005 through August 1, 2005). The shares were offered and sold pursuant
to an exemption from the registration requirements of the Securities Act of 1933
under Section 4(2) of such Act and Rule 506 promulgated thereunder.

      (h) On February 24, 2005, pursuant to the terms of a License Agreement
("License"), dated February 24, 2005, between Biophan and aMRIs Patent GmbH
("Licensor"), Biophan agreed to issue 200,000 shares of its unregistered common
stock to aMRIs Patent GmbH, the Licensor. The shares issued were exempt from
registration pursuant to the exemption set forth in Section 4(2) and Regulation
S. Biophan did not receive any cash consideration for the shares of common stock
and no underwriters were involved in the placement of the common stock.

      (i) On January 21, 2004 and February 10, 2004, respectively, we issued
932,000 and 500,000 shares of common stock for the conversion of $93,200 and
$50,000 of line of credit obligation payable to Biomed Solutions, LLC. Biomed
had previously sold those portions of its receivable to a single purchaser,
Bellador Advisory Services (Labuan) Ltd., a Kuala Lumpur, Malaysia company. The
shares were issued to Bellador and its assigns pursuant to the exemption
provided by Section 3(a)(9) of the Securities Act of 1933, involving an exchange
of securities with an existing securityholder where no commission is payable.
The debt was assigned by Biomed to Bellador pursuant to the provisions of
Regulation S of the Securities Act. All recipients of the shares were
nonaffiliated, non U.S. persons deemed to be accredited investors and/or persons
with knowledge of business. There was no general solicitation or general
advertising related to the transaction, and the recipients were required to
represent that they were non U.S. persons and that they were not acquiring the
shares for the account or benefit of any U.S. Person. The offer to purchase the
shares was not made to a person in the United States and, at the time of the
transaction, the purchasers were outside the United States.


                                      II-3





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

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

      (l) 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.

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

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


Item 16. Exhibits and Financial Statement Schedules.

      Please refer to the exhibit index following the signature page of this
registration statement.

Item 17. Undertakings.

      The undersigned registrant hereby undertakes:

      (1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:


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

            (ii) To reflect in the prospectus any facts or events arising after
      the effective date of the registration statement (or the most recent
      post-effective amendment thereof) which, individually or in the aggregate,
      represent a fundamental change in the information set forth in the
      registration statement. Notwithstanding the foregoing, any increase or
      decrease in volume of securities offered (if the total dollar value of
      securities offered would not exceed that which was registered) and any
      deviation from the low or high end of the estimated maximum offering range
      may be reflected in the form of prospectus filed with the Securities and
      Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the
      changes in volume and price represent no more than a 20 percent change in
      the maximum aggregate offering price set forth in the "Calculation of
      Registration Fee" table in the effective registration statement; and

            (iii) To include any material information with respect to the plan
      of distribution not previously disclosed in the registration statement or
      any material change to such information in the registration statement.


                                      II-4



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

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

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


The undersigned registrant hereby undertakes:

         That, for the purpose of determining liability under the Securities Act
of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part
of a registration statement relating to an offering, other than registration
statements relying on Rule 430B or other than prospectuses filed in reliance on
Rule 430A, shall be deemed to be part of and included in the registration
statement as of the date it is first used after effectiveness. Provided,
however, that no statement made in a registration statement or prospectus that
is part of the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a time
of contract of sale prior to such first use, supersede or modify any statement
that was made in the registration statement or prospectus that was part of the
registration statement or made in any such document immediately prior to such
date of first use.

         That, for the purpose of determining liability of the registrant under
the Securities Act of 1933 to any purchaser in the initial distribution of the
securities:

         The undersigned registrant undertakes that in a primary offering of
securities of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to
the purchaser, if the securities are offered or sold to such purchaser by means
of any of the following communications, the undersigned registrant will be a
seller to the purchaser and will be considered to offer or sell such securities
to such purchaser:

      i.    Any preliminary prospectus or prospectus of the undersigned
            registrant relating to the offering required to be filed pursuant to
            Rule 424;

      ii.   Any free writing prospectus relating to the offering prepared by or
            on behalf of the undersigned registrant or used or referred to by
            the undersigned registrant;

      iii.  The portion of any other free writing prospectus relating to the
            offering containing material information about the undersigned
            registrant or its securities provided by or on behalf of the
            undersigned registrant; and

      iv.   Any other communication that is an offer in the offering made by the
            undersigned registrant to the purchaser.


                                      II-5



                                   SIGNATURES



      Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant has duly caused this Registration Statement on Form S-1 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the Town
of Pittsford, New York, on May 24, 2007.



                                        BIOPHAN TECHNOLOGIES, INC.


                                        By: /s/ Michael L. Weiner
                                            ------------------------------------
                                            Michael L. Weiner
                                            President and Director


            Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.




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


/s/ Michael L. Weiner                    President and Director                   May 24, 2007
- --------------------------------------   (principal executive officer)
Michael L. Weiner


/s/ Darryl L. Canfield                   Vice President, Secretary,               May 24, 2007
- --------------------------------------   Treasurer and CFO (principal financial
Darryl L. Canfield                       and principal accounting officer)


/s/ Guenter H. Jaensch                   Chairman                                 May 24, 2007
- --------------------------------------
Guenter H. Jaensch


/s/ Theodore A. Greenberg                Director                                 May 24, 2007
- --------------------------------------
Theodore A. Greenberg

/s/ Stan Yakatan                         Director                                 May 24, 2007
- --------------------------------------
Stan Yakatan


/s/ Bonita L. Labosky
- --------------------------------------   Director                                 May 24, 2007
Bonita L. Labosky



* By: /s/ Michael L. Weiner
    -----------------------
    Attorney-in-fact








Exhibit No.                   Description                                                                                  Location
- -----------   ----------------------------------------------------------------------------------------------------------   --------
                                                                                                                     
    3.1       Articles of Incorporation                                                                                       (1)
    3.2       Amendment to Articles of Incorporation                                                                          (2)
    3.3       Certificate of Amendment to Articles of Incorporation                                                           (3)
    3.4       Certificate of Amendment to Articles of Incorporation                                                            *
    3.5       Bylaws                                                                                                          (4)
    4.1       Stock Purchase Agreement dated May 27, 2005 between Biophan and SBI Brightline XI, LLC                          (5)
    4.2       Amendment No. 1, dated January 8, 2006, to Stock Purchase Agreement by and between Biophan and SBI              (6)
              Brightline XI, LLC
    4.3       Line of Credit Agreement dated as of May 27, 2005 between Biophan and Biomed Solutions, LLC                     (7)
    4.4       First Amendment to Line of Credit Agreement between Biophan and Biomed Solutions, LLC                           (8)
    4.5       Convertible Promissory Note of Biophan in the face amount of $2,000,000 payable to the order of Biomed          (9)
              Solutions, LLC dated May 27, 2005
    4.6       First Amendment to Convertible Promissory Note                                                                 (10)
    4.7       Stock Purchase Warrant issued to Biomed Solutions, LLC dated May 27, 2005                                      (11)
    4.8       Rights Agreement among Myotech, LLC, the Members of Myotech, LLC and Biophan                                   (12)
    4.9       Line of Credit Agreement dated as of January 24, 2006 between Biophan and Biomed Solutions, LLC                (13)
   4.10       Amendment No. 1, dated  October 11, 2006, to Line of Credit Agreement by and between Biophan Technologies,     (14)
              Inc. and Biomed Solutions, LLC
   4.11       Convertible Promissory Note of Biophan in the face amount of $5,000,000 payable to the order of Biomed         (15)
              Solutions, LLC dated January 24,  2006
   4.12       Amended and Restated Convertible Promissory Note of Biophan Technologies, Inc., in the principal amount of     (16)
              $5,000,000, dated October 11, 2006, payable to the order of Biomed Solutions, LLC
   4.13       Stock Purchase Warrant for the Purchase of up to 1,198,630 Shares of Common Stock issued to Biomed             (17)
              Solutions, LLC
   4.14       Subordination and Standstill Agreement dated October 11, 2006, by and among Biophan Technologies, Inc.,        (18)
              Biomed Solutions, LLC, and those Purchasers named therein
   4.15       Form of Senior Secured Convertible Notes due October 11, 2009 issued pursuant to the  Securities Purchase      (19)
              Agreement, dated October 11, 2006, by and among Biophan Technologies, Inc. and those Purchasers named
              therein
   4.16       Form of Five-Year Warrants issued and to be issued pursuant to the Securities Purchase Agreement, dated        (20)
              October 11, 2006, by and among Biophan Technologies, Inc. and those Purchasers named therein
   4.17       Form of One-Year Warrants issued pursuant to the Securities Purchase Agreement, dated  October 11, 2006,       (21)
              by and among Biophan Technologies, Inc. and those Purchasers named therein
   4.18       Form of Three-Year Warrants issued pursuant to the Forbearance Agreement dated as of February 16, 2007
              by and among Biophan Technologies, Inc. and the Note Holders named therein.                                    (22)
   4.19***    Amended and Restated 2001 Stock Option Plan                                                                    (23)
   4.20***    2006 Incentive Stock Plan                                                                                      (24)
    5.1       Opinion of Sichenzia Ross Friedman Ference LLP                                                                   *
   10.1       Agreement dated as of February 24, 2005 among Biophan, aMRIs GmbH, Dr. Michael Friebe, Tomovation GmbH,        (25)
              Prof. Dr. Andreas Melzer, Dipl-Ing. Gregor Schaefers, and Dipl. Betriebsw. Andreas Pieper
   10.2       Note and Pledge Agreement dated November 24, 2005 between Biophan, Tomovation GmbH and Prof. Dr. Andreas       (26)
              Melzer
   10.3       Termination of  Stock Purchase Agreement between Biophan and SBI Brightline Consulting, LLC                    (27)
   10.4       Investment Agreement dated June 30, 2005 between Biophan and Boston Scientific Scimed, Inc.                    (28)









Exhibit No.                   Description                                                                                  Location
- -----------   ----------------------------------------------------------------------------------------------------------   --------
                                                                                                                     
   10.5       Securities Purchase Agreement, dated October 11, 2006, by and among Biophan Technologies, Inc. and those       (29)
              Purchasers named therein.
   10.6       Security Agreement, dated as of October 11, 2006, by and among Biophan Technologies,  Inc., the Purchasers     (30)
              named therein and Iroquois Master Fund Ltd., as agent for the Purchasers
   10.7       Forbearance Agreement dated as of February 16, 2007 by and among Biophan Technologies, Inc. and the Note
              Holders named therein.                                                                                         (31)
   10.8       License Agreement between Biophan, Xingwu Wang and  Nanoset, LLC dated January 15, 2004                        (32)
   10.9       Development Agreement between Biophan and Greatbatch Enterprises, Inc. dated February 28, 2001                 (33)
   10.10      License Agreement between Biophan and Johns Hopkins University                                                 (34)
   10.11      AMP-Biophan License Agreement dated February 24, 2005 between Biophan and aMRIs Patent GmbH                    (35)
              (Confidential treatment has been granted with respect to certain
              positions of this Agreement. This Agreement has been filed
              separately with the SEC)
   10.12      License Agreement dated June 30, 2005 between Biophan and Boston Scientific Scimed, Inc.                       (36)
   10.13      Capital Pledge Agreement dated February 24, 2005 among Biophan, TomoVation GmbH, and Prof. Dr. Andreas         (37)
              Melzer
   10.14      Securities Purchase Agreement between Biophan and Myotech, LLC, dated  November 30, 2005                       (38)
   10.15      Letter Agreement, Amendment and Waiver of Certain Conditions to Closing, between Biophan and Myotech, LLC,     (39)
              dated December 21, 2005
   10.16      Amendment No. 2 to Securities Purchase Agreement dated as of November 28, 2006 between Myotech LLC and Biophan (40)
   10.17      Letter Agreement dated August 19, 2002 between Biomed Solutions, LLC and Biophan                               (41)
   10.18      Payment Agreement dated June 3, 2004 between  Biophan and TE Bio LLC                                           (42)
   10.19      Joint Research Agreement between Nanolution, LLC and NaturalNano Inc. dated as of May 25, 2005, together         **
              with Non-Disclosure Agreement
   10.20      Lease Agreement between Biophan and High Technology of Rochester, Inc.                                         (43)
   10.21      Lease between Schoen Place LLC and Biophan Technologies, Inc.                                                  (44)
   10.22      Amendment No. 1 to Lease between Schoen Place LLC and Biophan Technologies, Inc.                               (45)
  10.23***    Executive Employment Agreement between Biophan and  Michael L. Weiner dated December 1, 2000                   (46)
  10.24***    Executive Employment Agreement between Biophan and  Jeffrey L. Helfer dated June 6, 2002                       (47)
  10.25***    Executive Employment Agreement between Biophan and  Stuart G. MacDonald dated June 6, 2002                     (48)
  10.26***    Executive Employment Agreement between Biophan and  John F. Lanzafame effective as of September 9, 2004        (49)
  10.27***    Executive Employment Agreement dated as of November  9, 2005 between Biophan and Darryl L. Canfield,           (50)
              together with Employee Confidential Information,  Invention and Non-Competition Agreement
  10.28***    Executive Employment Agreement dated as of January 1, 2006 between Biophan and Jeffrey L. Helfer               (51)
  10.29***    Employment Agreement dated February 24, 2005 among aMRIs GmbH, Dr. Michael Friebe and Biophan                  (52)
   21.1       Subsidiaries                                                                                                     **
   23.1       Consent of Sichenzia Ross Friedman Ference LLP (See Exhibit 5.1)                                               (53)
   23.2       Consent of Goldstein Golub Kessler LLP                                                                            *
   24.1       Power of Attorney of Michael L. Weiner, Darryl L. Canfield, Geunter H. Jaensch, Steven Katz
              and Theodore A. Greenberg                                                                                        **
   24.2       Power of Attorney of Stan Yakatan                                                                                **



   24.3       Power of Attorney of Bonita L. Labosky                                                                           **





* Filed herewith

** Previously filed

*** May be deemed a compensatory plan or arrangement.




(1)   Incorporated by reference to Exhibit 3.1 to Form 10-KSB for the year ended
      February 29, 2000 (the "2000 10-KSB").


(2)   Incorporated by reference to Exhibit 3.1(i) to Form 8-K filed on December
      15, 2000.

(3)   Incorporated by reference to Exhibit 3.1(i) to Form 8-K filed on August
      27, 2001.

(4)   Incorporated by reference to Exhibit 3.2 to Form 10-SB filed on May 13,
      1999.

(5)   Incorporated by reference to Exhibit 4.21 to Form 10-KSB/A for the year
      ended February 28, 2005 (the "2005 10-KSB").

(6)   Incorporated by reference to Exhibit 4.1 to Form 8-K filed January 9,
      2006.

(7)   Incorporated by reference to Exhibit 10.50 to the 2005 10-KSB.

(8)   Incorporated by reference to Exhibit 4.2 to Form 10-Q for the period ended
      November 30, 2005 (the "Q3'05 10-Q").

(9)   Incorporated by reference to Exhibit 4.22 to the 2005 10-KSB.

(10)  Incorporated by reference to Exhibit 4.3 to the Q3'05 10-Q.

(11)  Incorporated by reference to Exhibit 4.23 to the 2005 10-KSB.

(12)  Incorporated by reference to Exhibit 4.1 to the Q3'05 10-Q.

(13)  Incorporated by reference to Exhibit 4.1 to Form 8-K filed January 25,
      2006 (the "January 25, 2006 8-K").

(14)  Incorporated by reference to Exhibit 10.2 to Form 8-K filed October 13,
      2006 (the "October 13, 2006 8-K").

(15)  Incorporated by reference to Exhibit 4.2 to the January 25, 2006 8-K.

(16)  Incorporated by reference to Exhibit 10.3 to the October 13, 2006 8-K.

(17)  Incorporated by reference to Exhibit 4.3 to the January 25, 2006 8-K.

(18)  Incorporated by reference to Exhibit 10.4 to the October 13, 2006 8-K.

(19)  Incorporated by reference to Exhibit 4.2 to the October 13, 2006 8-K.

(20)  Incorporated by reference to Exhibit 4.3 to the October 13, 2006 8-K.

(21)  Incorporated by reference to Exhibit 4.4 to the October 13, 2006 8-K.


(22)  Incorporated by reference to Exhibit 4.1 to Form 8-K filed February 27,
      2007 (the "february 27,2007 8-K")

(23)  Incorporated by reference to Appendix A to Proxy Statement filed on
      Schedule 14A on June 28, 2005.

(24)  Incorporated by reference to Appendix A to Proxy Statement filed on
      Schedule 14A on June 21, 2006.

(25)  Incorporated by reference to Exhibit 2.4 to the 2005 10-KSB.

(26)  Incorporated by reference to Exhibit 4.10 to the 2005 10-KSB.

(27)  Incorporated by reference to Exhibit 4.20 to the 2005 10-KSB.




(28)  Incorporated by reference to Exhibit 4.5 to Form 10-Q for the period ended
      August 31, 2005.

(29)  Incorporated by reference to Exhibit 4.1 to the October 13, 2006 8-K.

(30)  Incorporated by reference to Exhibit 10.1 to the October 13, 2006 8-K.

(31)  Incorporated by reference to Exhibit 10.1 to the February 27, 2007 8-K.

(32)  Incorporated by reference to Exhibit 10.50 to Registration Statement on
      Form SB-2 (File No. 333-109592) filed on October 9, 2003.

(33)  Incorporated by reference to Exhibit 10.28 to Amendment No. 2 to
      Registration Statement on Form SB-2/A (File No. 333-102526) filed on May
      1, 2003.

(34)  Incorporated by reference to Exhibit 10.23 to Amendment No. 1 to
      Registration Statement on Form SB-2/A (File No. 333-102526) filed on March
      14, 2003.

(35)  Incorporated by reference to Exhibit 10.46 to the amended 2005 10-KSB.

(36)  Incorporated by reference to Exhibit 10.2 to Amended Form 10-Q for the
      period ended August 31, 2005, filed January 9, 2006.

(37)  Incorporated by reference to Exhibit 10.48 to the 2005 10-KSB.

(38)  Incorporated by reference to Exhibit 10.1 to the Q3'05 10-Q.

(39)  Incorporated by reference to Exhibit 10.2 to the Q3'05 10-Q.

(40)  Incorporated by reference to Exhibit 10.1 to Form 8-K filed on December 8,
      2006.

(41)  Incorporated by reference to Exhibit 10.54 to Amendment No. 2 to
      Registration Statement on Form SB-2 (File No. 333-112678) filed on April
      9, 2004.

(42)  Incorporated by reference to Exhibit 99.1 to Form 8-K filed on June 3,
      2004.

(43)  Incorporated by reference to Exhibit 10.19 to Amendment No. 1 to
      Registration Statement on Form SB-2/A (File No. 333-102526) filed on March
      14, 2003.

(44)  Incorporated by reference to Exhibit 10.1 to Form 8-K filed on November 9,
      2006.

(45)  Incorporated by reference to Exhibit 10.2 to the February 27, 2007 8-K.

(46)  Incorporated by reference to Exhibit 10.7 to Form 10-QSB for the period
      ended May 31, 2002 (the "Q1'02 10-QSB").

(47)  Incorporated by reference to Exhibit 10.8 to the Q1'02 10-QSB.

(48)  Incorporated by reference to Exhibit 10.9 to the Q1'02 10-QSB.

(49)  Incorporated by reference to Exhibit 10.49 to the 2005 10-KSB.

(50)  Incorporated by reference to Exhibit 10.1 to Form 8-K filed January 26,
      2006.

(51)  Incorporated by reference to Exhibit 10.2 to Form 8-K filed January 26,
      2006.

(52)  Incorporated by reference to Exhibit 10.47 to the 2005 10-KSB.

(53)  Included in Exhibit 5.1.

EX-3.4

EX-5.1

EXHIBIT 5.1

                       SICHENZIA ROSS FRIEDMAN FERENCE LLP
                             61 Broadway, 32nd Floor
                               New York, NY 10006
                            Telephone: (212) 930-9700
                            Facsimile: (212) 930-9725

                                  May 22, 2007

VIA ELECTRONIC TRANSMISSION

Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549

RE:      Biophan Technologies, Inc.
         Form S-1 Registration Statement

Ladies and Gentlemen:

         We refer to the above-captioned registration statement on Form S-1 (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Act"), filed by Biophan Technologies, Inc., a Nevada corporation (the
"Company"), with the Securities and Exchange Commission.

         We have examined the originals, photocopies, certified copies or other
evidence of such records of the Company, certificates of officers of the Company
and public officials, and other documents as we have deemed relevant and
necessary as a basis for the opinion hereinafter expressed. In such examination,
we have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as certified copies or photocopies and the
authenticity of the originals of such latter documents.

         Based on our examination mentioned above, we are of the opinion that
the securities being sold pursuant to the Registration Statement are duly
authorized and will be, when issued in the manner described in the Registration
Statement, legally and validly issued, fully paid and non-assessable.

         We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to our firm under "Legal Matters" in
the related Prospectus. In giving the foregoing consent, we do not hereby admit
that we are in the category of persons whose consent is required under Section 7
of the Act, or the rules and regulations of the Securities and Exchange
Commission.

/s/ Sichenzia Ross Friedman Ference LLP

EX-23.2

                                                                    EXHIBIT 23.2


            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors
Biophan Technologies, Inc.

We hereby consent to the use in Amendment No. 4 of this Registration Statement
on Form S-1 (No. 333-138632) of our report dated May 4, 2007, relating to the
consolidated financial statements of Biophan Technologies, Inc. and Subsidiaries
as of February 28, 2007 and 2006 and for each of the three years in the period
ended February 28, 2007, which appear in such Registration Statement. We also
consent to the reference to us under the heading "Experts" in such Registration
Statement.



GOLDSTEIN GOLUB KESSLER LLP
New York, New York


May 24, 2007

EX-24.3

                                                                    EXHIBIT 24.3


                                POWER OF ATTORNEY

      The undersigned, Bonita L. Labosky, hereby constitutes and appoints
Michael L. Weiner and Darryl L. Canfield, and each of them severally, as her
true and lawful attorney-in-fact and agent, each acting alone with full power of
substitution and resubstitution, for her in her name, place and stead, in any
and all capacities, to sign any or all amendments (including post-effective
amendments) and exhibits to the Registration Statement of Biophan Technologies
on Form S-1 (No. 333-138632), and to any registration statement filed under
Commission Rule 462, and to file the same, with all exhibits thereto, and all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as they or either
of them might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.


                                                         /s/ Bonita L. Labosky
                                                         -----------------------
                                                         Bonita L. Labosky
March 26, 2007