SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    ---------
                                   FORM 10-KSB
(Mark One)

  [X]    ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
         OF 1934:
         For the fiscal year ended December 31, 2004

  [ ]    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934:
         For the transition period from __________ to __________

                         Commission file number 0-27848

                                 BIOFIELD CORP.
                 ----------------------------------------------
                 (Name of small business issuer in its charter)

               Delaware                                 13-3703450
    ------------------------------                 -------------------
    (State or other jurisdiction of                 (I.R.S. employer
    incorporation or organization)                 identification No.)

    Suite M, 1025 North Nine Drive, Alpharetta, Georgia       30004
    ---------------------------------------------------     ----------
             (Address of principal executive offices)       (Zip Code)

               Issuer's telephone number: (770) 740-8180

       Securities registered under Section 12(b) of the Exchange Act: None

         Securities registered under Section 12(g) of the Exchange Act:

                     Common Stock, par value $.001 per share
                     ---------------------------------------
                                (Title of class)

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

        Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

        State issuer's revenues for its most recent fiscal year: $10,550.

        State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the
common equity was sold, or the average bid and asked price of such common
equity, as of a specified date within the past 60 days:

               Approximately $1,513,041 based on the closing sale price ($0.08)
               on March 22, 2005, as reported by The Nasdaq Stock Market, Inc.
               InfoQuote service furnished by Financial Insight Systems, Inc.

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

               As of March 22, 2005  - 34,348,472 shares of Common Stock.

        Documents Incorporated by Reference: None.

        Transitional Small Business Disclosure Format (check one) Yes [ ] No [X]
<PAGE>

                                     PART I

Item 1.  Description of Business.

General

        We are a medical technology company that has developed a device to
assist in detecting breast cancer in a non-invasive procedure.

        Our technology is based on the principle that epithelial cancers, such
as cancer of the breast, ovaries, skin, prostate and colon, are characterized by
small changes in the electrical charge of the affected tissue. These changes,
when they occur, result in a depolarization of the charge distribution found in
normal epithelial tissue which lines many solid organs, including the stomach,
colon, prostate, endometrium, lung and breast. Moreover, this depolarization
appears to be progressive as cell transformation and carcinogensis occur, and is
measurable at the skin surface.

        Our breast cancer diagnostic device, which we call the Biofield
Diagnostic System, employs single-use sensors of our own design and a
measurement device to detect and analyze changes associated with the development
of epithelial cancers, such as breast cancer. The Biofield Diagnostic System
takes multiple readings from an array of test points on the skin surface of the
symptomatic breast and asymptomatic breast to measure differentials, which may
exist between test points. We believe that the analysis of these differentials,
using a pre-programmed algorithm, provides useful diagnostic information. The
device is intended to be used by physicians or by trained medical technicians
under the supervision of a physician.

        The Biofield Diagnostic System is intended to be used as an adjunct to
physical examination or relevant imaging modalities to provide physicians and
patients with immediate and objective information about the probability that a
previously identified lesion is malignant or benign, without regard to the size,
weight or volume of the lesion. The device currently is intended for palpable
breast lesions, in women under 55 years of age. We believe that the Biofield
Diagnostic System, together with other available clinical information, could
reduce diagnostic uncertainty and decrease the number of diagnostic procedures,
including surgical biopsies, performed on suspicious breast lesions. In clinical
studies, the Biofield Diagnostic System performed statistically better in the
clinically difficult subgroup of women 55 years of age and younger, for whom
certain diagnostic imaging modalities, such as mammography and ultrasound, are
generally considered less effective.

        The Biofield Diagnostic System has not been approved by the U.S. Food
and Drug Administration ("FDA") and, therefore, is not available for commercial
distribution in the United States. We have obtained a CE mark Certification
administered by the European regulatory authorities, which permits us to market
the model of our device which has been certified in European Union member
countries. At the present time, our marketing activities have been severely
curtailed, as our limited cash resources are being utilized almost entirely in
connection with the activities necessary to seek FDA approval and to maintain
our essential operations. Although we have entered into marketing distribution
agreements for Brazil, Italy, the Philippines, Southern Africa and South Korea,
our sales have been negligible.

        At December 31, 2004, we had a working capital deficiency of $6.4
million, which amount has increased since such date. We require an immediate
infusion of additional financial resources in order for us to continue our
operations. Unless such resources timely become available, we will be compelled
to cease operations.

Company History

        We were originally organized as a New York corporation in October 1987
and, in 1992, re-incorporated in Delaware by merging into our wholly owned
Delaware subsidiary.

        In March 1996, we completed our initial public offering of 1,819,000
shares of our common stock at a purchase price of $11.00 per share, for
aggregate proceeds of approximately $18 million (net of related expenses of
approximately $2 million).

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        In December 1997, we received net proceeds of approximately $8.4 million
from the sale of an additional 2,867,670 shares of our common stock in a private
placement. In connection with the private placement, we also issued an aggregate
of 643,639 shares of our common stock in exchange for previously issued
warrants. These proceeds, along with other funds previously received, during the
four years ended December 31, 1998, were utilized for research and development
activities and operating expenses.

        In November 1998, we curtailed most of our operations due to lack of
adequate financial resources and thereafter, as we failed to raise additional
capital, we shut down all of our remaining operations. In December 1998, our
common stock was de-listed from trading on The Nasdaq Stock Market ("NASDAQ")
for lack of compliance with the requirement to maintain at least $4 million of
tangible net worth and to maintain a bid price of our common stock in excess of
$1.00 per share. In March 1999, we terminated our reporting obligations under
the Securities Exchange Act of 1934, since we had less than 300 stockholders of
record of our common stock.

        In December 1999, we sold 14 million unregistered shares of our common
stock in a private placement for $700,000 to David M. Long, Jr., M.D., Ph.D.,
his son, Raymond A. Long, M.D., and their affiliated entities. The sales price
of $0.05 per share was the result of arms-length negotiation between the
parties. Although the price of our common stock in the over-the-counter market
during the period from January 1, 1999 through the date of the sale ranged from
$0.375 per share to $0.032 per share, no public information concerning our
company had been released since we terminated our SEC reporting obligations in
March 1999, and our Board of Directors did not believe that the public market
sales prices accurately reflected the fair value of our company. Approximately
$600,000 of the proceeds from this private placement were used for operating
expenses and for payments to consultants for regulatory activities, and the
balance of approximately $100,000 was used for marketing the Biofield Diagnostic
System.

        Simultaneously with the December 1999 private placement, our Board of
Directors was reconstituted, Dr. David Long was appointed as our Chairman and
Chief Executive Officer and a director, and all of our other then remaining
directors and executive officers resigned. Thereafter, we concentrated our
efforts primarily on activities which we believed to be appropriate to assist us
in obtaining FDA approval, CE mark Certification to market our device in
European Union countries and related marketing and regulatory activities. In
2000, we engaged outside consultants for our marketing and FDA regulatory
activities. In May 2000, we were successful in obtaining CE mark Certification
for the then current model of our Biofield Diagnostic System, and were
re-certified by ISO-9001 Quality Systems. The CE mark Certification allows us to
market the model of our device which has been certified in certain European and
other countries that recognize the CE mark. Marketing of our device within the
United States is dependent on our obtaining FDA approval, which we have not yet
received.

        In December, 2000, we sold three million unregistered shares of our
common stock in a private placement for $0.50 per share and raised $1,500,000.
Dr. David Long participated in the placement and bought 482,000 of such shares.
The closing price of our common stock, as reported by NASDAQ's InfoQuote
service, was $0.57 per share. The proceeds from the placement were used to fund
our operations in 2001.

        During 2002, our operating activities were funded almost entirely with
$1,750,000 of borrowings obtained from, or with the assistance of, Dr. David
Long and certain of his affiliates. During the first eleven months of 2003, our
operating activities were funded entirely with $680,000 of borrowings obtained
from, or with the assistance of, Dr. David Long and certain of his affiliates.

        In December 2003, we sold an aggregate of $637,500 of our 12% promissory
notes due December 31, 2004 and 3,187,500 unregistered shares of our common
stock for an aggregate of $637,500 in the first two tranches of a private
placement. This placement was completed by the sale of an additional aggregate
of $362,500 of such 12% promissory notes and 1,812,500 unregistered shares of
our common stock for an aggregate of $362,500 in two additional tranches, one
each in January and February 2004. In connection with this placement, we issued
five-year warrants to purchase an aggregate of 500,000 shares of our common
stock at a purchase price of $0.20 per share to the placement agent. As
stipulated in the private placement, we registered, at our expense, the shares
of common stock issued and issuable in the placement. At the time of the sales,
the closing price of our common stock, as reported by NASDAQ's InfoQuote
service, ranged from $0.25 to $0.50 per share. We received an aggregate of
$564,570 of net proceeds from the placement.

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<PAGE>

        In the period from June 2004 to August 2004, we sold an aggregate of
$329,000 of our 12% promissory notes due May 31, 2005 and 1,645,000 unregistered
shares of our common stock for an aggregate of $329,000 in the three tranches of
a second private placement. In connection with this placement also, we issued
five-year warrants to purchase an aggregate of 164,500 shares of our common
stock at a purchase price of $0.20 per share to the placement agent. We also
registered, at our expense, the shares of common stock issued and issuable in
the placement. At the time of the sales, the closing price of our common stock,
as reported by NASDAQ's InfoQuote service, ranged from $0.16 to $0.31 per share.
We received an aggregate of $293,100 of net proceeds from the second placement.
The private placement was supplemented by a sale of $50,000 of our 12%
promissory note to our placement agent on the terms and condition applicable for
the notes issued pursuant to the second placement.

        In October, 2004, we engaged an investment broker and consultant to
obtain financing for our operations while waiting for FDA approval by offering
our shares of Common Stock offshore to non-U.S. citizens in accordance with the
provisions of Regulation S at a cost of 50% of the amount of gross capital
raised as fees. Under the agreement, the broker bears all the associated
marketing and operating costs, and is required to offer the shares at a price
per share of not less than $0.10. Under this arrangement, we received aggregate
gross proceeds of $123,400 against aggregate issuance of 1,224,000 shares of
Common Stock, at an aggregate discount of $38,425 over the market price on the
date of the sale during the period from October 29, 2004 to December 31, 2004.
Additionally, from January 1, 2005 to March 24, 2005, we have received aggregate
gross proceeds of $280,816 against aggregate issuance of approximately 2.8
million shares of Common Stock at $0.10 per share and 50% agent's fees of
$140,408. We continue to source more funds through this avenue to sustain our
operations.


Breast Cancer

Background

        Breast cancer is one of the most common cancers among women and,
notwithstanding the currently available detection modalities, is the leading
cause of death among women aged 35 to 54. According to the American Cancer
Society, approximately one in nine women in the United States will develop
breast cancer during her lifetime. In 1999, the American Cancer Society
estimated that during each year approximately 175,000 new cases of invasive
breast cancer among women would be diagnosed in the United States, and that
approximately 43,300 women would die as a result of the disease. Early detection
of breast cancer is critical. There is widespread agreement that screening for
breast cancer, when combined with appropriate follow-up, will reduce mortality
from the disease.

        The American Cancer Society recommends that all women over the age of 40
should undergo breast cancer screening in the form of physical examination or
mammography screening as a routine part of preventative healthcare. For these
women, the American Cancer Society has published guidelines for breast cancer
screening, including: (i) monthly breast self-examinations, and (ii) an annual
mammogram for women age 40 and older. As a result of family medical histories
and other factors, certain women are at high-risk of developing breast cancer
during their lifetimes. For these women, physicians often recommend close
monitoring, particularly if a potentially pre-cancerous condition has been
detected.

        Each year approximately eight million women in the United States require
diagnostic testing for breast cancer because of a physical symptom, such as a
palpable lesion, pain or nipple discharge, discovered through self or physician
examination (approximately seven million) or a non-palpable lesion detected by
screening x-ray mammography (approximately one million). Once a physician has
identified a suspicious lesion in a woman's breast, the physician may recommend
further diagnostic procedures, including diagnostic mammography, ultrasound or
fine needle aspiration. In each case, the potential benefits of additional
diagnostic testing must be balanced against the costs, risks, anxiety and
discomfort to the patient associated with undergoing the additional procedures.
Each of the currently available non-surgical modalities for breast cancer
detection has various clinical limitations.

Screening and Diagnostic Modalities

        Physical examinations conducted by a physician or by a woman performing
breast self-examination can only detect relatively large lesions, which may be
advanced cancers. Furthermore, physical examination of the breast does not
reliably distinguish between malignant and benign tissue. As a result, other
techniques are used to detect breast cancer.

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<PAGE>

        Mammography is an x-ray modality commonly used for both routine breast
cancer screening and as a diagnostic tool. A mammogram produces an image of the
internal structure of the breast, which is intended to display lesions as blurry
white spots against normal tissue. In a screening mammogram, radiologists seek
to detect the presence of suspicious lesions, while in a diagnostic mammogram
radiologists seek to characterize suspicious lesions. Mammograms require
subjective interpretation by a radiologist and are often uncomfortable for the
patient. Because x-ray mammography exposes the patient to radiation, the
American Cancer Society recommends that mammograms be limited to one per year.
In addition, x-ray mammography is considered to be less effective for women
under the age of 50 who generally have dense breast tissue. The average cost of
a diagnostic mammogram is approximately $120 to $160 per procedure, and requires
the use of equipment ranging in cost from approximately $75,000 to $225,000. Due
to the high costs associated with mammography equipment and the specialized
training necessary to operate the equipment and to read the x-ray images,
mammography is usually available only at specialty clinics or hospitals.

        Ultrasound uses high frequency sound waves to create an image of soft
tissues in the body. Like a mammogram, this image requires interpretation by a
physician. Ultrasound's principal role in breast cancer diagnosis has been to
assist the physician in determining whether a palpable lesion is likely to be a
cyst (usually benign) or a solid mass (potentially cancerous). The average cost
of an ultrasound of the breast is approximately $75 to $200 per procedure, and
requires the use of equipment ranging in cost from approximately $60,000 to
$200,000. Like mammography, ultrasound is generally available only at specialty
clinics or hospitals.

        Other currently available surgical diagnostic techniques include fine
needle aspiration, core needle biopsy and stereo tactic needle biopsy. In each
of these procedures, a physician seeks to obtain cell samples from a suspicious
lesion through a needle for analysis by a cytopathologist. These procedures are
invasive, require follow-up and range in cost from approximately $300 to $600
per procedure, and inadequate sampling often renders these procedures invalid.

        Due in part to the limitations of the currently available modalities to
identify malignant lesions, many patients with suspicious lesions proceeds to
additional diagnostic procedures, including surgical biopsy, which is an
invasive and expensive procedure. Approximately 750,000 surgical biopsies are
performed each year in the United States, of which approximately 500,000 result
in the surgical removal of benign breast tissue. The average cost of a surgical
biopsy ranges from approximately $1,000 to $5,000 per procedure. In addition,
surgical biopsy can result in pain, scarring and anxiety to the patient.
Patients who are referred to biopsy usually are required to schedule the
procedure in advance, and generally have to wait several days to receive their
biopsy results.

The Biofield Diagnostic System

        The Biofield Diagnostic System is intended to provide physicians and
patients with immediate and objective information concerning the probability
that the lesion is proliferative or non-proliferative. Based upon such
information, a physician can recommend whether or not a lesion should be removed
by biopsy or whether other action should be taken. Only a biopsy, followed by
microscopic examination, can determine whether a lesion is benign or malignant.
A breast examination utilizing our device is a non-invasive test, and can be
performed in a physician's office by a physician or a medical technician in less
than 20 minutes. Single-use sensors of our design are arranged on the skin
surface in and around the quadrant of the breast where a suspicious lesion has
been identified and in corresponding locations on the asymptomatic breast. A
suspicious lesion is generally detected through physical examination or a
mammogram. Sensor readings are measured and analyzed using a pre-programmed
algorithm. Our device generally is intended only to be used as an adjunct to
physical examination or relevant imaging modalities in women 55 years of age or
younger who have palpable breast lesions.

     The higher the Biofield Diagnostic System's output, the greater the
probability that the patient has proliferative disease or cancer in the area
examined. The physician can use this information, together with other available
clinical information, to determine the appropriate course of action. We believe
that our device will offer several advantages compared with currently available
modalities, including the following:

     o    It provides immediate, objective test results that characterize a
          lesion, and indicate the probability that a suspicious lesion is
          highly proliferative, proliferative or non-proliferative.
     o    It is non-invasive, since all measurements are taken from sensors
          placed on the skin surface.

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     o    Unlike x-ray mammography, there is no exposure to radiation or breast
          compression, which will allow the test to be repeated as often as
          needed, especially important for women at high risk for developing
          breast cancer and patients requiring follow-up examination.
     o    In limited clinical studies to date, it has performed better in the
          clinically difficult subgroup of younger women for whom diagnostic
          imaging modalities are generally considered less effective.
     o    A physician or medical technician can perform the test in less than 20
          minutes in a physician's office.
     o    The estimated cost of the device is expected to be significantly less
          than the cost of purchasing and installing diagnostic x-ray
          mammography or other diagnostic imaging equipment.
     o    It is likely to be preferred by third party payers of health care
          costs, since it has the potential of reducing the number of expensive
          diagnostic tests, including surgical biopsies.

Clinical Studies

        We have used the Biofield Diagnostic System to test over 3,000
participants in the United States, Europe and Japan, involving women with
suspicious breast lesions, detected either by x-ray mammography screening or a
physical examination (self or by physician). Women who participated in our
clinical trials had undergone diagnostic work-ups, which often included a series
of tests, before proceeding to biopsy. In each of our studies, the results
obtained were then compared to the biopsy results. Based on our clinical studies
to date, and although our device cannot determine the presence of breast cancer
in all cases, we believe that our device, together with other available
information, could reduce diagnostic uncertainty and decrease the number of
diagnostic procedures, including surgical biopsies performed on suspicious
lesions.

     Our test is conducted under the supervision of a licensed medical
practitioner. Both the technician performing the test and the supervising
physician must have undergone appropriate training on the use of the Biofield
Diagnostic System. Our test does not replace the usual screening methods for
detecting breast lesions by mammography or palpation, nor evaluation using
biopsy when appropriate. Moreover, efficacy of our device has not been fully
evaluated by our research in the following types of patients:

     o    Patients with a history of breast cancer or breast augmentation;
     o    Patients who have had recent fine needle aspiration of a suspicious
          lesion; and
     o    Patients who have undergone chemotherapy or radiation therapy within
          the past three years.

     Furthermore, women with certain conditions are believed to confound the
results of the test. These conditions include:

     o    Women who have undergone active tamoxifen or raloxifene therapy within
          the past three months,
     o    Women with clinically diagnosed active mastitis;
     o    Women with visible or known dermatological conditions or other
          physical abnormality that precludes the application of sensors;
     o    Women with a known allergy to adhesives or ECMs used to apply
          electrocardiogram or electroencephalogram sensors;
     o    Women with only a single breast;
     o    Women with active electrically powered implanted devices;
     o    Women with breast tattoos and nipple jewelry; and
     o    Pregnant women.


Other Possible Product

        Based on our clinical experience with the Biofield Diagnostic System for
testing women that have symptoms of breast cancer (often referred to as
symptomatic women) and our belief that the electrophysiological characteristics
of cancer are similar for both lesions that can be felt in a physical
examination (palpable) and those lesion that cannot be felt in a physical
examination (non-palpable), we believe that our technology should be adaptable
for breast cancer screening in women who have not demonstrated any symptoms of
breast cancer (often referred to as asymptomatic women). Based on this belief,
we have contemplated a prototype design of an enhanced version of our device,
which may be of use as a screening system. The enhanced version of our device
would contain additional data channels to allow for more sensors to surround the
breast or other area where a lesion is present and an algorithm to better

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<PAGE>

analyze the data received. However, we have not yet completed a final sensor
configuration for the proposed device, nor have we commenced any clinical
testing for the proposed device, since we believe that the protocol for a
full-scale clinical trial would involve significant financial resources. As a
result, we cannot assure you when, if ever, any further efforts will be made to
complete the development of the proposed device.

        We believe that the need exists for products to provide early and
accurate detection of types of cancers found in the epithelial tissue other than
breast cancer. Our previous preclinical research had been designed to obtain
additional scientific knowledge of the fundamentals underlying our core
technology and to identify new applications based on our technology for the
detection of other cancers, including cancer of the ovaries, skin, prostate and
colon. However, due to the cost of this research and our limited financial
resources, we have not made any efforts in this regard since 1996, and we cannot
assure you when, if ever, any further steps will be undertaken.

Government Regulation

        The manufacture and sale of medical devices intended for commercial
distribution are subject to extensive governmental regulation both in the United
States and abroad.

United States Regulations

        The FDA regulates the research, testing, manufacture, safety, labeling,
storage, record keeping, advertising, distribution and production of medical
devices in the United States under the Food, Drug and Cosmetic Act.

FDA's Pre-market Clearance and Approval Requirements.

        Unless an exemption applies, no medical device can be marketed in the
United States without receiving either a 510(k) clearance or a PMA approval in
advance from the FDA. The FDA's 510(k) clearance process usually takes from four
to twelve months, but it can take longer. The process of obtaining PMA approval
is much more costly, lengthy and uncertain.

        The FDA decides whether a device must undergo either the 510(k)
clearance or pre-market application ("PMA") approval process, based upon
statutory criteria. These criteria include the level of risk that the FDA
perceives is associated with the device, and a determination as to whether the
device is within a type that is already legally marketed. Devices deemed to pose
relatively less risk are placed in either class I or II, which classification
requires that the manufacturer submit a pre-market notification requesting
510(k) clearance. The pre-market notification must demonstrate that the device
is substantially equivalent in intended use, safety and effectiveness to a
legally marketed "predicate device" that is either in class I or class II, or is
a "preamendment" class III device (i.e., one that was in commercial distribution
before the May 28, 1976 amendment) for which the FDA has not changed the
classification requiring PMA approval process.

        Devices deemed by the FDA to pose the greatest risk (e.g.,
life-sustaining, life-supporting or implantable devices) or deemed not
substantially equivalent to a legally marketed predicate device are placed in
class III. Such devices are required to undergo the PMA approval process, in
which the manufacturer must prove the safety and effectiveness of the device. An
application for PMA approval must provide extensive preclinical and clinical
trial data, and also information about the device and its components including
its manufacturing, labeling and promotion. After approval of a PMA, a new PMA or
PMA supplement is required in the event of any modification to the device, its
labeling or its manufacturing process. As part of the PMA review, the FDA will
typically inspect the manufacturer's facilities for compliance with Quality
System Regulation, requirements that impose elaborate testing, control,
documentation and other quality assurance procedures.

        Upon submission, the FDA determines if the application for PMA approval
is sufficiently complete to permit a substantive review, and, if so, the
application is accepted for filing. The FDA then commences an in-depth review of
the application, which typically takes one to three years, but may take longer.
The review time is often significantly extended as a result of the FDA
requesting more information or clarification of information already provided.
The FDA also may respond with a "not approvable" determination based on
deficiencies in the application, and require additional clinical trials that are
often expensive, time consuming and can delay approval for months or even years.

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<PAGE>

During the review period, an FDA advisory committee, typically a panel of
clinicians, usually will be convened to review the application and recommend to
the FDA whether, or upon what conditions, PMA approval should be considered.
Although the FDA is not bound by the advisory panel decision, the panel's
recommendation is important to the FDA's overall decision-making process.

        If the FDA's evaluation of the application is favorable, the FDA
typically issues an "approvable letter," requiring the applicant's agreement to
specific conditions (e.g., changes in labeling) or specific additional
information (e.g., submission of final labeling) in order to secure final
approval of the application. Once the conditions in an approvable letter are
satisfied, the FDA will approve the device for the approved indications, which
can be more limited than those originally sought by the manufacturer. The PMA
can include post-approval conditions that the FDA believes are necessary to
ensure the safety and effectiveness of the device including, among other things,
restrictions on labeling, promotion, sale and distribution. Failure to comply
with the conditions of approval can result in significant adverse enforcement
action, including the loss or withdrawal of the approval. The PMA process can be
expensive and lengthy, and there is no assurance that any application for PMA
approval will ever be approved for marketing a device. Even after approval, if
any, of a PMA, a new PMA or PMA supplement is required in the event of a
modification to the device, its labeling or its manufacturing process.

        A clinical trial may be required in support of a 510(k) submission or an
application for PMA approval. Such trials generally require an Investigational
Device Exemption ("IDE") application approved in advance by the FDA for a
limited number of patients, unless the product is deemed a non-significant risk
device eligible for more abbreviated IDE requirements. The IDE application must
be supported by appropriate data, such as animal and laboratory testing results.
Clinical trials may begin if the IDE application is approved by the FDA and by
the appropriate institutional review boards at the clinical trial sites.

        In December 1996, we submitted our application for PMA approval of the
Biofield Diagnostic System. Our application was based principally upon the
results of clinical trials on over 1,200 women tested at six U.S. medical
institutions under the direction of physicians involved in breast cancer
diagnosis and treatment. In February 1997, the FDA informed us that our
application had not been accepted for filing, and requested us to respond to the
following deficiency:

        "The design of the clinical trial is not valid. You have tested several
        algorithms on the PMA data set and selected the one that gave the most
        desired results. This is not an accepted procedure for definitive data
        sets. You will need to select a final algorithm. Then you must test it
        with an independent data set for sensitivity, specificity, etc. The
        design of the clinical trial must provide data that supports the
        indications for use, which should include the impact on patient
        management."

        Commencing in September 2001, we had discussions with the FDA about our
data analysis, the CE mark Certification for our device, its comprehensive
algorithm and clinical efficacy, and also discussed our then proposed course of
action in support of the re-submission of our PMA application, including timing
of on-going data analysis and patient management categories. In 2002, we had
further discussions with the FDA about the science related to our device's
measurements, reviewed clinical study databases to be used for training and
testing, regulatory course of action related to a PMA application, statistical
methodology and clinical goals, and advised the FDA that a Pre-Market
Surveillance (PMS) Study was in progress in Europe. In March 2002, the FDA
orally informed us that it anticipated that our PMA application, upon
submission, would be reviewed under its expedited review policy. We subsequently
met with the FDA to outline the content of our proposed PMA application and to
introduce our next generation device and discuss necessary testing of such
device to demonstrate equivalency with our original device. In December 2002, we
submitted our detailed statistical analysis plan to the FDA and the application
thereof to a portion of the results of our testing, in an effort to receive
approval of such plan prior to proceeding with our PMA submission, and advised
the FDA that a portion of our test data had not yet been analyzed, and was being
maintained by a third party for subsequent analysis and algorithm validation
under an FDA-reviewed statistical analysis plan. During the first quarter of
2003, we had several telephone conferences with the FDA, in which the FDA raised
additional questions concerning our statistical analysis plan (which we
responded in a series of written communications) and the FDA indicated that our
training set data results appeared to be statistically significant.

                                       7
<PAGE>

        In the last quarter of 2003, we determined to pursue an application for
510(k) clearance of our device (instead of resubmitting a PMA application) after
an internal determination that the performance data from our device demonstrates
substantial equivalency to a predicate category of devices ("Thermographic
Systems"), which process is less costly and would allow us to commence marketing
our device sooner than under a PMA approval process. We have not discussed the
change in our proposed FDA submission with the FDA and there can be no assurance
that the FDA will determine that our device is substantially equivalent to an
approved device already in commercial distribution or that the FDA will grant
market clearance for our device.

        In March, 2004, we submitted our application for 510(k) clearance to the
notified body, KEMA Registered Quality, Inc. ("KEMA"), for review prior to
formal submission to the FDA. KEMA subsequently recommended to the FDA that our
diagnostic device is ``substantially equivalent to devices marketed in U.S.
interstate commerce prior to May 26, 1976, the enactment date of the Medical
Device Amendments, or to devices that have been reclassified in accordance with
the provision of the Federal Food, Drug, and Cosmetic Act.'' In November, 2004,
we submitted our application for formal submission to the FDA to approve our
device. In December, 2004, we received the FDA's response to our 510(k)
submission, which reclassified by statute the Biofield Diagnostic System into
class III (Premarket Approval) pursuant to Section 513(f) of the Federal Food,
Drug and Cosmetic Act (the ``Cosmetic Act''). As a result of the FDA's
reclassification, we must obtain an approved PMA with the FDA, absent any
subsequent reclassification, prior to legally marketing or distributing our
device. The basis of the FDA's decision was its determination that the device is
not ``substantially equivalent to devices marketed in U.S. interstate commerce
prior to May 26, 1976, the enactment date of the Medical Device Amendments, or
to any devices which have been reclassified into class I (General Controls) or
class II (Special Controls) or to another device found to be substantially
equivalent through the 510(k) process.'' The FDA indicated that its decision was
also based on our device having ``new technological characteristics that could
affect safety and effectiveness. In addition, the FDA raised new types of safety
and effectiveness questions. For example:

        1) Do rapidly proliferating cells produce a measurable electrical
        potential that is different from that of normal cells?
        2) If there is a measurable electrical potential difference, is it
        specific for malignant cells?
        3) Can the measurement be used to differentiate between normal and
        malignant breast cancers in the human?''

        In its December letter, the FDA also advised us that a manufacturer
whose device is found to be not substantially equivalent to a predicate device
can request the FDA to make a risk-based classification for its device. However,
the letter also included a statement that the FDA believes that ``based on the
review of your device, general controls would be inadequate and special controls
difficult to develop, to provide reasonable assurance of the device's safety and
effectiveness.''

        In January, 2005, in accordance with recommended FDA procedure, we
submitted a Request for Evaluation of Automatic Class III Designation for the
Biofield(R) Breast Proliferation Rate Detection System under ss.513(f)(2) of the
Cosmetic Act. In this request, we also addressed the FDA's technological
concerns based on information we had previously provided to the FDA. On March 4,
2005 we were notified by the FDA that it had reviewed our petition for
reclassification and concluded that we have not demonstrated that the device
meets the criteria under section 513(a)(1) of the Federal Food Drug and Cosmetic
act (21 U.S.C. 360c(a)(1) for classification into class I or II. Therefore the
device is automatically classified in class III requiring approval through a
premarket approval (PMA) process. In the event that the FDA clears our device,
and if we are successful in obtaining sufficient additional financing, we
anticipate commencing our marketing efforts for the device in the United States
shortly thereafter. However, due to our very limited financial resources, if the
FDA does not grant our request as described above and/or requires substantial
additional information in support of such request, we will need to obtain
substantial additional funding in order to complete our application to the FDA,
as well as to sustain our operations during the time our application is being
considered by the FDA. In the event that we are unable to secure such funding,
we may be compelled to cease operations.

Pervasive and Continuing FDA Regulation.

        A host of regulatory requirements apply to marketed devices, including
labeling regulations, the Quality System Regulation, which requires
manufacturers to follow elaborate design, testing, control, documentation and
other quality assurance procedures. The Medical Device Reporting regulation
requires that manufacturers report to the FDA deaths or serious injuries
associated with regulated products and product malfunctions likely to cause or

                                       8
<PAGE>

contribute to death or serious injury. The FDA generally prohibits promotion of
products for unapproved or `off-label' uses. Class II devices also can have
special controls (e.g., performance standards, post-market surveillance, patient
registries and FDA guidelines) that do not apply to Class I devices. There is no
assurance that unanticipated changes in existing regulatory requirements or the
adoption of new requirements would not have a significant adverse effect on our
business and financial condition.

        Upon commencing commercial distribution, we will be subject to
inspection by the FDA to determine compliance with regulatory requirements. If
the FDA finds that we have failed to comply with the requirements, it can
institute a wide variety of enforcement actions. The FDA sometimes issues a
public warning letter, but also may pursue more severe remedies such as fines,
injunctions and civil penalties against us; recalls or seizures of our products;
operating restrictions, partial suspension or total shutdown of our production;
refusing our requests for 510(k) clearance or PMA approval of new products;
withdrawal of product approvals already granted; and commencement of criminal
prosecution. Any FDA enforcement action could have a significant adverse effect
on our business and financial condition.

Other U.S. Regulation

        We must comply with numerous federal, state and local laws relating to
such matters as safe working conditions, manufacturing practices, environmental
protection, fire hazard control and hazardous substance disposal, and we could
incur significant costs to comply with such laws and regulations.

        Unapproved products subject to the FDA's pre-market application
requirements must receive prior FDA export approval to be marketed outside of
the United States, unless they are approved for use by a member country of the
European Union or certain other countries including Australia, Canada, Israel,
Japan, New Zealand, Switzerland and South Africa, in which case they can be
exported to any country provided that certain limited FDA notification
requirements are met.

Foreign Regulations

        Sales of medical devices outside the United States are subject to
foreign regulatory requirements that vary widely from country to country. The
time required to obtain approvals in foreign countries may be longer or shorter
than that required for FDA approval, and requirements for licensing may differ
from the FDA requirements.

        Medical devices which are sold within the European Union are required to
achieve compliance with the requirements of the Medical Devices Directive issued
by the European Union and obtain a "CE" marking for the device. To obtain a CE
marking, the medical device is required to meet the Essential Requirements as
defined under the Directive, relating to safety and performance of the device,
and the supplier must successfully undergo verification of its regulatory
compliance (known as a "conformity assessment") by an appropriate approved
standards agency or "notified body". It also is required to comply with
additional national requirements that are beyond the scope of the Directive.

        We have received approval by KEMA to market a version of the Biofield
Diagnostic System and our sensors under the CE mark Certification, and this
notified body has granted certified ISO-9001 Quality System status for design,
production management, sales and distribution of such version of the Biofield
Diagnostic System. In order to obtain such approvals, KEMA personnel conducted a
detailed review of our technical files and records, and reviewed certain of our
medical research files; however, KEMA did not conduct any confirming research
and did not comment on our clinical research. At the conclusion of the review,
KEMA issued to us a Certificate of Conformity for the product category
"electropotentials systems for the diagnosis of epithelial cancers". KEMA did
not offer any endorsement of the efficacy of the Biofield Diagnostic System. We
will be required to apply for CE recertification for our newly redesigned
device, which we intend to do at an appropriate time when adequate long-term
funding is obtained.

        The CE mark Certification and the ISO-9001 Quality System status, which
status is subject to semi-annual audit by KEMA, permit us to sell an approved
device in Europe and other countries that recognize CE mark Certification,
without obtaining any further regulatory approval. Failure to maintain
compliance with the appropriate Medical Devices Directive and other applicable
requirements could have a significant adverse effect on our business and
financial condition.

                                       9
<PAGE>

Manufacturing

        We are a development and marketing company and do not manufacture any of
our products or prototypes. We have used contract manufacturers who meet current
quality system regulations and good manufacturing practices requirements imposed
by the FDA to produce the initial quantities of our device and disposable
sensors, and intend to continue to use contract manufacturers to satisfy our
future needs. Electronic components and raw materials used in our device and our
sensors are available from numerous suppliers. Some components are stock items,
while others have been designed and manufactured to our specifications. The
specifications for our device and our sensors are treated as a trade secret. We
own certain moulds and other equipment used to manufacture our components.

        SeaMED Corporation was the contract manufacturer for the previous
version of our device, pursuant to an agreement, which expired May 15, 2001.
TriVirix International Limited has redesigned our device to reduce manufacturing
costs and make product platform improvements, a major portion of which work has
been completed. However, until we obtain additional financing, we are unable to
complete the payments under our redesign contract and finish the redesign of the
new version of our device. We have arranged with Ludlow Technical Products Inc.
to contract manufacture our sensors, which in turn has contracted with Dow
Pharmaceutical Sciences, Inc. to supply the gel, which is used with our sensors.

Marketing and Sales

General

        As a result of the large number of diagnostic procedures that are
performed on suspicious breast tissue in the United States, we intend to focus
our marketing efforts on the clinical ability of our device to reduce diagnostic
uncertainty and decrease the number of diagnostic tests performed on these
suspicious lesions. We believe that the potential market for our device will
include physicians involved in the detection and management of breast cancer,
including radiologists, gynecologists, general surgeons, breast surgeons and
general practitioners, as well as hospitals and clinics. We anticipate that, if
the FDA approves our device, we will market our device in the United States
through one or more distribution partners. We have not commenced discussions
with any potential distribution partner and cannot assure that any discussions,
which we may have, will result in any strategic or other relationship.

        Based on obtaining CE mark Certification for our device, we have been
able to market the previous version of our device in the European Union and
certain other countries that recognize the CE marking. In December 2001, we
signed an exclusive three-year distribution agreement with Trilogy Critical Care
(Pty) Ltd. of Johannesburg, South Africa, a health care distributor in southern
Africa, to market and sell our device in South Africa and certain other southern
African countries, conditioned on achieving annual minimum sales. In 2002, we
have signed similar distribution agreements for Italy, South Korea, Republic of
the Philippines and Brazil, in 2003, we signed a similar distribution agreement
for certain countries in the Middle East and in 2004 we signed a similar
agreement for Malaysia. Each of our distribution agreements permit us to
terminate the distribution arrangement if minimum annual purchases are not made.
Although none of the minimum annual purchases have been made under any of these
distribution agreements, we have not exercised our election to terminate any of
such agreements. Except for the initial purchases of demonstration units made
under these agreements, no subsequent purchases have been made.

        We believe that the cost for use of our device will be competitive with
the current procedure costs of diagnostic mammography and ultrasound. Although
we have not sold the device in the United States, at such time, if at all, as we
receive FDA approval, we currently expect to price our device at under $20,000,
which will be substantially less than the cost of diagnostic mammography
equipment or ultrasound systems, which range in price from approximately $60,000
to $225,000. We also currently expect to price our single-use sensors at
approximately $60 a set.

        Due to our current lack of cash resources, our marketing staff consists
of only one part-time independent marketing consultant, who has worked with us
for several years and is familiar with our device. Our marketing efforts, to
date, have achieved very limited success. The redesign of a new version of our
device is mostly complete, but we will not be able to commence marketing our
redesigned device until such time, if at all, as we secure additional financing
to enable us to complete the payments under our redesign contract, at which time
we would resume our marketing activities.

                                       10
<PAGE>

Effect of Third Party Reimbursement

        Suppliers of health care products and services are greatly affected by
Medicare, Medicaid and other government insurance programs, as well as by
private insurance reimbursement programs. Third party payers (i.e., Medicare,
Medicaid, private health insurance, health administration authorities in foreign
countries and other organizations) may affect the pricing or relative
attractiveness of our products by regulating the maximum amount of reimbursement
provided to the physicians and clinics utilizing our products, or by taking the
position that reimbursement is not available for procedures utilizing our
device.

        We believe that the availability and level of third party reimbursement
will impact the decisions of physicians, clinics and hospitals to purchase and
use our products and, thereby, affect the pricing of our products. In the United
States, many patients are reimbursed for mammograms, in amounts that vary
considerably by the location in which the procedure is performed. Our intended
marketing strategy is to obtain approval of payers for payments to physicians
using our products, while working with professional organizations to foster
awareness. We also intend to seek support for our products, and enlist the
assistance of opinion leaders in making presentations to health care
administrators to inform them of the benefits of our device.

        Several states and the federal government are investigating a variety of
alternatives to reform the health care delivery system and to reduce and control
health care spending. These reform efforts include proposals to limit spending
on health care items and services, to limit coverage for new technology and to
limit or control the price of products and services. The scope and timing of
these reforms cannot be predicted, but if adopted and implemented, these reforms
could have a significant adverse effect on our business and financial condition.

        Reimbursement for use of our device in international markets will vary
and will be determined on a country-by-country basis. Although we intend to
pursue our efforts to obtain reimbursement status in major European markets, we
do not yet have a schedule for commencing these efforts, there is no assurance
of success, once such efforts are commenced, if at all, and our ability to
achieve any significant market penetration may depend upon the availability of
third party governmental reimbursement. Initially, we expect that the patient
will be responsible for the cost of the procedure.

Patents and Proprietary Information

        We have a number of issued U.S. and foreign patents, the earliest of
which expires in 2007, relating to our products and technology. Since the
technology applicable to our products is rapidly developing, any patent rights,
which we have, or may obtain, may not provide us with any competitive advantage.
A number of companies may have filed applications for, or have been issued,
patents relating to technology that is similar to some of the technology
developed or used by us.

        We also seek to protect our intellectual property rights through a
combination of trade secret, non-disclosure and other contractual arrangements.
We generally enter into confidentiality agreements with our employees,
consultants, vendors and clinical investigators, and attempt to limit access to
and distribution of our proprietary information.

        We may be required to obtain licenses to patents or other proprietary
rights from third parties. We cannot assure you that any licenses required under
any patents or proprietary rights would be made available to us on acceptable
terms, if at all. If we are unable to obtain required licenses, we could
encounter delays in product development or find that the development,
manufacture or sale of products requiring these licenses could be foreclosed.

        From time to time, we may support and collaborate in research conducted
by universities and governmental research organizations to obtain rights to use
the resulting technical information and any inventions. In these circumstances,
it is not unusual for the university or research organization to retain certain
rights, which then could be licensed to others.

                                       11
<PAGE>

Licenses and Other Agreements

        We are a party to several licensing and royalty arrangements relating to
the Biofield Diagnostic System, as well as to prior versions of this product.

        We have a royalty arrangement under a terminated employment agreement
with Mark L. Faupel, Ph.D., our former Vice President, Research and Development,
pursuant to which we were obligated to pay royalties based on 2% of gross sales
of a prior version of our device and its sensors, which are no longer being
marketed, and 1% of gross sales of any pre-gelled electrodes used in connection
with our device through 2005 or until these royalties reach $8 million,
whichever comes first.

        We have a 1992 royalty agreement with Abel Laboratories, Inc., an
affiliate of our Chairman and Chief Executive Officer, Dr. David Long. Under
this agreement, Abel assigned to us all of its rights and interests in all
inventions, and technology conceived or developed by it in connection with
laboratory services performed by it for us which relate to the use of
bioelectronics in the diagnosis, screening or management of disease, infection,
ovulation or other bioelectric events. This agreement also provides that Abel is
entitled to royalties of 5% of net sales of products incorporating any of these
inventions or technology which are embodied in any patent issued to us, during
the life of the patent, up to a maximum of $2 million per patent, as well as a
portion of the proceeds we may receive from the license of these patents to
others. One patent has been issued to us that is covered by this agreement.

        In October 2000, we entered into a non-exclusive license agreement with
Cardio Dynamics International Corporation, a manufacturer of medical devices,
for use of our interconnect design patent on cables to be manufactured by them.
The agreement was due to expire on December 31, 2003 and was renewable by Cardio
Dynamics for an additional two years based on a mutual agreement of minimum
royalties. We received the contractual minimum royalties of $19,770 for 2001 and
$46,890 for 2002. The agreement was amended in December 2002 to reset the then
remaining royalty from $98,465 to $54,606. In consideration for prepayment of
such royalty in 2003, the agreement was extended (for no additional royalty)
until December 31, 2004. The agreement expired on December 31, 2004 and was not
renewed.

Research and Development

        All of our research and development activities have been related to our
core technology and our attempt to commercialize this technology. Since we are
still in the development stage, our research and development activities have
been substantial, although they have decreased significantly since 1998. Most of
our research has been completed and we did not incur any expense for research in
2004.

Competition

        The medical device industry generally, and the cancer diagnostic and
screening segments in particular, are characterized by rapidly evolving
technology and intense competition. Existing breast cancer diagnostic tools will
compete with our device, including imaging equipment such as MRI systems
manufactured by Hitachi Medical Corporation of America, Royal Philips
Electronics, Siemens AG, Toshiba America Medical Systems and others; x-ray
mammography equipment manufactured by General Electric Company, Royal Philips
Electronics, Siemens AG, Picker International division of Marconi plc and
others; ultrasound or high frequency ultrasound systems manufactured by Aligent
Technologies Inc., Siemens AG, Toshiba America Medical Systems, Royal Philips
Electronics and others; stereotactic needle biopsy devices manufactured by Royal
Philips Electronics, Johnson and Johnson Company, Siemens AG and others;
thermograph devices manufactured by Scanted Medical Inc. and Lifeline
BioTechnologies Inc.; devices for blood and/or genetic tests manufactured by
Bayer Corporation, Hoffman-La Roche Ltd., Eli Lilly and Company and others; and
electrical impedance and transilluminational devices manufactured by TranScan
Research & Development Co. Ltd. Other emerging cancer diagnostic devices and
technologies which might compete with our device include OmniCorder,
manufactured by BioScan Screening Systems, Inc., which looks at changes in blood
flow surrounding cancer, using thermographs for viewing and recording heat
patterns and R2 Technology, Inc.'s ImageChecker(R), a computer-aided detection
device for mammography. In addition, other companies which produce devices
utilizing these tools, as well as other companies which may be developing, or
could in the future attempt to develop, additional products which assist in
diagnosing cancers, including non-invasive products, could compete with the
Biofield Diagnostic System.

        Substantially all of these companies have significantly greater
resources and name recognition than we do, and substantially greater expertise
than us in research and development. Since all of these companies have existing

                                       12
<PAGE>

products, they each possess substantially greater experience in manufacturing,
marketing and obtaining regulatory approvals.

        Our competitors may succeed in developing or marketing technologies and
products that are more effective than those developed or marketed by us or that
would render our technology and products obsolete or noncompetitive.
Additionally, we cannot assure you that we will be able to successfully compete
against these competitors and potential competitors. Although we believe that
our products may offer certain advantages over our competitors' products,
earlier entrants in the market for a diagnostic application often obtain and
maintain significant market share relative to later entrants, such as us.

        Physicians using currently existing imaging equipment, or other
diagnostic techniques, may determine not to use the Biofield Diagnostic System
or any other products that we may develop. Currently, mammography is employed
widely and sales, if any, of our device will, in part, be dependent on our
ability to demonstrate its additional clinical utility as an adjunct to
mammography and/or physical examination, and its advantages over other available
diagnostic tests and products.

Employees

        As of March 22, 2005, we had two full-time employees, our chief
executive officer and our chief operating officer. Both employees are involved
in all aspects of our business and operations, including data management,
supervision of research and development activities, management, manufacturing
supervision, product development and financial and administrative functions. In
addition, when needed, we use the services of our past employees and an
independent marketing consultant, and two other consultants who assist us with
regulatory work. Due to a lack of financial resources during 2003, we deferred
compensation due our employees for six months (and agreed to pay a 100% percent
premium on such deferred compensation) and we reduced our employee compensation
for four months (and issued options under our 1996 Stock Option Plan in an
attempt to make up for such shortfall). In 2004, we were able to pay the
employees' 2003 salary arrears but we still have to pay them the premium for
back pay. As at December 31, 2004, we owed $160,486 to the employees for the
premium.

        Due to the specialized scientific nature of our business, we are highly
dependent upon our ability to timely attract and retain qualified scientific,
technical and managerial personnel. The loss of the services of existing
personnel, as well as our failure to recruit key scientific, technical and
managerial personnel in a timely manner would be detrimental to our business.
From time to time, we seek services of consultants who specialize in different
aspects of regulatory work. Although we do not have the financial resources or
any plan to hire new employees in the immediate future, competition for
qualified personnel is intense and there is no assurance that we will be able to
timely attract and retain qualified personnel who may be necessary for the
development of our business.

                                       13
<PAGE>

Risk Factors

The FDA has Rejected Our Most Recent Submission for Approval of the Biofield
Diagnostic Device and Reclassified Our Device

        In March, 2004, we submitted our application for clearance of our
device, pursuant to the FDA's 510(k) clearance procedure to KEMAfor review prior
to formal submission to the FDA. KEMA subsequently recommended to the FDA that
our diagnostic device be approved. In November, 2004, we submitted our
application for formal submission to the FDA to approve our device.

        In December, 2004, the FDA notified us that it had reclassified by
statute the Biofield Diagnostic System into class III (Premarket Approval)
pursuant to Section 513(f) of the Federal Food, Drug and Cosmetic Act. As a
result of the FDA's reclassification, we must, absent any subsequent
reclassification, obtain PMA approval prior to legally marketing or distributing
our device. The basis of the FDA's decision was its determination that the
device is not "substantially equivalent to devices marketed in U.S. interstate
commerce...." The FDA also informed us that although a manufacturer whose device
is found to be not substantially equivalent to a predicate device can request
the FDA to make a risk-based classification for its device, the FDA believes
that "based on the review of your device, general controls would be inadequate
and special controls difficult to develop, to provide reasonable assurance of
the device's safety and effectiveness."

        Had the FDA accepted our submission for clearance, we would have been
able to commence sales and marketing efforts immediately. However, on March 4,
2005 we were notified by the FDA that it had reviewed our petition for
reclassification and concluded that we have not demonstrated that the device
meets the criteria under section 513(a)(1) of the Federal Food Drug and Cosmetic
act (21 U.S.C. 360c(a)(1) for classification into class I or II. Therefore the
device is automatically classified in class III requiring approval through a
premarket approval. Consequently, there can be no assurance that we will ever
obtain FDA clearance for the Biofield Diagnostic Device. At a minimum, we will
likely experience significant additional expense and time in order to obtain
clearance for our device from the FDA. In the event that we are unable to obtain
such approval, we will likely be compelled to cease operations.

We Need to Obtain Financing in Order to Continue Our Operations or We will Cease
Operations.

        At May 2, 2005, we virtually have no cash, and we were unable to meet
the interest payments due on April 30, 2005 with respect to the promissory notes
described below. Since December 2004, we have survived on some funding we
obtained from issuance of notes, sale of our shares abroad and advances made by
Dr. Long and his affiliates. Our line of credit of $1.2 million, which is
secured by personal guarantees from Dr. Long and his affiliates, expires on
December 2, 2005. Furthermore, we were unable to repay the $1 million of 12%
promissory notes which we issued in a private placement in December 2003 and
January and February 2004, when it became due on December 31, 2004. The $329,000
private placement notes and the $50,000 note to our placement agent are due on
May 31, 2005. All the notes will bear interest (until paid) at 1.5% per month
after the due dates. We are also required to issue 2.5 million shares of our
common stock for the default in connection with the $1 million private
placement. We will be required to issue 947,500 shares for the second placement
and $50,000 note in the event we do not repay the notes on or before May 31,
2005. We have been seeking long-term financing through investment banking
channels for over three years, but have not yet been successful in obtaining
such financing. Unless such resources timely become available, we will be
compelled to cease operations.

We Anticipate Significant Dilution of Our Current Stockholders in Obtaining
Necessary Funding

        Our $1 million and $329,000 private placements and our $50,000 note to
our placement agent required us to issue (in addition to $1.4 million of
short-term notes) an aggregate of approximately 6.9 million shares of our common
stock. We are also required to issue 2.5 million to the holders of the notes
under $1 million private placement for not repaying the notes on December 31,
2004. On April 30, 2005, we defaulted on the monthly interest payments due on
these notes. We will be required to issue 947,500 shares if we default in
payment of $329,000 and $50,000 notes which become due on May 31, 2005.
Additionally, from October 2004 to March 2005, we sold approximately 4 million
shares at $0.10 per shares to investors outside United States, and we continue
to sell our shares of Common Stock to overseas investors to fund its operations.
In addition, in September 2004, we borrowed $50,000 from an affiliate of our

                                       14
<PAGE>

placement agent in exchange for the issuance of 500,000 shares of common stock.
Furthermore, the subscription agreement relating to our $1 million private
placement contained an undertaking requiring us to file an application for
approval of our device with the FDA by June 20, 2004. In March 2004, we
submitted our 510(k) application to KEMA as described above. We believe that our
filing of the 510(k) application with KEMA satisfies such undertaking to file an
application with the FDA by June 20, 2004. In the event, however, that it is
determined that the filing of our 510(k) application did not satisfy such
undertaking, we would then be required to issue an additional 500,000 shares of
our common stock to the participants in the private placement, as well as an
additional 500,000 shares of our common stock for each period of 30 days after
June 20, 2004 in which the undertaking remained unsatisfied. If we are
successful in raising additional funds by selling our equity securities, the
equity ownership of our existing stockholders will be significantly further
diluted. If we are able to raise additional funds through debt financing, which
currently is unlikely without a third party guaranty, we will incur significant
borrowing costs.

We Have a Limited Operating History

        We have had a limited history of operations. Since our inception in
October 1987, we have engaged principally in the development of our device,
which has not been approved for sale in the United States. Consequently, we have
little experience in manufacturing, marketing and selling our products.

We Expect to Continue to Incur Significant Operating Losses Which Endangers our
Viability as a Going-Concern

        We currently have no established source of operating revenue and have
incurred net operating losses since our inception. At December 31, 2004, we had
an accumulated deficit of approximately $70 million. These losses have resulted
principally from costs incurred in research and development and clinical trials
and from general and administrative costs associated with our operations. We
expect operating losses to continue for at least the next several years, mainly
due to the anticipated expenses associated with the pre-market approval process
and proposed commercialization of our device, research and development and
marketing activities and administration costs. Our continuing losses have caused
our independent accountants to qualify their audit report regarding our use of
"going concern" basis of accounting in preparation of our 2004 consolidated
financial statements.

Our Business May Never Become Profitable

        Our ability to achieve profitability will depend, in substantial part,
on our ability to obtain regulatory approvals for our device, and to develop the
capacity to successfully manufacture and market our device within a reasonable
time. We cannot assure you when, or if, we will receive required regulatory
approvals to manufacture and market our device. Accordingly, the extent of
future losses and the time required to achieve profitability, are highly
uncertain.

Our Cash Flow Problems Have Caused Us to Be Delinquent in Payments to Vendors
and Other Creditors

        Since 1998, our lack of financial resources has caused us to delay
payment of our obligations as they became due in the ordinary course of our
business. Such delays have damaged some of our vendor and professional
relationships, and have caused us to incur additional expenses in the payment of
late charges and penalties. As of December 31, 2004, we had a working capital
deficiency of $6.4 million and accounts payable, primarily to service providers
and vendors, aggregating approximately $1.1 million, substantially all of which
are past due. These amounts have increased since December 31, 2004. At December
31, 2004, we also owed our employees approximately $160,486.

We Will Require Significant Additional Capital to Continue Operations Which May
Not Be Available

        We expect that we will need significant additional funding to complete
all the steps necessary to receive approval from the FDA, for operating expenses
and for our marketing program. Moreover, our fixed commitments, including
salaries and fees for current employees and consultants, rent, payments under
license agreements and other contractual commitments, including commitments to
previous service providers and others which are contingent upon improvement in
our cash position and have been extended until some indefinite future time, are
substantial and are likely to increase. We do not expect to generate positive
cash flow for at least several years, if at all, as revenues, initially, are
unlikely to cover funds required for operating expenses, including the expected
cost of commercializing our device. We cannot assure you that additional
financing will be available when needed or, if available, will be available on
acceptable terms. Since 2001, insufficient funds have prevented us from
implementing our business strategy and have required us to delay, scale back or
eliminate certain activities.

                                       15
<PAGE>

We May Never Be Able to Bring our Device to Market or Sustain Its Sales After
Regulatory Approval

        Our device faces a high degree of uncertainty, including the following:

    o   we may not be able to obtain United States regulatory approval.
        Obtaining regulatory approval may take significantly more time and cost
        significantly more money than anticipated. Lack of United States
        regulatory approval has significantly affected our ability to sell our
        device outside of the United States.
    o   we may not be able to produce our device in commercial quantities at
        reasonable cost.
    o   we may not be able to successfully market our device or find an
        appropriate corporate partner, if necessary, to assist us in the
        marketing of our device.
    o   our device may not gain satisfactory market acceptance.
    o   our device may be superceded by another product commercialized for the
        same use or may infringe patents issued to others, which would prevent
        us from marketing and selling our device.
    o   after approval, our device may be recalled or withdrawn at any time as a
        result of regulatory issues, including those concerning safety and
        efficacy.

        If we are unable to successfully market our device or sustain its sales,
our business, financial condition and results of operations will be
significantly and adversely affected.

We Are Currently Dependent on a Single Product Which Has Not Yet Been
Commercialized

        Although we intend to develop additional applications for our device,
based on its core technology, none of these applications is expected to result
in a commercial product for at least several years, if at all. Consequently,
until such time, if at all, as our device is approved for commercial
distribution in the United States, limited distribution of our device overseas
will account for substantially all of our revenues, if any.

Our Contract Manufacturers May Be Unable to Produce Commercial Quantities of Our
Products

        Our current contract manufacturer for our device has not yet completed
the redesign of a new version of our device due to our delay in payment for its
redesign services and has not yet manufactured our device. We cannot assure you
that it will complete its redesign services or be able to manufacture in volume,
when or if the need may arise. If this situation occurs, our business could be
significantly and adversely affected.

If Our Single Source Suppliers Are Unable to Deliver, Our Business Would Suffer

        For certain services and components, we currently rely on single
suppliers. If we encounter delays or difficulties with our third-party suppliers
in producing, packaging or distributing our device and its components, market
introduction and subsequent sales would be significantly adversely affected. If
we are required to rely on alternative sources of supply, we cannot assure you
that we will be able to enter into alternative supply arrangements at
commercially acceptable rates, if at all. If we are unable to obtain or retain
qualified suppliers and contract manufacturers on commercially acceptable terms,
we will not be able to commercialize our device as planned. Our dependence upon
third parties for the manufacture and supply of our device and components may
significantly and adversely affect our ability to attain profitability and our
ability to manufacture and deliver our device on a timely and competitive basis.

We May Not Be Able to Apply Our Technology to Other Uses and Products

        We cannot assure you that our technology will be approved and accepted
for breast cancer screening or for the detection of other cancers. Furthermore,
we also cannot assure you, even if we can develop any new products or uses for
our current device, that such products or uses would be approved by the FDA or
by any comparable foreign regulatory bodies, or would be commercially viable.

                                       16
<PAGE>

We May Not Be Able to Obtain Government Regulatory Approval to Market and Sell
Our Products

        Regulation by governmental authorities in the United States will be a
significant factor in the manufacture and marketing of our products, as well as
our research and development activities. All of our proposed products will
require regulatory approval by governmental agencies before commercialization
and our products must undergo rigorous preclinical and clinical testing and
other pre-market approval procedures prescribed by the FDA. Various federal and,
in some cases, state statutes and regulations also govern or influence the
manufacturing, safety, labeling, storage, record keeping and marketing of
medical devices. The lengthy process of seeking these approvals, and the
subsequent compliance with applicable statutes and regulations, will require us
to expend substantial resources. If we fail to obtain or are otherwise
substantially delayed in obtaining regulatory approvals, our business and
operations could be significantly and adversely affected. The regulation of
medical devices, particularly in Europe, continues to develop and we cannot
assure that, as new laws and regulations are adopted, these actions will not
have an adverse effect on us.

Our Device Will Be Subject to Continuing Review by the FDA Which Could Impact On
Our Ability to Sell It in the Future

        Changes to our device or the manner in which it is used after it is
approved will require additional approval by the FDA. Our failure to receive
approval of such a change on a timely basis, or at all, would have a significant
adverse effect on our business.

A Failure of Our Contract Manufacturers to Comply with FDA Regulations Would
Impact On Our Ability to Sell Our Device

        We cannot assure that our manufacturers will be in compliance with the
FDA's quality system regulations and good manufacturing practices, when the FDA
inspects them, or that they will continue to maintain this compliance. A failure
to maintain compliance could significantly delay approval of our pre-market
application to the FDA for our device or prevent us from marketing it if we
obtain this approval, and would have a significant adverse effect on our
business.

If Foreign Regulatory Approvals Are Withdrawn, Our Business Will Suffer

        We cannot assure you that the foreign regulatory approvals that we have
received, which allow us to sell the prior version of our device in certain
foreign countries, will not be withdrawn or that our redesigned device, when
completed, will receive regulatory approval. Our failure to continue to maintain
these approvals or to obtain any additional foreign approvals could have a
significant adverse effect on our business.

Changes to Health Care Reimbursement Regulations and Practices Could Adversely
Affect Us

        Our ability to successfully commercialize our products will depend, in
part, on the extent to which reimbursement for the cost of our products and
related treatment will be available from government health administration
authorities, private health insurers and other organizations. These third-party
payers are increasingly challenging the price of medical products and services.
Several proposals have been made that may lead to a government-directed national
health care system. Adoption of this type of system could further limit
reimbursement for medical products, and we cannot assure you that adequate
third-party coverage will be available to enable us to establish, and then
maintain, price levels sufficient to generate reasonable profit. In addition, we
also cannot assure you that the U.S. government or foreign governments will not
implement a system of price controls. Any change in the existing system might
significantly affect our ability to market our products profitably.

Health Care Insurers May Not Reimburse For the Use of Our Products

        Governmental health authorities, private health insurers and other
organizations may not approve the cost for the use of our device as an
authorized medical expenditure under their programs, which would severely
restrict the marketability of our device.

                                       17
<PAGE>

Certain Foreign Governments May Not Give Reimbursement Code for Our Device

        Government health authorities, especially in the countries where most of
the reimbursements flow through government agencies, may not provide us with a
reimbursement code, which is required for claiming the cost for the use of our
device from government agencies. If we are unable to obtain such reimbursement
codes in major markets, marketability of our device may be severely restricted.

We Expect to Encounter Difficulty in Hiring Required Personnel and the Loss of
any Key Personnel Could Adversely Affect our Operations

        As a small medical technology company, we are heavily dependent upon the
talents of key personnel. Due to lack of funding, we are unable to hire
permanent employees. We use services of some of the ex-employees as consultants
when we have the cash and they are available to perform the required services.
Competition for qualified personnel in the medical device and biotechnology
industries is intense and we do not know if we will be successful in our
recruitment efforts. If we are unable to attract, and then retain, qualified
personnel, our operations will be significantly adversely affected.

Our Limited Marketing and Sales Experience and Capability Could Impact Our
Ability to Successfully Sell Our Device

        We currently have not set up a full marketing or sales organization to
market our device. If we are unable to build, and then maintain, a marketing
organization and a sales force, either directly or through third parties, our
financial condition and operating results could be significantly and adversely
affected.

Our Results of Operations May Suffer if Foreign Trade is Restricted or Foreign
Regulations are Modified

        When funds become available, we intend to commence commercial sales of
our device outside of the United States before we commence this activity in the
United States, where sales cannot occur unless and until we receive pre-market
approval from the FDA. Thus, until we receive approval from the FDA to market
our device in the United States, our revenues, if any, will be derived from
international sales. A significant portion of our revenues, therefore, may be
subject to the risks associated with international sales, including foreign
regulatory requirements, economic or political instability, shipping delays,
fluctuations in foreign currency exchange rates and various trade restrictions,
all of which could have a significant impact on our ability to deliver products
on a competitive and timely basis and our ability to achieve profitable
operations. Future impositions of, or significant increases in the level of,
customs duties, export quotas or other trade restrictions could have a
significant adverse effect on our business.

We Face Substantial Competition in the Medical Technology Field and May Not Be
Able to Successfully Compete

        The medical technology industry is highly competitive, particularly in
the area of cancer screening and diagnostic products. We are likely to encounter
significant competition with respect to our device, as well as any other
products that we may develop. A number of companies are engaged in the same
field as us, and many of these companies have significantly greater financial,
technical and marketing resources than us. In addition, many of these companies
may have more established positions in the industry and may be better equipped
than us to develop, refine and market their products. Our inability to
successfully compete in the industry would have a significant adverse effect on
our business.

Our Device May Be Rendered Obsolete By Rapid Technological Changes

        Methods for the detection of cancer are subject to rapid technological
innovation and we cannot assure you that technological changes will not render
our device obsolete. Likewise, we cannot assure you that the development of new
types of diagnostic medical equipment or technology will not have a significant
adverse effect on the marketability of our device. Commercial availability of
any new product could render our device obsolete, which would have a significant
adverse effect on our business.

Product Liability Claims in Excess of the Amount of Our Insurance Could
Significantly Affect Our Financial Condition

        Our business exposes us to potential product liability risks, which are
inherent in the testing, manufacturing and marketing of cancer detection
products. Significant litigation, none of which has involved us, has occurred in
the past based on allegations of false negative diagnoses of cancer. While our
device does not purport to diagnose any patient, we cannot assure you that we

                                       18
<PAGE>

will not be subjected to future claims and potential liability. We cannot assure
you that claims against us arising with respect to our device will be
successfully defended or that any insurance which we then carry will be
sufficient to cover liabilities arising from these claims. A successful claim
against us in excess of any insurance coverage, which we may have, would, in
most instances, deplete our assets and have a significant adverse effect on our
business. Furthermore, we cannot assure that we will be able to obtain, or
maintain, liability insurance on acceptable terms.

Our Contract Manufacturers Use Potentially Hazardous Materials, the Replacement
of Which Could Affect Our Costs

        Although we do not manufacture any of our products, we understand that
various cleaning solvents, used in connection with the contract manufacture of
our products, may contain potentially hazardous materials. As a result, our
contract manufacturers, in the future, could become subject to stringent
federal, state and local laws, rules, regulations and policies governing the
use, generation, manufacture, storage, air emission, effluent discharge,
handling and disposal of these materials. We cannot assure you that we will not
incur significant future price increases imposed by our contract manufacturers
to comply with environmental laws, rules, regulations and policies, or that our
business will not be significantly and adversely affected by current or future
environmental laws, rules, regulations and policies or by any releases or
discharges of hazardous materials.

If We Are Unable to Protect Our Intellectual Property Rights, We Could Lose Our
Competitive Advantage

        Our commercial success will be dependent upon proprietary rights that we
own or license. We cannot assure you that any of our patents will not be
invalidated or that our patents will provide us protection that has commercial
significance. Litigation may be necessary to protect our patent positions, which
could be costly and time consuming. If any of our key patents that we own or
license is invalidated, our business may be significantly adversely affected. In
addition, other companies may have trade secrets or may independently develop
know-how or obtain access to our trade secrets, know-how or proprietary
technology, which could significantly and adversely affect our business.

We Do Not Have the Financial Resources to Enforce and Defend All of Our
Intellectual Property Rights

        The actions, which we may take to protect our intellectual property, may
not be adequate to deter misappropriation of this property. We currently do not
have adequate financial resources required to enforce, through litigation, our
intellectual property rights. In addition, litigation could result in a
substantial diversion of managerial time and resources, which could adversely
affect our business.

Our Device May Infringe Third Party Intellectual Property Rights

        Other companies may have obtained other proprietary rights to technology
that may be potentially useful to us. It is possible that a third party could
successfully claim that our device or its components infringe on its
intellectual property rights. If this were to occur, we may be subject to
substantial damages, and we may not be able to obtain appropriate licenses at a
cost that we could afford and we may not have the ability to timely redesign our
device. If we are required to pay material damages or are unable to obtain these
rights or are unable to successfully redesign our device at a reasonable cost,
our business could be significantly and adversely affected.

Our Stock Price Has Been Volatile

        The price of our common stock has fluctuated substantially since our
initial public offering in 1996. The market price for our common stock, like
that of the common stock of many other medical device companies, is likely to
continue to be highly volatile.

Our Principal Stockholder Can Control Most Matters Requiring Approval by Our
Stockholders

        Dr. David Long, our Chairman and Chief Executive Officer, and his son,
Dr. Raymond Long, and their respective affiliated entities, beneficially own
approximately 36% of our outstanding shares of common stock. As a result, Dr.
David Long has significant influence on the nomination and election of our
directors, our policies and the outcome of all important matters that are

                                       19
<PAGE>

subject to the vote of our stockholders. This concentration of ownership, among
other things, also may increase our difficulty in raising necessary financing.

We Lack Independent Directors

        We cannot assure you that our Board of Directors will have independent
directors. Our previous independent directors resigned in December 2002 due,
among other things, to our potential inability to maintain directors' and
officers' liability insurance and to our financial inability to continue to
assure that we will operate as a going concern. In the absence of a majority of
independent directors, our current three-member Board of Directors, which
consists of our two executive officers (one of whom is our principal
stockholder) and a non-employee director who is related to our principal
stockholder, could establish policies and enter into transactions without
independent review. This could present the potential for a conflict of interest
between us and our stockholders, and increases our difficulty in raising
necessary financing. In addition, we cannot establish an audit committee or
compensation committee without independent directors, which will prohibit us
from listing our shares of common stock for trading on a recognized national
securities exchange or on any electronic exchange regulated by NASDAQ.

We May Issue Preferred Stock

        Our Board of Directors has the authority to issue up to 12,300,000
shares of preferred stock and to determine the price, rights, preferences,
conversion and other privileges and restrictions, including voting rights, of
those shares without any vote or action by our common stockholders. The rights
of the holders of the common stock will be subject to, and could be materially
adversely affected by, the rights of the holders of any preferred stock that may
be issued in the future. The issuance of preferred stock, while providing
flexibility in connection with corporate purposes, could have the effect of
delaying, deferring or preventing a change in control, discouraging tender
offers for the common stock, and materially adversely affecting the voting
rights and market price of the common stock.

Our Stockholders Could Be Adversely Affected by the Anti-Takeover Effects of
Delaware Law

        We are subject to the provisions of Section 203 of the General
Corporation Law of the State of Delaware. In general, Section 203 prohibits a
publicly held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date of
the transaction in which the person becomes an interested stockholder, unless
the business combination is approved in a prescribed manner or unless the
interested stockholder acquires at least 85% of the corporation's voting stock
(excluding shares held by certain designated stockholders) in the transaction in
which it becomes an interested stockholder. A "business combination" includes
mergers, asset sales and other transactions resulting in a financial benefit to
the interested stockholder. Subject to certain exceptions, an "interested
stockholder" is a person who, together with affiliates and associates, owns, or
within the previous three years did own, 15% or more of the corporation's voting
stock. This provision of the Delaware law could delay and make more difficult a
business combination, even if the business combination would be beneficial to
the interests of our stockholders, and also could limit the price certain
investors might be willing to pay for shares of our common stock.

We Do Not Expect That We Will Pay Dividends

        We have never declared or paid any cash dividends on our capital stock
and do not intend to pay any cash dividends in the foreseeable future.

Our Obligation to Maintain the Registration of Shares of our Common Stock for
Two Years Will be Costly and May Lower the Market Price of Our Common Stock.

        We are required to maintain the effectiveness of the registration
statement of the shares issued in our $1 million and $329,000 private placements
for two years from the date of effectiveness. The cost of maintaining such
effectiveness will affect the availability of funds for our business operations.
Furthermore, sales of these registered shares of common stock in the public
market, or the perception that these sales could occur, could adversely affect
the trading price of our common stock and could impair our ability to raise
funding through an offering of our equity securities.

                                       20
<PAGE>

Resale of Restricted Shares Held By Our Current Directors and Executive Officers
May Lower the Market Price of Our Common Stock

        At March 22, 2005, 34,348,472 shares of our common stock were
outstanding, of which approximately 9 million shares were freely tradable by the
holders of these shares without limitations under the Securities Act of 1933,
inclusive of 8,250,238 shares which are currently being sold pursuant to an
effective Registration Statement. Approximately 37% of the shares of our
outstanding common stock were held by our current executive officers and
directors and their affiliated entities. These persons, and other holders of
restricted shares, are eligible to sell substantially all of their shares
subject to the volume and other limitations of Rule 144 promulgated under the
Securities Act of 1933. Three months after these persons are no longer deemed to
be our affiliates, and provided that they have held their shares for more than
one year, they will be able to sell their shares without restriction under Rule
144. Sales of substantial amounts of our restricted shares of common stock in
the public market, or the perception that these sales could occur, could
adversely affect the trading price of our common stock and could impair our
ability to raise funding through an offering of our equity securities.

Future Issuances of Our Securities May Be Dilutive to Our Stockholders

        We will need additional capital to fund our future operations through
public or private financings, collaborative licensing or other arrangements with
corporate partners. We have already issued 610,280 shares of our common stock
which we sold in 2004 under the exemption provided by Regulation S, and we
continue to sell the shares in 2005 with approximately 2.8 million shares will
be issued for sales made up to March 23, 2005. If additional funds are raised by
issuing equity securities, dilution to our existing stockholders will occur. As
of March 22, 2005, options, warrants and rights to purchase a total of 1,763,331
shares of our common stock were outstanding with a weighted average exercise
price of $0.35 per share, 716,331 of which were then exercisable. In addition,
1,210,496 shares of our common stock were available for future option grants
under our stock option plans. Furthermore, under the terms of our $1 million
private placement, we are required to issue additional 2,500,000 shares of
common stock non-payment of notes on December 31, 2004, the maturity date.
Similarly, 947,500 shares will be due if we default to repay the notes due under
our $329,000 private placement and $50,000 note issued to our placement agent if
the notes are not repaid on May 31, 2005. As no new financing arrangement has
been made, we are likely to default in making this payment and will be required
to pay the additional shares. To the extent that any of the foregoing options
are exercised or shares are issued, the interests of our stockholders would be
diluted.

Special Note Regarding Forward-looking Statements

     We have made statements in this Annual Report on Form 10-KSB that are
"forward-looking statements" within the meaning of the Securities Act of 1933
and the Securities Exchange Act of 1934. Sometimes these statements contain
words like 'may,' 'believe,' 'expect,' 'continue,' 'intend,' 'anticipate' or
other similar words. These statements could involve known and unknown risks,
uncertainties and other factors that might significantly alter the actual
results suggested by the statements. In other words, our performance might be
quite different from what the forward-looking statements imply. The following
factors, as well as those discussed above in Item 1 - "Description of Business",
could cause our performance to differ from the implied results:

     o    inability to obtain capital for continued operations and the
          development and commercialization of our products.
     o    inability to obtain FDA approval for our products in a timely manner,
          if at all.
     o    failure to obtain expected results in any future clinical trials.
     o    technological obsolescence of our products.
     o    changes in governmental regulations in our principal markets.
     o    inability to generate significant market acceptance of our products.
     o    failure to obtain customers for our products.
     o    inability to manage our growth.
     o    loss of our key employees.
     o    changes in general economic and business conditions.
     o    inability to obtain third party reimbursement for use of our products.

                                       21
<PAGE>

     We have no obligation to release publicly the result of any revisions to
any of our "forward-looking statements" to reflect events or circumstances that
occur after the date of this Report or to reflect the occurrence of other
unanticipated events.

Item 2. Description of Property.

        All of our operations currently are conducted from our offices located
at Units M and K, 1025 Nine North Drive, Alpharetta, Georgia. We lease our
office space, which comprises approximately 4,000 square feet, on a
month-to-month basis for an aggregate monthly payment of $1,818.

        We intend to move our operations to Spring Valley, California if and
when cash resources become available. We are currently subleasing from Abel
Laboratories, Inc., an affiliate of Dr. David Long, our Chairman and Chief
Executive Officer and principal stockholder, approximately 5,000 square feet of
furnished and laboratory equipped space at 2737 Via Orange Way, Spring Valley,
California. Under the sublease arrangement, we are to pay Abel the same amount
of rent charged to Abel by the landlord of the premises, without any adjustment.
Abel signed a new two-year lease with effect from April 1, 2005, and Abel's
monthly rent for the first year is $5,056. The rent increases to $5,268 in the
second year. In 2004, we incurred rent expense of $59,580 under the Abel
sublease, including late charges imposed by the landlord. We believe that the
terms and conditions of this sublease are no less favorable to us than those
that would be available from an unaffiliated third party. We estimate the cost
of our move to California, including moving expenses and relocation costs of
employees, to be approximately $300,000. Although we have moved a portion of our
records relating to research and development activities to California, our
administrative and Regulatory and Quality Assurance functions are still carried
out in our Alpharetta, Georgia office.

Item 3. Legal Proceedings.

        We are not a party to any pending legal proceeding which is not routine
litigation incidental to our business or which involves a claim for damages
exceeding 10% of our current assets, nor are we aware of any proceeding
concerning us that a governmental authority may be contemplating.

Item 4. Submission of Matters to a Vote of Security Holders.

        No matter was submitted to a vote of our securities holders during the
fiscal quarter ended December 31, 2004.


                                     PART II

Item 5. Market for Common Equity, Related Stockholder Matters and Small Business
        Issuer Purchases of Equity Securities.

Market Information

        Our common stock, par value $.001 per share, traded, until February 9,
1999, on The Nasdaq National Market, at which time it was delisted as a result
of our continued failure to comply with certain listing requirements. Since that
date, and until July 21, 2000, our common stock was quoted on the OTC Bulletin
Board. Commencing July 24, 2000, our common stock has been listed in the "Pink
Sheets" published by The National Quotation Bureau, Inc.

        The following table sets forth the high and low per share daily closing
sales prices for our common stock as reported by NASDAQ's InfoQuote service for
the periods indicated.

Year ended December 31, 2003

First Quarter                                             $0.38         $0.25
Second Quarter                                             0.25          0.09
Third Quarter                                              0.20          0.07
Fourth Quarter                                             0.44          0.14

                                       22
<PAGE>

Year ended December 31, 2004
First Quarter                                              0.53          0.16
Second Quarter                                             0.28          0.20
Third Quarter                                              0.21          0.10
Fourth Quarter                                             0.44          0.14

Year ending December 31, 2005

First Quarter (through March 22, 2005)                     0.19          0.06

     On March 22, 2005, the closing sale price for our common stock was $0.08
per share, as reported by NASDAQ's InfoQuote service.

Holders

     As of April 6, 2005, there were 263 holders of record of our common stock,
including Cede & Co., who held 14,469,316 shares for an undisclosed number of
beneficial holders.

Dividends

        We have not declared or paid any dividends since our inception, and do
not intend to pay any cash dividends in the foreseeable future, although we have
not entered into any agreement which restricts our ability to pay dividends. We
currently anticipate that we will retain all earnings, if any, for use in the
operation and expansion of our business.

Recent Sale of Unregistered Securities

        Set forth below is certain information concerning all sales made by us
of our securities since January 1, 2004 which were not registered under the
Securities Act of 1933 and were not previously disclosed by us in our Quarterly
Reports on Form 10-QSB.

        In October, 2004, we engaged an investment broker and consultant to
obtain financing its operations while waiting for FDA approval by offering
shares of Common Stock offshore to non-U.S. citizens in accordance with the
provisions of Regulation S at a cost of 50% of the amount of gross capital
raised as fees. Under the agreement, the broker bears all the associated
marketing and operating costs, and is required to offer the shares at a price
per share of not less than $0.10. Under this arrangement, we received aggregate
gross proceeds of $123,400 against aggregate issuance of 1,224,000 shares of
Common Stock, at an aggregate discount of $38,425 over the market price on the
date of the sale during the period from October 29, 2004 to December 31, 2004.
Additionally, from January 1, 2005 to March 24, 2005, we have received aggregate
gross proceeds of $280,816 against aggregate issuance of approximately 2.8
million shares of Common Stock at $0.10 per share and 50% agent's fees of
$140,408.


Repurchases of Securities

        We did not engage in any repurchases of our securities during the fiscal
quarter ended December 31, 2004.

Item 6. Management's Discussion and Analysis or Plan of Operations.

        The following discussion and analysis should be read in conjunction with
our Financial Statements and Notes thereto appearing elsewhere in this document.

Overview

        As a development stage company, we have incurred net losses since
inception through December 31, 2004 of approximately $70 million. Our current
liabilities exceeded our current assets by approximately $6.4 million, and our

                                       23
<PAGE>

total liabilities exceeded our total assets by approximately $6.2 million. These
factors raise substantial doubt about our ability to continue our operations
without obtaining immediate funding.

        In 2001 and 2002, our major efforts were focused primarily in connection
with the actions necessary to seek FDA approval to market our device in the
United States, marketing our device in certain overseas markets, redesigning our
device, seeking to obtain funds for our future operating and capital needs and
administrative support to sustain our then current activities. Despite our
efforts during such period, we were unable to obtain adequate third party
funding to pursue our business goals or to cover our operating costs, and Dr.
David Long and certain of his affiliates funded our minimum operating expenses.

        In January 2003, Dr. David Long and certain of his affiliates advanced
$450,000 to cover certain minimum operating expenses and, during the first
quarter of 2003, we instituted a cost reduction program that included reducing
salaries of our six then current employees, reducing use of outside consultants,
reducing our marketing activities and arranging with our employees and one of
our consultants to accept options to acquire 514,227 of our common stock at
$0.33 per share as compensation for a portion of their services. In June 2003,
Dr. Long and certain of his affiliates deposited additional collateral with our
bank as a condition to our bank increasing its line of credit to us by $200,000,
which amount was then drawn down. During the second half of 2003, Dr. Long
advanced an additional $30,000 to us and we commenced a private placement to
raise $1 million.

        On December 4, 2003, we sold $300,000 of our securities in the first
tranche of the placement. The remaining tranches of $337,500, $250,000 and
$112,500 closed on December 29, 2003, January 21, 2004 and February 20, 2004,
respectively. $100,000 principal amount of our 12% promissory Notes and 500,000
shares of our common stock were issued for each $100,000 received and we issued
to the placement agent five-year warrants to purchase an aggregate of 500,000
shares of our common stock at a purchase price of $0.20 per share. The Notes
became due and payable on December 31, 2004. The Notes provide by their terms
that if the Notes are not paid by December 31, 2004 (i) we are obligated to
issue an additional 250,000 shares of common stock for each $100,000 principal
amount of notes, and (ii) the Notes thereafter bear interest at 1.5% per month.
Accordingly, we are now obligated to issue to the note-holders a total of
2,500,000 shares of our Common Stock. Until the Notes are repaid, the holders
have the right to participate in any offering by us of our equity securities
(including of convertible debt) by using the Notes (and accrued interest
thereon) to acquire the equity securities at a 25% discount from the offering
price (and if the offering is of convertible debt to acquire such debt at face
with the conversion feature at a 25% discount). In March 2004, we submitted our
application for 510(k) clearance to KEMA for review prior to formal submission
to the FDA. Kema subsequently recommended to the FDA that our diagnostic device
be approved. In November, 2004, we submitted our application for formal
submission to the FDA to approve our device.

        In December, 2004, the FDA notified us that it had reclassified by
statute the Biofield Diagnostic System into class III (Premarket Approval)
pursuant to Section 513(f) of the Federal Food, Drug and Cosmetic Act. As a
result of the FDA's reclassification, we must have an approved PMA absent any
subsequent reclassification, prior to legally marketing or distributing our
device. The basis of the FDA's decision was its determination that the device is
not "substantially equivalent to devices marketed in U.S. interstate commerce."
The FDA also informed the company that although a manufacturer whose device is
found to be not substantially equivalent to a predicate device can request the
FDA to make a risk-based classification for its device, the FDA believes that
"based on the review of your device, general controls would be inadequate and
special controls difficult to develop, to provide reasonable assurance of the
device's safety and effectiveness." On March 4, 2005 we were notified by the FDA
that it had reviewed our petition for reclassification and concluded that we
have not demonstrated that the device meets the criteria under section 513(a)(1)
of the Federal Food Drug and Cosmetic act (21 U.S.C. 360c(a)(1) for
classification into class I or II. Therefore the device is automatically
classified in class III requiring approval through a premarket approval (PMA)
process.

        Consequently, we may never obtain FDA approval for the Biofield
Diagnostic Device. In the event that we are unable to obtain such approval, we
will likely be compelled to cease operations.

        On May 3, 2004, we entered into another agreement (with the placement
agents who helped us secure $1 million in December 2003) to seek additional
short-term bridge financing of up to $800,000 on identical terms and conditions
as the December 2003 offering. Under the new agreement, we sold $100,000 of our
securities in the first tranche of the placement and further tranches of
$154,000 and $75,000 of our securities on July 1, 2004 and August 5, 2004,

                                       24
<PAGE>

respectively. The subscription for the placement was closed after sale of
$329,000 of our securities under this placement on August 30, 2004. The
registration statement for these securities and securities sold under the first
placement of $1 million were filed for registration on September 14, 2004 and
were declared effective by the Securities and Exchange Commission on September
30, 2004. The Notes are due and payable on the earlier of the date that we
receive gross proceeds aggregating at least $3.5 million from the sale of our
debt and equity securities (for which purpose, all such sales within a six month
period would be aggregated) or May 31, 2004. If the notes are not paid by the
due date (i) we are obligated to issue an additional 150,000 shares of common
stock for each $100,000 principal amount of notes, and (ii) the notes thereafter
bear interest at 1.5% per month. There is no assurance that we can obtain the
remaining financing on a timely basis, if at all, under this new agreement. On
September 8, 2004, we signed an agreement for $50,000 with the private placement
on similar terms and condition as the $329,000 placement and received aggregate
proceeds of $50,000, which was used to pay interest due on the notes issued in
the $1 million and $329,000 placements.

        In October, 2004, we engaged an investment broker and consultant to
obtain financing its operations while waiting for FDA approval by offering
shares of Common Stock offshore to non-U.S. citizens in accordance with the
provisions of Regulation S at a cost of 50% of the amount of gross capital
raised as fees. Under the agreement, the broker bears all the associated
marketing and operating costs, and is required to offer the shares at a price
per share of not less than $0.10. Under this arrangement, we received aggregate
gross proceeds of $123,400 against aggregate issuance of 1,224,000 shares of
Common Stock, at an aggregate discount of $38,425 over the market price on the
date of the sale during the period from October 29, 2004 to December 31, 2004.
Additionally, from January 1, 2005 to March 24, 2005, we have received aggregate
gross proceeds of $280,816 against aggregate issuance of approximately 2.8
million shares of Common Stock at $0.10 per share and 50% agent's fees of
$140,408.

        Our cash resources have completely depleted and survival of the Company
and continuation of its essential operations are dependent on securing immediate
cash to continue operations. We are unable to pay our employees back pay and for
other critical services. Our 510(k) application was reviewed and approved by
KEMA, the notified body, and it was submitted to the FDA. However, the FDA
response has not been positive, and the process may take longer than previously
anticipated. See detailed discussion under `Government Regulations' of Item 1.
In the interim our immediate cash needs for minimal operational activities is
critical, and continuation of the operations will depend on our ability to
immediately obtain such funds. There is no assurance that we can obtain such
financing on a timely basis, if at all.

Liquidity and Capital Resources

        We have financed our operations since inception almost entirely by the
issuance of our securities, interest income on the then unutilized proceeds from
these issuances and with loans made directly, or guaranteed and collateralized,
by Dr. David Long and certain of his affiliates.

        At December 31, 2004, we had a working capital deficiency of $6,415,735,
an increase of $2,591,267 from December 31, 2003. Our cash and cash equivalents
were $33,142 at December 31, 2004, as compared to $369,332 at December 31, 2003.
The 2003 cash balance was higher was due to the receipt of $337,500 cash
proceeds from that portion of our private placement which closed in December
2003.

        At December 31, 2004, we had no value on the balance sheet for the
inventory as we decided to make full provision for all the items in our
inventory. At December 31, 2003, we had inventory of $81,480.

        During 2004, our operating activities utilized $1,304,073 of net cash,
our investing activities used $5,284 and our financing activities provided
$973,167 of net cash, $654,563 (net of $86,937 of expenses) of which represented
net cash proceeds from the $1 million and $329,000 private placements, advances
aggregating $253,698 from Dr. David Long and certain of his affiliates, and
$64,906 (net of commission and discount of $96,919) representing the net cash
proceeds received from sale of shares of our common stock. During 2003, our
operating activities utilized $845,180 of net cash and our financing activities
provided $1,213,099 of net cash, $200,000 of which represented a draw-down of
our bank line of credit (which has been guaranteed and collateralized by Dr.
David Long and certain of his affiliates), advances aggregating $505,406 from
Dr. David Long and certain of his affiliates, and $507,693 (net of $129,807 of
expenses) representing the net cash proceeds received in December 2003 from the
first two tranches of our $1 million private placement.

                                       25
<PAGE>

        In June 2000, we obtained a $500,000 line of credit from a bank,
repayment of which has been guaranteed and collateralized by an affiliate of Dr.
David Long. The line of credit was increased in November 2001 to $750,000, in
January 2002 to $1 million, and in December 2003 to $1.2 million The line of
credit has been fully drawn-down and is due to expire, unless extended, on
December 2, 2005.

        Since 2001, we have been seeking additional third-party funding. During
such time, we have retained a number of different investment banking firms to
assist us in locating available funding; however, we have not yet been
successful in obtaining any of the long-term funding needed to make us into a
commercially viable entity. During such period, Dr. David Long and certain of
his affiliates have made funding available to us to permit us to maintain
certain minimum operations; however, in 2003 Dr. Long advised us that we should
not expect that he or his affiliates will make any further funds available to
us. During the period from December 2003 to February 2004, we were able to
obtain short-term financing of $1 million from a private placement (which
resulted in net proceeds to us of $811,778, prior to any allocation for the cost
of our required registration of the shares of common stock issued in the
placement). On May 3, 2004, we signed an agreement with our placement agent to
secure bridge financing up to $800,000, and we secured $329,000 under this
placement. On September 8, 2004, we signed a note in favor of our private
placement for $50,000 under the same terms and conditions as the $329,000
private placement. Most of the proceeds from this note were set aside to pay for
interest due on notes issued under the $1 million and $329,000 private
placements. On April 30, 2005, we defaulted on the payment of interest due on
the foregoing indebtedness. Although we have filed our 510(k) application to the
FDA and are continuing with our efforts to obtain funding to maintain our
operations, we cannot assure you that we will be successful or that any funding
we receive will be received timely or on commercially reasonable terms. Due to
our working capital deficiency, and if we do not receive adequate and timely
financing, we may be forced to cease our operations. Under such circumstances,
we will be unable to pay our vendors, lenders and other creditors since the net
realizable value of our non-current assets will not generate adequate cash.

        Until such time, if at all, as we receive adequate funding, we have no
option but to continue to defer payment of all of our obligations which are
capable of being deferred, which actions have resulted in some vendors demanding
cash payment for their goods and services in advance, and other vendors refusing
to continue to do business with us. In the event that we are successful in
obtaining third-party funding, we do not expect to generate a positive cash flow
from our operations for at least several years, if at all, due to anticipated
expenditures for research and development activities, administrative and
marketing activities, and working capital requirements and expect to continue to
attempt to raise further capital through one or more further private placements.

Results of Operations

Comparison of the Year Ended December 31, 2004 with the Year Ended December 31,
2003

        We sold one device and sensors to a distributor overseas for $10,550; we
did not sell any of our products in 2003. In 2003, as we did not sell any
products, we did not incur any cost of sales.

        In 2004, we did not have any cost of sales as full provision was made
for the items sold. Also, in 2004, we wrote down in full our then remaining
inventory by making an additional provision of $81,480; no similar write-down
occurred in 2003.

        Research and development expenses include the costs of engineering,
manufacturing and related activities conducted in connection with obtaining
required governmental and regulatory approvals for our device, expenses related
to the adoption of new technology and costs incurred in connection with the
redesign of our device. We did incur any research and development expenses in
2004; in 2003, we spent $41,425 for research and development. Our redesign
project was completed and no new research was started due to lack of funds.

        Selling, general and administrative expenses increased by $1,688,146, or
98%, to $3,410,214 in 2004 from $1,722,068 in 2003. The increase was largely
attributable to the following cost related to issuance of financial instruments
to secure new funding:

                                       26
<PAGE>

        The major savings were made in the costs related to personnel (employees
and consultants) which were lower by approximately $146,000, professional fees
were reduced by $169,000, and payments to investment advisors was down by
$112,000 in 2004 compared to 2003. These savings in expenditure partly offset
the increase of $2.1 million in cost related to issuing of financial instruments
for new funding.

        As a result of our total operating expenses increased $1,646,721, or
93%, from $1,763,493 in 2003 to $3,410,214 in 2004.

        We had net interest expense of $365,373 in 2004, compared to $455,822 in
2003, a decrease of $90,449, or 20%, due to accrual of interest ($192,243)
payable to employees on deferred remuneration due in 2003, partly off set by
additional interest on increased borrowings in 2004.

        We did not earn any royalty income in 2004 ads the royalty agreement
expired in 2004; in 2003, royalty income was $54,617.

        As a result of the foregoing, we incurred a net loss of $3,846,517 in
2004, compared to a net loss of $2,164,698 in 2003, an increase of $1,681,819,
or 78%.

        While we have raised capital to meet our working capital and financing
needs in the past, additional financing is required in order to meet our current
and projected cash flow deficits from operations and development. We are seeking
financing in the form of equity in order to provide the necessary working
capital. We currently have no commitments for financing. There is no guarantee
that we will be successful in raising the funds required.

        By adjusting its operations and development to the level of
capitalization , management believes it has suffucient capital resources to meet
projected cash flow deficits through the next twelve months . However, if
thereafter, we are not successful in generating sufficient liquidity from
operations or in raising sufficient capital resources, on terms acceptable to
us, this could have a material adverse effect on our business, results of
operations, liquidity and financial condition.

        The independent auditors report on our December 31, 2004 financial
statements states that our recurring losses raise substantial doubts about our
ability to continue as a going concern.

Product Research and Development

        We do not anticipate incurring material research and development
expenditures during the next 12 months.

Acquisition or Disposition of Plant and Equipment

        We do not anticipate the sale of any significant property, plant or
equipment during the 12 months. We do not anticipate the acquisition of any
significant property, plant or equipment during the next 12 months.

Number of Employees

        From our inception through the period ended December 31, 2004, we have
relied on the services of outside consultants for services and currently have
two (2) full time employees. In order for us to attract and retain quality
personnel, we anticipate we will have to offer competitive salaries to future
employees. We do not anticipate our employment base will significantly change
during the next 12 months. As we continue to expand, we will incur additional
cost for personnel. This projected increase in personnel is dependent upon our
generating revenues and obtaining sources of financing. There is no guarantee
that we will be successful in raising the funds required or generating revenues
sufficient to fund the projected increase in the number of employees.

Off-Balance Sheet Arrangements

        The Company does not maintain off-balance sheet arrangements nor does it
participate in non-exchange traded contracts requiring fair value accounting
treatment.

                                       27
<PAGE>

Application of Critical Accounting Policies

Impairment of long-lived assets

        At December 31, 2004, we had $211,108 of capitalized patent costs. In
assessing the recoverability of our patents, we have made assumptions regarding
estimated future cash flows and other factors relating to the use of our patents
to determine the fair value of the respective assets. If our estimates or their
related assumptions change in the future, we may be required to record
additional charges for these assets not previously recorded. For the year ended
December 31, 2004, we had patent amortization expense of $37,600. In 2003,
amortization expense for capitalized patent costs was $37,600. Subsequent
impairment losses, if any, will be reflected in operating income in our
statement of operations.

Valuation of deferred tax assets

        In assessing the realizability of deferred tax assets, we have
considered whether it is more likely than not that some portion, or all, of
deferred tax assets will be realized. The ultimate realization of deferred tax
assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible. At December 31,
2004 and 2003, we have made full provision for our deferred tax assets due to
our continued operating losses and inability to assess the likelihood of
generating sufficient future taxable income to realize such benefits.
Substantially all of our net operating loss carryforwards are subject to
limitation and may expire unutilized.

Inventory valuation reserves

        We provide for inventory obsolescence based upon assumptions concerning
future demand, market conditions and anticipated timing of the release of next
generation products. If actual market conditions or future demand are less
favorable than those projected by management, or if next generation products are
released earlier than anticipated, additional inventory write-downs may be
required. Due to our decision to introduce a new device with updated technology
and major design modifications in 2003 (which is now projected to occur in 2005,
subject to receipt of adequate financing to enable us to complete the project),
we created a reserve for our inventory of old devices amounting to $179,916 in
2001 and increased this reserve by $352,154 in 2002 to fully provide for the old
units and all the sensors for these units. In 2004, we increased the reserve by
$81,480 to fully provide for all the inventory items. Additionally, we wrote off
obsolete and scrapped inventory totaling $41,364 in 2002.

Stock-Based Compensation

        We apply the intrinsic value-based method of accounting prescribed by
Accounting Principles Board Opinion 25, "Accounting for Stock Issued to
Employees", and related interpretations, in accounting for our stock option
plans. As such, compensation expense is recorded on the date of grant of an
employee stock option only if the then current market price of the underlying
stock exceeds the exercise price. Statement of Financial Accounting Standards
(SFAS) No. 123, "Accounting for Stock-Based Compensation", established
accounting and disclosure requirements using a fair value-based method of
accounting for stock-based employee compensation plans. As allowed by SFAS
No.123, we have elected to continue to apply the intrinsic value-based method of
accounting described above, and have adopted the disclosure requirements of SFAS
No. 123. We also have adopted the annual disclosure provisions of SFAS No. 148,
"Accounting for Stock-Based Compensation - Transition and Disclosure - an
Amendment of SFAS 123" in our financial reports for the year ended December 31,
2003 and for the subsequent periods.

Audit Committee and Financial Expert

        Our Board of Directors has not had an Audit Committee since the
resignation of our two independent directors in December 2002, and we have not
had the available financial resources to obtain any replacement. None of our
current directors would be considered to have the experience to be considered to
be an audit committee financial expert.

                                       28
<PAGE>

Non-GAAP Financial Measures

        The financial statements appearing in this annual report on Form 10-KSB
do not contain any financial measures which are not in accordance with generally
accepted accounting procedures.

New Accounting Pronouncements

        In November 2004, the Financial Accounting Standards Board (FASB) issued
SFAS 151, Inventory Costs- an amendment of ARB No. 43, Chapter 4. This Statement
amends the guidance in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify
the accounting for abnormal amounts of idle facility expense, freight, handling
costs, and wasted material (spoilage). Paragraph 5 of ARB 43, Chapter 4,
previously stated that "under some circumstances, items such as idle facility
expense, excessive spoilage, double freight, and rehandling costs may be so
abnormal as to require treatment as current period charges" This Statement
requires that those items be recognized as current-period charges regardless of
whether they meet the criterion of "so abnormal." In addition, this Statement
requires that allocation of fixed production overheads to the costs of
conversion be based on the normal capacity of the production facilities. This
Statement is effective for inventory costs incurred during fiscal years
beginning after June 15, 2005. Management does not believe the adoption of this
Statement will have any immediate material impact on the Company.

        In December 2004, the FASB issued SFAS No.152, "Accounting for Real
Estate Time-Sharing Transactions-an amendment of FASB Statements No. 66 and 67"
("SFAS 152) The amendments made by Statement 152 This Statement amends FASB
Statement No. 66, Accounting for Sales of Real Estate, to reference the
financial accounting and reporting guidance for real estate time-sharing
transactions that is provided in AICPA Statement of Position (SOP) 04-2,
Accounting for Real Estate Time-Sharing Transactions. This Statement also amends
FASB Statement No. 67, Accounting for Costs and Initial Rental Operations of
Real Estate Projects, to state that the guidance for (a) incidental operations
and (b) costs incurred to sell real estate projects does not apply to real
estate time-sharing transactions. The accounting for those operations and costs
is subject to the guidance in SOP 04-2. This Statement is effective for
financial statements for fiscal years beginning after June 15, 2005. with
earlier application encouraged. The Company does not anticipate that the
implementation of this standard will have a material impact on its financial
position, results of operations or cash flows.

        In December 2004, the FASB issued SFAS No. 123 (revised) ("SFAS No.
123R"), "Share-Based Payment." SFAS No. 123R eliminates the intrinsic value
method under APB 25, "Accounting for Stock Issued to Employees" as an
alternative method of accounting for stock-based awards. SFAS No. 123R also
revises the fair value-based method of accounting for share-based payment
liabilities, forfeitures and modifications of stock-based awards and clarifies
SFAS No. 123's guidance in several areas, including measuring fair value,
classifying an award as equity or as a liability and attributing compensation
cost to reporting periods. In addition, SFAS No. 123R amends SFAS No. 95,
"Statement of Cash Flows," to require that excess tax benefits be reported as a
financing cash inflow rather than as a reduction of taxes paid, which is
included within operating cash flows. The Company is required to adopt SFAS No.
123R for the interim period beginning July 1, 2005 using a modified version of
prospective application or may elect to apply a modified version of
retrospective application. The Company currently accounts for its stock-based
awards under the intrinsic value approach in accordance with APB Opinion No. 25
and discloses the effect of stock-based awards as required by SFAS No. 148,
"Accounting for Stock-Based Compensation -- Transition and Disclosure" (see Note
1 and Note 2 to the consolidated financial statements). The adoption of the new
standard would require the Company to recognize compensation expense for
equity-based awards. This will have the effect of reducing the Company's net
income by the fair value of the options in future years, beginning in 2005. We
are not in a position to know the effects of adoption of the new standard at
this time.

        On December 16, 2004, FASB issued Statement of Financial Accounting
Standards No. 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion
No. 29, Accounting for Nonmonetary Transactions (" SFAS 153"). This statement
amends APB Opinion 29 to eliminate the exception for nonmonetary exchanges of
similar productive assets and replaces it with a general exception for exchanges
of nonmonetary assets that do not have commercial substance. Under SFAS 153, if
a nonmonetary exchange of similar productive assets meets a commercial-substance
criterion and fair value is determinable, the transaction must be accounted for
at fair value resulting in recognition of any gain or loss. SFAS 153 is
effective for nonmonetary transactions in fiscal periods that begin after June
15, 2005. The Company does not anticipate that the implementation of this
standard will have a material impact on its financial position, results of
operations or cash flows.

Item 7. Financial Statements.

Table of Contents                                                  Page

Independent Auditors' Report                                     F1

Consolidated Balance Sheets                                      F2

Consolidated Statements of Losses                                F3

Consolidated Statements of Stockholders' Equity (Deficit)        F4-F7

Consolidated Statements of Cash Flows                            F8-F9

Notes to Consolidated Financial Statements                       F10-F33

                                       29
<PAGE>

BIOFIELD CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

                    RUSSELL BEDFORD STEFANOU MIRCHANDANI LLP
                          CERTIFIED PUBLIC ACCOUNTANTS

        REPORT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM
        -----------------------------------------------------------------


Board of Directors and Shareholders
Biofield Corp.

Alpharetta, Georgia

         We have audited the accompanying consolidated balance sheets of
Biofield Corp. (a development stage company) (the "Company") as of December 31,
2004 and 2003 and the related consolidated statements of losses, deficiency in
stockholders' equity, and cash flows for the two years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. The financial statements of the Company, as of the year ended
December 31, 2002 and for the period October 16, 1987 (date of inception)
through December 31, 2002, were audited by other auditors whose report dated
March 28, 2003, expressed an unqualified opinion on those statements, which
included an explanatory paragraph that described the uncertainty regarding the
Company's ability to continue as a going concern.

         We have conducted our audits in accordance with the standards of the
Public Accounting Oversight Board (United States of America). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe our audit
provides a reasonable basis for our opinion.

         In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
the Company at December 31, 2004 and 2003 and the consolidated results of its
operations and its cash flows for the two years then ended in conformity with
accounting principles generally accepted in the United States of America.

         The accompanying consolidated financial statements for the two years
ended December 31, 2004 have been prepared assuming that the Company will
continue as a going concern. As shown in the financial statements, the Company
has incurred net losses since its inception. This raises substantial doubt about
the Company's ability to continue as a going concern. Management's plans in
regard to this matter are described in Note 1. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.



                                    /s/ RUSSELL BEDFORD STEFANOU MIRCHANDANI LLP
                                    --------------------------------------------
                                    Russell Bedford Stefanou Mirchandani LLP
                                    Certified Public Accountants


New York, New York
April 15, 2005

                                      F-1
<PAGE>

BIOFIELD CORP.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                    December 31,
                                                            ----------------------------
ASSETS                                                          2004           2003
<S>                                                         <C>             <C>
CURRENT ASSETS:
  Cash and cash equivalents                                 $     33,142    $    369,332
  Inventories                                                         --          81,480
  Other current assets                                           330,075         896,540
                                                            ------------    ------------
      Total current assets                                       363,217       1,347,352

      Property and Equipment - Net                                 5,676           8,131
      Other Assets                                                22,753          22,753
      Patent and Patent Application - Net                        211,108         248,701
                                                            ------------    ------------
                                                            $    602,754    $  1,626,937
                                                            ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
  Accounts payable                                          $  1,082,335    $    925,875
  Accrued liabilities                                            485,313         605,999
  Due to affiliate                                               272,499         198,281
  Bank line of credit                                          1,200,000       1,200,000
  Short-term notes payable                                     1,379,000         637,500
  Long-term debt - short-term portion                            552,136              --
  Advances from stockholder                                    1,807,669       1,604,165
                                                            ------------    ------------
      Total current liabilities                                6,778,952       5,171,820


  Long-term debt - related party                                      --         501,942

COMMITMENT AND CONTINGENCIES (Note 13)

STOCKHOLDERS' EQUITY (DEFICIT):
  Preferred Stock, $.001 par value; authorized
    12,300,000 undesignated shares;
    no shares issued or outstanding
  Common Stock, $.001 par value; authorized 40,000,000
    shares; issued 36,505,103 and 31,573,603 shares at
    December 31, 2004 and December 31, 2003, respectively         36,506          31,574
  Treasury stock - 2,306,131 shares                               (3,100)         (3,100)
  Additional paid-in capital                                  63,879,532      62,167,320
  Accumulated deficit during development stage               (70,089,136)    (66,242,619)
                                                            ------------    ------------
    Total stockholders' equity (deficit)                      (6,176,198)     (4,046,825)
                                                            ------------    ------------
                                                            $    602,754    $  1,626,937
                                                            ============    ============
</TABLE>

See notes to consolidated financial statements.

                                      F-2
<PAGE>

BIOFIELD CORP.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF LOSSES
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                       Year Ended                Period October 16, 1987
                                                      December 31,                 (Date of Inception)
                                               ----------------------------              Through
                                                   2004            2003             December 31, 2004
                                                                                    -----------------
<S>                                            <C>             <C>                  <C>
REVENUE                                        $     10,550    $         --         $        135,132

COST OF SALES
  Cost of goods sold                                     --              --                   75,447
  Loss on write down of inventory                    81,480              --                  693,500
                                               ------------    ------------         ----------------
GROSS PROFIT                                        (70,930)             --                 (633,815)

OPERATING EXPENSES:
  Research and development                               --          41,425               40,481,889
  Selling, general, and administrative            3,410,214       1,722,068               30,215,459
  (Gain) loss on disposition of fixed assets             --              --                   (8,084)
                                               ------------    ------------         ----------------
      Total operating expenses                    3,410,214       1,763,493               70,689,264


OTHER INCOME (EXPENSE):
  Interest income                                        --              --                2,476,723
  Interest expense                                 (365,373)       (455,822)              (1,352,876)
  Royalty income                                         --          54,617                  129,845
                                               ------------    ------------         ----------------
      Net (expense) other income                   (365,373)       (401,205)               1,253,692
                                               ------------    ------------         ----------------

LOSS BEFORE INCOME TAXES                         (3,846,517)     (2,164,698)             (70,069,387)

PROVISION FOR INCOME TAXES                               --              --                  (19,749)
                                               ------------    ------------         ----------------

NET LOSS                                       $ (3,846,517)   $ (2,164,698)        $    (70,089,136)
                                               ============    ============         ================

NET LOSS PER SHARE:
     Basic and Diluted                         $      (0.12)   $      (0.08)
                                               ============    ============

WEIGHTED-AVERAGE SHARES
     Basic and Diluted                           31,808,052      25,890,366
                                               ============    ============
</TABLE>

See notes to consolidated financial statements.

                                      F-3
<PAGE>

<TABLE>
<CAPTION>
BIOFIELD CORP.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Deficit)
-----------------------------------------------------------------------------------------------------------------------------------

                                                                Series A          Series B          Series C
                                                            Preferred Stock   Preferred Stock   Preferred Stock     Common Stock
                                                            ----------------  ----------------  ---------------  ------------------
                                                             Shares  Amount   Shares   Amount    Shares  Amount   Shares    Amount
<S>                                                         <C>     <C>       <C>     <C>       <C>     <C>       <C>       <C>
Sale of Common Stock, October 16, 1987
  (date of inception) ($.16 per share, net)                                                                        549,020  $    55
Issuance of Common Stock in connection with
  patent acquisition ($.001 per share)                                                                             235,294       24
Net loss, October 16, 1987 to March 31, 1988
Total comprehensive income (loss)
                                                          ---------  -------  -------  -------  -------  ------  ---------  -------
BALANCE AT MARCH 31, 1988                                         -        -        -        -        -       -    784,314       79
Net loss
Total comprehensive income (loss)
                                                          ---------  -------  -------  -------  -------  ------  ---------  -------
BALANCE AT MARCH 31, 1989                                         -        -        -        -        -       -    784,314       79
Net loss
Total comprehensive income (loss)
                                                          ---------  -------  -------  -------  -------  ------  ---------  -------
BALANCE AT MARCH 31, 1990                                         -        -        -        -        -       -    784,314       79
Acquisition of 235,294 shares of Common Stock
  ($.001 per share)
Net loss
Total comprehensive income (loss)
                                                          ---------  -------  -------  -------  -------  ------  ---------  -------
BALANCE AT MARCH 31, 1991                                         -        -        -        -        -       -    784,314       79
Retirement of Common Stock held in treasury                                                                       (235,294)     (24)
Issuance of Common Stock in exchange for notes
  and debt (with accrued interest) ($2.90 per share, net)                                                          431,372       43
Sale of Common Stock ($.82 per share, net)                                                                          24,510        2
Amortization of deferred compensation
Net loss
Total comprehensive income (loss)
                                                          ---------  -------  -------  -------  -------  ------  ---------  -------
BALANCE AT MARCH 31, 1992                                         -        -        -        -        -       -  1,004,902      100
Sale of Common Stock ($7.67 per share, net)                                                                        557,475       55
Exercise of Common Stock options                                                                                     2,451        1
Amortization of deferred compensation
Change in par value of common stock
  from $.0001 to $.001                                                                                                        1,408
Net loss
Total comprehensive income (loss)
                                                          ---------  -------  -------  -------  -------  ------  ---------  -------
BALANCE AT MARCH 31, 1993                                         -        -        -        -        -       -  1,564,828  $ 1,564
  (carried forward)                                       =========  =======  =======  =======  =======  ======  =========  =======
</TABLE>

<TABLE>
<CAPTION>
BIOFIELD CORP.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Deficit)
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                   Deficit
                                                                                 Accumulated    Foreign
                                                           Additional               During      Currency                 Total
                                                            Paid-In    Treasury  Development  Translation            Comprehensive
                                                            Capital     Stock       Stage      Adjustment    Total       Loss
                                                          -----------  -------- ------------- ----------- ----------- -------------
<S>                                                       <C>          <C>      <C>           <C>         <C>          <C>
Sale of Common Stock, October 16, 1987
  (date of inception) ($.16 per share, net)               $    91,898                                     $   91,953
Issuance of Common Stock in connection with patent
  acquisition ($.001 per share)                                   276                                            300
Net loss, October 16, 1987 to March 31, 1988                                   $   (159,359)                (159,359)
Total comprehensive income (loss)                                                                                      $  (159,359)
                                                          -----------  ------   -----------    --------   ----------   ===========
BALANCE AT MARCH 31, 1988                                      92,174       -      (159,359)          -      (67,106)
Net loss                                                                           (495,520)                (495,520)
Total comprehensive income (loss)                                                                                      $  (495,520)
                                                          -----------  ------   -----------    --------   ----------   ===========
BALANCE AT MARCH 31, 1989                                      92,174       -      (654,879)          -     (562,626)
Net loss                                                                           (233,347)                (233,347)
Total comprehensive income (loss)                                                                                      $  (233,347)
                                                          ----------   ------   -----------    --------   ----------   ===========
BALANCE AT MARCH 31, 1990                                      92,174       -      (888,226)          -     (795,973)
Acquisition of 235,294 shares of Common Stock
  ($.001 per share)                                                    $ (300)                                  (300)
Net loss                                                                           (285,179)                (285,179)
Total comprehensive income (loss)                                                                                      $  (285,179)
                                                          -----------  ------   -----------    --------   ----------   ===========
BALANCE AT MARCH 31, 1991                                      92,174    (300)   (1,173,405)          -   (1,081,452)
Retirement of Common Stock held in treasury                      (276)    300
Issuance of Common Stock in exchange for notes
  and debt (with accrued interest) ($2.90 per share, net)   1,248,638                                      1,248,681
Sale of Common Stock ($.82 per share, net)                     19,998                                         20,000
Amortization of deferred compensation                         136,880                                        136,880
Net loss                                                                           (461,061)                (461,061)
Total comprehensive income (loss)                                                                                      $  (461,061)
                                                          -----------  ------   -----------    --------   ----------   ===========
BALANCE AT MARCH 31, 1992                                   1,497,414       -    (1,634,466)          -     (136,952)
Sale of Common Stock  ($7.67 per share, net)                4,275,223                                      4,275,278
Exercise of Common Stock options                                  624                                            625
Amortization of deferred compensation                         477,453                                        477,453
Change in par value of common stock
  from $.0001 to $.001                                         (1,408)
Net loss                                                                         (3,099,637)              (3,099,637)
Total comprehensive income (loss)                                                                                      $(3,099,637)
                                                          -----------  ------   -----------    --------   ----------   ===========
BALANCE AT MARCH 31, 1993                                 $ 6,249,306       -    (4,734,103)          -    1,516,767
  (carried forward)                                       ===========  ======   ===========    ========   ==========
</TABLE>
See notes to consolidated financial statements.                      (Continued)

                                       F-4
<PAGE>
<TABLE>
<CAPTION>

BIOFIELD CORP.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Deficit)
-----------------------------------------------------------------------------------------------------------------------------------

                                                           Series A            Series B         Series C
                                                       Preferred Stock     Preferred Stock   Preferred Stock     Common Stock
                                                       ------------------  ----------------  ---------------  ------------------
                                                        Shares  Amount      Shares   Amount   Shares  Amount   Shares    Amount
<S>                                                    <C>     <C>          <C>     <C>       <C>     <C>       <C>       <C>

BALANCE AT MARCH 31, 1993                                       -       -         -      -          -        -   1,564,828 $ 1,564
  (brought forward)
Exercise of Common Stock options                                                                                       735       1
Sale of Series A Preferred Stock
  ($3.97 per share, net)                                2,119,896 $ 2,120
Issuance of Series A Preferred Stock in
  exchange for notes ($4.50 per share)                    222,222     222
Issuance of Common Stock warrants
Amortization of deferred compensation
Net loss
Total comprehensive income (loss)
                                                       ----------  ------  --------  -----  ----------  ------  ---------- -------

BALANCE AT MARCH 31, 1994                               2,342,118   2,342         -      -           -       -   1,565,563   1,565
Sale of Series B Preferred Stock
  ($4.04 per share, net)                                                    481,644    482
Issuance of Common Stock warrants
Amortization of deferred compensation
Net loss
Total comprehensive income (loss)
                                                       ----------  ------  --------  -----  ----------  ------  ---------- -------
BALANCE AT DECEMBER 31, 1994                            2,342,118   2,342   481,644    482           -       -   1,565,563   1,565
Sale of Series C Preferred Stock
  ($4.11 per share, net)                                                                     2,914,771   2,915
Issuance of Common Stock warrants
Amortization of deferred compensation
Net loss
Total comprehensive income (loss)
                                                       ----------  ------  --------  -----  ----------  ------  ---------- -------
BALANCE AT DECEMBER 31, 1995                            2,342,118   2,342   481,644    482   2,914,771   2,915   1,565,563   1,565
Sale of Common Stock  ($9.91/share)                                                                              1,819,000   1,819
Conversion of Series A, B, and C
  Preferred Stock to Common Stock                      (2,342,118) (2,342) (481,644)  (482) (2,914,771) (2,915)  3,046,474   3,047
Exercise of Common Stock warrants                                                                                    2,058       2
Amortization of deferred compensation
Net loss
Total comprehensive income (loss)
                                                       ----------  ------  --------  -----  ----------  ------  ---------- -------
BALANCE AT DECEMBER 31, 1996                                    -       -         -      -           -       -   6,433,095   6,433
  (carried forward)                                    ==========  ======  ========  =====  ==========  ======  ========== =======
</TABLE>

<TABLE>
<CAPTION>
BIOFIELD CORP.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Deficit)
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                 Deficit
                                                                               Accumulated    Foreign
                                                         Additional               During      Currency                 Total
                                                          Paid-In    Treasury  Development  Translation            Comprehensive
                                                          Capital     Stock       Stage      Adjustment    Total       Loss
                                                        -----------  --------  ------------   --------  ----------- -------------
<S>                                                     <C>          <C>      <C>           <C>         <C>          <C>
BALANCE AT MARCH 31, 1993                               $ 6,249,306         -    (4,734,103)         -     1,516,767
  (brought forward)
Exercise of Common Stock options                                187                                              188
Sale of Series A Preferred Stock
  ($3.97 per share, net)                                  8,411,370                                        8,413,490
Issuance of Series A Preferred Stock in
  exchange for notes ($4.50 per share)                      999,778                                        1,000,000
Issuance of Common Stock warrants                             2,119                                            2,119
Amortization of deferred compensation                     1,580,320                                        1,580,320
Net loss                                                                         (6,899,515)              (6,899,515)
Total comprehensive income (loss)                                                                                      $(6,899,515)
                                                        -----------   -------  ------------   --------    ----------   ===========
BALANCE AT MARCH 31, 1994                                17,243,080         -   (11,633,618)         -    5,613,369
Sale of Series B Preferred Stock
  ($4.04 per share, net)                                  1,947,149                                       1,947,631
Issuance of Common Stock warrants                                 6                                               6
Amortization of deferred compensation                        14,859                                          14,859
Net loss                                                                         (4,959,312)             (4,959,312)
Total comprehensive income (loss)                                                                                    $ (4,959,312)
                                                       ------------   -------  ------------   --------  -----------  ============
BALANCE AT DECEMBER 31, 1994                             19,205,094         -   (16,592,930)         -    2,616,553
Sale of Series C Preferred Stock
  ($4.11 per share, net)                                 11,977,856                                      11,980,771
Issuance of Common Stock warrants                               161                                             161
Amortization of deferred compensation                       195,874                                         195,874
Net loss                                                                         (8,739,858)             (8,739,858)
Total comprehensive income (loss)                                                                                    $ (8,739,858)
                                                       ------------   -------  ------------   --------  -----------  ============
BALANCE AT DECEMBER 31, 1995                             31,378,985         -   (25,332,788)         -    6,053,501
Sale of Common Stock  ($9.91/share)                      18,026,419                                      18,028,238
Conversion of Series A, B, and C
  Preferred Stock to Common Stock                             2,692
Exercise of Common Stock warrants                            20,145                                          20,147
Amortization of deferred compensation                        26,093                                          26,093
Net loss                                                                        (10,036,090)            (10,036,090)
Total comprehensive income (loss)                                                                                    $(10,036,090)
                                                       ------------   -------  ------------   --------  -----------  ============
BALANCE AT DECEMBER 31, 1996                             49,454,334         -   (35,368,878)         -   14,091,889
  (carried forward)                                    ============   =======  ============   ========  ===========
</TABLE>
                                                                     (Continued)
                                       F-5
<PAGE>
<TABLE>
<CAPTION>

BIOFIELD CORP.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Deficit)
-----------------------------------------------------------------------------------------------------------------------------------
                                                             Series A          Series B          Series C
                                                         Preferred Stock   Preferred Stock   Preferred Stock       Common Stock
                                                       ------------------  ---------------- ------------------  ------------------
                                                          Shares  Amount   Shares   Amount    Shares  Amount     Shares    Amount
<S>                                                      <C>     <C>       <C>     <C>       <C>     <C>       <C>       <C>
BALANCE AT DECEMBER 31, 1996                                    -       -         -      -           -       -   6,433,095   6,433
  (brought forward)
Sale of Common Stock ($2.92 per share, net)                                                                      2,867,670   2,868
Warrants exchanged for Common Stock                                                                                643,639     644
Exercise of Common Stock options                                                                                    50,674      50
Exercise of Common Stock warrants                                                                                    9,531      10
Issuance of Common Stock for consulting                                                                             25,000      25
  services ($4.00 per share, net)
Amortization of deferred compensation
Net loss
Foreign currency translation adjustment
Total comprehensive income (loss)
                                                       ----------  ------  --------  -----  ----------  ------  ---------- -------
BALANCE AT DECEMBER 31, 1997                                    -       -         -      -           -       -  10,029,609  10,030
Repurchase of Common Stock
 for treasury (2,246,131 shares)
Net loss
Foreign currency translation adjustment
Total comprehensive income (loss)
                                                       ----------  ------  --------  -----  ----------  ------  ---------- -------
BALANCE AT DECEMBER 31, 1998                                    -       -         -      -           -       -  10,029,609  10,030
Sale of Common Stock ($.05 per share, net)                                                                      14,000,000  14,000
Net loss
Foreign currency translation adjustment
Total comprehensive income (loss)
                                                       ----------  ------  --------  -----  ----------  ------  ---------- -------
BALANCE AT DECEMBER 31, 1999                                    -       -         -      -           -       -  24,029,609  24,030
Issuance of right to purchase Common Stock
  in lieu of compensation ($0.45 per share)
Sale of common stock ($0.05 per share)                                                                             500,000     500
Sale of common stock ($0.50 per share)                                                                           3,000,000   3,000
Memorandum entry to record as expense for
  honorary services rendered by a shareholder
Repurchase of Common Stock
 for treasury (60,000 shares)
Net loss
Foreign currency translation adjustment
Total comprehensive income (loss)
                                                       ----------  ------  --------  -----  ----------  ------  ---------- -------
BALANCE AT DECEMBER 31, 2000                                    -       -         -      -           -       -  27,529,609 $27,530
  (carried forward)                                    ==========  ======  ========  =====  ==========  ======  ========== =======
</TABLE>

<TABLE>
<CAPTION>
BIOFIELD CORP.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Deficit)
-----------------------------------------------------------------------------------------------------------------------------------

                                                                                  Deficit
                                                                                Accumulated   Foreign
                                                        Additional                 During     Currency                  Total
                                                         Paid-In     Treasury   Development  Translation            Comprehensive
                                                         Capital       Stock       Stage      Adjustment    Total        Loss
                                                       ------------ ---------- ------------- ----------- ---------- -------------
<S>                                                    <C>          <C>        <C>           <C>        <C>         <C>
BALANCE AT DECEMBER 31, 1996                             49,454,334         -   (35,368,878)         -   14,091,889
  (brought forward)
Sale of Common Stock ($2.92 per share, net)               8,377,583                                       8,380,451
Warrants exchanged for Common Stock                            (644)
Exercise of Common Stock options                            168,541                                         168,591
Exercise of Common Stock warrants                            93,299                                          93,309
Issuance of Common Stock for consulting                      99,975                                         100,000
  services ($4.00 per share, net)                            62,579                                          62,579
Amortization of deferred compensation
Net loss                                                                        (10,151,041)            (10,151,041)
Foreign currency translation adjustment                                                       $  1,333        1,333
Total comprehensive income (loss)                                                                                    $(10,149,708)
                                                       ------------   -------  ------------   --------  -----------  ============
BALANCE AT DECEMBER 31, 1997                             58,255,667         -   (45,519,919)     1,333   12,747,111
Repurchase of Common Stock
  for treasury (2,246,131 shares)                                        (100)                                 (100)
Net loss                                                                        (10,654,597)            (10,654,597)
Foreign currency translation adjustment                                                         55,891       55,891
Total comprehensive income (loss)                                                                                    $(10,598,706)
                                                       ------------   -------  ------------   --------  -----------  ============
BALANCE AT DECEMBER 31, 1998                             58,255,667      (100)  (56,174,516)    57,224    2,148,305
Sale of Common Stock ($.05 per share, net)                  686,000                                         700,000
Net loss                                                                         (1,253,696)             (1,253,696)
Foreign currency translation adjustment                                                        (43,020)     (43,020)
Total comprehensive income (loss)                                                                                    $ (1,296,716)
                                                       ------------   -------  ------------   --------  -----------  ============
BALANCE AT DECEMBER 31, 1999                             58,941,667      (100)  (57,428,212)    14,204    1,551,589
Issuance of right to purchase Common Stock
  in lieu of compensation ($0.45 per share)                 198,000                                         198,000
Sale of common stock ($0.05 per share)                       24,500                                          25,000
Sale of common stock ($0.50 per share)                    1,497,000                                       1,500,000
Memorandum entry to record as expense for
  honorary services rendered by a shareholder               100,000                                         100,000
Repurchase of common stock
  for treasury (60,000 shares)                                         (3,000)                               (3,000)
Net loss                                                                         (1,522,233)             (1,522,233)
Foreign currency translation adjustment                                                        (14,204)     (14,204)
Total comprehensive income (loss)                                                                                    $ (1,522,233)
                                                       ------------   -------  ------------   --------  -----------  ============
BALANCE AT DECEMBER 31, 2000                           $ 60,761,167   $(3,100) $(58,950,445)  $     --  $ 1,835,152
  (carried forward)                                    ============   =======  ============   ========  ===========

</TABLE>

See notes to consolidated financial statements.                      (Continued)

                                      F-6
<PAGE>
<TABLE>
<CAPTION>
BIOFIELD CORP.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Deficit)
-----------------------------------------------------------------------------------------------------------------------------------

                                                            Series A           Series B          Series C
                                                        Preferred Stock    Preferred Stock    Preferred Stock      Common Stock
                                                       ------------------- ----------------- ----------------- --------------------
                                                        Shares    Amount    Shares  Amount    Shares   Amount    Shares  Amount
<S>                                                    <C>         <C>     <C>       <C>    <C>         <C>     <C>        <C>
BALANCE AT DECEMBER 31, 2000                                    -       -         -      -           -       -  27,529,609 $ 27,530
  (brought forward)
Memorandum entry to record as expense for
  honorary services rendered by a shareholder
Net loss
Total comprehensive income (loss)
                                                       ----------  ------  --------  -----  ----------  ------  ---------- --------
BALANCE AT DECEMBER 31, 2001                                    -       -         -      -           -       -  27,529,609 $ 27,530
Exercise of Common Stock options                                                                                    62,745       63
Memorandum entry to record as expense for
  honorary services rendered by a shareholder
Net loss
Total comprehensive income (loss)
                                                       ----------  ------  --------  -----  ----------  ------  ---------- --------
BALANCE AT DECEMBER 31, 2002                                    -       -         -      -           -       -  27,592,354 $ 27,593
                                                       ==========  ======  ========  =====  ==========  ======  ========== ========
Issuance of Common Stock for consulting
  services ($0.30 per share, net)                               -       -         -      -           -       -      50,000       50
Issuance of Common Stock for consulting
  services ($0.32 per share, net)                                                                                  468,749      468
Issuance of Common Stock for consulting
  services ($0.11 per share, net)                                                                                  275,000      275
Issuance of Common Stock as incentive for
  funding by issue of notes ($0.25 per share net)                                                                3,187,500    3,188
Common Stock (410,358 shares) to be issued
  for interest accrued on stockholder's advances
Memorandum entry to record as expense for
  honorary services rendered by a shareholder
Net loss
Total comprehensive income (loss)
                                                       ----------  ------  --------  -----  ----------  ------  ---------- --------
BALANCE AT DECEMBER 31, 2003                                    -       -         -      -           -       -  31,573,603 $ 31,574
                                                       ==========  ======  ========  =====  ==========  ======  ========== ========
Issuance of Common Stock as incentive for
 funding by issue of notes ($0.25 per share net)                                                                 1,812,500    1,813
Issuance of Common Stock as incentive for
 funding by issue of notes ($0.31 per share net)                                                                 1,895,000    1,895
Sale of Common Stock ($0.10 per share)                                                                           1,224,000    1,224
Common Stock (286,421 shares) to be issued
  for interest accrued on stockholder's advances
Accrual of 2,500,000 shares of Common Stock
  due on payment default on notes payable
Memorandum entry to record as expense for
   honorary services rendered by a shareholder
Net loss
Total comprehensive income (loss)
                                                       ----------  ------  --------  -----  ----------  ------  ---------- --------
BALANCE AT DECEMBER 31, 2004                                    -       -         -      -           -       -  36,505,103 $ 36,506
                                                       ==========  ======  ========  =====  ==========  ======  ========== ========

</TABLE>

<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Deficit)
-----------------------------------------------------------------------------------------------------------------------------------

                                                                                  Deficit
                                                                                Accumulated   Foreign
                                                        Additional                 During     Currency                  Total
                                                         Paid-In     Treasury   Development  Translation            Comprehensive
                                                         Capital       Stock       Stage      Adjustment    Total        Loss
                                                       ------------ ---------- ------------- ----------- ---------- -------------
<S>                                                    <C>          <C>        <C>           <C>        <C>         <C>
BALANCE AT DECEMBER 31, 2000                             60,761,167    (3,100) $(58,950,445)         -    1,835,152
  (brought forward)
Memorandum entry to record as expense for
  honorary services rendered by a shareholder               100,000                                         100,000
Net loss                                                                         (2,238,687)             (2,238,687)
Total comprehensive income (loss)                                                                                    $ (2,238,687)
                                                       ------------   -------  ------------   --------  -----------  ============
BALANCE AT DECEMBER 31, 2001                             60,861,167    (3,100)  (61,189,132)         -     (303,535)
Exercise of Common Stock options                             15,623                                          15,686
Memorandum entry to record as expense for
  honorary services rendered by a shareholder               100,000                                         100,000
Net loss                                                                         (2,888,789)             (2,888,789)
Total comprehensive income (loss)                                                                                    $ (2,888,789)
                                                       ------------   -------  ------------   --------  -----------  ============
BALANCE AT DECEMBER 31, 2002                           $ 60,976,790   $(3,100) $(64,077,921)  $      -  $(3,076,638)
                                                       ============   =======  ============   ========  ===========

Issuance of Common Stock for consulting
  services ($0.30 per share, net)                            14,950                                          15,000
Issuance of Common Stock for consulting
  services ($0.32 per share, net)                           149,532                                         150,000
Issuance of Common Stock for consulting
  services ($0.11 per share, net)                            29,975                                          30,250
Issuance of Common Stock as incentive for
 funding by issue of notes ($0.25 per share net)            793,687                                         796,875
Common Stock (410,358 shares) to be issued
  for interest accrued on stockholder's advances            102,386                                         102,386
Memorandum entry to record as expense for
  honorary services rendered by a shareholder               100,000                                         100,000
Net loss                                                                         (2,164,698)             (2,164,698)
Total comprehensive income (loss)                                                                                    $ (2,164,698)
                                                       ------------   -------  ------------   --------  -----------  ============
BALANCE AT DECEMBER 31, 2003                           $ 62,167,320  $ (3,100) $(66,242,619)  $      -  $(4,046,825)
                                                       ============   =======  ============   ========  ===========
Issuance of Common Stock as incentive for
 funding by issue of notes ($0.25 per share net)            451,312                                         453,125
Issuance of Common Stock as incentive for
 funding by issue of notes ($0.31 per share net)            585,555                                         587,450
Sale of Common Stock ($0.10 per share)                      160,601                                         161,825
Common Stock (286,421 shares) to be issued
  for interest accrued on stockholder's advances             64,743                                          64,743
Accrual of 2,500,000 shares of Common Stock
  due on payment default on notes payable                   350,000                                         350,000
Memorandum entry to record as expense for
   honorary services rendered by a shareholder              100,000                                         100,000
Net loss                                                                         (3,846,517)             (3,846,517)
Total comprehensive income (loss)                                                                                    $ (3,846,517)
                                                       ------------   -------  ------------   --------  -----------  ============
BALANCE AT DECEMBER 31, 2004                           $ 63,879,531  $ (3,100) $(70,089,136)  $      -  $(6,176,198)
                                                       ============   =======  ============   ========  ===========
</TABLE>

See notes to consolidated financial statements.                      (Concluded)

                                       F-7
<PAGE>

BIOFIELD CORP.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                                              Period October 16,
                                                                                      December 31,              1987 (Date of
                                                                              ----------------------------    Inception) Through
                                                                                  2004            2003         December 31, 2004
                                                                                                               -----------------
<S>                                                                           <C>             <C>              <C>
OPERATING ACTIVITIES
  Net loss                                                                    $ (3,846,517)   $ (2,164,698)    $    (70,089,136)
  Adjustments to reconcile net loss to net cash used in operating activities:
    Depreciation and amortization                                                   45,332          47,517            2,718,406
    Amortization of premiums on short-term investments                                  --              --              156,692
    Amortization of deferred financing costs                                     1,693,978          30,142            1,724,120
    Loss on disposal of property and equipment                                          --              --              194,102
    Loss on license and settlement agreements                                           --              --               49,026
    Loss on abandonment of patent applications                                          --              --              303,234
    Loss on inventory write-down                                                    81,480              --              693,500
    Vendor settlements                                                                  --              --              (77,257)
    Noncash compensation                                                           100,000         100,000            3,408,451
    Gain from disposition of fixed assets                                               --              --             (159,473)
    Interest paid in shares of Common Stock                                         64,743         102,386              464,277
    Commission and discount on sale of shares of Common Stock                       96,919                               96,919
    Loan repayment default payable in shares of Common Stock                       350,000              --              350,000
    Consultancy fees paid in Common Stock                                               --         195,250              195,250
    Changes in assets and liabilities:
       Accounts receivable                                                              --          71,000                   --
       Inventories                                                                      --           1,958             (693,500)
      Other current assets                                                              --          34,017                   --
      Other assets                                                                      --              --             (134,582)
      Due to affiliate                                                              74,218         129,967              272,499
      Accounts payable and accrued expenses                                         35,774         607,281            1,624,732
                                                                              ------------    ------------     ----------------
          Net cash used in operating activities                                 (1,304,073)       (845,180)         (58,902,740)
                                                                              ------------    ------------     ----------------

INVESTING ACTIVITIES
  Acquisitions of property and equipment                                            (5,284)             --           (2,610,691)
  Costs incurred for patents and patent applications                                    --              --             (782,527)
  Proceeds from sale of property and equipment                                          --              --              294,748
  Purchases of short-term investments                                                   --              --          (26,476,638)
  Proceeds from sale and maturity of short-term investments                             --              --           26,406,378
                                                                              ------------    ------------     ----------------
          Net cash provided by (used in) investing activities                       (5,284)             --           (3,168,730)
                                                                              ------------    ------------     ----------------

FINANCING ACTIVITIES
  Repayments of capitalized lease obligations                                           --              --              (82,234)
  Proceeds from issuance of Series A Preferred Stock - net                              --              --            8,413,490
  Proceeds from issuance of Series B Preferred Stock - net                              --              --            1,947,631
  Proceeds from issuance of Series C Preferred Stock - net                              --              --           11,980,771
  Proceeds from issuance of Common Stock and Common Stock warrants - net            64,906              --           33,088,112
  Proceeds from exercise of Common Stock options and Common Stock warrants              --              --              298,546
  Proceeds from issuance of notes payable                                          741,500         637,500            1,379,000
  Notes financing costs                                                            (86,937)       (129,807)            (216,744)
  Net bank borrowings under a line of credit                                            --         200,000            1,200,000
  Advances from stockholder and related party                                      253,698         505,406            1,809,104
  Repayments of advances from stockholder                                               --              --             (145,000)
  Repurchases of Common Stock held in treasury                                          --              --               (3,100)
  Proceeds from notes payable issued to stockholder and related party                   --              --            2,546,533
                                                                              ------------    ------------     ----------------
          Net cash provided by financing activities                                973,167       1,213,099           62,216,109
                                                                              ------------    ------------     ----------------
    NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                          (336,190)        367,919              144,639
    EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS                                                       (111,497)

Cash and cash equivalents, beginning of period                                     369,332           1,413                   --
                                                                              ------------    ------------     ----------------

Cash and cash equivalents, end of period                                      $     33,142    $    369,332     $         33,142
                                                                              ============    ============     ================
</TABLE>

See notes to consolidated financial statements                       (continued)

                                      F-8
<PAGE>

BIOFIELD CORP.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                                                Period October 16,
                                                                                           December 31,           1987 (Date of
                                                                                   ---------------------------  Inception) Through
                                                                                       2004           2003       December 31, 2004
                                                                                                                 -----------------
<S>                                                                                <C>            <C>            <C>
SUPPLEMENTAL DISCLOSURES OF CASH
  FLOW INFORMATION:
  Cash paid during the period for interest                                         $    186,492   $     62,227   $        764,496
                                                                                   ============   ============   ================

SUPPLEMENTAL SCHEDULE FOR NONCASH
  INVESTING AND FINANCING ACTIVITIES:

  Acquisition of property and equipment under capital lease transactions                                         $         82,234
-----------------------------------------------------------------------------------                              ================

  During the fiscal year ended March 31, 1994, the Company issued 222,222 shares
    of Series A Preferred Stock in exchange for an aggregate of $1 million in
    notes payable to a principal stockholder and a former Director:
    Notes payable                                                                                                $      1,000,000
                                                                                                                 ----------------
    Issuance of Series A Preferred Stock                                                                         $      1,000,000
-----------------------------------------------------------------------------------                              ================

  At inception, the Company acquired the rights to a patent and assumed certain
    liabilities in exchange for 235,294 shares of Common Stock, as follows:
    Fair value of patent acquired                                                                                $        112,732
    Liabilities assumed                                                                                                   112,432
                                                                                                                 ----------------
    Issuance of Common Stock                                                                                     $            300
-----------------------------------------------------------------------------------                              ================

  Pursuant to a license and settlement agreement with respect to an acquired
    patent (see above) the Company reacquired during the year ended March 31,
    1991 its 235,294 shares of Common Stock issued in connection with the
    acquired patent, which was retired during the year end March 31, 1992:
    Remaining carrying value of patent on date of
      license and settlement agreement                                                                           $         49,326
    Common Stock returned to the Company                                                                                      300
                                                                                                                 ----------------
    Loss on Settlement                                                                                           $         49,026
-----------------------------------------------------------------------------------                              ================

  During the fiscal year ended March 31, 1992, the Company exchanged 431,372
    shares of Common Stock for notes, debt and accrued interest payable to a
    principal stockholder:
    Notes payable                                                                                                $         96,660
    Debt                                                                                                                  854,873
    Accrued interest                                                                                                      297,148
                                                                                                                 ----------------
    Issuance of Common Stock                                                                                     $      1,248,681
-----------------------------------------------------------------------------------                              ================

  During the fiscal year ending December 31, 2003, the Company exchanged 793,749
    shares of Common Stock for services rendered by consultants:
    Fair value of services rendered                                                               $    195,250   $        195,250
                                                                                                  ------------   ----------------
    Issuance of Common Stock                                                                      $    195,250   $        195,250
-----------------------------------------------------------------------------------               ============   ================

  During the fiscal year ending December 31, 2003, the Company transferred
    accrued interest on advances from a stockholder to be exchanged for 410,358
    shares of Common Stock: of Common Stock:
    Accrued interest                                                                              $    102,386   $        102,386
                                                                                                  ------------   ----------------
    Issuance of Common Stock                                                                      $    102,386   $        102,386
-----------------------------------------------------------------------------------               ============   ================

  During the fiscal year ending December 31, 2003, the Company issued 3,187,500
    shares as incentive for notes payable secured under a private placement
    funding:
    Fair value of Finance costs                                                                   $    796,875   $        796,875
                                                                                                  ------------   ----------------
    Issuance of Common Stock                                                                      $    796,875   $        796,875
-----------------------------------------------------------------------------------               ============   ================

See notes to consolidated financial statements                       (Continued)
</TABLE>
                                      F-9
<PAGE>
<TABLE>
<CAPTION>
BIOFIELD CORP.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
----------------------------------------------------------------------------------------------------------------------------------

                                                                                                                 Period October 16,
                                                                                            December 31,           1987 (Date of
                                                                                       ----------------------    Inception) Through
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                        2004         2003      December 31, 2004
                                                                                                                 -----------------
<S>                                                                                    <C>                       <C>
  During the fiscal year ended December 31, 2004, 3,707,500 shares of Common Stock
    were issued as incentive for funds secured against notes payable under a private
    placement funding:
    Fair value of Finance costs                                                        $1,040,575                $       1,040,575
                                                                                       ----------                -----------------
    Issuance of Common Stock                                                           $1,040,575                $       1,040,575
------------------------------------------------------------------------------------   ==========                -----------------
  During the fiscal year ended December 31, 2004, the Company transferred accrued
   interest on advances from a principal stockholder to Additional Paid-In Capital
    account to be exchanged for 286,421 shares of Common Stock:
    Accrued interest                                                                   $   31,414                $          31,414
                                                                                       ----------                -----------------
    Issuance of Common Stock                                                           $   31,414                $          31,414
------------------------------------------------------------------------------------   ==========                =================

  During the fiscal year ended December 31, 2004, 2,500,000 shares of Common Stock
    were due as penalty for non-payment of notes payable on maturity:
    Fair value of Finance costs                                                        $  350,000                $         350,000
                                                                                       ----------                -----------------
    Issuance of Common Stock                                                           $  350,000                $         350,000
------------------------------------------------------------------------------------   ==========                =================

See notes to consolidated financial statements                                                                           (Conluded)

See notes to unaudited consolidated financial statements                                                                 (Concluded)
</TABLE>

                                      F-10

<PAGE>

BIOFIELD CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

1.   GOING CONCERN BASIS OF ACCOUNTING

        As shown in the accompanying financial statements, Biofield Corp. (the
"Company") continues to incur significant losses. As of December 31, 2004, the
Company's current liabilities exceeded its current assets by $6.4 million and
its total liabilities exceeded its total assets by $6.1 million. These factors
raise substantial doubt about the Company's ability to continue as a going
concern.

        During 2002, the Company financed its operations almost entirely with
$1,750,000 of borrowings obtained from, or with the assistance of, Dr. David M.
Long, Jr., M.D., Ph.D., its Chairman, Chief Executive Officer and principal
stockholder ("Dr. Long"), and certain of his affiliates.

        In the first quarter of 2003, the Company instituted a cost reduction
program that included lowering salaries of its six then current employees and
some of its consultants, minimizing use of outside consultants, arranging with
its employees and a consultant to accept options to acquire the Company's Common
Stock for a portion of their services, and limiting its marketing activities. In
January 2003, Dr. Long advanced $475,000 to enable the Company to meet its then
projected minimum financial requirements. As of December 31, 2004, the aggregate
amount due to Dr. Long and his affiliates, including advances made by him in
2003 and 2004, liability for a three-year promissory note amounting to $450,000
and interest accrued on all the debts due to him, is $2,632,304, and is also
entitled to receive 696,778 shares of the Company's Common Stock for interest
due up to December 31, 2004 on an advance of $1,050,000 made by him in 2003.

        During the seven months commencing April 16, 2003, the Company was
unable to meet its payroll commitments. Five of its six employees agreed to the
deferment of the payment of the salary due to them, payable with 100% interest
thereon, until the receipt of the proceeds from new funding. The Company also
granted options to acquire 514,227 shares of Common Stock to these employees at
an exercise price of $0.33 per share, the closing market price of the Common
Stock on the date of the grant, in consideration for the reduction in
remuneration accepted by them during the first four months of 2003.

        In June 2003, the Company's bank line of credit was increased by
$200,000 to $1.2 million upon the furnishing of additional collateral provided
to the bank by Dr. Long and certain of his affiliates. The line expired on
November 2, 2004, and is being renewed on the basis of assurance given by Dr.
Long and his affiliates that they will continue to provide collateral for the
line of credit.

                                      F-11
<PAGE>

        In October 2003, the Company entered into an agreement with a placement
agent for assistance in obtaining short-term bridge financing agreement of up to
$700,000 (subsequently increased to $1 million) in a private placement on a best
effort basis. In December 2003, the Company received gross proceeds of $637,500
against issuance of $637,500 principal amount of notes payable and 3,187,500
shares of Common Stock, at a cost of $796,875 which is being amortized over 365
days. Additionally, the Company made cash payments of $129,807 for financing
costs that are also amortized over the same period.

        During January and February 2004, the Company received further gross
proceeds of $362,500 and issued an additional $362,500 of notes payable and
1,812,500 shares of Common Stock, at a cost of $453,125 which is being amortized
over the remaining 365 days since the initial sale in December 2004.
Additionally, the Company made cash payments of $46,038 for financing costs that
are also amortized over the same period.

        On May 3, 2004, the Company signed a similar agreement with the same
placement agent to secure further short-term bridging finance of up to $800,000.
Under the new agreement, the Company sold $329,000 of its securities, and the
offering was closed on August 30, 2004. The Company received gross proceeds of
$100,000, $154,000 and $75,000 against aggregate issuance of $329,000 principal
amount of notes payable and 1,645,000 shares of Common Stock, at a cost of
$509,950 on June 1, 2004, July, 2004 and August, 2004, respectively. The value
of Common Stock is being amortized over the period of the notes all of which
expire on May 31, 2005. Additionally, the Company made cash payments of $35,900
for financing costs that are also amortized over the same period.

        On September 8, 2004, the Company signed an agreement for $50,000 with
the placement agent on the same terms and conditions as the agreement signed on
May 3, 2004, and received gross proceeds of $15,644 and $34,356 on September 8,
2004 and November 12, 2004, respectively, against aggregate issuance of $50,000
principal amount of notes payable and 250,000 shares of Common Stock, at a cost
of $77,500. The Company has also incurred other finance expenses of $5,000 that
is also being amortized over the term of the loan.

        On October 13, 2004, the Company engaged an investment broker and
consultant to obtain financing its operations while waiting for FDA approval by
offering the Company shares of Common Stock to non-U.S. citizens overseas
investors in accordance with the provisions of Rule 903 or Rule 904 of
Regulation S or pursuant to registration of the securities under the Securities
Act of 1933 at a cost of 50% of the amount of gross capital raised as fees.
Under the agreement, the broker bears all the associated marketing and operating
costs, and is required to offer the shares at a price per share of not less than
$0.10. Under this arrangement, the Company received aggregate gross proceeds of
$123,400 against aggregate issuance of 1,224,000 shares of Common Stock, at an
aggregate discount of $38,425 over the market price on the date of the sale
during the period from October 29, 2004 to December 31, 2004. Additionally, from
January 1, 2005 to March 24, 2005, the Company has received aggregate gross
proceeds of $280,816 against aggregate issuance of approximately 2.8 million
shares of Common Stock at $0.10 per share and 50% agent's fees of $140,408. The
Company continues to sell its shares of Common Stock under this arrangement to
fund its operations.

        The Company used the proceeds from the two placements and from the sale
of its shares under the exemption provided by Regulation S to finance the
expense to complete its FDA application to obtain approval to market the
Biofield Diagnostic System in the United States, marketing of the Company's
device in certain European countries and to keep the Company operational. On
January 5, 2005, in accordance with recommended FDA procedure, the Company
submitted a Request for Evaluation of Automatic Class III Designation for the
Biofield(R) Breast Proliferation Rate Detection System under ss.513(f)(2) of the
Cosmetic Act. Simultaneously, the Company is attempting to raise long-term
capital of approximately $5 million to $7 million to enable it to commercialize
its device (assuming FDA approval is obtained) and maintain its operations. The
infusion of long-term capital is essential for the Company to continue its
operations. There is no assurance the Company will be successful in securing the
long-term capital or any the short-term funding.

        The Company has depleted all its cash resources and the Company had to
let go all its employees, except the Chief Operating Officer and Chief Executive
Officer, who does not receive any remuneration for his services. Since the

                                      F-12
<PAGE>

employees' departure and up to March 28, 2005, the Company has been able and has
relied on past employees' services on a consultancy basis when funds are
available as it is unable to pay their salaries on a regular basis. As at
December 31, 2004, the Company owes $ 160,486 in accrued interest to the past
employees for the delay in payment a portion of their 2003 salaries.

        The notified body, KEMA Registered Quality, Inc., submitted a formal
510(k) application to the FDA on November 16, 2004. FDA informed the Company on
December 3, 2004 that a manufacturer whose device is found to be not
substantially equivalent to a predicate device can request the FDA to make a
risk-based classification for its device. However, the letter also included a
statement that the FDA believes that "based on the review of your device,
general controls would be inadequate and special controls difficult to develop,
to provide reasonable assurance of the device's safety and effectiveness." On
January 5, 2005, in accordance with recommended FDA procedure, the Company
submitted a Request for Evaluation of Automatic Class III Designation for the
Biofield(R) Breast Proliferation Rate Detection System under ss.513(f)(2) of the
Cosmetic Act.

        The Company's existence is dependent upon management's ability to secure
immediately cash to resolve its current liquidity problems. However, no
assurance can be given that management's actions will result in profitable
operations or the resolution of the Company's liquidity problems. The
accompanying consolidated financial statements do not include any adjustments to
the amounts and classification of assets and liabilities that might result
should the Company be unable to continue as a going concern.


2.      THE COMPANY

        Biofield Corp. is a development stage company that has developed a
system to assist in detecting breast cancer using a non-invasive procedure. The
Company's breast cancer diagnostic device, the Biofield Diagnostic System,
employs single-use sensors to measure and analyze changes in cellular electrical
charge distributions associated with the development of epithelial cancers, such
as breast cancer. Principal activities to date include product development,
conducting clinical trials, seeking permission from various regulatory
authorities to market the device and raising capital. The Company operates in
one market segment, the biomedical device segment.

        In March 1996, the Company completed its initial public offering of
1,819,000 shares of Common Stock, at a purchase price of $11.00 per share, for
net proceeds of approximately $18 million.

        During the first half of 1997, the Company formed a wholly owned
Delaware corporation, Biofield International, Inc., which established a branch
in Switzerland. The Subsidiary closed the branch in March 1999.

        In December 1997, the Company received net proceeds of approximately
$8.4 million from the sale of 2,867,670 shares of Common Stock in a private
placement. Simultaneously, the Company issued 643,639 shares of Common Stock in
exchange for previously issued warrants to purchase 1,574,930 shares of Common
Stock.

        In November 1998, the Company decided to eliminate certain operations
due to lack of adequate financial resources. In December 1998, the Common Stock
was delisted from trading on The Nasdaq Stock Market due primarily to the
Company's inability to meet certain financial criteria and, in March 1999, the
Company's reporting obligations under the Securities Exchange Act of 1934 were
terminated. At such time, the Company announced that its efforts would be
directed to selling its existing technology if it was unsuccessful in raising
additional capital.

        In December 1999, the Company sold 14 million shares of Common Stock for
$700,000 to Dr. Long and a related investor and certain of their affiliated
entities. Simultaneously, the Company's Board of Directors was reconstituted and

                                      F-13
<PAGE>

Dr. Long was appointed as the Chairman and Chief Executive Officer of the
Company.

        In 2000, the Company's then existing device and sensors received CE mark
certification and were granted ISO-9001 quality system status, which allows the
Company to market such device and sensors within the European community.

        In 2001 and 2002, the Company's major efforts had been focused primarily
on activities to seek FDA approval to market the Company's device in the United
States, marketing the device in certain overseas markets and attempting to
obtain funds for the operating and capital needs of the Company.

        In 2003 and 2004, the Company has had to severely curtail its activities
as its cash resources depleted and Dr. Long and his affiliates extended limited
funding for operations beyond March 31, 2003. In 2004, the Company received
short-term funding of $741,500, from the two private placements and a $50,000
note payable and $253,698 from Dr. Long and his affiliates, and $161825 in
permanent capital from the sale of shares of Common Stock under Regulation S.
See Notes 1 and 9. This funding has enabled the Company to complete and submit
an application to the FDA for its device and to continue operations in 2004. In
2005, the Company intends to continue to actively source long-term funding.

        The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary, Biofield International, Inc.
Significant intercompany transactions have been eliminated in consolidation.


3.   SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents

        The Company considers cash on hand, deposits in banks, and short-term
investments purchased with an original maturity date of three months or less to
be cash and cash equivalents. The carrying amounts reflected in the balance
sheets for cash and cash equivalents approximate the fair values due to short
maturities of these instruments.

Accounts Receivable

        The Company provides an allowance for doubtful accounts equal to the
estimated uncollectible amounts. At December 31, 2004 and December 31, 2003, a
provision of $71,000 was made for bad and doubtful accounts, representing an
allowance of 100% for the outstanding accounts receivable.

Inventory and Inventory Valuation Reserve

        Inventories are stated at the lower of cost or market, determined by the
first-in, first-out (FIFO) method, including provisions for obsolescence.
Obsolescence is based upon assumptions concerning future demand, market
conditions and anticipated timing of the release of next generation products. If
actual market conditions or future demand are less favorable than those
projected by management, or if next generation products are released earlier
than anticipated, additional inventory write-downs may be required.

Property and Equipment

        Property and equipment are stated at cost, less accumulated depreciation
and amortization. Depreciation and amortization are computed using straight-line
methods over the estimated useful lives of the assets, principally three to five
years, or the term of the lease, if shorter, for leasehold improvements.

                                      F-14
<PAGE>

Patents

        The costs of patents are amortized on a straight-line basis over their
estimated economic life, but not exceeding 17 years.

Revenue recognition and deferred revenue

        The Company recognizes revenue in accordance with SEC Staff Accounting
Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements". SAB No.
101 requires that four basic criteria must be met before revenue can be
recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has
occurred; (3) the selling price is fixed and determinable; and (4)
collectibility is reasonably assured. Determination of criteria (3) and (4) are
based on management's judgments regarding the fixed nature of the selling prices
of the products delivered and the collectibility of those amounts. Provisions
for discounts and rebates to customers, estimated returns and allowances, and
other adjustments are provided for in the same period that the related sales are
recorded. Royalty revenues are recognized in the period they are earned. The
Company defers any revenue for which the product has not been delivered or is
subject to refund until such time that the Company and the customer jointly
determine that the product has been delivered or no refund will be required.

Income Taxes

        Income taxes are provided based on the liability method for financial
reporting purposes in accordance with the provisions of Statements of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes". Under this
method, deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be removed or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in
the statement of operations in the period that includes the enactment date.

Impairment of Long-Lived Assets

        The Company has adopted SFAS No. 144, which requires that long-lived
assets and certain identifiable intangibles held and used by the Company be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Events relating to
recoverability may include significant unfavorable changes in business
conditions, recurring losses, or a forecasted inability to achieve break-even
operating results over an extended period. The Company evaluates the
recoverability of long-lived assets based upon forecasted undiscounted cash
flows. Should impairment in value be indicated, the carrying value of intangible
assets will be adjusted, based on estimates of future discounted cash flows
resulting from the use and ultimate disposition of the asset. SFAS No. 144 also
requires that assets to be disposed of be reported at the lower of the carrying
amount or the fair value less costs to sell.

Stock-Based Compensation

        The Company applies the intrinsic value-based method of accounting
prescribed by Accounting Principles Board Opinion 25, "Accounting for Stock
Issued to Employees", and related interpretations, in accounting for its stock
option plans. As such, compensation expense would be recorded on the date of
grant only if the current market price of the underlying stock exceeded the
exercise price. SFAS No. 123, "Accounting for Stock-Based Compensation",
established accounting and disclosure requirements using a fair value-based
method of accounting for stock-based employee compensation plans. As allowed by
SFAS No. 123, the Company has elected to continue to apply the intrinsic
value-based method of accounting described above, and has adopted the disclosure
requirements of SFAS No. 123 which are included in Note 17. The Company has also
adopted the annual disclosure provisions of SFAS No. 148, "Accounting for

                                      F-15
<PAGE>

Stock-Based Compensation - Transition and Disclosure - an Amendment of SFAS 123"
in its financial reports for the year ended December 31, 2003 and for the
subsequent periods.

        In accordance with Financial Accounting Standards Board Emerging Issues
Task Force ("EITF") 96-18, the measurement date to determine fair value for
shares issued to consultants was the date at which a commitment for performance
by the consultant to earn the equity instrument was reached. The Company valued
the shares issued for consulting services at the rate which the Company believes
represents the fair value of the services received, which did not differ
materially from the value of the Common Stock issued.

Research and Development

        The Company accounts for research and development costs in accordance
with the SFAS No. 2, "Accounting for Research and Development Costs". Under SFAS
No. 2, all research and development costs must be charged to expense as
incurred. Accordingly, internal research and development costs are expensed as
incurred. Third-party research and developments costs are expensed when the
contracted work has been performed or as milestone results have been achieved.
Company-sponsored research and development costs related to both present and
future products are expensed in the period incurred. Total expenditures on
research and product development incurred for 2004, 2003, and the period from
October 16, 1987 (date of inception) to December 31, 2004 were $0, $41,425, and
$40,481,889, respectively.

Basic and Diluted Loss per Share

        The basic loss per share is computed by dividing loss to common
stockholders by the weighted average number of shares of Common Stock
outstanding for the period. Diluted loss per share reflects the potential
dilution that could occur if the Company's dilutive outstanding stock options
were exercised. Common equivalent shares totaling 2,217,931 as at December 31,
2004 (1,926,717 as at December 31, 2003) are not included in the per share
calculations of diluted loss per share, since the effect of their inclusion
would be antidilutive.

Use of Estimates

        The preparation of financial statements in conformity with generally
accepted accounting principles 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 income and expenses during the reporting
period. Actual results could differ from those estimates.

Reclassification

        Certain prior period figures have been reclassified to conform to the
current year's presentation.

Comprehensive Income

        SFAS No. 130, "Reporting Comprehensive Income", establishes standards
for reporting and displaying of comprehensive income, its components and
accumulated balances. Comprehensive income is defined to include all changes in
equity, except those resulting from investments by owners and distributions to
owners. Among other disclosures, SFAS No. 130 requires that all items that are
required to be recognized under current accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. The Company does not have any
items of comprehensive income in any of the periods presented.

                                      F-16
<PAGE>

New Accounting Pronouncements

        In November 2004, the Financial Accounting Standards Board (FASB) issued
SFAS 151, Inventory Costs- an amendment of ARB No. 43, Chapter 4. This Statement
amends the guidance in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify
the accounting for abnormal amounts of idle facility expense, freight, handling
costs, and wasted material (spoilage). Paragraph 5 of ARB 43, Chapter 4,
previously stated that "under some circumstances, items such as idle facility
expense, excessive spoilage, double freight, and rehandling costs may be so
abnormal as to require treatment as current period charges" This Statement
requires that those items be recognized as current-period charges regardless of
whether they meet the criterion of "so abnormal." In addition, this Statement
requires that allocation of fixed production overheads to the costs of
conversion be based on the normal capacity of the production facilities. This
Statement is effective for inventory costs incurred during fiscal years
beginning after June 15, 2005. Management does not believe the adoption of this
Statement will have any immediate material impact on the Company.

        In December 2004, the FASB issued SFAS No.152, "Accounting for Real
Estate Time-Sharing Transactions-an amendment of FASB Statements No. 66 and 67"
("SFAS 152) The amendments made by Statement 152 This Statement amends FASB
Statement No. 66, Accounting for Sales of Real Estate, to reference the
financial accounting and reporting guidance for real estate time-sharing
transactions that is provided in AICPA Statement of Position (SOP) 04-2,
Accounting for Real Estate Time-Sharing Transactions. This Statement also amends
FASB Statement No. 67, Accounting for Costs and Initial Rental Operations of
Real Estate Projects, to state that the guidance for (a) incidental operations
and (b) costs incurred to sell real estate projects does not apply to real
estate time-sharing transactions. The accounting for those operations and costs
is subject to the guidance in SOP 04-2. This Statement is effective for
financial statements for fiscal years beginning after June 15, 2005. with
earlier application encouraged. The Company does not anticipate that the
implementation of this standard will have a material impact on its financial
position, results of operations or cash flows.

        In December 2004, the FASB issued SFAS No. 123 (revised) ("SFAS No.
123R"), "Share-Based Payment." SFAS No. 123R eliminates the intrinsic value
method under APB 25, "Accounting for Stock Issued to Employees" as an
alternative method of accounting for stock-based awards. SFAS No. 123R also
revises the fair value-based method of accounting for share-based payment
liabilities, forfeitures and modifications of stock-based awards and clarifies
SFAS No. 123's guidance in several areas, including measuring fair value,
classifying an award as equity or as a liability and attributing compensation
cost to reporting periods. In addition, SFAS No. 123R amends SFAS No. 95,
"Statement of Cash Flows," to require that excess tax benefits be reported as a
financing cash inflow rather than as a reduction of taxes paid, which is
included within operating cash flows. The Company is required to adopt SFAS No.
123R for the interim period beginning July 1, 2005 using a modified version of
prospective application or may elect to apply a modified version of
retrospective application. The Company currently accounts for its stock-based
awards under the intrinsic value approach in accordance with APB Opinion No. 25
and discloses the effect of stock-based awards as required by SFAS No. 148,
"Accounting for Stock-Based Compensation -- Transition and Disclosure" (see Note
1 and Note 2 to the consolidated financial statements). The adoption of the new
standard would require the Company to recognize compensation expense for
equity-based awards. This will have the effect of reducing the Company's net
income by the fair value of the options in future years, beginning in 2005. We
are not in a position to know the effects of adoption of the new standard at
this time.

        On December 16, 2004, FASB issued Statement of Financial Accounting
Standards No. 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion
No. 29, Accounting for Nonmonetary Transactions (" SFAS 153"). This statement
amends APB Opinion 29 to eliminate the exception for nonmonetary exchanges of
similar productive assets and replaces it with a general exception for exchanges
of nonmonetary assets that do not have commercial substance. Under SFAS 153, if

                                      F-17
<PAGE>

a nonmonetary exchange of similar productive assets meets a commercial-substance
criterion and fair value is determinable, the transaction must be accounted for
at fair value resulting in recognition of any gain or loss. SFAS 153 is
effective for nonmonetary transactions in fiscal periods that begin after June
15, 2005. The Company does not anticipate that the implementation of this
standard will have a material impact on its financial position, results of
operations or cash flows

4.      INVENTORIES

        Inventories at December 31, 2004 and 2003 consisted of the following:

                                                   2004           2003
                                               ---------------------------

          Components and supplies              $     37,749   $     37,749
          Finished goods                            564,559        575,801
                                               ------------   ------------
                                                    602,308        613,550
          Less: Reserve for potential losses        602,308        532,070
                                               ------------   ------------
                                               $         --   $     81,480
                                               ============   ============

        Due to a 2001 Company decision to introduce an enhanced model of its
device with updated technology and design modifications by 2003, the Company
created a reserve for the inventory of the old device. By December 31, 2002, the
Company had set aside $532,070 to fully provide for the old units and all of the
sensors for these units. In 2004, the Company fully provided for the remaining
inventory amounting to $81,480. In 2003, the Company replaced inventory worth
$1,958 held by a distributor at no charge. This amount is disclosed as a part of
"Selling, general and administrative" in the accompanying Consolidated
Statements of Operations.

5.      DEFERRED FINANCING COST

        Deferred financing costs at December 31, 2004 and 2003 consisted of the
following:

                                           2004           2003
                                       ---------------------------

          Deferred financing costs          311,073        773,405
          Private placement expenses         19,002        123,135
                                       ------------   ------------
                                       $    330,075   $    896,540
                                       ============   ============

        Financing expenses (deferred financing costs and private placement
expenses) pertaining to the bridge financing incurred in 2004 and 2003, as
discussed in Note 9, were $1,127,513 and $926,682, respectively. The financing
expenses for 2004 and 2003 included private placement costs and legal fees of
$86,938 and $129,807 and the fair market values of $1,040,575 and $796,875 for
the 3,707,500 and 3,187,000 shares issued, respectively. Costs relating to the
bridge financing are capitalized and amortized over the term of the debt, using
the straight-line method. Accumulated amortization at December 31, 2004 and
December 31, 2003 were $1,724,120 and $30,142, respectively, and deferred
financing costs charged to operations in 2004 and 2003 were $1,693,970 and
$30,142, respectively. When a loan is paid in full, any unamortized financing
costs are charged to operations. See Note 9.

                                      F-18
<PAGE>

6.      PROPERTY AND EQUIPMENT

        Property and equipment at December 31, 2004 and 2003 consisted of the
following:


                                               2004           2003
                                           ---------------------------

          Furniture and office equipment   $     54,738   $     49,454
          Plant and production equipment        144,308        144,308
                                           ------------   ------------
                                                199,046        193,762
          Less accumulated depreciation         193,370        185,631
                                           ------------   ------------
                                           $      5,676   $      8,131
                                           ============   ============

        Depreciation expense in 2004, 2003 and for the period from inception
through December 31, 2004, were $7,739, $9,923 and $2,386,701, respectively.


6.      PATENT AND PATENT APPLICATION COSTS

        The Company entered into a 15-year agreement dated December 22, 1992
with a consultant and inventor for the assignment of certain rights relating to
performance under a laboratory service agreement. The Company paid $100,000 for
such assignment and agreed to pay royalties of 5% of the Net Sales Price of
Covered Inventions (as defined), if any, subject to a limit of $2.5 million. No
royalties have been paid or accrued as of December 31, 2004.

        The Company has a patent royalty agreement with Dr. Long and his
affiliated corporation which assigns all rights to the Company for patented
inventions, if any, resulting from performance under a laboratory service
agreement (see Note 16). The Company has been issued a United States patent in
which Dr. Long is a named co-inventor. No royalties have been paid or accrued as
of December 31, 2004.

        Accumulated amortization for patents was $254,998 and $217,405 at
December 31, 2004 and 2003, respectively. Patent amortization expense for 2004,
2003, and for the period from inception through December 31, 2004, was $37,594,
$37,594 and $331,708, respectively.

        In 2002 and 2001, the Company evaluated its patent application program
and related costs and, as a result, has written off previously capitalized costs
of approximately $25,000 and $30,000, respectively. The impairment based on fair
value of the patents was determined to be zero as the Company concluded that
there was no alternative market for the patents or reasonable basis of
determining fair value using expected future cash flows related to the patents.
The Company believes that the remaining net patent and patent application costs
are not impaired.


7.      ACCRUED EXPENSES

        Accrued expenses at December 31, 2004 and 2003 consisted of the
following:

                                                    2004           2003
                                                ---------------------------

          Professional fees                     $    283,369   $    255,614
          Unpaid employees' remuneration              19,080        157,596
          Interest due on unpaid remuneration        160,486        192,243
          Other                                       22,378            546
                                                ------------   ------------
                                                $    485,313   $    605,999
                                                ============   ============

                                      F-19
<PAGE>

        Due to severe cash flow constraints experienced by the Company in 2003,
its employees were not paid salaries from April 16, 2003 to October 31, 2003.
Five of its six employees then agreed to the deferment of the payment of the
salary due to them, payable with 100% interest thereon, until the receipt of the
proceeds from new funding. The Company also granted options to acquire 514,227
shares of Common Stock to these employees at an exercise price of $0.33 per
share, the closing market price of the Company's shares of Common Stock on the
date of the grant in consideration for the reduction in remuneration accepted by
them during the first four months of 2003. The unpaid salary and interest
thereon is recorded as accrued expenses in these financial statements. In 2004,
the Company fully paid the 2003 past salaries and $31,757 of the accrued
interest on these salaries. At December 31, 2004, the employees were due $19,080
for services rendered in November and December of 2004 and $160,486 for accrued
interest on 2003 salaries.

8.      BANK LINE OF CREDIT

        The Company has a revolving line of credit with a commercial bank for
$1.2 million. The line is secured by personal guarantees from and collateral of
Dr. Long and certain of his affiliates. The line of credit expires on December
2, 2005, unless extended, and bears interest at the greater of 0.5% above the
bank's prime rate (5.5% at December 31, 2004) or 5%.

9.      SHORT-TERM NOTES PAYABLE

Private Placement ($1 million, December 2003)

        During December 2003, the Company received gross proceeds of $637,500
from the sale of 12.75 Units (each Unit consisting of (a) a non-negotiable,
non-transferable, unsecured promissory note (the "Note") in the principal amount
of $50,000, bearing interest at 12% per annum, payable monthly, and (b) 250,000
shares of Common Stock) in a $700,000 private placement. The fair value of the
shares issued was determined as $796,875, based on the market price ($0.25 per
share) at the time of first issuance. The amount raised in the private placement
was subsequently increased from $700,000 to $1 million. In January, 2004 and
February, 2004, the Company received $250,000 and $125,500 from the sale under
this private placement of the remaining 5 Units and 2.25 Units, respectively.
The fair values of the shares issued in January, 2004 and February, 2004 were
determined as $312,500 and $140,625, respectively, based on the market price
($0.25 per share) at the time of first issuance.

        In 2004 and 2003, financing expenses pertaining to the $1 million
private placement amounted to $499,163 and $926,682, respectively. The financing
expenses for 2004 and 2003 the placement included private placement costs and
legal fees of $46,038 and $129,807, respectively, and the fair market values of
the shares issued, at December 31, 2004 and December 31, 2003, of $453,125 and
$796,875 for the 1,812,500 and 3,187,000 shares, respectively. The finance
expenses were capitalized, and set forth as deferred financing costs in these
financial statements. These deferred finance costs are amortized over the term
of the Note, which matures December 31, 2004, using the straight-line method.
Accumulated amortization at December 31, 2004 and December 31, 2003 were
$1,724,120 and $30,142, respectively, and deferred financing costs charged to
operations in 2004 and 2003 were $1,693,977 and $30,142, respectively. In
addition to receiving 10% of gross proceeds as commission in cash, the placement
agent is to receive five year cashless warrants, excercisable at $0.20 per
share, to purchase 10% of the number of shares of Common Stock issued to the
holders of the Units. A finder's fees equal to 2.7% of the gross proceeds is
payable to an unaffiliated third party.

        The Notes are due and payable on the earlier of the date that the
Company receives gross proceeds of at least $2.5 million from the sale of its
debt and equity securities (for which purpose, all such sales within a six month
period would be aggregated) or December 31, 2004. The Notes were not paid by
December 31, 2004, and the Company is obligated to issue an additional 125,000

                                      F-20
<PAGE>

shares of Common Stock for each $50,000 principal amount of unpaid Notes and the
Notes would be reset to bear interest at 1.5% per month. The Company is required
to issue 2.5 million shares, and has recorded a charge in these financial
statements of $350,000, calculated using the closing market price of $0.14 per
share on December 31, 2004, the date the notes were due. Until the Notes are
repaid, the holders have the right to participate in any offering by the Company
of its equity securities (including of convertible debt) by using the Notes (and
accrued interest thereon) to acquire such equity securities at a 25% discount
from the offering price (and if the offering is of convertible debt to acquire
such debt at face with a conversion feature at a 25% discount). The Company has
fulfilled its undertaking to register all unregistered shares of Common Stock
issued as part of the private placement, at its expense, and to file a
registration statement with the SEC to effect the registration. The Company has
also complied with the requirement of submitting an application with FDA to
market the Company's device in the United States.

Private Placement ($329,000, May 2004)

        On May 3, 2004, the Company signed an agreement similar to the $1
million private placement agreement with the same placement agent to secure
further short-term bridging finance of up to $800,000. Under the new agreement,
the Company sold $329,000 of its securities before it was closed on August 30,
2004. The Company received gross proceeds of $100,000, $154,000 and $75,000
against aggregate issuance of $329,000 principal amount of notes payable and
1,645,000 shares of Common Stock, at a cost of $509,950 on June 1, 2004, July,
2004 and August, 2004, respectively.

        The value of Common Stock amounting to $509,950 and other finance
expenses of $35,900 for financing costs that are also being amortized over the
term of the notes which become due on May 31, 2005. The amortization charges and
accumulated amortization for the notes issued under the $329,000 private
placement for 2004 was $276,355. .

        In addition to receiving 10% of gross proceeds as commission in cash,
the placement agent is to receive five year cashless warrants, excercisable at
$0.20 per share, to purchase 10% of the number of shares of Common Stock issued
to the holders of the Units. A finder's fees equal to 2.7% of the gross proceeds
is payable to an unaffiliated third party.

        The Notes are due and payable on the earlier of the date that the
Company receives gross proceeds of at least $2.5 million from the sale of its
debt and equity securities (for which purpose, all such sales within a six month
period would be aggregated) or May 31, 2005. If the Notes are not paid by May
31, 2005, and the Company is obligated to issue an additional 125,000 shares of
Common Stock for each $50,000 principal amount of unpaid Notes and the Notes
would be reset to bear interest at 1.5% per month. Until the Notes are repaid,
the holders have the right to participate in any offering by the Company of its
equity securities (including of convertible debt) by using the Notes (and
accrued interest thereon) to acquire such equity securities at a 25% discount
from the offering price (and if the offering is of convertible debt to acquire
such debt at face with a conversion feature at a 25% discount). The Company has
fulfilled its undertaking to register all unregistered shares of Common Stock
issued as part of the private placement, at its expense, and to file a
registration statement with the SEC to effect the registration. The Company has
also complied with the requirement of submitting an application with FDA to
market the Company's device in the United States.

$50,000 notes payable issued in 2004

        On September 8, 2004, the Company signed an agreement for $50,000 with
the placement agent on the same terms and conditions as those for the notes
issued under the $329,000 private placement, and received on September 8, 2004
and November 12, 2004, gross proceeds of $15,644 and $34,356 against issuance of
notes payable of $15,644 and $34,356 and shares of Common Stock of 78,220 and
171,780, respectively.

                                      F-21
<PAGE>

        The value of Common Stock amounting to $77,500 and other finance
expenses of $5,000 for financing costs that are also being amortized over the
term of the notes which become due on May 31, 2005. The amortization charges and
accumulated amortization for the note for 2004 was $22,273. .

        In 2004, the Company has capitalized a total of $1,127,513 (2003,
$926,682) of finance costs, representing the value of Common Stock issued of
$1,040,575 (2003, $796,875) and finance expenses of $86,938 (2003, $129,807), of
which $797,438 (2003, $30,143) is amortized, leaving an aggregate cost of
$330,075 unamortized.

10.     ADVANCES FROM STOCKHOLDERS

        Advances from stockholders included payments amounting to $1,050,000
received from Dr. Long and his affiliates during 2002 to finance the Company's
working capital needs. The debt is unsecured and became payable on demand after
December 31, 2002. The debt bears interest of 2% above the prime rate (4.25% at
December 31, 2004). The interest is calculated quarterly, and is payable in
unregistered shares of Common Stock, unless Dr. Long requests payment in cash at
the start of the applicable quarter. The number of shares to be issued for the
interest accrued during any quarter is determined using the closing price of the
Common Stock on the last business day of the quarter. In 2004 and 2003, the
interest amounted to $64,743 and $65,432, respectively. At December 31, 2004 and
2003, since no cash payment was requested for any quarter, an aggregate of
696,778 shares and 410,358 shares of Common Stock were reserved for issuance in
payment of the interest. As at December 31, 2004, total accrued interest of
$167,129 has been credited to Additional Paid-In Capital.

        Advances from stockholders also included payments received from Dr. Long
and his affiliates in 2004 and 2003 amounting to $147,032 and $505,406,
respectively. The debt bears interest of 10% per annum. The interest for 2004
amounted to $56,472 and has been accrued and added to the debt.

11.     LONG-TERM DEBT - RELATED PARTY

        On November 8, 2002, the Company issued its 10% three-year promissory
convertible note in the principal amount of $450,000 to Dr. Long in
consideration for his loan to the Company in such amount. The note (with
accrued, unpaid interest thereon) is convertible at the end of three years, at
the option of the holder, into unregistered shares of Common Stock at the rate
of $0.40 per share, the closing price of the Common Stock on November 5, 2002.
Interest for 2004 and 2003 amounted to $50,194 and $45,631, respectively, and
has been added to the note amount. This note is disclosed as short-term portion
of long-term debt in these financial statements.

12.     INCOME TAXES

        Due to the Company's operating losses, there was no provision for U.S.
income taxes in 2004 and 2003.

        At December 31, 2004, the Company had Federal net operating loss carry
forwards of approximately $65 million, which expire in years 2005 through 2024.
However, substantially all of the net operating loss carry forwards are not
utilizable, as a result of the limitations imposed by Section 382 of the
Internal Revenue Code, due to ownership changes in 1992, 1995, 1997 and 1999. To
the extent that these losses are utilizable, they may be offset against future
U.S. taxable income, if any, during the carry forward period.

        The tax effects of temporary differences that give rise to deferred tax
assets at December 31, 2004 and 2003 are as follows:

                                      F-22
<PAGE>

                                                   2004            2003
        -------------------------------------------------------------------

        Deferred tax assets:
            Net operating loss carryforwards   $ 24,797,058    $ 23,398,615
            Research and development credits        510,609         510,609
            Other                                        --              --
                                               ------------    ------------
        Total gross deferred tax assets          25,307,667      23,909,224
        Deferred tax liabilities:
            Depreciation and amortization           (40,763)        (38,727)
                                               ------------    ------------
        Net deferred tax assets                  25,266,904      23,870,497
        Less valuation allowance                (25,266,904)    (23,870,497)
                                               ------------    ------------
        Net deferred tax assets                $         --    $         --
                                               ============    ============

        The valuation allowances are equal to the deferred tax assets because of
the uncertainty of the future realization of the assets.

13.     COMMITMENTS AND CONTINGENCIES

Lease Commitments

        Total rental expense relating to operating expenses for the years 2004,
2003 and for the period from inception to December 31, 2004, was $84,593,
$87,729 and $1,491,033, respectively.

        In 1999, the Company canceled or terminated various office leases that
were being rented for approximately $17,000 per month. Beginning in 1999, the
Company rented an office at an annual rental of $12,000. As of December 31,
2004, the Company occupied an aggregate of approximately 4,000 square feet near
Atlanta, Georgia under month-to-month leases, for an annual rental of $21,816.

        The Company intends to move its operations to San Diego, California when
cash resources become available. It is currently subleasing from Abel
Laboratories, Inc. ("Abel"), an affiliate of Dr. Long, approximately 5,000
square feet of furnished and laboratory equipped space. Under the arrangement,
the Company is to pay Abel the same amount of rent paid by Abel to the landlord,
without any adjustment. Abel's rent is $58,230, with an automatic annual
adjustment based upon any increase that may occur in the Consumer Price Index.
Abel waived the rental charge during three months of 2002. Abel's lease expires
April 1, 2007.

Employee Agreements

        The Company has no current employment agreements. Pursuant to an
agreement with a former officer, the Company is obligated to pay royalties of 2%
and 1%, respectively, on two inventions for which the officer was the inventor
or co-inventor through December 31, 2005 or until such royalties reach $8
million, whichever occurs first. No royalties had been paid or accrued to the
officer as of December 31, 2004.

Vendor Commitments

        As part of its ongoing efforts to conserve cash resources, the Company,
in 1999, negotiated agreements and settlements with certain vendors. During the
period ended December 31, 1999, certain vendor-payable amounts were settled for
about $77,000 less than the invoiced amounts. In addition, approximately
$101,000 of the current accounts payable balances at December 31, 2004 and 2003
has been deferred by agreement with vendors until the Company has adequate
financial resources.

                                      F-23
<PAGE>

Bank Line of Credit

        The Company has a revolving line of credit arrangement with a commercial
bank to borrow up to $1.2 million with interest at the greater of the bank's
prime rate (5.5% at December 31, 2004) plus 0.5% or 5%. The borrowing limit
under the line of credit, which originally was $500,000, was increased in
November 2001 to $750,000, in January 2002 to $1 million and in June 2003 to
$1.2 million. The line of credit expires, unless renewed, on December 2, 2005.
Dr. Long and certain of his affiliates have guaranteed the repayment of all
borrowings, which also are secured with certain assets of the guarantors. As of
December 31, 2004, the Company had drawn the full amount of $1.2 million under
the line of credit.

Redesign Agreement

        In October 2001, the Company entered into a $364,000 contract to
redesign the Biofield Diagnostic System. As of December 31, 2004, the Company
had paid $237,504 and owed $152,195 under the contract, including cost relating
to contract amendments.

Distribution Agreements

        In December 2001, the Company signed an exclusive three-year
distribution agreement to market and to sell the Biofield Diagnostic System in
southern Africa, subject to the distributor achieving specified annual sales
targets. The Company signed similar distribution agreements in 2002 for South
Korea, Brazil, Italy and Philippines and in 2003 for certain Middle Eastern
countries. Except for initial purchases of demonstration devices, no subsequent
purchases have been made and each of the agreements may be terminated by the
Company.

Notes Payable

        In connection with the issuance of its Notes and shares of Common Stock
in the $329,000 private placement (see Notes 9 and 19), the Company is obligated
to issue an additional 125,000 shares of its Common Stock for each $50,000
principal amount of unpaid Notes on May 31, 2005, the date of maturity and the
Notes would be reset to bear interest at 1.5% per month. On December 31, 2004,
the Company defaulted in repaying the notes issued under $1 million private
placement and has recorded $350,000 charge for 2.5 million shares which it is
required to issue to the investors under the terms of the agreement.

        The Notes are due and payable on the earlier of the date that the
Company receives gross proceeds of at least $2.5 million from the sale of its
debt and equity securities (for which purpose, all such sales within a six month
period would be aggregated) or May 31, 2005. Until the Notes issued under the $1
million private placement and $329,000 private placement are repaid, the holders
of the notes have the right to participate in any offering by the Company of its
equity securities (including of convertible debt) by using the Notes (and
accrued interest thereon) to acquire such equity securities at a 25% discount
from the offering price (and if the offering is of convertible debt to acquire
such debt at face with a conversion feature at a 25% discount).

14.      ROYALTY AGREEMENT

         In October 2000, the Company entered into a non-exclusive license
agreement with a manufacturer of medical devices to use the Company's patented
cable designs. The agreement, which was due to expire on December 31, 2003, was
extended to December 31, 2004 in consideration for the acceleration of the final
royalty payment, which was paid in 2003. The Company received $54,616 in 2003
under the agreement. The agreement was not renewed on expiration on December 31,
2004.

                                      F-24
<PAGE>

15.     STOCKHOLDERS' EQUITY

Private Placements in 1993, 1994 and 1995

        In December 1993, the Company completed a private placement of 2,342,118
shares of its Series A Preferred Stock for $9,413,490 (net of related expenses
of $1,126,041). $1 million of the net proceeds were used to pay off related
party loans (see Note 16).

        In September 1994, the Company completed a private placement of 481,644
shares of its Series B Preferred Stock for $1,947,631 (net of related expenses
of $219,761), and issued, for no additional consideration, warrants to purchase
2,843 shares of Common Stock. The warrants expired unexercised in September
1999.

        During 1995, the Company completed a private placement of 2,914,771
units of its securities for $11,980,771 (net of related expenses of $1,135,699).
Each unit consisted of (a) a share of Series C Preferred Stock, (b) one-half of
a warrant to purchase a share of Series D Preferred Stock at $6.00 per share or,
upon the occurrence of certain events (which subsequently occurred), a share of
Series C Preferred Stock at $4.50 per share, and (c) one-half of a warrant to
purchase a share of Series D Preferred Stock at $6.00 per share. In addition,
the purchasers of the units (the "Unit Purchasers") were granted the right, upon
the occurrence of certain events, to receive warrants to purchase 357,192 shares
of Common Stock at an exercise price of $9.18 per share. The warrants expired
unexercised in March 2000.

Initial Public Offering (IPO) in 1996

        In March 1996, the Company completed its IPO of 1,819,000 shares of
Common Stock at a purchase price of $11.00 per share for $18,028,238 (net of
related expenses of $1,980,762). Upon completion of the IPO (a) each outstanding
share of Series A Preferred Stock was converted into .5729 shares of Common
Stock, (b) each outstanding share of Series B Preferred Stock was converted into
..5729 shares of Common Stock, (c) each outstanding share of Series C Preferred
Stock was converted into .4902 shares of Common Stock, (d) each outstanding
warrant to purchase a share of Series C Preferred Stock became exercisable for
..4902 shares of Common Stock, and (e) each outstanding warrant to purchase a
share of Series D Preferred Stock became exercisable for .4902 shares of Common
Stock. The Series C warrants entitled the holders to purchase an aggregate of
78,976 shares, 84,425 shares, and 84,425 shares of Common Stock at an exercise
price of $9.18, $12.24 and $9.18 per share, respectively. The Series C warrants
expired unexercised in June 2000. In June 1996, the Company issued to the Unit
Purchasers warrants to purchase 357,192 shares of Common Stock at an exercise
price of $9.18 per share. These warrants expired unexercised in March 2000.

Private Placements in 1997, 1999 and 2000

        In December 1997, the Company completed a private placement of 2,867,670
shares of Common Stock for $8,380,451 (net of related expenses of $652,710). The
Company also issued to the Unit Purchasers participating in the placement
643,639 shares of Common Stock in exchange for their previously issued warrants
to purchase 1,574,930 shares of Common Stock.

        In December 1999, the Company completed a private placement of 14
million shares of Common Stock for $700,000 (see Note 16).

        In December 2000, the Company completed a private placement of 3 million
shares of Common Stock for $1.5 million.

                                      F-25
<PAGE>

Share Issues to Directors and Officers in 2000

        In January 2000, the Board of Directors authorized the sale of 100,000
shares of Common Stock to each of its two nonaffiliated directors and three of
its then principal executive officers, at a price of $0.05 per share, the same
price at which the Company sold shares of Common Stock in December 1999 in a
private placement. The sale to the directors was based on their foregoing
compensation for their services to the Company during 2000, and the sale to the
executive officers was based on their agreements to accept a maximum salary of
$100,000 in 2000. The Company recognized $198,000 as compensation expense in
2000 for the issuance of these shares.

Voluntary services rendered by Dr. David Long since 2000

        During 2000 and every year thereafter, Dr. Long has provided services to
the Company without compensation. The value of his services has been estimated
at $100,000 for each year, which amount was recorded as a non-cash expense with
a corresponding increase in the additional paid-in capital.

Changes to Authorized Share Capital in 2000

        In October 2000, the Company amended its articles of incorporation to
increase the number of authorized shares of Common Stock from 25 million shares
to 40 million shares, and to reclassify all authorized shares of Preferred Stock
as "undesignated preferred".

Convertible note in favor of Dr. Long in 2002

        In November 2002, the Company issued its 10% three-year promissory
convertible note in the principal amount of $450,000 to Dr. Long in
consideration for his loan to the Company in such amount. The note (with
accrued, unpaid interest thereon) is convertible at the end of three years, at
the option of the holder, into unregistered shares of Common Stock at the rate
of $0.40 per share, the closing price of the Common Stock on November 5, 2002.
At December 31, 2004, the principal and unpaid interest amounted to $552,136
(December 31, 2003 - $501,942).

Shares due for interest accrued on 2002 advances by Dr. Long

        Interest on advances amounting to $1,050,000 from Dr. Long during 2002
is payable in unregistered shares of Common Stock, unless Dr. Long requests
payment in cash for a quarter before the beginning of that quarter. The number
of shares to be issued for the interest accrued during any quarter is determined
using the closing price of the Common Stock on the last business day of the
quarter. At December 31, 2004, an aggregate of 696,778 (December 31, 2003 -
410,358) unregistered shares of Common Stock have been reserved for issuance in
payment of the then accrued interest. At December 31, 2004, the total accrued
interest of $167,129 was added to additional paid-in capital, pending the
issuance of 696,778 shares of Common Stock.

Treasury Stock

        In December 1998, the Company repurchased 2,246,131 shares of Common
Stock for $100. In June 2000, the Company repurchased 60,000 shares of Common
Stock for $3,000 from an executive who resigned. The Company holds all of these
shares in its treasury.

Shares issued to consultants for service rendered in 2003

        In January 2003, the Company issued 50,000 unregistered shares of Common
Stock as consideration for advising the Company in attempting to obtain
additional capital, which services were valued by the Company at $15,000.

        In April 2003, the Company issued 468,750 unregistered shares of Common
Stock as consideration for business and financial advisory services valued by
the Company at $150,000.

                                      F-26
<PAGE>

        In August 2003, the Company issued 225,000 unregistered shares of Common
Stock as consideration for public relations and corporate imaging services
valued by the Company at $24,750, and 50,000 unregistered shares of Common Stock
as consideration for financial advisory services valued by the Company at
$5,500.

Private Placement of $1 million in 2003

        In December 2003, the Company issued 3,187,500 unregistered shares of
its Common Stock to the purchasers in a private placement of 12.75 Units of its
securities for $507,693 (net of related expenses of $129,807). Each Unit
consisted of (i) a non-negotiable, non-transferable, unsecured promissory Note
in the principal amount of $50,000, due and payable on December 31, 2004 and
bearing interest at 12% per annum, payable monthly, and (ii) 250,000 shares of
Common Stock. See Note 9.

        The purchasers of the Units are to receive (i) an additional 125,000
shares of Common Stock for each $50,000 principal amount of Notes which are not
repaid by December 31, 2004, (ii) an additional 25,000 shares of Common Stock
per Unit at the start of each 30 days of delay if the Company has not made an
FDA filing within 180 days of December 4, 2003, and (iii) an additional 25,000
shares of Common Stock per Unit at the start of each 30 days of delay if the
shares of Common Stock issued as a result of the private placement are not
effectively registered with the SEC before July 20, 2004. See Note 13.

        In addition, the placement agent is to receive five year cashless
warrants, excercisable at $0.20 per share, to purchase 10% of the shares of
Common Stock received by the purchasers of the Units.

        The Notes are due and payable on the earlier of the date that the
Company receives gross proceeds of at least $2.5 million from the sale of its
debt and equity securities (for which purpose, all such sales within a six month
period would be aggregated) or December 31, 2004. The Notes were not paid by
December 31, 2004, and the Company is obligated to issue an additional 125,000
shares of Common Stock for each $50,000 principal amount of unpaid Notes and the
Notes would be reset to bear interest at 1.5% per month. The Company is required
to issue 2.5 million shares, and has recorded a charge in these financial
statements of $350,000, calculated using the closing market price of $0.14 per
share on December 31, 2004, the date the notes were due. Until the Notes are
repaid, the holders have the right to participate in any offering by the Company
of its equity securities (including of convertible debt) by using the Notes (and
accrued interest thereon) to acquire such equity securities at a 25% discount
from the offering price (and if the offering is of convertible debt to acquire
such debt at face with a conversion feature at a 25% discount). The Company has
fulfilled its undertaking to register all unregistered shares of Common Stock
issued as part of the private placement, at its expense, and to file a
registration statement with the SEC to effect the registration. The Company has
also complied with the requirement of submitting an application with FDA to
market the Company's device in the United States.

Private Placement of $329,000 in 2004

        On May 3, 2004, the Company signed an agreement similar to the $1
million private placement agreement with the same placement agent to secure
further short-term bridging finance of up to $800,000. Under the new agreement,
the Company sold $329,000 of its securities before it was closed on August 30,
2004. The Company received gross proceeds of $100,000, $154,000 and $75,000
against aggregate issuance of $329,000 principal amount of notes payable and
1,645,000 shares of Common Stock, at a cost of $509,950 on June 1, 2004, July,
2004 and August, 2004, respectively.

        The purchasers of the Units are to receive (i) an additional 125,000
shares of Common Stock for each $50,000 principal amount of Notes which are not
repaid by May, 2005. See Note 13.

        In addition, the placement agent is to receive five year cashless
warrants, excercisable at $0.20 per share, to purchase 10% of the shares of
Common Stock received by the purchasers of the Units.

                                      F-27
<PAGE>

$50,000 notes payable issued in 2004

        On September 8, 2004, the Company signed an agreement for $50,000 with
the placement agent on the same terms and conditions as those for the notes
issued under the $329,000 private placement, and received on September 8, 2004
and November 12, 2004, gross proceeds of $15,644 and $34,356 against issuance of
notes payable of $15,644 and $34,356 and shares of Common Stock of 78,220 and
171,780, respectively.

Sale of shares under Regulation S in 2004

        On October 13, 2004, the Company engaged an investment broker and
consultant to obtain financing its operations while waiting for FDA approval by
offering the Company shares of Common Stock to non-U.S. citizens overseas
investors in accordance with the provisions of Rule 903 or Rule 904 of
Regulation S or pursuant to registration of the securities under the Securities
Act of 1933 at a cost of 50% of the amount of gross capital raised as fees.
Under the agreement, the broker bears all the associated marketing and operating
costs, and is required to offer the shares at a price per share of not less than
$0.10. Under this arrangement, the Company received aggregate gross proceeds of
$123,400 towards an aggregate issuance of 1,224,000 shares of Common Stock
valued at $161,825, with an aggregate discount of $38,425 over the market price
on the date of the sale during the period from October 29, 2004 to December 31,
2004.


16.     RELATED PARTY TRANSACTIONS

The Laboratory Agreement

        In June 1992, the Company entered into a series of agreements with Dr.
Long, then a director of the Company, and Abel Laboratories, Inc. ("Abel") which
is owned by Dr. Long. One of the agreements (the "Laboratory Agreement") engaged
Abel to provide specified preclinical research. Although the Laboratory
Agreement expired in December 1993, the parties agreed that any research
conducted thereafter by Abel for the Company would be pursuant to substantially
the same terms as the Laboratory Agreement. Abel has conducted preclinical
research for the Company since such time, but none during the three years ended
December 31, 2004. Amounts owed to Abel at December 31, 2004 and 2003 are
recorded as "Due to affiliate" in the accompanying financial statements.

        In connection with the Laboratory Agreement, the Company granted Abel an
option to purchase 61,275 shares of Common Stock at $8.16 per share. Following
completion of the Company's Series A Preferred Stock private placement in
December 1993, the exercise price of the option was reduced to $2.04 per share
based on the market capitalization of the Company at such time. These options
expired unexercised in June 2002.

        During 1995, the Company granted Dr. Long options to acquire 24,510
shares of Common Stock at $10.20 per share, exercisable when services were to be
rendered in future. These options expired unexercised in March 2000.

        The Company, in January 1994, entered into a patent royalty agreement
with Dr. Long and Abel, which assigned all rights to the Company for any
patented inventions resulting from performance under the Laboratory Agreement.
In return, the Company agreed to pay royalties, ranging from 5% to 20 % of
revenue generated from such patented inventions, up to a maximum of $2 million
per invention. As of December 31, 2004, the Company has been issued one United
States patent in which Dr. Long is a named co-inventor, but the Company had not
paid or accrued any royalties to Dr. Long under the agreement.

                                      F-28
<PAGE>

The Long Transaction

        Dr. Long resigned as a director of the Company in April 1993. In
December 1999, Dr. Long and his son, Raymond Long, M.D., and certain of their
affiliated entities, purchased 14 million shares of Common Stock from the
Company (the "Long Transaction") for $700,000. Simultaneously, Dr. Long was
appointed a director of the Company, and the remaining directors and the
executive officers resigned. Dr. Long reconstituted the Board of Directors of
the Company. Dr. Raymond Long was appointed a director, and the Board elected
Dr. Long as Chairman and Chief Executive Officer.

        In connection with the Long Transaction, D. Carl Long ("Mr. Long"), a
son of Dr. Long, received a payment of $60,000 from the Company in consideration
for a release of all obligations owed to him by the Company under his then
employment agreement and consulting arrangement, as well as for a release of all
then outstanding options to purchase Common Stock. The employment agreement,
dated July 7, 1997, was for a term through July 7, 2000 and provided for Mr.
Long's employment, as President and Chief Executive Officer of the Company, at
an initial base compensation of $250,000 annually, plus a bonus of $70,000
subject to realization of certain milestones, and an automatic 5% cost-of-living
increase. Mr. Long also had been issued options to purchase an aggregate of
338,238 shares of Common Stock at prices ranging from $1.02 to $9.18 per share.
The consulting arrangement had been entered into as of April 15, 1999 for a
monthly fee of $15,000. Although Mr. Long received no compensation for the three
years ended December 31, 2004, he received $702,467 for the period from
inception to December 31, 2004. In addition, although Mr. Long received no
reimbursements for any expenses during the three years ended December 31, 2004,
he received reimbursement of $313,425 for the period from inception to December
31, 2004.

        An entity controlled by C. Leonard Gordon, who had been the Chairman,
President and Chief Executive Officer of the Company until his resignation in
1999 (in connection with the Long Transaction), had been receiving a fee of
$80,000 annually for Mr. Gordon's services. During the three years ended
December 31, 2004, Mr. Gordon and his affiliated entities received no payments
from the Company. In connection with the Long Transaction, Mr. Gordon and his
wife sold to Dr. Long 1,068,034 shares of Common Stock for $53,700.

        Harvey Horowitz, who resigned as a director in connection with the Long
Transaction, had performed legal services for the Company prior to his
resignation. During the three years ended December 31, 2004, Mr. Horowitz and
his affiliated law firm received no payments, but received $109,095 for the
period from inception to December 31, 2004.

Share Issues to Directors and Officers in 2000

        In January 2000, the Board of Directors authorized the sale of 100,000
shares of Common Stock to each of its then two nonaffiliated directors and three
of its then principal executive officers, at a price of $0.05 per share, the
same price at which the Company sold shares of Common Stock in a private
placement in December 1999. See Note 15.

Voluntary services rendered by Dr. Long Since 2000

        From 2000 to 2004, Dr. Long provided services to the Company without any
compensation or benefit realized by Dr. Long. The value of his services was
estimated at $100,000 for each year, and was recorded as a non-cash expense with
a corresponding increase in the additional paid-in capital.

Sub-Lease from Abel Laboratories, Inc.

        In January 2001, the Company entered into an oral arrangement with Abel
for the sublease of approximately 5,000 square feet of furnished and laboratory
equipped space in San Diego, California. See Note 13.

                                      F-29
<PAGE>

Stock options to Dr. Long for line of credit guarantee in 2001

        In 2001, the Company granted Dr. Long options to acquire 350,000 shares
of Common Stock at $0.62 per share, the market price of the Common Stock on the
date of the grant, as compensation for his guaranty and collateralization of the
Company's line of credit from a bank during 2001. The options were exercisable
upon issuance and expire on November 28, 2006.

Advances and Long-Term Loan received from Dr. Long in 2002, 2003 and 2004

        From March 2002 to December 2004, Dr. Long and his affiliates extended
financial support to the Company aggregating $2.36 million, $450,000 note and
accrued interest of $102,136 thereon is repayable in November 2005 and the
balance of which is repayable on demand. See Notes 10 and 11.

17.     STOCK OPTIONS

        At December 31, 2004, the Company has three stock option plans (the
"Plans"), which are described below.

The 1992 Employee Stock Incentive Plan (the "1992 Plan")

        The 1992 Plan provides for the grant of stock options, stock
appreciation rights ("Rights") and stock bonus awards ("Awards") to acquire a
maximum of 147,060 shares of Common Stock. The 1992 Plan permits the granting of
incentive stock options ("ISOs") and nonqualified stock options ("NSOs"). The
1992 plan provides that the exercise price for ISOs and Rights may not be less
than the fair market value per share at the date of grant. The price of NSOs is
determined at the time of grant. ISOs and Rights must expire within 10 years of
the date of grant. However, if ISOs are granted to persons owning more than 10 %
of the voting stock of the Company, the exercise price may not be less than 110
% of the fair market value per share at the date of grant and the term of such
ISOs may not exceed five years. Vesting of options granted under the 1992 Plan
is determined at the time of grant and has generally been set at two or three
years. No further options may be granted under the 1992 Plan.

The Biofield Corp. 1996 Option Plan (the "1996 Plan")

        The 1996 Plan, as amended, provides for the grant of options to acquire
a maximum of 1.5 million shares of Common Stock. The 1996 Plan permits the
granting of ISOs and NSOs. ISOs may be granted to individuals who, at the time
of grant, are employees of the Company or its affiliates. NSOs may be granted to
directors, employees, consultants and other agents of the Company or its
affiliates. The 1996 Plan provides that the exercise price for ISOs may not be
less than the fair market value per share of the Common Stock at the date of
grant and the exercise price for NSOs may not be less than 85% of such fair
market value. Each ISO must expire within 10 years of the date of grant.
However, if ISOs are granted to persons owning more than 10 % of the voting
stock of the Company, the exercise price may not be less than 110 % of the fair
market value per share at the date of grant and the term of such ISOs may not
exceed five years. Unless otherwise provided at the time of grant, options
granted under the 1996 Plan vest at a rate of 25 % per year over a four-year
period.

                                      F-30
<PAGE>

The Biofield Corp. 1996 Stock Options Plan for Non-Employee Directors (the
"Directors' Plan")

        The Directors' Plan provides for the automatic grant of NSOs to
non-employee directors. Options under the Directors' Plan may be granted only to
directors of the Company who are not employees of the Company. Under the
Directors' Plan, 150,000 shares of Common Stock have been reserved for issuance
upon exercise of the options. Each eligible director serving on the Board of
Directors on the effective date of the Directors' Plan automatically received an
option to purchase 10,000 shares of Common Stock, subject to vesting in three
equal annual installments. Subsequently, whenever a new director joins the
Board, such director automatically receives options, unless waived, to purchase
10,000 shares of Common Stock on the date of his or her election to the Board,
subject to vesting in three equal annual installments. In each year, other than
the year in which a director receives an initial grant of options, such director
automatically receives, unless waived, options to purchase 2,500 shares of
Common Stock. The term of each option granted under the Directors' Plan is 10
years. The exercise price of each option under the Directors' Plan must be equal
to the fair market value of the Common Stock on the grant date.

        All options granted under the Plans have an exercise price equal to or
in excess of the fair market price of the Common Stock on the grant date.

        In 2003, the Company granted NSOs under the 1996 Stock Option Plan to
purchase an aggregate of 514,227 shares of Common Stock at $0.33 per share, the
closing market price of the Common Stock on the date of the grant, to five of
its employees in connection with the reduction in their remuneration during the
first four months of 2003.

        A summary of the status of the Plans as of December 31, 2004 and 2003,
and the changes during the years ended December 31, 2004 and 2003 is presented
below:

<TABLE>
<CAPTION>
                                                     2004                           2003
                                         ----------------------------   ----------------------------
                                                           Average                        Average
                                            Options     Exercise Price     Options     Exercise Price
<S>                                         <C>          <C>                <C>         <C>
Outstanding at beginning of period            829,227    $       0.44        450,000    $       0.83
Granted                                            --                        514,227             .33
Exercised
Canceled                                     (355,396)           0.41       (135,000)           1.32
                                         ------------    ------------   ------------    ------------
Outstanding at end of year                    473,831            0.46        829,227            0.44
                                         ------------    ------------   ------------    ------------
Options exercisable at year end               366,331            0.41        614,227            0.38
                                         ------------    ------------   ------------    ------------
Options available for future grant          1,210,496
                                         ------------

Weighted-average fair value of options
  granted during the period              $ N/A                          $       0.33
                                         ------------                   ------------
</TABLE>

        The Company, through 1998, granted NSOs outside of the Plans to certain
officers and directors of, and consultants to, the Company which are exercisable
over various periods through November 28, 2006. Certain of these NSOs are
performance-based options and become exercisable solely upon the achievement of
certain milestones as described in the option agreements and certain NSOs become
exercisable immediately in the event of a merger or sale of all or substantially
all of the assets of the Company.

                                      F-31
<PAGE>

        In 2001, NSOs were granted to Dr. Long as compensation for his guaranty
and collateralization of the Company's line of credit from a bank during 2001.
The options were exercisable upon issuance and expire on November 28, 2006. See
Note 16.

        A summary of the status of the Company's NSOs granted outside the Plans
as of December 31, 2004 and 2003 and the changes during 2004 and 2003 are
presented below:

<TABLE>
<CAPTION>
                                                     2004                           2003
                                         ----------------------------   ----------------------------
                                                          Weighted-                      Weighted-
                                                           Average                        Average
                                            Options     Exercise Price     Options     Exercise Price
<S>                                           <C>                <C>         <C>                <C>
Outstanding at beginning of period            368,382            0.74        386,764            1.06
Granted                                            --
Exercised                                          --                                             --
Canceled                                      (18,382)           3.00        (18,382)           7.48
                                         ------------    ------------   ------------    ------------
Outstanding at end of year                    350,000            0.62        368,382            0.74
                                         ------------    ------------   ------------    ------------
Options exercisable at year end               350,000            0.62        368,382            0.74
                                         ------------    ------------   ------------    ------------

Weighted-average fair value of options
  granted during the period              $ N/A                          $ N/A
                                         ------------                   ------------
</TABLE>

        The following table summarizes information about stock options
outstanding at December 31, 2004:

                    Number                           Number
                  Outstanding      Weighted-       Exercisable      Weighted-
    Range             at            Average            at            Average
 of Exercise     December 31,      Remaining      December 31,       Exercise
    Prices           2004         Life (Yrs.)         2004            Price
-------------------------------------------------------------------------------

    $ 0.33          258,831           3.08           258,831         $ 0.33
      0.44            5,000           1.75             3,750           0.44
      0.62          560,000           1.92           453,750           0.62
                   --------                         --------
                    823,831                          716,331
                   ========                         ========

        As provided by SFAS 148, the fair value of each option granted before
the IPO in 1996 is estimated on the date of grant using the minimum value
method, and the fair value of each option grant after the IPO is estimated on
the date of grant using the Black-Scholes option pricing model. The following
weighted-average assumptions were used for option grants during 2003 with an
expected life of five years: (a) dividend yield of 0.0%; (b) expected volatility
of 98.76%; and (c) risk-free interest rate of 3.98%. There were no options
granted in 2004 or 2003.

        Had compensation cost for the Plans been determined based on the fair
value at the grant dates consistent with the method of SFAS 123, the Company's
net loss and net loss per common and common equivalent share for the years ended
December 31, 2004 and 2003 would have been increased to the pro forma amounts
indicated below:

                                      F-32
<PAGE>

                                                2004            2003
                                           ----------------------------
       Net loss, as reported               $ (3,846,517)   $ (2,164,698)
       Add: Total stock-based
         employee compensation
         expense determined under
         fair value based method for
         all awards, net of related tax
         effects                                 (5,659)       (133,961)
                                           ------------    ------------
       Pro forma net loss                  $ (3,852,176)   $ (2,298,659)
                                           ============    ============

       Earnings per share:
       Basic and diluted loss per share:
         As reported                       $      (0.12)   $      (0.08)
         Pro forma                         $      (0.12)   $      (0.09)
                                           ============    ============

18.     DEVELOPMENT STAGE COMPANY

        The Company is in the development stage, and its operations are subject
to the risks inherent in the establishment of a new business with previously
untested technology. The Company has generated nominal revenues and has
accumulated losses of more than $70 million for the period from inception
through December 31, 2004. Since inception, the Company has financed its
operations primarily by the issuance of equity securities, interest income on
the then unutilized proceeds from these issuances and short-term borrowings.

        During 2004, the Company financed its operations with (a) proceeds of
$741,500 from issuance of short-term notes, (b) $253,698 of advances from Dr.
Long and his affiliates, and (c) $161,825 from issuance of shares of Common
Stock. See Notes 8, 9 and 10.

        The Company requires the immediate infusion of long-term capital to
continue it operations. See Note 1.

19.     SUBSEQUENT EVENT

Sale of shares under Regulation S in 2005

        On October 13, 2004, the Company engaged an investment broker and
consultant to obtain financing its operations while waiting for FDA approval by
offering the Company shares of Common Stock to non-U.S. citizens overseas
investors in accordance with the provisions of Rule 903 or Rule 904 of
Regulation S or pursuant to registration of the securities under the Securities
Act of 1933 at a cost of 50% of the amount of gross capital raised as fees.
Under the agreement, the broker bears all the associated marketing and operating
costs, and is required to offer the shares at a price per share of not less than
$0.10. Under this arrangement, the Company received aggregate gross proceeds of
$123,400 against aggregate issuance of 1,224,000 shares of Common Stock, at an
aggregate discount of $38,425 over the market price on the date of the sale
during the period from October 29, 2004 to December 31, 2004. Additionally, from
January 1, 2005 to March 24, 2005, the Company has received aggregate gross
proceeds of $280,816 against aggregate issuance of approximately 2.8 million
shares of Common Stock at $0.10 per share and payment of 50% agent's fees
amounting to $140,408. The Company continues to sell its shares of Common Stock
under this arrangement to fund its operations.

                                      F-33
<PAGE>

Increase in authorized capital to 60 million shares

        The Board of Directors and the majority of the stockholders of the
Company have approved the increase of the Company's authorized capital of Common
Stock from 40 million shares to 60 million shares. The approval was granted
conditioned upon the amendment not taking effect until at least 20 days after
the mailing of an Information Statement to all registered stockholders. The
Board sent out the Information Statement on March 17, 2005, and the Company
filed on April 12, 2005 with Secretary of State of the State of Delaware the
certificate of Amendment to Articles of Incorporation described in its
Definitive Information Statement filed on March 17, 2005.

New Evaluation Request to FDA

        The notified body, KEMA Registered Quality, Inc., submitted a formal
510(k) application to the FDA on November 16, 2004. FDA informed the Company on
December 3, 2004 that a manufacturer whose device is found to be not
substantially equivalent to a predicate device can request the FDA to make a
risk-based classification for its device. However, the letter also included a
statement that the FDA believes that "based on the review of your device,
general controls would be inadequate and special controls difficult to develop,
to provide reasonable assurance of the device's safety and effectiveness." On
January 5, 2005, in accordance with recommended FDA procedure, the Company
submitted a Request for Evaluation of Automatic Class III Designation for the
Biofield(R) Breast Proliferation Rate Detection System under ss.513(f)(2) of the
Cosmetic Act.

                                      F-34
<PAGE>

Item 8. Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure.

        On November 20, 2003, upon recommendation of our Board of Directors, we
dismissed our independent accountant, Deloitte & Touche LLP ("Deloitte").
Deloitte's report on our financial statements for the year ended December 31,
2002 did not contain an adverse opinion or disclaimer of opinion; however, the
audit report contained an explanatory paragraph regarding substantial doubt
about our ability to continue as a going concern. During the year ended December
31, 2002 and the subsequent interim period through November 20, 2003, we had no
disagreement with Deloitte on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure. We engaged
Russell Bedford Stefanou Mirchandani LLP ("RBSM") as our independent accountant
as of November 20, 2003; they audited our financial statements for the years
ended December 31, 2003 and December, 2004. Prior to its engagement, we did not
consult with RBSM with respect to the application of accounting principles to a
specified transaction, either completed or proposed, or the type of audit
opinion that might be rendered on our consolidated financial statements, or with
regard to any of the items set forth in Item 304(a) (2) (i) and (ii) of
Regulation S-B.

Item 8A. Controls and Procedures.

        Dr. David Long, our chief executive officer, and John Stephens, our
chief financial officer, have evaluated the effectiveness of our disclosure
controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the
Securities Exchange Act of 1934) as they existed at December 31, 2004.

        Based on his evaluation, our Chief Executive Officer and Chief Financial
Officer concluded that our disclosure controls and procedures need improvement
and were not adequately effective as of December 31, 2004 to ensure timely
reporting with the Securities and Exchange Commission. Our management is in the
process of identifying deficiencies with respect to our disclosure controls and
procedures and implementing corrective measures, which includes the
establishment of new internal policies related to financial reporting.

Changes in Internal Control over Financial Reporting

        As required by Rule 13a-15(d), the Company's Chairman and Chief
Financial Officer, also conducted an evaluation of Biofield's internal controls
over financial reporting to determine whether any changes occurred during the
fourth fiscal quarter that have materially affected, or are reasonably likely to
materially affect, the Company's internal control over financial reporting.
During the preparation of the Company's financial statements as of and for the
year ended December 31, 2004, the Company has concluded that the current system
of disclosure controls and procedures was not effective because of the internal
control weaknesses identified below. As a result of this conclusion, the Company
has initiated the changes in internal control, to the extent possible given
limitations in financial and manpower resources, also described below. It should
be noted that any system of controls, however well designed and operated, can
provide only reasonable, and not absolute, assurance that the objectives of the
system will be met. In addition, the design of any control system is based in
part upon certain assumptions about the likelihood of future events.

Lack of Adequate Accounting Staff

        Due to limitations in financial and management resources, the Company
does not have adequate accounting staff. As a result, the Company took steps to
address its understaffed Finance and Accounting team to correct this material
weakness. The Company engaged an independent contractor with extensive CFO-level
management and SEC reporting experience in public companies. The Company feel's
this addition to the Company's Finance and Accounting team will improve the
quality of future period financial reporting.

                                       30
<PAGE>

Item 8B. Other Information

        None.


                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
        with Section 16(a) of the Exchange Act.

Our directors and executive officers are:

Name                                Age     Positions and Offices

David M. Long, Jr., M.D., Ph.D.     76      Chairman of the Board and Chief
                                            Executive Officer

Raymond A. Long, M.D.               45      Director

John D. Stephens                    46      Director and Senior Vice President
                                            and Chief Operating Officer

        Each of our current directors was appointed to serve as a director by
the then existing Board of Directors. Each director serves until the next annual
meeting of stockholders and until his respective successor is elected and
qualified, or until his earlier resignation or removal. Our executive officers
are appointed by, and serve at the discretion of, our Board of Directors for a
term ending at the first meeting of our Board of Directors after the next annual
meeting of stockholders, or until his earlier resignation.

        Dr. David Long was appointed a director as of December 28, 1999 and was
elected our Chairman and Chief Executive Officer on January 9, 2000. Dr. Long
previously had served as a director from August 1992 until April 1993. Dr. Long
is a private investor and President of Abel Laboratories Inc., a currently
inactive private research laboratory that, from time to time, has conducted
research and development on a contract basis relating to medical devices and
pharmaceutical applications of interest to Dr. Long. Dr. Long previously was a
Professor of Surgery and Chief of Cardiovascular and Thoracic Surgery at the
University of Illinois, Abraham Lincoln School of Medicine, and a Clinical
Associate Professor of Surgery and Radiology at the University of California,
San Diego.

        Dr. Raymond Long was appointed a director on January 9, 2000. Dr.
Raymond Long, a graduate of The University of Michigan Medical School, is an
orthopedic surgeon in private practice in Saint Albans, Vermont. From July 1999
to June 2000, Dr. Raymond Long was a Fellow in shoulder and elbow surgery at
Florida Orthopedics Institute, and for more than the five years prior thereto
was associated with the University of Montreal, initially as a Resident in
orthopedics and then as a Fellow in anthroplasty and arthroscopy.

                                       31
<PAGE>

        John D. Stephens was elected our Senior Vice President and Chief
Operating Officer on January 3, 2000 and was appointed a director on December
29, 2002. For more than the three years prior to January 3, 2000, Mr. Stephens
was our Senior Director - Manufacturing, Operations and Logistics.

        No family relationship exists among any of our directors or executive
officers, except that Dr. Raymond Long is the son of Dr. David Long.

        As none of our directors would be considered to be independent, we do
not have an Audit Committee. Our most recent independent directors resigned in
December 2002, and we have not had the available financial resources to obtain
any replacements. Furthermore, none of our directors would be considered to have
the experience to be considered to be an audit committee financial expert.

        Our Board of Directors does not have a separate nominating committee,
and has no formal procedures relating to consideration of nominees by its
stockholders of persons proposed to be elected to its Board of Directors.

        None of our directors or executive officers has been involved in any
legal proceedings during the past five years that would be material to an
evaluation of his ability or integrity to act as such.

        Our Board of Directors has adopted a Code of Ethics which applies to our
principal executive officer, principal financial officer, principal accounting
officer or controller and persons performing similar functions. A copy of our
Code of Ethics will be furnished, without charge, to any person upon written
request to John Stephens, Senior Vice President, at our principal executive
offices.


Other Significant Employees

        Due to lack of resources, we have not been able to hire any other
employees on a permanent basis. We rely on some of our past employees for vital
and critical services, if available, as consultants or seek required services
from other outside professionals.

Section 16(a) Beneficial Ownership Reporting Compliance

        Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and persons who beneficially own more than ten percent of the
Company's Common Stock, to file initial reports of beneficial ownership and
reports of changes in beneficial ownership with the SEC. Executive officers,
directors and greater than ten percent beneficial owners are required by the SEC
to furnish the Company with copies of all Section 16(a) forms they file.

        Based upon a review of the copies of such forms furnished to the Company
and written representations from the Company's executive officers and directors,
the Company believes that during fiscal year ended December 31, 2004 all Section
16(a) filing requirements applicable to its executive officers, directors and
greater than ten percent beneficial owners were complied with on a timely basis,
except for each of Dr. David M. Long, Jr., President and Chief Executive
Officer, and Long Family Partners II LP, an owner of ten- (10%) percent or more
of the Company's Common Stock, each of whom failed to file on a timely basis a
report required by Section 16(a) with respect to six transactions and one
transaction, respectively. Each transaction has been subsequently reported.

                                       32
<PAGE>

Item 10. Executive Compensation.

Summary of Executive Compensation

        The following table sets forth information concerning compensation for
services in all capacities awarded or paid to, or earned by, our chief executive
officer and our other executive officer who received, on an accrual basis, cash
compensation from us aggregating at least $100,000 during the year ended
December 31, 2004.

<TABLE>
<CAPTION>
                                          Summary Compensation Table
                                                                                         Long-Term
                                                                                        Compensation
                                                      Annual Compensation                  Awards
Name                                                                                No. of Securities       All Other
and Principal Positions              Year       Salary        Bonus       Other     Underlying Options    Compensation
-----------------------              ----       ------        -----       -----     ------------------    ------------
<S>                                  <C>      <C>           <C>         <C>            <C>                       <C>
David M Long, Jr., M.D.,Ph.D.        2004           --             --        --           --                     --
  Chairman and Chief                 2003           --             --        --           --                     --
  Executive Officer                  2002           --             --        --           --                     --

John D. Stephens                     2004     $133,907(1)          --   $10,615(2)        --                     --
  Senior Vice President and          2003     $ 60,843(3)   $   2,000        --      101,538 shares(4)           --
  Chief Operating Officer            2002     $100,000             --        --           --                     --
</TABLE>
-------------------------------

     (1)  Includes $33,574 salary for 2003 paid to him in 2004; excludes 2004
          salary of $9,667 not paid in 2004.
     (2)  Represents part of agreed premium on 2003 unpaid salary paid in 2004.
     (3)  Excludes $33,574 salary due to him for 2003, but not paid. This unpaid
          salary, and an agreed premium thereon (and for late paid salary) of
          $48,583, aggregating $82,157, is being deferred until we determine
          that adequate funds are available.
     (4)  Represents stock options granted on February 4, 2003 under our 1996
          Stock Option Plan at an exercise price of $0.33 per share, the closing
          price of our common stock on the date of grant. These options
          currently are immediately exercisable. The options were issued in lieu
          of salary for four months in 2003.

Stock Options Granted

        We did not grant any stock options or stock appreciation rights in 2004
to our Executive Officers.

Aggregated Options Exercised and Year-End Values

        The following table sets forth the total number of exercisable and
unexercisable stock options held by each of our executive officers named in the
above Summary Compensation Table who held any stock options as of December 31,
2004. No options to purchase our common stock were exercised by any of our
executive officers during the year ended December 31, 2004 and no stock
appreciation rights were outstanding at December, 2004.

                                       33
<PAGE>

<TABLE>
<CAPTION>
      Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Values

                          Number of Securities Underlying      Value of Unexercised
                                Unexercised Options            In-the-Money Options
                                at December 31, 2004           at December 31, 2004
Name                         Exercisable   Unexercisable    Exercisable   Unexercisable
<S>                        <C>                    <C>            <C>            <C>
David M. Long, Jr.         350,000 shares        -0-            -0-            -0-

John D. Stephens           186,538 shares        -0-            -0-            -0-
</TABLE>

Compensation of Directors

        No cash compensation was paid to our directors during the year ended
December 31, 2004, and we have no standard arrangements pursuant to which
directors are compensated for any services provided as such.

        Our 1996 Stock Option Plan for Non-Employee Directors provides for the
automatic grant of nonqualified stock options to non-employee directors. Under
the Plan, 150,000 shares of our common stock have been reserved for issuance
upon exercise of options to non-employee directors. The Plan provides for the
automatic grant of options to eligible directors. Each non-employee director who
joins the Board will automatically receive, unless waived, an initial grant of
options to purchase 10,000 shares of our common stock at an exercise price equal
to the fair market value per share at the date of grant, subject to vesting in
three equal annual installments. In each year, other than the year in which a
director receives an initial grant of options, that director will automatically
receive, unless waived, options to purchase 2,500 shares of our common stock on
the date of the Annual Meeting of Stockholders, which vest immediately upon
being granted. No options have been granted under the Plan during the last five
years. If any options granted under the Plan, for any reason, expire or are
canceled or otherwise terminated without having been exercised in full, the
shares allocable to the unexercised portion of these options again become
available for grants under the Plan. The term of each option granted under the
Plan is ten years. Options granted under the Plan must be exercised before the
earlier of (a) the scheduled expiration date, or (b) one year following the date
of termination of service. The exercise price of an option is payable upon
exercise in cash. As of March 22, 2005, options for 150,000 shares of our common
stock are available for future grant under the Plan. Unless sooner terminated by
the Board, the Plan expires in January 2006.

Employment contracts

        We do not have any employment contracts or change-in-control
arrangements with any of our executive officers. Mr. Stephens is currently
employed by us at an annual salary of $110,000.

Item 11. Security Ownership of Certain Beneficial Owners and Management and
         Related Stockholder Matters.

        The following table sets forth, as of February 1, 2005, the number of
shares of our common stock beneficially owned by (a) each person or group who is
known to us to be the beneficial owner of more than 5% of our outstanding common
stock, (b) each of our current directors, (c) each of the persons named in the
Summary Compensation Table appearing under Item 10. - "Executive Compensation",
and (d) all our directors and executive officers, as a group (three persons).
Except as indicated in the footnotes to this table, we believe that the persons
named in this table have sole voting and investment power with respect to the
shares of our common stock indicated. As of such date, we had 34,348,472 shares
of Common Stock outstanding and no shares of Preferred Stock outstanding.

                                       34
<PAGE>

<TABLE>
<CAPTION>
Name (1)                                                  Shares Beneficially Owned (2)    Percent of Class
<S>                                                                <C>                           <C>
David M. Long, Jr., M.D. Ph.D. (3)                                 9,205,635(4)                  26.8%

Raymond A. Long, M.D. (5)                                          3,244,036(6)                   9.4%

John D Stephens (7)                                                  286,538(8)                   0.8%

Donna R. Long (9)                                                  9,205,635(10)                 26.8%

David and Donna Long Family Foundation (11)                        2,656,087                      7.7%

Capital Growth Equity Fund, LLC (12)                               2,000,000                      5.8%
All directors and executive officers, as a group (3 persons)      12,736,209(13)                 37.1%
</TABLE>
--------------------------

     (1)  The address for each person or entity, except as otherwise indicated,
          is c/o Biofield Corp., Suite M, 1025 Nine North Drive, Alpharetta,
          Georgia 30004.

     (2)  All shares are held of record, unless otherwise stated.

     (3)  Dr. David Long serves as Chairman of the Board of Directors and Chief
          Executive Officer. Dr. David Long is the father of Dr. Raymond Long.

     (4)  Consists of (a) 309,477 shares held of record, (b) 1,623,862 shares
          held by the David M. Long, Jr. Separate Property Trust, of which Dr.
          Long is trustee (including 696,788 unissued shares (which are
          currently issuable) accrued to the Trust's account for interest due on
          the Trust's loan to us, which interest is payable in shares of our
          common stock at the end of each quarter), (c) 236,299 shares owned by
          Long Family Partners II, LP, of which Dr. Long is the managing
          partner, (d) 93,367 shares (of which 8,087 shares are held in "street
          name") held by the Long Family Trust, of which Dr. Long and his spouse
          are co-trustees, with respect to which beneficial ownership is
          disclaimed, (e) 2,652,087 shares held by the David and Donna Long
          Family Foundation, of which Dr. Long was the founder, with respect to
          which beneficial ownership is disclaimed, (f) 2,323,590 shares held by
          Donna R. Long, Dr. Long's spouse, with respect to which beneficial
          ownership is disclaimed, (g) 923,223 shares held by the Donna R. Long
          Separate Property Trust, of which Dr. Long's spouse is trustee, with
          respect to which beneficial ownership is disclaimed, (h) 693,720
          shares held in trusts for the benefit of Dr. Long's grandchildren, of
          which Dr. Long is co-trustee, and (i) 350,000 shares currently
          issuable upon exercise of stock options.

     (5)  Dr. Raymond Long serves as Director. Dr. Raymond Long is the son of
          Dr. David Long.

     (6)  Consists of (a) 439,036 shares held of record, (b) 2,800,000 shares
          held by Raymond A. Long u/a 01/01/91 retirement plan, and (c) 5,000
          shares currently issuable upon exercise of stock options.

     (7)  Mr. Stephens serves as Director, Senior Vice President and Chief
          Operating Officer.

     (8)  Consists of (a) 100,000 shares held of record, and (b) 186,538 shares
          currently issuable upon exercise of stock options.

     (9)  Ms. Long is Dr. David M. Long's spouse.

     (10) Consists of (a) 2,323,590 shares held of record, (b) 93,367 shares (of
          which 8,087 shares are held in "street name") by the Long Family
          Trust, of which Ms. Long and her spouse are co-trustees, with respect
          to which beneficial ownership is disclaimed, (c) 2,652,087 shares held
          by the David and Donna Long Family Foundation, of which Ms. Long's
          spouse, Dr. David Long is a founder, with respect to which beneficial
          ownership is disclaimed, (d) 693,720 shares held in trusts for the
          benefit of Dr. Long's grandchildren, of which Dr. David M. Long is
          co-trustee and Donna R. Long is the grantor, with respect to which
          beneficial ownership is disclaimed, (e) 923,223 shares held by the
          Donna R. Long Separate Property Trust, of which Ms. Long is trustee,

                                       35
<PAGE>

          with respect to which beneficial ownership is disclaimed, (f) 309,477
          shares held by Dr. David M. Long, Ms. Long's spouse, with respect to
          which beneficial ownership is disclaimed, (g) 236,299 shares owned by
          Long Family Partners II, LP (referred to in note 3, above), of which
          Ms. Long's spouse is the managing partner, with respect to which
          beneficial ownership is disclaimed, (h) 1,623,862 shares held by the
          David M. Long, Jr. Separate Property Trust, of which Dr. Long is
          trustee (including 696,788 unissued shares (which are currently
          issuable) accrued to the Trust's account for interest due on the
          Trust's loan to us, which interest is payable in shares of our common
          stock at the end of each quarter), with respect to which beneficial
          ownership is disclaimed, and (i) 350,000 shares currently issuable to
          Dr. Long upon exercise of stock options, with respect to which
          beneficial ownership is disclaimed.

     (11) David and Donna Long Family Foundation is a Delaware non-stock,
          non-profit corporation, of which Dr. David Long is the founder. Dr.
          David Long does not have the ability to sell its assets and vote any
          of its securities; accordingly, he disclaims beneficial ownership of
          any securities held by the David and Donna Long Family Foundation. The
          Foundation's address is David and Donna Long Family Foundation c/o
          Roberts & Holland LLP, 825 Eighth Avenue, 37th Floor, New York, NY
          10019, Attn: JoAnn Luehring, Director, President and Treasurer.

     (12) Capital Growth Equity Fund I, LLC has filed a Schedule 13G with the
          SEC, dated October 20, 2004, in which it indicates that as of
          September 8, 2004 (a) its address is 225 NE Mizner Blvd., Suite 750,
          Boca Raton, Florida 33432, (b) it disclaims any beneficial ownership
          in the shares it reports, (c) such shares are owned for certain client
          accounts, and (d) it and such accounts are not acting as a group for
          purposes of Section 13(d) under the Securities Exchange Act of 1934.

     (13) Consists of the amounts listed in the table as being beneficially
          owned by Dr. David Long, Dr. Raymond Long and John D. Stephens.

        We do not know of any arrangements that may result in a change of
control of our company.


Securities Authorized for Issuance under Equity Compensation Plans

        The following table sets forth, as of December 31, 2004 (a) the number
of our securities issuable upon the exercise of outstanding options, warrants
and rights, (b) the weighted-average exercise price of such outstanding options,
warrants and rights, and (c) the number of our securities remaining available
for future issuance, with respect to each of our compensation plans (including
individual compensation arrangements).

                                       36
<PAGE>

<TABLE>
<CAPTION>
                                     Equity Compensation Plan Information

                                                                                   (c)
                                                                          Number of securities
                                 (a)                                       remaining available
                        Number of securities             (b)              for future issuances
                          to be issued upon        Weighted-average           under equity
                             exercise of          exercise price of        compensation plans
Plan category           outstanding options,     outstanding options,     (excluding securities
                         warrants and rights     warrants and rights       reflected in column
                                                                                  (a))
<S>                           <C>                       <C>                     <C>
Equity compensation
  plans approved by
  security holders              823,831                 $0.53                   1,210,496

Equity compensation
  plans not approved by
  security holders              939,500                  0.20                          -0-

      Total                   1,763,331                 $0.35                   1,210,496
</TABLE>

        From time to time, we have entered into agreements with third parties
who have agreed to render investment banking, public relations and financial
advisory services to us. We agreed to issue to CGF Securities, Inc., the
placement agent for our $1 million and $329,000 private placement and $50,000
note, which commenced in December 2003 and was completed in November 2004, as
partial compensation for its services in the placement, warrants to purchase
939,500 shares, being 10% of the shares of our common stock which we issued to
the investors in the placements. The warrants are exercisable during a five year
period at $0.20 per share. The equity compensation plan not approved by
shareholders that is referred to in the above table represents our agreement
with CGF Securities, and assumes that as stipulated in the agreement with CGF
Securities, we will be required to issue warrants to purchase 250,000 warrants
for defaulting to repay $1 million notes on December 31, 2004.

Item 12. Certain Relationships and Related Transactions.

        In June 1992, we entered into several agreements with Abel Laboratories,
Inc., an affiliate of Dr. David Long. One of these agreements, a laboratory
services agreement, which expired December 31, 1993, engaged Abel to provide
specified preclinical research to be managed by Dr. Long. Effective January 1,
1994, pursuant to a master laboratory services agreement, Abel agreed that any
research thereafter conducted for us by Abel would be on substantially the same
terms as the laboratory services agreement and would be on the basis of a budget
approved by us. Although from time to time Abel has conducted additional
preclinical research for us, no research had been preformed by Abel since 1998.

        In June 1992, we entered into a patent royalty agreement with Abel,
which assigned to us all of Abel's rights and interests in all inventions and/or
technology conceived and/or developed by Abel or Dr. David Long in connection
with laboratory services performed by Abel for us which relate to the use of
bioelectronics in the diagnosis, screening or management of disease, infection,
ovulation or other bioelectric events. Under the agreement, Abel is entitled to
royalties of 5% of the net sales of products incorporating any of these
inventions or technology which are embodied in any patent issued to us, during
the life of the patent, as well as 20% of the net proceeds we may receive from
the license of the patent to others, up to a maximum of $2 million. As of March
22, 2005, one patent has been issued to us that is covered by the agreement,
although we have not obtained any revenues therefrom.

        In January 2001, we entered into an oral arrangement with Abel for the
sublease of approximately 5,000 square feet of furnished and laboratory equipped
space. Under the arrangement, we pay Abel the same amount of rent charged Abel,
Abel's current monthly rent is $5,056. The lease currently expires April 1,
2007, and the rent increases to $5,268 with effect from April 1, 2006. We intend
to move all of our operations to this leased space when, and if, cash resources
become available. We have moved a portion of our research and development

                                       37
<PAGE>

records to this leased space, although the Company's administrative and
regulatory and quality assurance functions are still carried out in, and our
full-time employees are still located at, our Alpharetta, Georgia office. We
paid monthly rent to Abel until September 30, 2002, at which time Abel waived
the rental charges from the three months ended December 31, 2002. For additional
information, see Item 2. "Description of Property." As of December 31, 2004, we
owed an aggregate of $272,499 for rent and other expenses paid by Abel on our
behalf, including $55,516 for services rendered prior to 1998.

        In June 2000, we obtained a $500,000 line of credit from California Bank
& Trust, repayment of which has been personally guaranteed by Dr. David Long and
certain of his affiliates and secured by their collateral. The line was
increased in November 2001 to $750,000, in January 2002 to $1 million and, in
June 2003, to $1.2 million. As of December 31, 2004, the line was fully
utilized. In December 2001, we granted Dr. Long an option to acquire 350,000
shares of our common stock at $0.62 per share (the closing price of our common
stock on the date of grant) as compensation for such guaranty and
collateralization with respect to the 2001 year; we have not compensated Dr.
Long or any of his affiliates with respect to their guaranty or
collateralization since such time, nor do we have any written obligation to do
so.

        In March 2002, Dr. David Long issued his written commitment to us to
provide all of our financing needs to enable us to meet our operating
requirements through the end of 2002. Dr. Long then advanced $1,050,000 to us.
The advances, which bear interest at 2% above the prime rate, are unsecured and
currently payable on demand. Interest on the advances is calculated quarterly,
and is payable in unregistered shares of our common stock unless Dr. Long
requests payment in cash for the calendar quarter before the beginning of that
quarter. The number of shares to be issued for quarterly interest is determined
using the closing price of our common stock on the last business day of the
calendar quarter. During 2004 and 2003, interest on the advances amounted to
$64,743 and $65,432, respectively and, since Dr. Long did not request any cash
payment, an aggregate of 286,421 and 298,646 shares of our common stock were
reserved for issuance in payment of such accrued interest with respect to 2004
and 2003, respectively. At March 22, 2005, none of such 696,778 reserved shares
of our common stock have been issued.

        On November 5, 2002, an affiliate of Dr. David Long lent us $450,000 for
our operating requirements against a three-year convertible note. The note bears
interest of 10% per annum, payable on maturity of the note. The note contains an
option, at maturity, to convert all amounts due, including accrued interest,
thereunder into unregistered shares of our common stock at the rate of $0.40 per
share, the closing price on November 5, 2002. Interest for 2004 and 2003 under
the note amounted to $50,194 and $39,320, respectively.

        In order to meet our operating requirements, an affiliate of Dr. David
Long lent us $505,406 and $147,032 in 2003 and 2004, respectively. These
advances, which were outstanding on March 22, 2005, bear interest at 10% per
annum and are due on demand. Dr. Long has discussed a possible amendment to the
terms of the loan, including possible conversion into shares of our common
stock. At December 31, 2004 and December 31, 2003, interest of $42,618 and
$48,759, respectively, was accrued for these loans.

        During 2003, we were unable to pay our employees, including John
Stephens, our Senior Vice President and Chief Operating Officer, all previously
agreed compensation. We agreed with Mr. Stephens to defer $33,574 of his 2003
compensation until such time, if at all, as we have the financial ability to
make such payment and agreed that, at the time of such payment, we would pay him
an additional $48,583. In addition, during 2003, in consideration for Mr.
Stephens' voluntary agreement to temporarily reduce his compensation during a
four month period, we issued him non-qualified options under our 1996 Stock
Option Plan to acquire an aggregate of 101,538 shares of our common stock at a
price of $0.33 per share, the closing price of our common stock on the date of
grant. Such options became fully exercisable on August 4, 2003 and expire
February 4, 2008. As at December 2004, $9,667 was due to him for salary and
$47,135 for the interest on the 2003 deferred salary.

                                       38
<PAGE>

Item 13. Exhibits

(a)  Exhibits.

    2.     Plan of purchase, sale, reorganization, arrangement, liquidation or
           succession. - None

    3.(i)  Articles of incorporation.

           3.1    Fifth Amended and Restated Certificate of Incorporation of
                  Biofield Corp., as filed with the Secretary of State of the
                  State of Delaware on October 6, 2000. (1)

           3.2*   Certificate of Amendment to Certificate of Incorporation of
                  Biofield Corp, as filed with the Secretary of State of the
                  State of Delaware on April 7, 2005.


     (ii)  By-laws.

           3.3    By-laws of Biofield Corp. (2)

    4.     Instruments defining the rights of security holders, including
           indentures.

           4.1    Form of Promissory Note, due December 31, 2004, issued by
                  Biofield Corp. in 2003 private placement. (8)

           4.2    Form of Promissory Note, due May 31, 2005, issued by Biofield
                  Corp. in 2004 private placement. (11)

           4.3    Promissory Note, due May 31, 2005, issued by Biofield Corp. to
                  Capital Growth Equity Fund I LLC. (11)

           4.4    10% Convertible Promissory Note, dated November 8, 2002, by
                  the Biofield Corp. in favor of David M. Long, Jr. (6)

           4.5    Form of Subscription Agreement between Biofield Corp. and
                  investors who participated in 2003 private placement. (8)

           4.6    Form of Subscription Agreement between Biofield Corp. and
                  investors who participated in 2004 private placements. (11)

    9.     Voting trust agreement and amendment. - None

    10.    Material contracts.

           10.1   Registration Rights Agreement between Biofield Corp. and John
                  D. Stephens dated as of April 22, 1993. (3)

           10.2   Form of Stock Purchase Option Agreement between Biofield Corp.
                  and Abel Laboratories, Inc., dated as of June 1, 1992. (3)

           10.3   Patent Royalty Agreement between Biofield Corp. and Abel
                  Laboratories, Inc., dated as of June 1, 1992. (3)

           10.4   Master Laboratory Services Agreement between Biofield Corp.
                  and Abel Laboratories, Inc., dated as of January 1, 1994. (3)

                                       39
<PAGE>

           10.5   Biofield Corp. 1992 Stock Incentive Plan. (3)

           10.6   Biofield Corp. 1996 Stock Option Plan, as amended. (4)

           10.7   Biofield Corp. 1996 Stock Option Plan for Non-Employee
                  Directors. (3)

           10.8   Escrow Agreement among C. Leonard Gordon, Biofield Corp. and
                  Warshaw Burstein Cohen Schlesinger & Kuh, LLP, as escrow
                  agent, dated December 28, 1999. (1)

           10.9   License Agreement between Biofield Corp. and Cardio Dynamics
                  International Corporation dated October 16, 2000. (1)

           10.10  Share Option Agreement, dated as of March 16, 1995, between
                  Biofield Corp. and David M. Long, Jr., M.D. (1)

           10.11  Form of Share Option Agreement between Biofield Corp. and
                  Raymond A. Long, M.D., dated September 5, 2001. (5)

           10.12  Share Option Agreement, dated as of November 29, 2001, with
                  David M. Long, Jr., M.D. (5)

           10.13  Share Option Agreement, dated as of November 29, 2001, with
                  John D. Stephens. (5)

           10.14  Form of Share Option Agreement, dated November 29, 2001, with
                  Steven Preiss. (5)

           10.15  Form of Share Option Agreement, dated November 29, 2001, with
                  various Biofield Corp. employees. (5)

           10.16  10% Convertible Promissory Note, dated November 8, 2002 by
                  Biofield Corp. in favor of David M. Long, Jr. (6)

           10.17  Demand Promissory Note, dated January 3, 2003, by Biofield
                  Corp. in favor of David M. Long Separate Property Trust. (7)

           10.18  Investment Banking Services Agreement, dated March 5, 2003,
                  between Biofield Corp. and iCapital Finance, Inc. (7)

           10.19  Consulting Agreement, dated March 5, 2003, between Biofield
                  Corp. and Randall Letcavage and Rosemary Nguyen. (7)

           10.20  Redesign Agreement, dated October 15, 2001, between Biofield
                  Corp. and TriVirix International Limited. (7)

           10.21  Form of Share Option Agreement, dated February 4, 2003, with
                  various Biofield Corp. employees. (10)

           10.22  Service Agreement, dated July 8, 2003, between Biofield Corp.
                  and MRB Investor Relations, LLC. (10)

           10.23  Agreement for Financial Advisor, Investment Banker & Placement
                  Agent, dated April 25, 2003 between Biofield Corp and Brooks
                  Houghton & Company, Inc. and Brooks, Houghton Securities, Inc.
                  (10)

           10.24  Agreement, dated February 9, 2004, between Biofield Corp. and
                  ROI Group Associates, Inc. (10)

                                       40
<PAGE>

           10.25  Agreement, dated October 16, 2003 between Biofield Corp, and
                  CGF Securities, LLC. (10)

           10.26  Change in Terms Agreement, dated December 11, 2003, between
                  Biofield Corp. and California Bank & Trust. (10)

           10.27  Agreement, dated June 11, 2003, as amended December 11, 2003,
                  by Biofield Corp. to John Stephens. (10)

           10.28  Warrant Agreement to Purchase Shares of Common Stock of
                  Biofield Corp., dated as of January 1, 2004. (11)

           10.29  Warrant Agreement to Purchase Shares of Common Stock of
                  Biofield Corp., dated as of September 1, 2004. (11)

           10.30  Agreement dated March 23, 2004 between Biofield Corp. and
                  Capital Growth Financial, LLC. (11)

           10.31  Agreement, dated June 21, 2004 between Biofield Corp. and
                  Capital Growth Financial, LLC. (11)

    13.    Annual report to security holders for the last fiscal year, Form 10-Q
           or 10-QSB or quarterly report to security holders. - Not applicable.

    14.    Code of ethics.

           14.1   Code of Ethics adopted on February 16, 2004. (10)

    16.    Letter on change in certifying accountant.

           16.1   Letter from Deloitte & Touche, LLP, Certified Public
                  Accountants to the Commission, dated November 24, 2003. (9)

    18.    Letter on change in accounting principles - Not applicable.

    20.    Other documents or statements to security holders or any other
           document incorporated by reference. - None.

    21.    Subsidiaries of the small business issuer.

               Biofield International, Inc.   -   Incorporated in Delaware.

    22.    Published report regarding matters submitted to vote of security
           holders - Not applicable.

    23.    Consent of experts and counsel.

           23.1*  Consent of Russell Bedford Stefanou Mirchandani LLP.

    24.    Power of attorney - Not applicable.

    27.    Financial Data Schedule - Not applicable.

                                       41
<PAGE>

    31.    Rule 13a-14(a)/15d-14(a) Certifications.

           31.1*  Certification of David M. Long, Jr. President and Chief
                  Executive Officer.

           31.2*  Certification of John D. Stephens, Senior Vice President,
                  Chief Operating Officer and Chief Financial Officer.

    32.    Section 1350 Certifications.

           32.1*  Certification of David M. Long, Jr. President and Chief
                  Executive Officer.

           32.2*  Certification of John D. Stephens, Senior Vice President,
                  Chief Operating Officer and Chief Financial Officer.

    99.    Additional Exhibits - None.

------------------------
           (*)  Filed herewith.
           (1)  Filed with the Securities and Exchange Commission as an exhibit
                to Biofield's Registration Statement on Form 10-SB (Registration
                No. 0-27848) which became effective on October 18, 2000.
           (2)  Incorporated by reference to Biofield's Annual Report on Form
                10-K for the fiscal year ended December 31, 1996.
           (3)  Incorporated by reference to Biofield's Registration Statement
                on Form S-1 (Registration No. 333-00796) declared effective on
                March 19, 1996.
           (4)  Incorporated by reference to Biofield's Annual Report on Form
                10-K for the fiscal year ended December 31, 1997.
           (5)  Incorporated by reference to Biofield's Annual Report on Form
                10-KSB for the fiscal year ended December 31, 2001.
           (6)  Incorporated by reference to Biofield's Quarterly Report on Form
                10-QSB for the fiscal quarter ended September 30, 2002.
           (7)  Incorporated by reference to Biofield's Annual Report on Form
                10-KSB for the fiscal year ended December 31, 2002.
           (8)  Incorporated by reference to Biofield's December 4, 2003 Current
                Report on Form 8-K.
           (9)  Incorporated by reference to Biofield's Current Report on Form
                8-K filed on November 20, 2003.
           (10) Incorporated by reference to Biofield's Annual Report on Form
                10-KSB for the fiscal year ended December 31, 2003.
           (11) Filed with the Securities and Exchange Commission as an exhibit
                to Biofield's Registration Statement on form SB-2 (Registration
                No. 333-118964) declared effective on September 30, 2004.

                                       42
<PAGE>

Item 14.  Principal Accountant Fees and Services.

The following table sets forth fees billed to us by our independent accountants
during the fiscal years ended December 31, 2004 and December 31, 2003 for: (i)
services rendered for the audit of our annual financial statements and the
review of our quarterly financial statements, (ii) services rendered that are
reasonably related to the performance of the audit or review of our financial
statements and that are not reported as Audit Fees, (iii) services rendered in
connection with tax compliance, tax advice and tax planning, and (iv) all other
fees for services rendered. "Audit Related Fees" consisted of consulting fees
regarding accounting issues. "All Other Fees" consisted of fees related to the
issuance of consents for our SB-2 Registration Statements and this Annual
Report. Since we have no audit committee, none of these services were approved
by an audit committee, and we have no pre-approval policies or procedures.




                                Year ended December 31,

                                 2004            2003

      Audit Fees(1)            $71,568         $40,500

      Audit Related Fees(2)         -0-             -0-

      Tax Fees(3)                   -0-             -0-

      All Other Fees(4)         16,025              -0-

      Total                    $87,593         $40,500

---------------------
     (1)  The aggregate fees billed for the audit of our annual financial
          statements and review of our financial statements which were included
          in our Forms 10-QSB.

     (2)  The aggregate fees billed for assurance and related services that are
          reasonably related to the performance of the audit or the review of
          our financial statements and not included as "Audit Fees".

     (3)  The aggregate fees billed for professional services rendered for tax
          compliance, tax advice and tax planning.

     (4)  The aggregate fees billed for products and services provided, other
          than Audit Fees, Audit-Related Fees or Tax Fees.

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit
Services of Independent Auditors

      The Company currently does not have a designated Audit Committee, and
accordingly, the Company's Board of Directors' policy is to pre-approve all
audit and permissible non-audit services provided by the independent auditors.
These services may include audit services, audit-related services, tax services
and other services. Pre-approval is generally provided for up to one year and
any pre-approval is detailed as to the particular service or category of
services and is generally subject to a specific budget. The independent auditors
and management are required to periodically report to the Company's Board of
Directors regarding the extent of services provided by the independent auditors
in accordance with this pre-approval, and the fees for the services performed to
date. The Board of Directors may also pre-approve particular services on a
case-by-case basis.

                                       43
<PAGE>

                                   Signatures

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

Dated:

May 20, 2005                            BIOFIELD CORP.

                                        By: /s/ DAVID M. LONG, JR.
                                            ------------------------------------
                                            David M. Long, Jr., M.D., Ph.D.
                                            Chairman and Chief Executive Officer


In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated:

Dated:

May 20, 2005                            /s/ DAVID M. LONG, JR.
                                        ----------------------------------------
                                        David M. Long, Jr., M.D., Ph.D.
                                        Chairman and Chief Executive Officer
                                        and Director
                                        (Principal Executive Officer)


                                        ----------------------------------------
                                        Raymond A. Long, M.D.
                                        Director


May 2, 2005                             /s/ JOHN D. STEPHENS
                                        ----------------------------------------
                                        John D. Stephens
                                        Senior Vice President, Chief Operating
                                        Officer and Chief Financial Officer and
                                        Director
                                        (Principal Financial and Accounting
                                        Officer)

                                       44