<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 June 30, 1998

                          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:  36,875,001 SHARES OF 
COMMON STOCK, $.001 PAR VALUE PER SHARE, ISSUED AND OUTSTANDING AS OF JUNE 
30, 1998. NO SHARES OF PREFERRED STOCK, $.01 PAR VALUE PER SHARE, WERE ISSUED 
OR OUTSTANDING AS OF THAT DATE.

     Transitional Small Business Disclosure Format:

               YES: / /          NO:  /x/

==============================================================================
<PAGE>
                                        INDEX

<TABLE>
<CAPTION>

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

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

     ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR
               PLAN OF OPERATION . . . . . . . . . . . . . . . . . . . . . . . . . .8

PART II - OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

     ITEM 5.   OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 13

     ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K. . . . . . . . . . . . . . . . . . 13
</TABLE>
                                       i
<PAGE>

                            PART I.  FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

                             PHOTOGEN TECHNOLOGIES, INC.
                            (A DEVELOPMENT STAGE COMPANY)
                        CONSOLIDATED CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                JUNE 30,    DECEMBER 31,
                                                  1998          1997
                                              (UNAUDITED)    (AUDITED)
                                               ---------      -------
<S>                                          <C>            <C>
ASSETS

CURRENT ASSETS

  Cash and cash equivalents                  $  147,105     $   82,631

  Interest receivable                            10,227         21,402

  Prepaid expenses                                  -            8,164

  Marketable securities                             -          409,238
                                             ----------     ----------
      TOTAL CURRENT ASSETS
                                                157,332        521,435
UNITED STATES TREASURY
  NOTES, TOTAL FACE VALUE
  $7,725,000 and $1,538,000                   7,820,177      1,531,413

EQUIPMENT AND LEASEHOLD
  IMPROVEMENTS                                  372,894        194,252

PATENT COSTS                                     85,641         37,273
                                             ----------     ----------
      TOTAL ASSETS                           $8,436,044     $2,284,373
                                             ----------     ----------
                                             ----------     ----------

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES

  Accounts Payable                           $   30,315     $  118,233

  Current portion of
  obligations under capital
  leases                                         17,944         18,626
                                             ----------     ----------
      TOTAL CURRENT LIABILITIES                  48,259        136,859
                                             ----------     ----------
OBLIGATION UNDER CAPITAL
  LEASES                                         51,382         60,469
                                             ----------     ----------

                  SEE NOTES TO CONDENSED FINANCIAL STATEMENTS.

                                       1
<PAGE>

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; 36,875,000
  and 36,000,000 shares
  issued and outstanding                         36,875         36,000

 Additional paid-in capital                   9,606,651      2,607,526

 Deficit accumulated during
  the development stage
  after recapitalization                     (1,307,123)      (556,481)
                                             ----------     ----------
TOTAL SHAREHOLDERS' EQUITY                    8,336,403      2,087,045
                                             ----------     ----------
                                             $8,436,044     $2,284,373
                                             ----------     ----------
                                             ----------     ----------
</TABLE>

                   SEE NOTES TO CONDENSED FINANCIAL STATEMENTS

                                       2

<PAGE>

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

<TABLE>
<CAPTION>

                                               THREE          THREE           SIX            SIX          CUMULATIVE
                                               MONTHS         MONTHS         MONTHS         MONTHS         AMOUNTS
                                               ENDED          ENDED          ENDED          ENDED           FROM
                                              JUNE 30,       JUNE 30,       JUNE 30,       JUNE 30,      NOVEMBER 3,
                                                1998           1997           1998           1997           1996
                                             (UNAUDITED)    (UNAUDITED)    (UNAUDITED)    (UNAUDITED)    (UNAUDITED)
                                              ---------      ---------      ---------      ---------      ---------
<S>                                         <C>            <C>            <C>            <C>            <C>
REVENUES

  Investment Income                         $    94,611    $    36,103    $   150,182    $    36,103    $   257,315

EXPENSES

  General and administrative                    476,391         68,226        900,824         71,737      1,564,438
                                            -----------    -----------    -----------    -----------    -----------

        NET INCOME (LOSS)                   $  (381,780)   $   (32,123)   $  (750,642)   $   (35,634)   $(1,307,123)
                                            -----------    -----------    -----------    -----------    -----------
                                            -----------    -----------    -----------    -----------    -----------

NET INCOME (LOSS)
PER COMMON SHARE                            $      (.01)   $         0    $      (.02)           -
                                            -----------    -----------    -----------    -----------
                                            -----------    -----------    -----------    -----------
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING                $36,531,768    $36,642,815    $36,531,768    $30,936,481
                                            -----------    -----------    -----------    -----------
                                            -----------    -----------    -----------    -----------
</TABLE>

                   SEE NOTES TO CONDENSED FINANCIAL STATEMENTS

                                       3
<PAGE>

                           PHOTOGEN TECHNOLOGIES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
             CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                          CUMULATIVE
                                                            SIX MONTHS     SIX MONTHS       AMOUNTS
                                                               ENDED          ENDED          FROM
                                                              JUNE 30,       JUNE 30,     NOVEMBER 3,
                                                               1998           1997           1996
                                                            (UNAUDITED)    (UNAUDITED)    (UNAUDITED)
                                                             ---------      ---------      ---------
<S>                                                        <C>            <C>            <C>
OPERATING ACTIVITIES

  Net income (loss)                                        $  (750,642)   $   (35,634)   $(1,307,123)

  Depreciation                                                  12,699            -           30,215

  Realized gain on United
  States Treasury Notes                                            -          (18,599)       (29,737)

  Loss on securities                                             9,238            -           18,503

Changes in operating
 assets and liabilities:

  Prepaid expense                                                8,164        (16,329)           -

  Interest receivable                                           11,175        (54,249)       (10,227)

  Accounts payable                                             (87,918)           224         30,315
                                                           -----------    -----------    -----------

       NET CASH PROVIDED (USED) BY
       OPERATING ACTIVITIES                                   (797,284)      (124,587)    (1,268,054)
                                                           -----------    -----------    -----------

INVESTING ACTIVITIES

  Sale of marketable
  securities                                                   400,000            -        2,164,464

  Purchase of marketable
  securities                                                       -       (2,222,247)    (2,182,967)

  Purchase of United
  States Treasury Notes                                     (7,795,816)           -       (9,840,692)

  Sale of United States
  Treasury Notes                                             1,507,052      1,101,343      3,146,902

  Purchase of capital
  assets                                                      (191,341)        (8,981)      (320,508)

  Patent costs                                                 (48,368)        (9,564)       (85,703)
                                                           -----------    -----------    -----------

      NET CASH PROVIDED (USED) BY
      INVESTING ACTIVITIES                                  (6,128,473)    (1,139,449)    (7,118,504)
                                                           -----------    -----------    -----------

FINANCING ACTIVITIES

  Proceeds from issuance
   of common stock                                           7,000,000          6,313      7,006,313

                                       4
<PAGE>
                                                                                          CUMULATIVE
                                                            SIX MONTHS     SIX MONTHS       AMOUNTS
                                                               ENDED          ENDED          FROM
                                                              JUNE 30,       JUNE 30,     NOVEMBER 3,
                                                               1998           1997           1996
                                                            (UNAUDITED)    (UNAUDITED)    (UNAUDITED)
                                                             ---------      ---------      ---------

  Proceeds from capital
   contributions by
   stockholders                                                    -        1,918,312      1,911,674

  Cost of recapitalization                                         -         (371,111)      (371,111)

  Principal payments on
   capital lease
   obligations                                                  (9,769)           -          (13,213)
                                                           -----------    -----------    -----------

      NET CASH PROVIDED (USED) BY
      FINANCING ACTIVITIES                                   6,990,231      1,553,514      8,533,663
                                                           -----------    -----------    -----------

NET INCREASE (DECREASE) IN CASH                                 64,474        289,478        147,105
  AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS                                       82,631            -              -
  AT BEGINNING OF PERIOD                                   -----------    -----------    -----------

      CASH AND CASH EQUIVALENTS                            $   147,105    $   289,478    $   147,105
         AT END OF PERIOD                                  -----------    -----------    -----------
                                                           -----------    -----------    -----------
</TABLE>

                   SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
                                       5
<PAGE>

                            PHOTOGEN TECHNOLOGIES, INC.
                           (A DEVELOPMENT STAGE COMPANY)
              CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
                                    (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                 Additional     During The
                                            Common Stock              Members'     Paid-In      Development       Total
                                       Shares          Amount         Capital      Capital         Stage          -----
                                       ------          ------         -------      -------         -----
<S>                                  <C>              <C>            <C>         <C>            <C>             <C>
BALANCE AT
 JANUARY 1, 1997                            -          $   -           $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 SEPTEMBER
  30, 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 Stock
  for cash                              875,000            875            -        6,999,125            -        7,000,000

Net Loss for Six
  Months Ended
  June 30, 1998                              -              -              -              -        (750,642)      (750,642)
                                     ----------        -------         ------     ----------      ---------     ----------
Balance at
  June 30, 1998                       36,875,000       $36,875             -      $9,606,651    $(1,307,123)    $8,336,403
                                     ----------        -------         ------     ----------      ---------     ----------
</TABLE>

                   SEE NOTES TO CONDENSED FINANCIAL STATEMENTS

                                       6
<PAGE>

                             PHOTOGEN TECHNOLOGIES, INC.
                 NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

                                    June 30, 1998

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 six months ended June 30, 1998 and are not 
necessarily indicative of the results that may be expected for the year ended 
December 31, 1998.

                                       7
<PAGE>

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

     UNCERTAINTIES RELATING TO COMPANY.  Since the Company acquired Photogen, 
Inc. in May 1997,  the Company has been principally engaged in the research 
and development of drugs and medical device products and processes for use in 
photodynamic therapy.  The Company has not completed development of any 
product or process at this time and has no revenues from operations.  
Portions of the discussion in this Item 2 contain forward-looking statements 
and are subject to the Risk Factors described in Item 5 below.

     RESULTS OF OPERATIONS.  The Company has not generated revenues from the 
sale of any proposed products or other operations, and has continued to 
experience losses.  The Company's net loss for the six month period ended 
June 30, 1998, was $750,642, compared to a loss of $35,634 for the six month 
period ended June 30, 1997.  The Company's net loss for the three month 
period ended June 30, 1998 was $381,780, compared to a loss of $32,123 for 
the three months ended June 30, 1997.  The losses are attributable primarily 
to expenses related to pursuing patent protection for the Company's 
technology, conducting animal studies, expenses incurred in the Company's 
recent private offering and other general and administrative costs.  The 
Company expects to continue to incur increasing losses for at least the next 
several years as it intensifies its research and development, clinical 
testing, regulatory approval activities and engages the manufacture and/or 
sale of any products that the Company may develop.

          The Company's revenue for the six month period ended June 30, 1998 
was $150,182, compared to $36,103 of revenue for the six month period ended 
June 30, 1997.  The Company's revenue for the three month period ended June 
30, 1998 was $94,611, compared to $36,103 of revenue during the three months 
ended June 30, 1997.  The revenue resulted primarily from investment income 
on the proceeds from the sale of common stock in the Company's 1997 
restructuring and its 1998 private placement. The proceeds of the sales of 
the Company's common stock are invested primarily in United States Government 
obligations.  Because the Company has no revenues from operations at this 
time, investment of such funds in that manner is necessary to enable the 
Company to avoid becoming subject to the Investment Company Act of 1940.  

     LIQUIDITY; CAPITAL RESOURCES.  On March 13, 1998, the Company completed 
a private placement of 875,000 shares of common stock for $8.00 a share to a 
number of accredited investors. The Company received $7,000,000 in gross 
proceeds from this offering.  The Company has used, and expects over the next 
18 to 24 months to use, the gross proceeds from the sale of the common stock 
for corporate overhead and operating expenses, animal and clinical trials, 
the purchase or lease of scientific and laboratory equipment and related 
facilities, legal and regulatory consulting fees and for other working 
capital purposes, assuming the Company has no revenues during that period.

     PATENT AND OPERATIONAL MATTERS.  The Company is continuing to pursue 
patent protection for its proprietary technologies with the U. S. Patent and 
Trademark Office, and in various foreign jurisdictions.  In November of 1997, 
the Company received a Notice of Allowance from the U.S. Patent and 

                                       8
<PAGE>

Trademark Office allowing over 60 claims for Photogen's treatment 
application.  Likewise, in June of 1998, the Company received a Notice of 
Allowance from the U.S. Patent and Trademark Office allowing over 70 claims 
for Photogen's imaging application.  At the United States level, divisional 
patent applications are pending.  The Company has also filed patent 
applications under the Patent Cooperation Treaty ("PCT") covering a number of 
foreign countries, as well as a patent application in India.  No official 
actions have yet been received at the international level, nor have the 
national stages of the PCT applications been entered in any particular 
country.  In addition, the Company recently filed three additional United 
States patent applications.

          The Company is continuing its animal studies to examine the 
efficacy of activating PHOTOPHRIN (R) in laboratory mice using the Company's 
proprietary simultaneous two photon activation technology.  (PHOTOFRIN(R) is 
a photoactive agent produced by QLT PhotoTherapeutics, Inc.)  The Company 
recently announced that the preliminary results of the animal studies 
demonstrated that the Company achieved noninvasive activation of 
PHOTOPHRIN(R) by using light at 730 nm.  In addition, the Company was 
recently awarded a Phase 1 Small Business Innovation Research Project grant 
of $98,000 from the National Institutes of Health National Cancer Institute 
to evaluate the capability of the Company's proprietary simultaneous 
two-photon excitation technology to achieve reductions in cancerous tumor 
size using porphyrins and psoralen derivatives.  

          The Company has withdrawn its application for listing with the 
NASDAQ Small Cap market.  Following discussions with representatives of that 
exchange, the Company determined that it could not meet the listing criteria 
at this time. The Company's withdrawal is without prejudice to resubmit the 
application in the future, which management intends to do when it determines 
that the Company is better postured for listing.  The Company is also 
exploring listing on one or more regional exchanges.  In the meantime, the 
Company's common stock continues to be traded from time to time on the NASDAQ 
over-the-counter bulleting board market under the symbol "PHGN."

     PLAN OF OPERATION.  During the next twelve months, the Company will 
continue with animal trials and evaluation of its proprietary photoactive 
agent candidates, pursuing patent protection and seeking potential 
collaboration candidates.  During the six months ended June 30, 1998, the 
Company spent approximately $191,000 to acquire the laboratory instruments 
necessary to support animal clinical trials, and on development of its 
proprietary photoactive agent and targeting systems.  The Company anticipates 
increased spending during the fourth quarter for clinical equipment and 
clinical work provided by third-party researchers.  The Company intends to 
concentrate its research and development activities initially on applications 
in the treatment of advanced macular degeneration and lung and prostate 
cancers, and on imaging. The Company's efforts to develop collaborative 
arrangements with third parties for research and testing will concentrate on 
these areas as well.  During the next six months the Company expects to spend 
approximately $615,000 to acquire laser systems and related hardware required 
to support new clinical activities at well known clinical research centers. 

     The Company is evaluating its future needs for laboratory and office 
space and for scientific, managerial and support personnel.  See "Risk 
Factors" in Item 5, below.  The Company presently anticipates slowly adding 
additional personnel to support its current activities, while deferring any 
substantial growth in hiring 

                                       9
<PAGE>

and acquisition of space and equipment until the final results of the animal 
testing are known. The Company intends to structure its collaborative 
arrangements during its research and development phase to make use of 
personnel and facilities provided by the parties with whom the Company may 
contract.

          For these reasons, the Company believes it has enough cash 
resources for its currently anticipated needs during the next 18 to 24 months 
and will not be required to raise additional funds.  However, greater capital 
resources would enable the Company to accelerate and intensify its research 
and development activities over that 18- to 24-month period.  In any event, 
complete development and commercialization of the Company's technology will 
require substantial additional funds.  Accordingly, the Company is 
continuously evaluating capital formation activities and opportunities, 
either as part of its collaborative arrangements with third parties or 
through offerings of equity or debt unrelated to collaborations.  See "Risk 
Factors" in Item 5, below.

                             PART II - OTHER INFORMATION

ITEM 5.   OTHER INFORMATION

                                    RISK FACTORS 

     The Company cannot provide assurances that it will successfully achieve 
its goals or the commercial development of its technology in the foreseeable 
future. The Company's success in this regard must at this time be deemed 
speculative. This Form 10-QSB and other announcements and documents of the 
Company contain forward-looking statements which involve risks, uncertainties 
and other factors that may cause the Company's actual results or performance 
to differ materially from any results or performance expressed or implied by 
such forward-looking statements.  The statements under the caption "Risk 
Factors" are intended to serve as cautionary statements within the meaning of 
the Private Securities Litigation Reform Act of 1995 and should be read in 
conjunction with the forward-looking statements in this Report and statements 
presented elsewhere by management of the Company.  Factors that could cause 
or contribute to those differences include the following:  

     DEVELOPMENT STAGE COMPANY; NO PRODUCTS.  The Company and its technology 
are in an early stage of development.  The Company does not have any products 
for sale and has not generated revenues from sales.  The Company does not 
expect to achieve revenues for at least several years.  The products 
currently contemplated for development by the Company will require 
significant additional research and development, preclinical and clinical 
testing and regulatory approval prior to commercialization.  There can be no 
assurances that the Company's research or product development efforts will be 
successfully completed, or that any resulting products will be successfully 
transformed into marketable products, that required regulatory approvals can 
be obtained, that products can be manufactured at an acceptable cost and with 
appropriate quality, that any approved products can be successfully marketed, 
or that any products will be favorably accepted in the market.  

                                       10
<PAGE>

     HISTORY OF LOSSES; NO ASSURANCE OF FUTURE PROFITS; NO DIVIDENDS.  The 
Company and its predecessors have not declared or paid any cash dividends to 
stockholders, and the Company does not expect to do so in the foreseeable 
future.  The Company expects to incur substantial and increasing losses for 
at least the next several years as its financial resources are used for 
research and development, preclinical and clinical testing and regulatory 
activities, manufacturing, marketing and related expenses.  The Company 
cannot provide assurances that it will be able to achieve profitability in 
the future.  

     UNPROVEN SAFETY AND EFFICACY; NO CLINICAL TRIALS.  None of the Company's 
proposed drug and device products have completed the extensive preclinical 
and clinical testing for efficacy and safety in animals and humans required 
for regulatory approval prior to commercial use.  This process may take at 
least several years, and the Company may encounter problems or delays.  If 
clinical trials are successful, there can be no assurances that the Company's 
proposed products will demonstrate sufficient safety or efficacy to warrant 
approval by the Food and Drug Administration or other domestic or foreign 
regulatory authorities or that any approvals will cover the clinical 
indications for which the Company may seek approval. 

     RELIANCE ON THIRD PARTIES, COLLABORATIVE RELATIONSHIPS AND EMPLOYEES.  
The Company does not have manufacturing or clinical testing facilities for 
its proposed products.  The Company intends to enter into collaborative 
relationships with third parties in connection with the research and 
development, preclinical and clinical testing, manufacturing, marketing and 
distribution of its proposed products.  The Company initially will also be 
dependent on third parties for supply of laser products and for supplies of 
photodynamic drugs.  There can be no assurances that the Company will be able 
to negotiate acceptable collaborative and supply arrangements or that 
collaborative arrangements will result in marketable products.  In addition, 
there can be no assurances that collaborative relationships will not limit or 
restrict the Company or give the Company an adequate supply of necessary 
resources.  Further, there can be no assurances that the Company's 
collaborative partners will not develop or pursue alternative technologies 
either on their own or with others, including the Company's competitors, as a 
means of developing or marketing products for the diseases targeted by the 
collaborative programs and the Company's proposed products.  The Company is 
also highly dependent upon six employees for scientific and management 
expertise.  

     SUBSTANTIAL ADDITIONAL FINANCING REQUIRED.  The Company has incurred 
negative cash flows from operations since its inception and will expend 
substantial funds in connection with its research and development programs.  
The Company will require substantial additional funding (the amount of which 
cannot be accurately estimated at this time; however, the amount could be at 
least $50 million) to continue or undertake its research and development 
activities, clinical testing and manufacturing, marketing, sales, 
distribution and administrative activities.  Depending on market conditions, 
the Company will attempt to raise additional capital through equity and debt 
offerings, collaborative relationships and other available sources.  No 
assurances can be given that additional funds will be available on acceptable 
terms (if at all) or the extent of dilution to existing stockholders that may 
result from such offerings.  

                                       11
<PAGE>

     SUBSTANTIAL COMPETITION.  Many of the Company's competitors have 
substantially greater financial, technical and human resources than the 
Company and, alone or with collaborative partnerships, have substantially 
greater experience in developing products, conducting preclinical or clinical 
testing, obtaining regulatory approvals and manufacturing and marketing.  The 
Company's competitors include firms in the field of photodymanic therapy as 
well as firms in other fields generally relating to the diagnosis and 
treatment of disease but which use different technologies or scientific and 
medical approaches.  Some of these firms have drugs or devices that are in 
advanced stages of clinical trials and regulatory approvals.  Examples of 
such technologies are novel anti-tumor drugs, focused ultra-sound and focused 
microwave procedures.

     UNCERTAINTIES REGARDING REIMBURSEMENT AND HEALTH CARE REFORM.  Third 
party payors (including health insurers, managed care entities and similar 
organizations) are increasingly challenging the price of medical procedures 
and services and establishing protocols which may limit physicians' 
selections of products and procedures.  The extent to which third party 
payors will provide reimbursement for health care procedures and services 
(especially those using innovative technologies) is uncertain, and there can 
be no assurances that adequate reimbursement coverage will be available to 
enable the Company to achieve market acceptance of its proposed products or 
to maintain price levels sufficient for realization of an appropriate return 
on its proposed products.  

     UNCERTAINTIES REGARDING PATENT MATTERS.  The Company's success will 
depend, in part, on its ability to obtain, assert and defend its patents, 
protect trade secrets and operate without infringing the proprietary rights 
of others.  There is a risk that some of the Company's patent applications 
will not result in issued patents; and there is a risk that any issued 
patents will not provide the Company with proprietary protection or 
competitive advantages, will be designed around by others, will be challenged 
by others and held to be invalid or unenforceable or that the patents of 
others will have a material adverse effect on the Company.  The Company's 
current technology and any related patents are subject to two Confirmatory 
Licenses in favor of the United States Government as required by applicable 
regulations, in which the Company granted an irrevocable license to the 
Government to use the technology under certain circumstances and granted 
certain "march-in rights" (permitting the Department of Energy to make use of 
the technology under certain circumstances).  The Company also seeks to 
protect its proprietary technology and processes in part by confidentiality 
agreements; however, there can be no assurances that these agreements will 
not be breached, that the Company will have adequate remedies for any breach, 
or that the Company's trade secrets will not otherwise become known or be 
independently discovered by competitors.  

     CONTROL BY EXISTING STOCKHOLDERS.  As of June 30, 1998, the Company's 
officers, directors and principal stockholders beneficially owned 
approximately 86.13% of the outstanding common stock.  Certain of the 
Company's principal stockholders are also parties to a Voting Agreement 
concerning the election of certain designees to the Board of Directors of the 
Company and Photogen, Inc. These stockholders will be able to elect the 
Company's directors and will have the ability to influence significantly the 
Company and the direction of its business and affairs.  Such concentration of 
ownership may delay or prevent a change in control of the Company, and may 
also result in the scarcity of outstanding shares currently available for 
purchase on the open markets.  These factors may affect the market and the 
market 

                                       12
<PAGE>

price for the common stock in ways that do not necessarily reflect the 
intrinsic value of the Company's stock (see "Possible Volatility of Stock 
Price," below). 

          POSSIBLE VOLATILITY OF STOCK PRICE.  The market price of the 
Company's Common Stock, like that of the securities of other biotechnology 
companies, has fluctuated significantly recently and is likely to fluctuate 
in the future.  The market for securities of biotechnology companies has 
experienced significant price and volume fluctuations that are unrelated to 
the operating performance of such companies.  In addition, announcements by 
the Company or others regarding scientific discoveries, technological 
innovations, commercial products, patents or proprietary rights, the progress 
of clinical trials or government regulation, public concern as to the safety 
of devices or drugs, the issuance of securities analysts' reports and general 
market conditions may all have a significant effect on the market price of 
the Company's Common Stock.  Fluctuations in financial performance from 
period to period, and the availability of stock on the market compared to 
demand (see "Control by Existing Stockholders"), may also have a significant 
impact on the market price of the Common Stock.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits.  The following exhibits are furnished with this Form 10-QSB:

<TABLE>
<CAPTION>

         Exhibit    Description
         -------    -----------
         <S>        <C>
          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 June 30, 1998:

     1.     Report on Form 8-K dated June 17, 1998 disclosing that, at the 1998
            Annual Meeting of Stockholders, the stockholders approved an 
            amendment to paragraph (b) of Article Fifth of the Company's 
            Restated Articles of Incorporation to increase the size of the Board
            from five to six, elected six directors and approved the Photogen 
            Technologies, Inc. 1998 Long Term Incentive Compensation Plan.

                                       13
<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:   August 10, 1998           John T. Smolik, President

                                       14
<PAGE>

                                    EXHIBIT INDEX

<TABLE>
<CAPTION>

     Exhibit
     No.       Description
     -------   -----------
     <S>       <C>
     27        Financial Data Schedule of Photogen Technologies, Inc.
</TABLE>