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

                                   FORM 10-Q/A

  |X| QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
                                     OF 1934

                 For the quarterly period ended: August 31, 2006

                                       OR

   |_| TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT OF 1934

  For the transition period from ________________ to __________________________

                           Commission File No. 0-26057

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

             Nevada                                               82-0507874
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)

                       150 Lucius Gordon Drive, Suite 215
                         West Henrietta, New York 14586
               (Address of principal executive offices) (Zip Code)

                                 (585) 214-2441
              (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 |X| No |_|

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one).

Large Accelerated Filer |_| Accelerated Filer |X| Non-Accelerated Filer |_|

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).

Yes |_| No |X|

Indicate the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.

Class outstanding as of October 6, 2006 - Common Stock, $.005 par value -
82,819,199 shares

<PAGE>

EXPLANATORY NOTE

We are filing this Amendment #1 to our Quarterly Report on Form 10-Q for the
quarterly period ended August 31, 2006 for the following purposes:

      (a)   In Part I, Item 1, Financial Statements, to restate our financial
            statements to reflect a change in our accounting for our investment
            in Myotech, LLC a development stage company, and a developer of
            cardiac assist technologies. FASB Interpretation No. 46 (FIN-46R)
            (Revised December 2003), Consolidation of Variable Interest
            Entities, requires that if an enterprise is the primary beneficiary
            of a variable interest entity, the assets, liabilities and results
            of operations of the variable interest entity should be included in
            the consolidated financial statements of the enterprise. On November
            30, 2005 we acquired 3,768,488 Class A (voting) units of Myotech
            (representing a 35% equity interest), in exchange for 4,923,080
            shares of our common stock valued at $8,467,698. This investment was
            previously accounted for using the equity method.

            We have determined that Myotech is a variable interest entity in
            accordance with FIN-46R and have concluded that we are the primary
            beneficiary as defined by FIN-46R. As a result, we are required to
            consolidate Myotech as of the date of acquisition of November 30,
            2005. Therefore, the consolidated financial statements included in
            this amended Quarterly Report on Form 10-Q have been restated to
            include the accounts of Myotech.

      (b)   In Part I, Item 4, Controls and Procedures, to disclose our
            conclusions regarding the effectiveness of our financial reporting
            controls and procedures.

      (c)   In Part I, Item 2, Management's Discussion and Analysis of Financial
            Condition and Results of Operations, to amend the financial analyses
            to reflect the restatement of financial statements as explained
            above.

      (d)   To amend such other financial information included elsewhere as
            affected by the restatement of our financial statements.

<PAGE>

                                      INDEX
                                                                           Page
                                                                          Number
Part 1: FINANCIAL INFORMATION

ITEM 1. Financial Statements

Condensed Consolidated Balance Sheets, August 31, 2006 (Unaudited)
  and February 28, 2006                                                        1

Condensed Consolidated Statements of Operations, Three Months and
  Six Months Ended August 31, 2006 and 2005 (Unaudited), and from
  August 1, 1968 (Date of Inception) through August 31, 2006
  (Unaudited)                                                                  2

Condensed Consolidated Statements of Cash Flows, Six Months Ended
  August 31, 2006 and 2005 (Unaudited) and from August 1, 1968
  (Date of Inception) through August 31, 2006 (Unaudited)                      3

Notes to Condensed Consolidated Financial Statements                           5

ITEM 2. Management's Discussion and Analysis of Financial Condition
  and Results of Operations                                                   10

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk            15

ITEM 4. Controls and Procedures                                               15

PART II. OTHER INFORMATION                                                    16

ITEM 1. Legal Proceedings                                                     16

ITEM 1A. Risk Factors                                                         16

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds           19

ITEM 3. Defaults Upon Senior Securities                                       19

ITEM 4. Submission of Matters to a Vote of Security Holders                   19

ITEM 5. Other Information                                                     20

ITEM 6. Exhibits                                                              20

SIGNATURES                                                                    21

<PAGE>

                          PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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

                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                  August 31,        February 28,
                                                                     2006               2006
                                                                 (Unaudited)
                                                                  (Restated)         (Restated)
                                                                --------------     --------------
<S>                                                             <C>                <C>
                                     ASSETS
Current assets:
     Cash and cash equivalents                                  $      582,443     $    1,477,716
     Accounts receivable                                                66,919            170,058
     Due from related parties                                           44,881              4,801
     Prepaid expenses                                                  140,464            147,203
     Other current assets                                               54,312             81,048
                                                                --------------     --------------
         Total current assets                                          889,019          1,880,826

Property and equipment, net                                            185,351            126,341

Other assets:
     Intangible assets, net of amortization:
       Myotech, LLC                                                 23,762,804         24,451,580
       Other                                                         1,363,024          1,403,270
     Investment in New Scale Technologies, Inc.                        100,000            100,000
     Security deposit                                                    6,049              6,049
     Deferred tax asset, net of valuation allowance of
        $9,431,000 and $7,560,000, respectively                             --                 --
                                                                --------------     --------------
                                                                    25,231,877         25,960,899
                                                                --------------     --------------
                                                                $   26,306,247     $   27,968,066
                                                                ==============     ==============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable and accrued expenses                      $    2,066,078     $    1,191,812
     Line of credit - related party, net of discount
         of $1,098,442 and $1,323,921, respectively                  3,331,558          1,476,079
     Notes payable                                                      74,634             15,886
     Due to related parties                                                724             26,548
     Common stock subscribed                                         1,050,000                 --
     Deferred revenues                                                  83,333            520,833
                                                                --------------     --------------
         Total current liabilities                                   6,606,327          3,231,158

Minority interest                                                   13,929,107         15,189,109

Stockholders' equity:
     Common stock $.005 par value:
        Authorized, 125,000,000 shares
        Issued, 82,819,199 and
           81,805,243 shares, respectively                             414,096            409,026
     Additional paid-in capital                                     52,691,778         49,576,129
                                                                --------------     --------------
                                                                    53,105,874         49,985,155
     Treasury stock, 4,923,080 shares                               (8,467,698)        (8,467,698)
                                                                --------------     --------------
                                                                    44,638,176         41,517,457
     Deficit accumulated during the
        development stage                                          (38,867,363)       (31,969,658)
                                                                --------------     --------------
                                                                     5,770,813          9,547,799
                                                                --------------     --------------
                                                                $   26,306,247     $   27,968,066
                                                                ==============     ==============
</TABLE>

            See Notes to Condensed Consolidated Financial Statements.


                                       1
<PAGE>

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

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                                       Period from
                                                                                                                      August 1, 1968
                                                         Three Months Ended                Six Months Ended              (date of
                                                             August 31,                        August 31,              inception) to
                                                   -----------------------------     -----------------------------      August 31,
                                                       2006             2005             2006             2005             2006
                                                    (Restated)                        (Restated)                        (Restated)
                                                   ------------     ------------     ------------     ------------     ------------
<S>                                                <C>              <C>              <C>              <C>              <C>
Revenues:
    Development payments                           $         --     $         --     $         --     $         --     $    300,000
    License fees                                        187,500           62,500          437,500           62,500          916,666
    Testing services and consulting fees                122,599               --          217,521               --          558,216
                                                   ------------     ------------     ------------     ------------     ------------
                                                        310,099           62,500          655,021           62,500        1,774,882
Operating expenses:
    Research and development                          1,941,513        2,291,762        4,529,921        3,891,504       17,549,340
    General and administrative                        1,573,434        3,123,641        3,659,625        5,019,625       21,600,997
    Write-down of intellectual
       property rights                                       --               --               --               --          530,000
                                                   ------------     ------------     ------------     ------------     ------------
                                                      3,514,947        5,415,403        8,189,546        8,911,129       39,680,337
                                                   ------------     ------------     ------------     ------------     ------------

Operating loss                                       (3,204,848)      (5,352,903)      (7,534,525)      (8,848,629)     (37,905,455)

Other income(expense):
    Interest expense                                   (380,934)        (767,316)        (684,407)        (767,316)      (3,556,196)
    Interest income                                       5,263            8,966           11,606           11,716          140,754
    Other income                                         46,163           87,775           93,701          170,913          785,898
    Other expense                                            --               --               --               --          (65,086)
                                                   ------------     ------------     ------------     ------------     ------------
                                                       (329,508)        (670,575)        (579,100)        (584,687)      (2,694,630)
                                                   ------------     ------------     ------------     ------------     ------------

Loss from continuing operations before minority
  interest in net loss of Myotech, LLC               (3,534,356)      (6,023,478)      (8,113,625)      (9,433,316)     (40,600,085)

Minority interest in net loss of Myotech, LLC           520,095               --        1,215,920               --        1,822,079
                                                   ------------     ------------     ------------     ------------     ------------
Loss from continuing operations                      (3,014,261)      (6,023,478)      (6,897,705)      (9,433,316)     (38,778,006)

Loss from discontinued operations                            --               --               --               --          (89,357)
                                                   ------------     ------------     ------------     ------------     ------------
Net loss                                           $ (3,014,261)    $ (6,023,478)    $ (6,897,705)    $ (9,433,316)    $(38,867,363)
                                                   ============     ============     ============     ============     ============
Loss per common share - basic and diluted          $      (0.04)    $      (0.08)    $      (0.09)    $      (0.13)
                                                   ============     ============     ============     ============
Weighted average shares outstanding                  77,893,673       75,129,518       77,393,718       74,773,448
                                                   ============     ============     ============     ============
</TABLE>

            See Notes to Condensed Consolidated Financial Statements.


                                       2
<PAGE>

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

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                             Period from
                                                                              Six Months Ended              August 1, 1968
                                                                                 August 31,                   (date of
                                                                     ---------------------------------      inception) to
                                                                          2006               2005          August 31, 2006
                                                                       (Restated)                            (Restated)
                                                                     --------------     --------------     --------------
<S>                                                                  <C>                <C>                <C>
Cash flows used for operating activities:
    Net loss                                                         $   (6,897,705)    $   (9,433,316)    $  (38,867,363)
    Adjustments to reconcile net loss to net cash
      used in operating activities:
        Amortization of intangible assets                                   729,022             27,286          1,134,463
        Depreciation                                                         31,194             19,477            170,628
        Loss on disposal of equipment                                         1,162              1,505              2,667
        Realized and unrealized losses on marketable securities                  --                 --             66,948
        Accrued interest on note converted to common stock                       --             19,506             31,504
        Amortization of interest on convertible notes payable                    --                 --          1,050,950
        Write-down of intellectual property rights                               --                 --            530,000
        Amortization of discount on payable to related party                498,424            729,023          1,644,988
        Issuance of common stock for services                                    --                 --            406,948
        Issuance of common stock for interest                                    --                 --            468,823
        Stock options issued for services                                   839,096          4,572,157          7,402,674
        Expenses paid by stockholder                                             --                 --              2,640
        Minority interest                                                (1,260,002)            43,443         (1,796,618)
    Changes in operating assets and liabilities:
      (Increase) decrease in accounts receivable                            103,139                 --            (59,419)
      (Increase) decrease in due from related parties                       (40,080)           122,007           (104,181)
      (Increase) decrease in prepaid expenses                                 6,739           (180,527)          (140,464)
      (Increase) decrease in other current assets                            26,736            (19,810)           (12,974)
      (Increase) decrease in security deposits                                   --               (867)            (3,800)
      Increase (decrease) in accounts payable and
         accrued expenses                                                   874,266            (32,107)         1,490,186
      Increase (decrease) in due to related parties                         (25,824)                --            (42,772)
      Increase (decrease) in deferred revenues                             (437,500)           687,500             83,333
                                                                     --------------     --------------     --------------
         Net cash used in operating activities                           (5,551,333)        (3,444,723)       (26,540,839)

Cash flows used for investing activities:
    Purchases of property and equipment                                     (91,366)           (33,797)          (326,576)
    Sales of marketable securities                                               --                 --          2,369,270
    Purchase of investment                                                       --                 --           (100,000)
    Acquisition costs of intangible assets                                       --                 --           (466,583)
    Cash paid for investment in Myotech,
      net of cash received of $19,408                                            --                 --           (280,594)
    Cash paid for acquisition of Biophan Europe,
      net of cash received of $107,956                                           --                 --           (258,874)
    Purchases of marketable securities                                           --                 --         (2,436,218)
                                                                     --------------     --------------     --------------
         Net cash used in investing activities                              (91,366)           (33,797)        (1,499,575)

Cash flows provided by financing activities:
    Proceeds of bridge loans                                                     --                 --            986,500
    Loan from stockholder                                                        --                 --            143,570
    Line of credit borrowing from related party, net of
      discount                                                            3,630,000          2,000,000          8,480,950
    Line of credit payments                                              (2,000,000)                --         (2,572,500)
    Notes payable                                                            58,748           (184,114)          (109,480)
    Common stock subscribed                                               1,050,000                 --          1,050,000
    Proceeds from sale and subscription of common stock                   2,000,000          6,050,000         18,263,849
    Exercise of options                                                       8,678            182,541            653,966
    Exercise of warrants                                                         --             20,707          1,142,451
    Swing profits                                                                --            295,362            696,087
    Deferred equity placement costs                                              --                 --           (112,536)
                                                                     --------------     --------------     --------------
                Net cash provided by financing activities                 4,747,426          8,364,496         28,622,857
                                                                     --------------     --------------     --------------
Net increase(decrease) in cash and cash equivalents                        (895,273)         4,885,976            582,443

Cash and cash equivalents, beginning                                      1,477,716            753,288                 --
                                                                     --------------     --------------     --------------
Cash and cash equivalents, ending                                    $      582,443     $    5,639,264     $      582,443
                                                                     ==============     ==============     ==============
</TABLE>

            See Notes to Condensed Consolidated Financial Statements.


                                       3
<PAGE>

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

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                                   Period from
                                                                                    Six Months Ended              August 1, 1968
                                                                                        August 31,                   (date of
                                                                            ---------------------------------     inception) to
                                                                                 2006               2005         August 31, 2006
                                                                              (Restated)                            (Restated)
                                                                            --------------     --------------     --------------
<S>                                                                         <C>                <C>                <C>
Supplemental schedule of cash paid for:

     Interest                                                               $       30,000     $           --     $       39,800
                                                                            ==============     ==============     ==============
Supplemental schedule of non cash investing and financing activities:

    Allocation of proceeds from line of credit - related party
      to beneficial conversion feature and warrants                         $      272,945     $      958,160     $    2,668,430
                                                                            ==============     ==============     ==============

    Issuance of common stock upon conversion
      of line of credit loans                                               $           --     $    1,000,000     $    1,978,450
                                                                            ==============     ==============     ==============
    Issuance of common stock for the acquisition of
      a 35% interest in Myotech, LLC                                        $           --     $           --     $    8,467,698
                                                                            ==============     ==============     ==============
    Issuance of common stock in satisfaction of
       accounts payable                                                     $           --     $           --     $      134,000
                                                                            ==============     ==============     ==============
Liabilities assumed in conjunction with acquisition of 51% interest in
    Biophan Europe and certain intellectual property rights:
      Fair value of assets acquired                                                                               $    1,105,714
      Cash paid                                                                                                         (366,830)
      Promissory note issued                                                                                            (200,000)
      Restricted stock issued                                                                                           (134,000)
      Payables incurred                                                                                                 (226,500)
                                                                                                                  --------------
        Liabilities assumed                                                 $           --     $           --     $      178,384
                                                                            ==============     ==============     ==============
Issuance of common stock upon conversion
  of bridge loans                                                           $           --     $           --     $    1,142,068
                                                                            ==============     ==============     ==============
Acquisition of intellectual property                                        $           --     $           --     $      425,000
                                                                            ==============     ==============     ==============
Intellectual property acquired through issuance of
  capital stock and assumption of related party payable                     $           --     $           --     $      175,000
                                                                            ==============     ==============     ==============
</TABLE>

            See Notes to Condensed Consolidated Financial Statements.


                                       4
<PAGE>

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

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 August 31, 2006

INTERIM FINANCIAL STATEMENTS:

The condensed consolidated financial statements as of August 31, 2006 and for
the three and six months ended August 31, 2006 and 2005 are unaudited. However,
in the opinion of management of the Company, these financial statements reflect
all adjustments, consisting solely of normal recurring adjustments, necessary to
present fairly the financial position and results of operations for such interim
periods. The results of operations for the interim periods presented are not
necessarily indicative of the results to be obtained for a full year. These
unaudited condensed consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-K/A for the fiscal year ended
February 28, 2006.

BASIS OF CONSOLIDATION:

The consolidated financial statements include the accounts of Biophan
Technologies, Inc. ("Biophan"), its wholly owned subsidiaries, LTR Antisense
Technology, Inc.("Antisense") and Nanolution, LLC, formerly MRIC Drug Delivery
Systems, LLC, ("Nanolution"), its majority owned subsidiaries Biophan Europe
GmbH ("Biophan Europe"), formerly aMRIs GmbH, and TE Bio LLC ("TE Bio"), and
Myotech, LLC ("Myotech"), a variable interest entity, collectively referred to
as the "Company". All significant inter-company accounts and transactions have
been eliminated in consolidation.

FASB Interpretation No. 46 (FIN-46R) (Revised December 2003), Consolidation of
Variable Interest Entities, requires that if an enterprise is the primary
beneficiary of a variable interest entity, the assets, liabilities and results
of operations of the variable interest entity should be included in the
consolidated financial statements of the enterprise.

COMPANY HISTORY:

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

PRINCIPAL BUSINESS ACTIVITIES:

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

ACCOUNTING FOR STOCK-BASED COMPENSATION

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

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


                                       5
<PAGE>

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

As a result of adopting SFAS 123(R) on March 1, 2006, our net loss and basic and
diluted loss per share for the three months and the six months ended August 31,
2006, were $213,096 ($.003 per share) and $691,045 ($.009 per share) higher,
respectively, than if we had continued to account for stock-based compensation
under APB Opinion No. 25 for our stock option grants.

The following table illustrates the effect on operating results and per share
information had the Company accounted for stock-based compensation in accordance
with SFAS 123(R) for the three months and six months ended August 31, 2005:

<TABLE>
<CAPTION>
                                                 Three Months          Six Months
                                                     Ended                Ended
                                               August 31, 2005      August 31, 2005
                                               ----------------     ----------------
<S>                                            <C>                  <C>
Net loss - as reported                         $     (6,023,478)    $     (9,433,316)

Add: Stock-based employee compensation
 expense included in reported net loss,
 net of related tax effects                           2,986,530            4,325,530

Deduct:  Total stock-based employee
 compensation expense determined
 under fair value based method for
 all awards, net of related tax effects              (3,904,417)          (6,059,454)
                                               ----------------     ----------------

Net loss - pro forma                           $     (6,941,365)    $    (11,167,240)
                                               ================     ================
Basic and diluted loss
 per share - as reported                       $           (.08)    $           (.13)
                                               ================     ================

Basic and diluted loss
 per share - pro forma                         $           (.09)    $           (.15)
                                               ================     ================
</TABLE>

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

<TABLE>
<CAPTION>
                                     Three             Three             Six                 Six
                                  Months Ended      Months Ended      Months Ended       Months Ended
                                    August 31,       August 31,        August 31,         August 31,
                                       2006             2005              2006               2005
                                  ------------      ------------      ------------       ------------
<S>                                  <C>              <C>              <C>                <C>
Expected volatility                   119.7             87.8           119.7-121.8         60.3-87.8
Risk-free interest rate               5.35%            4.08%           4.6%-5.35%         4.08%-4.27%
Expected life of options             8 years          10 years          4-8 years           10 years

Weighted-average grant-date           $0.79            $1.91              $1.09              $2.06
fair value
Expected dividends                     -0-              -0-                -0-                -0-
</TABLE>

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

At August 31, 2006, there was $1,486,823 of unrecognized compensation cost
related to stock-based payments which is expected to be recognized over a
weighted-average period of 1.38 years.


                                       6
<PAGE>

ACCOUNTING FOR STOCK-BASED COMPENSATION (Continued)

The following table represents stock option activity for the six months ended
August 31, 2006:

<TABLE>
<CAPTION>
                                                                                Weighted-Average
                                                              Weighted-Average      Remaining
                                                Number of         Exercise           Contract
                                                  Shares            Price              Life
                                                ---------     ----------------  ----------------
<S>                                             <C>                 <C>                <C>
Outstanding options at 2/28/06                  9,594,020           $ .95
Granted                                           240,000           $1.19
Exercised                                         (13,956)          $ .62
Forfeited                                         (92,000)          $1.18
Expired                                           (90,000)          $ .50
                                               ----------
Outstanding options at end of period            9,638,064           $ .96              7.09
                                               ==========           =====              ====
Outstanding exercisable at end of period        6,993,064           $ .82              6.58
                                               ==========           =====              ====
</TABLE>

Shares available for future stock option grants to employees and others under
our 2001 Stock Option Plan were 337,982. Shares available for future stock
option grants to employees and others under our 2006 Stock Option Plan were
7,340,000.

At August 31, 2006, the aggregate intrinsic value of options outstanding was
$1,223,708, and the aggregate intrinsic value of options exercisable was
$1,066,571. Total intrinsic value of options exercised was $7,973 for the six
months ended August 31, 2006.

The following table summarizes our nonvested stock option activity for the six
months ended August 31, 2006:

                                                             Weighted-Average
                                              Number of       Grant-Date Fair
                                               Shares              Value
                                             ----------      ----------------
Nonvested stock options at
  beginning of period                         3,048,750            $1.31
Granted                                         240,000            $1.09
Vested                                         (551,750)           $1.51
Forfeited                                       (92,000)           $1.53
                                             ----------
Nonvested stock options at
  end of period                               2,645,000            $1.24
                                             ==========

RECLASSIFICATION

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

REVENUE RECOGNITION:

The Company earns and recognizes revenue under development agreements when the
phase of the agreement to which amounts relate is completed and the Company has
no further performance obligation. Completion is determined by the attainment of
specified milestones, such as a written progress report. Advance fees received
on such agreements are deferred until recognized.

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

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

INVESTMENT IN MYOTECH LLC AND RESTATEMENT OF FINANCIAL STATEMENTS:

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


                                       7
<PAGE>

Based upon the terms of the Securities Purchase Agreement, we were obligated to
purchase for cash consideration of $2.225 million an additional 811,037 Class A
units. We may elect to acquire up to an additional 3,563,097 Class A units for
further cash consideration of up to $9.775 million, over a 24-month period,
which may result in the Company owning a majority interest in Myotech. During
the three month period ended February 28, 2006, Biophan provided $1,185,000 of
additional funding for 431,946 newly issued Class A units of Myotech. During the
six month period ended August 31, 2006, Biophan has provided $1,228,500 of
additional funding satisfying the cash consideration of $2.225 million cited
above, for 447,802 newly issued Class A units of Myotech, which increased our
ownership to 40.4%. Additional investments of $130,000 have been made since
August 31, 2006.

This investment was previously accounted for using the equity method. However,
the Company has re-evaluated its investment in Myotech and has determined that
Myotech is a variable interest entity in accordance with FASB Interpretation No.
46 (FIN-46R) (Revised December 2003), Consolidation of Variable Interest
Entities. The Company has further concluded that it is the primary beneficiary
as defined by FIN-46R and, as a result, the Company is required to consolidate
Myotech as of the date of acquisition of November 30, 2005. Therefore, the
consolidated financial statements of the Company have been restated to include
the accounts of Myotech, LLC. The principal impact of this consolidation is an
increase in assets due to the recording of the value of intangible assets
acquired of $24,795,968, based on an independent appraisal, over the amount of
the investment, and an increase in the amount of the minority interest
representing outside interests in the equity of Myotech. Aggregate changes were
as follows as of and for the three and six month periods ended August 31, 2006:

<TABLE>
                                                                  Adjustments
                                               As Previously        Increase
                                                 Reported          (Decrease)        As Restated
                                               ------------       ------------       ------------
<S>                                            <C>                <C>                <C>
Intangible assets, net                         $    915,879       $ 24,209,949       $ 25,125,828
Investment in Myotech, LLC                       12,368,031        (12,368,031)               -0-
Other assets                                      1,167,281             13,138          1,180,419
                                               ------------       ------------       ------------
                                               $ 14,451,191       $ 11,855,056       $ 26,306,247
                                               ============       ============       ============

Liabilities                                    $  6,170,399       $    435,928       $  6,606,327

Minority interest                                    25,461         13,903,646         13,929,107

Capital stock                                       414,096                -0-            414,096
Additional paid-in capital                       46,094,852          6,596,926         52,691,778
Treasury stock                                          -0-         (8,467,698)        (8,467,698)
Accumulated deficit                             (38,253,617)          (613,746)       (38,867,363)
                                               ------------       ------------       ------------
                                               $ 14,451,191       $ 11,855,056       $ 26,306,247
                                               ============       ============       ============

Operating loss-three months ended 8/31/06      $ (2,241,604)      $   (963,244)      $ (3,204,848)
                                               ============       ============       ============
Net loss- three months ended 8/31/06           $ (2,805,037)      $   (209,224)      $ (3,014,261)
                                               ============       ============       ============

Operating loss-six months ended 8/31/06        $ (5,370,042)      $ (2,164,483)      $ (7,534,525)
                                               ============       ============       ============
Net loss-six months ended 8/31/06              $ (6,453,314)      $   (444,391)      $ (6,897,705)
                                               ============       ============       ============
</TABLE>

The $0.93 million increase in the operating loss for the three month period
ended August 31, 2006 is primarily due to additional research and development
charges of approximately $0.83 million, which includes $0.35 million of
amortization of intangible assets.

The $2.16 million increase in the operating loss for the six month period ended
August 31, 2006 is primarily due to additional research and development charges
of approximately $1.89 million, which includes $0.70 million of amortization of
intangible assets.

The following is selected financial data for Myotech, LLC:

                                     August 31, 2006
                                    ------------------
        Total current assets        $           18,719
        Intangible assets                   23,762,804
        Other assets                            47,819
                                    ------------------
        Total assets                $       23,829,342
                                    ==================
        Current liabilities         $          489,328
        Equity                              23,340,014
                                    ------------------
                                    $       23,829,342
                                    ==================

                                    Three Months Ended       Six Months Ended
                                     August 31, 2006         August 31, 2006
                                    ------------------      ------------------
        Net loss from operations    $      (1,015,086)     $       (2,274,929)
                                    ==================      ==================


                                       8
<PAGE>

LINE OF CREDIT AGREEMENTS:

On May 27, 2005, we entered into a Line of Credit Agreement with Biomed
Solutions, LLC, whereby Biomed agreed to provide a line of credit facility of up
to $2 million. Borrowings under the line bear interest at 8% per annum, are
payable on demand after August 31, 2006 and are convertible, at Biomed's
election, into the Company's common stock at 90% of the average closing price
for the 20 trading days preceding the date of borrowings under the line. In June
2005, the Company borrowed the entire $2 million under the line in two separate
draws of $1 million each and, in accordance with the agreement, Biomed received
warrants to purchase 500,000 shares of the Company's common stock at an exercise
price of 110% of the average closing price for the 20 trading days preceding the
date of execution of the credit agreement. The Company recorded a discount on
the borrowings of $958,160 due to the beneficial conversion feature of the note
as well as for the value of the warrants. The discount was amortized as
additional interest expense over the term of the note and has been fully
amortized as of November 30, 2005. On August 31, 2005, Biomed elected to convert
$1 million of the note plus accrued interest into 480,899 shares of common stock
at which time, the remaining discount related to the $1 million portion of the
loan was fully expensed. On October 7, 2005, we repaid $500,000 of principal and
all accrued interest on the loan. The balance of borrowings on the line was
$500,000 at August 31, 2006.

On January 24, 2006, we entered into an additional Line of Credit Agreement (the
"Line of Credit Agreement") with Biomed Solutions, LLC, a related party,
pursuant to which Biomed has committed to make advances to us, in an aggregate
amount of up to $5,000,000. Under the Line of Credit Agreement, advances may be
drawn down in such amounts and at such times as we determine upon 15 days prior
notice to Biomed, except that we may not draw down more than $1,500,000 in any
30-day period. Amounts borrowed bear interest at the rate of 8% per annum and
are convertible into shares of our Common Stock at the rate of $1.46 per share.
Biomed's obligation to lend to us under the Line of Credit Agreement expires on
June 30, 2007, on which date the entire amount borrowed by us (and not converted
into shares of our Common Stock) becomes due and payable. We are obligated to
utilize the entire credit facility. In connection with the establishment of the
credit facility under the Line of Credit Agreement, on January 24, 2006 we
issued to Biomed a Stock Purchase Warrant (the "Warrant") entitling Biomed to
purchase up to 1,198,630 shares of our Common Stock at an exercise price of
$1.89 per share. The Company previously recorded an additional discount of
$272,945 on incremental borrowings of $2,650,000 due to the beneficial
conversion feature of the note. The discount is being amortized as additional
interest expense over the term of the note. During the quarter ended August 31,
2006 amortization of the discount on the note resulted in a non-cash interest
expense of $288,900 and $498,424 for the three and six months ended August 31,
2006, respectively. Biomed's purchase rights under the Warrant expire on January
23, 2011. The Company is required to make its best efforts to register the
common stock underlying the warrants and it is not required to settle any part
or all of the instruments with cash. Accordingly, these instruments are
classified as equity. The balance of borrowings on the line was $3,930,000 at
August 31, 2006. The fair value of the note is not readily determinable as there
is a limited market for such related party debt.

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

COMMON STOCK SUBSCRIBED:

On July 21, 2006 the Company elected to put the second tranche of the Stock
Purchase Agreement with SBI Brightline XI, LLC. The Company has received
$1,050,000 which is shown as a current liability since the shares of stock have
not been issued as of August 31, 2006. Shares will be issued upon receipt of
full payment for the second tranche. At that time the liability will be
reclassified to common stock and additional paid in capital.

STOCKHOLDERS' EQUITY:

On May 27, 2005, the Company entered into a Stock Purchase Agreement with SBI
Brightline XI, LLC. The agreement provides a $30 million fixed price financing
for up to 10,000,000 shares at prices ranging from $2 to $4 a share. The sales
of stock must be taken in tranches of 1 million shares each and the financing
agreement requires the shares to be registered for resale by SBI. There are no
resets, warrants, finder's fees or commissions associated with this financing
transaction. Registration of the shares for resale by SBI was effective on May
18, 2006 and the Company elected to put the first tranche of 1 million shares at
$2 per share on May 23, 2006. The Company elected to put the second tranche of 1
million shares at $2 per share on July 21, 2006. Of the total proceeds of
$4,000,000, $3,050,000 was received by August 31, 2006. Subsequent to August 31,
2006 the Company has received an additional $125,000 and the Company has issued
to SBI all shares for which they have paid. On October 11, 2006, the Company
elected to put the entire remaining tranches, at a weighted average price of
$2.60 per share, to SBI.

SUBSEQUENT EVENT:

On October 11, 2006, we entered into a Securities Purchase Agreement (the
"Purchase Agreement") with 10 private investors led by Iroquois Master Fund Ltd
("Iroquois").

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

As further consideration to the investors, on October 12, 2006 we issued to the
investors one-year warrants to purchase an aggregate of 10,820,896 shares of our
common stock at a price of $0.67 per share. If the investors elect to exercise
these one-year warrants, they will also receive additional five-year warrants to
purchase shares of our common stock equal to the number of shares purchased
under this one-year warrant, with 50% of the additional warrants having an
exercise price of 115% of the per share purchase price, and the remaining 50% of
the additional five-year warrants having an exercise price of 125% of the per
share purchase price. We also issued to the investors five-year warrants to
purchase an aggregate of 10,820,896 shares of our common stock. The first
five-year warrants allow for the purchase of 5,410,448 shares of our common
stock at an exercise price of $0.81 per share, and the second five-year warrants
allow for the purchase of 5,410,448 shares of our common stock at an exercise
price of $0.89 per share. The warrants contain anti-dilution protection that
will automatically adjust the exercise price of the warrants should we issue
equity or equity-linked securities at a price per common share below the
exercise price of the five-year warrants to the price at which we issue such
equity or equity-linked securities.


                                       9
<PAGE>

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

The discussion and analysis set forth below in this Item 2 have been amended to
reflect the restatement of our consolidated financial statements for the fiscal
year ended February 28, 2006 and for the period ended August 31, 2006, as
described above in the Explanatory Note to this amended Quarterly on Form 10-Q
and in the Note entitled "Investment in Myotech, LLC and Restatement of
Financial Statements," to Condensed Consolidated Financial Statements included
in Item 1 above. For this reason, the data set forth in this section may not be
comparable to discussions and data in our previously filed Quarterly Reports.

All statements contained in this Item 2, unless they are specifically otherwise
stated to be made as of a different date, are made as of October 13, 2006, the
original filing date of our Quarterly Report on Form 10-Q for the period ended
August 31, 2006, and do not reflect events occurring after the filing of our
Quarterly Report on Form 10-Q filed on October 13, 2006 other than the
restatement, and we undertake no obligation to update the forward-looking
statements in this amended Quarterly Report on Form 10-Q.

GENERAL

Our primary mission is to develop and commercially exploit technologies for
improving the performance, and the corresponding competitiveness, of biomedical
devices manufactured by third party companies. We do not currently employ our
own manufacturing or distribution channels but rather rely on relationships with
sub-contractors and/or partner companies. We develop technology protected by
strong intellectual property targeted at specific markets within the medical
technology sector.

COMPANY BUSINESS

We are a technology development company with a strong focus on solving
real-world technical challenges facing the medical device industry. When
selecting a market opportunity to address, we generate a wide range of potential
technical solutions. Each technical solution we pursue is well-protected by
intellectual property to ensure that we have the capability to effectively
market our technologies. Whenever practical, we attempt to develop and patent
multiple solutions for any given technology requirement. This is done both to
strengthen our position against competitors, and to be in a position to offer
multiple manufacturers alternative solutions, such as for MRI safety of
pacemakers, or MRI visibility of vascular stents, as we introduce our
technologies to the market.

This approach has resulted in the development of a range of core technologies,
in various related segments of the medical device market. We are aggressive in
development and defense of our intellectual property assets and have an
intellectual property portfolio several times the size of many comparable sized
companies.

Over the past quarter, we have:

o Continued to develop and market our technology to help solve the problems of
MRI safety that prevent MRI examination of people with pacemakers, implantable
cardioverter-defibrillators, neurostimulators, pain control devices, pumps, and
virtually any implanted or interventional device with elongated metal leads.

o Continued technical meetings and contract negotiations with representatives of
multiple medical device companies concerning Biophan's solutions for MRI safety,
and entered into currently ongoing negotiations with several of these companies
in which we have responded to requests for pricing for exclusive and
co-exclusive licensing options. As a result of the acquisition of Guidant and
Advanced Bionics by Boston Scientific, these companies have a license to use our
technology for MRI safety on a non-exclusive basis. As a result of this, we have
had a significant increase in activity and interest in additional licenses for
our technology. We have also expanded our dialog with the major MRI guided
device manufacturers as our technologies impact the future potential for MRI
interventional medical procedures and expanded diagnostic procedures. Several of
these discussions have resulted in the exchange of term sheets as well as
discussions about possible forms of new R&D relationships.

o Recognized approximately $310,000 in revenue from licensing, MRI testing, and
consulting. We expect to recognize additional revenue from these transactions in
the next several quarters.

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

o Continued optimization of our technology to improve stents so they can be
non-invasively imaged with MRI to detect the presence of restenosis (blood
vessel blockage) and blood clots after implantation; several technologies to
enable stent visibility are licensed exclusively to Boston Scientific
(NYSE:BSX), who has rights to enforce and/or sub-license the technology to third
parties. Another technology, for stent visibility, licensed exclusively to
Biophan and developed in Aachen, Germany, is outside the Boston Scientific
Agreement, and we can license this technology to third parties. We believe these
technologies offer significant competitive advantage for manufacturers due to
the benefit of non-invasive imaging of device function and the detection of
blockage.

o Continued development of an MRI image compatible vena cava filter, which
allows MR imaging of blood clots that may be present in the filter to help
ensure the safe removal of the device. We are also developing a heart valve
which can be imaged and also implanted under MRI as well as a septal occluder
device to treat conditions such as atrial septal defects, a hole in the septum
between the left and right atria in the heart, which will be the first septal
occluder to be visible as well as implantable under MRI.


                                       10
<PAGE>

o Entered into a Cooperative Research and Development Agreement (CRADA) with the
FDA's Office of Science and Engineering Laboratories (OSEL) to research and
define methods for measuring MRI safety of medical implants by examining the
leads of cardiac rhythm management and neurostimulation devices. This work will
involve identifying worst case conditions for testing MRI safety, establishing
precise device safety guidelines, and defining measurement methods, i.e., how to
measure device safety. An intent of the CRADA is to develop test methods and
guidelines that could be offered to standards-setting groups as well as FDA
reviewers for consideration for testing MR compatibility.

                      LICENSING AND JOINT VENTURE STRATEGY

BOSTON SCIENTIFIC LICENSE

Our license agreement with Boston Scientific provides them with the right to use
Biophan's MRI safety and image compatibility technologies in a broad range of
exclusive and non-exclusive product areas at royalty rates of 3% to 5%. The
exclusive product categories include vascular implants and RF ablation
catheters, and the non-exclusive product categories cover a broad array of
medical devices including pacemakers, implantable cardioverter defibrillators,
neurostimulators, guidewires and catheters. As part of our role under the CRADA,
we have organized workshops attended by the pacemaker, defibrillator and
neurostimulator companies, as well as MRI device manufacturers.

As a result of Boston Scientific's acquisition of Guidant, non-exclusive rights
to pacemakers, defibrillators, neurostimulators, catheters, and guidewires now
extend to Guidant, who may elect to use our technology in their product lines.

The agreement required Boston Scientific to make an initial upfront payment to
Biophan of $750,000, which was made on the closing of the agreement and has been
amortized over the last twelve months, and to make annual minimum royalty and
potentially substantial earned royalty payments. The agreement also provides
Boston Scientific with a right of first negotiation on new technologies acquired
by Biophan in the fields of MRI safety and image compatibility. The initial
$750,000 payment was made on August 2, 2005 and was recognized as revenue over
the next 12 months. Accordingly, the final $125,000 was recorded as revenue in
the current quarter ended August 31, 2006.

We received $250,000 for the first annual minimum payment under our license in
December, 2005. Revenue from this $250,000 payment is being recognized over 12
months. Accordingly, for the three months ended August 31, 2006, the Company
recorded $62,500 in revenue from this payment.

This agreement is available as an Exhibit to our 10-Q for the quarter ended
August 31, 2005, as amended on January 9, 2006.

ACQUISITION OF INTELLECTUAL ASSETS

We currently have 57 issued U.S. patents and over 100 U.S. and international
patents pending.

We believe that a strong intellectual property portfolio is vital to our ability
to achieve and maintain royalties and product sales to major industrial partners
across our product lines.

These technologies cover a broad array of capabilities, with primary focus on
our core businesses of:

o making medical devices safe for use with MRI, as many are contraindicated,
including pacemakers, implantable cardioverter defibrillators and
neurostimulators.

o making implants such as stents visible under MRI so that they can be
non-invasively examined, such as for in-stent restenosis or blood clots. Today,
invasive imaging procedures such as angiograms are required. We believe that
non-invasive imaging of stents is a feature which can move market share between
otherwise competitive devices.

The technologies allowing visualization of implants have been developed at
Biophan, and with technology partners under exclusive license, including aMRIs
Patents GmbH in Germany (via an exclusive license); Aachen Resonance in Germany
(via an exclusive license); and Nanoset, LLC in the U.S. (via an exclusive
license). Biophan holds both sub-licensing and enforcement rights (rights to
litigate) under these agreements.

On an ongoing basis we review our patent portfolio to ensure we are protecting
our innovations and new discoveries in those strategic areas of our business
where we believe the medical device industry is heading. To ensure the
continuing value of our intellectual assets, we intend to aggressively defend
our patents and licensed technology, both domestically and abroad. Additionally,
our license agreement with Boston Scientific provides them enforcement rights in
the areas of our business which are exclusive to them. They also have
sub-licensing rights in the exclusive product categories, with royalties owed to
Biophan on the sublicense, should they elect to allow one of their competitors
access to those technologies.

LIQUIDITY

As further described under the heading "Line of Credit Agreement" in Notes to
Condensed Consolidated Financial Statements, our affiliate Biomed Solutions,
LLC, provided us with a $5 million Line of Credit. Under the Line of Credit
agreement, advances may be drawn down in such amounts and at such times as we
determine upon 15 days prior notice to Biomed, except that we may not draw down
more than $1,500,000 in any 30-day period. Amounts borrowed will bear interest
at the rate of 8% per annum and are convertible into shares of our Common Stock
at the rate of $1.46 per share. Biomed's obligation to lend to us under the line
of credit agreement expires on June 30, 2007, on which date the entire amount
borrowed by us (and not converted into shares of our Common Stock) becomes due
and payable. We are obligated to utilize the entire credit facility. The balance
of borrowings on the line was $3,930,000 at August 31, 2006. Biomed is headed by
our CEO, Michael Weiner, who is also a substantial beneficial owner of Biomed.
The Biomed line of credit is on terms we believe to be competitive with
comparable transactions involving unaffiliated parties and was approved
unanimously by the independent members of our Board of Directors.


                                       11
<PAGE>

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

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

As described in greater detail under the heading "Common Stock Subscribed" and
"Stockholders' Equity" in the "Notes to Condensed Consolidated Financial
Statements", we have an agreement with SBI Brightline XI, LLC for a $30 million
fixed price financing involving the sale to SBI of up to 10,000,000 shares of
our common stock. The Company elected to sell the first tranche of 1 million
shares at $2 per share on May 23, 2006; the funds from the sale of this first
tranche have been received. The Company elected to sell the second tranche of 1
million shares at $2 per share on July 21, 2006. To date $1,175,000 of the funds
from the sale of this tranche has been received and all related shares have been
issued. On October 11, 2006, we elected to exercise all of our remaining put
rights, requiring SBI to purchase the remaining tranches at a price of
$26,000,000.

Contractually, the SBI agreement is adequate to meet our requirements for the
next twelve months. However, management is concerned as to the viability of the
balance of the financing as a result of the disparity between the contractual
strike price and the current market price for our shares, the failure of SBI to
make payment in full for the second tranche of shares as required by the SBI
agreement and the potential reluctance of SBI to honor additional puts. In
addition, the Company has also determined that this facility does not provide
the necessary institutional shareholder support that management believes the
Company requires in order to establish long-term value for our shareholders.

Additionally, certain negotiations in process with several medical device
companies may generate additional working capital in the form of up-front
licensing fees and/or royalty advances.

Effective November 30, 2005, we entered into a Securities Purchase Agreement for
the acquisition of an initial 35% interest in Myotech, LLC ("Myotoch"), a New
York limited liability company, whereby we exchanged 4,923,080 shares of our
common stock, par value $.005, for 3,768,488 Class A (voting) units of Myotech.
Based upon the terms of the Securities Purchase Agreement, we were obligated to
purchase for cash consideration of $2.225 million an additional 811,037 Class A
units. We may elect to acquire up to an additional 3,563,097 Class A units for
further cash consideration of up to $9.775 million, over a 24-month period,
which may result in the Company owning a majority interest in Myotech. During
the three month period ended February 28, 2006, Biophan provided $1,185,000 of
additional funding for 431,946 newly issued Class A units of Myotech. During the
six month period ended August 31, 2006, Biophan has provided $1,228,500 of
additional funding satisfying the cash consideration of $2.225 million cited
above, for 447,802 newly issued Class A units of Myotech, which increased our
ownership to 40.4% Additional investments of $130,000 have been made since
August 31, 2006.

On October 11, 2006, we entered into a Securities Purchase Agreement (the
"Purchase Agreement") with 10 private investors led by Iroquois Master Fund Ltd
("Iroquois").

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


                                       12
<PAGE>

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

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

We believe that the Company has adequate working capital resources for the
upcoming 6-9 months of operations.

RESULTS OF OPERATIONS

The following comments discuss the significant factors affecting the
consolidated operating results, financial condition and liquidity and cash flows
of the Company comparing the three months ended August 31, 2006 to the three
months ended August 31, 2005 and the six months ended August 31, 2006 to the six
months ended August 31, 2005.

Comparison of the Three Months Ended August 31, 2006 to the Three Months Ended
August 31, 2005.

Revenues: Revenues were $0.310 million for the three months ended August 31,
2006 as compared to $0.063 million revenues for the three months ended August
31, 2005 due to development contract payments and license fees from Boston
Scientific Scimed, and operating revenues from our European subsidiary, which
consisted primarily of MRI-related testing and consulting services to medical
device manufacturers.

Operating Expenses

Research and Development. Research and development expenses decreased by 15%, or
$0.350 million to approximately $1.942 million for the three months ended August
31, 2006 from approximately $2.292 million for the three months ended August 31,
2005. Stock options expense (non cash expense) amounted to $0.080 million in the
three months ended August 31, 2006 and $1.237 million in the three months ended
August 31, 2005 due primarily to the accounting for contingent stock options in
the quarter ended August 31, 2005. After consideration of these expenses,
research and development expenses increased by approximately $0.807 million or
76%, to approximately $1.862 million for the three months ended August 31, 2006
from approximately $1.055 million for the three months ended August 31, 2005.

Because we consolidated Myotech LLC at November 30, 2005, the three months ended
August 31, 2006 include approximately, $0.485 million of operating expenses and
$0.345 million in amortization expenses pertaining to Myotech's intangible
assets. With the inclusion of Myotech, and aside from the increase due to
amortization expenses, the increase in expenses is primarily attributable to
spending on certain research projects of approximately $0.700 million and
increased salary-related expenses of approximately $0.075 million, partially
offset by reduced license and patent attorney fees of approximately $0.420
million. .

General and Administrative. General and administrative expenses decreased by 50%
to approximately $1.573 million for the three months ended August 31, 2006 from
approximately $3.124 million for the three months ended August 31, 2005. Stock
options expense (non cash expense) amounted to $0.178 million in the three
months ended August 31, 2006 and $1.873 million in the three months ended August
31, 2005 due primarily to the accounting for contingent stock options in the
quarter ended August 31, 2005. After consideration of these expenses, general
and administrative expenses increased by approximately $0.144 million or 11%, to
approximately $1.395 million for the three months ended August 31, 2006 from
approximately $1.251 million for the three months ended August 31, 2005.

Because we consolidated Myotech LLC at November 30, 2005, the three months ended
August 31, 2006 include approximately, $0.120 million of operating expenses.
With the inclusion of Myotech, the increase in expenses is primarily
attributable to spending for outside financial compliance, audit services and
other professional services of $0.075 million, and increased costs related to
salaries $0.120 million, combined with decreased spending for other activities.

Other Income (Expense)

Interest Expense. We incurred interest expense amounting to approximately $0.380
million for the three months ended August 31, 2006 compared to $0.767 million
expense for the three months ended August 31, 2005. The reduced expense
pertained to two lines of credit from Biomed Solutions, LLC ("Biomed"). For the
$2 million line, one-half was converted to Company stock in the three months
ended August 31, 2005, which accelerated recognition of a non-cash beneficial
conversion feature amounting to $0.729 million and interest of $0.038 million
for the three months ended August 31, 2005. In the third quarter of 2005, the
Company repaid $0.500 million, leaving a balance of $0.500 million outstanding
on this line. The Company also borrowed against a second line of credit, which
had a balance at August 31, 2006 of $3.930 million. This borrowing also includes
a non-cash beneficial conversion feature, which amounted to $0.289 in non-cash
interest expensecombined with normal interest expense of $0.091 million for the
three months ended August 31, 2006.


                                       13
<PAGE>

Minority Interest in Net Loss of Myotech LLC

The loss of $0.520 million is a pro rata share of the loss incurred by Myotech,
LLC attributable to minority interests for the three months ended August 31,
2006. There was no investment in Myotech LLC or loss on investment in Myotech
LLC for the three months ended August 31, 2005. As further described under the
heading "Investment in Myotech LLC" in the "Notes to Condensed Consolidated
Financial Statements" the Company holds a 40.4% interest in Myotech LLC, which
we must consolidate as a variable interest entity since the Company is deemed to
be the primary beneficiary in the relationship with Myotech.

Comparison of the Six Months Ended August 31, 2006 to the Six Months Ended
August 31, 2005.

Revenues: Revenues were $0.655 million for the six months ended August 31, 2006
as compared to $0.063 million revenues for the six months ended August 31, 2005
due to development contract payments and license fees from Boston Scientific
Scimed, and operating revenues from our European subsidiary, which consisted
primarily of MRI-related testing and consulting services to medical device
manufacturers.

Operating Expenses

Research and Development. Research and development expenses increased by 16%, to
approximately $ 4.530 million for the six months ended August 31, 2006 from
approximately $3.892 million for the six months ended August 31, 2005. Stock
options expense (non cash expense) amounted to $0.358 million in the six months
ended August 31, 2006 and $2.031 million in the six months ended August 31, 2005
due primarily to the accounting for contingent stock options in the six months
ended August 31, 2005. After consideration of these expenses, research and
development expenses increased by approximately $2.311 million or 124%, to
approximately $4.172 million for the six months ended August 31, 2006 from
approximately $1.861 million for the six months ended August 31, 2005

Because we consolidated Myotech LLC at November 30, 2005, the six months ended
August 31, 2006 include approximately, $1.190 million of operating expenses and
$0.690 million in amortization expenses pertaining to Myotech's intangible
assets. With the inclusion of Myotech, and aside the increase due to
amortization expenses, the increase in expenses is primarily attributable to
spending on certain research projects of approximately $1.640 million and
increased salary-related expenses of approximately $0.175 million, partially
offset by reduced license and patent attorney fees of approximately $0.450
million.

General and Administrative. General and administrative expenses decreased by 27%
to approximately $3.660 million for the six months ended August 31, 2006 from
approximately $5.020 million for the six months ended August 31, 2005. Stock
options expense (non cash expense) amounted to $0.481 million in the six months
ended August 31, 2006 and $2.542 million in the six months ended August 31, 2005
due primarily to the accounting for contingent stock options in the 6 months
ended August 31, 2005. After consideration of these expenses, general and
administrative expenses increased by approximately $0.700 million or 28%, to
approximately $3.180 million for the six months ended August 31, 2006 from
approximately $2.475 million for the three months ended August 31, 2005.

Because we consolidated Myotech LLC at November 30, 2005, the six months ended
August 31, 2006 include approximately, $0.275 million of operating expenses.
With the inclusion of Myotech, the increase in expenses is primarily
attributable to spending for outside financial compliance, audit services and
other professional services of $0.300 million, increased legal fees of $0.245
million, and increased costs related to salaries $0.310 million, partially
offset by decreased spending for other activities.

Other Income (Expense)

Interest Expense. We incurred interest expense amounting to approximately $0.684
million for the six months ended August 31, 2006 compared to $0.767 million
expense for the six months ended August 31, 2005. The reduced expense pertained
to two lines of credit from Biomed Solutions, LLC ("Biomed"). For the $2 million
line, one-half was converted to Company stock in the six months ended August 31,
2005, which accelerated recognition of a non-cash beneficial conversion feature
amounting to $0.729 million and interest of $0.038 million for the six months
ended August 31,2005. A balance of $0.500 million remains outstanding on this
line. During the six months ended August 31, 2006, the Company borrowed against
a second line of credit, which had a balance at August 31, 2006 of $3.930
million. This borrowing also includes a non-cash beneficial conversion feature,
which amounted to $0.499 in non-cash interest expense combined with normal
interest expense of $0.185 million for the six months ended August 31, 2006.

Minority Interest in Net Loss of Myotech LLC

The loss of $1.216 million is a pro rata share of the loss incurred by Myotech,
LLC attributable to minority interests for the six months ended August 31, 2006.
There was no investment in Myotech LLC or loss on investment in Myotech LLC for
the six months ended August 31, 2005. As further described under the heading
"Investment in Myotech LLC" in the "Notes to Condensed Consolidated Financial
Statements" the Company holds a 40.4% interest in Myotech LLC, which we must
consolidate as a variable interest entity since the Company is deemed to be the
primary beneficiary in the relationship with Myotech.

CAPITAL RESOURCES

Our current strategic plan does not indicate a need for material capital
expenditures in the conduct of research and development activities.

We currently employ twenty-eight full-time individuals, twenty-three in the U.S.
and five in Europe.


                                       14
<PAGE>

FORWARD LOOKING STATEMENTS

Forward looking statements in this Form 10-Q and in other documents incorporated
herein, as well as in oral statements made by the Company, statements that are
prefaced with the words "may," "will," "expect," "anticipate," "continue,"
"estimate," "project," "intend," "designed" and similar expressions, are
intended to identify forward-looking statements regarding events, conditions,
and financial trends that may affect the Company's future plans of operations,
business strategy, results of operations and financial position. These
statements are based on the Company's current expectations and estimates as to
prospective events and circumstances about which the Company can give no firm
assurance. Further, any forward-looking statement speaks only as of the date on
which such statement is made, and the Company undertakes no obligation to update
any forward-looking statement to reflect subsequent events or circumstances.
Forward-looking statements should not be relied upon as a prediction of actual
future financial condition or results. These forward-looking statements, like
any forward-looking statements, involve risks and uncertainties that could cause
actual results to differ materially from those projected or unanticipated.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Derivative Financial Instruments, Other Financial Instruments, and Derivative
Commodity Instruments.

As of August 31, 2006, the Company did not participate in any derivative
financial instruments, or other financial and commodity instruments for which
fair value disclosure would be required under SFAS No. 107.

Primary Market Risk Exposures.

The Company's primary market risk exposures are in the areas of interest rate
risk and foreign currency exchange rate risk. The Company's investment portfolio
of cash equivalents is subject to interest rate fluctuations, but the Company
believes this risk is immaterial due to the short-term nature of these
investments. For the three and six months ended August 31, 2006, foreign
currency translation gains and losses were immaterial as a result of
consolidating the Company's foreign subsidiaries. During the period, the Company
did not engage in any foreign currency hedging activities.

ITEM 4. CONTROLS AND PROCEDURES

(a) Restatement

FASB Interpretation No. 46 (FIN-46R) (Revised December 2003), Consolidation of
Variable Interest Entities, requires that if an enterprise is the primary
beneficiary of a variable interest entity, the assets, liabilities and results
of operations of the variable interest entity should be included in the
consolidated financial statements of the enterprise. The Company has invested in
Myotech, LLC, (Myotech) a development stage business, and a developer of cardiac
assist technologies. This investment was made on November 30, 2005 in the form
of a Securities Purchase Agreement, whereby the Company received 3,768,488 Class
A (voting) units for a 35% interest in Myotech, in exchange for 4,923,080 shares
of our common stock valued at $8,467,698. This investment was previously
accounted for using the equity method.

The Company has re-evaluated its investment in Myotech and has determined that
Myotech is a variable interest entity in accordance with FIN-46R. The Company
has further concluded that it is the primary beneficiary as defined by FIN-46R
and, as a result, the Company is required to consolidate Myotech as of the date
of acquisition of November 30, 2005. Therefore, the consolidated financial
statements of the Company included in this Report on Form 10-Q, have been
restated to include the accounts of Myotech, LLC.

(b) Evaluation of Disclosure Controls and Procedures

In connection with the restatement, under the direction of our Chief Executive
Officer and our Chief Financial Officer, we reevaluated our disclosure controls
and procedures. We identified our failure to recognize and apply the correct
criteria, as explained in FIN 46R, for the proper accounting for our investment
in Myotech, LLC on November 30, 2005 as a material weakness in our internal
control over financial reporting. Solely as a result of this material weakness,
we concluded that our disclosure controls and procedures were not effective as
of November 30, 2005, or for the quarterly periods ended February 28, 2006, May
31, 2006 and August 31, 2006.

(c) Remediation of Material Weakness in Internal Control

We are confident that, as of the date of this filing, we have fully remediated
the material weaknesses in our internal control over financial reporting with
respect to the item cited above. The remedial actions included:

      o     Improving education and accounting reviews to ensure that personnel
            involved in entity investments and asset purchases understand and
            apply the pertinent accounting principles appropriate to the nature
            of the transaction.

In connection with this amended Report on Form 10-Q, our Chief Executive Officer
and Chief Financial Officer have evaluated our disclosure controls and
procedures as currently in effect and as a result of the remedial actions
discussed above, have concluded that as of this date our disclosure controls and
procedures are effective.

(d) Management's Report on Internal Control Over Financial Reporting (as
restated)

The management of Biophan Technologies, Inc. is responsible for establishing and
maintaining adequate internal control over financial reporting for the company.
With the participation of the Chief Executive Officer and the Chief Financial
Officer, our management conducted an evaluation of the effectiveness of our
internal control over financial reporting as of November 30, 2005, February28,
2006, May 31, 2006 and August 31, 2006, based on the framework and criteria
established in Internal Control -- Integrated Framework, issued by the Committee
of Sponsoring Organizations of the Treadway Commission.

In our Quarterly Report on Form 10-Q for the period ended November 30, 2005
(filed on January 17, 2006 ), in our Annual Report on Form 10-K for the year
ended February 28, 2006 (originally filed on May 15, 2006 and amended on June 6,
2006) and in our Quarterly Reports on Form 10-Q for the periods ended May 31,
2006 (filed on July 10, 2006) and ,August 31, 2006 (filed on October 13, 2006)
management concluded that our internal control over financial reporting was
effective as of the end of the periods covered by such reports. Subsequently,
management identified material weaknesses in internal control over financial
reporting with respect to accounting for the investment in Myotech, LLC on
November 30, 2005. Solely as a result of these material weaknesses, our
management has revised its earlier assessment and has now concluded that our
internal control over financial reporting was not effective as of November 30,
2005, or for the quarterly periods ended February 28, 2006, May 31, 2006 and
August 31, 2006.


                                       15
<PAGE>

                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not a party to any material legal proceedings and there are no material
legal proceedings pending with respect to our property, except as noted below.
We are not aware of any legal proceedings contemplated by any governmental
authorities involving either us or our property. None of our directors, officers
or affiliates is an adverse party in any legal proceedings involving us or our
subsidiaries, or has an interest in any proceeding which is adverse to us or our
subsidiaries.

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

ITEM 1A. RISK FACTORS

In addition to the other information contained or incorporated by reference in
this Form 10-Q, you should carefully consider the risks described below before
making an investment decision regarding our securities. If any of the following
risks actually occur, our business, financial condition and results of
operations could be harmed. In that case, the trading price of our securities
could decline and you could lose all or part of your investment. Additional
risks not presently known to us or that we currently deem immaterial may also
impair our business operations.

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


                                       16
<PAGE>

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

o organizational activities;

o developing a business plan;

o obtaining funding;

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

o aggressively patenting our intellectual property;

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

o marketing to major biomedical device manufacturers.

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

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

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

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

For the fiscal years ended February 28, 2006, and 2005, and February 29, 2004,
we incurred net losses of $14,484,384, $5,793,547, and $3,718,570, respectively.
Additionally, we have incurred net losses from inception through August 31, 2006
of $38,867,363. We expect to continue to incur losses as we spend additional
capital to develop and market our technologies and establish our infrastructure
and organization to support anticipated operations. We cannot be certain whether
we will ever earn a significant amount of revenues or profit, or, if we do, that
we will be able to continue earning such revenues or profit. Also, our current
economic weakness may limit our ability to develop and ultimately market our
technologies. Any of these factors could cause our stock price to decline and
result in you losing a portion or all of your investment.

OUR INABILITY TO RETAIN AND ATTRACT KEY PERSONNEL COULD ADVERSELY AFFECT OUR
BUSINESS.

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

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


                                       17
<PAGE>

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

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

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

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

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

o substantially greater financial, technical and marketing resources;

o larger customer bases;

o better name recognition;

o related product offerings; and

o larger marketing areas.

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

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

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


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<PAGE>

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

Proprietary rights are critically important to us. We currently have 57 issued
U.S. patents and over 100 U.S. and international patents pending. Although we
intend to aggressively pursue additional patent protection for our technologies
as we continue to develop them, we cannot assure you that any additional patents
will be issued. Although we will seek to defend our patents and to protect our
other proprietary rights, our actions may be inadequate to protect our patents
and other proprietary rights from infringement by others, or to prevent others
from claiming infringement by us of their patents and other proprietary rights.

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

WE MAY BE UNABLE TO INCREASE THE NUMBER OF AUTHORIZED SHARES UNDER OUR CORPORATE
CHARTER TO ENABLE US TO COMPLETE FUTURE FINANCINGS.

The primary method by which we raise capital is to continue selling shares
directly to investors or to arrange for debt financing which include a
conversion feature to common stock. If our shareholders, via shareholder vote,
are unwilling to increase the number of authorized shares, currently set at 125
million shares, we may be unable to continue raising funds to continue
operations until we are able to internally generate cash to fund our operational
cash needs.

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

Sales of a substantial number of shares of our common stock, or the perception
that sales could occur, whether at the then current market price or below the
then current market price, could adversely affect prevailing market prices for
our common stock. For example, in connection with our issuance of $7,250,000 of
senior secured amortizing convertible notes on October 12, 2006, the holders of
the notes may elect to convert the notes at any time into shares of the
Company's common stock at a price of $0.67 per share (the "Fixed Conversion
Price"). Payments of interest and principal on the notes may be made, at the
Company's option, in cash or shares of the Company's common stock registered for
resale under the Securities Act, and if we elect to make payments on the notes
in shares, those payments will be based on the lower of (i) the Fixed Conversion
Price or (ii) 90% of the volume weighted 20-day trailing average price per share
of our common stock on the date we make a payment (in the case of interest
payments) or 87.5% of the volume weighted 15-day trailing average price per
share of our common stock on the date we make a payment (in the case of
principal payments). As additional consideration to the purchasers of the notes,
the Company issued five-year warrants to purchase an aggregate of 10,820,896
shares of our common stock. The first five-year warrants allow for the purchase
of 5,410,448 shares of our common stock at an exercise price of $0.81 per share,
and the second five-year warrants allow for the purchase of 5,410,448 shares of
our common stock at an exercise price of $0.89 per share. As further
consideration to the purchasers of the notes, the Company issued one-year
warrants to purchase up to 10,820,896 million shares of our common stock at a
price of $0.67 per share. If the purchasers elect to exercise this one-year
warrant, they will also receive additional five-year warrants to purchase the
Company's common stock equal to the number of shares purchased under this
one-year warrant, with 50% of the additional warrants having an exercise price
of 115% of the per share purchase price, and the remaining 50% of the additional
five-year warrants having an exercise price of 125% of the per share purchase
price. In addition, if we issue additional shares of our common stock for sale
in future financings, our stockholders would experience additional dilution.

BECAUSE TWO OF OUR DIRECTORS ARE EQUITY OWNERS AND MANAGERS OF BIOMED SOLUTIONS,
LLC, A SIGNIFICANT CREDITOR OF BIOPHAN, AND BECAUSE SEVERAL OF OUR DIRECTORS AND
OFFICERS ARE AFFILIATES OF OTHER ENTITIES WITH WHOM BIOPHAN HAS SIGNIFICANT
BUSINESS RELATIONSHIPS, THERE MAY BE CONFLICTS OF INTEREST.

Michael L. Weiner, our President, CEO and director, is the Manager and a 24.3%
beneficial owner of Biomed, a company engaged in the business of identifying and
acquiring technologies in the biomedical field for exploitation. Mr. Weiner and
Ross Kenzie, also a director of Biophan, make up the Biomed Board of Members.
Biomed is a beneficial owner of 3.61% of our outstanding common stock and holds
on aggregate of $7 million face amount of our convertible promissory notes. Mr.
Weiner is also the Manager and 42.3% equity member of Technology Innovations,
LLC, which is a 57% equity member of Biomed. Further, Mr. Weiner is on the board
of Nanoset, LLC, an entity owned in part by Biomed and with which we have
entered into a technology license agreement, and Myotech, LLC, an entity in
which Biomed is a 25% owner. Messrs Weiner and Kenzie, as well as Steven Katz,
another of our directors, and John Lanzafame, our COO, are also on the Board of
NaturalNano, Inc., the principal owner of which is Technology Innovations, LLC.
NaturalNano has entered into a research and development agreement with us for
drug eluting technology.

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

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

We did not make any unregistered sales of our equity securities during the
quarter ended August 31, 2006.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On Tuesday July 18, 2006, pursuant to proper notice to stockholders, the Company
held its Annual Meeting of Stockholders in Rochester, New York. At the Meeting,
the following directors were elected, by the indicated vote, to serve as
directors until the next Annual Meeting of Stockholders or until their
successors are elected and qualified.

   ------------------------------------------------------------------
   Nominee                                   For           Withhold
   ------------------------------------------------------------------
   Michael L. Weiner                      58,555,044         676,031
   ------------------------------------------------------------------
   Guenter H. Jaensch                     58,630,944         600,131
   ------------------------------------------------------------------
   Steven Katz                            58,427,534         803,541
   ------------------------------------------------------------------
   Ross B. Kenzie                         58,495,494         735,581
   ------------------------------------------------------------------
   Theodore A. Greenberg                  58,647,094         583,981
   ------------------------------------------------------------------

A proposal was made to approve the Company's 2006 Incentive Stock Plan. The
proposal carried by a vote of 18,332,722 for, 1,355,185 against and 148,804
abstaining.

Lastly, stockholders ratified the appointment of Goldstein Golub Kessler, LLP,
as the Company's independent registered public accounting firm for the fiscal
year ending February 28, 2007 by a vote of 58,911,890 for, 274,216 against and
44,969 abstaining.


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<PAGE>

ITEM 5. OTHER INFORMATION

Not applicable

ITEM 6. EXHIBITS

Exhibit No.                  Exhibit Description                     Location
-----------  -------------------------------------------------    --------------

31.1         Certification of C.E.O. pursuant to Rule 13a-14(a)   Filed herewith

31.2         Certification of C.F.O. pursuant to Rule 13a-14(a)   Filed herewith

32.1         Certification of C.E.O. pursuant to Rule 13a-14(b)   Filed herewith
               and 18 U.S.C. Section 1350

32.2         Certification of C.F.O. pursuant to Rule 13a-14(b)   Filed herewith
               and 18 U.S.C. Section 1350


                                       20
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                           BIOPHAN TECHNOLOGIES, INC.
                                  (Registrant)


                           By: /s/ Michael L. Weiner
                               -------------------------------------
                               Name:  Michael L. Weiner,
                               Title: Chief Executive Officer


                           By: /s/ Darryl L. Canfield
                               -------------------------------------
                               Name:  Darryl L. Canfield
                               Title: Chief Financial Officer, Treasurer and
                                      Secretary (Principal Financial Officer and
                                      Principal Accounting Officer)

                           Date: January 24, 2007


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