<PAGE>


================================================================================

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

                                   FORM 10-QSB

/x/  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 for the quarterly period ended September 30, 1999

                         Commission File Number 0-23553

                           PHOTOGEN TECHNOLOGIES, INC.
             (Exact name of registrant as specified in its charter)

               NEVADA                                      36-4010347
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
 incorporation or organization)

                         7327 OAK RIDGE HIGHWAY, SUITE B
                               KNOXVILLE, TN 37931
               (Address of principal executive offices)(Zip Code)

                                 (423) 769-4012
               (Registrant's telephone number including area code)

     Check whether the issuer (1) has filed all reports required to be filed by
section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the Registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days:

               YES:  /x/        NO:  / /

     State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 37,378,886 SHARES OF COMMON
STOCK, $.001 PAR VALUE PER SHARE, ISSUED AND OUTSTANDING AS OF NOVEMBER 10, 1999
AND 12,015 SHARES OF SERIES A CONVERTIBLE EXCHANGEABLE PREFERRED STOCK, $.01 PAR
VALUE PER SHARE, WERE ISSUED AND OUTSTANDING AS OF THAT DATE.

     Transitional Small Business Disclosure Format:

               YES: / /          NO:  /x/

================================================================================


<PAGE>



                                      INDEX

<TABLE>
<CAPTION>

                                                                                                  PAGE
<S>      <C>       <C>                                                                            <C>
PART I  -  FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         1

         ITEM 1.   FINANCIAL STATEMENTS (UNAUDITED)  . . . . . . . . . . . . . . . . . . .         1

         ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                       FINANCIAL CONDITION OR PLAN OF OPERATION . . . . . . . . . . . . . .        6

PART II - OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       14

         ITEM 5.   OTHER INFORMATION  . . . . . . . . . . . . . . . . . . . . . . . . . . .       14

         ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . . . . .       21


</TABLE>



                                        i

<PAGE>

                          PART I. FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

                           PHOTOGEN TECHNOLOGIES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                                All amounts in $

<TABLE>
<CAPTION>

                                                                          September 30, 1999     December 31, 1998
                                                                              (UNAUDITED)            (AUDITED)
                                                                          ------------------     -----------------
<S>                                                                            <C>                   <C>
                                     ASSETS
CURRENT ASSETS
         Cash and cash equivalents                                             $   817,063           $   652,226
         Interest receivable                                                        42,938               121,471
         Prepaid expenses                                                          741,287               435,395
                                                                               -----------           -----------
                  TOTAL CURRENT ASSETS                                          $1,601,288            $1,209,092

UNITED STATES TREASURY NOTES, TOTAL
         FACE VALUE $2,210,000 and $5,660,000                                   $2,213,768            $5,682,105

EQUIPMENT AND LEASEHOLD IMPROVEMENTS                                             1,219,579             1,169,388

Intangible Assets                                                                  400,000                     -

                                                                               -----------           -----------
              TOTAL ASSETS                                                      $5,434,635            $8,060,585
                                                                               -----------           -----------
                                                                               -----------           -----------

                                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
         Accounts Payable                                                       $1,038,242      $        804,248
         Current portion of obligations under
               capital leases                                                       43,883               111,769
                                                                                                     -----------

              TOTAL CURRENT LIABILITIES                                          1,082,125              916,017
                                                                               -----------           -----------

OBLIGATION UNDER CAPITAL LEASES                                                         -     $          35,990
                                                                               -----------           -----------
                                                                               -----------           -----------

SHAREHOLDERS' EQUITY
         Preferred stock; par value
         $.01 per share; 5,000,000
         shares authorized; none issued                                                   -             -

         Common stock; par value $.001
         per share; 150,000,000 shares
         authorized; 36,917,348 shares issued and
         outstanding                                                               36,917                36,875


         Additional paid-in capital                                            10,307,833             9,602,097

         Deficit accumulated during
         development stage after
         recapitalization                                                      (5,999,240)           (2,530,394)
                                                                               -----------           -----------

              TOTAL SHAREHOLDERS' EQUITY                                        4,352,510             7,108,578
                                                                               -----------           -----------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                     $5,434,635           $ 8,060,585
                                                                               -----------           -----------
                                                                               -----------           -----------

</TABLE>

                                        1

<PAGE>



                           PHOTOGEN TECHNOLOGIES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                                All amounts in $

<TABLE>
<CAPTION>

                                              Three            Three           Nine              Nine
                                              Months          Months          Months            Months             Cumulative
                                              ended            ended           Ended             Ended              Amounts
                                            September        September       September       September 30,            From
                                             30, 1999        30, 1998        30, 1999            1998           November 3, 1996
                                           (Unaudited)      (Unaudited)     (Unaudited)       (Unaudited)         (Unaudited)
<S>                                          <C>               <C>           <C>                <C>                 <C>
REVENUES

      Investment Income                      $     37,743      $  126,297    $   157,050        $    276,479        $    656,782

EXPENSES
      General and administrative                1,647,541         703,612      3,618,896           1,604,436           6,649,022
                                                ---------         -------      ---------           ---------        ------------

                  NET LOSS                   ($1,609,708)      ($577,315)    ($3,461,846)        ($1,327,157)        ($5,992,240)
                                             ============      ==========    ===========         ===========         ===========

BASIC AND DILUTED NET
      LOSS PER COMMON SHARE                         (.04)           (.02)           (.09)              (.04)
                                                    =====           =====           ====               =====

WEIGHTED AVERAGE
      NUMBER OF COMMON
      SHARES OUTSTANDING                       36,982,075      36,875,020      36,877,346         36,756,430
                                               ==========      ==========      ==========         ==========

</TABLE>





                                        2

<PAGE>



                           PHOTOGEN TECHNOLOGIES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
                                   (UNAUDITED)
                                All amounts in $


<TABLE>
<CAPTION>

                                                       Nine Months Ended      Nine Months Ended        Cumulative
                                                       September 30, 1999    September 30, 1998       Amounts From
                                                          (Unaudited)            (Unaudited)        November 3, 1996
                                                                                                       (Unaudited)
<S>                                                       <C>                    <C>                   <C>
OPERATING ACTIVITIES
      Net income (loss)                                   ($3,461,846)           ($1,327,957)          ($5,992,240)
      Depreciation                                            154,684                 57,369               320,961
      United States Treasury Notes
              Amortization                                     24,642                      -                56,271
      Loss on Securities                                            -                  9,238               (20,499)
         Stock Option Compensation                            405,778                      -               451,224
Changes in operating assets and liabilities:
      Prepaid expense                                        (305,892)               (91,961)             (372,642)
      Interest receivable                                      78,533                 21,402              (411,583)
      Accounts payable                                        233,994                (85,586)            1,038,242
                                                         ------------           ------------           -----------

      NET CASH PROVIDED (USED) BY
      OPERATING ACTIVITIES                                ($2,870,107)           ($1,417,495)          ($4,930,266)
                                                         ------------           ------------           -----------

INVESTING ACTIVITIES
      Sale of marketable securities                                 -                400,000             2,164,464
      Purchase of marketable securities                             -                      -            (2,182,967)
      Purchase of United States Treasury Notes             (1,058,353)            (7,795,816)          (17,619,983)
      Sale of United States Treasury Notes                  4,502,048              2,567,249            16,485,596
      Purchase of capital assets                             (204,875)              (290,766)           (1,211,501)
      Patent cost                                             100,000               ( 86,398)             (137,335)
                                                         ------------           ------------           -----------

                  NET CASH PROVIDED (USED)
                  BY INVESTING ACTIVITIES                  $3,138,820            ($5,205,681)          ($2,301,726)
                                                         ------------           ------------           -----------
FINANCING ACTIVITIES
      Proceeds from issuance of common stock                        -              7,000,000            $6,956,313
      Proceeds from capital contributions by
         stockholders                                               -                      -             1,911,674
      Cost of recapitalization                                      -                      -              (371,111)
      Principal payments on capital lease
         obligations                                         (103,876)               (15,877)             (247,821)
                                                         ------------           ------------           -----------

      NET CASH PROVIDED (USED) BY
      FINANCING ACTIVITIES                                  ($103,876)          $  6,984,123           $ 8,249,055
                                                         ------------           ------------           -----------
NET INCREASE (DECREASE) IN CASH
   AND CASH EQUIVALENTS                                      $164,837                360,947               817,063

CASH AND CASH EQUIVALENTS AT
   BEGINNING OF PERIOD                                        652,226                 82,631                     -
                                                         ------------           ------------           -----------

CASH AND CASH
   EQUIVALENTS AT END OF PERIOD                              $817,063           $    443,578           $   817,063
                                                         ------------           ------------           -----------
                                                         ------------           ------------           -----------

</TABLE>


                                        3

<PAGE>



                           PHOTOGEN TECHNOLOGIES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
            CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
                                   (UNAUDITED)
                        All amounts (except shares) in $

<TABLE>
<CAPTION>
                                                                                                     Deficit
                                                                                                   Accumulated
                                            Common Stock                            Additional     During The
                                            ------------               Members       Paid-In       Development
                                      Shares        Amount             Capital       Capital           Stage             Total
                                      ------        ------             -------       -------       -----------           -----


<S>                                <C>            <C>              <C>              <C>               <C>              <C>
CONTRIBUTION OF CAPITAL                                            $     7,268                                         $     7,268

NET LOSS FOR THE PERIOD                     --             --           (1,779)             --                --            (1,779)
                                   -----------    -----------       -----------     -----------       -----------       ----------

BALANCE AT
   DECEMBER 31, 1996                        --             --            5,489              --                --             5,489

NET LOSS AND CAPITAL
   CONTRIBUTIONS FOR THE
   PERIOD JANUARY 1, 1997
   TO MAY 15, 1997                          --             --            3,511              --            (3,511)               --
                                   -----------    -----------       -----------     -----------       -----------       ----------

BALANCE AT MAY 15, 1997            $              $        --      $     9,000     $        --       ($    3,511)      $     5,489
ISSUANCE OF STOCK FOR  CASH          6,312,833          6,313               --       1,797,137                --         1,803,450

EFFECT OF
   RECAPITALIZATION
   AND MERGER                       29,687,167         29,687          ( 9,000)      1,181,500             1,732         1,203,919

COST ASSOCIATED WITH
   RECAPITALIZATION
   AND MERGER                               --             --               --        (371,111)               --          (371,111)

NET LOSS FOR THE
   PERIOD MAY 16, 1997
   TO DECEMBER 31, 1997                     --             --               --              --       ($  554,702)         (554,702)
                                   -----------    -----------       -----------     -----------       -----------       ----------

BALANCE AT
   DECEMBER 31, 1997                36,000,000         36,000               --       2,607,526          (556,481)        2,087,045


ISSUANCE OF COMMON STOCK
                                       875,020            875               --       6,999,125                --         7,000,000
COST ASSOCIATED WITH
COMMON STOCK ISSUANCE
                                            --             --               --         (50,000)               --           (50,000)
OPTIONS ISSUED TO
CONSULTANTS
                                            --             --               --          45,446                --            45,446
NET LOSS FOR THE YEAR ENDED
DECEMBER 31, 1998
                                            --             --               --              --        (1,973,913)       (1,973,913)
                                   -----------    -----------       -----------     -----------       -----------       ----------
BALANCE AT DECEMBER 31, 1998

OPTIONS ISSUED TO                   36,875,020         36,875               --       9,602,097        (2,530,394)        7,108,578
CONSULTANTS

 STOCK ISSUED FOR PATENT                    --             --               --          96,111                --            96,111

 WARRANTS ISSUED TO A
   CONSULTANT                               --             --               --         309,667                --           309,667

 NET LOSS FOR NINE                      42,328             42               --         299,958                --           300,000
   MONTHS ENDED
   SEPTEMBER 30, 1999                       --             --               --              --        (3,461,846)       (3,461,846)
                                   -----------    -----------       -----------     -----------       -----------       ----------

BALANCE AT
   SEPTEMBER 30, 1999               36,917,348    $    36,917      $        --     $10,307,833       ($5,992,240)      $ 4,352,510
                                   ===========    ===========       ===========    ===========       ===========       ===========

</TABLE>



                                        4

<PAGE>




                           PHOTOGEN TECHNOLOGIES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)

                               September 30, 1999

1.   BASIS OF PRESENTATION

      The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information pursuant to Regulation S-B. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
nine months ended September 30, 1999 are not necessarily indicative of the
results that may be expected for the year ended December 31, 1999.




                                        5

<PAGE>



ITEM 2.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION OR PLAN OF OPERATION

UNCERTAINTIES RELATING TO PHOTOGEN

         Photogen Technologies, Inc. and its wholly-owned subsidiary Photogen,
Inc. are collectively referred to as "Photogen," the "Company," "we," or "us."
Portions of the discussion in this Item 2 contain forward-looking statements and
are subject to the Risk Factors described in Item 5, below.

         We are a development-stage company focused on creating minimally
invasive diagnostic and therapeutic procedures based on our proprietary
excitation and other related photodynamic technologies. We have discovered new
methods for using electromagnetic energy, generated from lasers or x-rays, to
activate photoactive agents within tissue sufficient to produce a range of
beneficial therapeutic and diagnostic outcomes. These technologies involve
methods, materials and devices that may be used to produce electromagnetic
energy and photoactive agents that may destroy diseased cells, remove tissue or
identify and diagnose disease. Much of our proprietary technology is covered
under existing U.S. patents or pending applications in the U.S. and worldwide.
We have no products or operating revenues at this time.

RESULTS OF OPERATIONS

         We have not completed development of any product or process at this
time. We have not generated revenues from the sale of any proposed products or
other operations, and we continue to experience losses. Our net loss for the
nine month period ended September 30, 1999 was $3,461,846, compared to a loss of
$1,327,957 for the nine month period ended September 30, 1998. Our net loss for
the three month period ended September 30, 1999 was $1,609,708, compared to a
loss of $577,135 for the three month period ended September 30, 1998. The
increase in losses is attributable primarily to expenses related to conducting
studies pursuant to preclinical research agreements and other research,
initiating supply arrangements, and other general and administrative costs.

         We expect to continue to incur increasing losses for at least the next
several years as we intensify research and development, clinical testing,
regulatory approval activities and engage in the manufacture and/or sale of any
products that we may develop. In particular, we are presently a party to four
research contracts with various third parties that will require an expenditure
of a total of $658,101 over the remaining terms of those contracts for the
protocols currently under investigation. See "Plan of Operation," below.

         Our revenue for the nine month period ended September 30, 1999 was
$157,050, compared to $276,479 of revenue for the nine month period ended
September 30, 1998. Our revenue for the three month period ended September
30, 1999 was $37,743, compared to $126,297 of revenue during the three months
ended September 30, 1998. The revenue resulted primarily from our investment
income on the proceeds from the sale of common stock in our 1998 private
placement. The proceeds of the sales of our common stock are invested
primarily in United States Government obligations. Because we have no
revenues from operations at this time, investment of such funds in that
manner is necessary to avoid becoming subject to the Investment Company Act
of 1940.

                                        6

<PAGE>



PATENT MATTERS

         We are continuing to pursue patent protection for our proprietary
technologies with the U.S. Patent and Trademark Office, and in various foreign
jurisdictions. We have filed patent applications covering inventions in the
following areas:

            -        Radiocontrast (x-ray contrast) agents and methods for
                     treating tissue using those agents
            -        Radiosensitizer, agents and methods for treating tissue
                     using a radiosensitizer
            -        Multiphoton activation technology
            -        Methods and apparatus for imaging and treating tissue using
                     photodynamic therapies
            -        Additional photodynamic therapy methods and apparatus for
                     topical treatment of disease
            -        Methods and apparatus for treatment of tissue containing an
                     endogenous pigment (for example, melanoma destruction)

         Currently, we have been awarded two U.S. patents and received Notice of
Allowance on a third U.S. patent. We have another thirteen U.S. patent
applications pending in various stages at the U.S. Patent and Trademark Office.
We acquired certain patented technology that describes methods for using certain
particulate contrast materials used in lymphography, and we have sub-licensed
another group of nanoparticulate contrast materials. Together, these
lymphography compounds involve four patents in the U.S. and certain foreign
jurisdictions and two patent applications. See "Subsequent Developments -- New
Patent and License Acquisition," in Item 5, below.

RESEARCH AND DEVELOPMENT PROJECTS

         We continue to pursue development of proprietary technologies as a
result of our research in chemistry, photochemistry, and biochemistry. Our
technologies embrace a broad definition of photodynamic therapy processes,
predominantly from the standpoint of the use of a wide spectrum of light
sources. Our technological applications are based on using ultrafast-pulsed,
near infrared light generated by ultrafast-pulsed lasers (using our proprietary
simultaneous two photon excitation and multi-photon excitation processes),
visible green light, x-rays (high energy photons), and other means. We have
been concentrating our research in the following applications: oncology,
lymphography, dermatology, ophthalmology, imaging and related fields. We will be
evaluating the data obtained from these research projects with a view to
designing future human clinical trials in one or more of these applications. We
are currently working on the following research and development projects:

         1. PROSTATE, LUNG AND BREAST CANCER. In October 1998, we executed an
agreement with Massachusetts General Hospital for work that was carried out at
its Center for Imaging and Pharmaceutical Research ("CIPR") which initially
involved preclinical research on the treatment of prostate and lung cancer using
our simultaneous two-photon excitation technology. Subject to the terms of the
agreement, Massachusetts General Hospital has the right to patent any new
inventions


                                        7

<PAGE>



arising out of that research agreement and we have the right to obtain an
exclusive license concerning any such invention. Gerald L. Wolf, Ph.D., M.D.,
was the Principal Investigator.

         The CIPR research agreement was terminated in August 1999 when Dr. Wolf
joined our staff as Medical Director. As part of his employment, we granted Dr.
Wolf options to acquire 750,000 shares of common stock, 150,000 shares of which
vest over time and the balance of which vest when we achieve certain milestones
of progress toward product development, such as FDA approvals.

         Dr. Wolf moved his laboratory to a Photogen sponsored facility
located at Tufts University School of Veterinary Medicine (while maintaining
an affiliation as an Professor Emeritus at Harvard Medical School) to
complete animal preclinical work on breast cancer as well as prostate and
lung cancer. His work is currently focused on preclinical research involving
radiosensitizer PH-10. Our research agreement with Tufts University has a
term through 2004 (subject to earlier termination in accordance with the
agreement), and David Ruslander, DVM, DACVIM, is the co-Principal
Investigator. Tufts will own the patent rights to any invention it or its
personnel conceives, and we have the right to an exclusive royalty bearing
license to the patented invention.

         We recently demonstrated that a new class of photodynamic therapy
agents may potentially be successful radiosensitizers. A drug we call PH-10,
injected directly into a tumor grown on the side of a laboratory mouse, was
retained in the tumor for many days with small amounts of leakage and
produced enough x-ray contrast to clearly identify the tumor images on a
conventional CT scan. Dr. Wolf announced research findings in September 1999
from our work in photodynamic therapy and Dr. Wolf's interest and research
into non-invasive treatment of cancer in which we previously discovered
PH-10's ability to bond with tumor tissue and asborb x-rays. Our findings
confirmed PH-10's ability to provide enough contrast to show tumor margins
during a CT scan and maintain visibility in a tumor for several days. Our
results showed a 90% "kill" rate of cancerous tumor cells in laboratory mice
within 48 hours of treatment. This treatment consisted of a combination of
low-voltage x-ray radiation and PH-10 that was injected directly into the
tumor cells. These observations suggest a new approach to radiation therapy
which we believe could enable wider use of x-rays to treat tumors anywhere in
the body while improving the overall safety of radiation therapy. We have
applied for U.S. patents covering the use of the PH-10 compound to diagnosis
and treat disease in combination with x-rays and other electromagnetic energy.

         Our work with Dr. Wolf and Tufts will also cover lymphography using
contrast agents and CT imaging. Lymphography is a procedure following the
diagnosis of cancer that is used to determine if a patient's cancer has spread
to the lymph nodes. The presence or absence of cancer in the sentinel lymph
node, the first lymph node to receive lymphatic drainage from a tumor, is an
indication of the seriousness of the disease and the ability to cure it. Under
current treatment, a malignant node or a node that is suspected of containing
cancerous cells must be surgically removed. We are providing Tufts with a new
$1.2 million Picker scanner with sophisticated imaging capabilities for the
lymphography work. Our joint venture with Elan (see "Subsequent Developments --
Elan Joint Venture" at Item 5, below) will be devoted to lymphography work.

         2. OCULAR MELANOMA. In December 1998, we executed a research agreement
with Massachusetts Eye and Ear Infirmary ("MEEI"), a teaching affiliate of
Harvard Medical School. This agreement covers preclinical research to evaluate
our technology for the treatment of ocular


                                        8

<PAGE>



melanoma. Lucy H. Young, Ph.D., M.D., is the Principal Investigator. Subject to
the terms of the agreement, MEEI has the right to patent any new inventions
arising out of this agreement, and we have the right to obtain an exclusive
license concerning any invention. While ocular melanoma is a relatively rare
disease (about 2,000 cases per year in the United States), it is the most
prominent primary cancer of the eye in adults and there are few treatments for
this condition. This research agreement will evaluate our technology as a basis
for an alternative treatment that we believe could offer advantages over current
radiotherapy or surgical treatment options. This treatment approach continues to
show effective results for small tumors in our research study. This agreement
provides that research extensions may be undertaken by MEEI by agreement with
us, and the agreement was amended June 8, 1999 to extend the term to end in
November 1999.

         3. CUTANEOUS MELANOMA. In our laboratory, we performed research
assessing the use of ultra-short pulsed light to directly activate melanin and
its precursors to kill melanoma cells. We announced preliminary results of that
research in September 1998. Tumors produced in mice were treated by scanning the
affected area with light from an ultra-short pulsed laser. Tumors ranging in
size from 6 to 10 millimeters (mm) in diameter and up to 3 mm deep, when treated
with ultra-short pulsed laser light using simultaneous two photon excitation,
produced a visible "blanching" effect, resulting from the interaction between
melanin and the light. After treatment, tumor volume was reduced by 100 percent
with little or no scarring. Further research on this indication is being
deferred pending the completion and results of our ocular melanoma preclinical
research.

         4. TREATMENT SYSTEMS. We have been working with a laser manufacturer
to design ultra-short pulsed laser systems for photodynamic treatment of
melanoma and age-related macular degeneration. Two prototype systems have
been assembled that include a beam scanning and focusing device. In addition,
we have developed laser control software. Our scientists are working on a
third prototype system to be used for surface treatments such as hair
removal. During the third quarter we delivered a system to a research
facility and we are currently investigating certain design and manufacturing
companies to complete assembly of our systems.

         5. BARRETTS ESOPHAGUS. Barretts esophagus is a precancerous condition
of the esophagus created by chronic acid reflux. The esophagus is the
thin-walled tube that conveys food to the stomach. Because of its thin walls and
multiple tissue structures, successful photodynamic therapy must avoid
penetrating the esophagus and damaging deeper tissue layers. Problems with
conventional photodynamic therapy have included burning of the esophageal wall
caused by the laser light, and deep tissue damage creating post treatment
strictures. In our laboratory, we demonstrated selective targeting of a drug
topically applied in murine esophageal tissue. The potential benefits of this
approach in humans may be reduced treatment cost and improved safety and
efficacy. We began preclinical trials in July, 1999 in canines for treatment of
Barretts esophagus through our research agreement with the University of
Tennessee School of Veterinary Medicine. We have completed 13 treatments, the
results of which were consistent with our belief that our selective targeting
approach would lead to improved safety.

         6. DRUG DEVELOPMENT. In November 1999, we announced that we had entered
into an agreement with Akorn Inc., a diagnostic and therapeutic pharmaceutical
manufacturer in which Akorn agreed to develop certain formulations of the
photoactive compound PH-10 for our use in oncology and dermatology treatments.
Akorn will also provide us with necessary background


                                        9

<PAGE>



information for meeting regulatory requirements for Food and Drug Administration
(FDA) approval of PH-10. Akorn will develop and document raw materials,
production and testing procedures and specifications, necessary for us to use in
our new drug applications (NDAs).

         7. PSORIASIS. Psoriasis is an inflammatory dermatologic condition
characterized by red scaling plaques on the skin. It is estimated that
approximately 1.5 to 2% of the U.S. population is affected by this disease,
which contributes to approximately 10 to 15% of all visits to dermatologists
and approximately $1.6 billion per year in treatment costs in the U.S.
Treatment options for psoriasis include topical agents applied to the plaques
as well as various systemic treatments, including oral steroids, antibiotics,
and vitamin D3 analogs. These treatments typically work adequately for
control of minor inflammation. However, the most severe 10-20% of cases
typically require photodynamic therapy using psoralen (a photodynamic drug)
and UV-A light (PUVA). While effective, PUVA therapy may exhibit significant
side effects, including induction of skin cancer. We believe that our
photodynamic treatment, based on a relatively benign topical photosensitizer
and green light illumination, may provide a safer, more effective alternative
to PUVA treatment. Pilot studies undertaken in our laboratories appear to
show broad applicability of such treatments to various skin disorders,
including acute psoriasis. We intend to conduct pilot studies of safety and
efficacy of psoriasis treatment on human patients exhibiting stable plaques
beginning in the first quarter of 2000.

         8. WOUND HEALING/LEG ULCER STUDY. Diabetics and the elderly suffer from
wounds of the lower extremities that are slow to heal. This application of our
technology offers an opportunity for Photogen and our topical drug and
activation system. We intend to assess the feasibility of this proposed
treatment in parallel with our psoriasis work.

         9. HAIR REMOVAL STUDY. In our laboratory, we are investigating the use
of ultra-short pulsed laser light to remove hair. Photogen's photochemical
approach may be the only laser procedure we know of that is useful in removing
certain kinds of hair. Based on results we obtained, we are working toward a
research contract to perform human pilot studies and develop data for our FDA
submission in this indication.

         10. MACULAR DEGENERATION OF THE EYE. In October 1998, we executed a
research agreement with MEEI. Joan W. Miller, M.D. was the Principal
Investigator. This agreement had a term ending in June 1999 but was extended
through December, 1999 and covers preclinical research that evaluates the
technology for treatments of age-related macular degeneration ("AMD") of the
eye. Subject to the terms of the agreement, MEEI has the right to patent any new
inventions arising out of the agreement, and we have the right to obtain an
exclusive license concerning any such invention. We are continuing to evaluate a
number of photodynamic drugs activated with our prototype ultra fast pulsed
laser system in the belief that our proprietary activation system may improve
the overall efficacy of treatment for AMD. At the same time, three competitors
with similar procedures have announced progress in this area, and one competitor
has filed for FDA approval. This level of competition will significantly reduce
the market opportunity for a photodynamic drug and activation device to treat
AMD. We intend to complete our pre-clinical work in this area and then reassess
our interest in AMD treatment.

         11. DIAGNOSTIC EXPERIMENTS. In our laboratory, we are experimenting
with the diagnostic capabilities of simultaneous two-photon excitation. We
conducted initial experiments


                                       10

<PAGE>



on a chicken breast (used to simulate tissue). We demonstrated the capability to
retrieve signals through 5 mm of chicken breast using the common dye
fluorescein. We are attempting to improve the signal-to-noise ratio, through the
use of our proprietary modulation technologies. If successful, this improvement
could result in faster imaging, better resolution and increased depth at which
diagnosis could be conducted. Using our modulation technique, improved images
have been obtained in a model system.

         We cannot guarantee that our research will lead to the development of
new patentable technology, or that commercial products will be developed from
our technologies and successfully sold. We plan to continue to pursue
preclinical and clinical testing of proposed products in the areas of chemistry,
photochemistry and biochemistry. However, we cannot assure investors that we
will receive any grant monies, will be able to successfully develop and obtain
proprietary protection for new technologies, or that we can develop products
from these technologies that can be commercialized. Other than our joint venture
with Elan, we have not entered into any collaborative agreements for the
development of any specific product and we do not expect to do so until further
research and clinical trials are concluded.

OPERATIONAL MATTERS

         We are occupying approximately 4,000 square feet of office and
laboratory space in Knoxville, Tennessee. We negotiated a new lease agreement
beginning July 1999, with a term expiring May 2001, for this space at a monthly
rental of $2,700 for the facility (including certain equipment) plus charges for
utilities and similar items. We have two options to extend the lease agreement
for additional terms of one year each. We recently, through our subsidiary
Photogen, Inc., entered into a five year lease agreement for approximately 3,127
square feet of office space located in Massachusetts to be used for Photogen's
clinical trials group for an initial rental of $4,300 per month.

         We have received, installed and started-up three ultra-short pulsed
laser systems required for conduct of animal studies for use in the photodynamic
treatment of melanoma and age-related macular degeneration. We also took
delivery of another laser system for use in hair removal. We have completed
development of a software package for use in the control and operation of these
laser systems.

         During the third quarter, we retained a consultant and granted that
person five year warrants to acquire 1,000,000 shares of our Common Stock at an
exercise price of $9.45 per share. Half the warrants vested immediately and the
other half will vest on the consummation of certain transactions or in August
2000 (provided the consulting arrangement has not been terminated then). The
warrants carry registration rights for the underlying shares of Common Stock. We
also granted registration rights in connection with Common Stock we issued to
Alliance as part of our technology acquisition described below in Item 5.

LIQUIDITY; CAPITAL RESOURCES

         We have used, and expect over the next 12 months to use, the gross
proceeds from our fourth quarter sale of common stock to Elan and the gross
proceeds remaining from the March 13, 1998 private placement for corporate
overhead and operating expenses, animal trials, the purchase


                                       11

<PAGE>



or lease of scientific and laboratory equipment and related facilities, legal
and regulatory consulting fees and for other working capital purposes, assuming
we have no revenues during that period. Our use of cash and capital resources
for the first nine months of the 1999 fiscal year averaged about $390,000 per
month. We expect our use of capital to increase as we move toward initiating
clinical trials.

         We plan to raise additional capital in the fourth quarter of 1999 by
making a private placement of our Series B preferred stock to certain
accredited investors, and we have received a binding commitment from one of
our principal shareholders, Ted Tannebaum, to provide up to $4 million in
additional equity financing. Mr. Tannebaum will also make a $1,000,000 credit
facility available to us. If we utilize this credit facility, borrowings will
bear interest at 6% per year and interest only will be paid annually, with
the principal due in five years. The loan would be secured by a lien on all
of our assets.

PLAN OF OPERATION

         During the next twelve months, we will focus our efforts on
completing preclinical studies, beginning human trials, preparing for the
design and assembly of laser treatment devices, hiring new employees to work
in our new facilities in Massachusetts, preparing to manufacture clinical
quantities of our drug agent, preparation of required filings to FDA and
foreign regulatory bodies. We will also continue with evaluation of
proprietary photoactive agent candidates, pursuing patent protection and
seeking potential research and development and collaboration candidates.

          During the nine months ended September 30, 1999, we spent
approximately $642,370 to acquire equipment necessary to support animal
clinical trials, and on development of photoactive agents and targeting
systems. During the third quarter of 1999, we purchased approximately
$178,000 of laboratory equipment. We anticipate increased spending during the
fourth quarter for clinical equipment and clinical work provided by
third-party researchers. During the next twelve months we expect to spend
approximately $925,000 to obtain new equipment. The research contracts to
which we are currently a party in the aggregate will require us to spend
$628,101 during the next twelve months for the projects presently
contemplated under those agreements. Additional projects may be undertaken
with those institutions for compensation to be agreed upon at that time.

         We presently anticipate adding five additional personnel to work in our
Massachusetts office on clinical trial design, FDA and regulatory compliance,
business development, operations and similar activities to support our current
and future projects. We will consider faster growth if that would present
opportunities to increase our product pipeline, or opportunities for more rapid
FDA approval or to attain licensing revenues. We intend to structure our
research and development and collaborative arrangements to make the fullest
possible use of personnel and facilities provided by the parties with whom we
may contract.

         With the funds we will receive through our fourth quarter, 1999
financing, we believe we will have enough cash resources for our current
commitments during the next 12 months. However, as we progress toward human
clinical trials, our use of capital will increase and will continue to do so at
an accelerating pace. Greater capital resources would enable us to quicken and
expand our research and development activities over that 12-month period; and
our failure to raise


                                       12

<PAGE>



additional capital will (absent a suitable collaborative agreement providing for
a third party to take over these functions) significantly impair our ability to
conduct further research and development activities beyond those currently
contracted for and our ability to seek regulatory approval for any possible
product resulting from that research. In any event, complete development and
commercialization of our technology will require substantial additional funds.
Accordingly, we are continuously evaluating capital formation activities and
opportunities, either as part of collaborative arrangements with third parties
or through offerings of equity or debt unrelated to collaborations. See "Risk
Factors" in Item 5, below.

YEAR 2000 ISSUES

         The "Year 2000 issue" is the problem resulting from the use of a
two-digit date to identify the year in computer software. Consequently, computer
programs may not accurately reflect the appropriate date, confusing "00" as the
year 1900 rather than the year 2000. Year 2000 is a pervasive problem affecting
many information technology systems and embedded technologies (operating and
control systems that rely on embedded chip systems such as microprocessors in
communication systems) in all companies and in all industries.

         We have completed assessment of the impact of Year 2000 on our
operations and important systems. We also inquired about the Year 2000 readiness
of our material vendors, research institutions under contract with us, and other
material third parties on which we rely.

         With respect to our information technology systems, we believe that
with upgrades to our existing computer software, all of which should be readily
available in the market, the Year 2000 issue will not have a material adverse
affect on our financial position or results of operations. We expect to have
these upgrades completed by the end of 1999 and do not expect the cost of the
upgrades to be material (less than $5,000). With respect to embedded
technologies, we believe they are either Year 2000 compliant or will not be
materially effected by the Year 2000 problem because they do not significantly
rely upon date sensitive software.

         To date, we do not believe most third parties' Year 2000 issues will
have a material adverse impact on our operations. We believe that a "worst case"
scenario would result where the systems of third parties are not timely
converted and a third party fails to remediate its own Year 2000 issues. In a
worst case scenario, we could incur an adverse affect due to interruption of
third party systems. However, we currently believe that any adverse effect would
involve primarily disruption to sponsored research operations which we believe
could be transferred to alternative third parties who were Year 2000 compliant.
Any such transfer could result in a delay of research operations. At present we
cannot estimate the likelihood or potential cost of such third party failures.


                                       13

<PAGE>



                           PART II - OTHER INFORMATION

ITEM 5.           OTHER INFORMATION

                             SUBSEQUENT DEVELOPMENTS

         ELAN JOINT VENTURE. Shortly after the third quarter ended, we
established a joint venture with affiliates of Elan Corporation, plc ("Elan"),
an international drug delivery and biopharmaceutical health care company. This
joint venture greatly expands our lymphography research. We formed the joint
venture with Elan to develop and commercialize nanoparticulate diagnostic
imaging agents for the detection and treatment of cancer that has spread to
patients' lymph nodes. Our goal with this joint venture is to develop a
treatment that would reduce the number of lymph node surgeries by precisely
locating the nodes where cancer has spread and at the same time, if necessary,
treating the affected lymph nodes in one all-inclusive non-invasive procedure.
This approach uses a high resolution image of the lymph nodes surrounding a
primary tumor to be generated for mapping and potential diagnosis and treatment.
Potential benefits include a non-invasive procedure and use as a tool to monitor
progression of the disease.

         We and Elan each contributed intellectual property and know-how to
further the goals of the venture. Our contribution includes knowledge relating
to lymphography accessed through our recent technology acquisition and licensing
agreements. Elan, through its drug delivery division Elan Pharmaceutical
Technologies, is contributing its NanoCrystal(TM) stabilized nanoparticulate
formulation technology to develop the diagnostic imaging agents. Phase II human
trials with the venture's lead candidate are expected to begin in 2000.

         Elan International Services, Ltd. ("EIS") will provide us with a
credit facility to fund our share of the development costs of the joint
venture. Borrowings under this $4.8 million line of credit may be converted
by EIS into our Common Stock at a ratio of $18.15 per share. In addition, EIS
purchased $6 million of our Common Stock and a five year warrant to purchase
an additional 100,000 shares of Common Stock at an exercise price of $21.17
per share. We granted EIS certain registration rights for the Common Stock it
owns or may acquire on exercise or conversion of those instruments and the
Series A preferred stock, described below.

         As part of the joint venture, EIS also purchased 12,015 shares of
our newly issued Series A preferred stock at $1,000 per share. We used the
$12,015,000 proceeds from the sale of our Series A Preferred to purchase 80.1%
of the equity of Photogen Newco Ltd. (EIS currently owns the other 19.9% of
Photogen Newco Ltd.). Photogen Newco Ltd. used the entire $15 million of
proceeds received to pay EIS a license fee of $15 million to use intellectual
property licensed by Elan Pharma International Limited to Photogen Newco Ltd.

         Under the Amended and Restated Certificate of Designations, Preferences
and Rights of Series A Convertible Exchangeable Preferred Stock, EIS, as holder
of Series A Preferred, has a liquidation preference entitling it to the first
$12,015,000 of funds available for distribution to stockholders upon
liquidation. The holder of Series A Preferred has the right to convert shares of
Series A Preferred into Common Stock at any time after October 20, 2001 at a
conversion price of $21.17 per share of Common Stock. Alternatively, the holder
of Series A Preferred may exchange shares of Series A Preferred for common
shares of Photogen Newco Ltd. so that EIS owns 50% of


                                       14

<PAGE>



the equity of Photogen Newco Ltd. Each share of Series A Preferred will be
paid a mandatory payment-in-kind dividend equal to 7%, payable in additional
shares of Series A Preferred. The payment-in-kind dividend is cumulative,
compounds on a semi-annual basis and is payable twice a year, beginning April
2000.

         EIS has the right to designate a member to our Board of Directors so
long as EIS owns 10% of our Common Stock or until October, 2004. The Elan Board
nominee will be on the management slate of directors at our next annual meeting.
EIS has a preemptive right to participate in our future equity offerings to
maintain its pro rata interest in Photogen until October 2003. Also, if in our
next third-party financing we sell Common Stock at a price less than $13 per
share, we must issue additional shares to Elan so that Elan's overall price for
its Common Stock equals the effective price in that other offering.

         NEW PATENT AND LICENSE ACQUISITION. In October 1999, we acquired
technology from Alliance Pharmaceutical Corp. ("Alliance") and licensed
technology from Massachusetts General Hospital intended to benefit our
programs in non-invasive lymphography and cancer treatments. From Alliance,
we acquired technology that describes methods for using certain particulate
contrast materials that follow the course of tumor cells to the appropriate
lymph node. From Massachusetts General Hospital, we have licensed and
sub-licensed a special group of nanoparticulate contrast materials, including
one compound ready for a Phase II/III clinical trial. The materials, which
will be used in lymphography and other applications, disseminate throughout
the lymphatic system to quickly locate the sentinel lymph nodes. Additional
proprietary methods and materials, co-invented and recently improved by Dr.
Gerald Wolf, Photogen's medical director, complement our use of the
radiosensitizer PH-10 by expanding our proprietary position to include
methods of administration and treatment, and additional material agents.

         HENDRIX OPTION. In September 1999, we acquired an option which expires
in February 2000 from Mary J.C. Hendrix, Ph.D., professor of anatomy and cell
biology and deputy director of the University of Iowa Cancer Center, to form a
new company to carry out a joint venture. The new company would initially focus
on commercializing diagnostic and therapeutic products related to diseases such
as prostate and breast cancer.

         Dr. Hendrix's research covers methods to identify the presence of
breast cancer and its growth potential, using a group of new marker proteins
which may be used in blood or serum-based diagnostics, and may eventually lead
to more effective molecular-based vaccines against tumors. Her research also
addresses an adhesion molecule that may increase survival rates for prostate
cancer patients, whose best chances of survival occur when the cancerous cells
remain localized.

         If we proceed with this joint venture, the technologies and research to
be contributed by the parties would be part of a newly formed Photogen
Biotechnologies, Inc. and will include further studies intended to validate Dr.
Hendrix's initial findings. The discoveries are intended to culminate with new
non-invasive diagnostic tools and treatments for cancer and other diseases.

         If we exercise the option, we will be obligated to provide at least $3
million to fund the new operation. In addition, we will contribute our
technologies related to the production of vaccines and other methods useful for
the identification of viruses. Under terms of the agreement,


                                       15

<PAGE>



if completed, we would own 85% of Photogen Biotechnologies, Inc. stock and
appoint two of its three directors. Dr. Hendrix would own the balance and
appoint the third director.

                                  RISK FACTORS

         Photogen and its business involve a high degree of risk. You should
carefully consider the risks listed below and all of the information
contained in this Form 10-QSB and our other filings with the Securities and
Exchange Commission. The risks listed below are not all of the risks facing
Photogen. There may be additional risks and uncertainties that we currently
are not aware of or have deemed not material, all of which could have a
negative impact on our business, financial condition and results of
operations. "We" and "our" refer to Photogen Technologies, Inc. and its
wholly owned subsidiary Photogen, Inc.

         This Form 10-QSB and other filings, announcements and documents of
Photogen and oral statements of our representatives contain "forward-looking
statements," within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements involve risks, uncertainties and other
factors that may cause our actual results or performance to differ materially
from any results or performance expressed or implied by those statements.
Examples of forward-looking statements include predictive statements, statements
that depend on or refer to future events or conditions, which include words such
as "expects," "anticipates," "intends," "plans," "believes," "estimates,"
"should," "may" or similar expressions, or statements that involve hypothetical
events.

         Forward-looking statements discuss future events or circumstances,
including future revenues, earnings or growth rates, ongoing business strategies
or prospects, and our possible future actions. These statements are based on
current expectations and projections about future events and are subject to
risks, uncertainties, and assumptions about Photogen, economic and market
factors and the industries in which we do business, and other factors.
Forward-looking statements are not guaranties of future performance and actual
events and results may differ materially from those expressed or forecasted in
forward-looking statements. We have no specific intention to update these
statements.

         The following are some of the key risk factors that may affect our
future results:

WE ARE A DEVELOPMENT STAGE COMPANY, WE HAVE CONDUCTED ONLY LIMITED STUDIES ON
OUR TECHNOLOGIES AND WE DO NOT HAVE ANY PRODUCTS OR REVENUES FROM SALES.

                  Our company and our technology are in an early stage of
         development. We have not generated revenues from sales or operations,
         and we do not expect to generate any revenues for at least several
         years.

                  Use of our technology has been limited to laboratory
         experiments or animal testing and only one compound has completed Phase
         I clinical trials. We have therefore not yet conducted any
         substantive studies on the effectiveness of any compound on human
         subjects. The products we currently contemplate developing will require
         significant additional research and development, preclinical and
         clinical testing and regulatory approval before they can be
         manufactured and sold. We cannot assure that we will be able to
         develop our technology


                                       16

<PAGE>



         into marketable products or that the technology will be effective to
         diagnosis or treat human diseases. As a result of changing economic
         considerations, market, clinical or regulatory conditions, or clinical
         trial results, we may shift our focus or determine not to continue one
         or more of the projects we are currently pursuing.

WE HAVE A HISTORY OF LOSSES AND MAY NOT ACHIEVE OR MAINTAIN FUTURE PROFITS OR
PAYMENT OF DIVIDENDS.

                  We have incurred losses since the beginning of our operations.
         As of September 30, 1999, we have incurred total losses of
         approximately $5,992,240. We expect our losses to increase in the
         future as our financial resources are used for research and
         development, preclinical and clinical testing, regulatory activities,
         manufacturing, marketing and other related expenses. We may not be able
         to achieve or maintain profitability in the future. We have never
         declared or paid any cash dividends to stockholders, and do not expect
         to do so in the foreseeable future.

WE MUST OBTAIN SIGNIFICANT ADDITIONAL FINANCING.

                  Under the present circumstances, even with the receipt of the
         maximum amount of the proceeds from our Series B Preferred private
         placement (the maximum amount is $14 million), we will exhaust our
         available capital by approximately the first quarter of 2002 (depending
         on the pace of our spending for preclinical and clinical trials). We
         will need substantial additional financing for our research, clinical
         testing, product development and marketing programs. We cannot
         accurately estimate the amount of additional financing required;
         however, the amount could be an additional $30 - 50 million. Depending
         on market conditions, we will attempt to raise additional capital
         through stock and debt offerings, collaborative relationships and other
         available sources. Additional funds may not be available on acceptable
         terms, if at all, and existing stockholders may be diluted as a result
         of those offerings.

                  If we sell additional equity, Elan has a preemptive right
         until October 2003 to participate in that offering. If in our next
         third-party financing we sell Common Stock at a price less than $13 per
         share, we must issue additional shares to Elan so that Elan's overall
         price for its Common Stock equals the effective price in that other
         offering.

WE ARE HIGHLY DEPENDENT UPON A SMALL NUMBER OF EMPLOYEES AND CONSULTANTS WHO
PROVIDE SCIENTIFIC AND MANAGEMENT EXPERTISE.

                  These individuals have entered into employment or consulting
         agreements, confidentiality and/or non-competition agreements with us.
         We could suffer competitive disadvantage, loss of intellectual property
         rights or other material adverse effects on our business and results of
         operations if any employee or consultant violates or terminates these
         agreements or terminates their association with us. Our growth and
         future success also depends upon the continued involvement and
         contribution from these individuals, as well as our ability to attract
         and retain highly qualified personnel now and in the future



                                       17

<PAGE>



OUR PROPOSED PRODUCTS ARE SUBJECT TO EXTENSIVE TESTING AND GOVERNMENT REGULATION
AND APPROVAL, INCLUDING BY THE FOOD AND DRUG ADMINISTRATION ("FDA").

                  Most of our proposed drug and device products have not begun,
         and none has completed, the FDA's extensive approval process which must
         be completed before proposed products can be manufactured or sold. This
         process includes preclinical and clinical testing for effective use and
         safety in animals and humans and it can be extremely costly. The time
         frame necessary to perform these tasks for any individual product is
         long and uncertain, and we may encounter problems or delays which we
         cannot predict at this time. Even if clinical trials are successful,
         our proposed products may not demonstrate sufficient effectiveness or
         safety to warrant approval by the FDA or other domestic or foreign
         regulatory authorities. Any regulatory approval may not cover the
         clinical symptoms or indications that we may seek.

BECAUSE WE DO NOT HAVE, AND DO NOT INTEND TO DEVELOP, INTERNAL RESEARCH,
MANUFACTURING OR CLINICAL TESTING FACILITIES OR MARKETING RESOURCES FOR OUR
PROPOSED PRODUCTS, WE WILL HAVE TO RELY ON THIRD PARTIES AND COLLABORATIVE
RELATIONSHIPS.

                  We must continue to enter into collaborative relationships
         with third parties for research and development, preclinical and
         clinical testing, manufacturing, marketing and distribution of our
         proposed products. We will also be dependent on third parties for the
         supply of activation hardware (I.E., lasers and x-ray devices) and for
         supplies of photodynamic drugs. We have several research and supply
         agreements with third parties. However, we may not be able to
         negotiate other acceptable collaborative and supply arrangements in
         the future.

                  Collaborative relationships may limit or restrict our
         operations or may not result in an adequate supply of necessary
         resources. Our collaborative partners could also pursue alternative
         technologies as a means of developing or marketing products for the
         diseases targeted by our collaborative programs. Failure of a
         collaborative partner to perform under its agreement or its failure to
         meet regulatory standards could delay or prematurely terminate clinical
         testing of our proposed products.

LOSS OF PATENT AND OTHER INTELLECTUAL PROPERTY PROTECTION WOULD HAVE A MATERIAL
ADVERSE EFFECT ON OUR BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

                  Our success will depend, in part, on our ability to obtain,
         assert and defend our patents, protect trade secrets and operate
         without infringing upon the intellectual property of others. Our patent
         applications may not result in issued patents. Moreover, any issued
         patents may not provide us with adequate protection of our intellectual
         property or competitive advantages. Patented inventions may be "reverse
         engineered" by our competitors, and third parties may challenge our
         existing patents and seek to hold them invalid or unenforceable.
         Existing or future patents or patent applications (and the products or
         methods they cover) of our competitors may interfere, invalidate,
         conflict or infringe with our patents or patent applications.
         Similarly, our use of the methods or technologies contained in our
         patents and other intellectual property may conflict or infringe the
         rights of others.


                                       18

<PAGE>



                  Litigation over patents and other intellectual property rights
         occurs frequently in our industry, and there is a risk that we may not
         prevail in that litigation. Those disputes can be expensive and time
         consuming, even if we win. Intellectual property disputes are often
         settled through licensing arrangements that could be costly to us. In
         any intellectual property litigation, it is possible that licenses
         necessary to settle the dispute would not be available, or that we
         would not be able to redesign our technologies to avoid any claimed
         infringement.

                  Confidentiality agreements covering our intellectual property
         may be violated and we may not have adequate remedies for any
         violation. Also, our intellectual property may in other ways become
         known or be independently discovered by competitors.

                  To the extent we use intellectual property through licenses or
         sub-licenses (as is the case for some of our lymphography technology),
         our rights are subject to our performing the terms of the license or
         sub-license agreement with third parties. Our rights are also subject
         to the actions of third parties we may not be able to control, such as
         our sub-licensor complying with the terms of its license with the
         patent owner and the patent owner maintaining the patent. In some cases
         where U.S. Government funding was used to support a project, certain
         intellectual property is subject to the Government's "march in" rights
         which include a royalty-free license under certain circumstances
         pursuant to 35 U.S.C. Section 202(c).

OUR POTENTIAL MARKETS ARE EXTREMELY COMPETITIVE.

                  We face substantial competition from competitors with greater
         financial, technical and human resources and with greater experience in
         developing products, conducting preclinical or clinical testing,
         obtaining regulatory approvals, manufacturing and marketing. Our
         competitors include firms in the field of photodynamic therapy as well
         as other fields generally relating to the diagnosis and treatment of
         disease using different technologies or scientific and medical
         approaches. Examples of those technologies are novel drugs and
         hyperthermic and ultrasound procedures. Some of these firms have drugs
         or devices that have completed or are in advanced stages of clinical
         trials and regulatory approvals.

                  Our competitors may develop technologies and obtain patent
         protection that could render our technologies or products obsolete or
         less competitive or our patents invalid or unenforceable. Due to the
         inherent risk of failure associated with the testing, development and
         production of new and innovative technologies, our technologies and
         products may be found to be ineffective, have unanticipated limitations
         or otherwise be unsuccessful in the marketplace.

A SMALL GROUP OF STOCKHOLDERS CONTROLS PHOTOGEN.

                  A small group of our officers, directors and others control
         approximately 85% of our outstanding Common Stock. Several of our
         principal stockholders are also parties to a Voting Agreement
         concerning the election of certain designees to the Board of Directors
         of Photogen Technologies, Inc. and Photogen, Inc. This group of
         stockholders can significantly influence Photogen and the direction of
         our business and affairs. This


                                       19

<PAGE>



         concentration of ownership may delay or prevent a change in control of
         Photogen, and may also result in a small supply of shares available for
         purchase in the public securities markets. These factors may affect the
         market and the market price for our Common Stock in ways that do not
         reflect the intrinsic value of the stock.

OUR STOCK PRICE IS VOLATILE.

                  The price and trading volume of our Common Stock has
         fluctuated and is likely to continue to fluctuate significantly for
         reasons that may not have any relationship to our operating performance
         or other factors that traditionally determine a company's value. The
         following factors may have an impact on the price of our stock:

                  -        announcements by us or others regarding scientific
                           discoveries, technological innovations, commercial
                           products, patents or proprietary rights;
                  -        the progress of preclinical or clinical trials;
                  -        changes in government regulation;
                  -        public concern about the safety of devices or drugs;
                  -        limited coverage by securities analysts;
                  -        changes in our financial performance from period to
                           period; securities analysts' reports; and general
                           market conditions.

                  Our Common Stock trades in the over-the-counter bulletin board
         market and is not listed or traded on any stock exchange at this time.
         State securities laws may limit the extent to which brokers in a number
         of states may solicit transactions in our stock.

COMPUTER PROBLEMS RESULTING FROM THE YEAR 2000 ISSUE PRESENT POTENTIAL
UNCERTAINTIES.

                  We may incur delays in research and other material problems if
         the computer systems and other information technology systems that we
         use or that are used by certain third parties upon whom we rely for
         services do not accurately and adequately address the Year 2000 issue.
         We may not be able to identify and address all Year 2000 issues,
         including those of third parties. Failure to identify and correct
         unknown Year 2000 issues by us or important third parties on whom we
         rely could have a material adverse effect on our business, results of
         operations and financial condition.

WE CANNOT PREDICT THE EFFECT OF CHANGES IN HEALTH CARE REIMBURSEMENT AND
LEGISLATIVE REFORM ON OUR BUSINESS.

                  Our success will depend, in part, on the extent to which
         health insurers, managed care entities and similar organizations,
         provide coverage or reimbursement for the medical procedures and
         devices we plan to develop. These third-party payors are increasingly
         challenging the price of medical procedures and services and
         establishing guidelines that may limit physicians' selections of
         innovative products and procedures. We also cannot predict the effect
         of any current or future legislation or regulations relating to
         third-party coverage or reimbursement on our business. We may not be
         able to achieve market acceptance of our proposed products or maintain
         price levels sufficient to achieve or


                                       20

<PAGE>



         maintain any profits on our proposed products if adequate reimbursement
         coverage is not available.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits. The following is a list of exhibits filed as part of this Form
10-QSB. Exhibits that were previously filed are incorporated by reference. For
exhibits incorporated by reference, the location of the exhibit in the previous
filing is indicated in parenthesis.

<TABLE>
<CAPTION>

      EXHIBIT NO.        DESCRIPTION

          <S>            <C>
          3.1            Restated Articles of Incorporation of Photogen Technologies, Inc.  (Filed
                         as exhibit 3.1 to the Company's Current Report on Form 8-K dated
                         June 17, 1998 and incorporated herein by reference.)
          3.2            Bylaws of Photogen Technologies, Inc. (Filed as exhibit
                         3.2 to the Company's Registration Statement on Form
                         10-SB dated December 24, 1997 and incorporated herein
                         by reference.)
          3.3            Charter of Photogen, Inc.  (Filed as exhibit 3.3 to the Company's
                         Registration Statement on Form 10-SB dated December 24, 1997 and
                         incorporated herein by reference.)
          3.4            Amended and Restated Bylaws of Photogen, Inc. (Filed as exhibit 3.4 to
                         the Company's Form 10-KSB dated March 30, 1999 and incorporated
                         herein by reference.)
          3.5            Amended and Restated Certificate of Designations, Preferences and
                         Rights of Series A Preferred Stock
          10.1           1998 Long Term Incentive Compensation Plan (Filed as Exhibit A to the
                         Company's Schedule 14-A dated April 30, 1998 and incorporated herein by
                         reference.)
          10.2           Employment Agreement between Photogen, Inc. and Dr. Gerald L. Wolf
                         dated July 1, 1999.
          10.3           Tufts University Sponsored Research Agreement dated August 1, 1999 by
                         and between Photogen, Inc. and Tufts University, a/k/a Trustees of Tufts
                         College
          10.4           Consulting Agreement by and between Photogen Technologies, Inc. and
                         Farcap Group LLC effective August 9, 1999.
          10.5           Warrant Agreement by and between Photogen Technologies, Inc. and
                         Farcap Group LLC effective August 9, 1999.

</TABLE>


                                       21

<PAGE>


<TABLE>


          <S>            <C>
          10.6           Agreement effective August 9, 1999 by and among Alliance
                         Pharmaceutical Corp., Photogen Technologies, Inc. and Gerald Wolf,
                         Ph.D, M.D.
          10.7           License Agreement effective as of September 30, 1999 between The
                         General Hospital Corporation and Photogen, Inc.
          10.8           Securities Purchase Agreement dated as of October 20, 1999, among
                         Photogen Technologies, Inc. and Elan International Services, Ltd.
          10.9           Warrant to Purchase Shares of Common Stock dated October 20, 1999
                         between Photogen Technologies, Inc. and Elan International Services,
                         Ltd.
         10.10           Convertible Promissory Note dated October 20, 1999 from Photogen
                         Technologies, Inc. to Elan International Services, Ltd.
         10.11           Registration Rights Agreement dated October 20, 1999 by and among
                         Photogen Technologies, Inc. and Elan International Services, Ltd.
         10.12           Funding Agreement dated October 20, 1999 among Elan Pharma
                         International Limited and Photogen Technologies, Inc.
         10.13           License Agreement dated October 20, 1999 between Photogen
                         Technologies, Inc, Photogen Newco Ltd. and Elan Pharma International
                         Limited
         10.14           License Agreement dated October 20, 1999 between Elan Pharma International
                         Limited, Photogen Newco Ltd. and Photogen Technologies, Inc.
         10.15           Subscription, Joint Development and Operating Agreement dated October
                         20, 1999 between Elan Pharma International Limited, Elan International
                         Services, Ltd., Photogen Technologies, Inc. and Photogen Newco Ltd.
           27            Financial Data Schedule of  Photogen Technologies, Inc.

</TABLE>


(b)      Reports on Form 8-K.

         The following reports on Form 8-K were filed in the three month period
ended September 30, 1999:

         1.       Report on Form 8-K dated August 26, 1999, announcing the
                  appointment of Dr. Gerald Wolf as its Medical Director and a
                  five year research agreement with Tufts University.

         2.       Report on Form 8-K dated September 15, 1999 announcing
                  research results involving the compound PH-10.

         3.       Report on Form 8-K dated September 29, 1999 announcing
                  Photogen's acquisition of an option to form a joint venture
                  with Mary J.C. Hendrix, Ph.D.


                                       22

<PAGE>



                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                         Photogen Technologies, Inc.


                                         /s/ John T. Smolik
                                         ---------------------------------------
Date:   November 15, 1999                John T. Smolik, President




                                       23

<PAGE>



                                                      EXHIBIT INDEX

<TABLE>
<CAPTION>

      EXHIBIT NO.        DESCRIPTION
          <S>            <C>
          +3.1           Restated Articles of Incorporation of Photogen Technologies, Inc. (Filed
                         as exhibit 3.1 to the Company's Current Report on Form 8-K dated
                         June 17, 1998 and incorporated herein by reference.)
          +3.2           Bylaws of Photogen Technologies, Inc. (Filed as exhibit 3.2 to the
                         Company's Registration Statement on Form 10-SB dated December 24,
                         1997 and incorporated herein by reference.)
          +3.3           Charter of Photogen, Inc.  (Filed as exhibit 3.3 to the Company's
                         Registration Statement on Form 10-SB dated December 24, 1997 and
                         incorporated herein by reference.)
          +3.4           Amended and Restated Bylaws of Photogen, Inc. (Filed as exhibit 3.4 to
                         the Company's Form 10-KSB dated March 30, 1999 and incorporated
                         herein by reference.)
          *3.5           Amended and Restated Certificate of Designations, Preferences and
                         Rights of Series A Preferred Stock
         +10.1           1998 Long Term Incentive Compensation Plan (Filed as
                         Exhibit A to the Company's Schedule 14-A dated April
                         30, 1998 and incorporated herein by reference.)
         *10.2           Employment Agreement between Photogen, Inc. and Dr. Gerald L. Wolf
                         dated July 1, 1999.
         *10.3           Tufts University Sponsored Research Agreement dated August 1, 1999 by
                         and between Photogen, Inc. and Tufts University, a/k/a Trustees of Tufts
                         College
         *10.4           Consulting Agreement by and between Photogen Technologies, Inc. and
                         Farcap Group LLC effective August 9, 1999.
         *10.5           Warrant Agreement by and between Photogen Technologies, Inc. and
                         Farcap Group LLC effective August 9, 1999.
         *10.6           Agreement effective August 9, 1999 by and among Alliance
                         Pharmaceutical Corp., Photogen Technologies, Inc. and Gerald Wolf,
                         Ph.D, M.D.
         *10.7           License Agreement effective as of September 30, 1999 between The
                         General Hospital Corporation and Photogen, Inc.
         *10.8           Securities Purchase Agreement dated as of October 20, 1999, among
                         Photogen Technologies, Inc. and Elan International Services, Ltd.

</TABLE>


                                       24

<PAGE>

<TABLE>

          <S>            <C>
         *10.9           Warrant to Purchase Shares of Common Stock dated October 20, 1999
                         between Photogen Technologies, Inc. and Elan International Services,
                         Ltd.
         *10.10          Convertible Promissory Note dated October 20, 1999 from Photogen
                         Technologies, Inc. to Elan International Services, Ltd.
         *10.11          Registration Rights Agreement dated October 20, 1999 by and among
                         Photogen Technologies, Inc. and Elan International Services, Ltd.
         *10.12          Funding Agreement dated October 20, 1999 among Elan Pharma
                         International Limited and Photogen Technologies, Inc.
         *10.13          License Agreement dated October 20, 1999 between Photogen
                         Technologies, Inc, Photogen Newco Ltd. and Elan Pharma International
                         Limited
         *10.14          License Agreement dated October 20, 1999 between Elan Pharma International
                         Limited, Photogen Newco Ltd. and Photogen Technologies, Inc.
         *10.15          Subscription, Joint Development and Operating Agreement dated October
                         20, 1999 between Elan Pharma International Limited, Elan International
                         Services, Ltd., Photogen Technologies, Inc. and Photogen Newco Ltd.
          *27            Financial Data Schedule of Photogen Technologies, Inc.

</TABLE>

+        Incorporated by reference from the filing indicated.
*        Filed herewith.





                                       25