U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                  FORM 10-QSB


                 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934


               FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005

                          COMMISSION FILE NO. 0-28413


                                HUMAN BIOSYSTEMS
       (Exact name of small business issuer as specified in its charter)


            CALIFORNIA                                   77-0481056
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
 incorporation or organization)


                               1127 HARKER AVENUE
                          PALO ALTO, CALIFORNIA 94301
                    (Address of principal executive offices)

                                  650-323-0943
                          (Issuer's telephone number)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X]   No [ ]

At March 31, 2005, the registrant had outstanding 53,586,400  shares of common
stock, no par value.


Transitional Small Business disclosure format:  Yes [ ]   No  [X]

==============================================================================
                                HUMAN BIOSYSTEMS
                               TABLE OF CONTENTS
                                                                          PAGE
PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

CONDENSED BALANCE SHEET (UNAUDITED) -- as of March 31, 2005................F-2

CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Three Month Periods Ended March 31, 2005 and 2004
and the Period from February 26, 1998 (Inception) through March 31, 2005...F-3

CONDENSED STATEMENT OF STOCKHOLDERS' DEFICIT (UNAUDITED)
For the Three Months Ended March 31, 2005..................................F-4

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Three Months Ended March 31, 2005 and 2004,
and the Period from February 26, 1998 (Inception) through March 31, 2005...F-4

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)....................... F-5-8

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

ITEM 3.  CONTROLS AND PROCEDURES............................................19

PART II - OTHER INFORMATION.................................................19

ITEM 1.  LEGAL PROCEEDINGS..................................................19

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS........19

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES....................................20

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................20

ITEM 5.  OTHER INFORMATION..................................................20

ITEM 6.  EXHIBITS ..........................................................20

SIGNATURES .................................................................20
==============================================================================



                              HUMAN BIOSYSTEMS
                         (A DEVELOPMENT STAGE COMPANY)
                            CONDENSED BALANCE SHEET
                                 MARCH 31, 2005
                                  (UNAUDITED)
                                     ASSETS

<TABLE>
<CAPTION>
<S>                                                                       <C>

Current assets
        Cash                                                            $  152,800
        Prepaid expenses and other current assets                           69,000
                                                                        ----------
                Total current assets                                       221,800
                                                                        ----------
Total assets                                                            $  221,800
                                                                        ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities
        Accounts payable                                                $  194,700
        Accrued liabilities                                                 90,500
        Stockholder payables                                               317,700
                                                                        ----------
                Total current liabilities                                  602,900
                                                                        ----------
Total liabilities                                                          602,900

Commitments and contingencies                                                   --

Stockholders' equity
    Preferred stock; no par or stated value; 5,000,000 shares
          authorized, no shares issued or outstanding                           --
    Common stock; no par or stated value; 145,000,000 shares
           authorized, 58,696,697 shares
           and 53,386,400 issued and outstanding                        14,719,500
    Investment in marketable securities held in escrow                     (69,000)
    Accumulated other comprehensive loss                                    (9,400)
    Accumulated deficit during development stage                       (15,022,200)
                                                                        ----------
                Total stockholders' deficit                               (381,100)
                                                                        ----------
Total liabilities and stockholders' equity                              $ 221,800
                                                                        ==========

                 See Accompanying Notes To Financial Statements
</TABLE>
<PAGE>F-2

                                HUMAN BIOSYSTEMS
                         (A DEVELOPMENT STAGE COMPANY)
                       CONDENSED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)
<TABLE>
<CAPTION>                                                     <C>               <C>                  <C>
<S>                                                        Three Months   Three Months      February 26, 1998
                                                              ended           ended        (Inception) Through
                                                          March 31,2005   March 31,2004      March 31, 2005
                                                         ---------------   -----------     -----------------

Revenue                                                    $         --    $         --       $        --

Operating expenses
        General and administrative
                Stock based compensation                         32,600         176,500          3,706,400
                Other general and administrative expenses       260,900         144,700          5,830,500
                                                              ----------       ---------       -----------
        Total general and administrative                        293,500         321,200          9,536,900
        Research and development                                 43,900          44,200          1,972,700
        Sales and marketing                                      25,400          31,500            820,800
                                                              ----------       ---------       ------------
                Total operating expenses                        362,800         396,900         12,330,400
                                                              ----------       ---------       ------------
Loss from operations                                           (362,800)       (396,900)       (12,330,400)

Other income (expense)
        Loan fees                                                    --              --           (750,000)
        Bad debt related to other receivable                         --              --           (502,300)
        Loss on investment in marketable securities                  --              --           (762,600)
        Interest income                                              --              --              2,700
        Interest expense                                             --        (340,700)          (673,200)
                                                              ----------       ---------       ------------
Loss before provision for income taxes                         (362,800)       (737,600)       (15,015,800)

Provision for income taxes                                          800              --              6,400
                                                              ----------       ---------       ------------
Net loss                                                       (363,600)       (737,600)       (15,022,200)
                                                              ----------       ---------       ------------
Other comprehensive income(loss), net of tax
        Unrealized income(loss) on investment
         in marketable securities                                   400              --             (9,400)
                                                              ----------       ---------       ------------
Total comprehensive loss                                   $   (363,200)   $   (737,600)      $(15,031,600)
                                                              ==========       =========       ============

Basic and diluted loss per common share                    $      (0.01)   $      (0.02)         $   (0.88)
                                                              ==========       =========       ============
Basic and diluted weighted average
        common shares outstanding                            52,486,400      31,272,300         17,004,600
                                                            ===========     ===========       =============

               See Accompanying Notes To Financial Statements
</TABLE>
<PAGE>F-3

                                HUMAN BIOSYSTEMS

  <TABLE>
  <CAPTION>
  <S>                                             <C>                           <C>                                  <C>

                                                          HUMAN BIOSYSTEMS
                                                    (A DEVELOPMENT STAGE COMPANY)
                                            STATEMENT OF STOCKHOLDERS' EQUITY (Continued)


                                                                     Investment
                                                                         in          Accumulated     Accmulated
                                                 Common               Marketable        Other       Deficit During    Total
                                         ----------------------      Securities    Comprehensive    Development   Stockholders'
                                           Shares      Amount     Investments PLC      Loss            Stage         Deficit
                                         ----------  ----------   ---------------  --------------  ------------- -------------
Balance, December 31, 2004               51,447,000  $14,423,600  $    (68,800)    $    (9,800)     $(14,658,600) $  (313,600)

Issuance of common stock for cash (net
 offering cost of $609,900), weighted
 average price of $0.17                   1,746,100      262,200            --              --                --      262,200

Issuance of common stock for services,
 weighted average price of $0.07            282,200       31,600            --              --                --       31,600

Stock based compensation related to
 vesting of options previously granted           --        1,000            --              --                --        1,000

Stock options and warrants exercised,
 weighted average exercise price of $0.01   111,100        1,100            --              --                --        1,100

Comprehensive loss, net of tax
 Net loss                                        --           --            --              --          (363,600)    (363,600)
 Unrealized income on investment in
  marketable securities                          --           --          (200)            400                --          200
                                                                                                                  ------------
Total comprehensive loss                                                                                             (363,400)
                                         ----------  -----------  --------------   --------------    -----------  ------------
Balance, March 31, 2005(Unaudited)       56,586,400  $14,719,500  $    (69,000)    $    (9,400)     $(15,022,200) $  (381,100)
                                         ==========  ===========  ==============   ==============    ===========  ============

                                   See Accompanying Notes To Financial Statements
</TABLE>
<PAGE>F-4


                                HUMAN BIOSYSTEMS
                         (A DEVELOPMENT STAGE COMPANY)
                      CONDENSED  STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)

<table>
<caption>

                                                           <c>              <c>             <c>
                                                          Three Months    Three Months
                                                             ended           ended      February 26, 1998
                                                            March 31,       March 31,  (Inception) Through
                                                              2005            2004      March 31, 2004
                                                          -------------   -----------  -----------------
Cash flows from operating activities:
 Net loss                                                $  (363,600)    $  (737,600)  $ (15,022,200)
 Adjustments to reconcile net loss to net
  cash used by operating activities:
   Stock based compensation                                   32,600         176,500       3,706,400
   Depreciation                                                  200             500           9,800
   Deemed interest expense                                        --              --          92,800
   Interest expense paid in common stock                          --         340,200         487,800
   Amortization of discount and loan fees
    on notes payable                                              --              --         774,800
   Loss on investment in marketable securities                    --	          --         762,600
   Bad debt related to other receivables                          --              --         502,300
 Changes in operating assets and liabilities:
   Change in prepaid expenses and other asset                     --           3,700              --
   Change in accounts payable                                (29,900)         20,200         279,100
   Change in accrued liabilities                              28,800          (8,000)        199,900
                                                           ----------       ---------     -----------
          Net cash used by operating activities             (331,900)       (204,500)     (8,206,700)

Cash flows from investing activities:

  Purchase of fixed assets                                        --              --          (9,800)
                                                            ---------       ----------    -----------
    Net cash used by investing activities                         --              --          (9,800)

 Cash flows from financing activities:
   Change in stockholder payables                           (57,300)         115,300       1,179,600
   Proceeds from issuance of common stock                   263,300          114,400       7,055,500
   Proceeds from borrowing on notes payable                      --               --         323,100
   Principal payments on notes payable                           --               --         (97,400)
   Principal payments on stock subject to rescission             --               --         (41,500)
   Change in other receivables                                   --               --         (50,000)
                                                           ---------        ---------     -----------
     Net cash provided by financing activities              206,000          229,700       8,369,300
                                                           ---------        ---------     -----------
  Net increase (decrease) in cash                          (125,900)          25,200         152,800

  Cash, beginning of period                                 278,700            7,400              --
                                                           ---------       ----------     -----------
  Cash, end of period                                     $ 152,800       $   32,600       $ 152,800
                                                           =========       ==========     ===========
 Supplemental disclosure of cash flow information:
  Cash paid for income taxes                              $      --       $       --       $   4,800
                                                           =========       =========      ===========
  Cash paid for interest                                  $      --       $       --       $  12,900
                                                           =========       =========      ===========

Schedule of non-cash financing activities:

Issuance of common stock in satisfaction of
  accounts payable(excluding interest of $7,500)          $      --       $  13,700        $  13,700
                                                           =========       =========       ==========

Issuance of common stock in satisfaction of
  stockholder payables (excluding interest of $332,700)   $      --       $ 620,000        $ 620,000
                                                           =========       =========       ==========


</table>
            See Accompanying Notes to Financial Statements
<page>F-4


                                HUMAN BIOSYSTEMS
                         (A DEVELOPMENT STAGE COMPANY)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                HUMAN BIOSYSTEMS
                                  (UNAUDITED)
1.   BASIS OF PRESENTATION

Human BioSystems (hereinafter referred to as the "Company") is a development
stage company incorporated on February 26, 1998 under the laws of the state of
California.  The business purpose of the Company is to develop the technology
for preservation of certain biologic material, including platelets (a blood
component), red blood cells, heart valves, tissue and organs.  The Company is in
the eighth year of its research and development activities.  The Company's goal
is to develop the technology to extend and maintain functionality of these
materials for much longer periods of time than is currently possible.

The accompanying unaudited condensed financial statements have been prepared in
accordance with Securities and Exchange Commission requirements for interim
financial statements.  Therefore, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States for complete financial statements.  The financial statements should be
read in conjunction with the Company's Form 10-KSB for the year ended December
31, 2004.

The interim financial statements present the condensed balance sheet, statements
of operations, stockholders' deficit and cash flows of Human BioSystems.  The
financial statements have been prepared in accordance with accounting principles
generally accepted in the United States.

The interim financial information is unaudited.  In the opinion of management,
all adjustments necessary to present fairly the financial position of the
Company as of March 31, 2005 and the results of operations and cash flows
presented herein have been included in the financial statements.  Interim
results are not necessarily indicative of results of operations for the full
year.

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

<page>F-5

2.	STOCK-BASED EMPLOYEE COMPENSATION

The Company applies Accounting Principles Board ("APB") Opinion No. 25,
Accounting for Stock Issued to Employees, and Related Interpretations, in
accounting for stock options issued to employees. Under APB No. 25, employee
compensation cost is recognized when the estimated fair value of the underlying
stock on date of the grant exceeds the exercise price of the stock option. For
stock options and warrants issued to non-employees, the Company applies SFAS No.
123, Accounting for Stock-Based Compensation, which requires the recognition of
compensation cost based upon the fair value of stock options at the grant date
using the Black-Scholes option pricing model.

The following table represents the effect on net loss and loss per share if the
Company had applied the fair value based method and recognition
provisions of Statement of Financial Accounting Standards (SFAS)
No. 123, "Accounting for Stock-Based Compensation", to stock-
based employee compensation:

                                            Three Months        Three Months
                                               ended                ended
                                              March 31,           March 31,
                                               2005                 2004
                                              -------             --------
Net loss, as reported                   $    (363,600)       $    (737,600)

Add: Stock-based employee compensation
 expense included in reported loss,
 net of related tax effects                        --                   --

Deduct: Total stock-based employee
 compensation expense determined under
 fair value based methods for all awards,
 net of related tax effects                    (9,400)             (49,500)
                                             ---------            ---------
Pro forma net loss                      $    (373,000)       $    (787,100)
                                             =========            =========
Net loss per common share
 Basic and diluted loss, as reported    $       (0.01)       $       (0.02)
                                             =========            =========
 Basic and diluted loss, pro forma      $       (0.01)       $       (0.03)
                                             =========            =========


3.	RELATED PARTY TRANSACTIONS

Stockholder payables consist of the following as of March 31, 2005:

Wages payable to stockholder employees	       $ 314,600

Accrued vacation for stockholder employees         3,100
                                               ---------
				               $ 317,700
				               =========
<page>F-6

4.   COMMON STOCK

During the first quarter 2005, the Company issued 1,546,100 shares of common
stock for cash totaling $262,200 (including offering costs of $609,900).

During the first quarter 2005, the Company issued 482,200 shares of common stock
for services totaling $31,600.

During the first quarter 2005, the Company issued 111,100 shares of common stock
in relation to the exercise of warrants for cash totaling $1,100.

Loan Agreement - Effective October 28, 2004, the Company entered into the Loan
Agreement with Ben David.   The Loan Agreement called for Ben David to loan the
Company an aggregate of $2,300,000 euros (the "Loan").   The Loan was to bear
interest at the rate of three percent per annum, with payments of interest due
monthly and all principal plus accrued but unpaid interest due and payable on
November 1, 2007.  Repayment of the Loan was secured by 23,000,000 shares of the
Company's common stock (the "Shares") issuable pursuant to Regulation S under
the Securities Act.  Pursuant to the Loan Agreement and an Escrow Agreement
between Ben David and the Company, certificates representing the Shares were
delivered to Ben David to hold until funds for repayment of the Loan were
delivered to the escrow agent.  However, the Loan Agreement provided that it
would terminate, and the Shares immediately returned to the Company, in the
event that the Loan funds were not delivered to the Company by the 15th calendar
day following the date of the Loan Agreement (November 13, 2004).  Pursuant to
Ben David's request, the Company extended the date for receipt of Loan funds to
December 23, 2004; however, no Loan funds were received by that date.  On
January 11, 2005, the Company instructed its transfer agent to cancel the
Certificates, and notified Ben David that the Loan Agreement was cancelled and
of no further force or effect.  The Company did not incur any early termination
penalties in connection with the cancellation of the Loan Agreement.

5.   GOING CONCERN

The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business.  The Company is in the development
stage, has no operating revenue and incurred a net loss of $363,600 for the
three months ended March 31, 2005.  The Company is in the eighth year of
research and development, with an accumulated loss during the development stage
of $15,022,200.  As of March 31, 2005, management is uncertain as to the
completion date or if any of the Company's products will be completed at all.

<page>F-7

Management's plan, in this regard, is to raise financing of approximately
$2,500,000 through a combination of equity and debt financing.  Management
believes this amount will be sufficient to finance the continuing research for
the next twelve months.  However, there is no assurance that the Company will be
successful in raising such financing.

These conditions give rise to substantial doubt about the Company's ability to
continue as a going concern.  These financial statements do not include
adjustments relating to the recoverability and classification of reported asset
amounts or the amount and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern.  The Company's
continuation as a going concern is dependent upon its ability to obtain
additional financing or sale of its common stock as may be required and
ultimately to attain profitability.

6.   SUBSEQUENT EVENTS

During March 2005, and subsequently amended during April 2005, the Company
entered into an agreement with a public relations and promotions services
company for consulting services.  The public relations and promotions services
company will promote the Company to the investment community and the general
public through press releases and other communications, all of which must be
approved in advance by the Company.  The initial term of the agreement is 6
months, subject to prior termination.  In consideration of the services being
performed, the Company will issue compensation shares equal to 30% of the
increase in buy volume of the Company's common stock directly attributable to
the public relations and promotions services company, as defined in the
agreement.  The Company will also issue bonus shares of 10% of the increase in
buy volume of the Company's common stock in the event the sales price of the
Company's common stock equals or exceeds $0.25 per share.  Additionally, the
Company has agreed to issue 3 million shares of common stock to be held by an
escrow agent.  Through May 10, 2005, the Company released approximately
1,255,000 shares of common stock in consideration of this agreement.

During June 2004, the Company entered into an Investment Agreement (the
"Investment Agreement") with Dutchess Private Equities Fund II, LP ("Dutchess")
effective June 28, 2004.  Pursuant to the terms of the Investment Agreement, the
Company may offer, through a series of puts, and Dutchess must purchase up to
38,000,000 shares of the Company's common stock with an aggregate purchase price
up to $5,000,000.  Pursuant to the Investment Agreement, Dutchess acquired
30,000 shares of the Company's common stock in exchange for approximately
$16,700 during April 2005.

During April and May 2005, the Company received approximately $12,900 in
exchange for warrants to purchase approximately 202,200 shares of the Company's
common stock.

<page>F-8

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

THIS QUARTERLY REPORT CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF
SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, INCLUDING, WITHOUT
LIMITATION, STATEMENTS REGARDING OUR EXPECTATIONS, BELIEFS, INTENTIONS OR FUTURE
STRATEGIES THAT ARE SIGNIFIED BY THE WORDS "EXPECTS", "ANTICIPATES", "INTENDS",
"BELIEVES", OR SIMILAR LANGUAGE.  THESE FORWARD-LOOKING STATEMENTS INVOLVE
RISKS, UNCERTAINTIES AND OTHER FACTORS.  ALL FORWARD-LOOKING STATEMENTS INCLUDED
IN THIS DOCUMENT ARE BASED ON INFORMATION AVAILABLE TO US ON THE DATE HEREOF AND
SPEAK ONLY AS OF THE DATE HEREOF.  THE FACTORS DISCUSSED BELOW UNDER "RISK
FACTORS" AND ELSEWHERE IN THIS QUARTERLY REPORT ON FORM 10-QSB ARE AMONG THOSE
FACTORS THAT IN SOME CASES HAVE AFFECTED OUR RESULTS AND COULD CAUSE THE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE PROJECTED IN THE FORWARD-LOOKING
STATEMENTS.

The following discussion should be read in conjunction with the Condensed
Financial Statements and Notes thereto.

Overview/ Recent Developments

We are a developmental stage company, and have a very limited operating history
and no revenue to date.  Our prospects must be considered in light of the risks
and uncertainties encountered by companies in an early stage of development
involving new technologies and overcoming regulatory approval process
requirements before any revenue is possible.

We have experienced operating losses since our inception.  These losses have
resulted from the significant costs incurred in the development of our
technology and the establishment of our research and development facility.
Expenditures will increase in all areas in order to execute our business plan,
particularly in research and development and in gaining regulatory approval to
market our products in the U.S. and abroad.

In 2003, we experienced increased difficulty in raising outside capital.  This
difficulty continued through the third quarter of 2004.  Although research
continued in organ preservation, we were forced to suspend animal testing and
human infusion testing due to a lack of funds.  Our employees accepted a
temporary 50% salary reduction in January 2004 to conserve cash, and several of
these employees as well as certain of our outside consultants elected to convert
a portion of their deferred compensation to shares of our common stock.  On
September 1, 2004, we restored all employee salaries; however, employees
received 50% of their salaries in cash and 50% in shares or restricted common
stock as an accrual.  In March 2005, we made the decision to pay all of these
accrued salaries in cash. In February 2005, we changed our overall compensation
structure to reduce recurring payroll expenses in non-critical areas in order to
provide additional resources for the completion of our scientific objectives.

<page>2

During the year ended December 31, 2004, we pursued various alternatives for
raising capital, including but not limited to transactions with Dutchess Private
Equities Fund II ("Dutchess"), Langley Park Investments PLC ("Langley") and Pini
Ben David ("Ben David") (see "Liquidity and Capital Resources" below).  We also
raised funds through the sales of our capital stock through Regulation S under
the Securities Act.  To date, we continue to seek alternative sources for
capital.

Our principal business objective is to develop and provide economical, non-toxic
methods of extending the shelf life and improving the quality of blood platelets
and other biological material.  We have been successful in preserving blood
platelets for ten days under refrigeration while maintaining cell structure and
morphology, which has never been done before to our knowledge.  We had
originally contemplated submitting our findings to the FDA in the first half of
2003; however, additional pre-human infusion tests were necessary to address
certain aspects of our findings. We believe that we have now satisfactorily
resolved all issues raised by these findings, and resumed our human infusion
tests in February 2005.  We currently anticipate that these tests will be
completed within the next four to six months.

We began research on kidney preservation in 2002 and have developed what we
believe is a solution that will operate under refrigerated temperature storage
conditions for over 30 hours, allowing organ preservation beyond current
capabilities.  In our most recent preliminary tests, we were able to preserve a
rat's kidney at negative 20 degrees Centigrade for 48 hours.  Our next step will
be to continue our tests to progressively longer periods of time using this
solution.  Our goal is to extend the kidney shelf life for from up to 72 to 96
hours.  We believe that the extended shelf life should enable better matching of
donor kidneys to recipients.  In 2003, we suspended this animal testing pending
receipt of funding; however, we recently resumed our organ preservation research
and in the near future plan to double the number of animal organ preservation
experiments as compared to the current schedule.

In July 2002, we received our first patent on our technology and methodology for
preserving blood platelets.  We filed a provisional patent application in June
2001 to cover our platelet preservation methods.  In August 2003, we filed
another patent application covering improved platelet preservation methods.  We
will seek strategic alliances with companies that have the capability to provide
technical and clinical expertise as well as financial and marketing expertise to
leverage our current expertise in these areas.

<page>3

In addition to our attempts to raise outside capital, we have pursued
opportunities to acquire existing products and businesses that currently
produce, or have the potential to produce, revenue.  In September 2003 we signed
a binding letter of intent to acquire all rights to a cream product with
potential skin healing and antibacterial properties.  The purpose of the
acquisition is to develop a product to generate revenues while our blood
platelet preservation technology is awaiting human infusion tests.  During 2004,
using minimal funding, we were able to reformulate the cream for better
appearance and use.  We then tested the reformulated cream for safety at an
independent laboratory, and received positive results.  We are now seeking a
business partner to produce and market the cream.  There is no guarantee that we
will be able to develop a marketable product based on the cream.  If we are able
to develop a marketable product, it will require additional research and
development as well as additional capital.  At this time, we do not have an
estimate of the time or the amount of funds that would be required to produce
and market such a product.

Results of Operations

THREE MONTHS ENDED MARCH 31, 2005 COMPARED WITH THREE MONTHS ENDED MARCH 31,
2004

Revenues.  We did not generate any revenue in either of the three-month periods
ended March 31, 2005 or 2004, and we have not generated revenues since our
inception in February 1998, as our focus to date has been on the research and
development of products.  We are a development stage company in the eighth year
of research and development activities, and do not anticipate receiving revenue
until we complete product development and clinical testing.

General and Administrative Expenses.   Total general and administrative expenses
in the three months ended March 31, 2005 were $293,500, a decrease from $321,200
for the three months ended March 31, 2004.  The decrease was due primarily to a
decrease in stock-based compensation, offset by increases in salaries, marketing
expenses and fees for professional services.  From time to time, our staff has
worked for under market rate compensation or has had to accrue pay for extended
periods of time when financing was not available.  We have granted stock options
to certain employees in partial consideration for salary reductions, and certain
employees have elected to receive stock in lieu of compensation.  Our employees
accepted a temporary 50% salary reduction in January 2004 to conserve cash, and
several of these employees as well as certain of our outside consultants elected
to convert a portion of their deferred compensation to shares of our common
stock.  On September 1, 2004, we restored all employee salaries; however,
employees received 50% of their salaries in cash and 50% in shares or restricted
common stock as an accrual.  We subsequently made the decision to pay all of
these accrued salaries in cash.  In February 2005, we changed our overall
compensation structure to reduce recurring payroll expenses in non-critical
areas in order to provide additional resources for the completion of our
scientific objectives.  As a result, stock-based compensation decreased to
$32,600 for the three months ended March 31, 2005, compared to stock-based
compensation of $176,500 for the comparable period in 2004.

<page>4

Research and Development.  Our research and development expenses were $43,900
for the three months ended March 31, 2005, a slight decrease from $44,200 for
the comparable period in 2004.    This decrease was primarily due to a slowdown
in research and development activity beginning in the fourth quarter of 2003 and
continuing into 2004, reflecting our funding shortfall.  In 2003, we suspended
human infusion studies and animal testing pending receipt of funding, and this
suspension remained in place for all of 2004 and the first half of the first
quarter of fiscal 2005.  In February 2005, however, we resumed our infusion
studies and organ preservation research and in the near future plan to double
the number of animal organ preservation experiments as compared to the current
schedule.   We believe that recent payroll reductions should allow us to
maintain and possibly accelerate our scientific program.

Sales and Marketing Expenses.  Our sales and marketing expenses for the three
months ended March 31, 2005 equaled $25,400, a decrease from $31,500 for the
comparable period in 2004.    We recently reduced payroll in the sales and
marketing area in order to give priority to the completion of our scientific
objectives - to complete human infusion studies for platelets and move closer to
human testing utilizing our organ preservation technology.

Interest Income and Expense.  We did not receive interest income or incur
interest expense during the three months ended March 31, 2005.  During the
comparable period in 2004, we incurred interest expense of $340,700, due
primarily to interest on certain accrued wages, vacation and accounts payable
converted to common stock.

Net Loss.  As a result of the foregoing factors, our net loss decreased to
$363,600 for the three months ended March 31, 2005 from a net loss of $737,600
for the three months ended March 31, 2004.  Our net loss per share decreased to
$0.01 for the three months ended March 31, 2005 from $0.02 for the comparable
period in 2004.

<page>5

Liquidity and Capital Resources

In the three months ended March 31, 2005, we continued to spend cash to fund our
operations.  Cash used by operating activities for the three months ended March
31, 2005 equaled $331,900, and consisted principally of our net loss of $363,300
and a decrease in accounts payable of $29,900, offset by $32,600 provided by
stock based compensation, $200 for depreciation and an increase in accrued
liabilities of $28,800.   For the comparable period in 2004, cash used by
operating activities equaled $204,500, and consisted of our net loss of $737,600
and a decrease in accrued liabilities of $8,000, offset by $340,200 provided by
interest expense paid in shares of our common stock, $176,500 provided by stock
based compensation, an increase in accounts payable of $20,200, an increase of
$3,700 in prepaid expenses and other assets, and $500 in depreciation.

There was no cash used in investing activities for either of the three months
ended March 31, 2005 or 2004.

Cash flow from financing activities for the three months ended March 31, 2005
produced a net increase in cash of $206,000, consisting principally of $263,300
from the issuance of common stock, offset by a decrease of $57,300 in
stockholder payables.  Cash flow from financing activities for the three months
ended March 31, 2004 produced a net increase in cash of $229,700, which resulted
from $114,400 in proceeds from the issuance of common stock and a $115,300
increase in stockholder payables.

As of March 31, 2005, we had cash and cash equivalents amounting to $152,800, a
decrease of $125,900 from the balance at December 31, 2004. Our working capital
deficit increased to $381,100 at March 31, 2005 from $313,800 at December 31,
2004.  The increase in this deficit is from the resources used in our
operations, as explained above.  There are no material commitments for capital
expenditures at March 31, 2005.

Our operating plan for calendar year 2005 is focused on continued development of
our products. It is our estimate that a cash requirement of $2.5 million is
required to support this plan for the next twelve months.  Since our inception,
we have financed our operations through private and public equity placements
During the year ended December 31, 2004, we received an aggregate of $999,400
from the issuance of common stock, compared to an aggregate of approximately
$905,400 received in the year ended December 31, 2003 and approximately
$2,151,300 received in the year ended December 31, 2002.  During the first three
months of 2005, we have received an aggregate of $263,300 from the issuance of
common stock.  We are actively seeking additional funding.  Once we receive the
required additional financing, we anticipate continued growth in our operations
and a corresponding growth in our operating expenses and capital expenditures.
We do not anticipate any revenue from operations for the next two or three
years. Therefore, our success will be dependent on funding from private
placements of equity securities.  Although we have entered into certain
agreements with Dutchess and Langley, there can be no assurance that we will be
successful in raising any capital pursuant to any of these agreements.  At the
present time, we have no other agreements or arrangements for any private
placements.

<page>6

In 2003, we experienced increased difficulty in raising outside capital.  This
difficulty continued through the third quarter of 2004.  Although research
continued in organ preservation, we were forced to suspend animal testing and
human infusion testing due to a lack of funds.  Our employees accepted a
temporary 50% salary reduction in January 2004 to conserve cash, and several of
these employees as well as certain of our outside consultants elected to convert
a portion of their deferred compensation to shares of our common stock.  On
September 1, 2004, we restored all employee salaries; however, employees
received 50% of their salaries in stock and 50% in shares or restricted common
stock as an accrual.   We subsequently made the decision to pay all of these
accrued salaries in cash. In February 2005, we changed our overall compensation
structure to reduce recurring payroll expenses in non-critical areas in order to
provide additional resources for the completion of our scientific objectives.

We are in the eighth year of research and development, with an accumulated loss
during the development stage of $15,022,200.  As of March 31, 2005, we are
uncertain as to the completion date of our research and development, or if
products will ever be completed as a result of this research and development
activity.  We anticipate that the funds spent on research and development
activities will need to increase prior to completion of a product. Additionally,
we may not be able to secure funding in the future necessary to complete our
intended research and development activities.

These conditions give rise to substantial doubt about our ability to continue as
a going concern. Our financial statements do not include adjustments relating to
the recoverability and classification of reported asset amounts or the amount
and classification of liabilities that might be necessary should we be unable to
continue as a going concern.  Our continuation as a going concern is dependent
upon our ability to obtain additional financing from the sale of our common
stock, as may be required, and ultimately to attain profitability.

The report of our independent certified public accountants, included in our most
recent Annual Report on Form 10-KSB, contains a paragraph regarding our ability
to continue as a going concern.

During the year ended December 31, 2004, we pursued various alternatives for
raising capital.  We entered into the Investment Agreement with Dutchess
effective June 28, 2004.  Pursuant to the terms of the Investment Agreement, we
may offer, through a series of puts, and Dutchess must purchase from time to
time, up to a maximum of 38,000,000 shares of our common stock, provided that
Dutchess shall not be required to purchase shares of our stock with an aggregate
purchase price in excess of $5,000,000.  The purchase price of shares purchased
under the Investment Agreement shall be equal to 95% of the lowest closing "best
bid" price (the highest posted bid price) of the common stock during the five
consecutive trading days immediately following the date of our notice to
Dutchess of our election to put shares pursuant to the Investment Agreement.
The dollar value that we will be permitted to put pursuant to the Investment
Agreement will be either: (A) 200% of the average daily volume in the US market
of the common stock for the ten trading days prior to the notice of our put,
multiplied by the average of the three daily closing bid prices immediately
preceding the date of the put, or (B) $10,000.  No single put can exceed
$1,000,000.  We filed a registration statement on Form SB-2 in July 2004 to
register for resale an aggregate of 38,000,000 shares of common stock issuable
under the Investment Agreement; this registration statement was declared
effective on August 23, 2004.  In April 2005, we issued 30,000 shares of common
stock to Dutchess pursuant to our first put under the Investment Agreement, and
received $16,725 in proceeds.

<page>7

In July 2004, we entered into the Stock Purchase Agreement, whereby we would
sell shares of our restricted common stock for shares in Langley, a London-based
institutional investment trust.  Langley was formed in February 2004 to invest
in a diverse portfolio of U.S. small-cap companies (defined by Langley
management as those public companies having a market capitalization of less than
U.K. $100 million).  Although Langley's investments are not limited to specific
sectors, it has concentrated on mining, oil and gas, energy-related and
technology companies since it commenced operations in February 2004.  Langley's
stated investment objective is to achieve long-term capital growth.  The Langley
ordinary shares are registered as a unit investment trust on the London Stock
Exchange ("LSE").  The trading symbol for the ordinary shares is LSE:LPI.  The
Langley Investment Trust consists of a portfolio of the common stock of 23 U.S.
publicly traded small cap companies.

Langley purchased 7,000,000 shares of our restricted stock at a price of
$930,999, or approximately $0.13 per share.  The shares issued to Langley
constituted 17.9% of our outstanding common stock at July 31, 2004.  In lieu of
cash, Langley issued to us an aggregate of 512,665 Langley ordinary shares at a
price of U.K. $1.00 per share (one British Pound Sterling = US $1.8160 on July
30, 2004).  The Langley ordinary shares issued to us constituted less than one
percent of Langley's issued and outstanding ordinary shares at September 30,
2004.  The total sales price of $930,999 was determined by multiplying the
7,000,000 shares by the average of the closing bid price of our common stock
during the ten trading days preceding the date of the Agreement.  The 512,665
shares in Langley received as consideration was calculated by dividing the total
sales price by the conversion rate of the British Pound Sterling to the U.S.
dollar as of the close of business on July 26, 2004.  Upon the closing of this
transaction, Langley and we were required to issue our respective shares into an
escrow account, whereby we could immediately liquidate up to 50% of the Langley
shares.  We and the other portfolio companies have received one-half of the
free-trading Langley ordinary shares sold to us under the Stock Purchase
Agreement.  The remaining 50% of the free-trading Langley ordinary shares will
be held in escrow for two years as a downside price protection against our
shares issued to Langley.  In the event of a decline in the market price of our
common stock at the end of two years, we will be required to sell to Langley the
amount of our Langley shares equal to (i) the original number of Langley shares
issued as consideration under the Stock Purchase Agreement multiplied by (ii)
the percentage decrease in the market price of our common stock.  If at the end
of the two-year period the trading price of our common stock falls below $0.065,
we will have to sell back to Langley all the escrowed Langley shares.  If at the
end of the trading period the trading price of our common stock is more than
$0.065 but less than $0.13, we will need to sell back to Langley only a
proportionate amount of our Langley ordinary shares.  We have no obligation to
register for resale our shares that are held by Langley.

<page>8

On May 6, 2005, Langley had a net asset value for its underlying portfolio of
U.K. $0.71 per ordinary share, or an aggregate net asset value of U.K.
$52,949,544 (U.S. $98,115,505, based on U.K. $1.00 = U.S. $1.8530 on May 14,
2005).  Assuming that the downside protection (or "claw-back rights") had been
exercised by Langley, this would represent a net asset value per ordinary share
of U.K. $0.48, or an aggregate net asset value of U.K. $35,796,875 (U.S.
$66,331,609).  We had anticipated that the trust would traditionally trade at a
discount to its net asset value; however, the discount has been more significant
than we expected.  To date, due to the low trading price of the Langley stock on
the London Stock Exchange (U.K. $0.1325 per ordinary share on May 13, 2005), we
have not sold any of our Langley ordinary shares.

The rights of holders of Langley ordinary shares are set forth in Langley's
Memorandum of Association.  In general, each holder of Langley ordinary shares
has one vote for every ordinary share held.  Unless Langley's directors decide
otherwise, a holder of ordinary shares may not vote, either personally or by
proxy, unless all calls and other amounts payable with respect to the ordinary
shares have been paid.  Holders of ordinary shares may receive dividends in
Langley as and when declared by the directors.  In the event of a liquidation of
Langley, holders of ordinary shares may receive their pro rata share of any
remaining assets.  In the event that Langley has more than one class of shares,
the rights of the holders of any one class of shares may be varied only with the
written consent of holders of three-fourths of the nominal value of the issued
shares of that class, or with the sanction of an extraordinary resolution passed
at a separate general meeting of such holders.

We considered a variety of possible financing options prior to entering into the
transaction with Langley.  In the past year, it has become more difficult for us
to effect equity placements on terms and conditions satisfactory to us and our
shareholders.  We were approached by a number of private investors who sought to
purchase common stock at significant discounts to market and other potential
investors who wanted to receive common stock in advance of forwarding
consideration for the stock to us.  None of these alternatives were acceptable
to management.  We selected Langley after due diligence on Langley and its
management, including but not limited to a review of a prior fund with similar
structure and investment strategies, assembled by the founders of Langley.

<page>9

Effective October 28, 2004, we entered into the Loan Agreement with Ben David.
The Loan Agreement called for Ben David to loan us an aggregate of 2,300,000
euros (the "Loan").  The Loan was to bear interest at the rate of three percent
per annum, with payments of interest due monthly and all principal plus accrued
but unpaid interest due and payable on November 1, 2007.  Repayment of the Loan
was secured by 23,000,000 shares of our common stock (the "Shares") issuable
pursuant to Regulation S under the Securities Act.  Pursuant to the Loan
Agreement and an Escrow Agreement between Ben David and us, certificates
representing the Shares (the "Certificates") were delivered to Ben David to hold
until funds for repayment of the Loan were delivered to Ben David to hold until
funds for repayment of the Loan were delivered to the escrow agent.  However,
the Loan Agreement provided that it would terminate, and the Shares immediately
returned to us, in the event that the Loan funds were not delivered to us by the
15th calendar day following the date of the Loan Agreement (November 13, 2004).
Pursuant to Ben David's request, we extended the date for receipt of Loan funds
to December 23, 2004; however, no Loan funds were received by that date.  On
January 11, 2005, we instructed our transfer agent to cancel the Certificates,
and notified Ben David that the Loan Agreement was cancelled and of no further
force or effect.  We did not incur any early termination penalties in connection
with the cancellation of the Loan Agreement.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States requires us
to make judgments, assumptions and estimates that affect the amounts reported.
Note 1 of Notes to Financial Statements describes the significant accounting
policies used in the preparation of the financial statements. Certain of these
significant accounting policies are considered to be critical accounting
policies, as defined below.

A critical accounting policy is defined as one that is both material to the
presentation of our financial statements and requires management to make
difficult, subjective or complex judgments that could have a material effect on
our financial condition and results of operations. Specifically, critical
accounting estimates have the following attributes: 1) we are required to make
assumptions about matters that are highly uncertain at the time of the estimate;
and 2) different estimates we could reasonably have used, or changes in the
estimate that are reasonably likely to occur, would have a material effect on
our financial condition or results of operations.

Estimates and assumptions about future events and their effects cannot be
determined with certainty. We base our estimates on historical experience and on
various other assumptions believed to be applicable and reasonable under the
circumstances. These estimates may change as new events occur, as additional
information is obtained and as our operating environment changes.  These changes
have historically been minor and have been included in the consolidated
financial statements as soon as they became known. Based on a critical
assessment of our accounting policies and the underlying judgments and
uncertainties affecting the application of those policies, management believes
that our financial statements are fairly stated in accordance with accounting
principles generally accepted in the United States, and present a meaningful
presentation of our financial condition and results of operations.

<page>10

In preparing our financial statements to conform to accounting principles
generally accepted in the United States, we make estimates and assumptions that
affect the amounts reported in our financial statements and accompanying notes.
These estimates include useful lives for fixed assets for depreciation
calculations and assumptions for valuing options and warrants. Actual results
could differ from these estimates.

We consider that the following are critical accounting policies:

Research and Development Expenses

All research and development costs are expensed as incurred. The value of
acquired in-process research and development is charged to expense on the date
of acquisition. Research and development expenses include, but are not limited
to, payroll and personnel expense, lab supplies, preclinical studies, raw
materials to manufacture our solution, manufacturing costs, consulting, legal
fees and research-related overhead. Accrued liabilities for raw materials to
manufacture our solution, manufacturing costs, and patent legal fees are
included in accrued liabilities and included in research and development
expenses.

Employee Stock Plans

As permitted by SFAS No. 123, "Accounting for Stock-Based Compensation," we
elected to continue to apply the provisions of APB Opinion No. 25, "Accounting
for Stock Issued to Employees," and related interpretations in accounting for
our employee stock option and stock purchase plans. We are generally not
required under APB Opinion No. 25 and related interpretations to recognize
compensation expense in connection with our employee stock option and stock
purchase plans. We are required by SFAS No. 123 to present, in the Notes to
Financial Statements, the pro forma effects on reported net income and earnings
per share as if compensation expense had been recognized based on the fair value
method of accounting prescribed by SFAS No. 123.

Risk Factors

Our business, financial condition or results of operations could be materially
and adversely affected by any of the following risks:

WE HAVE A HISTORY OF LOSSES, AND OUR INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
HAVE RAISED DOUBTS ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN.

<page>11

Since our inception in 1998, we have incurred substantial losses from
operations, resulting primarily from costs related to research and development
and building our infrastructure.  Because of our status as a development stage
company and the need to conduct additional research and development prior to
introducing products and services to the market, we expect to incur net losses
for the foreseeable future.  If our growth is slower than we anticipate or our
operating expenses exceed our expectations, our losses will be significantly
greater.  We may never achieve profitability.  Primarily as a result of these
recurring losses, our independent certified public accountants modified their
report on our December 31, 2004 financial statements to include an uncertainty
paragraph wherein they expressed substantial doubt about our ability to continue
as a going concern.

We are in the eighth year of research and development, with an accumulated loss
during the development stage of $15,031,800.  We currently do not know when our
research and development will be completed, or if a product will ever result
from this research and development activity.  We anticipate that the funds spent
on research and development activities will need to increase significantly prior
to completion of research and development and commercialization of a product.
Additionally, we may not be able to secure funding in the future necessary to
complete our intended research and development activities.  In 2003, we scaled
back our research and development activities significantly, due to our lack of
capital.  In February 2005, we resumed certain research and development projects
on a limited basis, but cannot predict when we will be able to maintain a
complete research and development program.

These conditions give rise to substantial doubt about our ability to continue as
a going concern. Our financial statements do not include adjustments relating to
the recoverability and classification of reported asset amounts or the amount
and classification of liabilities that might be necessary should we be unable to
continue as a going concern.  Our continuation as a going concern is dependent
upon our ability to obtain additional financing from the sale of our securities,
as may be required, and ultimately to attain profitability.

<page>12

WE REQUIRE IMMEDIATE ADDITIONAL CAPITAL.

Our operating plan for calendar year 2005 is focused on development of our
products. It is our estimate that a cash requirement of $2.5 million is required
to support this plan for the next twelve months.  During the year ended December
31, 2004, we received an aggregate of $999,400 from the issuance of common
stock, compared to an aggregate of approximately $905,400 received in the year
ended December 31, 2003 and approximately $2,151,300 received in the year ended
December 31, 2002.  During the three months ended March 31, 2005, we received an
aggregate of $263,300 from the issuance of common stock.  We are actively
seeking additional funding.  There can be no assurance that the required
additional financing will be available on terms favorable to us or at all.
Although we have entered into certain agreements with Dutchess and Langley,
there can be no assurance that we will be successful in raising any capital
pursuant to any of these agreements.

Obtaining capital will be challenging in a difficult environment, due to the
downturn in the United States economy and current world instability.  We
currently have no commitments for any funding, and there can be no assurance
that we will be able to obtain additional funding in the future from either debt
or equity financings, bank loans, collaborative arrangements or other sources on
terms acceptable to us, or at all.  If our human infusion studies are
successful, we believe that we will be able to obtain additional funding through
a license agreement with one or more of the potential strategic partners with
whom we have had discussions to date, thereby satisfying our financial needs for
at least 2005; however, we currently do not have the capital to continue our
infusion studies and there can be no assurance that we will achieve successful
results in our human infusion studies or that we can enter into a license
agreement or agreements providing adequate financing for 2005 and beyond.

If adequate funds are not available or are not available on acceptable terms
when required, we may be required to significantly curtail our operations or may
not be able to fund expansion, take advantage of unanticipated acquisition
opportunities, develop or enhance services or products or respond to competitive
pressures. Such inability could have a material adverse effect on our business,
results of operations and financial condition.  If additional funds are raised
through the issuance of equity or convertible debt securities, the percentage
ownership of our shareholders will be reduced, shareholders may experience
additional dilution, and such securities may have rights, preferences and
privileges senior to those of our common stock.

OUR CHIEF EXECUTIVE OFFICER IS THE SUBJECT OF SEC AND JUSTICE DEPARTMENT
PROCEEDINGS FOR SECURITIES FRAUD.

<page>13

On August 7, 2002, the United States Attorney for the Eastern District of New
York and the Securities and Exchange Commission announced that they were
bringing securities fraud charges against Harry Masuda, our Chief Executive
Officer, for allegedly paying an unregistered broker an undisclosed commission
in a 1999 and 2000 private placement.  The allegations generally charge Mr.
Masuda with the failure to adequately disclose to investors in this private
placement a commission agreement with Larry Bryant, an unlicensed broker-dealer.
Remedies sought in these proceedings include criminal penalties and a bar from
service as an officer or director of a publicly-traded company.  The SEC also
brought securities fraud charges against us for the same transactions.  Although
we believe that the charges are unwarranted, and that the issues involved in
this matter were resolved over two years ago to the full satisfaction of all
investors, there can be no assurance that Mr. Masuda will be able to continue to
serve as our Chief Executive Officer in the event that the Securities and
Exchange Commission receives the remedies that it seeks.  In December 2003, we
filed motions to proceed with the civil case and to change the venue for these
proceedings from New York to Northern California.  As of March 2005, however, we
have not been informed of any rulings on these motions.  However, the United
States Government and Mr. Masuda have entered into a deferred prosecution
agreement which should lead to a dismissal of all charges against Mr. Masuda at
the end of the 18-month deferred prosecution term.

WE ARE A DEVELOPMENT STAGE COMPANY, AND HAVE A LIMITED OPERATING HISTORY ON
WHICH TO EVALUATE OUR POTENTIAL FOR FUTURE SUCCESS.

We are a development stage company, and have yet to produce or sell any products
or services.  We have only a limited operating history upon which you can
evaluate our business and prospects, and have yet to develop sufficient
experience regarding actual revenues to be received from our products and
services.  You must consider the risks and uncertainties frequently encountered
by early stage companies in new and rapidly evolving markets.  If we are
unsuccessful in addressing these risks and uncertainties, our business, results
of operations and financial condition will be materially and adversely affected.

OUR FUTURE REVENUES ARE UNPREDICTABLE AND OUR QUARTERLY OPERATING RESULTS MAY
FLUCTUATE SIGNIFICANTLY.

We have a very limited operating history, and have no revenue to date. We cannot
forecast with any degree of certainty whether any of our products or services
will ever generate revenue or the amount of revenue to be generated by any of
our products or services. In addition, we cannot predict the consistency of our
quarterly operating results. Factors which may cause our operating results to
fluctuate significantly from quarter to quarter include:

-  our ability to attract new and repeat customers;

-  our ability to keep current  with  the evolving requirements of our target
   market;

-  our ability to protect our proprietary technology;

-  the ability of our  competitors to offer new or enhanced products or
   services; and

-  unanticipated  delays or cost  increases  with  respect to research and
   development.

<page>14

Because of these and other factors, we believe that quarter-to-quarter
comparisons of our results of operations are not good indicators of our future
performance.  If our operating results fall below the expectations of securities
analysts and investors in some future periods, then our stock price may decline.

ESTABLISHING OUR REVENUES AND ACHIEVING PROFITABILITY WILL DEPEND ON OUR ABILITY
TO DEVELOP AND COMMERCIALIZE OUR PRODUCTS.

Much of our ability to establish revenues and to achieve profitability and
positive cash flows from operations will depend on the successful introduction
of our products in development.  Products based on our technologies will
represent new methods of treatment and preservation. Our prospective customers,
including blood banks, hospitals and clinics, will not use our products unless
they determine that the benefits provided by these products are greater than
those available from competing products.  Even if the advantage from our planned
products is clinically established, prospective customers may not elect to use
such products for a variety of reasons.

We may be required to undertake time-consuming and costly development activities
and seek regulatory clearance or approval for new products. The completion of
the development and commercialization of any of our products under development
remains subject to all of the risks associated with the commercialization of new
products based on innovative technologies, including unanticipated technical or
other problems, manufacturing difficulties and the possible insufficiency of the
funds allocated for the completion of such development.

WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY.

As a development stage company, we are entering a biological material
preservation market that is presently addressed by large companies with
extensive financial resources.  Those companies include DuPont and Baxter, among
others.  Additionally, smaller companies with which we may compete include
LifeCell Corporation for platelet preservation, Cerus for viral inactivation of
platelets and other blood products and Cryo Life for preserving heart valves by
cryo-preservation. These companies are active in research and development of
biological material preservation.  We have limited funds with which to develop
products and services.  These companies are active in research and development
of biological material preservation, and we do not know the current status of
their development efforts.  Most of the above competitors have significantly
greater financial resources, technical expertise and managerial capabilities
than we currently possess.

<page>15

WE MAY FAIL TO OBTAIN GOVERNMENT APPROVAL OF OUR PROCESSES

The FDA regulates the commercial distribution and marketability of medical
solutions and equipment.  In the event that we determine that these regulations
apply to our proposed products, we will need to obtain FDA approval for such
distribution.  The process of obtaining FDA approval may be expensive, lengthy
and unpredictable.  We have not developed our products to the level where these
approval processes can be started.  We do not know if such approval could be
obtained in a timely fashion, if at all.  In the event that we do not receive
any required FDA approval for certain products, we would not be able to sell
such products in the United States.

The regulation of our processes and products outside the United States will vary
by country.  Noncompliance with foreign country requirements may include some or
all of the risks associated with noncompliance with FDA regulation as well as
other risks.

ACTS OF TERRORISM, RESPONSES TO ACTS OF TERRORISM AND ACTS OF WAR MAY IMPACT OUR
BUSINESS AND OUR ABILITY TO RAISE CAPITAL.

Future acts of war or terrorism, national or international responses to such
acts, and measures taken to prevent such acts may harm our ability to raise
capital or our ability to operate, especially to the extent we depend upon
activities conducted in foreign countries, such as Russia where we currently
perform research and development.  In addition, the threat of future terrorist
acts or acts of war may have effects on the general economy or on our business
that are difficult to predict.  We are not insured against damage or
interruption of our business caused by terrorist acts or acts of war.

WE MAY FAIL TO ESTABLISH AND MAINTAIN STRATEGIC RELATIONSHIPS.

We believe that the establishment of strategic partnerships will greatly benefit
the growth of our business, and we intend to seek out and enter into strategic
alliances.  We may not be able to enter into these strategic partnerships on
commercially reasonable terms or at all.  Even if we enter into strategic
alliances, our partners may not attract significant numbers of customers or
otherwise prove advantageous to our business.   Our inability to enter into new
distribution relationships or strategic alliances could have a material and
adverse effect on our business.

<page>16

SHARES ELIGIBLE FOR FUTURE SALE BY OUR CURRENT STOCKHOLDERS MAY ADVERSELY AFFECT
OUR STOCK PRICE.

To date, we have had a very limited trading volume in our common stock.  As long
as this condition continues, the sale of a significant number of shares of
common stock at any particular time could be difficult to achieve at the market
prices prevailing immediately before such shares are offered.  In addition,
sales of substantial amounts of common stock, including shares issued upon the
exercise of outstanding options and warrants, under Securities and Exchange
Commission Rule 144 or otherwise could adversely affect the prevailing market
price of our common stock and could impair our ability to raise capital at that
time through the sale of our securities.  A number of our employees and
consultants have elected to convert a portion of their compensation to shares of
our common stock, and these shares have been registered for resale to the
public.

OUR COMMON STOCK PRICE IS LIKELY TO BE HIGHLY VOLATILE; OUR COMMON STOCK IS
"PENNY STOCK".

The market price of our common stock is likely to be highly volatile as the
stock market in general, and the market for technology companies in particular,
has been highly volatile.  The trading prices of many technology companies'
stocks have recently been highly volatile and have recorded lows well below
historical highs.

Factors that could cause such volatility in our common stock may include, among
other things:

 -  actual or anticipated fluctuations in our quarterly operating results;

 -  announcements of technological innovations;

 -  changes in financial estimates by securities analysts;

 -  conditions or trends in our industry;  and

 -  changes in the market valuations of other comparable companies.

In addition, our stock is currently traded on the NASD O-T-C Bulletin Board and
it is uncertain that we will be able to successfully apply for listing on the
AMEX, the NASDAQ National Market, or the Nasdaq SmallCap Market in the
foreseeable future due to the trading price of our common stock, our working
capital and revenue history.  Failure to list our shares on the AMEX, the Nasdaq
National Market, or the Nasdaq SmallCap Market will impair the liquidity of our
common stock.

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The Securities and Exchange Commission has adopted regulations which generally
define a "penny stock" to be any security that 1) is priced under five dollars,
2) is not traded on a national stock exchange or on NASDAQ, 3) may be listed in
the "pink sheets" or the NASD OTC Bulletin Board, 4) is issued by a company that
has less than $5 million in net tangible assets and has been in business less
than three years, or by a company that has under $2 million in net tangible
assets and has been in business for at least three years, or by a company that
has revenues of less than $6 million for three years.

Penny stocks can be very risky: penny stocks are low-priced shares of small
companies not traded on an exchange or quoted on NASDAQ.  Prices often are not
available.  Investors in penny stocks are often unable to sell stock back to the
dealer that sold them the stock.  Thus an investor may lose his/her investment.
Our common stock is a "penny stock" and thus is subject to rules that impose
additional sales practice requirements on broker/dealers who sell such
securities to persons other than established customers and accredited investors,
unless the common stock is listed on The Nasdaq SmallCap Market. Consequently,
the "penny stock" rules may restrict the ability of broker/dealers to sell our
securities, and may adversely affect the ability of holders of our common stock
to resell their shares in the secondary market.

SOME OF THE INFORMATION IN THIS QUARTERLY REPORT CONTAINS FORWARD-LOOKING
STATEMENTS.

Some of the information in this Quarterly Report contains forward-looking
statements that involve substantial risks and uncertainties. You can identify
these statements by forward-looking words such as "may", "will", "expect",
"intend", "anticipate", "believe", "estimate" and "continue" or similar words.
You should read statements that contain these words carefully because they:

 -     discuss our expectations about our future performance;

 -     contain projections of our future operating results or of our future
       financial condition; or

 -     state other "forward-looking" information.

We believe it is important to communicate our expectations to our shareholders.
There may be events in the future, however, that we are not able to predict
accurately or over which we have no control.  The risk factors listed in this
section, as well as any cautionary language in this quarterly report, provide
examples of risks, uncertainties and events that may cause our actual results to
differ materially from the expectations we describe in our forward- looking
statements. You should be aware that the occurrence of any of the events
described in these risk factors and elsewhere in this quarterly report could
have a material and adverse effect on our business, results of operations and
financial condition and that upon the occurrence of any of these events, the
trading price of our common stock could decline.

<page>18

ITEM 3.  CONTROLS AND PROCEDURES

Based on an evaluation conducted within 90 days prior to the filing date of this
Quarterly Report on Form 10-QSB, our Chief Executive Officer and acting Chief
Financial Officer concluded that we maintain effective disclosure controls and
procedures that ensure information required to be disclosed in our reports under
the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and forms.
Specifically, the disclosure controls and procedures assure that information is
accumulated and communicated to our management, including our Chief Executive
Officer and acting Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure.  There have been no significant changes
in our internal controls or in other factors that could significantly affect
these controls subsequent to the date of management's evaluation.

PART II -- OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

On August 7, 2002, the United States Attorney for the Eastern District of New
York and the Securities and Exchange Commission announced that they were
bringing securities fraud charges against Harry Masuda, our Chief Executive
Officer, for allegedly paying an unregistered broker an undisclosed commission
in a 1999 and 2000 private placement.  The allegations generally charge Mr.
Masuda with the failure to adequately disclose to investors in this private
placement a commission agreement with Larry Bryant, an unlicensed broker-dealer.
Remedies sought in these proceedings include criminal penalties and a bar from
service as an officer or director of a publicly-traded company.  The SEC also
brought securities fraud charges against us for the same transactions.  Although
we believe that the charges are unwarranted, and that the issues involved in
this matter were resolved over two years ago to the full satisfaction of all
investors, there can be no assurance that Mr. Masuda will be able to continue to
serve as our Chief Executive Officer in the event that the Securities and
Exchange Commission receives the remedies that it seeks.  In December 2003, we
filed motions to proceed with the civil case and to change the venue for these
proceedings from New York to Northern California.  As of March 2005, however, we
have not been informed of any rulings on these motions.  However, the United
States Government and Mr. Masuda have entered into a deferred prosecution
agreement which should lead to a dismissal of all charges against Mr. Masuda at
the end of the 18-month deferred prosecution term.

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

Set forth in chronological order is information regarding shares of common stock
issued and options and warrants and other convertible securities granted by us
during the three months ended March 31, 2005.  Also included is the
consideration, if any, received by us for such shares, options and warrants, and
information relating to the section of the Securities Act of 1933, as amended
(the "Securities Act"), or the rule of the Securities and Exchange Commission,
under which an exemption from registration was claimed.

<page>19

In the first quarter of 2005, we issued an aggregate of 1,746,100 shares of our
common stock to investors outside the United States for aggregate consideration
of $872,100 (including offering costs of $609,900). These issuances were made
pursuant to an offering under Regulation S promulgated under the Securities Act.
The issuances were made in an "offshore transaction" as defined in Regulation S,
to persons other than "U.S. Persons".  The investors represented to us that they
would resell the shares only in accordance with Regulation S, and the
certificates evidencing the shares bear a legend restricting transfer except
pursuant to Regulation S.

In the first quarter of 2005, we issued an aggregate of 282,200 shares of our
common stock to two individuals for services with an aggregate determined value
of $31,600. The issuances were made in reliance on Section 4(2) of the
Securities Act, and were made without general solicitation or advertising.  The
recipients were sophisticated investors with access to all relevant information
necessary to evaluate the investments, and who represented to us that the shares
were being acquired for investment purposes.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

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

Not applicable.

ITEM 5.  OTHER INFORMATION.

Not applicable.

ITEM 6.  EXHIBITS.

Exhibit No.	 Title of Exhibit

10.01	Consulting Agreement, dated March 22, 2005,
        by and between the Company and Abernathy
        Mendelson & Associates

31.01	Rule 13a-14(a)/15d-14(a) Certification

32.01	Section 1350 Certification



SIGNATURES


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

HUMAN BIOSYSTEMS


Date: May 16, 2005		 	 /s/ Harry Masuda
                                        -----------------
                                             Harry Masuda
                                             Chief Executive Officer
<page>20