<PAGE>


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                                    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, 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 
SEPTEMBER 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/

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<PAGE>


                                        INDEX


                                                                           PAGE

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 . . . . . . . . . . . . . . . . . . . . . . . . 11

          ITEM 5.   OTHER INFORMATION . . . . . . . . . . . . . . . . . . . 11

          ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K. . . . . . . . . . . . 14




                                          i
<PAGE>

                          PART I. FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

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

                                     ASSETS
<TABLE>
<CAPTION>
                                                      September 30, 1998     December 31,
                                                           (Unaudited)           1997
                                                      ------------------     -------------
<S>                                                   <C>                    <C>
CURRENT ASSETS
         Cash and cash equivalents                     $    443,578           $     82,631
         Interest receivable                                    -0-                 21,402
         prepaid expenses                                   100,125                  8,164
         Marketable securities                                    -                409,238
                                                       ------------           ------------
                  TOTAL CURRENT ASSETS                      543,703                521,435

UNITED STATES TREASURY NOTES, TOTAL
         FACE VALUE $6,550,000 and $1,538,000             6,759,978              1,531,413

EQUIPMENT AND LEASEHOLD IMPROVEMENTS                        427,651                194,252

PATENTS COSTS                                               123,621                 37,273
                                                       ------------           ------------
                  TOTAL ASSETS                         $  7,854,953           $  2,284,373
                                                       ------------           ------------
                                                       ------------           ------------
                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
         Accounts Payable                              $     32,647           $    118,233
         Current portion of obligations under
               capital leases                                19,861                 18,626
                                                       ------------           ------------
                  TOTAL CURRENT LIABILITIES            $     52,508           $    136,859
                                                       ------------           ------------
OBLIGATION UNDER CAPITAL LEASES                              43,357                 60,469
                                                       ------------           ------------
                                                       ------------           ------------

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; 36,875,001 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
         development stage after
         recapitalization                                (1,884,438)              (556,481)
                                                       ------------           ------------
                  TOTAL SHAREHOLDERS' EQUITY              7,759,088              2,087,045
                                                       ------------           ------------
                                                       $  7,854,953           $  2,284,373
                                                       ------------           ------------
                                                       ------------           ------------
</TABLE>

                                       1
<PAGE>

                           PHOTOGEN TECHNOLOGIES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                       Three Months      Three Months        Nine Months       Nine Months      Cumulative
                                       Ended             Ended September     Ended             Ended            Amounts
                                       September 30,     30, 1997            September 30,     September        From
                                       1998                                  1998              30, 1997         November 3,
                                                                                                                1996
<S>                                    <C>               <C>                 <C>               <C>              <C>
REVENUES
      Investment Income                $    126,297      $     48,292        $    276,479      $     84,395     $    383,612

EXPENSES
      General and administrative            703,612           237,938           1,604,436           309,675        2,268,050
                                       ------------     -------------       -------------      ------------    -------------

                  NET INCOME (LOSS)    $   (577,315)     $   (189,646)       $ (1,327,957)     $   (225,280)    $ (1,884,438)
                                       ------------     -------------       -------------      ------------    -------------
                                       ------------     -------------       -------------      ------------    -------------
NET INCOME (LOSS)
      PER COMMON SHARE                 $       (.02)     $          -        $       (.04)     $       (.01)
                                       ------------     -------------       -------------      ------------
                                       ------------     -------------       -------------      ------------
WEIGHTED AVERAGE
      NUMBER OF COMMON
      SHARES OUTSTANDING                 36,875,001        36,000,000          36,875,001        32,878,269
                                       ------------     -------------       -------------      ------------
                                       ------------     -------------       -------------      ------------
</TABLE>


                                     2

<PAGE>

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

<TABLE>
<CAPTION>
                                                                                                       Cumulative
                                                       Nine Months Ended    Nine Months Ended         Amounts From
                                                       September 30, 1998   September 30, 1997      November 3, 1996
<S>                                                    <C>                  <C>                     <C>
OPERATING ACTIVITIES
      Net income (loss)                                 $(1,327,957)             (225,280)          $(1,884,438)
      Depreciation                                           57,369                 2,605                74,883
      Realized gain on United States
        Treasury Notes                                           --               (18,599)              (29,737)
      Loss on Securities                                      9,238                 1,048                18,503
Changes in operating assets and liabilities:
      Prepaid expense                                       (91,961)              (11,329)             (100,125)
      Interest receivable                                    21,402               (47,697)                    -
      Accounts payable                                      (85,586)               29,944                32,649
                                                        -----------         -------------          ------------
      NET CASH PROVIDED (USED) BY
      OPERATING ACTIVITIES                              $(1,417,495)             (269,308)           (1,888,265)
                                                        -----------         -------------          ------------
                                                        -----------         -------------          ------------

INVESTING ACTIVITIES

      Sale of marketable securities                         400,000             1,204,464             2,164,464
      Purchase of marketable securities                          --            (2,222,247)           (2,182,967)
      Purchase of United States Treasury Notes           (7,795,816)           (1,406,212)           (9,840,692)
      Sale of United States Treasury Notes                2,567,249             1,300,780             4,207,099
      Purchase of capital assets                           (290,766)              (72,046)             (419,933)
      Patent cost                                           (86,348)              (14,400)             (123,683)
                                                        -----------         -------------          ------------
                  NET CASH PROVIDED (USED)
                  BY INVESTING ACTIVITIES                (5,205,681)           (1,209,661)           (6,195,712)
                                                        -----------         -------------          ------------
                                                        -----------         -------------          ------------
FINANCING ACTIVITIES
      Proceeds from issuance of common stock              7,000,000                 6,313             7,006,313
      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                                        (15,877)                    -               (19,321)
                                                        -----------         -------------          ------------
      NET CASH PROVIDED (USED) BY
      FINANCING ACTIVITIES                                6,984,123             1,553,514             8,527,555
                                                        -----------         -------------          ------------
                                                        -----------         -------------          ------------
NET INCREASE (DECREASE) IN CASH
   AND CASH EQUIVALENTS                                     360,947                74,545               443,578

CASH AND CASH EQUIVALENTS AT
   BEGINNING OF PERIOD                                       82,631                     -                     -
                                                        -----------         -------------          ------------
                  CASH AND CASH
                  EQUIVALENTS
                  AT END OF PERIOD                          443,578                74,545               443,578
                                                        -----------         -------------          ------------
                                                        -----------         -------------          ------------
</TABLE>

                                     3

<PAGE>

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

<TABLE>
<CAPTION>
                                            Common Stock                         Additional       During The
                                                                   Members         Paid-In        Development
                                    Shares            Amount       Capital         Capital           Stage          Total
                                    ------            ------       -------         -------           -----          -----
<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 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 STOCK
   FOR CASH                         875,001               875             -       6,999,125                -        7,000,000


NET LOSS FOR NINE
   MONTHS ENDED
   SEPTEMBER 30, 1998                     -                 -             -               -       (1,327,957)      (1,327,957)
                                -----------       -----------     ---------     -----------      -----------      -----------

BALANCE AT
   SEPTEMBER 30, 1998            36,875,001       $    36,875             -     $ 9,606,651      ($1,884,438)     $ 7,759,088
                                -----------       -----------     ---------     -----------      -----------      -----------
                                -----------       -----------     ---------     -----------      -----------      -----------
</TABLE>

                                     4

<PAGE>

                           PHOTOGEN TECHNOLOGIES, INC.
               NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
                               September 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 nine months ended September 30, 1998 and are not 
necessarily indicative of the results that may be expected for the year ended 
December 31, 1998.


                                     5

<PAGE>

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

     UNCERTAINTIES RELATING TO COMPANY.  Since acquiring Photogen, Inc. in 
May 1997, Photogen Technologies, Inc. (which, together with its wholly-owned 
subsidiary Photogen, Inc., are collectively referred to as the "Company") has 
been principally engaged in the research and development of drugs and medical 
device products and processes for use in photodynamic therapy and imaging 
technology.  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 nine month period ended 
September 30, 1998, was $1,327,957, compared to a loss of $225,280 for the 
nine month period ended September 30, 1997.  The Company's net loss for the 
three month period ended September 30, 1998 was $577,315, compared to a loss 
of $189,646 for the three months ended September 30, 1997.  The losses are 
attributable primarily to expenses related to pursuing patent protection for 
the Company's technology, conducting animal studies 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 in the 
manufacture and/or sale of any products that the Company may develop.  In 
particular, the Company is presently a party to four research contracts with 
various third parties that will require an expenditure of a total of $509,000 
over the remaining terms of those contracts (see "Plan of Operation," below). 

     The Company's revenue for the nine month period ended September 30, 1998 
was $276,479, compared to $84,325 of revenue for the nine month period ended 
September 30, 1997.  The Company's revenue for the three month period ended 
September 30, 1998 was $126,297, compared to $48,292 of revenue during the 
three months ended September 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.  The Company has used, and expects over 
the next 12 to 18 months to use, the gross proceeds from the March 13, 1998 
private placement and from the sale of stock in the Company's 1997 
restructuring for corporate overhead and operating expenses, animal 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


                                      8

<PAGE>

in various foreign jurisdictions.  In November of 1998, U.S. Patent Number 
5,829,444 issued to the Company containing 68 claims for Photogen's treatment 
application.  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.  In addition, the Company recently filed 
three additional United States patent applications.  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.  A preliminary report has been received at the international level, 
indicating the novelty, inventive step and industrial applicability of the 
claims of each PCT application.  The national stages of the PCT applications 
have been entered into in Australia and Canada, with other countries to 
follow. 

     The Company is continuing its animal studies to examine the efficacy of 
photodynamic therapy utilizing its proprietary simultaneous two-photon 
excitation technology in a variety of applications.  The Company has research 
contracts with the University of Tennessee School of Veterinary Medicine and 
the Thomson Cancer Survival Center; and the Company recently announced that 
it signed two research agreements with teaching affiliates of Harvard Medical 
School:  the first agreement is with Massachusetts General Hospital's Center 
for Imaging and Pharmaceutical Research ("CIPR") for the study of possible 
treatment of lung and prostate cancer; the other is with the Massachusetts 
Eye and Ear Infirmary ("MEEI") for the study of possible treatments for 
age-related macular degeneration. Copies of the CIPR and MEEI Research 
Agreements are attached hereto as Exhibits 10.1 and 10.2.

     The Company, primarily in its own laboratories, has been working on 
research pursuant to a Phase 1 Small Business Innovation Research ("SBIR") 
Project grant of $99,927 from the National Institutes of Health National 
Cancer Institute.  During the course of the SBIR project, the Company 
demonstrated successful multiphoton activation of an FDA approved photoactive 
drug in a living organism.  That study also indicated that the Company's 
simultaneous two-photon laser beam could be directed at a target area in a 
mouse liver with little or no collateral damage to other tissues outside the 
target area.  In contrast, conventional single-photon excitation produced 
damage on the laser beam line of flight and in some cases severely damaged 
non-targeted organs.  

     The Company is also conducting research assessing the use of ultrafast 
light to activate melanin and its precursors to kill melanoma cells. 
Preliminary results of that research were announced in September, 1998.  
Tumors produced in mice were treated by scanning the affected area with light 
from an ultrafast pulsed laser. Tumors ranging in size from 6 to 10 mm in 
diameter and up to 3 mm deep, when treated with ultrafast pulsed laser light, 
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.  Tumors treated with conventional, 
continuous wave, laser light produced only a minimal response.  Results of a 
single treatment showed that mice with tumors 6 to 10 mm in diameter and 3 mm 
deep showed no evidence of tumor recurrence after three weeks. Tumors 5 to 7 
mm deep have shown some recurrence three weeks after treatment.  However, 
Photogen's multiphoton process is very precisely confined to the confocal 
(concentrated region of light) area of the laser beam, which reaches a depth 
of approximately 3-5 mm.  Therefore, the deeper parts of very large tumors 
under testing conditions described above were not exposed to the confocal 
region and not actually treated.  Recurrent tumors were eliminated upon 
subsequent treatment.  The Company will continue to evaluate the effects of 
multiple treatments for recurrent tumors as well as methods to insure that 
all areas of large tumors can be treated.

                                      9

<PAGE>

          In September, 1998 the Company announced the formation of its 
Scientific Advisory Council.  The Council was organized to provide scientific 
advice and counsel to the Board of Directors and Company management team.  It 
is charged with providing guidance and recommendations to help the Company 
pursue commercially important applications, benefit from the latest 
developments in chemistry, biochemistry, laser design and photochemistry, 
avoid investing Company resources in unprofitable areas, benefit fully from 
the Company's proprietary technologies, become properly staffed and equipped, 
and advance its interests by facilitating the development of licenses and 
collaborative agreements.  In addition to the Company's President, Dr. Daniel 
Tosteson (former dean of the Harvard Medical School and an accomplished 
contributor to the fields of molecular biology and medical education) 
currently serves on the Council. 

     PLAN OF OPERATION.  During the next twelve months, the Company will 
continue with animal studies and evaluation of its proprietary photoactive 
agent candidates, pursuing patent protection and seeking potential research 
and development and collaboration candidates. During the nine months ended 
September 30, 1998, the Company spent approximately $290,766 to acquire the 
laboratory instruments necessary to support animal clinical trials, and on 
development of its proprietary photoactive agent and targeting systems.  
During the third quarter of 1998, the Company purchased $92,750 of equipment 
associated with continuing development of photodynamic therapy procedures, 
(specifically melanoma, barretts esophagus and psoriasis) and equipment for 
the collection and assessment of imaging procedures technology.  The Company 
anticipates increased spending during the fourth quarter for clinical 
equipment and clinical work provided by third-party researchers.  During the 
next twelve months the Company expects to spend approximately $750,000 to 
$1,000,000 to acquire laser systems and related hardware required to support 
new clinical activities at well known clinical research centers.   The four 
research contracts to which the Company is currently a party, in the 
aggregate, will require the Company to spend $850,000 during the next twelve 
months for the projects presently contemplated under those agreements.  
Additional projects may be undertaken with those institutions with 
compensation to be agreed upon at that time.

     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 and acquisition of space and equipment until the 
final results of the animal testing are known. The Company has hired two 
full-time employees and one part-time employee during the last six months to 
provide personnel for administrative functions and laboratory assistance.  
The Company is also planning to engage a consultant for FDA and related 
regulatory matters.  The Company intends to structure its research and 
development and collaborative arrangements to make the fullest possible 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 current commitments during the next 12 to 18 months and will not be 
required to raise additional funds.  However, as the Company progresses 
toward human clinical trials, its use of capital will increase and will 
continue to do so at an accelerating pace.  Greater capital resources would 
enable the Company to quicken and expand its research and development 
activities over that 12- to 18-month period; and failure to raise additional 
capital will (absent a suitable collaborative agreement providing for a third 
party to take over these functions) significantly impair the Company's 
ability


                                      10

<PAGE>

to conduct further research and development activities beyond those currently 
contracted for as well as its ability to seek regulatory approval for any 
possible product resulting from that research.  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.  

     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.  


                                      11

<PAGE>

     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.  

     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.


                                      12

<PAGE>

     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 September 30, 1998, the 
Company's officers, directors and principal stockholders beneficially owned 
approximately 86.40% 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 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 companies generally in the 
biotechnology and similar scientific fields, has fluctuated significantly 
recently and is likely to fluctuate in the future.  The market for securities 
of such 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 


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<PAGE>

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:


     EXHIBIT        DESCRIPTION
     -------        -----------

     10.1      Research Agreement dated as of October 1, 1998 by and between
               Photogen, Inc. and Massachusetts General Hospital (relating to
               the Center for Imaging and Pharmaceutical Research).

     10.2      Research Agreement dated as of October 1, 1998 by and between
               Photogen, Inc. and The Massachusetts Eye and Ear Infirmary
               (relating to age-related macular degeneration research).

     27        Financial Data Schedule of  Photogen Technologies, Inc.

(b)  Reports on Form 8-K.

     The following reports on Form 8-K were filed in the three month period 
ended September 30,  1998:

     1.   Report on Form 8-K dated July 14, 1998, announcing U.S. Patent and
          Trademark Office notice of allowance regarding imaging patent
          application.

     2.   Report on Form 8-K dated September 3, 1998 disclosing the Company's
          announcement of preliminary results of research regarding melanoma 
          treatment.

     3.   Report on Form 8-K dated September 24, 1998 disclosing the Company's
          announcement that Daniel Tosteson, M.D., the retired dean of Harvard 
          Medical School, joined the Photogen Scientific Advisory Council.


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<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 13, 1998                John T. Smolik, President


                                      15

<PAGE>

                                    EXHIBIT INDEX


EXHIBIT
NO.       DESCRIPTION
-------   -----------

10.1      Research Agreement dated as of October 1, 1998 by and between
          Photogen, Inc. and Massachusetts General Hospital (relating to the
          Center for Imaging and Pharmaceutical Research).

10.2      Research Agreement dated as of October 1, 1998 by and between
          Photogen, Inc. and The Massachusetts Eye and Ear Infirmary (relating
          to age-related macular degeneration research).

27        Financial Data Schedule of  Photogen Technologies, Inc.


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