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 SEPTEMBER 30, 2004

                          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 September 30, 2004, the registrant had outstanding 38,999,200 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 September 30, 2004...............2

CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Three and Nine Month Periods Ended September 30, 2004 and 2003
and the Period from February 26, 1998 (Inception) through September 30, 2004..3

CONDENSED STATEMENT OF STOCKHOLDERS' DEFICIT (UNAUDITED)
For the Nine Months Ended September 30, 2004..................................4

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Nine Months Ended September 30, 2004 and 2003,
and the Period from February 26, 1998 (Inception) through September 30, 2004..5

NOTES TO FINANCIAL STATEMENTS (UNAUDITED).....................................6

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION............9

ITEM 3.  CONTROLS AND PROCEDURES.............................................16

PART II - OTHER INFORMATION..................................................16

ITEM 1.  LEGAL PROCEEDINGS...................................................16

ITEM 2.  CHANGES IN SECURITIES...............................................16

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.....................................16

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.................16

ITEM 5.  OTHER INFORMATION...................................................17

ITEM 6.  EXHIBITS ...........................................................17

SIGNATURES...................................................................17

EXHIBITS.....................................................................18

===============================================================================


                        PART I -- FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

                                HUMAN BIOSYSTEMS
                         (A DEVELOPMENT STAGE COMPANY)
                            CONDENSED BALANCE SHEET
                                SEPTEMBER 30, 2004
                                  (UNAUDITED)
                                     ASSETS

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

Current assets
        Cash                                                            $      300
        Prepaid expenses and other current assets                            4,300
                                                                        ----------
                Total current assets                                         4,600

Fixed assets, net                                                              500
                                                                        ----------

Total assets                                                            $    5,100
                                                                        ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities
        Accounts payable                                                $  306,800
        Accrued liabilities                                                117,300
        Due to stockholders                                                311,400
                                                                        ----------
                Total current liabilities                                  735,500
                                                                        ----------
Total liabilities                                                          735,500

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, 41,553,333 shares issued
           and 38,999,200 shares outstanding                            12,737,400
    Accumulated deficit during development stage                       (13,467,800)
                                                                        ----------
                Total stockholders' deficit                               (730,400)
                                                                        ----------

Total liabilities and stockholders' deficit                             $    5,100
                                                                        ==========

                 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 Ended          Nine Months Ended          February 26, 1998
                                                             September 30,                September 30,         (Inception) Through
                                                         2004            2003           2004         2003        September 30, 2004
                                                     --------------  -----------       -------      -------      -----------------

Revenue                                          $         --     $      --        $      --     $    --          $        --

Operating expenses
    General and administrative
       Stock based compensation                         54,500       70,700         329,700       205,300           3,541,300
       Other general and administrative expenses       202,400       317,200         467,900     1,031,900           5,391,300
                                                     -----------   -----------      ---------     -------           ----------
    Total general and administrative                   256,900       387,900         797,600     1,237,200           8,932,600
    Research and development                            42,300       107,100         154,600       328,500           1,864,900
    Sales and marketing                                 35,500        54,000          93,900       165,400             742,900
                                                     -----------   -----------      ----------    --------          ----------
            Total operating expenses                   334,700       549,000       1,046,100     1,731,100          11,540,400
                                                     -----------   -----------      ----------    --------          ----------
Loss from operations                                  (334,700)     (549,000)     (1,046,100)   (1,731,100)        (11,540,400)

Other income (expense)
    Loan fees                                               --            --             --            --             (750,000)
    Bad debt related to other receivable                    --            --             --            --             (502,300)
    Interest income                                         --            --             --            --                2,700
    Interest expense                                      (100)         (900)       (366,200)       (6,900)           (673,000)
                                                    -----------   -----------      -----------   ----------          ----------
Loss before provision for income taxes                (334,800)     (549,900)     (1,412,300)   (1,738,000)        (13,463,000)

Provision for income taxes                                  --            --             --            --                 4,800
                                                    -----------   -----------      -----------   -----------         ----------

Net loss                                         $    (334,800)    $(549,900)      $(1,412,300) $(1,738,000)      $ (13,467,800)
                                                    ===========   ===========     ============   ============       =============

Basic and diluted loss per common share          $      (0.01)    $   (0.02)      $     (0.04)  $     (0.07)       $      (0.92)
                                                    ===========   ===========     ============   ============      ==============
Basic and diluted weighted average
  common shares outstanding                        38,412,316     27,748,900       35,614,160     26,187,300         14,630,922
                                                   ===========   ===========     =============   ===========       ==============

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


                                HUMAN BIOSYSTEMS
                         (A DEVELOPMENT STAGE COMPANY)
                  CONDENSED STATEMENT OF STOCKHOLDERS' DEFICIT
                                  (UNAUDITED)

<table>
<caption>

                                                    <c>             <c>              <c>                <c>
                                                                                    Accumulated
                                                           Common Stock           Deficit During          Total
                                                           ------------             Development        Stockholders'
                                                     Shares           Amount           Stage             Deficit
                                                    ----------       ----------      -------------      ------------
Balance December 31, 2003                           29,522,800      $11,080,200       $(12,055,500)      $(975,300)

Issuance of common stock for cash (net of
   offering costs of $176,200), weighted
   average price of $0.17                           1,473,300          252,100                 --         252,100

Issuance of common stock for services,
  weighted average price of $0.16                   1,703,400          273,000                 --         273,000

Issuance of common stock to employees of
  Russian Branch for services (including
  accrued liabilities of $30,400), $0.46              129,200           58,900                 --          58,900


Stock based compensation related to granting
  of options                                               --           28,200                 --          28,200

Common stock issued in satisfaction of
  account payables (including interest of
   $26,600),$0.17                                     442,700           75,200                 --          75,200

Common stock issued in satisfaction of
 accrued liabilities (including interest of
  $20,000),$0.17                                      333,500           56,700                 --          56,700

Common stock issued in satisfaction of due
to stockholders (including interest of
 $318,700), $0.17                                   5,394,300          913,100                 --         913,100

Net loss                                                   --               --         (1,412,300)     (1,412,300)
                                                   ----------       ----------       -------------      ------------
Balance September 30,2004                          38,999,200      $12,737,400       $(13,467,800)   $   (730,400)
                                                   ==========      ===========       =============      ============

</table>
<page>F-4

 See Accompanying Notes To Financial Statements

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

<table>
<caption>

                                                            <c>            <c>                     <c>

                                                              Nine months   Nine months      February 26, 1998
                                                                  ended         ended          (Inception)
                                                              September 30,  September 30,      Through
                                                                  2004           2003       September 30, 2004
                                                                 -------        -------       ------------
Cash flows from operating activities:
 Net loss                                                     $(1,412,300)    $(1,738,000)  $  (13,467,800)
 Adjustments to reconcile net loss to net
 cash used by operating activities:
   Stock based compensation                                       329,700         205,300        3,656,000
   Depreciation                                                     1,100           1,500            9,300
   Deemed interest expense                                             --              --           92,800
   Interest expense paid in common stock                          365,300           5,200          487,800
   Amortization of discount and loan fees
    on notes payable                                                   --             --           774,800
   Bad debt related to other receivables                               --             --           502,300
 Changes in operating assets and liabilities:
   Change in prepaid expenses and other assets                    14,100          15,100            (4,300)
   Change in accounts payable                                     90,600         179,900           380,100
   Change in accrued liabilities                                  40,200         130,200           256,700
                                                                 ---------       ----------     -----------
          Net cash used by operating activities                 (571,300)     (1,200,800)       (7,312,300)

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 due to stockholders                                  312,100         346,000        1,143,300
   Proceeds from issuance of common stock                         252,100         749,800        6,044,900
   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                    564,200       1,140,800        7,322,400
                                                                 ---------      ----------      -----------
  Net increase (decrease) in cash                                  (7,100)         (60,000)             300

  Cash, beginning of period                                         7,400        144,700                --
                                                                ---------       ---------         ----------
  Cash, end of period                                           $     300       $ 84,700          $    300
                                                                =========       =========        ===========
  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 $26,600)             $  48,600       $     --          $ 48,600
                                                                ==========      =========        ===========
  Issuance of common stock in satisfaction of
    stockholder payables (excluding interest of $5,200)         $       -       $ 24,200          $ 24,200
                                                                ==========      =========        ===========
  Issuance of common stock in satisfaction of
   accrued liabilities (excluding interest of $20,000)          $  36,700       $     --          $ 36,700
                                                                ==========      =========        ===========
  Issurance of common stock to employees of Russian
   Branch for accrued liabilities (excluding services of
     ($28,500)                                                  $  30,400       $     --          $ 30,400
                                                                ==========      =========        ===========
  Issuance of common stock in satisfaction of due to
   stockholders (excluding interest of $318,700)                $ 594,400       $     --          $ 594,400
                                                                ==========      =========        ===========
        See Accompanying Notes To Financial Statements


</table>
<page> F-5


                                HUMAN BIOSYSTEMS
                         (A DEVELOPMENT STAGE COMPANY)
                         NOTES TO FINANCIAL STATEMENTS

1.	BASIS OF PRESENTATION

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 Form 10-KSB for the year ended December 31, 2003 of
Human BioSystems (the "Company").

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 September 30, 2004 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.

2. 	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reclassification - Certain prior year balances have been reclassified to conform
to the current year presentation, which have no effect on net income.

3.	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:

		Nine months ended September 30,
		                            2004		    2003

Net loss, as reported	              $	(1,412,300)	      $	(1,738,100)
Add: Stock-based employee compensation
 expense included in reported loss,
 net of related tax effects		    20,000		        --
Deduct: Total stock-based employee
 compensation expense determined under
 fair value based methods for all awards,
 net of related tax effects		   (84,700)		   (19,900)
                                      -------------           -------------
Pro forma net loss	              $	(1,477,000)	      $	(1,757,900)
                                      =============           =============
Net loss per common share
 Basic and diluted loss, as reported  $      (0.04)	      $	     (0.07)
                                      =============           =============
 Basic and diluted loss, pro forma    $      (0.04)	      $	     (0.07)
                                      =============           =============

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure". SFAS No. 148 amends the transition and
disclosure provisions of SFAS No. 123. The Company is currently evaluating SFAS
No. 148 to determine if it will adopt SFAS No. 123 to account for employee stock
options using the fair value method and, if so, when to begin transition to that
method.

4.	RELATED PARTY TRANSACTIONS

During February 2004, the Company granted options to purchase 1,000,000 shares
of common stock at $0.11 per share to various employees and directors.  The
options vest 30% upon grant, 30% after one year, and 40% after two years and
were valued at $20,000 per APB No. 25.

Stockholder payables consist of the following as of September 30, 2004:

Wages payable to stockholder employees			      $	292,400

Promissory note payable to stockholder and director
unsecured, interest of 10%, due on demand		          7,000

Accrued vacation for stockholder employees		         11,800

Accrued interest on note payable				    200
                                                              ---------
				                              $	311,400
                                                              =========

During March 2004, the Company issued 5,266,900 shares of the Company's common
stock to various stockholder employees and directors of the Company in
satisfaction of $579,400 (excluding interest of $316,000) in accrued wages and
vacation.  Additionally, during the nine months ended September 30, 2004, the
Company issued 127,400 shares of common stock to a stockholder and director in
satisfaction of $15,000 (excluding interest of $2,700) in principal of a
promissory note payable.

5.	COMMON STOCK

During the first quarter 2004, the Company issued 512,900 shares of common stock
for cash totaling $114,400 (including offering costs of $66,500).

During the first quarter 2004, the Company issued 840,600 shares of common stock
for services totaling $153,400.

During the first quarter 2004, the Company issued 124,500 shares of common stock
in satisfaction of accounts payable totaling $21,200 (excluding interest of
$7,500).

During the first quarter 2004, the Company issued 233,500 shares of common stock
in satisfaction of accrued liabilities totaling $39,700 (excluding interest of
$14,000).

During the second quarter 2004, the Company issued 469,600 shares of common
stock for cash totaling $69,100 (including offering costs of $36,300).

During the second quarter 2004, the Company issued 412,000 shares of common
stock for services totaling $67,500.

During the second quarter 2004, the Company issued 129,200 shares of common
stock to certain employees of the Russian Branch for services totaling $58,900
(including accrued liabilities of $30,400).

During the second quarter 2004, the Company issued 318,200 shares of common
stock in satisfaction of accounts payable totaling $54,000 (including interest
of $19,100).

During the second quarter 2004, the Company issued 100,000 shares of common
stock in satisfaction of accrued liabilities totaling $17,000 (excluding
interest of $6,000).

During the third quarter 2004, the Company issued 450,800 shares of common stock
for services totaling $52,100.

During the third quarter 2004, the Company issued 490,800 shares of common stock
for cash totaling $68,600 (including offering costs of $73,400).

6.   INVESTMENT AGREEMENT

In 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.  The purchase price of the shares is equal to 95% of the lowest
closing "best bid" price (the highest posted bid price) during the five trading
days immediately following the date of put.  The value that the Company 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 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.

7.   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 $1,412,300 for the
nine months ended September 30, 2004.  The Company is in the seventh year of
research and development, with an accumulated loss during the development stage
of $13,467,800.  As of September 30, 2004, management is uncertain as to the
completion date or if any of the Company's products will  be completed at all.

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.

8.    SUBSEQUENT EVENTS

On July 29, 2004, the Company entered into a Stock Purchase Agreement (the
"Purchase Agreement") with Langley Park Investments, PLC ("Langley"), a London
Investment Company, to issue 7,000,000 shares of the Company's common stock to
Langley in return for 512,665 shares of Langley. The Company issued the
7,000,000 shares during August 2004.  Fifty percent of Langley shares issued to
the Company under this agreement are to be held in escrow for two years as a
downside price protection against the 7,000,000 shares issued to Langley. In the
event of a decline in the market price of the Company's common stock at the end
of two years, the Company will be required to sell to Langley the amount of
Langley shares held in escrow equal to (i) the original number of Langley shares
issued as consideration under the Purchase Agreement multiplied by (ii) the
percentage decrease in the market price of the Company's common stock.  The
Company's shares are to be held by Langley for a period of at least two years.
The Purchase Agreement became effective during October 2004 when Langley was
approved for trading by the UK Listing Authority and Langley shares began
trading.

During October 2004, the Company entered into a Loan Agreement (the "Loan
Agreement") with an unaffiliated individual (the "Lender").  The Loan Agreement
calls for the Lender to loan an aggregate of E2,300,000 to the Company (the
"Loan").  The Loan bears 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 is secured
by 23,000,000 shares of the Company's common stock issuable under Regulation S
under the Securities Act of 1933, as amended (the "Shares").  Pursuant to the
Loan Agreement and an Escrow Agreement between the Lender and the Company, the
23,000,000 Shares were issued during October 2004 and will be delivered to the
Lender to hold until funds for repayment of the Loan have been delivered to the
escrow agent.  The Loan Agreement will be declared in default, and the Shares
will be immediately returned to the Company, in the event that the Loan funds
are not delivered by the 15th calendar day following the date of the Loan
Agreement (November 13, 2004).

During October 2004, the Company issued 150,000 shares in satisfaction of
accounts payable totaling $11,000.

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

THIS 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 has continued into 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 receive
50% of their salaries in cash and 50% in shares of restricted common stock.  We
hope to restore full cash salaries in the foreseeable future.

We 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, 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.  To date, we have not issued any puts of common
stock under the Investment Agreement.

In July 2004, we entered into a Stock Purchase Agreement (the "Agreement"),
whereby we would sell 7,000,000 shares of restricted common stock in exchange
for shares in Langley Park Investments PLC ("Langley").  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
may immediately liquidate up to 50% of the Langley shares.  The remaining 50%
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 Agreement multiplied by (ii) the percentage
decrease in the market price of our common stock.  To date, due to the low
trading price of the Langley stock on the London Stock Exchange, we have not
sold any of our Langley shares.

Effective October 28, 2004, we entered into a loan agreement (the "Loan
Agreement") with Pini Ben David (Grunspan), an unaffiliated individual who
resides in Switzerland (the "Lender").  The Loan Agreement calls for the Lender
to loan us an aggregate of E2,300,000 (the "Loan").  The Loan bears 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 is secured by 23,000,000 shares of our common stock
issuable under Regulation S under the Securities Act of 1933, as amended (the
"Shares").  Pursuant to the Loan Agreement and an Escrow Agreement between
Lender and us, a certificate representing the Shares is being delivered to
Lender to hold until funds for repayment of the Loan have been delivered to the
escrow agent.  The Loan Agreement will be declared in default, and the Shares
will be immediately returned to us, in the event that the Loan funds are not
delivered to us by the 15th calendar day following the date of the Loan
Agreement (November 13, 2004).  We intend to use the proceeds from the Loan
primarily for working capital, including but not limited to the commencement of
the second-stage program to refine and validate our breakthrough storage
technologies for donor organs.

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 submission of our findings to the U.S. Food and Drug
Administration ("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 that human infusion tests will commence once we have obtained the
required funding.

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 goal is to
extend the kidney shelf life from up to 72 to 96 hours.  We believe that the
extended shelf life should enable better matching of donor kidneys to
recipients.  Due to a lack of additional capital, we have temporarily
discontinued efforts to test methods of preserving organs.  However, we continue
to conduct organ preservation research.

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.

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 undergoing human infusion tests.  We are
currently testing the cream product to determine its beneficial properties;
however, there can be no assurance 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 develop such a product.

Results of Operations

THREE MONTHS ENDED SEPTEMBER 30, 2004 COMPARED WITH THREE MONTHS ENDED SEPTEMBER
30, 2003

Revenues.  We did not generate any revenue in either of the three-month periods
ended September 30, 2004 or 2003, 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 seventh 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 September 30, 2004 were $256,900, a decrease from
$387,900 for the three months ended September 30, 2003. This decrease was
primarily due to reductions in employee cash compensation in 2004, as in January
2004 we instituted a temporary 50% salary reduction for all United States
employees. This decrease was also due to the impact of stock-based compensation,
which equaled $54,500 for the three months ended September 30, 2004 compared to
$70,700 for the comparable period in 2003. On September 1, 2004, we restored all
employee salaries; however, employees receive 50% of their salaries in cash and
50% in shares of restricted common stock.  We hope to restore full cash salaries
in the foreseeable future.

Research and Development.  Our research and development expenses were $42,300
for the three months ended September 30, 2004, a decrease from $107,000 for the
comparable period in 2003.  This decrease was primarily due to a slowdown in
research and development activity beginning in the fourth quarter of 2003,
reflecting our funding shortfall.

Sales and Marketing Expenses.  Our sales and marketing expenses for the three
months ended September 30, 2004 equaled $35,500, a decrease from $54,000 for the
comparable period in 2003.    We continue to develop our sales and marketing
efforts, but intend to expand at a measured pace until our products are ready
for introduction into the market.

Interest Expense.  We incurred interest expense of $100 during the three months
ended September 30, 2004, as compared to interest expense of $900 for the same
period in 2003.   This decrease was due primarily to lower outstanding interest-
bearing loan balances owed by us during the three months ended September 30,
2004.

Net Loss.  As a result of the foregoing factors, our net loss decreased to
$334,800 for the three months ended September 30, 2004 from a net loss of
$549,900 for the three months ended September 30, 2003.  Our net loss per share
decreased to $0.01 for the three months ended September 30, 2004 from $0.02 for
the comparable period in 2003.

NINE MONTHS ENDED SEPTEMBER 30, 2004 COMPARED WITH NINE MONTHS ENDED SEPTEMBER
30, 2003

Revenues.  We did not generate any revenue in either of the nine-month periods
ended September 30, 2004 or 2003, 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 seventh 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 nine months ended September 30, 2004 were $797,600, a decrease from
$1,237,200 for the nine months ended September 30, 2003.  This decrease was
primarily due to reductions in employee cash compensation in 2004, as in January
2004 we instituted a temporary 50% salary reduction for all United States
employees.  The decrease was partially offset by an increase in stock-based
compensation.  Stock-based compensation equaled $329,700 for the nine months
ended September 30, 2004, compared to $205,300 for the comparable period in
2003.  On September 1, 2004, we restored all employee salaries; however,
employees receive 50% of their salaries in cash and 50% in shares of restricted
common stock.  We hope to restore full cash salaries in the foreseeable future

Research and Development.  Our research and development expenses were $154,600
for the nine months ended September 30, 2004, a decrease from $328,500 for the
comparable period in 2003.  This decrease was primarily due to a slowdown in
research and development activity beginning in the fourth quarter of 2003,
reflecting our funding shortfall.

Sales and Marketing Expenses.  Our sales and marketing expenses for the nine
months ended September 30, 2004 equaled $93,900, a decrease from $165,400 for
the comparable period in 2003.    We continue to develop our sales and marketing
efforts, but intend to expand at a measured pace until our products are ready
for introduction into the market.

Interest Expense.  We incurred interest expense of $366,200 during the nine
months ended September 30, 2004, as compared to interest expense of $6,900 for
the same period in 2003.   This substantial increase was due primarily to
interest on certain accrued wages, vacation and accounts payable converted to
common stock during the first quarter of 2004.

Net Loss.  As a result of the foregoing factors, our net loss decreased to
$1,412,300 for the nine months ended September 30, 2004 from a net loss of
$1,738,000 for the nine months ended September 30, 2003.  Our net loss per share
decreased to $0.04 for the nine months ended September 30, 2004 from $0.07 for
the comparable period in 2003

Liquidity and Capital Resources

Our operating plan for calendar year 2004 is focused on continued development of
our products. It is our estimate that a cash requirement of $2.5 million is
needed to support this plan for the next twelve months.  Since our inception, we
have financed our operations primarily through private and public equity
placements.  During the year ended December 31, 2003, we received an aggregate
of $905,400 from the issuance of common stock, compared to an aggregate of
approximately $2,147,300 received in 2002.  During the first nine months of
2004, we received an aggregate of $252,100 in cash 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.

In 2003, we experienced increased difficulty in raising outside capital.  This
difficulty has continued into the first 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 receive
50% of their salaries in cash and 50% in shares of restricted common stock.  We
hope to restore full cash salaries in the foreseeable future.

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.  To date, we have not issued any puts of common
stock under the Investment Agreement.

In July 2004, we entered into the Agreement with Langley, whereby we would sell
7,000,000 shares of restricted common stock in exchange for shares in Langley.
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 may immediately liquidate up to 50% of the Langley
shares.  The remaining 50% 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 Agreement
multiplied by (ii) the percentage decrease in the market price of our common
stock.  To date, due to the low trading price of the Langley stock on the London
Stock Exchange, we have not sold any of our Langley shares.

Effective October 28, 2004, we entered into the Loan Agreement with Pini Ben
David (Grunspan), an unaffiliated individual who resides in Switzerland (the
"Lender").  The Loan Agreement calls for the Lender to loan us an aggregate of
E2,300,000 (the "Loan").  The Loan bears 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
is secured by 23,000,000 shares of our common stock issuable under Regulation S
under the Securities Act of 1933, as amended (the "Shares").  Pursuant to the
Loan Agreement and an Escrow Agreement between Lender and us, a certificate
representing the Shares is being delivered to Lender to hold until funds for
repayment of the Loan have been delivered to the escrow agent.  The Loan
Agreement will terminate, and the Shares will be immediately returned to us, in
the event that the Loan funds are not delivered to us by the 15th calendar day
following the date of the Loan Agreement (November 13, 2004).  We intend to use
the proceeds from the Loan primarily for working capital, including but not
limited to the commencement of the second-stage program to refine and validate
its breakthrough storage technologies for donor organs.

Once we receive the required additional funding, 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 to three years. Therefore, our success will be dependent on funding
from private placements of equity securities.  At the present time however, we
have no agreements or other arrangements for any such private placements other
than described above.

We are in the seventh year of research and development, with an accumulated loss
during the development stage of $13,467,800.  As of September 30, 2004, 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.  In 2003, we scaled back our
research and development activities significantly, due to the lack of capital.

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.

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.

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, 2003 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 seventh year of research and development, with an accumulated loss
during the development stage of $13,467,800.  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.

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.

WE REQUIRE IMMEDIATE ADDITIONAL CAPITAL.

Our operating plan for calendar year 2004 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, 2003, we received an aggregate of $905,400 from the issuance of common
stock, compared to an aggregate of approximately $2,147,300 received in the year
ended December 31, 2003.  During the first nine months of 2004, we received an
aggregate of $252,100 in cash 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 at terms favorable to us or at
all.  Although we have entered into certain agreements with Dutchess, Langley
and Pini Ben David (see "Management's Discussion and Analysis or Plan of
Operation"), 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.

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.  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 November 12, 2004,
however, we have not been informed of any rulings on these motions, and there
has been no further action or progress made in the resolution of these matters.

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.

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.

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.

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 recently elected to convert a portion of their compensation to
shares of our common stock.

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.

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. Before you invest in our common stock, 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 and you
could lose all or part of your investment.

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.

Not applicable.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

In the third quarter of 2004, we issued an aggregate of 450,800 shares of our
common stock to consultants for services with an aggregate value of $52,100.
These issuances were made in reliance on Section 4(2) of the Securities Act of
1933, as amended (the "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, who represented to
us that the shares were being acquired for investment purposes.

In the third quarter of 2004, we issued an aggregate of 490,800 shares of common
stock for cash consideration of $68,600.  These issuances we made in reliance
on Section 4(2) of the Act and were made without general solicitation or
advertising.  The recipients were sophisticated investors with access to all
relevant information necessary to evaluate the investment, 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
-----------       --------------------------------------

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: November 15, 2004	  /s/ Harry Masuda
                             --------------
                              Harry Masuda
                              Chief Executive Officer