**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 Washington,
        D.C. 20549
  
 
 **FORM
        10-QSB**
 **QUARTERLY
        REPORT**
 
 Pursuant
        to Section 13 or 15(d) of the Securities Exchange Act of 1934
  
  For
        the
        Quarter Period Ended
 **September
        30, 2005**


**Nanobac
        Pharmaceuticals, Incorporated**
 (Exact
        name of registrant as specified in its charter)





**Florida**
              (State
                or Other Jurisdiction of Incorporation)
            **0-24696**
              (Commission
                File Number)
            **59-3248917**
              (I.R.S.
                Employer Identification Number)





**2727
      W. Dr. Martin Luther King Jr. Blvd, Suite 850, Tampa, Florida
      33607**


(Address
      of Principal Executive Office) (Zip Code)





**(813)
      264-2241**


(Registrant’s
      telephone number, including area code)





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for a shorter period that the registrant was required
      to
      file such reports), and (2) has been subject to such filing requirements for
      the
      past 90 days.





Yes x
      No o





Indicate
      by check mark whether the Registrant is an accelerated filer (as defined in
      Rule
      12b-2 of the Act):




Yes
o
      No x





The
      number of shares issued and outstanding of the Registrant’s Common Stock, no par
      value, as of November 9, 2005 was 189,006,760.










**NANOBAC
      PHARMACEUTICALS, INCORPORATED AND SUBSIDIARIES**




**PART
                I - FINANCIAL INFORMATION****Item
                1:**
            **Financial
                Statements**Condensed
                Consolidated Balance Sheets as of September 30, 2005
                (unaudited)and
                December 31, 2004
            3Condensed
                Consolidated Statements of Operations for the three and
                ninemonths
                ended September 30, 2005 and 2004 (unaudited)
            4Condensed
                Consolidated Statements of Changes in Stockholders'Equity
                for the period ended September 30, 2005 (unaudited)
            5Condensed
                Consolidated Statements of Cash Flows for the ninemonths
                ended September 30, 2005 and 2004 (unaudited)
            6Notes
                to the Condensed Consolidated Financial Statements
            7**Item
                2:**
            **Management’s
                Discussion and Analysis of Financial****Condition
                and Results of Operations**
            15**Item
                3:**
            **Quantitative
                and Qualitative Disclosures About Market Risk**
            31**Item
                4:**
            **Controls
                and Procedures**
            31**PART
                II - OTHER INFORMATION****Item
                1:**
            **Legal
                Proceedings**
            32**Item
                2:**
            **Unregistered
                Sales of Equity Securities and Use of Proceeds**
            33**Item
                3:**
            **Defaults
                Upon Senior Securities**
            34**Item
                4:**
            **Submission
                of Matters to a Vote of Security Holders**
            34**Item
                5:**
            **Other
                Information**
            34**Item
                6:**
            **Exhibits**
            34











**NANOBAC
        PHARMACEUTICALS INCORPORATED AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**




(Unaudited)September
                  30, 2005
              
              December
                  31, 2004**ASSETS****CURRENT
                  ASSETS**Cash
              
              $
              12,172
              
              $
              17,908Account
                  receivable
              
              
              16,209
              
              
              3,395Inventory
              
              
              67,958
              
              
              70,571Prepaid
                  expenses
              
              
              48,518
              
              
              23,649Total
                  current assets
              
              
              144,857
              
              
              115,523**FIXED
                  ASSETS,**less
                  accumulated depreciationof
                  $119,540
                  and
                  $84,143, respectively
              
              
              123,624
              
              
              124,995**OTHER
                  ASSETS**Security
                  deposits
              
              
              20,777
              
              
              68,054Intangible
                  assets, less accumulated amortizationof
                  $1,362,891
                  and
                  $832,701, respectively
              
              
              5,230,152
              
              
              5,760,342Goodwill
              
              
              3,615,393
              
              
              3,615,393**Total
                  other assets**
              
              
              8,866,322
              
              
              9,443,789**TOTAL
                  ASSETS**
              
              $
              9,134,803
              
              $
              9,684,307**LIABILITIES
                  AND STOCKHOLDERS' EQUITY****CURRENT
                  LIABILITIES**Accounts
                  payable
              
              $
              490,348
              
              $
              645,491Accrued
                  compensation
              
              
              365,565
              
              
              50,611Accrued
                  expenses
              
              
              224,063
              
              
              335,861Short-term
                  notes payable
              
              
              51,582
              
              
              62,379Other
                  liabilities
              
              
              31,823
              
              
              16,423Related
                  party loans
              
              
              1,839,667
              
              
              194,068**Total
                  current liabilities**
              
              
              3,003,048
              
              
              1,304,833**LONG-TERM
                  LIABILITIES**Accrued
                  compensation
              
              
              -
              
              
              350,000Stock
                  settlement liability
              
              
              2,910,998
              
              
              1,918,630**Total
                  liabilities**
              
              
              5,914,046
              
              
              3,573,463**COMMITMENTS
                  AND CONTINGENCY**
              
              
              -
              
              
              -**STOCKHOLDERS'
                  EQUITY**Common
                  stock, no par value, 250,000,000 shares authorized,189,006,760
                  shares issued and outstanding atSeptember
                  30, 2005 and 187,240,093 shares issued andoutstanding
                  at December 31, 2004
              
              
              16,307,050
              
              
              16,296,550Preferred
                  stock, no par value, 1,000,000 shares authorized,no
                  shares issued and outstanding
              
              
              -
              
              
              -Additional
                  paid-in capital
              
              
              3,508,955
              
              
              3,539,328Accumulated
                  deficit
              
              
              (16,591,261
              )
              
              (13,693,198
              )Accumulated
                  other comprehensive loss
              
              
              (3,987
              )
              
              (31,836
              )**Total
                  stockholders' equity**
              
              
              3,220,757
              
              
              6,110,844**TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY**
              
              $
              9,134,803
              
              $
              9,684,307





The
      accompanying notes are an integral part


of
      these
      financial statements.





3




**NANOBAC
        PHARMACEUTICALS INCORPORATED AND SUBSIDIARIES**
 **CONDENSED
          CONSOLIDATED STATEMENTS OF OPERATIONS**
 **(Unaudited)**




Three
                  Months
              
              Three
                  Months
              
              Nine
                  Months
              
              Nine
                  Monthsended
              
              ended
              
              ended
              
              endedSeptember
                  30, 2005
              
              September
                  30, 2004
              
              September
                  30, 2005
              
              September
                  30, 2004**REVENUE**
              
              $
              130,394
              
              $
              118,141
              
              $
              450,247
              
              $
              224,090**COST
                  OF REVENUE**
              
              
              47,085
              
              
              42,104
              
              
              149,384
              
              
              80,785**GROSS
                  PROFIT**
              
              
              83,309
              
              
              76,037
              
              
              300,863
              
              
              143,305**OPERATING
                  EXPENSES**Sales,
                  general and administrative
              
              
              278,199
              
              
              373,804
              
              
              888,716
              
              
              4,417,066Research
                  and development
              
              
              264,503
              
              
              409,667
              
              
              858,765
              
              
              1,507,957Depreciation
                  and amortization
              
              
              189,462
              
              
              219,069
              
              
              567,188
              
              
              587,608**Total
                  Operating Expenses**
              
              
              732,164
              
              
              1,002,540
              
              
              2,314,669
              
              
              6,512,631**OPERATING
                  LOSS**
              
              
              (648,855
              )
              
              (926,503
              )
              
              (2,013,806
              )
              
              (6,369,326
              )**OTHER
                  INCOME (EXPENSES)**Interest
                  expense
              
              
              (20,866
              )
              
              (69,412
              )
              
              (43,380
              )
              
              (238,130
              )Derivative
                  loss
              
              
              (46,094
              )
              
              -
              
              
              (792,368
              )
              
              -Other,
                  net
              
              
              (4,192
              )
              
              1,639
              
              
              (48,509
              )
              
              6,969**LOSS
                  FROM CONTINUING OPERATIONS****BEFORE
                  INCOME TAXES**
              
              
              (720,007
              )
              
              (994,276
              )
              
              (2,898,063
              )
              
              (6,600,487
              )**PROVISION
                  FOR INCOME TAXES**
              
              
              -
              
              
              -
              
              
              -
              
              
              -**LOSS
                  FROM CONTINUING OPERATIONS**
              
              
              (720,007
              )
              
              (994,276
              )
              
              (2,898,063
              )
              
              (6,600,487
              )**DISCONTINUED
                  OPERATIONS:**Loss
                  from discontinued operations(no
                  applicable income taxes)
              
              
              -
              
              
              -
              
              
              -
              
              
              (57,268
              )**NET
                  LOSS**
              
              $
              (720,007
              )
              $
              (994,276
              )
              $
              (2,898,063
              )
              $
              (6,657,755
              )**LOSS
                  PER COMMON SHARE****(BASIC
                  AND DILUTED):**Continuing
                  operations
              
              $
              (0.00
              )
              $
              (0.01
              )
              $
              (0.02
              )
              $
              (0.05
              )Discontinued
                  operations
              
              
              0.00
              
              
              0.00
              
              
              0.00
              
              
              0.00Net
                  loss
              
              $
              0.00
              
              $
              (0.01
              )
              $
              0.02
              
              $
              (0.05
              )**WEIGHTED
                  AVERAGE NUMBER OF****COMMON
                  SHARES OUTSTANDING**Basic
                  and Diluted
              
              
              189,006,760
              
              
              146,829,556
              
              
              188,809,202
              
              
              142,895,391





The
      accompanying notes are an integral part


of
      these
      financial statements.





4





**NANOBAC
        PHARMACEUTICALS INCORPORATED AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY**
 **FOR
        THE NINE MONTHS ENDED SEPTEMBER 30, 2005**
 **(Unaudited)**


**Accumulated****Additional**
              
              
              
              
              
              **Other****Common**
              
              **Stock**
              
              **Paid-in**
              
              **Accumulated**
              
              **Comprehensive**
              
              **Comprehensive****Shares**
              
              **Value**
              
              **Capital**
              
              **Deficit**
              
              **Loss**
              
              **Loss**
              
              **Total****Balance,
                  December 31, 2004**
              
              
              **187,240,093**
              
              **$**
              **16,296,550**
              
              **$**
              **3,539,328**
              
              **$**
              **(13,693,198**
              **)**
              
              
              
              **$**
              **(31,836**
              **)**
              **$**
              **6,110,844**Stock
                  issued for services
              
              
              100,000
              
              
              10,500
              
              
              -
              
              
              -
              
              
              
              
              
              -
              
              
              10,500Sale
                  of common stock
              
              
              1,666,667
              
              
              -
              
              
              (30,373
              )
              
              -
              
              
              
              
              
              -
              
              
              (30,373
              )Comprehensive
                  loss:Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              (2,898,063
              )
              $
              (2,898,063
              )
              
              -
              
              
              (2,898,063
              )Foreign
                  currency translationadjustment
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              27,849
              
              
              27,849
              
              
              27,849Comprehensive
                  loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (2,870,214
              )**Balance,
                  September 30, 2005**
              
              
              **189,006,760**
              
              **$**
              **16,307,050**
              
              **$**
              **3,508,955**
              
              **$**
              **(16,591,261**
              **)**
              
              
              
              **$**
              **(3,987**
              **)**
              **$**
              **3,220,757**





The
      accompanying notes are an integral part of
      these
      financial statements.





5





**NANOBAC
        PHARMACEUTICALS INCORPORATED AND SUBSIDIARIES**


CONSOLIDATED
        STATEMENTS OF CASH FLOWS


**(Unaudited)**


Nine
                  Months
              
              Nine
                  Monthsended
              
              endedSeptember
                  30, 2005
              
              September
                  30, 2004**CASH
                  FLOWS FROM OPERATING ACTIVITIES**Net
                  Loss
              
              $
              (2,898,063
              )
              $
              (6,657,755
              )Adjustments
                  to reconcile net loss to cashflows
                  from operating activities:Depreciation
                  and amortization
              
              
              567,188
              
              
              587,608Derivative
                  loss
              
              
              792,368
              
              
              -Charges
                  from common stock issuances
              
              
              10,500
              
              
              2,562,750Interest
                  expense added to stockholder loan
              
              
              41,048
              
              
              236,792Net
                  (increase) decrease in assets:Accounts
                  receivable
              
              
              (12,814
              )
              
              3,651Inventory
              
              
              2,613
              
              
              (3,823
              )Other
                  assets
              
              
              21,758
              
              
              9,197Net
                  increase (decrease) in liabilities:Accounts
                  payable
              
              
              (155,143
              )
              
              266,940Accrued
                  compensation
              
              
              (35,046
              )
              
              309,404Accrued
                  expenses
              
              
              (111,798
              )
              
              94,099Deferred
                  revenue
              
              
              15,400
              
              
              13,163Total
                  adjustments
              
              
              1,136,074
              
              
              4,079,781**Net
                  cash flows from operating activities**
              
              
              (1,761,989
              )
              
              (2,577,974
              )**CASH
                  FLOWS FROM INVESTING ACTIVITIES**Acquisition
                  of fixed assets
              
              
              (39,425
              )
              
              (26,531
              )Security
                  deposits
              
              
              -
              
              
              2,500Acquistion
                  of subsidiary, net of cash received
              
              
              -
              
              
              (900
              )Cash
                  received from exercise of stock option in subsidiary
              
              
              -
              
              
              200,000**Net
                  cash flows from investing activities**
              
              
              (39,425
              )
              
              175,069**CASH
                  FLOWS FROM FINANCING ACTIVITIES**Proceeds
                  from issuance of common stock andstock
                  subscription agreements
              
              
              200,000
              
              
              540,000Stock
                  issuance costs
              
              
              (30,373
              )
              
              -Proceeds
                  from stockholder loans
              
              
              1,604,551
              
              
              1,873,190Proceeds
                  from notes payable
              
              
              12,581
              
              
              -Payment
                  of notes payable
              
              
              (23,378
              )
              
              (43,700
              )**Net
                  cash flows from financing activities**
              
              
              1,763,381
              
              
              2,369,490**Effect
                  of exchange rate changes**
              
              
              32,297
              
              
              (4,251
              )Net
                  change in cash
              
              
              (5,736
              )
              
              (37,666
              )Cash
                  balance, beginning of period
              
              $
              17,908
              
              
              49,755**Cash
                  balance, end of period**
              
              $
              12,172
              
              $
              12,089**Supplemental
                  disclosures of cash flow information:**Cash
                  paid for interest expense
              
              $
              2,332
              
              $
              1,338**Supplemental
                  schedule of non-cash investing and financing
                  activities:**Common
                  stock issued in acquisition
              
              $
              -
              
              $
              5,712,500Common
                  stock issued for the conversion of debt
              
              $
              -
              
              $
              7,610,806Capital
                  contribution associated with sale of subsidiary to
                  affiliate:Reduction
                  in stockholder loan
              
              $
              -
              
              $
              250,000Assumption
                  of accounts payable and accrued expenses
              
              $
              -
              
              $
              499,327





The
      accompanying notes are an integral part of
      these
      financial statements.





6


**NANOBAC
        PHARMACEUTICALS, INCORPORATED AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
        30, 2005**
 **(UNAUDITED)**




**1** . **Nature
      of operations and summary of significant accounting
      polices**





**Nature
      of business**





Nanobac
      Pharmaceuticals, Incorporated and subsidiaries, ("Nanobac”, the "Company", or
      "NNBP") trades under the symbol "NNBP."





NNBP’s
      primary business is the study and development of therapeutic and diagnostic
      technologies related to calcifying nano-particles (“Nanobacteria”). Nanobacteria
      are believed to be small, slowly growing nano-particles that can be found in
      human blood, kidney stones and arterial wall plaques.





**Basis
      of Presentation**





In
      the
      opinion of management, the accompanying financial statements include all
      adjustments, consisting only of normal recurring items, necessary for their
      fair
      presentation in conformity with generally accepted accounting principles. The
      results of operations for the nine months ended September 30, 2005 are not
      necessarily indicative of the results for a full year.





The
      financial statements for the period ended September 30, 2005 and notes thereto
      should be read in conjunction with the financial statements and notes thereto
      for the year ended December 31, 2004 for the Company as filed in the annual
      report on Form 10-KSB, which information is included herein by reference. The
      report of the Company’s independent auditors for the year ended December 31,
      2004 contains an explanatory paragraph as to the Company’s ability to continue
      as a going concern. No adjustments have been made to the accompanying financial
      statements to give effect of this uncertainty.





**Liquidity
      and Management Plans**





The
      Company has incurred recurring losses and has a working capital deficiency
      at
      September 30, 2005. The Company is dependent on continued financing from outside
      investors including additional related party loans. Management believes that
      the
      Company will need to raise additional capital in order to launch new clinical
      trials, fund research and development for new treatment areas, and general
      working capital requirements. Capital may be raised through further sales of
      equity securities, which may result in dilution of the position of current
      shareholders. There can be no assurances that NNBP will be successful in
      obtaining debt or equity financing in order to achieve its financial objectives
      and continue as a going concern.





7
 
 **NANOBAC
          PHARMACEUTICALS, INCORPORATED AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
          30, 2005**
 **(UNAUDITED)**





**1** . **Nature
      of operations and summary of significant accounting polices
      (continued)**





**Principles
      of Consolidation**





The
      consolidated financial statements include the accounts of the Company and its
      wholly-owned subsidiaries. All material intercompany transactions and balances
      have been eliminated in consolidation.




**Revenue
      Recognition**





Revenue
      is recognized when the Company’s products are shipped and title has passed or
      when diagnostic results are provided to the customer. Revenue from the Company’s
      observation rights’ agreement is
      being
      recognized over the agreement’s 12-month term using the straight-line method.





Revenue
      is recorded net of reserves for estimated discounts and incentives.





**Use
      of estimates**





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





**Financial
      instruments**





The
      carrying value of the Company’s financial instruments, including cash, accounts
      receivable, accounts payable, short-term note payable, stockholder loans and
      stock settlement liability approximate their fair market values.





**Inventory**





Inventory
      is stated at the lower of cost or market. Cost is determined in a manner which
      approximates the first-in, first-out (FIFO) method. Inventory consists of raw
      materials for currently marketed products and materials and processing costs
      for
      antibodies and antigens used in our Finland laboratory. Inventory is shown
      net
      of applicable reserves and allowances. Shipping costs are expensed as incurred
      and are included in cost of revenue.





**Fixed
      Assets**





Fixed
      assets consist of furniture, fixtures, computers and lab equipment and are
      recorded at cost. Fixed assets are depreciated using the straight-line method
      over the estimated useful lives of three to seven years.





8


**NANOBAC
        PHARMACEUTICALS, INCORPORATED AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
        30, 2005**
 **(UNAUDITED)**




**1.
      Nature of operations and summary of significant accounting polices
      (continued)**





**Intangible
      assets and goodwill**





Intangible
      assets are recorded at cost, less accumulated amortization. Amortization of
      intangible assets is provided over the following estimated useful lives on
      a
      straight-line basis:





Patents
            12
                yearsProduct
                rights
            5
                years





In
      accordance with Statement of Financial Accounting Standards No. 142, “Goodwill
      and Other Intangible Assets” (“SFAS No. 142”), and Statement of Financial
      Accounting Standards, No. 144, “Accounting for the Impairment or Disposal of
      Long-Lived Assets” (“SFAS No. 144”), the Company reviews its non-amortizable
      long-lived assets, including goodwill, for impairment annually, or sooner
      whenever events or changes in circumstances indicate the carrying amounts of
      such assets may not be recoverable. Other depreciable or amortizable assets
      are
      reviewed when indications of impairment exist.





**Research
      and development expenses**





Research
      and development expenses are comprised of the following types of costs incurred
      in performing R&D activities: salaries and benefits, allocated overhead and
      occupancy costs, research studies, clinical trial and related clinical
      manufacturing costs, contract services, and other outside costs. Research and
      development costs are expensed as incurred.





**Income
      taxes**





The
      Company records its Federal and state tax liability in accordance with Financial
      Accounting Standards Board Statement No. 109 “Accounting for Income Taxes”.
      Deferred taxes are recorded for temporary differences between the recognition
      of
      income and expenses for tax and financial reporting purposes, using current
      tax
      rates. Deferred assets and liabilities represent the future tax consequences
      of
      those differences, which will either be taxable or deductible when the assets
      and liabilities are recovered or settled.





**Derivative
      financial instruments**




The
      Company accounts for derivative financial instruments indexed to and potentially
      settled in, its own stock in accordance with Emerging Issues Task Force 00-19,
      which provides that if the number of shares deliverable in a transaction be
      indeterminable, that said shares be presented as a liability in the balance
      sheet.  Further, the liability is to be measured at fair value until
      such
      time as the obligation is settled.  The shares issued in connection
      with
      the 2004 and 2005 Subscription Agreement transactions discussed in Note 4 are
      derivative transactions and as such the fair value of such derivatives have
      been
      presented in the accompanying balance sheets as liabilities and changes in
      fair
      value have been presented in the accompanying statements of operations as derivative
      loss.  The derivative loss represents the difference in the share fair
      value as issued and the fair value of said shares at the balance
      sheet dates.  At settlement, accumulated derivative losses will
      be
      charged to retained earnings as a constructive dividend.





9


**NANOBAC
        PHARMACEUTICALS, INCORPORATED AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
        30, 2005**
 **(UNAUDITED)**




**1.
      Nature of operations and summary of significant accounting polices
      (continued)**





**Accumulated
      other comprehensive loss**





Accumulated
      other comprehensive loss at September 30, 2005 consists entirely of cumulative
      foreign currency translation adjustments. Accumulated other comprehensive loss
      has no applicable income tax effect.





**Net
      loss per share**





Net
      loss
      per share represents the net loss attributable to common stockholders divided
      by
      the weighted average number of common shares outstanding during the period.
      The
      effect of incremental shares from common stock equivalents is not included
      in
      the calculation of net loss per share as the inclusion of such common stock
      equivalents would be anti-dilutive. Accordingly, fully dilutive shares
      outstanding equal basic shares outstanding as of and for the periods ended
      September 30, 2005 and 2004.





**Litigation**





In
      the
      normal course of business, the Company and its subsidiaries are party to various
      legal claims, actions and complaints. The Company’s management does not expect
      that the results in any of the legal proceedings will have a material adverse
      effect on the Company’s results of operations, financial position or cash flows.





**Reclassifications**





Certain
      prior year amounts have been reclassified to conform to the current year
      presentation.





**2.
      Income taxes**





NNBP
      has
      accumulated a net operating loss carryforward of approximately $11 million
      for
      income tax purposes, which can be used to offset future taxable income through
      2025.





Estimated
                future tax benefit
            
            $
            4,300,000Valuation
                allowance
            
            
            (4,300,000
            )Estimated
                future tax benefit
            
            $
            --





10


**NANOBAC
        PHARMACEUTICALS, INCORPORATED AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
        30, 2005**
 **(UNAUDITED)**




**3.
      Stockholders' deficit**





**Common
      stock:**





From
      August 2004 through February 2005, the Company entered into Subscription
      Agreements with three unaffiliated investors. Under the terms of the
      Subscription Agreements, the Company received cash of $852,500 (net of $122,500
      of expenses) through September 30, 2005. The Company is to receive additional
      cash of approximately $800,000 (net of expenses) within five days of registering
      the common shares and warrants issued as a result of the Subscription
      Agreements. The number of common shares to be issued is equal to the amount
      received divided by the lesser of $.12 or 52% of the average closing bid price
      of the Company’s common stock on the five trading days immediately prior to the
      date on which the registration statement is declared effective (“Fixed Price”).
      In addition, the Subscription Agreements provide for the issuance of warrants
      equal to the number of common shares issued. Fifty percent (50%) of the warrants
      are exercisable at 110% of the Fixed Price and the remaining 50% of the warrants
      are exercisable at 150% of the Fixed Price. Unexercised warrants will expire
      December 31, 2008. The Company has agreed to use its best efforts to promptly
      register the common shares and warrants.





During
      December 2004, the Company entered into a Subscription Agreement with an
      affiliate of the Company’s Chief Executive Officer. Under the terms of the
      Subscription Agreement, the Company received cash of $500,000 during the year
      ended December 31, 2004. The Company is to receive additional cash of $500,000
      within five days of registering the common shares and warrants issued as a
      result of the Subscription Agreement. All other terms of the Subscription
      Agreement are substantially the same as the Subscription Agreements to the
      unaffiliated investors described in the preceding paragraph.





All
      proceeds from these stock subscription agreements are classified as Stock
      Settlement Liability at September 30, 2005 and December 31, 2004.





As
      a
      result of the above Subscription Agreements, the Company has issued 12,291,667
      shares of common shares, which represents the minimum number of shares to be
      issued under the Subscription Agreements in exchange for cash received through
      September 30, 2005. If the price of the Company’s stock is less than $0.23 per
      share when the Company’s registration statement is declared effective, the
      Company will be required to issue additional shares under the above Subscription
      Agreements equal to a price of 52% of the average closing bid price of the
      Company’s common stock on the five trading days immediately prior to the date on
      which the registration statement is declared effective. The ultimate number
      of
      shares to be issued is indeterminate as the number of shares is dependent on
      NNBP’s closing bid price when a registration statement is declared effective. As
      a result, the $1,475,000 of cash received under the Subscription Agreements
      through September 30, 2005 is classified as Stock Settlement Liability at
      September 30, 2005.





At
      September 30, 2005 the Company measured the value of the shares to be issued
      under the Subscription Agreements based on the Company’s closing bid price at
      September 30, 2005 compared to the actual shares issued. As a result of this
      measurement, an additional $1,436,000 Stock Settlement Liability has been
      recorded at September 30, 2005 with a charge to derivative loss in the
      statements of operations of $792,000 for the nine months ended September 30,
      2005 and $644,000 for the twelve months ended December 31, 2004.





11


**NANOBAC
        PHARMACEUTICALS, INCORPORATED AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
        30, 2005**
 **(UNAUDITED)**


**4.
      Stockholders' deficit (continued)**





**Warrants:**





As
      of
      September 30, 2005, in connection with the acquisition of our wholly owned
      subsidiary, Nanobac OY, 5,000,000 warrants were issued with an exercise price
      of
      $.005 per common share and an expiration date of August 31, 2009.





At
      the
      finalization of the Subscription Agreements described above, management
      estimates between 18 million to 50 million warrants will be issued with an
      estimated weighted average exercise price of $.04 to $.16 per common share
      and
      an expiration date of five years from the date of issuance. The ultimate number
      of warrants to be issued and the related exercise price is indeterminate as
      the
      number of shares is dependent on NNBP’s closing bid price when a registration
      statement is declared effective.





**5.
      Related Party Transactions:**





Related
      Party Loan





An
      affiliate of the Chief Executive Officer has loaned NNBP approximately $1.8
      million as of September 30, 2005. These loans bear interest at the rate of
      5%
      per annum and are due on demand. Interest expense for the above loans for the
      nine months ended September 30, 2005 was approximately $41,000.





12


**Item
        2: Management's Discussion and Analysis of Financial Condition and Results
        of
        Operations**





**Business**





Nanobac
      Pharmaceuticals, Incorporated and its subsidiaries (which may be referred to
      as
“Nanobac”, “the Company”, “NNBP”, “we”, “us”, or “our”) is a research-based
      lifescience company.




Our
      research is focused on investigating the role of calcifying nano-particles,
      (“Nanobacteria”) in human diseases. Researchers at Nanobac have discovered a
      novel nano-sized particle that we believe is responsible for many diseases
      associated with soft tissue calcification or plaque. While calcification is
      a
      normal process for building healthy bones and teeth, calcification also plays
      a
      role in other conditions related to diseases, such as strokes and heart attacks.
      We believe that blood-borne nanobacteria forms slow-growing calcified colonies
      in arteries and organs, much as coral reefs are formed. Calcification of blood
      vessels typically involves the heart’s coronary arteries in atherosclerosis. It
      also occurs in arteries more generally throughout the body in arteriosclerosis,
      or hardening of the arteries. Kidney stones are calcifications within the
      urinary tracts. In addition, pathologic or soft tissue calcifications are
      observed in many other diseases such as, prostatitis (a painful inflammation
      of
      the prostate gland), and Polycystic Kidney Disease (growths of cysts in the
      kidneys). Research has shown the presence of Nanobacteria in the parts of the
      body affected by these diseases.





Our
      objective is to gain a better understanding of the role Nanobacteria plays
      in
      diseases associated with soft tissue calcification (or the build up of calcified
      deposits within the body), and to develop new methods to detect and treat
      diseases associated with nanobacterial infection. At the same time, we intend
      to
      expand the sales of our Dietary Supplements and In Vitro Diagnostic products.
      Our business is comprised of three areas:




·
            Dietary
                Supplements


·
            In
                Vitro Diagnostics


·
            Bio-Medical
                Research - Pharmaceutical Drug
                Discovery





We
      believe these three areas will fuel each other. Our research will lead to a
      better understanding of Nanobacteria and its role in disease. This in turn
      will
      enable us to develop better diagnostic tests to detect the presence of
      Nanobacteria. The development of new and more effective methods to diagnose
      nanobacterial infection and diseases involving pathologic calcification should
      increase the demand for our dietary supplements and for new drugs that we may
      bring to the market alone or in partnership. Likewise, as more effective
      therapies come to market, diagnostic test ordering tends to increase.





While
      there remains significant work ahead, we are encouraged by the progress being
      made in the study of Nanobacteria and the increasing level of acceptance in
      the
      medical community that there may be a relationship between the nano-particles
      we
      call Nanobacteria and the progression of certain diseases involving pathologic
      calcification. Our continuing research and development efforts, along with
      our
      efforts in obtaining recognition by various regulatory agencies (e.g. the FDA
      and similar agencies throughout the world), will require significant additional
      amounts of financing over the next several years.





13


**Item
        2: Management's Discussion and Analysis of Financial Condition and Results
        of
        Operations**




**Current
      Developments** -
      During
      August 2005, we executed an observation rights agreement with Mission Pharmacal
      Company, a global pharmaceutical company and leading kidney stone disease
      reference laboratory, to observe a multi-center collaboration involving
      researchers from Nanobac, the University of California, San Francisco (UCSF),
      and NASA's Johnson Space Center, to study kidney stone formation. As announced
      previously, the multi-disciplinary team will apply the same type of
      instrumentation used to analyze moon rocks and particles collected from space
      to
      analyze mineralized particles and stones collected from kidney stone patients.
      The team will attempt to find early events in stone formation and to verify
      whether Calcifying Nano-Particles, also known as Nanobacteria, are the
      initiators of kidney stone formation. Terms of the agreement were not
      disclosed.





***Intellectual
      Property -*** We
      are
      attempting to protect the intellectual property rights of our discoveries
      including our treatment therapies and our diagnostic methods by obtaining
      patents. We currently have one issued patent and multiple patent applications
      for treatment therapies including the combination of EDTA and tetracycline
      to
      treat nanobacteria infections and the formula mix and treatment regimen for
      Nanobac Supplements, We also have one issued patent and multiple patent
      applications related to our diagnostic products We are attempting to further
      protect our intellectual property rights by obtaining additional patents in
      unique areas of research with respect to the role of Nanobacteria in pathologic
      calcification. These efforts are ongoing and will require significant additional
      infusions of financing to complete. It is also anticipated that additional
      patents will be sought in the future as our research and development efforts
      yield new discoveries.





***Change
      of Name -*** During
      April 2004, we announced a name change from Nanobac Pharmaceuticals,
      Incorporated to Nanobac Life Sciences, Inc. to become effective upon approval
      by
      the shareholders.





14




**Item
        2: Management's Discussion and Analysis of Financial Condition and Results
        of
        Operations**




**Results
      of Operations**





The
      following table presents the percentage of period-over-period dollar change
      for
      the line items in our Condensed Consolidated Statements of Operations for the
      three and nine month periods ended September 30, 2005 and 2004. These
      comparisons of financial results are not necessarily indicative of future
      results.





**Three
                months ended Sept**
            
            **Nine
                months ended Sept**2005
            
            2004
            
            %
                Change
            
            2005
            
            2004
            
            %
                ChangeRevenue
            
            $
            130,394
            
            $
            118,141
            
            
            10
            %
            $
            450,247
            
            $
            224,090
            
            
            101
            %Cost
                of revenue
            
            
            47,085
            
            
            42,104
            
            
            12
            %
            
            149,384
            
            
            80,785
            
            
            85
            %Gross
                Profit
            
            
            83,309
            
            
            76,037
            
            
            10
            %
            
            300,863
            
            
            143,305
            
            
            110
            %Gross
                Profit percentage
            
            
            64
            %
            
            64
            %
            
            
            
            
            67
            %
            
            64
            %Selling,
                general and administrative
            
            
            278,199
            
            
            373,804
            
            
            -26
            %
            
            888,716
            
            
            4,417,066
            
            
            -80
            %Research
                and development
            
            
            264,503
            
            
            409,667
            
            
            -35
            %
            
            858,765
            
            
            1,507,957
            
            
            -43
            %Depreciation
                and amortization
            
            
            189,462
            
            
            219,069
            
            
            -14
            %
            
            567,188
            
            
            587,608
            
            
            -3
            %Operating
                loss
            
            
            (648,855
            )
            
            (926,503
            )
            
            -30
            %
            
            (2,013,806
            )
            
            (6,369,326
            )
            
            -68
            %Other
                income (Expense)
            
            
            (71,152
            )
            
            (67,773
            )
            
            5
            %
            
            (884,257
            )
            
            (231,161
            )
            
            283
            %Loss
                from continuing operations
            
            
            (720,007
            )
            
            (994,276
            )
            
            -28
            %
            
            (2,898,063
            )
            
            (6,600,487
            )
            
            -56
            %Discontinued
                Operations
            
            
            0
            
            
            0
            
            
            
            
            
            0
            
            
            (57,268
            )
            
            -100
            %Net
                loss
            
            
            ($720,007
            )
            
            ($994,276
            )
            
            -28
            %
            
            ($2,898,063
            )
            
            ($6,657,755
            )
            
            -56
            %





15


**Item
        2: Management's Discussion and Analysis of Financial Condition and Results
        of
        Operations**


**Revenue**





Revenue
      for the three and nine months ended September 30, 2005 and 2004 is summarized
      as
      follows:





**Three
                months ended Sept**
            
            **Nine
                months ended Sept**2005
            
            2004
            
            2005
            
            2004Nanobac
                Supplement
            
            $
            101,338
            
            $
            82,374
            
            $
            363,652
            
            $
            107,585License
                revenue
            
            
            0
            
            
            0
            
            
            0
            
            
            46,800Observation
                Rights
            
            
            4,000
            
            
            0
            
            
            4,000
            
            
            0Diagnostic
                Products
            
            
            25,056
            
            
            35,767
            
            
            82,595
            
            
            69,705$
            130,394
            
            $
            118,141
            
            $
            450,247
            
            $
            224,090





During
      February 2004, we initiated the license of a new product to a third party.
      Effective June 2004, the above license agreement was cancelled and we initiated
      sales of this product directly to customers under the name of Nanobac
      Supplement. Revenue from observation rights is being recognized over the
      agreement’s 12-month term using the straight-line method.





After
      five consecutive quarters of revenue growth, we experienced a decline in revenue
      for the three months ended September 30, 2005 compared to the preceding quarter,
      which is summarized as follows:




Quarter
                1 - 2004
            $
                32,385Quarter
                2 - 2004
            $
                73,564Quarter
                3 - 2004
            $118,141Quarter
                4 - 2004
            $134,271Quarter
                1 - 2005
            $151,865Quarter
                2 - 2005
            $167,988Quarter
                3 - 2005
            $130,394





The
      decrease in revenue was primarily attributable to lower sales to our physician
      distributors for the quarter ended September 30, 2005 compared to the prior
      two
      quarters.





**Cost
      of revenue**





Cost
      of
      revenue consists of direct materials, testing services (for diagnostic products)
      and shipping. As a percentage of revenue, cost of revenue was 36% for both
      the
      three months ended September 30, 2005 and September 30, 2004. As a percentage
      of
      revenue, cost of sales decreased from 36% to 33% for the nine months ended
      September 30, 2005 compared to the nine months ended September 30, 2004. The
      lower cost of revenue was primarily due to reduction of costs for our diagnostic
      products.





16


**Item
        2: Management's Discussion and Analysis of Financial Condition and Results
        of
        Operations**




**Selling,
      General and Administrative**





Approximately
      two-thirds of selling, general and administrative (“SG&A”) expenses are
      comprised of payroll, travel and professional fees. The majority of professional
      fees are related to public company expenses for audit, legal and investor
      relations. Other significant SG&A expenses include facility rental and
      insurance.





SG&A
      expenses are summarized as follows:


**Three
                months ended Sept**
            
            **Nine
                months ended Sept**2005
            
            2004
            
            2005
            
            2004Charges
                for stock issuance
            
            $
            0
            
            $
            0
            
            $
            0
            
            $
            2,562,750Other
                SG&A
            
            
            278,199
            
            
            373,804
            
            
            888,716
            
            
            1,854,316Total
                SG&A
            
            $
            278,199
            
            $
            373,804
            
            $
            888,716
            
            $
            4,417,066





SG&A
      expenses decreased approximately $96,000 for the three months ended September
      30, 2005 compared to the three months ended September 30, 2004. In particular,
      payroll expenses were reduced by approximately $60,000 and travel expenses
      were
      reduced $25,000 for the three months ended September 30, 2005 compared to the
      same period in 2004.





SG&A
      expenses for the nine months ended September 30, 2004 include a non-recurring
      $2.6 million charge for common stock issued to affiliates of our CEO. Other
      SG&A expenses decreased approximately $1.0 million for the nine months ended
      September 30, 2005 compared to the nine months ended September 30, 2004. In
      particular, payroll expenses were reduced by approximately $300,000,
      professional fees were reduced by approximately $360,000 and travel expenses
      were reduced approximately $230,000 for the nine months ended September 30,
      2005
      compared to the same period in 2004.





The
      reduction in SG&A expenses is consistent with the results for the prior
      three quarters as management has made a significant effort to reduce the level
      of SG&A expenses.





17


**Item
        2: Management's Discussion and Analysis of Financial Condition and Results
        of
        Operations**




**Research
      and Development**





For
      the
      nine months ended September 30, 2005 and 2004 research and development
      (“R&D) expenses consisted of the following types of expenses:




Nine
                months ended September 302005
            
            2004U.S.
                Payroll and medical directors
            
            
            60
            %
            
            49
            %Finland
                payroll and laboratory
            
            
            31
            %
            
            15
            %Research
                studies
            
            
            6
            %
            
            25
            %Signing
                bonuses
            
            
            0
            %
            
            0
            %Other
            
            
            3
            %
            
            10
            %100
            %
            
            100
            %





R&D
      expenses for the three and nine months ended September 30, 2005 decreased
      approximately $145,000 and $649,000, respectively compared to the three and
      nine
      months ended September 30, 2004. This decrease is due to a reduction in the
      use
      of outside medical directors and due to a reduction in costs for research
      studies. We have continued to perform significant research with our existing
      staffs in our Kuopio and NASA laboratories.





We
      anticipate increasing R&D expenses if we raise cash for such purpose.





**Depreciation
      and amortization**





Approximately
      95% of depreciation and amortization are related to the amortization of Product
      Rights and Patents acquired in the June 2003 acquisition of LABS and the
      November 2003 acquisition of OY.





**Operating
      Loss**





The
      operating loss improved 30% as the loss decreased to $649,000 for the three
      months ended September 30, 2005 compared to $927,000 for the three months ended
      September 30, 2004. The reduction of the operating loss was primarily
      attributable to the reduction of SG&A and R&D expenses for the three
      months ended September 30, 2005 compared to the same period in 2004. As noted
      above, SG&A expense reductions were primarily due to decreases in payroll,
      travel and professional fees, while R&D expense reductions were primarily
      due to reduced medical director fees and outside research studies.





The
      operating loss for the nine months ended September 30, 2005 was reduced to
      $2.0
      million compared to $6.4 million for the nine months ended September 30, 2004.
      The majority of this improvement was related to the non-recurring $2.6 million
      charge for stock issued we incurred for the nine months ended September 30,
      2004. The additional reduction in operating loss was primarily attributable
      to
      significant reductions in SG&A and R&D.





18


**Item
        2: Management's Discussion and Analysis of Financial Condition and Results
        of
        Operations**





**Other
      income (Expense)**





Other
      income (expense) for the three and nine months ended September 30, 2005 and
      2004
      is summarized as follows:


**Three
                months ended Sept**
            
            **Nine
                months ended Sept**2005
            
            2004
            
            2005
            
            2004Interest
                expenseRelated
                party loan
            
            
            ($20,385
            )
            
            ($69,530
            )
            
            ($41,048
            )
            
            ($236,792
            )Other
            
            
            (481
            )
            
            118
            
            
            (2,332
            )
            
            (1,338
            )Derivative
                loss
            
            
            (46,094
            )
            
            0
            
            
            (792,368
            )
            
            0Foreign
                exchange gain (loss)
            
            
            (2,107
            )
            
            7,037
            
            
            (38,239
            )
            
            12,163Other,
                net
            
            
            (2,085
            )
            
            (5,398
            )
            
            (10,270
            )
            
            (5,194
            )Total
            
            
            ($71,152
            )
            
            ($67,773
            )
            
            ($884,257
            )
            
            ($231,161
            )





The
      shares issued in connection with the 2004 and 2005 Subscription Agreement
      transactions are derivative transactions and as such have been presented in
      the
      accompanying balance sheets as stock settlement liabilities. The derivative
      loss
      represents the difference in the share fair value as issued and the
      fair
      value of said shares at the balance sheet date based on
      the trading value of the stock at September 30, 2005.  The stock
      settlement liabilities are expected to be satisfied with the issuance of Nanobac
      common stock. Accordingly, the accumulated derivative losses have not been
      funded with cash and are not expected to be funded with cash. At settlement,
      accumulated derivative losses will be charged to retained earnings as a
      constructive dividend.





Foreign
      currency gains and losses result from exchange rate changes between the U.S.
      dollar and the Euro on intercompany advances between our U.S. subsidiary and
      our
      Finland subsidiary. We recognized a loss for the three and nine months ended
      September 30, 2005 due to the devaluation of the Euro to the dollar during
      2005.





19


**Item
        2: Management's Discussion and Analysis of Financial Condition and Results
        of
        Operations**




**Net
      Loss**





We
      are
      experiencing significant losses as we conduct research and development related
      to nanobacteria and launch our products and services. We believe it will take
      significant time before we will earn sufficient revenue to offset our expenses
      and there is no assurance that we will be able to accomplish this goal. As
      a
      result of the losses, we are dependent on affiliates of our CEO and other
      investors to provide sufficient cash sources to fund our operations.





**Liquidity
      and Capital Resources**





Since
      the
      United States Bankruptcy Court confirmed a plan of reorganization that allowed
      the Company to emerge from Chapter 11 during calendar 2002, the Company has
      financed its activities primarily through loans made by entities affiliated
      with
      our current Chief Executive Officer (referred to herein as “the Affiliated
      Entities”). These loans were made as funding was needed and were extremely
      advantageous to the Company in that the amounts were funded as the Company
      needed financial infusions and allowed the Company to avoid the costs and
      distractions of attempting to raise these amounts from unrelated parties. It
      is
      unrealistic to believe that unrelated parties would have offered terms as
      generous as those obtained from the Affiliated Entities, and it is also unlikely
      that any financing could have been obtained under any terms without the
      financing of the Affiliated Entities. From time to time the Affiliated Entities
      have agreed to allow a portion of the loan balances to be converted into shares
      of the Company’s common stock. There is no obligation on the part of the
      Affiliated Entities to make additional loans to the Company. The Affiliated
      Entities are also under no obligation to convert any portion of the loan
      balances owed to it into additional shares of the Company’s stock.





As
      of
      September 30, 2005, we had total assets of $9.1 million of which only $145,000
      were current assets. At September 30, 2005, we had total current liabilities
      of
      $3.0 million and a working capital deficit of $2.9 million.





Net
      cash
      used for operating activities for the nine months ended September 30, 2005
      was
      $1.8 million. The negative cash flow from operating activities reflects the
      $2.9
      million net loss for the period offset by the non-cash charges of $567,000
      for
      depreciation and amortization and $792,000 for derivative losses. In addition,
      current liabilities were reduced $287,000 during the nine months ended September
      30, 2005.





Net
      cash
      used by investing activities for the nine months ended September 30, 2005 was
      $39,000 for the purchase of fixed assets.





Net
      cash
      provided by financing activities for the nine months ended September 30, 2005
      was $1.8 million, which is attributable to related party loans of $1.6 million
      and collection of common stock subscriptions of $200,000 less expenses of
      $30,000. Because of certain terms in the subscription agreements and
      insufficient available authorized common shares, the proceeds from common stock
      subscriptions are presented as stock settlement liability in the accompanying
      2005 balance sheet.





As
      noted
      above, cash from related party loans and capital contributions financed our
      net
      loss and reduction of current liabilities. We are dependent on raising
      additional funding necessary to implement our business plan. Should we not
      be
      successful in raising cash from our CEO and other investors, we are unlikely
      to
      continue as a going concern.





20


**Item
        2: Management's Discussion and Analysis of Financial Condition and Results
        of
        Operations**




**Critical
      accounting policies**





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





**Forward
      Looking Statements**





Our
      disclosure and analysis in this Form 10-QSB contains some forward-looking
      statements, within the meaning of the Private Securities Litigation Reform
      Act
      of 1995 (“the Act”), that set forth anticipated results based on our plans and
      assumptions. From time to time, we also provide forward-looking statements
      in
      other materials we release to the public as well as oral forward-looking
      statements. Such statements give our current expectations or forecasts of future
      events; they do not relate strictly to historical and current facts. We have
      tried wherever possible to identify such statements by using words such as
      “anticipate”, “estimate”, “expect”, “project”, “intend”, “plan”, “believe”,
“will” and similar expressions in connection with any discussion of future
      operating or financial performance.





In
      light
      of the important factors that can materially affect results, including those
      set
      forth above and elsewhere in this report, the inclusion of forward-looking
      information herein should not be regarded as a representation by us or any
      other
      person that our objectives or plans will be achieved. We may encounter
      competitive, technological, financial and business challenges making it more
      difficult than expected to continue to market our products and services;
      competitive conditions within our industry may change adversely; we may be
      unable to retain existing key management and research personnel; our forecasts
      may not accurately anticipate market demand; and there may be other material
      adverse changes in our operations or business. Certain important factors
      affecting the forward looking statements made herein include, but are not
      limited to (i) accurately forecasting capital expenditures; (ii) obtaining
      new
      sources of external financing; (iii) serving as the nexus for nanobacteria
      research and (iv) conducting successful clinical trials supporting Dr.
      Kajander’s theories that the human body does not recognize nanobacteria as
      harmful, and accordingly, nanobacteria could be the cause of pathological
      disease causing calcification found in multiple diseases. Assumptions relating
      to budgeting, marketing, product development and other management decisions
      are
      subjective in many respects and thus susceptible to interpretations and periodic
      revisions based on actual experience and business developments, the impact
      of
      which may cause the Company to alter its capital expenditure or other budgets,
      which may in turn affect the Company's financial position and results of
      operations.





**Risk
      Factors**





**Trends,
      Risks and Uncertainties**





We
      have
      sought to identify what we believe to be the most significant risks to our
      business. However, we cannot predict whether, or to what extent, any of such
      risks may be realized nor can we guarantee that we have identified all possible
      risks that might arise. You should not consider the risks and assumptions
      identified in this report to be a complete discussion of all potential risks
      and
      uncertainties affecting the Company. Investors should carefully consider all
      risk factors before making an investment decision with respect to our Common
      Stock.





21


**Item
        2: Management's Discussion and Analysis of Financial Condition and Results
        of
        Operations**




**Risk
      Factors (continued)**





**Cautionary
      Factors that may affect Future Results**





We
      provide the following cautionary discussion of risks, uncertainties and possible
      inaccurate assumptions relevant to our business and our products. These are
      factors that we think could cause our actual results to differ materially from
      expected results. Other factors besides those listed here could adversely affect
      us.





**We
      require additional financing in order to continue in business as a going
      concern, the availability of which is uncertain. We may be forced by business
      and economic conditions to accept financing terms which will require us to
      issue
      our securities at a discount, which could result in further dilution to our
      existing stockholders.**




As
      discussed under the heading, "Management's Discussion and Analysis - Liquidity
      and Capital Resources," we require additional financing to fund our operations.
      There can be no assurance that additional financing will be available to us
      when
      needed or, if available, that it can be obtained on commercially reasonable
      terms. In addition, any additional equity financing may involve substantial
      dilution to our stockholders. If we fail to raise sufficient financing to meet
      our immediate cash needs, we will be forced to scale down or perhaps even cease
      the operation of our business, which may result in the loss of some or all
      of
      your investment in our common stock.


In
      addition, in seeking debt or equity private placement financing, we may be
      forced by business and economic conditions to accept terms which will require
      us
      to issue our securities at a discount from the prevailing market price or face
      amount, which could result in further dilution to our existing
      stockholders.





**Liquidity
      and Working Capital Risks; Need for Additional Capital to Finance** **Growth
      and Capital Requirements**





Throughout
      2005 and 2004, affiliates of our Chief Executive Officer have provided a
      significant portion of our capital needs through loans and capital
      contributions. While these affiliates continue to provide for the majority
      of
      our cash requirements, they are under no obligation to continue such financing
      and/or strategic guidance. In the event these affiliates should discontinue
      their support, we may have difficulty in continuing our operations. In such
      an
      event, shareholders could lose their investment in its entirety. Historically,
      these affiliates have provided capital to us on a demand debt basis after which
      they may agree to convert debt into shares of our common stock. If, in the
      future we require additional funds, these affiliates might contribute some
      or
      all of our requirements. We anticipate that as a part of any such loan, these
      affiliates would have rights to convert into additional shares of our common
      stock. In such an event and to the degree of which we require these affiliates’
      support, shareholders may experience dilution. At present, we do not maintain
      key man insurance for our CEO.





In
      addition to the financial support we may receive from affiliates of our CEO,
      we
      may continue to seek to raise capital from public or private equity or debt
      sources to provide working capital to meet our general and administrative costs
      until net revenues make the business self-sustaining. We cannot guarantee that
      we will be able to raise any such capital on terms acceptable to us or at all.
      Such financing may be upon terms that are dilutive or potentially dilutive
      to
      our stockholders. If alternative sources of financing are required, but are
      insufficient or unavailable, we will be required to modify our growth and
      operating plans in accordance with the extent of available funding.





22


**Item
        2: Management's Discussion and Analysis of Financial Condition and Results
        of
        Operations**


**Risk
      Factors (continued)**





**We
      have a history of operating losses and fluctuating operating results, which
      raise substantial doubt about our ability to continue as a going
      concern.**




The
      report of the Company’s independent auditors for the year ended December 31,
      2004 contains an explanatory paragraph as to the Company’s ability to continue
      as a going concern. Since inception through September 30, 2005, we have incurred
      aggregate losses of $16.6 million. There is no assurance that we will operate
      profitably or will generate positive cash flow in the future. In addition,
      our
      operating results in the future may be subject to significant fluctuations
      due
      to many factors not within our control, such as the unpredictability of when
      customers will order products, the size of customers' orders, the demand for
      our
      products, and the level of competition and general economic conditions.


Although
      we are confident that revenues will increase, we also expect an increase in
      research and development costs and operating costs. Consequently, we expect
      to
      incur operating losses and negative cash flow until our products gain market
      acceptance sufficient to generate a commercially viable and sustainable level
      of
      sales, and/or additional products are developed and commercially released and
      sales of such products made so that we are operating in a profitable manner.





**Potential
      Incorrect Conclusions on the Detection and Eradication of
      Nanobacteria**





Most
      of
      our future revenue is based on our ability to detect and eradicate Nanobacteria.
      If it is ultimately proved that our diagnostic methodologies and treatment
      regimens as covered by our patents are ineffective or based upon incorrect
      scientific conclusions, our existing patents and product lines may lose most
      or
      all of their value. Further, if we are unsuccessful in leveraging our diagnostic
      and therapeutic products to detect and treat nanobacterial diseases, we may
      not
      generate sufficient revenue to offset our expenses.





**Development
      and Commercialization of Pharmaceutical and Nurtraceutical
      Products**





Pharmaceutical
      and nutraceutical research and development is highly speculative and involves
      a
      high and significant degree of risk.  The marketability of any product
      developed by us will be affected by numerous factors beyond our control,
      including:





·
            the
                discovery of unexpected toxicities or lack of sufficient efficacy
                of
                products which make them unattractive or unsuitable for human
                use;


·
            preliminary
                results as seen in animal and/or limited human testing may not be
                substantiated in larger controlled clinical
                trials;


·
            manufacturing
                costs or other factors may make manufacturing of products impractical
                and
                non-competitive;


·
            proprietary
                rights of third parties or competing products or technologies may
                preclude
                commercialization; and


·
            requisite
                regulatory approvals for the commercial distribution of products
                may not
                be obtained.





Other
      factors may become apparent during the course of research, up-scaling or
      manufacturing which may result in the discontinuation of research and other
      critical projects.





23


**Item
        2: Management's Discussion and Analysis of Financial Condition and Results
        of
        Operations**




**Risk
      Factors (continued)**





**Acceptance
      of Products in the Marketplace is Uncertain** .





Our
      future financial performance will depend, at least in part, upon the
      introduction and customer acceptance of our proposed treatments and products.
      Our treatments and products may not achieve market acceptance, and such adverse
      marketing results could materially harm the Company.





**Limited
      Operating History Anticipated Losses; Uncertainty of Future
      Results**





We
      have a
      limited operating history upon which an evaluation of our Company and our
      prospects can be based. Our prospects must be evaluated with a view to the
      risks
      encountered by companies in early stages of development, particularly in light
      of the uncertainties relating to the new and evolving lifescience research
      which
      we intend to develop and market, and the acceptance of our business model.
      We
      will be incurring costs to: (i) perform research studies to prove the
      effectiveness of our pharmaceutical products, (ii) further develop and market
      our products; (iii) establish distribution relationships; and (iv) build an
      organization. To the extent that such expenses are not subsequently followed
      by
      commensurate revenues, our business, results of operations and financial
      condition will be materially adversely affected. We, therefore, cannot insure
      that we will be able to immediately generate sufficient revenues. We expect
      negative cash flow from operations to continue for at least the next 12 months
      as we continue to develop and market our business. If cash generated by
      operations is insufficient to satisfy our liquidity, we may be required to
      sell
      additional equity or debt securities. The sale of additional equity or
      convertible debt securities would result in additional dilution to our
      stockholders. Our initial operations may not be profitable, since time will
      be
      required to build our business to the point that our revenues will be sufficient
      to cover our total operating costs and expenses. Our reaching a sufficient
      level
      of sales revenues will depend upon a large number of factors, including
      availability of sufficient working capital, the number of customers we are
      able
      to attract and the costs of continuing development of our product
      line.





**Federal
      Food and Drug Administration**





Some
      or
      all of our products may be governed by rules and regulations established by
      the
      United States Food and Drug Administration (“FDA”). Changes in FDA regulations
      and the enforcement thereof may affect our lifescience business. Furthermore,
      we
      may not be successful in filing and obtaining approval of our 510K or PMA
      filings with the FDA for our Nano-Capture Antigen and Nano-Sero IgG ELISA
      assays.





**Data
      Obtained Through Clinical Trials** .





Data
      obtained from pre-clinical studies and clinical trials do not necessarily
      predict results that will be obtained from later pre-clinical studies and
      clinical trials. Moreover, pre-clinical and clinical data is susceptible to
      varying interpretations, which could delay, limit or prevent regulatory
      approval. A number of companies in the pharmaceutical industry have suffered
      significant setbacks in advanced clinical trials, even after experiencing
      promising results in earlier trials. The failure to adequately demonstrate
      the
      safety and/or effectiveness of an intended product under development could
      delay
      or prevent regulatory clearance of the potential drug or treatment, resulting
      in
      delays to commercialization, and could materially harm the
      business.





24


**Item
        2: Management's Discussion and Analysis of Financial Condition and Results
        of
        Operations**


**Risk
      Factors (continued)**





**Competitors
      in the Nutraceutical and Pharmaceutical Industry May Develop Competing
      Technologies**





We
      have a
      number of competitors, some of whom are better able to commercialize their
      products, which could render our products obsolete or uncompetitive prior to
      recovering our expenses. We anticipate that we will face increased competition
      in the future as new products enter the market and advanced technologies become
      available.





**Regulations
      may Inhibit our Ability to Sell Nanobac Supplements**





Codex
      is
      a joint body comprising government representatives
      and non-governmental organizations, jointly managed by the United
      Nation's (U.N.) Food and Agriculture Organization (FAO) and the World
      Health Organization (WHO) of the U.N. The Codex Committee on Nutrition and
      Foods
      for Special Dietary Uses (CCNFSDU) has been attempting to develop international
      guidelines for vitamins and minerals since 1991.




There
      is
      a school of thought within the dietary supplement community that
      buying vitamins and other dietary supplements will be severely limited
      by
      this CODEX. Passage of the above guidelines may inhibit our ability
      to sell
      Nanobac Supplement outside of the United States. We do not believe that the
      passage will impact United State revenue as the U.S. draft position states
      that
      "The United States supports consumer choice and access to dietary supplements
      that are safe and are labelled in a truthful and non-misleading manner." 
      Further, the CODEX Draft notes that the Codex Guidelines for Vitamin and Mineral
      Supplements will not adversely affect the availability of safe and truthfully
      labelled supplement products in the U.S. marketplace or to U.S. consumers.
      If
      our interpretation is not correct passage of the international guidelines may
      inhibit the sales of Nanobac Supplement inside and outside of the United States





**Risk
      of Third Party Lawsuits** .





We
      are
      exposed to potential product liability risks that are inherent in the testing,
      manufacturing and marketing of pharmaceutical products. We cannot assure
      potential investors that such claims will not be asserted against the Company.
      A
      successful liability claim or series of claims brought against us could have
      a
      material adverse effect on our financial condition. In addition, we may be
      sued
      by third parties who claim that our products and treatments infringe upon the
      intellectual property rights of others or that we have misappropriated trade
      secrets of others. This risk is exacerbated by the fact that the validity and
      breadth of claims covered in medical technology patents and the breadth and
      scope of trade secret protection involve complex legal and factual questions
      for
      which important legal principles are unresolved. Any litigation or claims
      against us, whether or not valid, could result in substantial costs, could
      place
      a significant strain on our financial resources, and could harm our
      reputation.





25


**Item
        2: Management's Discussion and Analysis of Financial Condition and Results
        of
        Operations**


**Risk
      Factors (continued)**





**Government
      Regulation**





Healthcare
      in general and the pharmaceuticals industry in particular are highly regulated
      markets, subject to both federal and a multitude of state regulations and
      guidelines. The majority of our business is still in clinical research
      applications and is governed by the medical community. There can be no assurance
      that changes to state or federal laws will not materially restrict our ability
      to sell our products or develop new product lines.





**Intellectual
      Property Rights**





We
      have a
      family of patents encompassing the detection and eradication of nanobacteria.
      There are risks inherent in any intellectual property rights in that they may
      be
      challenged as being invalid or not original. Additionally, other parties may
      abuse such intellectual rights, causing the Company to defend its rights.





**Dependency
      upon Key Technical and Scientific Personnel Who May Terminate Employment at
      Any
      Time** . ****





Our
      success will depend to a significant degree upon the continued services of
      key
      technical and scientific personnel, including but not limited to E. Olavi
      Kajander, MD, PhD. In addition, our success may depend on our ability to attract
      and retain other highly skilled personnel. Competition for qualified personnel
      is intense, and the process of hiring and integrating such qualified personnel
      is often lengthy. We may be unable to recruit personnel on a timely basis,
      if at
      all. All of the Company’s management and other employees may voluntarily
      terminate their employment with us at any time. The loss of the services of
      key
      personnel, or the inability to attract and retain additional qualified
      personnel, could result in delays to development, loss of sales, and/or
      diversion of management resources that could have a material adverse affect
      on
      the Company.





**Competition**





The
      markets in which we compete include successful and well-capitalized competitors
      that vary in size and scope. Principal competitors include Pfizer, Merck and
      other pharmaceutical companies having unique treatments for cardiovascular
      disease. All of these competitors are more established, benefit from greater
      name recognition and have substantially greater resources than us. Moreover,
      we
      could face additional competition as other established and emerging companies
      enter the market and new products and technologies are introduced. Increased
      competition could result in price reductions, fewer customer subscriptions,
      reduced gross margins and loss of market share, any of which could materially
      adversely affect our business, financial condition and operating results. In
      addition, current and potential competitors may make strategic acquisitions
      or
      establish cooperative relationships among themselves or with third-parties,
      thereby increasing the ability of their products to address the needs of our
      prospective consumers. While we believe we can differentiate our product from
      these current and future competitors, focusing on the products' functionality,
      flexibility, adaptability and features, there can be no assurance that we will
      be able to compete successfully against current and future competitors. The
      failure to effectively compete would have a material adverse effect upon our
      business, financial condition and operating results.





26


**Item
        2: Management's Discussion and Analysis of Financial Condition and Results
        of
        Operations**


**Risk
      Factors (continued)**





**Lack
      of Independent Directors**





We
      cannot
      guarantee our Board of Directors will have a majority of independent directors
      in the future. In the absence of a majority of independent directors, our
      executive officers, who are also principal stockholders and directors, could
      establish policies and enter into transactions without independent review and
      approval thereof. This could present the potential for a conflict of interest
      between the Company’s stockholders and the controlling officers and/or
      directors.





**Limitation
      of Liability and Indemnification of Officers and Directors**





Our
      officers and directors are required to exercise good faith and high integrity
      in
      our management affairs. Our Articles of Incorporation and By Laws provide,
      however, that our officers and directors shall have no liability to our
      shareholders for losses sustained or liabilities incurred which arise from
      any
      transaction in their respective managerial capacities unless they violated
      their
      duty of loyalty, did not act in good faith, engaged in intentional misconduct
      or
      knowingly violated the law, approved an improper dividend or stock repurchase,
      or derived an improper benefit from the transaction. Our Articles and By-Laws
      also provide for the indemnification by us of the officers and directors against
      any losses or liabilities they may incur as a result of the manner in which
      they
      operate our business or conduct the internal affairs, provided that in
      connection with these activities they act in good faith and in a manner they
      reasonably believe to be in, or not opposed to, the best interests of the
      Company, and their conduct does not constitute gross negligence, misconduct
      or
      breach of fiduciary obligations.





**Continued
      Control by Current Officers and Directors**





The
      present officers and directors control approximately 50% of the outstanding
      shares of Common Stock, and are in a position to elect all of our Directors
      and
      otherwise control the Company, including, without limitation, authorizing the
      sale of equity or debt securities of the Company, the appointment of officers,
      and the determination of officer's salaries. Shareholders have no cumulative
      voting rights.





27


**Item
        2: Management's Discussion and Analysis of Financial Condition and Results
        of
        Operations**


**Limited
      Market Due To Penny Stock**




NNBP's
      stock differs from many stocks, in that it is a "penny stock." The Securities
      and Exchange Commission has adopted a number of rules to regulate penny stocks.
      These rules include, but are not limited to, Rules 3a5l-l, 15g-1, 15g-2, 15g-3,
      15g-4, 15g-5, 15g-6 and 15g-7 under the Securities and Exchange Act of 1934,
      as
      amended. Because our securities constitute penny stock within the meaning of
      the
      rules, the rules would apply to us and our securities. The rules may further
      affect the ability of owners of our stock to sell their securities in any market
      that may develop for them. There may be a limited market for penny stocks,
      due
      to the regulatory burdens on broker-dealers. The market among dealers may not
      be
      active. Investors in penny stock often are unable to sell stock back to the
      dealer that sold them the stock. The mark-ups or commissions charged by the
      broker-dealers may be greater than any profit a seller may make. Because of
      large dealer spreads, investors may be unable to sell the stock immediately
      back
      to the dealer at the same price the dealer sold the stock to the investor.
      In
      some cases, the stock may fall quickly in value. Investors may be unable to
      reap
      any profit from any sale of the stock, if they can sell it at all. Stockholders
      should be aware that, according to the Securities and Exchange Commission
      Release No. 34- 29093, the market for penny stocks has suffered in recent years
      from patterns of fraud and abuse. These patterns include: - Control of the
      market for the security by one or a few broker-dealers that are often related
      to
      the promoter or issuer; - Manipulation of prices through prearranged matching
      of
      purchases and sales and false and misleading press releases; - "Boiler room"
      practices involving high pressure sales tactics and unrealistic price
      projections by inexperienced sales persons; - Excessive and undisclosed bid-ask
      differentials and markups by selling broker-dealers; and - The wholesale dumping
      of the same securities by promoters and broker- dealers after prices have been
      manipulated to a desired level, along with the inevitable collapse of those
      prices with consequent investor losses. Furthermore, the penny stock designation
      may adversely affect the development of any public market for NNBP's shares
      of
      common stock or, if such a market develops, its continuation. Broker-dealers
      are
      required to personally determine whether an investment in penny stock is
      suitable for customers. Penny stocks are securities (i) with a price of less
      than five dollars per share; (ii) that are not traded on a "recognized" national
      exchange; (iii) whose prices are not quoted on the NASDAQ automated quotation
      system (NASDAQ-listed stocks must still meet requirement (i) above); or (iv)
      of
      an issuer with net tangible assets less than $2,000,000 (if the issuer has
      been
      in continuous operation for at least three years) or $5,000,000 (if in
      continuous operation for less than three years), or with average annual revenues
      of less than $6,000,000 for the last three years. Section 15(g) of the Exchange
      Act, and Rule 15g-2 of the Commission require broker-dealers dealing in penny
      stocks to provide potential investors with a document disclosing the risks
      of
      penny stocks and to obtain a manually signed and dated written receipt of the
      document before effecting any transaction in a penny stock for the investor's
      account. Potential investors in NNBP's common stock are urged to obtain and
      read
      such disclosure carefully before purchasing any shares that are deemed to be
      "penny stock." Rule 15g-9 of the Commission requires broker-dealers in penny
      stocks to approve the account of any investor for transactions in such stocks
      before selling any penny stock to that investor. This procedure requires the
      broker-dealer to (i) obtain from the investor information concerning his or
      her
      financial situation, investment experience and investment objectives; (ii)
      reasonably determine, based on that information, that transactions in penny
      stocks are suitable for the investor and that the investor has sufficient
      knowledge and experience as to be reasonably capable of evaluating the risks
      of
      penny stock transactions; (iii) provide the investor with a written statement
      setting forth the basis on which the broker-dealer made the determination in
      (ii) above; and (iv) receive a signed and dated copy of such statement from
      the
      investor, confirming that it accurately reflects the investor's financial
      situation, investment experience and investment objectives. Compliance with
      these requirements
      may make it more difficult for NNBP's stockholders to resell their shares to
      third parties or to otherwise dispose of them.





28




**Item
      3: Quantitative and Qualitative Disclosures About Market
      Risk**





While
      most of our operations are conducted in the United States, we also operate
      a
      laboratory in Kuopio Finland. We face two risks related to foreign currency
      exchange: translation risk and transaction risk. Amounts invested in our Finland
      operations are translated into US Dollars at the exchange rates in effect at
      the
      balance sheet date. Since the functional currency of our Finland subsidiary
      is
      the local currency, foreign currency translation of the balance sheet is
      reflected as a component of stockholders’ equity and does not impact operating
      results.





Our
      Finland subsidiary collects revenue and pays expenses in Euros, mitigating
      transaction risk. Revenues and expenses in Euros translate into varying amounts
      of US Dollars depending upon whether the US Dollar weakens or strengthens
      against the Euro. Therefore, changes in exchange rates may negatively affect
      the
      Company’s consolidated revenues and expenses (as expressed in US Dollars) from
      foreign operations.





Currency
      transaction gains or losses are incurred on our US Subsidiary’s intercompany
      advance to our Finland Subsidiary. We recognize a gain on the intercompany
      advance as the US Dollar weakens against the Euro and we recognize a loss when
      the US Dollar strengthens against the Euro.





The
      Company has not entered into a material amount of foreign currency forward
      exchange contracts or other derivative financial instruments to hedge the
      effects of adverse fluctuations in foreign currency exchange rates.





**Item
      4: Controls and Procedures**





***Disclosure
      controls and procedures***





Under
      the
      supervision and with the participation of our management, including our Chief
      Executive Officer, we have evaluated the effectiveness of the design and
      operation of our disclosure controls and procedures within 90 days of the filing
      date of this report, and, based on this evaluation, our Chief Executive Officer
      has concluded that these controls and procedures are effective.





Disclosure
      controls and procedures are our controls and other procedures that are designed
      to ensure that information required to be disclosed by us in the reports we
      file
      or submit under the Exchange Act is recorded, processed, summarized and
      reported, within the time periods specified in the Securities and Exchange
      Commission's rules and forms. Disclosure controls and procedures include,
      without limitation, controls and procedures designed to ensure that information
      required to be disclosed by us in the reports that we file under the Exchange
      Act is accumulated and communicated to our management, including our principal
      executive officer and principal financial officer, as appropriate to allow
      timely decisions regarding required disclosure.





29





**Item
      4: Controls and Procedures (continued)**





***Section
      404 of the Sarbanes-Oxley Act of 2002***




Section
      404 of the Sarbanes-Oxley Act of 2002 requires our report on Form 10-KSB for
      2006 to include a report of management on internal control over financial
      reporting. Internal control over financial reporting, as defined under these
      rules, is a process designed to provide reasonable assurance regarding the
      reliability of financial reporting and the preparation of financial statements
      for external purposes in accordance with generally accepted accounting
      principles.




In
      our
      report, we will be required, among other things, to assess the effectiveness
      of
      our internal control over financial reporting. The report must also disclose
      any
      material weaknesses in internal control over financial reporting identified
      by
      management, and if there are any material weaknesses, we must conclude that
      our
      internal control over financial reporting was not effective. A material
      weakness, under the applicable rules, is a control deficiency, or combination
      of
      control deficiencies, that results in more than a remote likelihood that a
      material misstatement of the annual or interim financial statements will not
      be
      prevented or detected.




In
      conducting our ongoing assessment of its internal control over financial
      reporting to prepare for compliance with the requirements under Section 404
      of the Sarbanes-Oxley Act, we have identified a lack of segregation of duties
      to
      be a potential material weakness in internal controls. Lack of segregation
      of
      duties is inherent to our company due to the small number of employees. Our
      assessment is still in process to determine if this situation is actually a
      material weakness or if there are any other material weaknesses.





***Changes
      in internal controls***





There
      were no significant changes in our internal controls or in other factors that
      could significantly affect these controls subsequent to the date of their
      evaluation.





**PART
      II - OTHER INFORMATION**





**Item
      1: Legal Proceedings**





On
      August
      10, 2004, we were served with a civil action as filed in the Superior Court
      of
      Fulton County State of Georgia by Foltz Martin LLC and Openbook Learning Club,
      Inc. (“Foltz”). This suit alleges that the Company is liable for approximately
      $67,000 of expenses plus approximately $11,000 interest for services performed
      by the plaintiffs for HealthCentrics, Inc. in 2003 and 2004. The Company owned
      100% of HealthCentrics from December 2003 through March 2004 when HealthCentrics
      was sold by the Company to an affiliate. We do not believe that the Company
      is
      liable for the obligations of HealthCentrics.





We
      know
      of no other material, active or pending legal proceedings against us, nor are
      we
      involved as a plaintiff in any material proceedings or pending litigation.
      There
      are no proceedings in which any of our directors, officers or affiliates, or
      any
      registered or beneficial shareholders are an adverse party or have a material
      interest adverse to us.





30





**Item
      2: Unregistered Sales of Equity Securities and Use of
      Proceeds**





From
      August 2004 through February 2005, we executed Subscription Agreements with
      three unaffiliated investors and one affiliated investor. These investors paid
      us 50% of the subscription price at execution and the remaining 50% is due
      within five days from the date that a registration statement is declared
      effective for the common shares that are being issued. In exchange for the
      cash
      consideration, we are to issue these investors shares of our common stock equal
      to the amount paid divided by the lesser of (a) $0.12 or (b) fifty-two percent
      of the average closing bid price for our common stock for the five days
      immediately prior to the date on which a registration statement is declared
      effective (“The Fixed Price”). In addition, each of these investors will receive
      an equivalent number of warrants with expiration dates of five years from the
      date of issuance. One half of these warrants will be priced at 110% of the
      Fixed
      Price and the remainder will be priced at 150% of the Fixed Price. The minimum
      number of shares and warrants that will be issued under these Subscription
      Agreements (assuming a Fixed Price of $0.12 per share) is as
      follows:




Numberof
                Shares
            
            Per
                Share
            
            ProceedsCommon
                Stock:Unaffiliated
                Investors
            
            
            16,250,000
            
            $
            0.12
            
            $
            1,950,000Affiliates
            
            
            8,333,333
            
            $
            0.12
            
            $
            1,000,00024,583,333
            
            
            
            
            $
            2,950,000Number
            
            Exerciseof
                Warrants
            
            PriceWarrants:Unaffiliated
                Investors
            
            
            8,125,000
            
            $
            0.13Unaffiliated
                Investors
            
            
            8,125,000
            
            $
            0.18Affiliates
            
            
            4,166,667
            
            $
            0.13Affiliates
            
            
            4,166,666
            
            $
            0.1824,583,333





As
      of
      September 30, 2005, 12,297,667 shares had been issued under the above
      Subscription Agreements. The actual number of shares and warrants that
      ultimately will be issued under these Subscription Agreements may be
      substantially higher due to the variability of the Fixed Price. Based on our
      recent traded price of $0.06 to $0.10 per share, over twice as many shares
      and
      warrants would be issued as described above. Further, if the Fixed Price is
      less
      than $0.09 per share, we do not have sufficient authorized shares to issue
      the
      common stock and warrants required under the above subscription agreements.
      Our
      shareholders need to approve any increase in our authorized shares.





Each
      of
      these investors received their shares in reliance upon Section 4(2) of the
      Securities Act of 1933, because each of the holders was knowledgeable,
      sophisticated and had access to comprehensive information about us. At all
      relevant times we were a reporting company under the Securities Exchange Act
      of
      1934 and there was readily available adequate current public information with
      respect to the Company.





A
      success
      fee was awarded to a broker for one of the above unaffiliated investor
      transactions in the form of 5-year warrants equal to 20% of the value of the
      transaction. These warrants have exercise prices equal to $0.16 to $0.22 per
      share for transactions completed to date. Future warrants issued under this
      agreement will have an exercise price equal to NNBP’s stock price on the date of
      closing. We estimate that 2 million warrants will be issued to this broker.





31





**Item
      3: Defaults upon Senior Securities**





None.





**Item
      4: Submission of Matters to a Vote of Security Holders**





None.





**Item
      5: Other Information**





None





**Item
      6: Exhibits and Reports on Form 8-K**





(a)
            The
                following exhibits are filed as part of this
                report:





Exhibit
      31.1 - Certification to Section 302 of the Sarbanes-Oxley Act of 2002 - Chief
      Executive Officer





Exhibit
      31.2 - Certification to Section 302 of the Sarbanes-Oxley Act of 2002 - Chief
      Financial Officer





Exhibit
      32.1 - Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
      to
      Section 906 of the Sarbanes-Oxley Act of 2002 - Chief Executive
      Officer





Exhibit
      32.2 - Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
      to
      Section 906 of the Sarbanes-Oxley Act of 2002 - Chief Financial
      Officer




(b)
            Reports
                on Form 8-K





None





32





**SIGNATURES**





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


Dated:
                November 9, 2005
              NANOBAC PHARMACEUTICALS,
                INCORPORATEDBy:
              /s/
                John D StantonJohn
                D StantonChief
                Executive Officer


33





**Nanobac
      Pharmaceuticals, Incorporated**





**EXHIBIT
      INDEX**





EXHIBIT
              NUMBER
            
            DESCRIPTION
            
            PAGE31.1
            
            Certification
                to Section 302 of the Sarbanes-Oxley Act of
                2002 - Chief Executive Officer
            
            3731.2
            
            Certification
                to Section 302 of the Sarbanes-Oxley Act of
                2002 - Chief Financial Officer
            
            3832.1
            
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant
                to Section 906 of the Sarbanes-Oxley Act of 2002 - Chief
                Executive Officer
            
            3932.2
            
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant
                to Section 906 of the Sarbanes-Oxley Act of 2002 - Chief
                Financial Officer
            
            40






34