---

---

UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

---

FORM 10-Q

|ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002

OR

|o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

for the transition period ended

Commission File Number 0-23553

---

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

NEVADA(State or other jurisdiction of
incorporation or organization)

36-4010347(I.R.S. Employer Identification No.)140 Union Square Drive
New Hope, Pennsylvania(Address of principal executive offices)

18938(Zip Code)


(215) 862-6860(Registrant's telephone number, including area code)

---

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 ý    No o

Indicate
by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange
Act): Yes o    No ý

Indicate
the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 38,842,298 SHARES OF COMMON STOCK, $.001 PAR VALUE PER
SHARE, ISSUED AND OUTSTANDING AT OCTOBER 31, 2002.

---

---

---



INDEX

|                                 |                                                                                                  |    | Page
|-------------------------------- | ------------------------------------------------------------------------------------------------ | -- | ----
|Part I.    Financial Information |                                                                                                  | 3 
|                                 | Item 1.    Financial Statements                                                                  |    | 3   
|                                 | Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations |    | 9   
|                                 | Item 3.    Quantitative and Qualitative Disclosures about Market Risk                            |    | 14  
|                                 | Item 4.    Controls and Procedures                                                               |    | 14  
|Part II.    Other Information    |                                                                                                  | 15
|                                 | Item 5.    Other Information                                                                     |    | 15  
|                                 | Item 6.    Exhibits and Reports on Form 8-K                                                      |    | 20  

2

---



PART I.    FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

Photogen Technologies, Inc.
(A Development Stage Company)
Consolidated Condensed Balance Sheets
All amounts in $

|                                                                                                              |                                                                                                                 | September 30,
2002                                                                                                                                                                                                                                                                             |            | December 31,
2001 |           
|------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------- | ----------------- | ----------
|
|Assets                                                                                                        |                                                                                                                 |                                                                                                                                                                                                                                                                                                |            |                   |           
|Current Assets                                                                                                |                                                                                                                 |                                                                                                                                                                                                                                                                                                |            |                   |           
|                                                                                                              | Cash and cash equivalents                                                                                       |                                                                                                                                                                                                                                                                                                | $          | 111,830           |           
|                                                                                                              | Prepaid expenses                                                                                                |                                                                                                                                                                                                                                                                                                |            | 282,458           |           
|                                                                                                              | Deposit                                                                                                         |                                                                                                                                                                                                                                                                                                |            | 132,193           |           
|                                                                                                              |                                                                                                                 |                                                                                                                                                                                                                                                                                                |            |                   |           
|Total Current Assets                                                                                          |                                                                                                                 |                                                                                                                                                                                                                                                                                                | 526,481    |                   |           
|Equipment and Leasehold Improvements,less accumulated depreciation of $1,346,273 and $1,059,997, respectively |                                                                                                                 |                                                                                                                                                                                                                                                                                                | 595,944    |                   |           
|Patent Costs,net of amortization of $131,942 and $100,693, respectively                                       |                                                                                                                 |                                                                                                                                                                                                                                                                                                | 368,058    |                   |           
|Deposits                                                                                                      |                                                                                                                 |                                                                                                                                                                                                                                                                                                | 14,383     |                   |           
|Investment in and Advances to Affiliate                                                                       |                                                                                                                 |                                                                                                                                                                                                                                                                                                | 10,388,806 |                   |           
|                                                                                                              |                                                                                                                 |                                                                                                                                                                                                                                                                                                |            |                   |           
|                                                                                                              |                                                                                                                 | Total Assets                                                                                                                                                                                                                                                                                   |            | $                 | 11,893,672
|                                                                                                              |                                                                                                                 |                                                                                                                                                                                                                                                                                                |            |                   |           
|Liabilities and Stockholders' Equity                                                                          |                                                                                                                 |                                                                                                                                                                                                                                                                                                |            |                   |           
|Current Liabilities                                                                                           |                                                                                                                 |                                                                                                                                                                                                                                                                                                |            |                   |           
|                                                                                                              | Accounts payable                                                                                                |                                                                                                                                                                                                                                                                                                | $          | 1,278,346         |           
|                                                                                                              | Accrued expenses                                                                                                |                                                                                                                                                                                                                                                                                                |            | 1,050,695         |           
|                                                                                                              | Accrued restructuring                                                                                           |                                                                                                                                                                                                                                                                                                |            |                  |           
|                                                                                                              | Accrued equipment lease                                                                                         |                                                                                                                                                                                                                                                                                                |            | 393,312           |           
|                                                                                                              |                                                                                                                 |                                                                                                                                                                                                                                                                                                |            |                   |           
|Total Current Liabilities                                                                                     |                                                                                                                 |                                                                                                                                                                                                                                                                                                | 2,722,353  |                   |           
|Accrued Equipment Lease                                                                                       |                                                                                                                 |                                                                                                                                                                                                                                                                                                | 524,382    |                   |           
|Long-Term Debt                                                                                                |                                                                                                                 |                                                                                                                                                                                                                                                                                                | 4,371,910  |                   |           
|                                                                                                              |                                                                                                                 |                                                                                                                                                                                                                                                                                                |            |                   |           
|Total Liabilities                                                                                             |                                                                                                                 |                                                                                                                                                                                                                                                                                                | 7,618,645  |                   |           
|                                                                                                              |                                                                                                                 |                                                                                                                                                                                                                                                                                                |            |                   |           
|Shares Subject to Rescission                                                                                  |                                                                                                                 |                                                                                                                                                                                                                                                                                                | 650,000    |                   |           
|                                                                                                              |                                                                                                                 |                                                                                                                                                                                                                                                                                                |            |                   |           
|Shareholders' Equity                                                                                          |                                                                                                                 |                                                                                                                                                                                                                                                                                                |            |                   |           
|                                                                                                              | Preferred stock; par value $.01 per share; 5,000,000 shares authorized including:                               |                                                                                                                                                                                                                                                                                                |            |                   |           
|                                                                                                              |                                                                                                                 | Series A Preferred Stock; 13,788 and 12,856 shares authorized, issued and outstanding at September 30, 2002 and December 31, 2001, respectively, liquidation preference $1,000 per share (in aggregate $13,788,000 at September 30, 2002
and $12,856,000 at December 31, 2001                  |            |                   | 137       
|                                                                                                              |                                                                                                                 | Series B Preferred Stock; 402,000 shares authorized; 378,716 and 357,280 shares issued and outstanding, at September 30, 2002 and December 31, 2001, respectively, liquidation preference $16.88 per share (in aggregate $6,392,726 at
September 30, 2002 and $6,030,886 at December 31, 2001) |            |                   | 3,786     
|                                                                                                              | Common stock; par value $.001 per share; 150,000,000 shares authorized; 9,585,948 shares issued and outstanding |                                                                                                                                                                                                                                                                                                |            | 9,586             |           
|                                                                                                              | Additional paid-in capital                                                                                      |                                                                                                                                                                                                                                                                                                |            | 38,746,451        |           
|                                                                                                              | Deficit accumulated during the development stage                                                                |                                                                                                                                                                                                                                                                                                |            | (35,134,933       | )         
|                                                                                                              |                                                                                                                 |                                                                                                                                                                                                                                                                                                |            |                   |           
|Total Shareholders' Equity                                                                                    |                                                                                                                 |                                                                                                                                                                                                                                                                                                | 3,625,027  |                   |           
|                                                                                                              |                                                                                                                 |                                                                                                                                                                                                                                                                                                |            |                   |           
|Total Liabilities and Shareholders' Equity                                                                    |                                                                                                                 | $                                                                                                                                                                                                                                                                                              | 11,893,672 |                   | $         
|                                                                                                              |                                                                                                                 |                                                                                                                                                                                                                                                                                                |            |                   |           

3

---

Photogen Technologies, Inc.
(A Development Stage Company)
Consolidated Condensed Statements of Operations
(Unaudited)
All amounts in $

|                                                                       |                                     | Three Months
Ended
September 30,
2002 |            | Three Months
Ended
September 30,
2001 |   | Nine Months
Ended
September 30,
3002 |           | Nine Months
Ended
September 30,
2001 |            | Cumulative
Amounts
From
November 3, 1996
(Inception) |  
|---------------------------------------------------------------------- | ----------------------------------- | ------------------------------------- | ---------- | ------------------------------------- | - | ------------------------------------ | --------- | ------------------------------------ | ---------- | ---------------------------------------------------- | -
|Operating Expenses                                                     |                                     |                                       |            |                                       |   |                                      |           |                                      |            |                                                      |  
|                                                                       | Research and development            |                                       | $          | 620,998                               |   | $                                    | 1,056,338 |                                      | $          | 2,007,641                                            |  
|                                                                       | General and administrative          |                                       |            | 841,804                               |   |                                      | 613,512   |                                      |            | 2,166,441                                            |  
|                                                                       | Provision for future lease payments |                                       |            |                                      |   |                                      |          |                                      |            |                                                     |  
|                                                                       | Restructuring charges               |                                       |            |                                      |   |                                      |          |                                      |            | 451,068                                              |  
|                                                                       |                                     |                                       |            |                                       |   |                                      |           |                                      |            |                                                      |  
|Total Operating Expenses                                               |                                     |                                       | 1,462,802  |                                       |   | 1,669,850                            |           |                                      | 4,625,150  |                                                      |  
|Loss from Joint Venture                                                |                                     |                                       | (305,400   | )                                     |   | (352,236                             | )         |                                      | (1,245,845 | )                                                    |  
|Investment Income                                                      |                                     |                                       | 30         |                                       |   | 18,711                               |           |                                      | 1,532      |                                                      |  
|Interest Expense                                                       |                                     |                                       | (71,444    | )                                     |   |                                     |           |                                      | (172,157   | )                                                    |  
|                                                                       |                                     |                                       |            |                                       |   |                                      |           |                                      |            |                                                      |  
|Net Loss                                                               |                                     | $                                     | (1,839,616 | )                                     | $ | (2,003,375                           | )         | $                                    | (6,041,620 | )                                                    | $
|                                                                       |                                     |                                       |            |                                       |   |                                      |           |                                      |            |                                                      |  
|Dividends on Preferred Stock                                           |                                     |                                       | (345,622   | )                                     |   | (758,493                             | )         |                                      | (1,024,300 | )                                                    |  
|                                                                       |                                     |                                       |            |                                       |   |                                      |           |                                      |            |                                                      |  
|Net Loss Applicable to Common Shareholders                             |                                     | $                                     | (2,185,238 | )                                     | $ | (2,761,868                           | )         | $                                    | (7,065,920 | )                                                    | $
|                                                                       |                                     |                                       |            |                                       |   |                                      |           |                                      |            |                                                      |  
|Basic and Diluted Loss per Common Share                                |                                     | $                                     | (.23       | )                                     | $ | (.29                                 | )         | $                                    | (.73       | )                                                    | $
|                                                                       |                                     |                                       |            |                                       |   |                                      |           |                                      |            |                                                      |  
|Weighted Average Number of Common Shares OutstandingBasic and Diluted |                                     |                                       | 9,710,575  |                                       |   | 9,526,080                            |           |                                      | 9,710,575  |                                                      |  
|                                                                       |                                     |                                       |            |                                       |   |                                      |           |                                      |            |                                                      |  

4

---

Photogen Technologies, Inc.
(A Development Stage Company)
Consolidated Condensed Statements of Shareholders' Equity
(Unaudited)
All amounts in $

|                                                |                                                                                   | Preferred Stock
Series A |        | Preferred Stock
Series B |     |     |         |         |   |       |       |           |           | Deficit
Accumulated
During the
Development
Stage |       |       |  
|----------------------------------------------- | --------------------------------------------------------------------------------- | ------------------------ | ------ | ------------------------ | --- | --- | ------- | ------- | - | ----- | ----- | --------- | --------- | ------------------------------------------------ | ----- | ----- | -
|
|
|
|Contribution of capital                         |                                                                                   |                         |        | $                        |    |     |        |         | $ |      |       |          |           | $                                                |      |       | $
|Net loss for the period ended December 31, 1996 |                                                                                   |                         |        |                          |    |     |        |         |   |      |       |          |           |                                                  |      |       |  
|                                                |                                                                                   |                          |        |                          |     |     |         |         |   |       |       |           |           |                                                  |       |       |  
|Balance,at December 31, 1996                    |                                                                                   |                         |        |                          |    |     |        |         |   |      |       |          |           |                                                  |      |       |  
|                                                | Net loss and capital contributions for the period January 1, 1997 to May 15, 1997 |                          |       |                          |     |    |         |        |   |       |      |           |          |                                                  |       |      |  
|                                                | Capital contribution                                                              |                          |       |                          |     |    |         |        |   |       |      |           |          |                                                  |       |      |  
|                                                |                                                                                   |                          |        |                          |     |     |         |         |   |       |       |           |           |                                                  |       |       |  
|Balance,at May 15, 1997                         |                                                                                   |                         |        |                          |    |     |        |         |   |      |       |          |           |                                                  |      |       |  
|                                                | Issuance of common stock                                                          |                          |       |                          |     |    |         |        |   |       |      |           | 1,578,208 |                                                  |       | 1,578 |  
|                                                | Effect of recapitalization and merger                                             |                          |       |                          |     |    |         |        |   |       |      |           | 7,421,792 |                                                  |       | 7,422 |  
|                                                | Cost associated with recapitalization and merger                                  |                          |       |                          |     |    |         |        |   |       |      |           |          |                                                  |       |      |  
|                                                | Net loss for the period May 16, 1997 to December 31, 1997                         |                          |       |                          |     |    |         |        |   |       |      |           |          |                                                  |       |      |  
|                                                |                                                                                   |                          |        |                          |     |     |         |         |   |       |       |           |           |                                                  |       |       |  
|Balance,at December 31, 1997                    |                                                                                   |                         |        |                          |    |     |        |         |   |      |       | 9,000,000 |           |                                                  | 9,000 |       |  
|                                                | Issuance of common stock                                                          |                          |       |                          |     |    |         |        |   |       |      |           | 218,755   |                                                  |       | 219   |  
|                                                | Costs associated with common stock issuance                                       |                          |       |                          |     |    |         |        |   |       |      |           |          |                                                  |       |      |  
|                                                | Options issued to consultants                                                     |                          |       |                          |     |    |         |        |   |       |      |           |          |                                                  |       |      |  
|                                                | Net loss for the year ended December 31, 1998                                     |                          |       |                          |     |    |         |        |   |       |      |           |          |                                                  |       |      |  
|                                                |                                                                                   |                          |        |                          |     |     |         |         |   |       |       |           |           |                                                  |       |       |  
|Balance,at December 31, 1998                    |                                                                                   |                         |        | $                        |    |     |        |         | $ |      |       | 9,218,755 |           | $                                                | 9,219 |       |  
|                                                | Exercise of stock options                                                         |                          |       |                          |     |    |         |        |   |       |      |           | 1,125     |                                                  |       | 1     |  
|                                                | Issuance of warrants and options                                                  |                          |       |                          |     |    |         |        |   |       |      |           |          |                                                  |       |      |  
|                                                | Issuance of common stock                                                          |                          |       |                          |     |    |         |        |   |       |      |           | 125,967   |                                                  |       | 126   |  
|                                                | Issuance of preferred stock                                                       |                          | 12,015 |                          |     | 120 |         |        |   |       |      |           |          |                                                  |       |      |  
|                                                | Net loss for the year ended December 31, 1999                                     |                          |       |                          |     |    |         |        |   |       |      |           |          |                                                  |       |      |  
|                                                |                                                                                   |                          |        |                          |     |     |         |         |   |       |       |           |           |                                                  |       |       |  
|Balance,at December 31, 1999                    |                                                                                   | 12,015                   |        |                          | 120 |     |        |         |   |      |       | 9,345,847 |           |                                                  | 9,346 |       |  
|                                                | Stock option compensation                                                         |                          |       |                          |     |    |         |        |   |       |      |           |          |                                                  |       |      |  
|                                                | Issuance of warrants and options                                                  |                          |       |                          |     |    |         |        |   |       |      |           |          |                                                  |       |      |  
|                                                | Issuance of preferred stock dividend                                              |                          | 841    |                          |     | 8   |         |        |   |       |      |           |          |                                                  |       |      |  
|                                                | Issuance of preferred stock                                                       |                          |       |                          |     |    |         | 337,056 |   |       | 3,370 |           |          |                                                  |       |      |  
|                                                | Net loss for the year ended December 31, 2000                                     |                          |       |                          |     |    |         |        |   |       |      |           |          |                                                  |       |      |  
|                                                |                                                                                   |                          |        |                          |     |     |         |         |   |       |       |           |           |                                                  |       |       |  
|Balance,at December 31, 2000                    |                                                                                   | 12,856                   |        |                          | 128 |     | 337,056 |         |   | 3,370 |       | 9,345,847 |           |                                                  | 9,346 |       |  
|                                                | Stock option compensation                                                         |                          |       |                          |     |    |         |        |   |       |      |           |          |                                                  |       |      |  
|                                                | Issuance of common stock for cash                                                 |                          |       |                          |     |    |         |        |   |       |      |           | 49,245    |                                                  |       | 49    |  
|                                                | Issuance of common stock in satisfaction of anti-dilution provision               |                          |        |                          |     |     |         |         |   |       |       |           | 190,856   |                                                  |       | 191   |  
|                                                | Issuance of preferred stock dividend                                              |                          |       |                          |     |    |         | 20,224  |   |       | 202   |           |          |                                                  |       |      |  
|                                                | Net loss for the year ended December 31, 2001                                     |                          |       |                          |     |    |         |        |   |       |      |           |          |                                                  |       |      |  
|                                                |                                                                                   |                          |        |                          |     |     |         |         |   |       |       |           |           |                                                  |       |       |  
|Balance,at December 31, 2001                    |                                                                                   | 12,856                   |        | $                        | 128 |     | 357,280 |         | $ | 3,572 |       | 9,585,948 |           | $                                                | 9,586 |       |  
|                                                | Stock option compensation                                                         |                          |       |                          |     |    |         |        |   |       |      |           |          |                                                  |       |      |  
|                                                | Issuance of preferred stock dividend                                              |                          | 932    |                          |     | 9   |         | 21,436  |   |       | 214   |           |          |                                                  |       |      |  
|                                                | Issuance of options in settlement of lawsuit                                      |                          |       |                          |     |    |         |        |   |       |      |           |          |                                                  |       |      |  
|                                                | Net loss for the nine months ended September 30 2002                              |                          |       |                          |     |    |         |        |   |       |      |           |          |                                                  |       |      |  
|                                                |                                                                                   |                          |        |                          |     |     |         |         |   |       |       |           |           |                                                  |       |       |  
|Balance,at September 30 2002                    |                                                                                   | 13,788                   |        | $                        | 137 |     | 378,716 |         | $ | 3,786 |       | 9,585,948 |           | $                                                | 9,586 |       |  
|                                                |                                                                                   |                          |        |                          |     |     |         |         |   |       |       |           |           |                                                  |       |       |  

5

---

Photogen Technologies, Inc.
(A Development Stage Company)
Consolidated Condensed Statements of Operations
(Unaudited)
All amounts in $

|                                                      |                                                        | Nine Months
Ended
September 30,
2002                                                                                                |            | Nine Months
Ended
September 30,
2001 |          | Cumulative
Amounts From
November 3, 1996
(Inception) |           
|----------------------------------------------------- | ------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------- | ---------- | ------------------------------------ | -------- | ---------------------------------------------------- | ----------
|Cash Flows From Operating Activities                  |                                                        |                                                                                                                                     |            |                                      |          |                                                      |           
|                                                      | Net loss                                               |                                                                                                                                     | $          | (6,041,620                           | )        | $                                                    | (7,104,484
|                                                      | Depreciation and amortization                          |                                                                                                                                     |            | 317,525                              |          |                                                      | 336,349   
|                                                      | Loss (gain) on disposal of fixed assets                |                                                                                                                                     |            |                                     |          |                                                      | (4,242    
|                                                      | Gain on sale of marketable securities                  |                                                                                                                                     |            |                                     |          |                                                      |          
|                                                      | United States Treasury Notes Amortization              |                                                                                                                                     |            |                                     |          |                                                      | 764       
|                                                      | Stock option compensation                              |                                                                                                                                     |            | 43,701                               |          |                                                      | 48,547    
|                                                      | Issuance of warrants in exchange for services rendered |                                                                                                                                     |            |                                     |          |                                                      | 760,363   
|                                                      | Loss from investment in affiliate                      |                                                                                                                                     |            | 1,245,845                            |          |                                                      | 1,514,080 
|                                                      | Changes in operating assets and liabilities:           |                                                                                                                                     |            |                                      |          |                                                      |           
|                                                      |                                                        | Prepaid expenses                                                                                                                    |            |                                      | (252,683 | )                                                    |           
|                                                      |                                                        | Interest receivable                                                                                                                 |            |                                      |         |                                                      |           
|                                                      |                                                        | Accounts payable                                                                                                                    |            |                                      | 904,572  |                                                      |           
|                                                      |                                                        | Accrued expenses                                                                                                                    |            |                                      | 656,453  |                                                      |           
|                                                      |                                                        | Accrued equipment lease                                                                                                             |            |                                      | 91,131   |                                                      |           
|                                                      |                                                        | Accrued restructuring                                                                                                               |            |                                      | 276,068  |                                                      |           
|                                                      |                                                        |                                                                                                                                     |            |                                      |          |                                                      |           
|Net cash used in operating activities                 |                                                        |                                                                                                                                     | (2,759,008 | )                                    |          | (4,083,683                                           | )         
|                                                      |                                                        |                                                                                                                                     |            |                                      |          |                                                      |           
|Cash Flows From Investing Activities                  |                                                        |                                                                                                                                     |            |                                      |          |                                                      |           
|                                                      | Sale of marketable securities                          |                                                                                                                                     |            |                                     |          |                                                      |          
|                                                      | Purchases of marketable securities                     |                                                                                                                                     |            |                                     |          |                                                      |          
|                                                      | Purchases of United States Treasury Notes              |                                                                                                                                     |            |                                     |          |                                                      | (4,770,000
|                                                      | Sales of United States Treasury Notes                  |                                                                                                                                     |            |                                     |          |                                                      | 8,915,000 
|                                                      | Purchase of capital assets                             |                                                                                                                                     |            |                                     |          |                                                      | (45,938   
|                                                      | Proceeds from sale of equipment                        |                                                                                                                                     |            |                                     |          |                                                      | 145,177   
|                                                      | Costs to acquire patent                                |                                                                                                                                     |            |                                     |          |                                                      |          
|                                                      | Investment in and advances to affiliate                |                                                                                                                                     |            | (639,971                             | )        |                                                      | (1,962,825
|                                                      | Decrease (increase) in deposit                         |                                                                                                                                     |            | 100,000                              |          |                                                      | (14,383   
|                                                      |                                                        |                                                                                                                                     |            |                                      |          |                                                      |           
|Net cash provided by (used in) investing activities   |                                                        |                                                                                                                                     | (539,971   | )                                    |          | 2,267,031                                            |           
|                                                      |                                                        |                                                                                                                                     |            |                                      |          |                                                      |           
|Cash Flows From Financing Activities                  |                                                        |                                                                                                                                     |            |                                      |          |                                                      |           
|                                                      | Principal payments on capital leases                   |                                                                                                                                     | $          |                                     |          | $                                                    | (13,812   
|                                                      | Net proceeds from issuance of equity                   |                                                                                                                                     |            |                                     |          |                                                      | 1,068,723 
|                                                      | Proceeds from capital contributions by shareholders    |                                                                                                                                     |            |                                     |          |                                                      |          
|                                                      | Proceeds from issuance of debt                         |                                                                                                                                     |            | 2,057,905                            |          |                                                      | 1,967,785 
|                                                      | Cost of recapitalization                               |                                                                                                                                     |            |                                     |          |                                                      |          
|                                                      |                                                        |                                                                                                                                     |            |                                      |          |                                                      |           
|Net cash provided by financing activities             |                                                        |                                                                                                                                     | 2,057,905  |                                      |          | 3,022,696                                            |           
|                                                      |                                                        |                                                                                                                                     |            |                                      |          |                                                      |           
|Increase (decrease) in Cash and Cash Equivalents      |                                                        |                                                                                                                                     | (1,241,074 | )                                    |          | 1,206,044                                            |           
|Cash and Cash Equivalents,at beginning of period      |                                                        |                                                                                                                                     | 1,352,904  |                                      |          | 622,795                                              |           
|                                                      |                                                        |                                                                                                                                     |            |                                      |          |                                                      |           
|Cash and Cash Equivalents,at end of period            |                                                        | $                                                                                                                                   | 111,830    |                                      | $        | 1,828,839                                            |           
|                                                      |                                                        |                                                                                                                                     |            |                                      |          |                                                      |           
|Supplemental Schedule of Noncash Investing Activities |                                                        |                                                                                                                                     |            |                                     
|                                                      | 2002                                                   |                                                                                                                                     |            |                                      |          |                                                      |           
|                                                      |                                                        | Payments due on the accrued equipment lease were made through a reduction in deposits due to the Company in the amount of $297,177. |            |                                      |          |                                                     
|                                                      |                                                        | Stock options valued at $450,000 were issued in settlement of a restructuring accrual.                                              |            |                                      |          |                                                     

6

---



Photogen Technologies, Inc.
(A Development Stage Company)
Notes To Condensed Financial Statements
(Unaudited)

September 30, 2002

The
accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information pursuant to
Regulation S-K. 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, 2002 are not necessarily indicative of the results that may be expected for the year ended December 31, 2002.

The
following is summarized financial information for the joint venture Sentigen, Ltd. at September 30, 2002 and 2001.

September 30,

2002

2001License purchased from Elan, net of amortization of $1,956,527 in 2002 and $978,263 in 2001

$
13,043,473

$
14,021,737Total assets

$
13,043,473

$
14,021,737Due to affiliates

$
366,961

$
339,733Total shareholders' equity


12,676,512


13,682,004Total liabilities and equity

$
13,043,473

$
14,021,737Research and development expense

$
802,926

$
1,156,539General and administrative expense


18,739


Amortization of license


733,698


733,698Net loss

$
1,555,363

$
1,890,237


Basic
and diluted loss per common share is computed based on the weighted average number of common shares outstanding. Loss per share excludes the impact of outstanding options and
warrants, preferred stock and convertible debt as they are antidilutive. Potential common shares excluded from the calculation at September 30, 2002 are 1,629,750 options, 593,450 warrants,
299,828 shares issuable upon the conversion of Series A and B Preferred Stock and 42,067 shares issuable upon conversion of the Elan line of credit. Basic and diluted loss per common share
includes 124,627 shares of common stock subject to rescission. See Note 6 for issuances after September 30, 2002.

In
2000, the Company recorded a restructuring charge of $597,025, included in operating expenses, relating to the closure of its operations in Westborough, Massachusetts. The
restructuring charge includes accruals related to estimated lease termination costs and accruals related to employee severance and related expenses in connection with their termination. All employees
at the Westborough facility were terminated. The activities previously
performed at the Westborough facility will continue at other company locations or with outside consultants. In 2002, the Company recorded an additional restructuring charge related to additional
termination costs for one of

7

---

the Westborough employees. As of September 30, 2002, all restructuring costs have been settled.    The restructuring charge is summarized as follows:

|               |  | Charged in
2000 |         | Utilized
in 2000 |   | Balance at
December 31,
2000 |  | Utilized
in 2001 |         | Balance at
December 31,
2001 |   | Charged in
2002 |  | Utilized
in 2002 |         | Balance at
September 30,
2002
|-------------- |  | --------------- | ------- | ---------------- | - | ---------------------------- |  | ---------------- | ------- | ---------------------------- | - | --------------- |  | ---------------- | ------- | -----------------------------
|Employee costs |  | $               | 395,223 |                  | $ | 65,223                       |  | $                | 330,000 |                              | $ | 156,068         |  | $                | 173,932 |                              
|Lease costs    |  |                 | 201,802 |                  |   | 201,802                      |  |                  |        |                              |   |                |  |                  |        |                              
|               |  |                 |         |                  |   |                              |  |                  |         |                              |   |                 |  |                  |         |                              
|Total          |  | $               | 597,025 |                  | $ | 267,025                      |  | $                | 330,000 |                              | $ | 156,068         |  | $                | 173,932 |                              
|               |  |                 |         |                  |   |                              |  |                  |         |                              |   |                 |  |                  |         |                              

Long-term
debt consists of the following:

|                                                                                                                                                                         |  | September 30,
2002 |           | December 31,
2001
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------ | --------- | -----------------
|Line of credit with Elan, interest at 8%, due in 2005 or convertible to common stock at $18.15 per share, maximum borrowings of $4,806,000                               |  | $                  | 2,846,910 |                  
|Line of credit with entity controlled by a director of the Company, interest at 4.65%, due in 2007, maximum borrowings of $2,500,000, secured by all of Company's assets |  |                    | 1,525,000 |                  
|                                                                                                                                                                         |  |                    |           |                  
|Total long-term debt                                                                                                                                                     |  | $                  | 4,371,910 |                  
|                                                                                                                                                                         |  |                    |           |                  

On
November 12, 2002, the Company closed the following transactions:



In
conjunction with these transactions, the Company implemented a one-for-four reverse split of its common stock. All amounts have been retroactively stated to
reflect this reverse stock split. Following the financing, split-off and reverse split, the Company's outstanding common stock totals approximately 13,475,156 shares.

8

---

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Portions of the discussion in this item contain forward-looking statements and are subject to the Risk Factors described below.

We
are an emerging, development-stage biopharmaceutical company focused on developing a novel contrast agent with potential applications in the imaging of the cardiovascular system and
cancer metastasizing into the lymphatic system. As of September 30, 2002, we also had in development products to treat psoriasis and other topical diseases and cancer for which we have signed
an agreement to split-off to five founding shareholders of Photogen. See "Other Products" and "Subsequent Events" below.

Our
principal product is a contrast agent we call PH-50, when referring to cardiovascular applications, and N1177 when referring to lymphography. The lymphography application
is being developed in a joint venture with units of Elan Corporation, plc. We own or license the rights for all other medical applications. In December 2001, we announced positive preclinical
results of PH-50. Based on these studies, the preclinical toxicology and other study work, including the product's use in 65 patients for lymphography, we shifted the strategic direction
of Photogen to focus on the cardiovascular and lymphography applications. We have not completed development of any diagnostic or therapeutic product or process at this time and have no revenue from
operations.

We
operate with a small staff of researchers and senior level managers to conduct basic research, oversee and direct third party contractors and perform administrative functions. We
contract with third party consultants having expertise in clinical development and regulatory matters to supplement our internal capabilities. We contract with third party research laboratories,
contract research organizations and manufacturers for clinical material supplies and the management of clinical trials. We also contract with academic and other institutions to conduct specified
research projects.

We
expect that our quarterly and annual results of operations will fluctuate based on several factors including, the timing and amount of expenses involved in conducting our research
programs, particularly the conduct of clinical trials, the cost of clinical material used in those trials and required for compliance with FDA regulations and the amount, if any, of fees, milestone
payments and research support payments received from potential strategic partners.

We
consider our investment in the joint venture with affiliates of Elan Corporation to be our only asset subject to a significant estimate. The carrying value of our 80.1% equity
interest in Sentigen, Ltd., the joint venture entity, at September 30, 2002 was $10,388,806. At year-end 2001, we reviewed the financial projections of Sentigen and the
underlying assumptions and have concluded that there has been no degradation to the carrying value of our investment. The assumptions underlying the financial forecasts were based on then currently
available information, including estimates of development costs, pricing, operating expenses and market sizes and penetration. These estimates may change and any such changes may impact our future
estimates of appropriate carrying values. At September 30, 2002, no changes had occurred in such estimates.

CORE PRODUCTS

Our core product is PH-50/N1177, a novel contrast agent that may have multiple applications in vascular and cardiac imaging and lymphography.

CARDIOVASCULAR IMAGINGPH-50 has application as a novel technique to image the cardiovascular system using
standard CT scanners. In animal model studies, encouraging results have been demonstrated to image the heart, liver and other organs. PH-50 could allow the imaging of the cardiovascular
system (angiography) and other organs without the need for catheters and high-speed cameras. Over two million angiography procedures are conducted annually in the U.S. Preclinical studies
also suggest that PH-50 can be used to detect coronary vulnerable plaque, a condition believed to be a precursor to heart attacks and sudden cardiac failure.

LYMPHOGRAPHYThrough a joint venture with units of Elan Corporation, we are developing N1177, a proprietary material to
precisely locate and diagnose the spread of cancer (micro-metastases) when administered into a patient's lymphatic system. This novel nanoparticulate (a very small particle designed to travel through
the lymphatic system) X-ray contrast agent, when used with a standard computed tomography (CT) scanner (a technology called "lymphography"), is being developed to enable imaging and
detection of cancer in lymph nodes prior to surgery. Phase 1 studies have been completed. Phase 2 studies are planned to commence within the next six months.

9

---



OTHER PRODUCTS

As of July 29, 2002 we signed definitive agreements with the five founders of Photogen, to split-off to an entity they control our
PH-10 and laser technologies in exchange for all the Company's stock beneficially owned by them (approximately 5,137,109 (post-reverse split) shares or 52.9% of our outstanding common
stock, all of which were cancelled at the closing). The corporate separation transaction was approved by our stockholders on October 31, 2002 and closed on November 12, 2002.

Products
and technology that were transferred to the founders related to our therapeutic business, and include:

PH-10PH-10 is a compound that reacts with energy and has applications for use in treating:



MULTIPHOTON TECHNOLOGYA proprietary laser technology that uses ultrashort, pulsed bursts of long wavelength light to activate
photoactive agents and other compounds that react with light to destroy diseased tissue. This technology can also be used to create images of tissue for diagnostic purposes.

Our
senior executive and clinical development organization operates from our corporate headquarters in New Hope, Pennsylvania. We have on staff personnel with expertise in clinical
development, clinical trial design and regulatory approval processes. We also work closely with consultants experienced in drug development and regulatory requirements. Our scientific research team
and certain administrative functions (all of which were transferred in the corporate separation transaction), located in Knoxville, Tennessee, included specialists in
molecular biology, non-linear laser physics, interventional radiology, spectroscopy, bioengineering and photochemistry.

RESULTS OF OPERATIONS

Our efforts have been focused on the development and clinical testing of diagnostic and therapeutic products. To date, we have not generated revenues from the
sale of any proposed diagnostic or therapeutic products or other operations.

Research
and development costs for the nine-month period ended September 30, 2002 decreased 12.8% percent to $2,007,641 from $2,301,793 for the comparable
nine-month period ended September 30, 2001. The decrease was due principally to our pursuit of the development program for PH-50 at a slower pace than originally
planned, lower expense levels for our FDA consultants and reduced costs associated with prosecuting patent protection for our intellectual property.

General
and administrative expenses declined 19.6% percent to $2,166,441 in the nine-month period ended September 30, 2002 from $2,695,167 in the comparable 2001
period. The decline is primarily attributable to the reduction in the amortization of the cost of certain warrants that had been granted to a consultant, the absence of recruiting costs, partially
offset by costs of our New Hope, PA office.

In
August 2002, we entered into a contract with Clinical Regulatory Strategies, L.L.C. to provide us with consulting services and support related to the clinical development of
PH-50 and N1177 and certain other business development matters as the need may arise. We will pay Clinical Regulatory Strategies on a time and materials basis and have awarded them
warrants to purchase 190,000 (post-reverse split) shares of our common stock with vesting to occur on the achievement of specified milestones. No such milestones have been achieved to date.

In
1999, we entered into a joint venture with affiliates of Elan Corporation for the development of N1177, a potential product to identify and diagnose lymph nodes for the presence of
cancer. We own 80.1% of the joint venture entity, Sentigen, Ltd., with the balance owned by Elan. During the first nine months of 2001 and 2002, we recorded losses from the joint venture of
$1,514,080 and $1,245,845, respectively. These losses resulted from our share of development expenses incurred in the joint venture by the two participants, including personnel expenses and costs
associated with developing a manufacturing process, including the purchase of drug substance and other materials.

In
September 2000, we initiated a restructuring of our clinical development operations and closed our Westborough Massachusetts office. We took a charge against earnings at the time of
$597,025 for termination of

10

---

our office lease and associated expenses and termination costs associated with certain of the employees at that location. During the first quarter 2002, we increased the provision by $451,068 to
provide for a potential settlement with one of the Westborough employees. As of September 30, 2002, we have fulfilled our obligation under the settlement.

During
the nine months ended September 30, 2002, we had no capital expenditures. During the next twelve months we expect capital expenditures to be less than $100,000. During
2001, as a result of the closing of the Westborough, Massachusetts facility and the shift in the research priorities, we determined that certain equipment we were leasing would no longer be useful in
our research. Accordingly, in the first quarter of 2001, we recorded a provision for future lease payments of $696,070. In the fourth quarter of 2001, we increased the accrual to a total of $1,264,208
representing the remaining lease obligations. While we will pursue opportunities to sublease or otherwise mitigate these obligations, there can be no assurance of any success in this regard.

For
the nine months ended September 30, 2002, our investment income decreased to $1,532 from $102,626 in the nine months ended September 30, 2001. The decrease in
investment income resulted primarily from lower average balances of securities in our investment portfolio. We expect our investment income to fluctuate both as our capital decreases or increases and
as the rates of interest earned by our portfolio vary due to shifts in short term interest rates.

We
recorded dividends on our two series of preferred stock totaling $1,024,300 in the first nine months of 2002 compared to $2,243,832 for the comparable period in 2001. This decrease is
due to the absence of the cost of certain beneficial conversion provisions payable under our Series B Preferred Stock originally issued in February 2000. Under the applicable Certificate
of Designations the holder of Series A Preferred is entitled to a mandatory payment-in-kind dividend equal to 7% (i.e., 0.07 additional shares of Series A
Preferred) which is cumulative, compounds on a semi-annual basis and is payable twice a year. Similarly, under the applicable Certificate of Designation the holders of Series B
Preferred were entitled to a payment-in-kind dividend equal to 6% (i.e., 0.06 additional shares of Series B Preferred), which is cumulative and payable annually. On
November 12, 2002, all shares of Series B Preferred were converted into common stock and the Series B Preferred is no longer outstanding. See "Subsequent Events" below.

During
the third quarter ended September 30, 2002, we conducted limited operations in order to conserve cash resources pending the anticipated closing of the institutional
financing. For the quarter, we reported a net loss applicable to common stockholders of $2,185,238. We funded our operations during the quarter utilizing our available cash resources and borrowings
under our credit line from Tannebaum, LLC. As a result of the reduced amount of funding to Photogen, we will continue to pursue the development program for PH-50, but at a slower pace than
originally planned.

As
a result of the above factors, our net loss of $6,041,620 for the nine months ended September 30, 2002, decreased by 15% from $7,104,484 reported for the nine months ended
September 30, 2001. Our cumulative losses since inception are approximately $35,134,933. Our net loss attributable to common shareholders (including "in kind" preferred dividends) for the nine
months ended September 30, 2002, decreased to $7,065,920, or $.73 per share from $9,348,316, or $.99 per share for the nine months ended September 30, 2001.

LIQUIDITY; CAPITAL RESOURCES

At September 30, 2002 we had cash and cash equivalents totaling approximately $111,830.

As
of September 30, 2002, we had a $4.8 million credit line available from Elan under which we could borrow to fund our portion of the losses incurred by the joint venture.
At September 30, 2002 we had borrowed $2,846,910 under this credit line to fund our capital obligations to Sentigen, a portion of which was in turn used by Sentigen to reimburse us for expenses
we had incurred on behalf of the joint venture. Borrowings under this facility bore
interest at 8% per annum, and were either repayable in 2005 or convertible, at Elan's election, into our common stock. On April 8, 2002, we entered into a credit facility that provided us with
a $2,500,000 revolving line of credit, bearing interest at 4.65%, for a period of five years. The loan was secured by a lien on all of our assets. At September 30, 2002, we had borrowed
$1,525,000 under this line of credit. In connection with our agreement to sell shares of our common stock to a group of institutional investors, both the Elan note (at a conversion rate of $6.00 per
share) and the $2,500,000 credit facility (at a conversion rate of $0.27 per share) were converted into shares of our common stock. See "Subsequent Events" below.

We
have a contingent liability of $650,000 because we sold 124,627 (post-reverse split) shares of common stock in a series of five transactions from April 26 through
June 21, 2001 under our Registration Statement

11

---

No. 333-46394 when that Registration Statement did not meet the requirements of Section 10(a)(3) of the Securities Act. As a result, those shares are subject to rescission.

With
the proceeds of the financing we closed in November, 2002, we believe we have sufficient capital to carry out planned activities into the third quarter of 2003. Our ability to
conduct operations beyond that date is entirely dependent on our ability to obtain additional capital. If we raise additional funds by issuing equity securities, substantial dilution to existing
stockholders may result. However, there can be no assurance that such capital will be available under acceptable terms, if at all. See "Risk FactorsWe must raise additional financing in
the future and our inability to do so could prevent us from implementing our business development plan," below.

We
have used, and expect over the next 12 months to use the capital available from sales of common stock, for general corporate purposes, including activities related to preparing
for and conducting clinical trials, purchase and preparation of clinical material, conduct of preclinical studies, administrative expenses to support our research and development activities, capital
expenditures and to meet working capital needs. Proceeds from the sale of our common stock to the institutional investors in November, 2002 must be used for the following purposes (including related
general and administrative costs) in the following order or priority, unless otherwise authorized by a majority of the Board:



We
evaluate from time to time the acquisition or license of businesses, technologies or products. The purchase of any such licenses or technologies would be funded by a portion of any
net proceeds of future offerings or the issuance of debt or equity securities specifically for that purpose. We also expect our use of capital to increase as we conduct further clinical trials.

Our
only long-term commitment that is not recorded on our financial statements is for our office space in Pennsylvania. Annual rent for this lease, which expires in 2004, is
approximately $190,765.

SUBSEQUENT EVENTS

The Company held its reconvened annual meeting of stockholders on October 31, 2002 in Chicago, Illinois. At the annual meeting, the stockholders approved
the following matters:



Each
proposal was approved by a significant majority of the shares voting at the meeting. In addition, the corporate separation transaction (Proposal 1) was approved by a majority
of the shares other than those held by the Company's five founding stockholders, as required by the Proxy Statement.

12

---

On
November 12, 2002, the Company closed the following transactions:



In
conjunction with these transactions, the Company implemented a one-for four reverse split of its common stock. All amounts have been retroactively stated to reflect this
reverse stock split. Following the financing, split-off and reverse split, the Company's outstanding common stock totals approximately 13,475,156 shares.

In
connection with the financing, we have entered into a confidential settlement agreement with Broadmark Capital, Inc. as of September 13, 2002. The dispute was regarding
the payment of brokerage commissions. The settlement includes, among various terms, the dismissal of all parties' claims and mutual releases, and certain payments to Broadmark.

Eric
A. Wachter, Ph.D. resigned from the Board of Directors upon completion of the corporate separation transaction. Also, on Wednesday, October 30, 2002, Aidan King notified the
Company that he would not stand for reelection to the Board of Directors. Elan has the right to designate another representative to sit on the Board of Directors. In accordance with the Bylaws, the
Board of Directors appointed William D. McPhee and Alan D. Watson to fill these vacancies.

Although
the current institutional investor group purchased $9,000,000 of common stock, we received stockholder approval to issue up to $15,000,000 of common stock to accredited
institutional investors by means of a private placement in one or more closings on the terms described in our proxy materials. We may use a broker to find additional institutional investors on a best
efforts basis, and we may pay commissions and grant warrants to the broker not to exceed 10% of the gross proceeds (or such greater amount as is permitted by applicable law and approved by our Board
of Directors). We have no agreement with any broker at this time.

Changes to Elan holdings

As part of the financing, all of the outstanding principal and accrued interest under our note to Elan in the amount of $3,082,487.30 was converted into common
stock at a conversion price of $6.00 (reduced from $18.15) resulting in the issuance of 128,437 (post-reverse split) shares of our common stock.

The
Company learned immediately prior to its annual stockholders meeting on October 31, 2002 that Elan Pharmaceutical Investments II, Ltd., the holder of the
Series A Preferred Stock, would not be in a position to
consent to the elimination of the liquidation preference (or the reduction of the conversion price), a condition precedent to the closing of the financing. The institutional investors agreed to waive
this condition, and Elan Corporation, plc agreed that in the event of a liquidation of the Company, Elan will make whole Mi3 L.P., Oxford Bioscience Partners IV L.P. and MRNA
Fund II L.P. if they incur losses as a result of the Series A liquidation preference upon liquidation of the Company. The Company's stockholders will have an opportunity to ratify
this agreement before February 1, 2003.

Changes to Series B Preferred Stock

As a condition to the closing of the financing transaction, the holders of over a majority of the Series B Preferred Stock agreed to convert their shares
into common stock. As a result, all shares of Series B Preferred Stock (including all shares of Series B Preferred Stock paid as in-kind dividends) were converted into common
stock on November 12, 2002. Each share of Series B Preferred Stock was converted into 4.25 shares of common stock contemporaneously with the closing of the financing transaction. The
result was that all shares of Series B Preferred Stock were converted into a total of approximately 422,316 (post reverse-split) shares of common stock

13

---

on November 12, 2002; and the shares of Series B Preferred Stock are no longer outstanding, nor will there be any liquidation preference associated with the Series B Preferred
Stock.

Reverse Split

On November 12, 2002, we amended our Articles of Incorporation to effect a one for four reverse split of our common stock.

PLAN OF OPERATION

During the next twelve months we will focus our efforts on the development of PH-50 and N1177 reflecting the strategic shift in the direction of the
Company and the split-off of our therapeutic PH-10 and laser technologies to certain founders of Photogen. Specifically, we expect to conduct preclinical and human clinical
studies, prepare required filings to the FDA, and as required to foreign regulatory bodies and acquire quantities of clinical grade drug formulations of these products. We expect to continue to incur
increasing losses for at least the next three years as we intensify research and development, preclinical and clinical testing and associated regulatory approval activities and engage in or provide
for the manufacture and/or sale of any products that we may develop.

As
we progress further into human clinical trials, our use of capital will increase. We expect to continue to incur increasing losses for at least the next several years as we intensify
research and development, preclinical and clinical testing and associated regulatory approval activities and engage in or provide for the manufacture and/or sale of any products that we may develop.
Greater capital resources would enable us to quicken and expand our research and development activities, and our failure to raise additional capital will (absent a suitable collaborative agreement
providing for a third party to take over these functions) significantly impair or curtail our ability to conduct further research and development activities 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. See "Risk
FactorsWe must raise additional financing in the future and our inability to do so could prevent us from implementing our business plan," below.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The primary market risk that could impact us is the fluctuation in interest rates related to our investments in Government bonds. As our investments all have
short-term maturities, the investment return will reflect the current market rates. To date, we have not engaged in any derivative or hedging activities.

ITEM 4. CONTROLS AND PROCEDURES

The Company maintains a set of disclosure controls and procedures and internal controls designed to ensure that information required to be disclosed in filings
made pursuant to the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. Our
principal executive and financial officers have evaluated our disclosure controls and procedures within 90 days prior to the filing of this Quarterly Report on Form 10-Q and
have determined that such disclosure controls and procedures are effective.

Subsequent
to our evaluation, there were no significant changes in internal controls or other factors that could significantly affect internal controls, including any corrective actions
with regard to significant deficiencies and material weaknesses.

14

---



PART II.    OTHER INFORMATION

ITEM 5.    OTHER INFORMATION

RISK FACTORS

This Form 10-Q contains (and press releases and other public statements we may issue from time to time may contain) a number of forward-looking
statements regarding our business and operations. Statements in this document that are not historical facts are forward-looking statements. Such forward-looking statements include those relating to:



Examples
of forward-looking statements include predictive statements, statements that depend on or refer to future events or conditions, and statements that may include words such as
"expects," "anticipates," "intends,"
"plans," "believes," "estimates," "should," "may," or similar expressions, or statements that imply uncertainty or involve hypothetical events.

Forward-looking
statements involve known and unknown risks and uncertainties that may cause our actual results in future periods to differ materially from what is currently anticipated.
We make cautionary statements in certain sections of this Form 10-Q, including under "Risk Factors." You should read these cautionary statements as being applicable to all related
forward-looking statements wherever they appear in this Form 10-Q, in the materials referred to in this Form 10-Q, in the materials incorporated by reference into
this Form 10-Q, or in our press releases or other public statements. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this
Form 10-Q or other documents incorporated by reference might not occur. No forward-looking statement is a guarantee of future performance and you should not place undue reliance on
any forward-looking statement.

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

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

Our Company and our technologies are in early stages of development. We began our business as a biopharmaceutical company in 1997. We have not generated revenues
from sales or operations, and we do not expect to generate sufficient revenues to enable us to be profitable for at least several years.

Our
proposed technologies and products generally must complete preclinical tests in animals and three phases of tests (also called clinical trials) in humans before we can market them
for use. Use of our technology has been limited primarily to laboratory experiments, animal testing or human pilot studies and only one compound has completed Phase 1 clinical trials. We have
therefore not yet conducted substantive studies on the effectiveness of our compounds on human subjects. The drug products we currently contemplate developing will require costly and
time-consuming research and development, preclinical and clinical testing and regulatory approval before they can be commercially sold. We may not be able to develop our technology into
marketable products or develop our technology so it is effective for diagnosis or treatment of 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 WE MAY NOT ACHIEVE OR MAINTAIN PROFITABILITY IN THE FUTURE OR PAY CASH DIVIDENDS.

We have incurred losses since the beginning of our operations. As of September 30, 2002, we have incurred cumulative net losses (before dividends on
preferred stock) of approximately $35,134,933. 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.

15

---

WE MUST RAISE ADDITIONAL FINANCING IN THE FUTURE AND OUR INABILITY TO DO SO WILL PREVENT US FROM IMPLEMENTING OUR BUSINESS DEVELOPMENT PLAN.

We believe that through the use of our cash and lines of credit, we will have cash resources for our current commitments through the third quarter of 2003
(depending on the pace of our spending for preclinical and clinical testing and other commitments, which, to an extent, we can adjust to preserve cash). We will need substantial additional financing
for our research, clinical testing, product development and marketing programs. As of November 12, 2002, we sold $9.0 million of our common stock to a syndicate of institutional
investors at a price of $1.08 per share. We cannot accurately estimate the amount of additional financing required; however, the amount could be an additional $30 million or more over the next
several years. Additional funds may not be available on acceptable terms, if at all, and existing stockholders may be diluted as a result of those offerings. The pricing of our common stock, or other
security convertible into common stock, in any such transaction may also result in an increase in the number of shares of common stock issuable upon exercise of warrants in accordance with the
anti-dilution provisions in the instruments governing those securities.

OUR PROPOSED PRODUCTS ARE SUBJECT TO EXTENSIVE TESTING AND GOVERNMENT APPROVAL, AND WE MAY NOT OBTAIN THE APPROVALS NECESSARY TO SELL OUR PROPOSED PRODUCTS.

None of our proposed imaging, drug and device products has received the Food and Drug Administration's approval. An extensive series of clinical trials and other
associated requirements must be completed before our proposed products can be approved and sold in the United States or other countries. Requirements for FDA approval of a product include preclinical
and clinical testing for effective use and safety in animals and humans; that testing 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 that we cannot predict at this time. Even if testing is successful, our proposed products may not demonstrate sufficient effectiveness or safety to
warrant approval by the FDA or other regulatory authorities. Any regulatory approval may not cover the clinical symptoms or indications that we may seek. Marketing our products in other countries will
require seeking and obtaining regulatory approvals comparable to those required in the United States.

IF WE DO NOT OBTAIN AND MAINTAIN PATENT OR OTHER PROTECTION OF OUR CORE TECHNOLOGIES (NAMELY PH-50 FOR CARDIOVASCULAR IMAGING, N1177 AND OUR OTHER LYMPHOGRAPHY
MATERIALS AND METHODS, WE MAY HAVE DIFFICULTY COMMERCIALIZING PRODUCTS USING THESE TECHNOLOGIES.

Our success depends in part on our ability to obtain, assert and defend our patents, protect trade secrets and operate without infringing the intellectual
property of others. Among the important risks in this area are that:



We
will be able to protect our proprietary rights from unauthorized use by third parties only to the extent that these rights are covered by valid and enforceable patents or effectively
maintained as trade secrets. We own two patents in the U.S., and sixteen other patents in foreign countries including Taiwan, Australia, Singapore, Japan and New Zealand. We are also the exclusive
licensee to a group of patented proprietary compounds known as nanoparticulates from Massachusetts General Hospital and Nycomed Imaging AS. We have filed patent applications under the Patent
Cooperation Treaty covering a number of foreign countries. These patents and the patent applications relate to the use of PH-50 as a cardiovascular imaging agent, laser and ionizing
radiation

16

---

technology, photoactive agents and methods, methods for enhanced cell production and methods for performing lymphography.

The
patent position of biopharmaceutical companies involves complex legal and factual questions, and therefore we cannot assure the enforceability of these patents. Litigation over
patents and other intellectual property rights occurs frequently in our industry, and there is a risk that we may not prevail in disputes over the ownership of intellectual property. Further,
interference may occur over the rights to certain inventions, and there is a risk that we may not prevail in an interference. Those disputes can be expensive and time consuming, even if we prevail.
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. Third parties may challenge our existing patents
and seek to hold them invalid or unenforceable. 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 us 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.

Where
intellectual property results from a research project supported by U.S. Government funding, the Government has limited rights to use the intellectual property without paying us a
royalty.

WE ARE HIGHLY DEPENDENT UPON A SMALL NUMBER OF EMPLOYEES AND CONSULTANTS WHO PROVIDE SCIENTIFIC AND MANAGEMENT EXPERTISE, AND IT MAY BE DIFFICULT TO IMPLEMENT OUR BUSINESS
DEVELOPMENT PLANS WITHOUT THIS 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 or other material adverse effects on our business and results of operations if any employee or consultant violates or terminates these
agreements or terminates his or her 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.

We
currently employ three senior executive officers, including Dr. Williams (our CEO), Mr. Boveroux (our CFO) and Dr. Reinhard Koenig (Senior Vice President of
Medical and Regulatory Affairs). We also have retained consultants to advise us in regulatory affairs and product development matters. If we lost the services of our executive officers or outside
consultants, we could experience a delay in the implementation of our business plan until we arranged for another individual or firm to fulfill the role.

WE HAVE TO RELY ON THIRD PARTIES AND COLLABORATIVE RELATIONSHIPS FOR THE MANUFACTURE, CLINICAL TESTING AND MARKETING OF OUR PROPOSED PRODUCTS, AND IT MAY BE DIFFICULT TO
IMPLEMENT OUR BUSINESS DEVELOPMENT PLANS WITHOUT THESE COLLABORATIONS.

We are currently involved in a joint venture with affiliates of Elan Corporation, plc, called Sentigen Ltd., to develop and commercialize materials in the
field of lymphography. We have had and expect to continue in the future to have a variety of research agreements with universities and other research institutions to investigate specific protocols. We
also contract and expect to continue to contract with research organizations and other third parties to manage clinical trials of our proposed products in development. We must continue to enter into
collaborative relationships with third parties for additional research and development, preclinical and clinical testing, marketing and distribution of our proposed products.

We
are also dependent on third parties for the manufacture of supplies of our products and for the supply of lasers and radiotherapy devices and similar hardware in physicians' offices
and hospitals. We have certain research and supply agreements with third parties. However, we may not be able to negotiate other acceptable collaborative and supply arrangements in the future.

17

---

Collaborative
relationships may limit or restrict our operations or may not result in an adequate supply of necessary resources. Our collaborative partner could also pursue alternative
technologies as a means of developing or marketing products for the diseases targeted by our collaborative program. If a third party we are collaborating with fails to perform under its agreement or
fails to meet regulatory standards, this could delay or prematurely terminate clinical testing of our proposed products.

OUR POTENTIAL MARKETS ARE EXTREMELY COMPETITIVE, AND MANY OF OUR COMPETITORS HAVE GREATER RESOURCES AND HAVE PRODUCTS THAT ARE IN MORE ADVANCED STAGES OF DEVELOPMENT.

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. We understand that the existing market for radiopaque contrast agents is estimated to be
approximately $3.4 billion worldwide. The dominant uses of media are those employed in conjunction with CT or X-ray scans. Approximately half of the usage is in the U.S.
Omnipaque(R), marketed by a unit of Amersham is estimated to be the leading agent utilized in coronary angiography. Other companies marketing contrast agents include Mallinckrodt, Inc. (a unit
of Tyco International Ltd.), Bristol-Myers Squibb Medical Imaging (a unit of Bristol-Myers Squibb Company), Berlex Laboratories, Inc., Abbott Laboratories and Bracco.

More
broadly defined, other modalities, such as magnetic resonance imaging and ultrasound, are also used by physicians to image internal vasculature and organs. These modalities,
including CT imaging, each have particular attributes that may make their use applicable to any particular situation.

Competitors
in the field of using light energy to treat and diagnose disease include: Miravant Medical Technologies, Pharmacyclics, Inc., QLT Inc., Axcan
Pharma Inc., Dusa Pharmaceuticals, Inc. and PhotoCure ASA. There are also numerous companies developing other technologies to image the vascular system and various body organs. Examples
of the technologies from those other companies are the use of magnetic resonance imaging or ultrasound techniques to create internal organ images.

Some
of these firms have drugs or devices that have completed or are in advanced stages of clinical trials and regulatory approvals. Others 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. Also, although we believe our estimates of the possible size of markets for our potential products are based on information we consider reliable (including data from the American Heart
Association, American Cancer Society and similar sources in the public domain), that data or our analysis of the data could prove incorrect.

CHANGES IN HEALTH CARE REIMBURSEMENT POLICIES OR LEGISLATION MAY MAKE IT DIFFICULT FOR PATIENTS TO USE OR RECEIVE REIMBURSEMENT FOR USING OUR PRODUCTS, WHICH COULD REDUCE OUR
REVENUES.

Our success will depend, in part, on the extent to which health insurers, managed care entities and similar organizations provide coverage or reimbursement for
using the medical procedures and devices we plan to develop. These third-party payers 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 maintain any profits on our proposed products
if adequate reimbursement coverage is not available.

THE CURRENT BOARD OF DIRECTORS CONTROLS PHOTOGEN, WHICH MAY MAKE IT DIFFICULT FOR STOCKHOLDERS WHO ARE NOT IN THAT GROUP TO INFLUENCE MANAGEMENT.

As of November 12, 2002, a small group of stockholders control approximately 61.5% of our outstanding common stock (calculated on a fully-diluted basis).
Several of our principal stockholders are also parties to a Voting, Drag-Along and Right of First Refusal Agreement concerning the election of certain designees to the Board of Directors.
The Voting Agreement requires these stockholders to vote their shares for the election of certain individuals nominated by parties to the Voting Agreement. This concentration of ownership and control

18

---

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.

THE PRICE AND TRADING VOLUME OF OUR COMMON STOCK FLUCTUATES SIGNIFICANTLY, WHICH MAY MAKE IT DIFFICULT FOR US OR A STOCKHOLDER TO SELL OUR COMMON STOCK AT A SUITABLE PRICE AND
MAY CAUSE DILUTION FOR EXISTING STOCKHOLDERS WHEN WE ISSUE ADDITIONAL SHARES.

During the period from January 1, 2002 through September 30, 2002 our closing stock price ranged from $1.32 to $6.04 per share. Daily trading volume
ranged from 0 (zero) shares to approximately 10,450 shares during that period. The above data are stated on a post-reverse split basis.

The
following factors may have an impact on the price of our stock:



OUR COMMON STOCK COULD BE DELISTED FROM THE NASDAQ SMALLCAP MARKET, WHICH WOULD MAKE TRADING IN OUR STOCK MORE DIFFICULT.

Since November 1999, our common stock has been quoted in the Nasdaq SmallCap Market. We received a letter dated September 25, 2002 from NASDAQ
notifying us that our stock has traded at less than $1 for a period of 30 consecutive trading days and that we have until March 4, 2003 to regain compliance with Marketplace
Rule 4310(c)(4). Our shares could be delisted if we fail to meet the listing requirements of the Nasdaq SmallCap Market, which would force us to list our shares on the OTC Bulletin Board or
some other quotation medium, such as pink sheets, depending upon our ability to meet the specific listing requirements of those quotation systems. As a result, an investor might find it more difficult
to dispose of, or to obtain accurate price quotations for, our shares. Delisting might also reduce the visibility, liquidity, and price of our common stock. If our common stock were delisted from the
Nasdaq SmallCap Market and were not traded on another national securities exchange, we could become subject to penny stock regulations that impose additional sales practice disclosure and market
making requirements on broker/dealers who sell or make a market in our stock. The rules of the SEC generally define "penny stock" to be common stock that has a market price of less than $5.00 per
share and is not traded on a national exchange. If our stock became subject to penny stock regulations, it could adversely affect the ability and willingness of broker/dealers who sell or make a
market in our common stock and of investors to purchase or sell our stock in the secondary market.

IF STOCKHOLDERS HOLDING SUBSTANTIAL AMOUNTS OF OUR COMMON STOCK SHOULD SELL IN THE PUBLIC MARKET, THE PRICE OF OUR STOCK COULD FALL OR IT MAY BE MORE COSTLY FOR US TO RAISE
CAPITAL.

As of November 12, 2002:



19

---



If
these options and warrants are all issued and exercised, investors may experience significant dilution in the voting power of their common stock. The sale of these shares could place
downward pressure on the overall market price of our stock.

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K



The
following is a list of exhibits filed as part of this Form 10-Q. 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.

|EXHIBIT
NO. |  | DESCRIPTION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1         |  | Common Stock Purchase Agreement dated as of August 2, 2002 by and among Photogen Technologies, Inc., Mi3 L.P., Oxford Bioscience Partners IV L.P., MRNA Fund II L.P., New England Partners Capital, L.P.
and Tannebaum LLC. (Filed as Exhibit C to the Company's DEFM 14A dated September 12, 2002 and incorporated herein by reference.)                                                                                                                                                                                                                                                                                                                                    
|2.2         |  | Amendment No. 1 to the Common Stock Purchase Agreement dated as of August 2, 2002 by and among Photogen Technologies, Inc., Mi3 L.P., Oxford Bioscience Partners IV L.P., MRNA Fund II L.P., New England Partners Capital, L.P. and
Tannebaum LLC. (Filed as Exhibit A to the Company's DEFR 14A Proxy Supplement dated October 18, 2002 and incorporated herein by reference.)                                                                                                                                                                                                                                                                                              
|2.3         |  | Separation Agreement dated as of July 29, 2002 by and among the following: Craig Dees, Ph.D. and Dees Family Foundation, Eric A. Wachter, Ph.D. and Eric A. Wachter 1998 Charitable Remainder Unitrust, Timothy D. Scott,
 Ph.D. and Scott Family Investment Limited Partnership, Walter Fisher, Ph.D., Fisher Family Investment Limited Partnership, and Walt Fisher 1998 Charitable Remainder Unitrust, and John A. Smolik and Smolik Family LLP, Photogen Technologies,
 Inc., Photogen, Inc., Robert J. Weinstein, M.D., Stuart P. Levine and Tannebaum, LLC (Filed as Exhibit A to the Company's DEFM 14A dated September 12, 2002 and incorporate herein by reference.)
|3.1         |  | Articles of Incorporation of Photogen Technologies, Inc., as amended (Filed as Exhibit E to the Company's Proxy Statement on Form DEFM 14A dated September 12, 2002 and incorporated herein by reference.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|3.2         |  | Amended and Restated Certificate of Designations, Preferences and Rights of Series A Preferred Stock. (Filed as Exhibit 3.5 to the Company's Quarterly Report on Form 10-QSB for the quarter ended September 30, 1999 and incorporated
herein by reference.)                                                                                                                                                                                                                                                                                                                                                                                                                 
|3.3         |  | Certificate of Designation, Preferences and Rights of Series B Convertible Preferred Stock. (Filed as Exhibit E to the Company's Proxy Statement on Form DEFM 14A dated September 12, 2002 and incorporated herein by reference.)                                                                                                                                                                                                                                                                                                                                                                                                                                            
|3.4         |  | Amended and Restated Bylaws of Photogen Technologies, Inc. (Filed as Exhibit F to the Company's Proxy Statement on Form DEFM 14A dated September 12, 2002 and incorporated herein by reference.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|3.5         |  | 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.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|3.6         |  | Amended and Restated Bylaws of Photogen, Inc. (Filed as Exhibit 3.3 to the Company's Current Report on Form 8-K dated May 17, 2000 and incorporated herein by reference.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

20

---

|9.1  |  | Amended and Restated Voting Agreement entered into as of the 4th day of September, 2001, by and among Eric A. Wachter, Ph.D., Craig Dees, Ph.D., Walter G. Fisher, Ph.D., Tim Scott, Ph.D., John Smolik,
Robert J. Weinstein, M.D., and Theodore Tannebaum, and joined into by Photogen Technologies, Inc. as stockholder of Photogen, Inc. (Filed as Exhibit 9.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2001 and incorporated herein by reference.)
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|9.2  |  | Voting, Drag-Along and Right of First Refusal Agreement entered into as of November 12, 2002 by and among Robert J. Weinstein, M.D., Stuart P. Levine, Tannebaum, LLC, Mi3 L.P., Oxford Bioscience
Partners IV L.P. and MRNA Fund II L.P. (Filed as Exhibit G to the Company's Proxy Statement on Form DEFM 14A dated September 12, 2002 and incorporated herein by reference.)                                                                                                                 
|10.1 |  | Registration Rights Agreement entered into as of November 12, 2002 by and among Photogen Technologies, Inc., Mi3 L.P., Oxford Bioscience Partners IV L.P., MRNA Fund II L.P. and Tannebaum, LLC (Filed as Exhibit D to
the Company's Proxy Statement on Form DEFM 14A dated September 12, 2002 and incorporated herein by reference.)                                                                                                                                                           
|10.2 |  | Letter Agreement entered into as of August 29, 2002 by and between Photogen Technologies, Inc. and Clinical Regulatory Strategies, LLC.                                                                                                                                                                                                                                                                                                                                                         
|99.1 |  | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                               
|99.2 |  | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                               



The
following reports on Form 8-K were filed during the three-month period ended September 30, 2002:

1.    Report
on Form 8-K dated August 8, 2002 disclosing the signing of definitive agreements regarding a corporate separation and a financing with
certain institutional investors.

2.    Report
on Form 8-K dated September 26, 2002 disclosing the adjournment of the Company's annual meeting.

21

---



Signatures

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

|Date: November 19, 2002 |  | Photogen Technologies, Inc.                                                                                                                      
|----------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------
|                        |  | /s/ Taffy J. WilliamsTaffy J. Williams, Ph.D., President and Chief
Executive Officer                                                             
|                        |  | /s/ Brooks BoverouxBrooks Boveroux, Senior Vice President
Finance and Chief Financial Officer (Principal
Financial and Chief Accounting Officer)

22

---



CERTIFICATION

I, Taffy J. Williams, Ph.D., President and Chief Executive Officer of Photogen Technologies, Inc. ("registrant"), certify that:

1.    I
have reviewed this quarterly report on Form 10-Q of the registrant;

2.    Based
on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.    Based
on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.    The
registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:



5.    The
registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent function):



6.    The
registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material
weaknesses.

|/s/ Taffy WilliamsTaffy J. Williams, Ph.D.
Chief Executive Officer
November 19, 2002 |  |  |  | 
|------------------------------------------------------------------------------------ |  |  |  | 

23

---

CERTIFICATION

I, Brooks Boveroux, Chief Financial Officer of Photogen Technologies, Inc. ("registrant"), certify that:

1.    I
have reviewed this quarterly report on Form 10-Q of the registrant;

2.    Based
on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.    Based
on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.    The
registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:



5.    The
registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent function):



6.    The
registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material
weaknesses.

|/s/ Brooks BoverouxBrooks Boveroux
Chief Financial Officer
November 19, 2002 |  |  |  | 
|---------------------------------------------------------------------------- |  |  |  | 

24

---



Exhibit Index

|EXHIBIT
NO. |  | DESCRIPTION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|+2.1        |  | Common Stock Purchase Agreement dated as of August 2, 2002 by and among Photogen Technologies, Inc., Mi3 L.P., Oxford Bioscience Partners IV L.P., MRNA Fund II L.P., New England Partners Capital, L.P. and Tannebaum LLC. (Filed as Exhibit C to the
Company's DEFM 14A dated September 12, 2002 and incorporated herein by reference.)                                                                                                                                                                                                                                                                                                                                  
|+2.2        |  | Amendment No. 1 to the Common Stock Purchase Agreement dated as of August 2, 2002 by and among Photogen Technologies, Inc., Mi3 L.P., Oxford Bioscience Partners IV L.P., MRNA Fund II L.P., New England Partners Capital, L.P. and Tannebaum LLC. (Filed
as Exhibit A to the Company's DEFR 14A Proxy Supplement dated October 18, 2002 and incorporated herein by reference.)                                                                                                                                                                                                                                                                                            
|+2.3        |  | Separation Agreement dated as of July 29, 2002 by and among the following: Craig Dees, Ph.D. and Dees Family Foundation, Eric A. Wachter, Ph.D. and Eric A. Wachter 1998 Charitable Remainder Unitrust, Timothy D. Scott, Ph.D. and Scott Family
Investment Limited Partnership, Walter Fisher, Ph.D., Fisher Family Investment Limited Partnership, and Walt Fisher 1998 Charitable Remainder Unitrust, and John A. Smolik and Smolik Family LLP, Photogen Technologies, Inc., Photogen, Inc., Robert J.
Weinstein, M.D., Stuart P. Levine and Tannebaum, LLC (Filed as Exhibit A to the Company's DEFM 14A dated September 12, 2002 and incorporate herein by reference.)
|+3.1        |  | Articles of Incorporation of Photogen Technologies, Inc., as amended (Filed as Exhibit E to the Company's Proxy Statement on Form DEFM 14A dated September 12, 2002 and incorporated herein by reference.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|+3.2        |  | Amended and Restated Certificate of Designations, Preferences and Rights of Series A Preferred Stock. (Filed as Exhibit 3.5 to the Company's Quarterly Report on Form 10-QSB for the quarter ended September 30, 1999 and incorporated herein by
reference.)                                                                                                                                                                                                                                                                                                                                                                                                               
|+3.3        |  | Certificate of Designation, Preferences and Rights of Series B Convertible Preferred Stock. (Filed as Exhibit E to the Company's Proxy Statement on Form DEFM 14A dated September 12, 2002 and incorporated herein by reference.)                                                                                                                                                                                                                                                                                                                                                                                                                                          
|+3.4        |  | Amended and Restated Bylaws of Photogen Technologies, Inc. (Filed as Exhibit F to the Company's Proxy Statement on Form DEFM 14A dated September 12, 2002 and incorporated herein by reference.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|+3.5        |  | 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.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|+3.6        |  | Amended and Restated Bylaws of Photogen, Inc. (Filed as Exhibit 3.3 to the Company's Current Report on Form 8-K dated May 17, 2000 and incorporated herein by reference.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|+9.1        |  | Amended and Restated Voting Agreement entered into as of the 4th day of September, 2001, by and among Eric A. Wachter, Ph.D., Craig Dees, Ph.D., Walter G. Fisher, Ph.D., Tim Scott, Ph.D., John Smolik, Robert J. Weinstein, M.D., and
Theodore Tannebaum, and joined into by Photogen Technologies, Inc. as stockholder of Photogen, Inc. (Filed as Exhibit 9.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2001 and incorporated herein by
reference.)                                                                                                                                                                           
|+9.2        |  | Voting, Drag-Along and Right of First Refusal Agreement entered into as of November 12, 2002 by and among Robert J. Weinstein, M.D., Stuart P. Levine, Tannebaum, LLC, Mi3 L.P., Oxford Bioscience Partners IV L.P. and MRNA Fund II L.P. (Filed as
Exhibit G to the Company's Proxy Statement on Form DEFM 14A dated September 12, 2002 and incorporated herein by reference.)                                                                                                                                                                                                                                                                                            
|+10.1       |  | Registration Rights Agreement entered into as of November 12, 2002 by and among Photogen Technologies, Inc., Mi3 L.P., Oxford Bioscience Partners IV L.P., MRNA Fund II L.P. and Tannebaum, LLC (Filed as Exhibit D to the Company's Proxy Statement on
Form DEFM 14A dated September 12, 2002 and incorporated herein by reference.)                                                                                                                                                                                                                                                                                                                                      
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

25

---

|*10.2 |  | Letter Agreement entered into as of August 29, 2002 by and between Photogen Technologies, Inc. and Clinical Regulatory Strategies, LLC.          
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------
|*99.1 |  | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|*99.2 |  | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

---

26

---

QuickLinks