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

                                   FORM 10-QSB

                                   (Mark one)

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

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2006

                                       OR

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

                        For the transition period from to

                        COMMISSION FILE NUMBER 000-51334

                                HEMOBIOTECH, INC.
                                -----------------
             (Exact name of registrant as specified in its charter)


                     DELAWARE                               33-0995817
          (State or other jurisdiction of                (I.R.S. Employer
          incorporation or organization)                Identification No.)
         14221 DALLAS PARKWAY, SUITE 1400
                   DALLAS, TEXAS                               75254
     (Address of principal executive offices)               (Zip Code)

       Registrant's telephone number, including area code: (214 540-8411)

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

Yes [X] No [ ]

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [_] No [X]

As of May 9, 2006, the registrant had  outstanding  14,054,399  shares of common
stock, $0.001 par value per share.

Transitional Small Business Disclosure Format (check one): Yes [_] No [X]

                                       1
<PAGE>

                                HEMOBIOTECH, INC.
                          (a development stage company)

                                TABLE OF CONTENTS


                                                                            Page
PART I -- FINANCIAL INFORMATION                                                2
   ITEM I. -- Financial Statements                                             2

       Condensed Balance Sheets                                                2
       Condensed Statements of Operations                                      3
       Condensed Statements of Changes In Stockholders' Equity                 4
       Condensed Statements of Cash Flows                                      5
       Condensed Notes to Financial Statements                                 6
   ITEM 2. -- Management's Discussion and Analysis or Plan of Operations      14
   ITEM 3. -- Controls and Procedures                                         19
PART II -- OTHER INFORMATION                                                  20
           SIGNATURES                                                         22
   Exhibit Index                                                              23
   Exhibit 31.1                                                               24
   Exhibit 31.2                                                               25
   Exhibit 32.1                                                               26
   Exhibit 32.2                                                               27

                                       2
<PAGE>

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

In addition to  historical  information,  this  Quarterly  Report on Form 10-QSB
contains forward-looking  statements.  Forward-looking statements are those that
predict or  describe  future  events or trends and that do not relate  solely to
historical  matters.  You can generally  identify forward looking  statements as
statements  containing  the words  "believe,"  "expect,"  "will,"  "anticipate,"
"intend," "estimate," "project," "assume" or other similar expressions, although
not  all  forward-looking   statements  contain  these  identifying  words.  All
statements in this report  regarding  our future  strategy,  future  operations,
projected financial position, estimated future revenues, projected costs, future
prospects,  and results that might be obtained by pursuing  management's current
plans and objectives are forward-looking  statements. You should not place undue
reliance on our forward-looking statements because the matters they describe are
subject  to known and  unknown  risks,  uncertainties  and  other  unpredictable
factors,  many of which are beyond our control.  Our forward-looking  statements
are based on the information  currently available to us and speak only as of the
date on which this report was filed with the Securities and Exchange  Commission
(the  "SEC").  We  expressly  disclaim  any  obligation  to issue any updates or
revisions to our forward-looking statements, even if subsequent events cause our
expectations to change regarding the matters discussed in those statements. Over
time, our actual results,  performance or  achievements  will likely differ from
the  anticipated  results,  performance  or  achievements  that are expressed or
implied  by  our  forward-looking  statements,  and  such  difference  might  be
significant and materially  adverse to our stockholders.  Many important factors
that could cause such a difference  are  described in our Annual  Report on Form
10-KSB,  file with the SEC on March 30, 2006,  under the caption "Risk Factors,"
all of which you should review  carefully.  Please consider our  forward-looking
statements in light of those risks as you read this report.

                                       1
<PAGE>

                         PART I -- FINANCIAL INFORMATION

                          ITEM I. FINANCIAL STATEMENTS

                                HEMOBIOTECH, INC.
                          (a development stage company)

                            CONDENSED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                          MARCH 31,       DECEMBER 31,
                                                                             2006             2005
                                                                         (Unaudited)
<S>                                                                      <C>              <C>
ASSETS:
CURRENT ASSETS:
    Cash                                                                 $ 2,556,000      $ 1,259,000
    Prepaid expenses                                                         232,000           42,000
                                                                         -----------      -----------
           Total current assets                                            2,788,000        1,301,000
    Equipment, net                                                            14,000           11,000
                                                                         -----------      -----------
                                                                         $ 2,802,000      $ 1,312,000
                                                                         ===========      ===========
LIABILITIES:
CURRENT LIABILITIES:
    Accounts payable and accrued expenses                                $   395,000      $   360,000
    Accrued interest payable                                                  13,000           20,000
    Convertible notes payable                                                137,000          337,000
                                                                         -----------      -----------
           Total current liabilities                                     $   545,000      $   717,000
                                                                         -----------      -----------
STOCKHOLDERS' EQUITY:
Common stock, $0.01 par value, 55,000,000 shares authorized,
13,515,996 shares issued and outstanding as of March 31, 2006
and 11,638,040 shares issued and outstanding as of December 31, 2005     $    14,000      $    12,000
Additional paid-in capital                                                 8,146,000        6,155,000
Unearned compensation                                                         (6,000)          (7,000)
Deficit accumulated during the development stage                          (6,112,000)      (5,565,000)
Common shares payable (128,264 shares)                                       215,000
                                                                         -----------      -----------
           Total stockholders' equity                                      2,257,000          595,000
                                                                         -----------      -----------
                                                                         $ 2,802,000      $ 1,312,000
                                                                         ===========      ===========
</TABLE>


                  SEE NOTES TO CONDENSED FINANCIAL STATEMENTS.

                                       2
<PAGE>

                                HEMOBIOTECH, INC.
                          (a development stage company)

                       CONDENSED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                 October 31, 2001
                                               Three Months Ended                   (Inception)
                                                    March 31                          through
                                                                                     March 31,
                                           2006                  2005                  2006
                                       -----------           -----------         ----------------
<S>                                    <C>                   <C>                   <C>
Revenue
Operating expenses:
     Research and development              148,000                29,000               697,000
     General and
          administrative                   372,000               222,000             3,398,000

Other income (expenses)
     Interest expense                       46,000               523,000             2,102,000
     Interest income                       (19,000)              (12,000)              (85,000)
                                       -----------           -----------           -----------
Net loss                                  (547,000)             (762,000)           (6,112,000)
                                       ===========           ===========           ===========
Basic and diluted loss
     per common share                  $      (.04)          $      (.08)
                                       ===========           ===========
Weighted average number
     of shares outstanding
     basic and diluted                  13,120,146            10,093,550
                                       ===========           ===========
</TABLE>


                  See Notes to Condensed Financial Statements.

                                       3
<PAGE>

                                HEMOBIOTECH, INC
                          (a development stage company)
             CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY

<TABLE>
<CAPTION>
                          COMMON         AMOUNT      ADDITIONAL      UNEARNED        DEFICIT          COMMON         TOTAL
                          SHARES                      PAID -IN     COMPENSATION    ACCUMULATED        SHARES
                                                       CAPITAL                     DURING THE        PAYABLE
                                                                                   DEVELOPMENT
                                                                                      STAGE
<S>                     <C>             <C>          <C>             <C>           <C>               <C>           <C>
     BALANCE
December 31, 2005       11,638,040      $12,000      $6,155,000      $(7,000)      $(5,565,000)          --        $  595,000
 Net Loss for the
   period                                                                             (547,000)                      (547,000)
Amortization                                                           1,000                                            1,000
Stock based
   compensation -
   board of
   advisors                                              12,000                                                        12,000
Stock based
   compensation-
   employees and
   directors                                             54,000                                                        54,000
Conversion of
   notes payable
   into common
   stock                                                 38,000                                      $215,000         253,000
Exercise of
   warrants, net
   of expenses of
   $101,000              1,877,956        2,000       1,887,000         --                --             --         1,889,000
                        ----------      -------      ----------      -------       -----------       --------      ----------
     BALANCE
   March 31, 2006
   (unaudited)          13,515,996      $14,000      $8,146,000      $(6,000)      $(6,112,000)      $215,000      $2,257,000
                        ==========      =======      ==========      =======       ===========       ========      ==========
</TABLE>

                                       4
<PAGE>

                                HEMOBIOTECH, INC.
                          (a development stage company)
                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (unaudited)


<TABLE>
<CAPTION>
                                                                     THREE MONTHS ENDED         OCTOBER 3, 2001
                                                                          MARCH 31,               (INCEPTION)
                                                                                                    THROUGH
                                                                    2006             2005        MARCH 31, 2006
                                                                -----------      -----------    ---------------
<S>                                                             <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                        $  (547,000)     $  (762,000)     $(6,112,000)
    Adjustments to reconcile net loss to net cash used in
      operating activities:
         Fair value of options and
           compensatory stock                                        86,000             --            442,000
         Beneficial conversion feature - interest expense            38,000           38,000
         Notes Issued for services - related party                     --               --            354,000
         Expenses paid by stockholder                                  --               --             14,000
         Amortization of deferred financing costs                      --            256,000        1,023,000
         Amortization of debt discount                                 --            211,000          789,000
         Depreciation                                                 1,000             --              3,000
         Contribution of salary                                                         --             11,000
         Changes in:
             Accounts payable and accrued expenses                   15,000            2,000        1,057,000
             Accrued interest                                         8,000           56,000          150,000
             Prepaid expenses                                      (190,000)          29,000         (232,000)
                                                                -----------      -----------      -----------
    Net cash used in operating activities                          (589,000)        (208,000)      (2,463,000)
                                                                -----------      -----------      -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of property and equipment                               (3,000)           (1000)         (16,000)
                                                                -----------      -----------      -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceed from issuance of common stock and debt                     --               --          3,767,000
Payment of Notes                                                       --               --           (621,000)
Exercise of warrants, net                                         1,889,000             --          1,889,000
                                                                -----------      -----------      -----------
    Net cash provided by financing activities                     1,889,000             --          5,035,000
                                                                -----------      -----------      -----------
INCREASE (DECREASE) IN CASH                                       1,297,000         (209,000)       2,556,000
Cash - beginning of period                                        1,259,000        3,086,000                0
                                                                -----------      -----------      -----------
CASH - END OF PERIOD                                              2,556,000      $ 2,877,000      $ 2,556,000
                                                                ===========      ===========      ===========
SUPPLEMENTARY CASHFLOW INFORMATION:
INTEREST PAID:                                                         --               --             97,000
SUPPLEMENTARY NON-CASH INVESTING AND FINANCING ACTIVITIES:
  Accrued salary exchanged for Note                                    --               --        $   150,000
  Employees/stockholders contribution of salary                        --               --        $   564,000
  Stockholders contribution of convertible note payable
      and related interest                                             --               --        $   280,000
  Conversion of carrying value of convertible notes payable
  and accrued interest into common stock                        $   215,000             --        $ 1,787,000
</TABLE>


                  See Notes to Condensed Financial Statements.

                                       5
<PAGE>

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE A -- THE COMPANY

We were founded in 2001 as "HemoBioTech, Inc.," a Texas corporation. In 2003, we
incorporated a sister  corporation  named  "HemoBioTech,  Inc.," in the state of
Delaware.  On December 1, 2003,  HemoBioTech,  Inc.  (Texas) was merged with and
into HemoBioTech,  Inc.,  (Delaware),  with HemoBioTech,  Inc. (Delaware) as the
surviving entity.

The accompanying  financial statements include the predecessor operations of the
Texas corporation from its inception on October 3, 2001. The historical basis of
accounting was carried over in the merger,  including the deficit accumulated in
the development  stage.  The Company is researching  and developing  human blood
substitute patented  technology licensed  exclusively from Texas Tech University
Health Service Center ("TTU") (Note E). The Company is in the development  stage
and its efforts have been principally devoted to capital raising, organizational
infrastructure development and research and development.

NOTE B -- BASIS OF PRESENTATION

The interim financial  statements  presented are unaudited but in the opinion of
management,   have  been  prepared  in  conformity  with  accounting  principles
generally accepted in the United States of America applied on a basis consistent
with those of the annual financial statements. Such interim financial statements
reflect all adjustments  (consisting of normal recurring accruals) necessary for
a fair presentation of the financial  position and the results of operations for
the interim periods presented. The results of operations for the interim periods
presented are not  necessarily  indicative of the results to be expected for the
full fiscal years. The interim financial statements should be read in connection
with the audited financial statements for the year ended December 31, 2005.

The  financial  statements  have been  prepared  assuming  that the Company will
continue as a going concern which  contemplates  the  realization  of assets and
satisfaction  of liabilities  in the normal course of business.  The Company has
incurred  cumulative losses of $6,112,000 for the period through March 31, 2006,
and has been  dependent  on  funding  operations  through  the  private  sale of
convertible  debt and equity  securities.  At March 31,  2006,  the  Company had
$2,556,000  in cash.  Management  believes that current cash  resources  will be
sufficient to fund  operations  for the next twelve months.  Management's  plans
include  continuing to finance  operations through one or more private or public
offerings of equity securities and monitoring and reducing expenditures.

NOTE C -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

[1] LOSS PER COMMON SHARE:

Basic and diluted  loss per common share is based on the net loss divided by the
weighted  average  number  of  common  shares  outstanding  during  the  period,
including  common  shares  payable.  No  effect  has been  given to  outstanding
potential common shares such as options, warrants and convertible instruments in
the diluted computation as their effect would be antidilutive.

                                       6
<PAGE>

                                               THREE MONTHS ENDED
                                                    MARCH 31,
                                               2006           2005
                                               ----           ----
         Options                            1,573,415       1,129,387
         Convertible notes*                    68,409       2,647,080
         Warrants                           5,858,576       7,676,532
                                            ---------      ----------
         Total                              7,500,400      11,452,999

* Note conversions will use the market price of the company's common shares.  At
March 31, 2006 and 2005, the closing price of the company's  stock was $2.20 and
$.85 per share respectively.

[2] STOCK -BASED COMPENSATION:

Effective  January 1, 2006, the Company has adopted SFAS No. 123 (Revised 2004),
Share  Based  Payment,  which  requires a public  entity to measure  the cost of
employee,  officer and  director  services  received in exchange for an award of
equity  instruments  based on the grant-date  fair value of the award.  SFAS No.
123(R)  supersedes  the  Company's  previous  accounting  under  SFAS  No.  123,
Accounting for Stock Based  Compensation  ("SFAS No. 123"),  which permitted the
Company to account  for such  compensation  under  Accounting  Principles  Board
Opinion  No.  25,  Accounting  for Stock  Issued to  Employees  ("APB No.  25").
Pursuant to APB No. 25, and related  interpretations,  no compensation  cost had
been recognized in connection with the issuance of stock options, as all options
granted under the Company's 2003 Stock  Option/Stock  Issuance Plan (the "Option
Plan") and all options  granted  outside  the Option Plan had an exercise  price
equal to or greater than the market value of the underlying  common stock on the
date  of  grant.  The  Company  adopted  SFAS  No.  123(R)  using  the  modified
prospective transition method, which requires that compensation cost be recorded
as earned for all unvested  stock  options  outstanding  at the beginning of the
first  fiscal  year of  adoption of SFAS No. 123R based upon the grant date fair
value estimated in accordance  with the original  provisions of SFAS No. 123 and
for compensation  cost for all share-based  payments  granted  subsequent to the
adoption,  based on the grant date fair value  estimated in accordance  with the
provisions of SFAS No. 123R.  The  Company's  condensed  consolidated  financial
statements,  as of and for the three months  ended March 31,  2006,  reflect the
impact  of  SFAS  No.  123(R).  In  accordance  with  the  modified  prospective
transition method, the Company's condensed consolidated financial statements for
prior periods have not been  restated to reflect,  and do not include the impact
of SFAS No. 123(R).

As a result of adopting  Statement  123(R) on January 1, 2006, the company's net
loss for the three months ended March 31, 2006, is $54,000 higher than if it had
continued to account for share-based compensation under APB No. 25.

The following table  illustrates the effect on net income and earnings per share
if the company had applied the fair value  recognition  provisions  of Statement
123 to options  granted  under the  company's  stock option plans in all periods
presented.  For purposes of this pro forma disclosure,  the value of the options
is  estimated  using a  Black-Scholes  option-pricing  formula and  amortized to
expense over the options' vesting periods:

                                       7
<PAGE>

                                                              THREE MONTHS
                                                                  ENDED
                                                                MARCH 31,
                                                                  2005
                                                                  ----

     Net Loss, as reported                                      (762,000)

           Add: Stock-based employee compensation
           expense included in reported net income, net
           of related tax effects                                 (7,000)

           Deduct: Total stock-based employee
           compensation expense determined under fair
           value based method for all awards, net of
           related tax effects                                      --
                                                               ---------
     Pro Forma Net Loss                                        $(769,000)
           Net loss per common share:
                  as reported                                  $    (.08)
                  pro forma                                    $    (.08)

The weighted-average fair values at date of grant for options granted during the
three  months  ended  March 31,  2005 was $0.74.  The value of the  options  was
estimated  using the  Black-Scholes  option  pricing  model  with the  following
weighted-average assumptions:

                                                    THREE MONTHS ENDED
                                                         MARCH 31,
                                                           2005
                                                           ----

             Expected life in years                        5-10
             Interest rate                            4.16% - 4.33%
             Volatility                                    80%
             Dividend yield                                 0%


[3] USE OF ESTIMATES:

The  preparation  of financial  statements  in  conformity  with U.S.  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Such estimates include the selection of assumptions underlying
the  calculation of the fair value of options.  Actual results could differ from
those estimates.

[4] DEFERRED FINANCING COSTS:

Deferred financing costs include costs attributable to issuing convertible notes
in the amount of $1,023,000  and such costs were  amortized to interest  expense
over the term of convertible notes through October 27, 2005.

                                       8
<PAGE>

NOTE D -- ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following:

                                           MARCH 31, 2006      DECEMBER 31, 2005
                                           --------------      -----------------
Professional fees                             $292,000              $288,000
Damages                                         38,000                40,000
Other                                           65,000                32,000
                                              --------              --------
Total                                         $395,000              $360,000

NOTE E -- AGREEMENTS WITH TEXAS TECH UNIVERSITY HEALTH SERVICE CENTER ("TTU")

On January 22, 2002,  the Company  entered into an exclusive  license  agreement
with TTU with  respect to  receiving  certain  patented  rights.  The Company is
committed to the exploitation of such patented rights.

In  consideration  for entering into the  agreement,  the Company issued 678,820
shares  of  common  stock  to TTU  (subject  to  anti-dilution  protection).  In
addition,  the Company has agreed to fund, over a four-year period, $1.2 million
to support  efforts in incubating and  commercializing  other TTU  technologies.
Under  the  agreement,  the  Company  reserves  the  right of first  refusal  on
licensing and commercializing  other technology developed from such funding. The
shares issued were valued at approximately  $1,000,  their estimated fair value,
and charged to  operations.  The  funding of the $1.2  million is subject to the
Company obtaining FDA approval of a blood substitute product. As of December 31,
2005, such approval had not been obtained.  In addition,  the Company has agreed
to  reimburse  TTU for all  intellectual  property  protection  costs and patent
maintenance  fees.  On May 20,  2004,  TTU  agreed  to waive  its  anti-dilution
protection  in exchange  for 135,765  additional  shares of common  stock.  Such
shares were valued at  approximately  $115,000,  their estimated fair value, and
charged to operations.

In  addition,  in July 2002,  the  Company  entered  into a  sponsored  research
agreement  with TTU for the period  September 1, 2002  through  August 31, 2006,
subject to a two-year  extension to be mutually  agreed on by the parties in the
second year of the agreement  and prior to December 31, 2006.  The agreement may
be terminated by either party on 90 days written  notice.  In November 2004, the
Company  agreed  to fund the next  phase of its  research  under  the  sponsored
research  agreement  through  November 30, 2005 for a fixed fee of approximately
$231,000, which was paid in December 2004.

In January  2006,  the Company  entered  into a Stage Three  Sponsored  Research
Agreement with Texas Tech University for the period January 1, 2006, to December
31,  2006.  In  connection  therewith,  the Company  made an initial  payment of
approximately $287,000 which is being amortized over the period of the research.
Additional  payments  may be made to TTU under the  agreement  based on mutually
agreed upon budgets.

                                       9
<PAGE>

NOTE F -- STOCKHOLDERS' EQUITY

[1] PRIVATE PLACEMENT:

On October 27, 2004, the Company  completed a private  placement of 45 units and
raised gross proceeds of $4,500,000.  Each unit consists of a $50,000  unsecured
convertible promissory note, 58,824 shares of common stock and 117,648 warrants.
The notes  bear  interest  at 10% per annum (an  effective  rate of 77%) and are
convertible  at the  option  of the  holder  into  common  stock or  convertible
securities  to be sold by the Company in its next  financing,  as defined,  at a
conversion price equal to the per share offering price of such financing.

Based on  negotiations  with the placement  agent,  the Company agreed to a fair
value for the Common  Stock of $.85 per share and  calculated  the fair value of
each warrant to be $.53 using the Black-Scholes  option pricing model.  Prior to
the  revision  in the  method of valuing  the common  stock,  the  Company  used
Black-Scholes  to value both common stock and warrants.  The gross proceeds from
the sale of each unit were  allocated  based on the relative fair values to each
of the components.

                  Convertible notes payable          $  31,000
                  Common stock                          31,000
                  Warrants                              38,000
                                                     ---------
                      Total                          $ 100,000

Based on the  allocation  of the relative  fair values to the  components of the
private  placement  offering,  the debt discount was  calculated to be $855,000,
which is being  amortized  as expense to interest  expense  over the term of the
notes.

At the time of the Company's  next  financing,  the Company will  determine if a
beneficial  conversion feature exists. The beneficial conversion feature will be
determined  by the  Company  by  comparing  the  number of shares  that would be
received  pursuant  to the  conversion  price at the time of the next  financing
compared  with the number that would have been  received  based on the then fair
value of the shares.  No beneficial  conversion  feature  existed at the date of
conversion  since the conversion  price was greater than the then share value of
the stock at issuance date of the Notes.

Through October 27, 2005, an aggregate of $1,540,000  principal  amount of Notes
and  approximately  $97,000 accrued but unpaid  interest  thereon were converted
into an  aggregate of  1,544,490  shares of the  Company's  common  stock,  at a
negotiated conversion price of $1.06 per share, in accordance with amendments to
the original terms of the Notes  permitting such conversion.  Effective  October
27,  2005,  holders of $337,500  aggregate  principal  amount of Notes agreed to
extend the maturity  date of such Notes from October 27, 2005 to April 27, 2006.
Accordingly,  the Company  paid the  remaining  outstanding  balance of $372,500
aggregate  principal  amount of Notes,  together with  approximately  $97,000 of
accrued interest thereon, to holders of Notes that had not converted their Notes
into shares of Company common stock on or prior to October 27, 2005.

During the first quarter of 2006, an aggregate of $200,000  principal  amount of
Notes and  approximately  $15,000  accrued  but  unpaid  interest  thereon  were
converted into an aggregate of 128,264 shares of the Company's  common stock, at
conversion  prices  ranging from $1.53 to $1.96 per share,  in  accordance  with
amendments to the original terms of the Notes  permitting  such  conversion.  In
connection therewith,  the Company recorded a charge of approximately $38,000 as
interest expense  representing  the difference  between the conversion price and
the market  price at date of  conversion.  See Note [G] for the  conversion  and
repayment of remaining balance of approximately $138,000 at March 31, 2006.

                                       10
<PAGE>

[2] STOCK WARRANTS

In connection with the private  placement,  the Company issued 5,294,160 Class A
warrants  exercisable  at $1.06 per share through the fifth  anniversary  of the
effectiveness of a registration statement of shares underlying the warrants. The
warrants are subject to redemption, at the Company's sole option, after one year
from the date of  effectiveness  of the  registration  statement of common stock
underlying  the warrants if the common stock price equals or exceeds $2.12 for a
period of at least 20  consecutive  trading days at a redemption  price of $.001
per warrant.

In connection  with the private  placement,  the  placement  agent was granted a
warrant to purchase  2,382,372  shares of common  stock at an exercise  price of
$.90  per  share,  exercisable  for five  years  from  the  effective  date of a
registration  statement to be filed on behalf of investors in the offering.  The
placement agent was granted "piggyback"  registration rights with respect to the
shares underlying this warrant.  The warrants are subject to redemption,  at the
Company's  sole  option,  after one year from the date of  effectiveness  of the
registration  statement covering the resale of shares of common stock underlying
the warrants if the common  stock price equals or exceeds  $2.12 for a period of
at least  20  consecutive  trading  days,  at a  redemption  price of $.001  per
warrant.

On July 28, 2005, and September 13, 2005, the Company  granted 50,000 and 10,000
warrants,  respectively  to service  providers.  In  connection  therewith,  the
Company  valued  the  warrants  using  Black-Scholes  option  pricing  model and
recorded a charge of $34,000.

At March 31, 2006, the Company had the following warrants outstanding:

                                                                NUMBER OF SHARES
                         EXERCISE PRICE    EXPIRATION DATE          RESERVED
                         --------------    ---------------          --------

Class A                       $1.06             May 13, 2010       3,416,204
Placement Agent                 .90             May 13, 2010       2,382,372
Other                          1.00            July 28, 2009          50,000
Other                          1.06       September 13, 2009          10,000
-----                         -----       ------------------       ---------
Total                                                              5,858,576

During the First  Quarter of 2006,  holders of 1,877,956  Class A Warrants  were
exercised at the exercise price of $1.06 per share, and the Company received net
proceeds of approximately $1,889,200.

See NOTE [G] for additional exercises.

[3] STOCK OPTION/STOCK ISSUANCE PLAN:

During 2003, the Board of Directors of the Company approved a Stock Option/Stock
Issuance Plan (the "Plan")  which  provides for the granting of options or stock
to purchase up to 3,000,000 shares of common stock (on a pre-reverse stock split
basis),  under which,  directors,  employees  and  independent  contractors  are
eligible to receive incentive and non-statutory  stock options and common shares
(employees). The Company's stockholders approved the Plan in August 2004.

On August 16,  2004,  the Board of  Directors  and  stockholders  of the Company
approved the  reduction  in the number of shares  reserved for under the Plan to
1,629,168 shares  reflecting the effect of the .543056 reverse split effected by
the Company.  Options  granted under the Plan are exercisable for a period of up
to 10 years from date of grant at an  exercise  price which is not less than the
fair value of the common stock on date of grant, except that the exercise period
of options  granted to a  stockholder  owning  more than 10% of the  outstanding
capital stock may not

                                       11
<PAGE>

exceed five years and their exercise price may not be less than 110% of the fair
value of the common  stock at date of grant.  Options  under the Plan  generally
vest 25% on the  first  anniversary  date of the  grant  and  then,  thereafter,
equally over thirty-six months.

During the year ended December 31, 2004, in connection with the change in status
of an option  holder  from a member of the Board of Advisors  to  Director,  the
Company  recorded  deferred  stock  compensation  of $13,000,  representing  the
difference  between the  exercise  price and the market  value of the  Company's
common stock on the date such stock option holder's status was changed. Deferred
compensation  is  included  as a  component  of  stockholders'  equity  (capital
deficiency) and is being amortized to expense over the remaining  vesting period
of the stock options.  Such amortization expenses were $1,000 and $6,000 for the
three  months  ended  March  31,  2006 and the year  ended  December  31,  2005,
respectively.

On July 13, 2005, the Company entered into an advisory agreement with its Acting
Vice President and Principal Investigator of Research and Development to receive
advisory   services  on  technical,   medical  and  market  issues   related  to
HemoBioTech, including its second generation blood substitute, HemoTech(TM). The
agreement provides for non-qualified stock options to purchase 271,528 shares of
Common Stock of HemoBioTech at an exercise price per share of $0.18,  subject to
certain  vesting  through July 13, 2009.  In connection  therewith,  the Company
recorded a charge of  $141,000  in 2005.  The  Company  will  record  additional
charges as and when the options vest at the then face value.

Additional information on shares subject to options is as follows:

At March 31, 2006,  55,753  options were available for grant under the Plan. The
following table presents information relating to stock options under the Plan as
of March 31, 2006.

<TABLE>
<CAPTION>

                                                         THREE MONTHS ENDED
                                                              MARCH 31,
                                                   2006                       2005
                                                   ----                       ----
                                                 WEIGHTED                   WEIGHTED
                                                 AVERAGE                    AVERAGE
                                                 EXERCISE                   EXERCISE
                                                  PRICE                       PRICE
                                                 ---------                  ---------
                                           Shares                     Shares
<S>                                      <C>           <C>          <C>           <C>
Options outstanding at beginning of      1,535,915     $   0.29     1,119,387     $   0.23
  period
Granted                                     37,500     $   2.22        10,000     $   0.85

Options outstanding at end of period     1,573,415     $   0.34     1,129,387     $   0.23
Options exercisable at end of period     1,096,597     $   0.32       697,923     $   0.24
Options vested or expected to vest       1,573,415                  1,129,387
</TABLE>

                                       12
<PAGE>

<TABLE>
<CAPTION>
                                                      MARCH 31, 2006
                            OPTIONS OUTSTANDING                            OPTIONS  EXCERCISABLE
                            -------------------                            -------  ------------
                                           WEIGHTED        WEIGHTED                         WEIGHTED
                                           AVERAGE          AVERAGE                         AVERAGE
   RANGE OF                                EXERCISE        REMAINING                        EXERCISE
EXERCISE PRICE           SHARES              PRICE       LIFE IN YEARS    SHARES             PRICE
--------------           ------              -----       -------------    ------             -----

<S>                    <C>                 <C>               <C>        <C>                 <C>
@$0.18 - 0.20           1,325,055          $   0.19          5.52       $  960,158              0.19

@$0.85 - 0.94             178,360              0.85          8.61           86,439              0.86

@$1.06 - 1.17              20,000              1.07          8.91           12,500              1.08

@$2.15 - 2.42              50,000              2.21          9.44           37,500              2.21
                       ----------          --------          ----       ----------          --------

                        1,573,415          $   0.34           6.0        1,096,597          $   0.24
                       ==========          ========          ====       ==========          ========
Aggregate
intrinsic value        $2,929,000                                       $2,061,000
                       ==========                                       ==========
</TABLE>

As of March 31, 2006, there was $84,000 of total unrecognized  compensation cost
related to nonvested  share-based  compensation  arrangements  granted under the
Plan. That cost is expected to be recognized over a  weighted-average  period of
1.9 years.

The weighted-average fair values at date of grant for options granted during the
three-month  period  ended  March  31,  2006  and  2005  were  $1.82  and  $0.74
respectively.  The value of the options was  estimated  using the  Black-Scholes
option pricing model with the following weighted average assumptions:

                                          2006                2005
                                          ----                ----
          Expected life in years          5-10                5-10
          Interest rate                   4.86%          4.16% - 4.33%
          Volatility                       80%                80%
          Dividend yield                   0%                  0%


[G] SUBSEQUENT EVENTS

During April 2006,  holders of the Company's Class A Warrants  exercised 395,591
warrants held by them for an aggregate consideration of approximately $419,000.

During April 2006, holders of aggregate of $25,000 principal amount of our Notes
and approximately $3,000 accrued but unpaid interest requested the conversion of
their Notes and interest into common shares in accordance with amendments to the
original terms of the Notes  permitting such conversion.  The conversion  prices
ranged from $1.87 to $1.91 per share, aggregating to approximately 14,500 shares
of the Company's common stock. In connection  herewith the Company will record a
charge  representing the difference  between the conversion price and the market
price at conversion.

                                       13
<PAGE>

On April 27,  2006,  the  Company  paid the  remaining  outstanding  balance  of
approximately  $113,000  aggregate  principal  amount  of Notes,  together  with
approximately  $12,000 of accrued interest thereon, to holders of Notes that had
not  converted  their Notes into shares of Company  common  stock on or prior to
April 27, 2006.

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

PLAN OF OPERATIONS

We were founded in 2001 as "HemoBioTech, Inc.," a Texas corporation. In 2003, we
incorporated  a sister  corporation  named  "HemoBioTech,  Inc." in the State of
Delaware.  On  December  1, 2003,  HemoBioTech,  Inc.  was merged  with and into
HemoBioTech, Inc., with HemoBioTech, Inc. as the surviving entity.

We are  primarily  engaged  in the  research  and  development  of  human  blood
substitute  technology  exclusively  licensed from Texas Tech University  Health
Services  Center,  although in 2003,  2004,  2005 and in the three  months ended
March 31,  2006,  most of our  working  capital  was used to pay for general and
administrative  costs,  salaries,  legal  and  accounting  fees  and the cost of
raising money.  After  reviewing the blood  substitute  technology  developed by
researchers  at Texas  Tech,  in January  2002 we  licensed  from Texas Tech the
exclusive rights to various  alternative  compositions of HemoTech(TM),  a novel
blood  substitute  that is based on hemoglobin  (which is the key protein in red
blood cells that carries oxygen) of both bovine (cow) and human origin,  as well
as methods for its production and use. What makes HemoTech(TM) a novel potential
blood substitute product is the fact that it is comprised of hemoglobin that has
been isolated from bovine blood and then chemically modified to make the product
non-toxic.  We also have an  agreement  with Texas Tech that any patent  issuing
from its patent application  relating to the induction of erythropoiesis  (which
is the  production  of red blood cells by the body) will be  included  under our
exclusive  license  with Texas  Tech.  In  addition  to our  license  and patent
agreement with Texas Tech, we entered into a sponsored  research  agreement with
Texas Tech in July 2002,  under  which we are  entitled  to use certain of Texas
Tech's production and research and development facilities in Lubbock, Texas.

Our goal is to address an  increasing  demand for a safe and  inexpensive  human
blood  substitute  product in the United States and around the world through our
licensed  technology.  We believe that certain  initial  pre-clinical  and early
stage  human  trials  undertaken  outside  the  U.S.  by prior  holders  of this
technology  suggest that our licensed  technology  may possess  properties  that
diminish the intrinsic  toxic effects of hemoglobin and help reduce or eliminate
the abnormal  reaction  associated with hemorrhagic  shock (which is the loss of
blood  pressure  and the  lowering  of vital  signs  resulting  from the loss of
blood).

RECENT DEVELOPMENTS

During April 2006,  holders of the Company's Class A Warrants  exercised 395,591
warrants held by them for an aggregate  consideration of approximately $419,000,
and in connection  therewith  they were issued an aggregate of 395,591 shares of
HemoBioTech  common stock.  The Warrants were originally  received as part of an
October 2004 private placement by HemoBioTech.  HemoBioTech filed a registration
statement with the SEC covering the resale of the shares of common stock issued.

During April 2006, holders of aggregate of $25,000 principal amount of our Notes
and approximately $3,000 accrued but unpaid interest requested the conversion of
their Notes and interest into common shares in accordance with amendments to the
original terms of the Notes  permitting such conversion.  The conversion  prices
ranged from $1.87 to $1.91 per share,

                                       14
<PAGE>

aggregating to  approximately  14,500 shares of the Company's  common stock.  In
connection   therewith  the  Company  will  record  a  charge  representing  the
difference between the conversion price and the market price at conversion.

On April 27,  2006,  the  Company  paid the  remaining  outstanding  balance  of
approximately  $113,000  aggregate  principal  amount  of Notes,  together  with
approximately  $12,000 of accrued interest thereon, to holders of Notes that had
not  converted  their Notes into shares of Company  common  stock on or prior to
April 27, 2006.

On April 21, 2006, the company had a Pre-IND meeting with the FDA to address the
preparation of a U.S. IND for HemoTech(TM).

RESEARCH AND DEVELOPMENT OF HEMOTECH(TM)

HemoTech(TM)  is  currently  our only  potential  product.  We  expect  that the
remaining production,  development, testing and FDA approval of HemoTech(TM), if
ever,  will occur  over a period of  approximately  five to six years.  In other
words,  assuming we are able to progress  through each phase of clinical  trials
efficiently  and  without  significant  delay,  we believe  we could  obtain FDA
approval of HemoTech(TM) by mid-2011, and possibly even earlier,  although there
is no guarantee that we will meet this timetable.

HemoTech(TM) must undergo several major stages of production,  development,  and
clinical testing before being in a position to submit its NDA application to the
FDA, as follows:

     o   PRODUCTION OF HEMOTECH(TM).  In order to produce HemoTech(TM) for Phase
         I U. S.  clinical  trials,  we must  complete  certain  upgrades of the
         current HemoTech(TM)  production  facilities located at Texas Tech. The
         initial stage of these upgrades was completed during the second quarter
         of 2005.  Additional  necessary  upgrades are planned for 2006. Some of
         these  upgrades and initiation of production  are  contemplated  by our
         Stage 3 sponsored  research agreement with Texas Tech. We paid $287,000
         to Texas Tech on January  12,  2006,  when we entered  into our Stage 3
         sponsored  research  agreement.  We  anticipate  that these  additional
         upgrades will be finished in 2006,  although  there can be no assurance
         that this will be the case,  depending on, among other  things,  worker
         schedules,  available  materials,   unexpected  costs  associated  with
         construction  and our ability to raise  sufficient  capital in order to
         complete such upgrades.

     o   PREPARATION  AND  SUBMISSION  OF  U.S.  IND  APPLICATION.   We  started
         preparing  our U.S.  IND  application  on December  13,  2004,  when we
         entered into our Phase 2 sponsored  research agreement with Texas Tech.
         Under our Phase 2 sponsored research  agreement,  Texas Tech has agreed
         to assist us in preparing our U.S. IND application by providing certain
         services,  including converting  information  contained in the European
         IND application  into digital format and analyzing our proposed Phase I
         U.S. clinical trial testing procedures, to be set forth in our U.S. IND
         application.   To  further   implement  the   preparation  of  the  IND
         application,  the Company had a Pre-IND  meeting  with the FDA on April
         21, 2006.  As a result of that meeting,  the company  expects to submit
         the US IND during 2007 at a cost of approximately  $500,000 or greater,
         although  there can be no assurance  that we will meet this deadline or
         budgeted amount.

     o   PHASE I OF OUR U.S.  CLINICAL  TRIALS.  A Phase I US clinical trial for
         HemoTech(TM)  will  commence  subsequent  to the  acceptance of the IND
         application.  We estimate that our Phase I clinical  trials  (including
         the costs of doing additional  research and development of HemoTech(TM)
         during  our  Phase I U. S.  clinical  trials  and the  operational  and
         overhead  costs  that we will incur  during  our Phase I U.S.  clinical
         trials)

                                       15
<PAGE>

         could cost approximately  $10.0 million,  although the final cost could
         be more or less than this estimate, which includes the following:

             o   approximately $1.4 million for the production of HemoTech(TM);

             o   approximately  $1.6 million for the testing of  HemoTech(TM) on
                 humans;

             o   approximately $1.9 million for personnel,  administrative,  and
                 operational expenses that we expect to incur during our Phase I
                 U. S. clinical trials;

             o   approximately $1.7 million for legal,  accounting,  consulting,
                 technical and other  professional  fees that we expect to incur
                 during our Phase I U. S. clinical trials;

             o   approximately  $1.6 million for research and development  costs
                 that we  expect  to incur  during  our  Phase I U. S.  clinical
                 trials;   and  approximately   $2.0  million  for  the  initial
                 modification  of  the  HemoTech(TM)   production   facility  in
                 preparation for our Phase II U. S. clinical trials.

We expect that our Phase I U. S. clinical trials would take approximately six to
nine months to complete  from the date we start such trials,  though such trials
could take significantly  longer to complete,  depending on, among other things,
the rate of production of  HemoTech(TM)  and the  availability  of patients.  We
estimate that we will be required to raise  approximately $10 to 15 million over
the next nine to ten  months in order to fund our Phase I U.S.  clinical  trials
from start to finish  and to cover the  related  expenses  described  above.  If
submission or acceptance of our U.S. IND  application is delayed for any reason,
and if we are  unable  to raise  such  additional  capital  in a timely  manner,
commencement of our Phase I U. S. clinical trials would also be delayed.

     o   PHASE II OF OUR U.S.  CLINICAL  TRIALS. A Phase II Clinical trial could
         commence subsequent to a successful Phase I trial. We estimate that our
         Phase II U. S. clinical trials (including the costs of doing additional
         research  and  development  of  HemoTech(TM)  during our Phase II U. S.
         clinical  trials and the  operational  and overhead  costs that we will
         incur   during  our  Phase  II  U.  S.   clinical   trials)  will  cost
         approximately $20.0 million, which includes the following:

             o   approximately  $4.0  million  for  additional  upgrades  to the
                 HemoTech(TM)  production facility and the further production of
                 HemoTech(TM);

             o   approximately   $4.0   million  for  the  further   testing  of
                 HemoTech(TM) and related activities;

             o   approximately $4.5 million for personnel,  administrative,  and
                 operational  expenses  that we expect to incur during our Phase
                 II U. S. clinical trials;

             o   approximately $2.5 million for legal, accounting,  consulting ,
                 technical and other  professional  fees that we expect to incur
                 during our Phase II U. S. clinical trials; and

             o   approximately  $2.5 million for research and development  costs
                 that we expect  to incur  during  our  Phase II U. S.  clinical
                 trials.

We expect that our Phase II U. S.  clinical  trials  could be  completed  within
approximately  eight to ten months  from the date we start such  trials,  though
such trials could take significantly longer to finish, depending on, among other
things,  the  timely  completion  of  necessary  upgrades  to  the  HemoTech(TM)
production  facility  and the  availability  of  patients.  If  commencement  or
completion of our Phase I U. S. clinical  trials are delayed for any reason,  or
if we are unable to raise  sufficient funds to begin our Phase II U. S. clinical
trials  immediately  following  completion of our Phase I U. S. clinical trials,
our Phase II U. S. clinical trials will be delayed.

                                       16
<PAGE>

     o   PHASE III OF OUR U.S. CLINICAL TRIALS. A Phase III Clinical trial could
         commence  subsequent to a successful  Phase II trial. At such time, and
         in order to cut the costs of conducting and completing our Phase III U.
         S. clinical  trials by  approximately  50%, we anticipate  that we will
         seek to enter into a partnership with a biopharmaceutical  company that
         has expertise in the production  and marketing of biological  products,
         although  there  can be no  assurance  that  we  will be able to do so.
         Alternatively,  if we are not able to enter into such a partnership, we
         may seek to enter into a manufacturing  arrangement with an experienced
         pharmaceutical  manufacturer,   under  which  such  manufacturer  would
         produce HemoTech(TM), which would significantly reduce the costs of our
         Phase  III U. S.  clinical  trials by  eliminating  the need to build a
         production  facility that meets the FDA's standards for Phase III U. S.
         clinical trials. If we are not able to enter into a partnership or find
         a manufacturer  that is willing to manufacture  HemoTech(TM) for us, we
         may be required to perform all aspects of the Phase III U. S.  clinical
         trials  independently.  In this case, we estimate that our Phase III U.
         S. clinical trials  (including the costs of doing  additional  research
         and  development  of  HemoTech(TM)  during our Phase III U. S. clinical
         trials and the operational and overhead costs that we will incur during
         our Phase III U. S. clinical  trials) could cost  approximately  $195.0
         million, which includes the following:

             o   approximately $100.0 million to build a production facility for
                 HemoTech(TM)  that is suitable  for such  advanced  testing and
                 that  meets  the  standards  of the  FDA as a  product  testing
                 facility;

             o   approximately   $70.0  million  for  the  further   testing  of
                 HemoTech(TM) and related activities;

             o   approximately $10.0 million for personnel,  administrative, and
                 operational  expenses  that we expect to incur during our Phase
                 III U. S. clinical trials;

             o   approximately $5.0 million for legal, accounting,  consulting ,
                 technical and other  professional  fees that we expect to incur
                 during our Phase III U. S. clinical trials; and

             o   approximately  $5.0 million for research and development  costs
                 that we expect  to incur  during  our Phase III U. S.  clinical
                 trials.

We expect that our Phase III U. S.  clinical  trials  could be  finished  within
15-18 months from the date we start such  trials,  though such trials could take
significantly  longer to complete,  depending on, among other things, the timely
completion  of  a  suitable   production   facility  for  HemoTech(TM)  and  the
availability  of  patients.  If we are unable to partner  with a  pharmaceutical
company,  we estimate that we will be required to raise the  approximately  $200
million (or such lesser amount as may be required if we are successfully able to
enter into a partnership)  that we will need in order to fund our Phase III U.S.
clinical trials from start to finish and to cover the related expenses described
above.  We would seek to raise this amount after we have  commenced our Phase II
U. S.  clinical  trials.  If  commencement  or  completion of our Phase II U. S.
clinical  trials  is  delayed  for any  reason,  or if we are  unable  to  raise
sufficient  funds to begin  our  Phase  III U. S.  clinical  trials  immediately
following  completion of our Phase II U. S. clinical trials, our Phase III U. S.
clinical trials will be delayed.

The estimated costs of each of the phases of our clinical trials set forth above
represent  our best  estimate of such  expenses  based on,  among other  things,
current economic  conditions and availability of materials and personnel.  Since
many of these  phases will not even be  commenced  by us for another two to five
years, we cannot offer any assurance that such estimates will reflect the actual
amounts  that we may be  required  to incur  during  each phase of our  clinical
trials  based  on,  among  other  things,   then-current   economic  conditions,
availability of materials and personnel,  and other factors that may be relevant
at the time.  The amounts we may actually be required to expend during any phase
of our clinical trials may be significantly  more than the amounts  estimated by
us above.

                                       17
<PAGE>

If our clinical  trials are successful and we are able to meet the timelines set
forth above, it is possible that an NDA could be approved by the FDA as early as
2010,  although  there can be no assurance that an NDA would be approved by such
time, if ever.  There can also be no assurance  that we will be able to complete
our clinical trials under the schedule described above, or ever, or that we will
be able to develop a viable and marketable  human blood  substitute,  even if we
are able to complete our clinical trials.  Further, we do not expect to generate
any revenues until after such time as HemoTech(TM) has received FDA approval, if
ever.

RESULTS OF OPERATIONS

We are a  development  stage  company and have not  generated  any revenue  from
inception through March 31, 2006. Through the third quarter of 2004, our efforts
were principally devoted to evaluating the HemoTech(TM) technology,  negotiating
and entering into our license agreement and sponsored  research  agreements with
Texas  Tech,  hiring  employees  and  consultants,  establishing  our  Board  of
Advisors,  developing a business plan,  raising  capital,  and engaging in other
organizational  and  infrastructure  development.  Until the consummation of our
October  2004  private  placement,  we did not have the  financial  resources to
engage in any significant research and development activities.

Total  expenses,  and thus our losses,  totaled  $6,112,000 from October 3, 2001
(inception) through March 31, 2006. Such losses included $3,454,000 in 2005, and
$547,000 for the three months ended March 31, 2006.

THREE MONTHS ENDED MARCH 31, 2006 COMPARED TO THREE MONTHS ENDED MARCH 31, 2005

Total expenses,  and thus our losses, for the three months ended March 31, 2006,
were  $547,000  compared  with $762,000 for the same period a year ago resulting
from  significantly  lower  interest  costs,  offset by somewhat  higher general
administrative and research costs.

Net interest costs were  approximately  $484,000 lower due to  amortizations  of
debt issue and debt discount ($256,000 and $211,000 respectively) costs incurred
during the first  three  months of 2005 that do not  repeat in the 2006  period.
Total  amortization  of these costs was completed  during 2005.  Interest  costs
relating to our 10% Convertible  Promissory  Notes was lower for the 2006 period
as a significant portion of these notes were either converted to common stock or
paid during 2005 (see Liquidity and Capital Resources  section below).  Interest
cost for the 2006 period  includes a  beneficial  conversion  feature of $38,000
related  to  $200,000  principal  value of those  notes,  which  represents  the
difference  between  the  conversion  price and the market  price at the date of
conversion.

General and Administrative  costs were $372,000 for the three months ended March
31,  2006,  an increase of $150,000  compared  with the same period in the prior
year.  This  increase  results from the company  implementation  of SFAS 123(R),
"stock based  compensation"  resulting in a charge to general and administrative
expenses of  approximately  $54,000,  and  increased  salary and related  costs,
combined with higher office expenses compared to the same period a year ago.

Research and Development expenses were $148,000 for the 2006 period, an increase
of $119,000  compared with the same period in 2005.  This increase  results from
higher regulatory consulting costs and amortization of our Stage Three Sponsored
Research  Agreement  with  Texas  Tech  University.  In  addition,   stock-based
compensation  related  to  the  aforementioned  implementation  of  SFAS  123(R)
included $32,000 in 2006.

                                       18
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

In October  2004,  we  completed a private  placement  of units,  with each unit
consisting of one 10%  convertible  unsecured  promissory  note in the principal
amount of $50,000; 58,824 shares of our common stock; and a five-year warrant to
purchase  117,648  shares of our common stock at an exercise  price of $1.06 per
share.  We sold 45 units in the private  placement  at a price of  $100,000  per
unit,  and we received  gross  proceeds of $4.5  million.  Our net proceeds were
$3.43  million,  which  includes  the  aggregate  principal  amount  of our  10%
unsecured convertible promissory notes outstanding.

During the period of January 1, 2006  through  March 31,  2006,  an aggregate of
$200,000  principal  amount of our notes  and  $15,000  of  accrued  but  unpaid
interest was converted  into an aggregate of 128,264  shares of our common stock
at  negotiated  conversion  prices  ranging  from $1.53 to $1.96 per share.  The
beneficial  conversion feature corresponding with the conversion of the $200,000
principal value was $38,000.

During  the first  quarter of 2006,  holders  of our Class A Warrants  exercised
1,877,956 Warrants held by them for aggregate  consideration of $1,991,000,  and
in  connection  therewith  they were  issued an  aggregate  1,877,956  shares of
HemoBioTech  common stock.  The warrants were originally  received as part of an
October 2004 private placement by HemoBioTech.

We intend to use our available cash (of which there is approximately  $2,556,000
remaining  as of March  31,  2006)  over the next  twelve  months to pay for the
following costs and expenditures:

         o   The principal and related interest on our 10% unsecured  promissory
             notes  for  holders  that did not  either  convert  or  extend  the
             principal   and  related   interest,   of   $113,000   and  $12,000
             respectively,  as of April 25,  2006.  These  amounts  were paid on
             April 27, 2006.

         o   our general administrative expenses (including salaries,  legal and
             other professional  fees,  consulting and advisory fees, and to pay
             for the costs associated with raising additional capital);

         o   preparation  of  our  U.S.  IND  application,   related  laboratory
             testing, and submission to the FDA; and

         o   additional   upgrades  to  HemoTech(TM)   production  facility  and
             initiation of production of HemoTech(TM) for clinical trials.

         We believe our cash available will be sufficient to fund operations for
the next twelve  months.  If our  warrant  holders  exercise  into shares of our
common stock (of which there can be no guarantee),  however,  we will apply such
unused funds to make up a portion of any  shortfall we may have in the foregoing
operating costs and to further develop HemoTech(TM).

         In order to complete our planned operations and clinical trials we will
need to  raise an  additional  $10 to 15  million  within  the next  nine to ten
months,  although there can be no assurance that we can meet this timeframe.  If
we fail to generate  enough working  capital,  either from future equity or debt
sales,  the exercise of our Class A Warrants or  Placement  Agent  Warrants,  or
revenue, we will have to curtail our planned operations.

ITEM 3. CONTROLS AND PROCEDURES

Disclosure  controls and  procedures  are designed with an objective of ensuring
that information required to be disclosed in our periodic reports filed with the
SEC,  such as this  Quarterly  Report on Form 10-QSB,  is  recorded,  processed,
summarized and reported within the time periods

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<PAGE>

specified by the SEC. Disclosure controls also are designed with an objective of
ensuring  that  such   information  is  accumulated  and   communicated  to  our
management,  including our chief executive officer and chief financial  officer,
in order to allow timely consideration regarding required disclosures.

Based on their review and evaluation as of the end of the period covered by this
Form 10-QSB,  our principal  executive  officer and principal  financial officer
have concluded that our disclosure  controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e)  under the Securities  Exchange Act of 1934, as amended)
are effective as of the end of the period  covered by this report.  They are not
aware of any significant  changes in our disclosure controls or in other factors
that could  significantly  affect these controls subsequent to the date of their
evaluation,   including  any  corrective  actions  with  regard  to  significant
deficiencies and material weaknesses.

The term  internal  control  over  financial  reporting  is defined as a process
designed by, or under the supervision of, the registrant's  principal  executive
and principal financial officers,  or persons performing similar functions,  and
effected by the registrant's board of directors, management and other personnel,
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 and includes those policies and
procedures that:

(a) Pertain to the maintenance of records that in reasonable  detail  accurately
and  fairly  reflect  the  transactions  and  dispositions  of the assets of the
registrant;

(b) Provide reasonable  assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles,  and that receipts and expenditures of the registrant are
being made only in accordance with authorizations of management and directors of
the registrant; and

(c) Provide  reasonable  assurance  regarding  prevention or timely detection of
unauthorized  acquisition,  use or disposition of the  registrant's  assets that
could have a material adverse effect on the financial statements.

During the period  covered by this Form 10-QSB,  there have not been any changes
in our internal control over financial reporting that have materially  affected,
or that are reasonably  likely to materially  affect,  our internal control over
financial reporting.

PART II --OTHER INFORMATION

Items 1, 2, 3, 4 and 5 are not applicable and have been omitted.

ITEM 6. EXHIBITS

31.1 Certification of Principal  Executive Officer required under Rule 13a-14(a)
or Rule 15d-14(a) of the Securities and Exchange Act of 1934, as amended.

31.2 Certification of Principal  Financial Officer required under Rule 13a-14(a)
or Rule 15d-14(a) of the Securities and Exchange Act of 1934, as amended.

32.1   *  Certification  of  Principal  Executive  Officer  required  under Rule
          13a-14(b)  or Rule  15d-14(b)  of the  Securities  and Exchange Act of
          1934, as amended, and 18 U.S.C. Section 1350.

                                       20
<PAGE>

32.2   *  Certification  of  Principal  Financial  Officer  required  under Rule
          13a-14(b)  or Rule  15d-14(b)  of the  Securities  and Exchange Act of
          1934, as amended, and 18 U.S.C. Section 1350.



* The certifications attached as Exhibits 32.1 and 32.2 accompany this Quarterly
Report on Form 10-QSB pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002
and shall not be deemed "filed" by HemoBioTech,  Inc. for purposes of Section 18
of the Securities Exchange Act of 1934, as amended.

                                       21
<PAGE>

SIGNATURES

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

HEMOBIOTECH, INC.

DATED MAY 15, 2006               BY: /s/ ARTHUR P. BOLLON, PH.D.
                                 DR. ARTHUR P. BOLLON- CHAIRMAN OF THE BOARD AND
                                 CHIEF EXECUTIVE OFFICER
                                 (PRINCIPAL EXECUTIVE OFFICER)

DATED MAY 15, 2006               BY: /s/ MARK J. ROSENBLUM
                                 MARK J. ROSENBLUM - CHIEF FINANCIAL OFFICER AND
                                 SECRETARY
                                 (PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)

                                       22
<PAGE>

EXHIBIT INDEX



31.1     Certification  of  Principal  Executive  Officer  required  under  Rule
         13a-14(a) or Rule 15d-14(a) of the Securities and Exchange Act of 1934,
         as amended.

31.2     Certification  of  Principal  Financial  Officer  required  under  Rule
         13a-14(a) or Rule 15d-14(a) of the Securities and Exchange Act of 1934,
         as amended.

32.1*    Certification  of  Principal  Executive  Officer  required  under  Rule
         13a-14(b) or Rule 15d-14(b) of the Securities and Exchange Act of 1934,
         as amended, and 18 U.S.C. Section 1350.

32.2*    Certification  of  Principal  Financial  Officer  required  under  Rule
         13a-14(b) or Rule 15d-14(b) of the Securities and Exchange Act of 1934,
         as amended, and 18 U.S.C. Section 1350.


* The certifications attached as Exhibits 32.1 and 32.2 accompany this Quarterly
Report on Form 10-QSB pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002
and shall not be deemed "filed" by HemoBioTech,  Inc. for purposes of Section 18
of the Securities Exchange Act of 1934, as amended.

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