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**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

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**FORM      10-Q**

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| **x** | **QUARTERLY                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934** |
|-------|------------------------------------------------------------------------------------------------------------------------------------------|

**For      the quarterly period ended June 30, 2007**

**OR**

| ** ̈** | **TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934** |
|------------|-------------------------------------------------------------------------------------------------------------------------------------------|

**Commission      File No. 0-51172**

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**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**(Exact      name of registrant as specified in its charter)**

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|                                                                                                |   |                                                                      |
|-----------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------|
| **Delaware**                                                                                        |   | **33-0795984**                                                            |
| **(State                or other jurisdiction of****incorporation                or organization)** |   | **(I.R.S.                Employer****Identification                No.)** |

**1635      Village Center Circle, Suite 250**

**Las      Vegas, Nevada**

**(Address      of principal executive offices)**

**89134**

**(Zip      Code)**

**702-839-7200**

**(Registrant’s      telephone number, including area code)**

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**Cardiovascular      Biotherapeutics, Inc.**

**FORM      10-Q**

**FOR      THE QUARTER ENDED JUNE 30, 2007**

**INDEX**

|                                                                                                                       |         |                                                                                                                                                                                                                                                              |         |     |
|----------------------------------------------------------------------------------------------------------------------------|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------|----------|
|                                                                                                                       |    |                                                                                                                                                                                                                                                              |    | **Page** |
| **Part                  I - Financial Information**                                                                        |    | 3                                                                                                                                                                                                                                                                 |
|                                                                                                                       |         |                                                                                                                                                                                                                                                              |
| Item 1.                                                                                                               |    | Financial                  Statements                                                                                                                                                                                                                             |    | 3        |
|                                                                                                                       |    | Balance                  Sheets as of December 31, 2006 and June 30, 2007                  (Unaudited)                                                                                                                                                            |    | 3        |
|                                                                                                                       |    | Statements                  of Operations (Unaudited) for the Six Month and Three Month Periods                  Ended                  June 30, 2006, 2007 and for the period from March 11, 1998 (inception)                  to                  June 30, 2007 |    | 4        |
|                                                                                                                       |    | Statements                  of Stockholders’ Equity (Deficit) (Unaudited) for the period from March                  11, 1998 (inception) to June 30, 2007                                                                                                  |    | 5        |
|                                                                                                                       |    | Statements                  of Cash Flows (Unaudited) for the Six Month Periods Ended June                  30, 2006                  and 2007 and for the period from March 11, 1998 (inception) to                  June 30,                  2007              |    | 7        |
|                                                                                                                       |    | Notes                  to Unaudited Financial Statements                                                                                                                                                                                                          |    | 9        |
| Item 2.                                                                                                               |    | Management’s                  Discussion and Analysis of Financial Condition and Results of                  Operations                                                                                                                                     |    | 41       |
| Item 3.                                                                                                               |    | Quantitative                  and Qualitative Disclosures About Market Risk                                                                                                                                                                                       |    | 51       |
| Item 4.                                                                                                               |    | Controls                  and Procedures                                                                                                                                                                                                                          |    | 52       |
|                                                                                                                       |         |
| **Part                  II - Other Information**                                                                           |    |                                                                                                                                                                                                                                                              |
|                                                                                                                       |         |                                                                                                                                                                                                                                                              |
| Item 1.                                                                                                               |    | Legal                  Proceedings                                                                                                                                                                                                                                |    | 53       |
| Item 1A.                                                                                                              |    | Risk                  Factors                                                                                                                                                                                                                                     |    | 53       |
| Item 2.                                                                                                               |    | Unregistered                  Sales of Equity Securities and Use of Proceeds                                                                                                                                                                                      |    | 56       |
| Item 3.                                                                                                               |    | Defaults                  Upon Senior Securities                                                                                                                                                                                                                  |    | 56       |
| Item 4.                                                                                                               |    | Submission                  of Matters to a Vote of Security Holders                                                                                                                                                                                              |    | 56       |
| Item 5.                                                                                                               |    | Other                  Information                                                                                                                                                                                                                                |    | 57       |
| Item 6.                                                                                                               |    | Exhibits                                                                                                                                                                                                                                                          |    | 57       |
| SIGNATURES                                                                                                                 |    | 58                                                                                                                                                                                                                                                                |
| EX-31.1                                                                                                                    |    |                                                                                                                                                                                                                                                              |    |     |
| EX-31.2                                                                                                                    |    |                                                                                                                                                                                                                                                              |    |     |
| EX-32                  (Certifications required under Section 906 of the Sarbanes-Oxley Act                  of 2002) |    |                                                                                                                                                                                                                                                              |

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**PART      I. FINANCIAL INFORMATION**

| **Item 1.** | **Financial                  Statements** |
|------------------|-------------------------------------------|

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**(Formerly      CARDIOVASCULAR GENETIC ENGINEERING, INC.)**

**(A      Development Stage Company)**

**BALANCE      SHEETS**

**DECEMBER      31, 2006 AND JUNE 30, 2007 (UNAUDITED)**

|                                                                                                                                                                                                                                                                   |   |                                        |       |                      |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------|------------|---------------------------|--------|
|                                                                                                                                                                                                                                                                   |   | **December 31,****2006**               |       | **June 30,****2007** |   |
|                                                                                                                                                                                                                                                                   |   |                                        |       | ***(Unaudited)***         |   |
|                                                                                                                                                                                                                                                                   |   | ***(Dollars                in thousands)*** |       |
| **ASSETS**                                                                                                                                                                                                                                                             |   |                                        |            |                      |   |  |   |
| **Current                Assets:**                                                                                                                                                                                                                                     |   |                                        |            |                      |   |  |   |
| Cash                and cash equivalents                                                                                                                                                                                                                               |   | $                                           | 8,503      |                      | $      | 863 |   |
| Restricted                cash                                                                                                                                                                                                                                         |   |                                        | 172        |                      |   | 175 |   |
| Due                from an affiliate                                                                                                                                                                                                                                   |   |                                        | 38         |                      |   | 14 |   |
| Prepaid                and other current assets (including related party amounts of $396                and $0, as                of December 31, 2006 and June 30, 2007, respectively)                                                                      |   |                                        | 1,266      |                      |   | 754 |   |
| **Total                current assets**                                                                                                                                                                                                                                |   | **$**                                       | **9,979**  |                      | $      | 1,806 |   |
|                                                                                                                                                                                                                                                                   |   |                                        |            |                      |   |  |   |
| Property                and equipment, net of accumulated depreciation ($164 and $305, as                of                December 31, 2006 and June 30, 2007,                respectively)                                                                 |   |                                        | 887        |                      |   | 802 |   |
| Deferred                financing costs, net of amortization ($403 and $653, as of                December 31, 2006 and June 30, 2007,                respectively)                                                                                          |   |                                        | 1,481      |                      |   | 395 |   |
| Other                assets                                                                                                                                                                                                                                            |   |                                        | 80         |                      |   | 81 |   |
| **Total                Assets**                                                                                                                                                                                                                                        |   | **$**                                       | **12,427** |                      | $      | 3,084 |   |
|                                                                                                                                                                                                                                                                   |   |                                        |            |                      |   |  |   |
| **LIABILITIES**                                                                                                                                                                                                                                                        |   |                                        |            |                      |   |  |   |
| **Current                Liabilities:**                                                                                                                                                                                                                                |   |                                        |            |                      |   |  |   |
| Accrued                interest payable                                                                                                                                                                                                                                |   | $                                           | 557        |                      | $      | 357 |   |
| Due                to affiliates                                                                                                                                                                                                                                       |   |                                        | 111        |                      |   | — |   |
| Accounts                payable                                                                                                                                                                                                                                        |   |                                        | 861        |                      |   | 2,595 |   |
| Accrued                payroll and payroll taxes                                                                                                                                                                                                                       |   |                                        | 223        |                      |   | 217 |   |
| Deferred                rent                                                                                                                                                                                                                                           |   |                                        | 158        |                      |   | 165 |   |
| **Total                current liabilities**                                                                                                                                                                                                                           |   | $                                           | **1,910**  |                      | $      | 3,334 |   |
| **Derivative                Liabilities**                                                                                                                                                                                                                              |   |                                        |            |                      |   |  |   |
| Convertible                notes payable and embedded derivatives                                                                                                                                                                                                      |   |                                        | 11,635     |                      |   | 15,297 |   |
| Warrants                derivatives                                                                                                                                                                                                                                    |   |                                        | 366        |                      |   | 793 |   |
| Option                derivatives                                                                                                                                                                                                                                      |   |                                        | 1,406      |                      |   | 157 |   |
| **Total                Liabilities**                                                                                                                                                                                                                                   |   | **$**                                       | **15,317** |                      | $      | 19,581 |   |
| **Commitments                and contingencies**                                                                                                                                                                                                                       |   |                                        |            |                      |   |  |   |
| **STOCKHOLDERS’                EQUITY (Deficit)**                                                                                                                                                                                                                |   |                                        |            |                      |   |  |   |
| Convertible                preferred stock, $0.001 par value; 10,000,000 shares authorized;                52,850                shares issued; and no                shares outstanding at December 31, 2006 and June 30, 2007,                respectively |   |                                        | —    |                      |   | — |   |
| Common                stock, $0.001 par value, 400,000 shares authorized; 125,458 and                134,552 shares                issued and outstanding at December 31, 2006 and June 30, 2007,                respectively*(shares in thousands)*         |   |                                        | 125        |                      |   | 134 |   |
| Committed                common stock                                                                                                                                                                                                                                  |   |                                        | —    |                      |   | — |   |
| Additional                paid in capital                                                                                                                                                                                                                              |   |                                        | 31,713     |                      |   | 44,345 |   |
| Deficit                accumulated during the development stage                                                                                                                                                                                                        |   |                                        | (34,728    | )                         |   | (60,976 | ) |
| **Total                stockholders’ equity (deficit)**                                                                                                                                                                                                          |   |                                        | (2,890     | )                         |   | (16,497 | ) |
| **Total                Liabilities and Stockholder’s Equity (Deficit)**                                                                                                                                                                                          |   | **$**                                       | **12,427** |                      | $      | 3,084 |   |

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**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**(Formerly      CARDIOVASCULAR GENETIC ENGINEERING, INC.)**

**(A      Development Stage Company)**

**STATEMENTS      OF OPERATIONS**

**(UNAUDITED)**

**FOR      THE SIX MONTHS AND THREE MONTHS PERIOD ENDED JUNE 30, 2006 AND 2007 AND      FOR**

**THE      PERIOD FROM MARCH 11, 1998 (INCEPTION) TO JUNE 30, 2007**

|                                                                                                                                                            |   | **Six                  Months Ended****June                  30** |    | **Three                  Months Ended****June                  30** |   | **For                  the Period****from March 11,****1998 (Inception)****to                  June 30,****2007** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|---------|---------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                            |   | **2006**                                                          |    | **2007**                                                            |   | **2006**                                                                                                                         |   | **2007** |   |   |   |
|                                                                                                                                                            |   | ***(In                  thousands except per share data)***       |    |
| **Operating                  expenses:**                                                                                                                        |   |                                                              |         |                                                                |   |                                                                                                                                  |   |   |  |   |   |  |   |   |  |   |
| Research                  and development (a)                                                                                                                   |   | $                                                                 | 3,201   |                                                                | $      | 3,333                                                                                                                            |   | $ | 1,732 |   | $ | 1,718 |   | $ | 19,945 |   |
| Selling,                  general and administrative (b)                                                                                                        |   |                                                              | 5,651   |                                                                |   | 8,167                                                                                                                            |   |   | 2,992 |   |   | 4,638 |   |   | 34,431 |   |
| Total                  operating expenses                                                                                                                       |   |                                                              | 8,852   |                                                                |   | 11,500                                                                                                                           |   |   | 4,724 |   |   | 6,356 |   |   | 54,376 |   |
|                                                                                                                                                            |   |                                                              |         |                                                                |   |                                                                                                                             |   |   |  |   |   |   |   |   |   |   |
| **Operating                  loss**                                                                                                                             |   | $                                                                 | (8,852  | )                                                                   |   | (11,500                                                                                                                          | )      | $ | (4,724 | ) | $ | (6,356 | ) | $ | (54,376 | ) |
| **Other                  income (expenses)**                                                                                                                    |   |                                                              |         |                                                                |   |                                                                                                                             |   |   |  |   |   |   |   |   |   |   |
| Interest                  income                                                                                                                                |   |                                                              | 399     |                                                                |   | 127                                                                                                                              |   |   | 307 |   |   | 26 |   |   | 1,182 |   |
| Interest                  expense                                                                                                                               |   |                                                              | (1,813  | )                                                                   |   | (6,191                                                                                                                           | )      |   | (1,609 | ) |   | (2,971 | ) |   | (17,643 | ) |
| Other                  expenses                                                                                                                                 |   |                                                              | — |                                                                |   | —                                                                                                                          |   |   | — |   |   | — |   |   | (5 | ) |
| Adjustments                  to fair value of derivatives                                                                                                       |   |                                                              | 3,691   |                                                                |   | (10,084                                                                                                                          | )      |   | 5,217 |   |   | (7,958 | ) |   | (1,909 | ) |
| Adjustments                  to fair value of derivatives- Other                                                                                                |   |                                                              | 4,940   |                                                                |   | 1,400                                                                                                                            |   |   | 6,121 |   |   | 847 |   |   | 11,790 |   |
| Equity                  in loss of unconsolidated investee                                                                                                      |   |                                                              | — |                                                                |   | —                                                                                                                          |   |   | — |   |   | — |   |   | (15 | ) |
| Net                  other income (expenses)                                                                                                                    |   |                                                              | 7,217   |                                                                |   | (14,748                                                                                                                          | )      |   | 10,036 |   |   | (10,056 | ) |   | (6,600 | ) |
| **Net                  (loss) Income before Provision for Income Taxes**                                                                                        |   |                                                              | (1,635  | )                                                                   |   | (26,248                                                                                                                          | )      |   | 5,312 |   |   | (16,412 | ) |   | (60,976 | ) |
| Provision                  for income taxes                                                                                                                     |   |                                                              | — |                                                                |   | —                                                                                                                          |   |   | — |   |   | — |   |   | — |   |
| **Net                  (loss) Income**                                                                                                                          |   | **$**                                                             | (1,635  | )                                                                   | **$**  | (26,248                                                                                                                          | )      | **$** | **5,312** |   | **$** | (16,412 | ) | **$** | (60,976 | ) |
| **(Loss)                  Earnings per share**                                                                                                                  |   |                                                              |         |                                                                |   |                                                                                                                             |   |   |  |   |   |   |   |   |   |   |
| Basic                  loss per share                                                                                                                           |   |                                                              | (0.01   | )                                                                   |   | (0.20                                                                                                                            | )      |   | 0.05 |   |   | (0.12 | ) |   |  |   |
| Diluted                  loss per share                                                                                                                         |   |                                                              | (0.01   | )                                                                   |   | (0.20                                                                                                                            | )      |   | 0.05 |   |   | (0.12 | ) |   |  |   |
| **Shares                  used to calculate (loss) earnings per share**                                                                                         |   |                                                              |         |                                                                |   |                                                                                                                             |   |   |  |   |   |   |   |   |  |   |
| Basic                  loss per share                                                                                                                           |   |                                                              | 123,962 |                                                                |   | 129,170                                                                                                                          |   |   | 124,016 |   |   | 134,382 |   |   |  |   |
| Diluted                  loss per share (c)                                                                                                                     |   |                                                              | 123,962 |                                                                |   | 129,170                                                                                                                          |   |   | 125,964 |   |   | 134,382 |   |   |  |   |
| (a)    Research                  and development with related parties (Notes 3 and 11)                                                      |   |                                                              | 1,131   |                                                                |   | 927                                                                                                                              |   |   | 665 |   |   | 384 |   |   |   |   |
| (b)    Selling                  general and administrative expenses with related parties (Notes                  3 and                  11) |   |                                                              | 1,624   |                                                                |   | 26                                                                                                                               |   |   | 167 |   |   | 5 |   |   |   |   |
| (c)                  As discussed in Note 4 - Loss per share calculation                                                                                        |   |                                                              |    |                                                                |   |                                                                                                                             |   |   |   |   |   |   |   |   |   |   |

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**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**(Formerly      CARDIOVASCULAR GENETIC ENGINEERING, INC.)**

**(A      Development Stage Company)**

**STATEMENTS      OF STOCKHOLDERS’ EQUITY (DEFICIT)**

**(UNAUDITED)**

**FOR      THE PERIOD FROM MARCH 11, 1998 (INCEPTION) TO JUNE 30,      2007**

|                                                                                                 |   | **Date/Note**                                                         |       | **Price Per****Equity****Unit** |   | **Preferred Stock****Series                A,****Convertible** |   | **Common                Stock** |    | **Committed****Stock** |   | **Additional****Paid-In****Capital** |   | **Accumulated****Deficit** |         | **Total** |   |
|------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|------------|--------------------------------------|--------|---------------------------------------------------------------------|--------|---------------------------------|---------|------------------------|--------|--------------------------------------|--------|----------------------------|--------------|-----------|--------|
|                                                                                                 |   |                                                                  |       |                                 |   | **Shares**                                                          |   | **Amount**                      |    | **Shares**             |   | **Amount**                           |   |                       |         |      |   |   |   |   |   |
|                                                                                                 |   | ***(In                thousands except price per equity unit data)*** |       |
| **Balance,                March 11, 1998 (date of inception)**                                  |   |                                                                  |            |                                 |   |                                                                     |   |                            | — |                   | $      | —                              |   |                       | —      |      | $      | — |   |   | — |   | $ | — |   | $ | — |   | $ | — |   |
| Issuance                of common stock to founders                                                  |   |                                                                  | (1         | )                                    | $      | 0.001                                                               |   |                            |         |                   |   |                                      |   |                       | 93,050       |      |   | 93 |   |   | — |   |   | (92 | ) |   |  |   |   | 1 |   |
| Issuance                of common stock for cash                                                     |   |                                                                  | 7/9/1998   |                                 |   | 0.10                                                                |   |                            |         |                   |   |                                      |   |                       | 300          |      |   | — |   |   |  |   |   | 30 |   |   |  |   |   | 30 |   |
| Issuance                of preferred stock for cash                                                  |   |                                                                  | (1         | )                                    |   | 9.85                                                                |   |                            | 53      |                   |   | —                              |   |                       |              |      |   |  |   |   |  |   |   | 520 |   |   |  |   |   | 520 |   |
| Net                loss (Unaudited)                                                                  |   |                                                                  |            |                                 |   |                                                                     |   |                            |    |                   |   |                                 |   |                       |         |      |   |   |   |   |     |   |   |   |   |   | (568 | ) |   | (568 | ) |
| **Balance,                December 31, 1998**                                                   |   |                                                                  |            |                                 |   |                                                                     |   |                            | **53**  |                   | **$**  | **—**                          |   |                       | **93,350**   |      | **$**  | **93** |   |   | **—** |   | **$** | **458** |   | **$** | (568 | ) | **$** | (17 | ) |
| Issuance                of common stock to founders                                                  |   |                                                                  | (2         | )                                    | $      | 0.001                                                               |   |                            |         |                   |   |                                      |   |                       | 4,580        |      |   | 5 |   |   | — |   |   | (5 | ) |   |  |   |   | — |   |
| Issuance                of common stock for cash                                                     |   |                                                                  | 6/25/1999  |                                 |   | 0.30                                                                |   |                            |         |                   |   |                                      |   |                       | 67           |      |   | — |   |   |  |   |   | 20 |   |   |  |   |   | 20 |   |
| Issuance                of common stock for cash                                                     |   |                                                                  | 6/25/1999  |                                 |   | 0.30                                                                |   |                            |         |                   |   |                                      |   |                       | 100          |      |   | — |   |   |  |   |   | 30 |   |   |  |   |   | 30 |   |
| Issuance                of common stock for cash                                                     |   |                                                                  | 10/5/1999  |                                 |   | 0.30                                                                |   |                            |         |                   |   |                                      |   |                       | 340          |      |   | — |   |   |  |   |   | 102 |   |   |  |   |   | 102 |   |
| Issuance                of stock options for services                                                |   |                                                                  |            |                                 |   |                                                                     |   |                            |         |                   |   |                                      |   |                       |              |      |   |  |   |   |  |   |   | 82 |   |   |  |   |   | 82 |   |
| Net                loss                                                                              |   |                                                                  |            |                                 |   |                                                                     |   |                            |    |                   |   |                                 |   |                       |         |      |   |   |   |   |   |   |   |   |   |   | (655 | ) |   | (655 | ) |
| **Balance,                December 31, 1999**                                                   |   |                                                                  |            |                                 |   |                                                                     |   |                            | **53**  |                   | **$**  | **—**                          |   |                       | **98,437**   |      | **$**  | **98** |   |   | **—** |   | **$** | **687** |   | **$** | (1,223 | ) | **$** | (438 | ) |
| Issuance                of common stock to founders                                                  |   |                                                                  | (3         | )                                    | $      | 0.001                                                               |   |                            |         |                   |   |                                      |   |                       | 2,120        |      |   | 2 |   |   | — |   |   | (2 | ) |   |  |   |   | — |   |
| Issuance                of common stock for cash                                                     |   |                                                                  | 12/21/2000 |                                 |   | 0.4117                                                              |   |                            |         |                   |   |                                      |   |                       | 8,750        |      |   | 9 |   |   |  |   |   | 3,593 |   |   |  |   |   | 3,602 |   |
| Issuance                of common stock for conversion of convertible preferred                stock |   |                                                                  | (4         | )                                    |   | 0.10                                                                |   |                            | (2      | )                      |   | —                              |   |                       | 150          |      |   | — |   |   |  |   |   | — |   |   |  |   |   | — |   |
| Issuance                of common stock for services                                                 |   |                                                                  | (5         | )                                    |   |                                                                     |   |                            |         |                   |   |                                      |   |                       | 583          |      |   | 1 |   |   |  |   |   | (1 | ) |   |  |   |   | — |   |
| Issuance                of stock options for services                                                |   |                                                                  |            |                                 |   |                                                                     |   |                            |         |                   |   |                                      |   |                       |              |      |   |  |   |   |  |   |   | 74 |   |   |  |   |   | 74 |   |
| Net                loss                                                                              |   |                                                                  |            |                                 |   |                                                                     |   |                            |    |                   |   |                                 |   |                       |         |      |   |   |   |   |   |   |   |   |   |   | (2,233 | ) |   | (2,233 | ) |
| **Balance,                December 31, 2000**                                                   |   |                                                                  |            |                                 |   |                                                                     |   |                            | **51**  |                   | **$**  | **—**                          |   |                       | **110,040**  |      | **$**  | **110** |   |   | **—** |   | **$** | **4,351** |   | **$** | (3,456 | ) | **$** | **1,005** |   |
| Issuance                of common stock for cash                                                     |   |                                                                  | 8/10/2001  |                                 |   | 0.80                                                                |   |                            |         |                   |   |                                      |   |                       | 150          |      |   | — |   |   | — |   |   | 120 |   |   | — |   |   | 120 |   |
| Net                loss                                                                              |   |                                                                  |            |                                 |   |                                                                     |   |                            |    |                   |   |                                 |   |                       |         |      |   |   |   |   |    |   |   |   |   |   | (1,665 | ) |   | (1,665 | ) |
| **Balance,                December 31, 2001**                                                   |   |                                                                  |            |                                 |   |                                                                     |   |                            | **51**  |                   | **$**  | **—**                          |   |                       | **110,190**  |      | **$**  | **110** |   |   | **—** |   | **$** | **4,471** |   | **$** | (5,121 | ) | **$** | (540 | ) |
| Net                loss                                                                              |   |                                                                  |            |                                 |   |                                                                     |   |                            |    |                   |   |                                 |   |                       |    |      |   |   |   |   |   |   |   |   |   |   | (1,328 | ) |   | (1,328 | ) |
| **Balance,                December 31, 2002**                                                   |   |                                                                  |            |                                 |   |                                                                     |   |                            | **51**  |                   | **$**  | **—**                          |   |                       | **110,190**  |      | **$**  | **110** |   |   | **—** |   | **$** | **4,471** |   | **$** | (6,449 | ) | **$** | (1,868 | ) |
| Issuance                of stock options for services                                                |   |                                                                  |            |                                 |   |                                                                     |   |                            |         |                   |   |                                      |   |                       |              |      |   |  |   |   |  |   |   | 47 |   |   |  |   |   | 47 |   |
| Issuance                of warrants for services                                                     |   |                                                                  |            |                                 |   |                                                                     |   |                            |         |                   |   |                                      |   |                       |              |      |   |  |   |   |  |   |   | 120 |   |   |  |   |   | 120 |   |
| Net                loss                                                                              |   |                                                                  |            |                                 |   |                                                                     |   |                            |    |                   |   |                                 |   |                       |         |      |   |   |   |   |   |   |   |   |   |   | (2,329 | ) |   | (2,329 | ) |
| **Balance,                December 31, 2003**                                                   |   |                                                                  |            |                                 |   |                                                                     |   |                            | **51**  |                   | **$**  | **—**                          |   |                       | **110,190**  |      | **$**  | **110** |   |   | **—** |   | **$** | **4,638** |   | **$** | (8,778 | ) | **$** | (4,030 | ) |

----

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**(Formerly      CARDIOVASCULAR GENETIC ENGINEERING, INC.)**

**(A      Development Stage Company)**

**STATEMENTS      OF STOCKHOLDERS’ EQUITY (DEFICIT)—(Continued)**

**(UNAUDITED)**

**FOR      THE PERIOD FROM MARCH 11, 1998 (INCEPTION) TO JUNE 30,      2007**

|        |   | **Date/Note**                                                         |   | **Price Per****Equity****Unit** |   | **Preferred Stock****Series                A,****Convertible** |   | **Common                Stock** |   | **Committed****Stock** |   | **Additional****Paid-In****Capital** |   | **Accumulated****Deficit** |   | **Total** |   |
|--------|--------|-----------------------------------------------------------------------|--------|--------------------------------------|--------|---------------------------------------------------------------------|--------|---------------------------------|--------|------------------------|--------|--------------------------------------|--------|----------------------------|--------|-----------|--------|
|   |   |                                                                  |   |                                 |   | **Shares**                                                          |   | **Amount**                      |   | **Shares**             |   | **Amount**                           |   |                       |   |      |   |   |   |   |   |
|   |   | ***(In                thousands except price per equity unit data)*** |   |

| Issuance                  of common stock for conversion of convertible notes                                          |   |   | (6  | )      |   |   |   |   |             |       |   |             |       |       | 1,650        |       |   | 2            |       |   |                                      |       |   | 4,529              |       |   |             |   |   | 4,531       |   |
|------------------------------------------------------------------------------------------------------------------------|--------|--------|-----|--------|--------|--------|--------|--------|-------------|------------|--------|-------------|------------|------------|--------------|------------|--------|--------------|------------|--------|--------------------------------------|------------|--------|--------------------|------------|--------|-------------|--------|--------|-------------|--------|
| Conversion                  of convertible preferred stock                                                             |   |   | (7  | )      |   |   |        |   | (28         | )          |   |             |       |       | 810          |       |   | 1            |       |   | 2                                    |       |   | (3                 | )          |   |             |   |   | —     |   |
| Interest                  on benefit conversion feature                                                                |   |   |     |   |   |   |   |   |             |       |   |             |       |       |              |       |   |              |       |   |                                      |       |   | 2,050              |       |   |             |   |   | 2,050       |   |
| Issuance                  of stock options for services                                                                |   |   |     |   |   |   |   |   |             |       |   |             |       |       |              |       |   |              |       |   |                                      |       |   | 79                 |       |   |             |   |   | 79          |   |
| Net                  loss                                                                                              |   |   |     |   |   |   |   |   |        |       |   |        |       |       |         |       |   |         |       |   |                                 |       |   |               |       |   | (8,013      | )      |   | (8,013      | )      |
| **Balance,                  December 31, 2004**                                                                        |   |   |     |   |   |   |   |   | **23**      | ** ** | **$**  | **—** | ** ** | ** ** | **112,650**  | ** ** | **$**  | **113**      | ** ** | **$**  | **2**                                | ** ** | **$**  | **11,293**         | ** ** | **$**  | **(16,791** | **)**  | **$**  | **(5,383**  | **)**  |
| Issuance                  of common stock for cash                                                                     |   |   | (8  | )      |   |   |   |   |             |       |   |             |       |       | 1,725        |       |   | 2            |       |   |                                      |       |   | 14,709             |       |   |             |   |   | 14,711      |   |
| Conversion                  of convertible notes                                                                       |   |   | (6  | )      |   |   |   |   |             |       |   |             |       |       | 4,228        |       |   | 4            |       |   |                                      |       |   | 10,327             |       |   |             |   |   | 10,331      |   |
| Conversion                  of convertible preferred stock                                                             |   |   | (7  | )      |   |   |   |   | (23         | )          |   |             |       |       | 4,325        |       |   | 4            |       |   | (2                                   | )          |   | (2                 | )          |   |             |   |   | —     |   |
| Exercise                  of options                                                                                   |   |   | (10 | )      |   |   |   |   |             |       |   |             |       |       | 123          |       |   |              |       |   |                                      |       |   | 83                 |       |   |             |   |   | 83          |   |
| Issuance                  of warrant for cash                                                                          |   |   | (9  | )      |   |   |   |   |             |       |   |             |       |       |              |       |   |              |       |   |                                      |       |   | —            |       |   |             |   |   | —     |   |
| Issuance                  of stock options for services                                                                |   |   | (11 | )      |   |   |   |   |             |       |   |             |       |       |              |       |   |              |       |   |                                      |       |   | 1,812              |       |   |             |   |   | 1,812       |   |
| Warrants                  exercised                                                                                    |   |   | (12 | )      |   |   |   |   |             |       |   |             |       |       | 848          |       |   | 1            |       |   |                                      |       |   | (1                 | )          |   |             |   |   |             |   |
| Net                  loss                                                                                              |   |   |     |   |   |        |   |   |        |       |   |        |       |       |         |       |   |         |       |   |                                 |       |   |               |       |   | (12,366     | )      |   | (12,366     | )      |
| **Balance,                  December 31, 2005**                                                                        |   |   |     |   |   |   |   |   | **—** | ** ** | **$**  | **—** | ** ** | ** ** | **123,899**  | ** ** | **$**  | **124**      | ** ** | **$**  | **—**                          | ** ** | **$**  | **38,221**         | ** ** | **$**  | **(29,157** | **)**  | **$**  | **9,188**   |   |
| Warrants                  exercised                                                                                    |   |   | (12 | )      |   |        |   |   |             |       |   |             |       |       | 89           |       |   |              |       |   |                                      |       |   | —            |       |   |             |   |   | —     |   |
| Options                  and warrants derivative                                                                       |   |   | (14 | )      |   |   |   |   |             |       |   |             |       |       |              |       |   |              |       |   |                                      |       |   | (12,278            | )          |   |             |   |   | (12,278     | )      |
| Reclassification                  of option derivative for options exercise                                            |   |   | (16 | )      |   |   |   |   |             |       |   |             |       |       |              |       |   |              |       |   |                                      |       |   | 1,318              |       |   |             |   |   | 1,318       |   |
| Reclassification                  of conversion and interest conversion derivative on note                  conversion |   |   | (18 | )      |   |        |   |   |             |       |   |             |       |       |              |       |   |              |       |   |                                      |       |   | 1,332              |       |   |             |   |   | 1,332       |   |
| Reclassification                  of interest conversion derivative on actual interest paid                            |   |   | (17 | )      |   |        |   |   |             |       |   |             |       |       |              |       |   |              |       |   |                                      |       |   | 482                |       |   |             |   |   | 482         |   |
| Exercise                  of options                                                                                   |   |   | (10 | )      |   |        |   |   |             |       |   |             |       |       | 465          |       |   |              |       |   |                                      |       |   | 230                |       |   |             |   |   | 230         |   |
| Issuance                  of stock for services                                                                        |   |   | (13 | )      |   |        |   |   |             |       |   |             |       |       | —      |       |   |              |       |   |                                      |       |   | —            |       |   |             |   |   | —     |   |
| Conversion                  of convertible notes                                                                       |   |   | (15 | )      |   |        |   |   |             |       |   |             |       |       | 1,005        |       |   | 1            |       |   |                                      |       |   | 1,929              |       |   |             |   |   | 1,930       |   |
| Stock                  based compensation                                                                              |   |   | (11 | )      |   |        |   |   |             |       |   |             |       |       |              |       |   |              |       |   |                                      |       |   | 479                |       |   |             |   |   | 479         |   |
| Net                  loss                                                                                              |   |   |     |   |   |        |   |   |        |       |   |        |       |       |         |       |   |         |       |   |                                 |       |   |          |       |   | (5,571      | )      |   | (5,571      | )      |
| **Balance,                  December 31, 2006**                                                                        |   |   |     |   |   |        |   |   | **—** | ** ** | **$**  | **—** | ** ** | ** ** | **125,458**  | ** ** | **$**  | **125**      | ** ** | **$**  | **—                  —** | ** ** | **$**  | **31,713**         | ** ** | **$**  | **(34,728** | **)**  | **$**  | **(2,890**  | **)**  |
| Exercise                  of options                                                                                   |   |   | (10 | )      |   |        |   |   |             |       |   |             |       |       | 360          |       |   | —      |       |   | —                              |       |   | 108                |       |   |        |   |   | 108         |   |
| Issuance                  of stock for services as independent directors                                               |   |   | (19 | )      |   |        |   |   |             |       |   |             |       |       | 48           |       |   | —      |       |   | —                              |       |   | 48                 |       |   |        |   |   | 48          |   |
| Option                  and warrant derivative                                                                         |   |   | (14 | )      |   |        |   |   |             |       |   |             |       |       |         |       |   |         |       |   |                                 |       |   | (178               | )          |   |        |   |   | (178        | )      |
| Conversion                  of convertible notes                                                                       |   |   | (15 | )      |   |        |   |   |             |       |   |             |       |       | 7,186        |       |   | 7            |       |   | —                              |       |   | 6,841              |       |   |        |   |   | 6,848       |   |
| Reclassification                  of conversion and interest conversion derivative on note                  conversion |   |   | (18 | )      |   |        |   |   |             |       |   |             |       |       |         |       |   |         |       |   |                                 |       |   | 3,672              |       |   |        |   |   | 3,672       |   |
| Reclassification                  of interest conversion derivative on actual interest paid                            |   |   | (17 | )      |   |        |   |   |             |       |   |             |       |       |         |       |   |         |       |   |                                 |       |   | 532                |       |   |        |   |   | 532         |   |
| Sale                  of common shares                                                                                 |   |   | (20 | )      |   |   |   |   |        |       |   |        |       |       | 1,500        |       |   | 2            |       |   |                                 |       |   | 1,498              |       |   |        |   |   | 1,500       |   |
| Stock                  based compensation                                                                              |   |   | (11 | )      |   |        |   |   |             |       |   |             |       |       |         |       |   |         |       |   |                                 |       |   | 111                |       |   |        |   |   | 111         |   |
| **Net                  loss (Unaudited)**                                                                              |   |   |     |   |   |        |   |   |        |       |   |        |       |       |    |       |   |    |       |   |                       |       |   |     |       |   | (26,248     | )      |   | (26,248     | )      |
| **Balance,                  June 30, 2007**                                                                            |   |   |     |   |   |        |   |   | **—** | ** ** | **$**  | **—** | ** ** | ** ** | **134,552**  | ** ** | **$**  | **134**      | ** ** | **$**  | **—**                          | ** ** | **$**  | **$44,345**        | ** ** | **$**  | **(60,976** | **)**  | **$**  | **(16,497** | **)**  |
|                                                                                                                   |   |   |     |   |   |        |   |   |             |       |   |             |       |       |              |       |   |              |       |   |                                      |       |   |                    |       |   |             |   |   |             |   |

| (1) | Multiple                transactions valued at the per share price in the year ended                December 31, 1998 |
|-----|----------------------------------------------------------------------------------------------------------------------------|

| (2) | Multiple                transactions valued at the per share price in the year ended                December 31, 1999 |
|-----|----------------------------------------------------------------------------------------------------------------------------|

| (3) | Multiple                transactions valued at the per share price in the year ended                December 31, 2000 |
|-----|----------------------------------------------------------------------------------------------------------------------------|

| (4) | Preferred                stock converted to common stock |
|-----|----------------------------------------------------------|

| (5) | Offering                costs |
|-----|-------------------------------|

| (6) | Multiple                transactions at $2.00 and $4.00 in the year ended December 31, 2004                and 2005 |
|-----|--------------------------------------------------------------------------------------------------------------------------|

| (7) | Multiple                transactions at 100:1 conversion rate in the year ended December 31,                2004 and 2005 |
|-----|--------------------------------------------------------------------------------------------------------------------------------|

| (8) | Public                offering of 1,725,000 common shares at $10.00 per                share |
|-----|----------------------------------------------------------------------------------------------|

| (9) | Underwriters                warrants sold with the public                offering |
|-----|-----------------------------------------------------------------------------------|

| (10) | Multiple                employee option exercises (exercise price range                $0.30-$2.00) |
|------|-----------------------------------------------------------------------------------------------------|

| (11) | Stock                options to directors and employees |
|------|---------------------------------------------------------|

| (12) | Warrants                exercised (exercise price $0.80) |
|------|----------------------------------------------------------|

| (13) | Issuance                of 20 commemorative shares to directors and executives with aggregating                value of $122 |
|------|------------------------------------------------------------------------------------------------------------------------------|

| (14) | Reclassification                from equity to liability of the fair value of employee stock options                transferred to a non-employee, by function of law, in the amount                of                $501,000                and reclassifications from liability to equity of the fair value                of                options exercised by non-employees of $286,098. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (15) | Conversion                of senior secured convertible notes and interest related to those                notes at                various prices. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                        |   | Six                months endedJune                30, 2006 |    | Six                months endedJune                30, 2007 |   | From                March 11, 1998(inception)                to June 30, 2007 |   |
|-------------------------------------------------------------|--------|-------------------------------------------------------------|---------|-------------------------------------------------------------|--------|-------------------------------------------------------------------------------|--------|
|                                                        |   |                                                        |    |                                                        |   |                                                                          |   |
|                                                        |   |                                                        |    |                                                        |   |                                                                          |   |
| Amount                of senior secured convertible notes   |   |                                                        |    |                                                        |   |                                                                          |   |   |   |   |
| converted                to uncommitted shares              |   | $                                                           | — |                                                        | $      | 6,743,707                                                                     |   | $ | 8,641,221 |   |
|                                                        |   |                                                        |    |                                                        |   |                                                                          |   |   |   |   |
| Above                senior secured convertible notes       |   |                                                        |    |                                                        |   |                                                                          |   |   |   |   |
| converted                to uncommitted shares              |   |                                                        | — |                                                        |   | 7,111,141                                                                     |   |   | 8,190,612 |   |
|                                                        |   |                                                        |    |                                                        |   |                                                                          |   |   |   |   |
| Amount                of senior secured convertible notes   |   |                                                        |    |                                                        |   |                                                                          |   |   |   |   |
| converted                to committed shares                |   |                                                        | — |                                                        |   | —                                                                       |   |   | — |   |
|                                                        |   |                                                        |    |                                                        |   |                                                                          |   |   |   |   |
| Interest                on senior secured convertible notes |   |                                                        |    |                                                        |   |                                                                          |   |   |   |   |
| paid                in common stock                         |   |                                                        | — |                                                        | $      | 104,634                                                                       |   | $ | 137,662 |   |

| (16) | Reclassification                from liability to equity for options                exercised. |
|------|------------------------------------------------------------------------------------------------|

| (17) | Reclassification                of interest conversion derivative from liability to equity on interest                paid in cash. |
|------|-------------------------------------------------------------------------------------------------------------------------------------|

| (18) | Reclassification                of adjustment to embedded derivatives, conversion and interest conversion                feature, from liability to equity for conversion of notes and interest                related to those notes to common                stock. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (19) | Issuance                of stock for services as independent                directors. |
|------|----------------------------------------------------------------------------------------|

| (20) | Sale                of common stock at $1.00 per share. |
|------|---------------------------------------------------------|

----

**CARDIOVASCULAR        BIOTHERAPEUTICS, INC.**

**(Formerly        CARDIOVASCULAR GENETIC ENGINEERING, INC.)**

**(A        Development Stage Company)**

**STATEMENTS        OF CASH FLOWS**

**(UNAUDITED)**

**FOR        THE SIX MONTHS PERIOD ENDED JUNE 30, 2006, AND 2007 AND        FOR**

**THE        PERIOD FROM MARCH 11, 1998 (INCEPTION) TO JUNE 30, 2007        (UNAUDITED)**

|                                                                                                                                                                                               |   |   |   | **For the Six Months Period****Ended                        June 30,** |   | **For                        the Period****from March 11,****1998 (Inception) to****June 30, 2007** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|-------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                               |   |   |   | **2006**                                                                                        |   | **2007**                                                                                                                          |   |   |   |
|                                                                                                                                                                                               |   |   |   | ***(In                        thousands)***                                                     |   |
| **Cash                        flows from operating activities:**                                                                                                                                   |   |   |   |                                                                                            |   |                                                                                                                              |   |   |   |
| Net                        loss                                                                                                                                                                    |   |   |        |                                                                                            | $      | (1,635                                                                                                                            | )      | $ | (26,248 | ) | $ | (60,976 | ) |
| Adjustments                        to reconcile net loss to net cash used in operating                        activities:                                                                          |   |   |   |                                                                                            |   |                                                                                                                              |   |   |   |   |   |   |   |
| Depreciation                                                                                                                                                                                       |   |   |        |                                                                                            |   | 46                                                                                                                                |   |   | 141 |   |   | 311 |   |
| Termination                        of financing cost                                                                                                                                               |   |   |   |                                                                                            |   | —                                                                                                                           |   |   | 351 |   |   | 351 |   |
| Amortization                        of beneficial conversion feature                                                                                                                               |   |   |        |                                                                                            |   | —                                                                                                                           |   |   | — |   |   | 2,050 |   |
| Amortization                        of deferred financing costs                                                                                                                                    |   |   |        |                                                                                            |   | 144                                                                                                                               |   |   | 765 |   |   | 3,304 |   |
| Interest                        paid in common stock                                                                                                                                               |   |   |        |                                                                                            |   | —                                                                                                                           |   |   | 105 |   |   | 138 |   |
| Stock                        based compensation                                                                                                                                                    |   |   |        |                                                                                            |   | 326                                                                                                                               |   |   | 111 |   |   | 2,684 |   |
| Stock                        issued for services rendered                                                                                                                                          |   |   |        |                                                                                            |   | —                                                                                                                           |   |   | 48 |   |   | 48 |   |
| Warrants                        issued for services rendered                                                                                                                                       |   |   |        |                                                                                            |   | 401                                                                                                                               |   |   | 401 |   |   | 1,722 |   |
| Amortization                        of discount related to warrants derivatives                                                                                                                    |   |   |        |                                                                                            |   | 221                                                                                                                               |   |   | 397 |   |   | 1,015 |   |
| Amortization                        of discount related to conversion feature                                                                                                                      |   |   |        |                                                                                            |   | 423                                                                                                                               |   |   | 2,300 |   |   | 3,918 |   |
| Amortization                        of discount related to interest on conversion feature                                                                                                          |   |   |        |                                                                                            |   | 336                                                                                                                               |   |   | 1,827 |   |   | 3,112 |   |
| Adjustments                        to fair value of derivatives                                                                                                                                    |   |   |        |                                                                                            |   | (3,692                                                                                                                            | )      |   | 10,084 |   |   | 1,909 |   |
| Adjustments                        to fair value of derivatives - warrant and option                        derivatives                                                                            |   |   |        |                                                                                            |   | (4,940                                                                                                                            | )      |   | (1,400 | ) |   | (11,790 | ) |
| Equity                        in loss of unconsolidated investee                                                                                                                                   |   |   |        |                                                                                            |   | —                                                                                                                           |   |   | — |   |   | 15 |   |
| (Increase)                        decrease in:                                                                                                                                                     |   |   |        |                                                                                            |   |                                                                                                                                   |   |   |  |   |   |   |   |
| Due                        from affiliate                                                                                                                                                          |   |   |        |                                                                                            |   | (126                                                                                                                              | )      |   | 24 |   |   | (14 | ) |
| Prepaid                        and other current assets (including $396,000 paid to related                        party in                        2006, none                        paid in 2007) |   |   |        |                                                                                            |   | (690                                                                                                                              | )      |   | 512 |   |   | (754 | ) |
| Other                        assets                                                                                                                                                                |   |   |        |                                                                                            |   | 6                                                                                                                                 |   |   | — |   |   | (96 | ) |
| (Increase)                        decrease in:                                                                                                                                                     |   |   |        |                                                                                            |   |                                                                                                                              |   |   |   |   |   |   |   |
| Due                        to affiliate                                                                                                                                                            |   |   |        |                                                                                            |   | 28                                                                                                                                |   |   | (111 | ) |   | — |   |
| Accounts                        payable                                                                                                                                                            |   |   |        |                                                                                            |   | 281                                                                                                                               |   |   | 1,734 |   |   | 2,595 |   |
| Accrued                        payroll and payroll taxes                                                                                                                                           |   |   |        |                                                                                            |   | (42                                                                                                                               | )      |   | (6 | ) |   | 217 |   |
| Accrued                        interest                                                                                                                                                            |   |   |        |                                                                                            |   | 597                                                                                                                               |   |   | (200 | ) |   | 357 |   |
| Accrued                        rent                                                                                                                                                                |   |   |        |                                                                                            |   | 67                                                                                                                                |   |   | 7 |   |   | 165 |   |
| Net                        cash used in operating activities                                                                                                                                       |   |   | (a)    |                                                                                            | $      | (8,249                                                                                                                            | )      | $ | (9,158 | ) | $ | (49,719 | ) |
|                                                                                                                                                                                               |   |   |   |                                                                                            |   |                                                                                                                              |   |   |   |   |   |  |   |
| **Cash                        flows from investing activities:**                                                                                                                                   |   |   |        |                                                                                            |   |                                                                                                                              |   |   |   |   |   |  |   |
| Purchase                        of restricted cash                                                                                                                                                 |   |   |        |                                                                                            |   | (32                                                                                                                               | )      |   | (3 | ) |   | (175 | ) |
| Purchase                        of property and equipment                                                                                                                                          |   |   |        |                                                                                            |   | (503                                                                                                                              | )      |   | (56 | ) |   | (1,113 | ) |
| Net                        cash used in investing activities                                                                                                                                       |   |   | (b)    |                                                                                            | $      | (535                                                                                                                              | )      | $ | (59 | ) | $ | (1,288 | ) |
|                                                                                                                                                                                               |   |   |        |                                                                                            |   |                                                                                                                              |   |   |   |   |   |   |   |
| **Cash                        flows from financing activities**                                                                                                                                    |   |   |        |                                                                                            |   |                                                                                                                              |   |   |   |   |   |   |   |
| Proceeds                        from sale of common stock - Pre IPO                                                                                                                                |   |   |        |                                                                                            |   | —                                                                                                                           |   |   | — |   |   | 3,904 |   |
| Proceeds                        from sale of common stock - Post IPO                                                                                                                               |   |   |        |                                                                                            |   | —                                                                                                                           |   |   | — |   |   | 15,548 |   |
| Proceeds                        from sale of common shares under Reg S                                                                                                                             |   |   |   |                                                                                            |   | —                                                                                                                           |   |   | 1,500 |   |   | 1,500 |   |
| Proceeds                        from exercise of options and warrants                                                                                                                              |   |   |        |                                                                                            |   | 27                                                                                                                                |   |   | 108 |   |   | 421 |   |
| Proceeds                        from sale of preferred stock                                                                                                                                       |   |   |        |                                                                                            |   | —                                                                                                                           |   |   | — |   |   | 520 |   |
| Proceeds                        from issuance of notes payables                                                                                                                                    |   |   |        |                                                                                            |   | —                                                                                                                           |   |   | — |   |   | 14,092 |   |
| Payment                        of financing cost                                                                                                                                                   |   |   |        |                                                                                            |   | (1,553                                                                                                                            | )      |   | (31 | ) |   | (4,049 | ) |
| Proceeds                        from notes payable issued under Reg D                                                                                                                              |   |   |        |                                                                                            |   | 20,000                                                                                                                            |   |   | — |   |   | 20,800 |   |
| Cash                        paid for deferred offering costs                                                                                                                                       |   |   |        |                                                                                            |   | —                                                                                                                           |   |   | — |   |   | (866 | ) |
| Due                        to net increase (decrease) in affiliates                                                                                                                                |   |   |        |                                                                                            |   | —                                                                                                                           |   |   | — |   |   | — |   |
| Subscription                        receivable                                                                                                                                                     |   |   |        |                                                                                            |   | —                                                                                                                           |   |   | — |   |   | — |   |
| **Net                        cash provided by (used in) financing activities**                                                                                                                     |   |   | (c)    |                                                                                            | $      | 18,474                                                                                                                            |   | $ | 1,577 |   | $ | 51,870 |   |
|                                                                                                                                                                                               |   |   |        |                                                                                            |   |                                                                                                                              |   |   |   |   |   |   |   |
| Increase                        (decrease) in cash and cash equivalents                                                                                                                            |   |   |        |                                                                                            |   | 9,690                                                                                                                             |   |   | (7,640 | ) |   | 863 |   |
| **Cash                        and cash equivalents at beginning of period**                                                                                                                        |   |   |        |                                                                                            |   | 8,675                                                                                                                             |   |   | 8,503 |   |   | **—** |   |
| **Cash                        and cash equivalents at end of period**                                                                                                                              |   |   |        |                                                                                            | **$**  | **18,365**                                                                                                                        |   | **$** | **863** |   | **$** | **863** |   |
| **Supplemental                        disclosure of cash flow information**                                                                                                                        |   |   |        |                                                                                            |   |                                                                                                                                   |   |   |   |   |   |   |   |
| Interest                        paid                                                                                                                                                               |   |   |        |                                                                                            |   | 92                                                                                                                                |   |   | 992 |   |   | 3,660 |   |
| California                        Franchise Taxes paid                                                                                                                                             |   |   |        |                                                                                            |   | —                                                                                                                           |   |   | — |   |   | 6 |   |

| (a) | Including                        amount with related parties of $2,755,595, $1,542,934, and                        $14,922,773,                        respectively |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Including                        amount with related parties of $0, $0 and $0,                        respectively                                                  |
| (c) | Including                        amount with related parties of $(1,705,422), $117,396, and                        $(3,868,756), respectively             |

----

**Supplemental      Disclosure of Non-Cash Financing Activities **

|  **Supplemental                Disclosure of Non-Cash Financing Activities**                                                          |   | **During                the Six months period ended June 30, 2006** |    | **During                the Six months period ended June 30, 2007** |   | **For                the Period from March 11, 1998 to June 30, 2007** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------|---------|---------------------------------------------------------------------|--------|------------------------------------------------------------------------|--------|
| Number                of shares of post-split adjusted common stock to founders                                                            |   |                                                                | — |                                                                |   | —                                                                |   |   | 99,750,000 |   |
| Number                of shares of post-split adjusted common stock for services                                                           |   |                                                                | — |                                                                |   | —                                                                |   |   | 583,000 |   |
| Beneficial                conversion feature in connection with issuance of convertible notes                payable Series I, II, and IIa |   |                                                                | — |                                                                |   | —                                                                |   |   | 2,050,000 |   |
| Number                of convertible preferred stock converted to common stock                                                             |   |                                                                | — |                                                                |   | —                                                                |   |   | 52,850 |   |
|                                                                                                                                       |   |                                                                |    |                                                                |   |                                                                   |   |   |   |   |
| Above                convertible preferred stock converted to common stock                                                                 |   |                                                                | — |                                                                |   | —                                                                |   |   | 5,285,000 |   |
| Number                of convertible notes payable converted to common stock                                                               |   |                                                                | — |                                                                |   | —                                                                |   |   | 14,862,200 |   |
| Above                convertible notes payable converted to common stock                                                                   |   |                                                                | — |                                                                |   | —                                                                |   |   | 5,877,550 |   |
| Amount                of Senior secured convertible notes payable converted to uncommitted                common stock (a)                 |   |                                                                | — |                                                                | $      | 6,743,707                                                              |   | $ | 8,641,221 |   |
| Senior                secured convertible notes payable converted to uncommitted                common                                     |   |                                                                | — |                                                                |   | 7,111,141                                                              |   |   | 8,190,612 |   |
| Amount                of senior secured convertible notes payable converted to committed                common                             |   |                                                                | — |                                                                |   | —                                                                |   |   | — |   |
| Senior                secured convertible notes payable converted to committed                common                                       |   |                                                                | — |                                                                |   | —                                                                |   |   | — |   |
|                                                                                                                                       |   |                                                                |    |                                                                |   |                                                                   |   |   |   |   |
|                                                                                                                                       |   |                                                                |    |                                                                |   |                                                                   |   |   |   |   |

----

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**NOTES      TO FINANCIAL STATEMENTS**

**(UNAUDITED)**

**JUNE      30, 2007**

**NOTE 1.      DESCRIPTION OF BUSINESS**

**NOTE 2.      BASIS OF PRESENTATION**

**Management’s      Plan**

|                                       |   | **As                of December****31,                2006** |   | **As                of June 30, 2007** |   |
|--------------------------------------------|--------|--------------------------------------------------------------|--------|----------------------------------------|--------|
|                                       |   |                                                         |   |                                   |   |
|                                       |   | ***(In                thousands)***                          |   |
|                                       |   |                                                         |   |                                   |   |
|                                       |   |                                                         |   |                                   |   |
| Cash                and cash equivalent    |   | $                                                            | 8,503  |                                   | $      | 863 |   |
| Restricted                cash             |   |                                                         | 172    |                                   |   | 175 |   |
| Stockholders’                deficit |   |                                                         | (2,890 | )                                      |   | (16,497 | ) |

|                             |   | **Three                Months Ended****June                30, 2006** |   | **Three                Months Ended****June                30, 2007** |   |
|----------------------------------|--------|-----------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|
|                             |   |                                                                  |   |                                                                  |   |
|                             |   | ***(In                thousands)***                                   |   |
|                             |   |                                                                  |   |                                                                  |   |
| Net                Income (Loss) |   | $                                                                     | 5,312  |                                                                  | $      | (16,412 | ) |

|   |   |   | On                May 21, 2007 the company entered into an agreement to sell in a private                offering 15,000,000 shares of the Company’s Common Stock at $1.00 per                share for a total of $15,000,000. There are no registration rights,                warrants, other dilutive securities or modifications of security                holders’                rights. |
|--------|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • |   | Developing                additional sources of debt and equity financing to satisfy the Company’s                current and future operating                requirements. |
|--------|---------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • |   | Pursuing                opportunities for licensing of drug indications for co-development,                clinical trials, marketing and distribution.                  |
|--------|---------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |   |                                                                                                                                                                     |
|   | • |   | Pursuing                opportunities for partnerships and joint ventures for co-development,                clinical trials, marketing and                distribution. |

----

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**NOTES      TO FINANCIAL STATEMENTS—(Continued)**

**(UNAUDITED)**

**JUNE      30, 2007**

**NOTE 3.      TRANSACTIONS AND CONTRACTUAL RELATIONSHIPS WITH AFFILIATED      ENTITIES**

|   | • |   | Phage                is a developer of recombinant protein pharmaceuticals; certain of                the                Company’s officers and directors control 27% and the Company controls 4.3%                of the common stock of Phage; |
|--------|---------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • |   | CPI                is a distributor for the future products for both Cardio and Phage                in                locations throughout the world other than United States and Canada,                Europe, Japan, and, with respect to Cardio only, the Republic of                Korea,                China, and Taiwan. Cardio and Phage each own approximately 43% of                CPI and                each has the right to appoint 45% of CPI’s                directors. |
|--------|---------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • |   | Sribna                    was developing a treatment for cancer utilizing cancer cell apoptosis                    (currently inactive); |
|--------|---------|--------|------------------------------------------------------------------------------------------------------------------------------------------|

|   | • |   | Proteomics                        was developing a non-injection method for medical protein                        (currently                        inactive); |
|--------|---------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • |   | Zhittya                          was researching adult stem cells (currently inactive);                          and |
|--------|---------|--------|----------------------------------------------------------------------------------------------------------------------|

|   | • |   | Qure                            was developing commercial medical applications (currently                            inactive); Qure                            owns less than 1% of the Company’s common                            stock. |
|--------|---------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Joint      Patent Agreement**

----

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**NOTES      TO FINANCIAL STATEMENTS—(Continued)**

**(UNAUDITED)**

**JUNE      30, 2007**

|                                          |   | **Six                Months Ended****June                30, 2006** |   | **Six                Months Ended****June                30, 2007** |   | **For                the Period from March 11, 1998 (inception) to June 30,                2007** |   |
|-----------------------------------------------|--------|---------------------------------------------------------------------|--------|---------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|--------|
|                                          |   |                                                                |   |                                                                |   |                                                                                              |   |
|                                          |   | ***(In                thousands)***                                 |   |
|                                          |   |                                                                |   |                                                                |   |                                                                                              |   |
| Technical                development services |   | $                                                                   | 806    |                                                                | $      | 927                                                                                               |   | $ | 4,863 |   |
|                                          |   |                                                                |        |                                                                |   |                                                                                                   |   |   |   |   |

|                                                    |   | **Six                Months Ended****June                30, 2006** |   | **Six                Months Ended****June                30****,                2007** |   | **For                the Period from March 11, 1998 (inception) to June 30,                2007** |   |
|---------------------------------------------------------|--------|---------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|--------|
|                                                    |   |                                                                |   |
|                                                    |   | ***(In                thousands)***                                 |   |
|                                                    |   |                                                                |   |                                                                                   |   |                                                                                              |   |
| Administrative                support provided by Phage |   | $                                                                   | 96     |                                                                                   | $      | 26                                                                                                |   | $ | 1,186 |   |

**Distribution      Agreement**

**Royalty      Agreement**

**Asia      Exclusive Patent License and Distribution Agreement**

----

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**NOTES      TO FINANCIAL STATEMENTS—(Continued)**

**(UNAUDITED)**

**JUNE      30, 2007**

**Guaranty      of Rental Agreements for Phage (Now Terminated)**

**Guaranty      from Daniel C. Montano**

----

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**NOTES      TO FINANCIAL STATEMENTS—(Continued)**

**(UNAUDITED)**

**JUNE      30, 2007**

**NOTE 4.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

**Development      Stage Enterprise**

**Stock      Split**

**Use      of Estimates**

**Cash      and Cash Equivalents**

**Restricted      Cash**

|                           |   | **As                of****December                31, 2006** |   | **As                of****June                30, 2007** |   |
|--------------------------------|--------|--------------------------------------------------------------|--------|----------------------------------------------------------|--------|
|                           |   |                                                         |   |                                                     |   |
|                           |   | ***(In                thousands)***                          |   |
|                           |   |                                                         |   |                                                     |   |
| Restricted                cash |   | $                                                            | 172    |                                                     | $      | 175 |   |

**Property,      Plant, and Equipment**

----

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**NOTES      TO FINANCIAL STATEMENTS—(Continued)**

**(UNAUDITED)**

**JUNE      30, 2007**

**Deferred      Rent**

**Income      Taxes**

|                                             |   | **As                of****December                31, 2006** |   | **As                of****June                30, 2007** |   |
|--------------------------------------------------|--------|--------------------------------------------------------------|--------|----------------------------------------------------------|--------|
| Net                Operating Loss carry forward: |   | ***(In                thousands)***                          |   |
|                                             |   |                                                         |   |                                                     |   |
| Federal                income taxes              |   | $                                                            | 45,147 |                                                     | $      | 56,324 |   |
| State                income taxes (California)   |   |                                                         | 44,185 |                                                     |   | 55,361 |   |

|                                                                 |                                | **As                of****June                30, 2007** |   |
|----------------------------------------------------------------------|-------------------------------------|----------------------------------------------------------|--------|
|                                                                 | ***(In                thousands)*** |
|                                                                 |                                |                                                     |   |
| Federal                research and development credit carry forward | $                                   | 727                                                      |   |

|                                      |                                | **Three                Months Ended****June                30, 2007** |   |
|-------------------------------------------|-------------------------------------|-----------------------------------------------------------------------|--------|
|                                      | ***(In                thousands)*** |
|                                      |                                |                                                                  |   |
| Recognized                tax benefit (a) | $                                   | 7,146                                                                 |   |
|                                      |                                |                                                                  |   |

**Fair      Value of Financial Instruments**

----

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**NOTES      TO FINANCIAL STATEMENTS—(Continued)**

**(UNAUDITED)**

**JUNE      30, 2007**

**Valuation      of Derivative Instruments**

*”*

**Research      and Development Costs**

**Non-monetary      Transactions**

**Deferred      Financing Costs**

|                                                        |          | **As                of****December                31, 2006** |   | **As                of****June                30,****2007** |   |
|-------------------------------------------------------------|---------------|--------------------------------------------------------------|--------|-------------------------------------------------------------|--------|
|                                                        |          |                                                         |   |                                                        |   |
|                                                        |          | ***(In                thousands)***                          |   |
|                                                        |          |                                                         |   |                                                        |   |
| Deferred                financing costs (a)                 |   $ | 1,883                                                        | $      | 1,160                                                       |   |
| Amortization                of the deferred costs           |          | 402                                                          |   | 765                                                         |   |
| Deferred                financing cost, net of amortization |          | 1,481                                                        |   | 395                                                         |   |

----

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**NOTES      TO FINANCIAL STATEMENTS—(Continued)**

**(UNAUDITED)**

**JUNE      30, 2007**

**Marketing      Expense**

|                              |   | **As                of****June                30, 2006** |   | **As                of****June                30, 2007** |   |
|-----------------------------------|--------|----------------------------------------------------------|--------|----------------------------------------------------------|--------|
|                              |   | ***(In                thousands)***                      |   |
|                              |   |                                                     |   |                                                     |   |
| Marketing                expenses |   | $                                                        | 1,700  |                                                     | $      | 190 |   |

**Concentrations      of Credit Risk**

|                          |   | **As                of****December                31, 2006** |   | **As                of****June                30, 2007** |   |
|-------------------------------|--------|--------------------------------------------------------------|--------|----------------------------------------------------------|--------|
|                          |   | ***(In                thousands)***                          |   |
|                          |   |                                                         |   |                                                     |   |
| Uninsured                Cash |   | $                                                            | 8,475  |                                                     | $      | 839 |   |

**Loss      per Share**

|                                     |                                       |                          |         |                      |
|------------------------------------------|--------------------------------------------|-------------------------------|--------------|---------------------------|
|                                     |                                  | **December 31,****2006** |    | **June 30,****2007** |
|                                     | ***(Shares                in thousands)*** |
| Stock                options             |                                  | 2,455                         |    | 1,159                     |
| Warrants                                 |                                  | 110                           |    | 172                       |
| Convertible                notes payable |                                  | 467                           |    | 2,153                     |

**Stock-Based      Compensation**

*“*

----

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**NOTES      TO FINANCIAL STATEMENTS—(Continued)**

**(UNAUDITED)**

**JUNE      30, 2007**

|                                                |   | **Six                Months****Ended****June                30, 2006** |   | **Six                Months Ended****June                30, 2007** |   |
|-----------------------------------------------------|--------|------------------------------------------------------------------------|--------|---------------------------------------------------------------------|--------|
|                                                |   | ***(In                thousands)***                                    |   |
|                                                |   |                                                                   |   |                                                                |   |
| Stock-based                compensation expense (a) |   | $                                                                      | 727    |                                                                | $      | 111 |   |

|                                                                  |   |                                |   | **Quarter                Ended****June                30, 2007** |   |
|-----------------------------------------------------------------------|--------|-------------------------------------|--------|------------------------------------------------------------------|--------|
|                                                                  |   | ***(In                thousands)*** |
|                                                                  |   |                                |   |                                                             |   |
| Stock-based                compensation in research and development   |   |                                | $      | 34                                                               |   |
|                                                                  |   |                                |   |                                                             |   |
| Stock-based                compensation in general and administration |   |                                | $      | 20                                                               |   |

**Stock      based compensations for options granted in 2006 and      2007:**

|                  |         |                                                   |         |                                |         |                                         |         |                                                         |         |                                       |   |   |
|-----------------------|--------------|--------------------------------------------------------|--------------|-------------------------------------|--------------|----------------------------------------------|--------------|--------------------------------------------------------------|--------------|--------------------------------------------|--------|--------|
| **Period**            |    | **Estimated Fair****Market                Value** |    | **Expected****Volatility (%)** |    | **Risk-Free Interest Rate****(%)** |    | **Weighted Average****Expected Life (years)** |    | **Expected****Dividend Yield****(%)** |   |
|                  |         |                                                   |         |                                |         |                                         |         |                                                         |         |                                       |   |   |
| 1st Quarter-2006 |    | $                                                      | 240,254      |                           | 76           |                                    | 4.785        |                                                    | 5            |                                  | 0      |   |
| 2nd Quarter-2006 |    |                                                   | 13,270       |                           | 79           |                                    | 5.125        |                                                    | 5            |                                  | 0      |   |
| 3rd Quarter-2006 |    |                                                   | 11,272       |                           | 77           |                                    | 4.570        |                                                    | 10           |                                  | 0      |   |
| 4th Quarter-2006 |    |                                                   | 235,920      |                           | 77           |                                    | 4.670        |                                                    | 10           |                                  | 0      |   |
| Total-2006            |    | $                                                      | 500,716      |                           |         |                                    |         |                                                    |         |                                  |   |   |
| 1st Quarter-2007 |    |                                                   | 309          |                           | 69           |                                    | 4.640        |                                                    | 10           |                                  | 0      |   |
| 2nd Quarter-2007 |         |                                                   | 1,982        |                                | 68           |                                         | 4.480        |                                                         | 10           |                                       | 0      |   |
| Total-2007            |    | $                                                      | 2,291        |                           |         |                                    |         |                                                    |         |                                  |   |   |

----

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**NOTES      TO FINANCIAL STATEMENTS—(Continued)**

**(UNAUDITED)**

**JUNE      30, 2007**

**Recently      Issued Accounting Pronouncements**

*”,*
*“*
*”.      *

----

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**NOTES      TO FINANCIAL STATEMENTS—(Continued)**

**(UNAUDITED)**

**JUNE      30, 2007**

**NOTE 5.      CASH, CASH EQUIVALENTS AND RESTRICTED CASH**

|                           |         |                          |         |                      |   |   |
|--------------------------------|--------------|-------------------------------|--------------|---------------------------|--------|--------|
|                           |    | **December 31,****2006** |    | **June 30,****2007** |
|                           |    | ***(In thousands)***     |
| Cash                in bank    |    | $                             | 8,503        |                 | $      | 863    |
| Restricted                cash |    |                               | 172          |                 |   | 175    |
| Total                          |    | $                             | 8,675        |                 | $      | 1,038  |

**NOTE 6.      PREPAID AND OTHER CURRENT ASSETS**

|                                                                |         |                          |         |                      |   |    |
|---------------------------------------------------------------------|--------------|-------------------------------|--------------|---------------------------|--------|---------|
|                                                                |    | **December 31,****2006** |    | **June 30,****2007** |
|                                                                |    | ***(In thousands)***     |
| Prepaid                clinical trial costs (a)                     |    | $                             | 142          |                 | $      | 312     |
| Prepaid                clinical trial costs—related party (b) |    |                          | 396          |                 |   | — |
| Prepaid                insurance (c)                                |    |                          | 83           |                 |   | 188     |
| Prepaid                professional and legal fees (d)              |    |                          | 312          |                 |   | 80      |
| Prepaid                trade shows (e)                              |    |                          | 51           |                 |   | — |
| Prepaid                and current assets (other) (f)               |    |                          | 282          |                 |   | 174     |
| Total                                                               |    | $                             | 1,266        |                 | $      | 754     |

|   | (a) | Includes                prepaid amounts associated with clinical trials conducted by contractors                such as: bioRASI, Perry Scientific, Beacon Bioscience and Orthopaedic                Education & Research. The balance includes $138,000                for                clinical trial study involving magnetic resonance imaging (“MRI”) of                patients with chronic back pain. These amounts are to be applied                against                the final invoices and will be recognized in our “Statement of Operations”                as research and development upon the completion of these                trials. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | Includes                a prepaid amount to Phage Biotechnology a related party. In August                2006,                the Company requested Phage conduct the pack-and-fill of the drug                product                for the PAD Phase I clinical trial. The Company agreed to have Phage                conduct the pack-and-fill provided Phage does not exceed the amount                of the                third-party proposal the Company received. The Company has paid $396,000                to Phage for this project as of June 30, 2007. Phage has performed                per the Company’s contract and is waiting for delivery instructions from                the Company. The Company has recognized this expense in our “Statement of                Operations” as research and development during the second quarter of                2007. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | Includes                prepaid insurance associated with directors and officers which is                amortized over a 12 month period to our “Statement of Operations” as                general and administrative expense. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (d) | Includes                prepaid professional and legal fees associated with SEC counsel,                research                and development studies, tax advisory services, legal retainer fees                and                investor relations programs. Legal prepayments are retainer amounts                required by our legal providers to initiate services. These retainers                remain recorded as prepaid until the relationship or the project                is                completed. At that time, these retainers will be recognized in our                “Statement of Operations” as legal expense. (Includes $50,000 legal                counseling fees and $19,000 of research                study). |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (e) | Includes                prepaid amounts associated with trade shows in San Francisco, Florida,                London, Las Vegas and Washington D.C. These items will be recognized                in                our “Statement of Operations” as general and administrative expense as                they occur. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (f) | Includes                $48,935 of rent for July 2007. Include other prepaid associated with                software licensing, office expenses, and miscellaneous consulting                fees.                These items will be recognized in our “Statement of Operations” as general                and administrative expense as they                occur. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**NOTES      TO FINANCIAL STATEMENTS—(Continued)**

**(UNAUDITED)**

**JUNE      30, 2007**

|   | (a) | Includes                prepaid amounts associated with clinical trials conducted by contractors                such as: bioRASI, Inc. These amounts are to be applied against the                final                invoices and will be recognized in our “Statement of Operations” as                research and development upon the completion of these                trials. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | Is                a prepaid amount to Phage Biotechnology a related party. In August                2006,                the Company requested Phage conduct the pack-and-fill of the drug                product                for the PAD Phase I clinical trial. The Company agreed to have Phage                conduct the pack-and-fill provided Phage does not exceed the amount                of the                third-party proposal the Company received. The Company has paid $396,000                to Phage for this project as of March 31, 2007. Phage has performed                per the Company’s contract and is waiting for delivery instructions from                the Company. The Company will recognize this expense in our “Statement of                Operations” as research and development upon transfer of the goods in                2007. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | Includes                prepaid insurance associated with directors and officers which is                amortized over a 12 month period to the “Statement of Operations” as                general and administrative expense. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (d) | Includes                prepaid legal fees associated with investor relations, SEC counsel,                tax                advisory services and legal retainer fees. Legal prepayments are                retainer                amounts required by our legal providers to initiate services. These                retainers remain recorded as prepaid until the relationship or the                project                is completed. At that time, these retainers will be recognized in                our                “Statement of Operations” as legal                expense. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (e) | Includes                prepaid amounts associated with trade shows in San Francisco, London,                Las                Vegas and Washington D.C. These items will be recognized in our “Statement                of Operations” as general and administrative expense as they                occur. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (f) | Includes                $50,848 prepaid amounts associated with consultants who are paid                in the                beginning of each month, and $47,704 of rent. These items will be                recognized in our “Statement of Operations” as general and administrative                expense as they occur. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**NOTE 7.      PROPERTY AND EQUIPMENT**

|                                                                    |   |  **December 31,****2006**         |   |  **June 30,****2007** |   |
|-------------------------------------------------------------------------|--------|---------------------------------------------|--------|---------------------------------|--------|
|                                                                    |   |  ***(In thousands)***   |   |
| Furniture,                  fixtures, computer software, and equipment  |   | $                                           | 679    |                            | $      | 733 |   |
| Scientific                  equipment                                   |   |                                        | 86     |                            |   | 86 |   |
| Leasehold                  improvements                                 |   |                                        | 286    |                            |   | 288 |   |
| Less                  accumulated depreciation                          |   |                                        | (164   | )                               |   | (305 | ) |
| Property                  and equipment net of accumulated depreciation |   | $                                           | 887    |                            | $      | 802 |   |

|                                    |   |                                |   | **As                of****June                30, 2006****(Unaudited)** |   | **As                of****June                30, 2007****(Unaudited)** |   | **For                the Period from March 11, 1998 (inception) to June 30,                2007****(Unaudited)** |   |
|-----------------------------------------|--------|-------------------------------------|--------|-------------------------------------------------------------------------|--------|-------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------|--------|
|                                    |   |                                |   |                                                                    |   |                                                                    |   |                                                                                                             |   |
|                                    |   | ***(In                thousands)*** |   |
| Depreciation                expense (a) |   |                                |   |                                                                    | $      | 46                                                                      |   | $                                                                                                                | 141    |   | $ | 311 |   |
|                                    |   |                                |   |                                                                    |   |                                                                    |   |                                                                                                             |   |   |   |   |   |

**NOTE 8.      DUE TO AND FROM AFFILIATES**

|                          |         |                          |   |   |                      |   |    |   |
|-------------------------------|--------------|-------------------------------|--------|--------|---------------------------|--------|---------|--------|
|                          |    | **December 31,****2006** |   |   | **June 30,****2007** |   |
|                          |    | ***(In thousands)***     |   |
| Due                to Phage   |    | $                             | (111   | )      |                      | $      | — |   |
| Due                from Phage |    |                          | 38     |   |                      |   | 14      |   |
| Total                         |    | $                             | (73    | )      |                      | $      | 14      |   |
|                          |    |                          |   |   |                      |   |    |   |

----

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**NOTES      TO FINANCIAL STATEMENTS—(Continued)**

**(UNAUDITED)**

**JUNE      30, 2007**

**NOTE 9.      CONVERTIBLE NOTES PAYABLE **

**Convertible      Senior Secured Notes**

| **Period**                                     |         | **Fair                valued at March 31, 2007** |                                | **Fair                valued from March 31, 2007 to May 21, 2007** |    | **Fair                Valued from****May                21, 2007 to****May                21, 2007** |    | **Fair                Valued from****May                21, 2007 to****June                30, 2007** |    | **Net                Decrease (Increase) Recorded as Adjustment to Fair                Value** |
|------------------------------------------------|--------------|--------------------------------------------------|-------------------------------------|--------------------------------------------------------------------|--------------|------------------------------------------------------------------------------------------------------|--------------|-------------------------------------------------------------------------------------------------------|--------------|------------------------------------------------------------------------------------------------|
|                                           |         |                                             | ***(In                thousands)*** |
| Warrants                                       | $            |   61                                   |                                     | $                                                                  | 7            |                                                                                            | $            | 1,566                                                                                                 |    | $                                                                                              | 2,058 |    | $ | (1,997) |
| Convertibility                Feature          |         |   84                                   |                                |                                                               | 8            |                                                                                            |         | 3,433                                                                                                 |    |                                                                                           | 3,998 |    |   | (3,914) |
| Interest                Convertibility Feature |    | 40                                               |                                |                                                          | 14           |                                                                                                 |    | 15                                                                                                    |         |                                                                                      | 414 |   |   | (374) |
| Total                                          | $            | 185                                              |                                     | $                                                                  | 29           |                                                                                            | $            | 5,014                                                                                                 |    | $                                                                                              |  6,470 |    | $ | (6,285) |

**Conversion      of senior secured notes:**

|                             |         |                                                                        |         |                                                |         |                              |         |                                                                                 |         |   |    |
|----------------------------------|--------------|-----------------------------------------------------------------------------|--------------|-----------------------------------------------------|--------------|-----------------------------------|--------------|--------------------------------------------------------------------------------------|--------------|--------|---------|
| **Period**                       |    | **Amount of Senior****Secured                Notes****Converted** |    | **Converted to****Number of Shares** |    | **Average Share Price** |    | **Interest Paid During****the Period with****Common Stock** |
|                             |         |                                                                        |         |                                                |         |                              |         |                                                                                 |         |   |    |
| 3rd                quarter- 2006 |    | $                                                                           | 295,723      |                                           | 110,500      |                         | $            | 2.76                                                                                 |    | $      | 7,576   |
| 4th                quarter -2006 |    |                                                                        | 1,601,791    |                                           | 968,971      |                         |         | 1.84                                                                                 |    |   | 25,454  |
| Total                -2006       |    | $                                                                           | 1,897,514    |                                           | 1,079,471    |                         |         |                                                                                 |    | $      | 33,030  |
| 1st                quarter -2007 |    |                                                                        | 3,493,266    |                                           | 3,655,993    |                         |         | 1.00                                                                                 |    |   | 72,225  |
| 2nd                quarter-2007  |         |                                                                        | 3,250,441    |                                                | 3,455,148    |                              |         | 0.99                                                                                 |         |   | 32,409  |
| Total                -2007       |    | $                                                                           | 6,743,707    |                                                | 7,111,141    |                              |         |                                                                                 |    | $      | 104,634 |

----

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**NOTES      TO FINANCIAL STATEMENTS—(Continued)**

**(UNAUDITED)**

**JUNE      30, 2007**

|                                                                                                                   |   |   | ***(In thousands)*** |         |
|------------------------------------------------------------------------------------------------------------------------|--------|--------|---------------------------|--------------|
| Convertible                Notes at face value at March 20, 2006                                                  |   |   |                      | $            | 20,000 |   |
| Notes                  converted into common stock                                                                     |   |   |                           |         | (8,641 | ) |
| Convertible                Notes at face value at June 30, 2007                                                   |   |   |                           |         | 11,359 |   |
| Discounts                on Notes:                                                                                     |   |   |                           |         |   |   |
| Embedded                derivatives                                                                                    |   |   |                           |         | (4,655 | ) |
| Warrant                derivative                                                                                      |   |   |                           |    | (2,383 | ) |
| Net                convertible notes on June 30, 2007                                                             |   |   |                           |         | 4,321 |   |
| Amortization                of discount from derivatives                                                               |   |   |                           |         | 4,506 |   |
| Convertible                notes at June 30, 2007                                                                 |   |   |                           |         | 8,827 |   |
| Embedded                derivatives at fair value at June 30, 2007                                                |   |   |                           |         | 4,412 |   |
| Warrant                derivative at fair value at June 30, 2007                                                  |   |   |                           |         | 2,058 |   |
| Net                Convertible notes, embedded derivatives and warrant derivative at                June 30, 2007 |   |   |                      | $            | 15,297 |   |

| **Item #** |    | **Derivatives**                                             |    | **Definition**                                                                                                                                                                                                                                                                                                                                                                                                                            |
|-----------------|--------------|-------------------------------------------------------------|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 1               |    | Warrants                Derivative                          |    | The                Company sold warrants in connection with the sale of senior secured                convertible notes on March 20, 2006. The warrants were fair valued                at                March 20, 2006 and subsequently are revalued at the end of each                quarter.                                                                                                                                                   |
|            |         |                                                        |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 2               |    | Conversion                Feature Embedded Derivative       |    | As                part of the sale of the senior secured convertible notes on March                20,                2006, the buyer has the right to convert up to 10% of the initial                balance                in to common stock each month starting August 20, 2006. The conversion                feature derivatives were fair valued at March 20, 2006 and subsequently                are revalued at the end of each quarter. |
|            |         |                                                        |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 3               |         | Interest                Conversion Embedded Derivative      |         | As                part of the sale of the senior secured convertible notes at March                20,                2006, the Company has the right to pay interest with its common stock                upon                the registration effective June 12, 2006. The interest conversion                derivatives were fair valued at March 20, 2006 and subsequently are                revalued at the end of each quarter.             |
|            |         |                                                        |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 4               |         | Options                issued to non-employees Derivatives  |         | As                part of the sale of the senior secured convertible notes at March                20,                2006, the Company was required to reclassify previously and subsequently                issued options to non-employees as option derivatives which were                revalued                at the end of each quarter.                                                                                                   |
|            |         |                                                        |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 5               |    | Warrants                issued to non-employees Derivatives |    | As                part of the sale of the senior secured convertible notes at March                20,                2006, the Company was required to reclassify previously and subsequently                issued warrants to non-employees as warrant derivatives which were                revalued at the end of each                quarter.                                                                                                 |

----

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**NOTES      TO FINANCIAL STATEMENTS—(Continued)**

**(UNAUDITED)**

**JUNE      30, 2007**

| **Derivatives**                                                           |   | **Dividend                Yield %** |   | **Expected****Volatility                %** |   | **Risk-Free****Interest****%** |   | **Expected                Life (years)** |                       | **CVBT                Stock Price** |   |
|---------------------------------------------------------------------------|--------|-------------------------------------|--------|---------------------------------------------|--------|--------------------------------|--------|------------------------------------------|----------------------------|-------------------------------------|--------|
|                                                                      |   |                                |   |                                        |   |                           |   |                                     |                       |                                |   |
|                                                                      |   |                                |   |                                        |   |                           |   |                                     |                       |                                |   |
| Warrant                derivative - Convertible Note                      |   |                                |   |                                        |   |                           |   |                                     |                       |                                |   |   |   |   |   |   |
| As                of March 20, 2006                                       |   |                                | 0      |                                        |   | 74.6                           |   |                                     | 4.59                       |                                |   | 3 |   | $ | 7.15 |   |
| As                of December 31, 2006                                    |   |                                | 0      |                                        |   | 71.44                - 84.04   |   |                                     | 4.62                - 4.83 |                                |   | 2 |   | $ | 1.48 |   |
| March                31, 2007 - May 21, 2007                              |   |                                | 0      |                                        |   | 79.65                          |   |                                     | 4.74                       |                                |   | 2 |   | $ | 0.75 |   |
| May                21, 2007 - May 21, 2007                                |   |                                | 0      |                                        |   | 79.65                          |   |                                     | 4.74                       |                                |   | 2 |   | $ | 0.75 |   |
| May                21, 2007 - June 30, 2007                               |   |                                | 0      |                                        |   | 78.21                          |   |                                     | 4.89                       |                                |   | 2 |   | $ | 0.89 |   |
|                                                                      |   |                                |   |                                        |   |                           |   |                                     |                       |                                |   |   |   |   |   |   |
| Conversion                feature embedded derivative - Convertible Note  |   |                                |   |                                        |   |                           |   |                                     |                       |                                |   |   |   |   |   |   |
| As                of March 20, 2006                                       |   |                                | 0      |                                        |   | 74.6                           |   |                                     | 4.59                       |                                |   | 3 |   | $ | 7.15 |   |
| As                of December 31, 2006                                    |   |                                | 0      |                                        |   | 71.44                - 84.04   |   |                                     | 4.62                - 4.83 |                                |   | 2 |   | $ | 1.48 |   |
| March                31, 2007 - May 21, 2007                              |   |                                | 0      |                                        |   | 79.65                          |   |                                     | 4.74                       |                                |   | 2 |   | $ | 0.75 |   |
| May                21, 2007 - May 21, 2007                                |   |                                | 0      |                                        |   | 79.65                          |   |                                     | 4.74                       |                                |   | 2 |   | $ | 0.75 |   |
| May                21, 2007 - June 30, 2007                               |   |                                | 0      |                                        |   | 78.21                          |   |                                     | 4.89                       |                                |   | 2 |   | $ | 0.89 |   |
|                                                                      |   |                                |   |                                        |   |                           |   |                                     |                       |                                |   |   |   |   |   |   |
| Interest                Conversion embedded derivative - Convertible Note |   |                                |   |                                        |   |                           |   |                                     |                       |                                |   |   |   |   |   |   |
| As                of March 20, 2006                                       |   |                                | 0      |                                        |   | 74.6                           |   |                                     | 4.59                       |                                |   | 3 |   | $ | 7.15 |   |
| As                of December 31, 2006                                    |   |                                | 0      |                                        |   | 71.44                - 84.04   |   |                                     | 4.62                - 4.83 |                                |   | 2 |   | $ | 1.48 |   |
| March                31, 2007 - May 21, 2007                              |   |                                | 0      |                                        |   | 79.65                          |   |                                     | 4.74                       |                                |   | 2 |   | $ | 0.75 |   |
| May                21, 2007 - May 21, 2007                                |   |                                | 0      |                                        |   | 79.65                          |   |                                     | 4.74                       |                                |   | 2 |   | $ | 0.75 |   |
| May                21, 2007 - June 30, 2007                               |   |                                | 0      |                                        |   | 78.21                          |   |                                     | 4.89                       |                                |   | 2 |   | $ | 0.89 |   |
|                                                                      |   |                                |   |                                        |   |                           |   |                                     |                       |                                |   |   |   |   |   |   |
| Options                issued to non-employees derivative                 |   |                                |   |                                        |   |                           |   |                                     |                       |                                |   |   |   |   |   |   |
| As                of March 20, 2006                                       |   |                                | 0      |                                        |   | 74.6                           |   |                                     | 4.59                       |                                |   | (a | ) | $ | 7.15 |   |
| As                of December 31, 2006                                    |   |                                | 0      |                                        |   | 71.44                - 84.04   |   |                                     | 4.62                - 4.83 |                                |   | (a | ) | $ | 1.48 |   |
| March                31, 2007 - May 21, 2007                              |   |                                | 0      |                                        |   | 79.65                          |   |                                     | 4.74                       |                                |   | 2 |   | $ | 0.75 |   |
| May                21, 2007 - May 21, 2007                                |   |                                | 0      |                                        |   | 79.65                          |   |                                     | 4.74                       |                                |   | 2 |   | $ | 0.75 |   |
| May                21, 2007 - June 30, 2007                               |   |                                | 0      |                                        |   | 78.21                          |   |                                     | 4.89                       |                                |   | 2 |   | $ | 0.89 |   |
|                                                                      |   |                                |   |                                        |   |                           |   |                                     |                       |                                |   |   |   |   |   |   |
| Warrants                issued to non-employees derivative                |   |                                |   |                                        |   |                           |   |                                     |                       |                                |   |   |   |   |   |   |
| As                of March 20, 2006                                       |   |                                | 0      |                                        |   | 74.6                           |   |                                     | 4.59                       |                                |   | (a | ) | $ | 7.15 |   |
| As                of December 31, 2006                                    |   |                                | 0      |                                        |   | 71.44                - 84.04   |   |                                     | 4.62                - 4.83 |                                |   | (a | ) | $ | 1.48 |   |
| March                31, 2007 - May 21, 2007                              |   |                                | 0      |                                        |   | 79.65                          |   |                                     | 4.74                       |                                |   | 2 |   | $ | 0.75 |   |
| May                21, 2007 - May 21, 2007                                |   |                                | 0      |                                        |   | 79.65                          |   |                                     | 4.74                       |                                |   | 2 |   | $ | 0.75 |   |
| May                21, 2007 - June 30, 2007                               |   |                                | 0      |                                        |   | 78.21                          |   |                                     | 4.89                       |                                |   | 2 |   | $ | 0.89 |   |

----

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**NOTES      TO FINANCIAL STATEMENTS—(Continued)**

**(UNAUDITED)**

**JUNE      30, 2007**

| **Adjustments                to fair value of derivatives**                                             |   | **Balance                as of December 31, 2006** |   | **Adjustment                to Fair Value of Derivative** |   | **Net                Additions/ Deletions for new issuance****conversion,                exercise** |   | **Adjustment                to Paid in Capital** |    | **Balance                as of June 30, 2007** |   |
|---------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------|--------|-----------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|---------|------------------------------------------------|--------|
|                                                                                                    |   |                                               |   |                                                      |   |                                                                                                |   |                                             |    |                                           |   |
|                                                                                                    |   |                                               |   |                                                      |   |                                                                                                |   |                                             |    |                                           |   |
| Warrant                derivative - convertible note                                                    |   | $                                                  | 172    |                                                      | $      | 1,885                                                                                               |   | $                                                | — |                                           | $      | — |   | $ | 2,058 |   |
| Adjustment                to fair value of derivative included in other income                (expense) |   |                                               | 172    |                                                      |   | 1,885                                                                                               |   |                                             | — |                                           |   | — |   |   | 2,058 |   |
|                                                                                                    |   |                                               |   |                                                      |   |                                                                                                |   |                                             |    |                                           |   |   |   |   |   |   |
| Conversion                feature embedded derivative -convertible note                                 |   |                                               | 321    |                                                      |   | 7,529                                                                                               |   |                                             | — |                                           |   | (3,852 | ) |   | 3,998 |   |
| Interest                conversion feature embedded derivative - convertible note                       |   |                                               | 98     |                                                      |   | 1,135                                                                                               |   |                                             | — |                                           |   | (819 | ) |   | 414 |   |
| Total                embedded derivatives                                                               |   |                                               | 419    |                                                      |   | 8,664                                                                                               |   |                                             | — |                                           |   | (4,671 | ) |   | 4,412 |   |
|                                                                                                    |   |                                               |   |                                                      |   |                                                                                                |   |                                             |    |                                           |   |   |   |   |   |   |
| Option                derivative - non-employees                                                        |   |                                               | 1,406  |                                                      |   | (1,077                                                                                              | )      |                                             | 28      |                                           |   | 436 |   |   | 793 |   |
| Warrant                derivative - non-employees                                                       |   |                                               | 366    |                                                      |   | (609                                                                                                | )      |                                             | 400     |                                           |   | — |   |   | 157 |   |
| Total                warrant and options derivative non-employees                                       |   |                                               | 1,772  |                                                      |   | (1,686                                                                                              | )      |                                             | 428     |                                           |   | 436 |   |   | 950 |   |

----

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**NOTES      TO FINANCIAL STATEMENTS—(Continued)**

**(UNAUDITED)**

**JUNE      30, 2007**

| **Period**                                                 |   | **Options                Granted** |    | **Exercise                Price -****Non-Employees** |   | **Estimated****Fair                Value on the date options granted or Transferred** |   | **Fair                Value of Portion Vested as of****June                30, 2007** |    | **Option                Derivatives** |   | **Transfer                of fully vested employee stocks to non-employee** |   |
|------------------------------------------------------------|--------|------------------------------------|---------|------------------------------------------------------|--------|---------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------|---------|---------------------------------------|--------|-----------------------------------------------------------------------------|--------|
|                                                       |   |                               |    |                                                 |   |                                                                                  |   |                                                                                  |    |                                  |   |                                                                        |   |
| During                quarter ended December 31, 2006 (a)  |   |                               | 150,000 |                                                 | $      | 10.00                                                                                 |   | $                                                                                     | 228,000 |                                  | $      | 14,242                                                                      |   | $ | 97,913 |   |   | — |   |
| During                the quarter ended March 31, 2007 (b) |   |                               | — |                                                 |   | 0.30                                                                                  |   |                                                                                  | 435,600 |                                  |   | —                                                                     |   |   | — |   |   | 440,000 |   |
| During                the quarter ended June 30, 2007      |   |                               | — |                                                 |   | —                                                                               |   |                                                                                  | — |                                  |   | —                                                                     |   |   | — |   |   | — |   |
|                                                       |   |                               |    |                                                 |   |                                                                                  |   |                                                                                  |    |                                  |   |                                                                        |   |   |   |   |   |   |   |

| **Adjustments                to fair value**                                                                |   | **At                March 31, 2007** |   |  **At                June 30, 2007** |   |
|-------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|--------|-------------------------------------------|--------|
|                                                                                                        |   |                                 |   |                                 |   |
|                                                                                                        |   | ***(In                thousands)***  |   |
|                                                                                                        |   |                                 |   |                                 |   |
| Adjustment                to the fair value of option derivatives for option derivatives                (a) |   | $                                    | (64    | )                                         | $      | (913 | ) |
| Adjustment                to the fair value of warrants derivatives for warrant                derivatives  |   |                                 | (488   | )                                         |   | (609 | ) |
| Total                adjustments to fair value                                                              |   | $                                    | (552   | )                                         | $      | (1,522 | ) |
|                                                                                                        |   |                                 |   |                                      |   |   |   |

** **

----

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**NOTES      TO FINANCIAL STATEMENTS—(Continued)**

**(UNAUDITED)**

**JUNE      30, 2007**

| **Stock                Option Transactions- Non-Employees** |   | **Number                of Option****Exercised** |    |  **Dividend                Yield****%** |   | **Expected                Volatility****%** |   |   **Risk                Free Interest****Rate                %** |                        | **Expected                Remaining Life****(                years)** |   | **Decrease****In                the FV of Option Derivatives** |   |
|-------------------------------------------------------------|--------|--------------------------------------------------|---------|----------------------------------------------|--------|---------------------------------------------|--------|----------------------------------------------------------------------------|-----------------------------|-----------------------------------------------------------------------|--------|----------------------------------------------------------------|--------|
|                                                        |   |                                             |    |                                    |   |                                        |   |                                                                  |                        |                                                                  |   |                                                           |   |
| Quarter                1- 2007                              |   |                                             | 160,000 |                                         |   | 0                                           |   |                                                                       | 70.97                -71.15 |                                                                  |   | 4.45-4.87                                                      |   |   | 2.80-3.03 |   | $ | 122,698 |   |
| Quarter                2- 2007                              |   |                                             | 180,000 |                                         |   | 0                                           |   |                                                                       | 69.58-70.94                 |                                                                  |   | 4.55-4.98                                                      |   |   | 2.50 |   |   | 163,400 |   |
| Total-2007                                                  |   |                                             | 340,000 |                                         |   |                                        |   |                                                                       |                             |                                                                  |   |                                                           |   |   |   |   | $ | 286,098 |   |

| **Warrant                Transactions- Non-Employees Office/Director** |   | **Warrants                issued** |    | **Dividend                Yield %** |   | **Expected****Volatility                %** |   | **Risk-Free****Interest****%** |   | **Expected                Life (years)** |   | **FV                on the date warrants granted** |   | **Exercise                price** |   |
|------------------------------------------------------------------------|--------|------------------------------------|---------|-------------------------------------|--------|---------------------------------------------|--------|--------------------------------|--------|------------------------------------------|--------|----------------------------------------------------|--------|-----------------------------------|--------|
|                                                                   |   |                               |    |                                |   |                                        |   |                           |   |                                     |   |                                               |   |                              |   |
| April                -2006 (a)                                         |   |                               | 250,000 |                                |   | 0                                           |   |                           | 79     |                                     |   | 5.125                                              |   |                              | 10     |   | $ | 1,602,500 |   | $ | 10.00 |   |

|                                                                                                                                              |         |                                |   |   |                                           |   |    |                                             |   |   |                                        |   |   |   |                |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------|--------------|-------------------------------------|--------|--------|------------------------------------------------|--------|---------|--------------------------------------------------|--------|--------|---------------------------------------------|--------|--------|--------|---------------------|--------|
|                                                                                                                                              |    | **Deferred****Finance****Costs**    |   |   | **Discount for****Warrant****Derivative** |   |    | **Discount for****Embedded****Derivatives** |   |   | **Addition to****Interest****Expense** |   |
|                                                                                                                                              |    | ***(In                thousands)*** |   |
| Balance                March 20, 2006 (close date)                                                                                           |    | $                                   | 1,553  |   |                                           | $      | 2,383   |                                             |   | $      | 8,196                                       |   |   | $      | —   |   |
| Adjustment                on the estimated legal expenses on the convertible notes                                                                |    |                                | (23    | )      |                                           |   | — |                                             |   |   | —                                     |   |   |   | (23                 | )      |
| Percent                change for conversion to common stock for June 30,                2007                                                |    |                                | (662   | )      |                                           |   | — |                                             |   |   | (3,541                                      | )      |   |   | (4,202              | )      |
| Amortization                for the period March 20, 2006 (close date) through June 30, 2007                charged to interest expense |    |                                | (653   | )      |                                           |   | (1,015  | )                                                |   |   | (3,491                                      | )      |   |   | (5,159              | )      |
| Remaining                deferred costs and discount to be amortized                                                                              |    | $                                   | 215    |   |                                           | $      | 1,368   |                                             |   | $      | 1,164                                       |   |   | $      | (9,384              | )      |

**Daniel      C. Montano Guaranty**

----

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**NOTES      TO FINANCIAL STATEMENTS—(Continued)**

**(UNAUDITED)**

**JUNE      30, 2007**

**Pre      IPO Debt**

**Series      I Convertible Promissory Notes**

**Series      II Convertible Promissory Notes**

**Series      IIa Convertible Promissory Notes**

----

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**NOTES      TO FINANCIAL STATEMENTS—(Continued)**

**(UNAUDITED)**

**JUNE      30, 2007**

**Components      of Interest Expense**

| **Convertible                promissory notes series I, II, IIa**      |   | **Six                Months Ended****June                30, 2006** |    | **Six                Months Ended****June                30, 2007** |   | **For                the Period from March 11, 1998 (inception) to June 30,                2007** |   |
|------------------------------------------------------------------------|--------|---------------------------------------------------------------------|---------|---------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|--------|
|                                                                   |   |                                                                |    |                                                                |   |                                                                                              |   |
| Interest                expense from the beneficial conversion feature |   | $                                                                   | — |                                                                | $      | —                                                                                           |   | $ | 2,050,000 |   |
| Total                financing cost                                    |   |                                                                | — |                                                                |   | —                                                                                           |   |   | 2,135,715 |   |
| Interest                expense on series I, II, IIa                   |   |                                                                | — |                                                                |   | —                                                                                           |   |   | 1,357,285 |   |
| Total                                                                  |   | $                                                                   | — |                                                                | $      | —                                                                                           |   | $ | 5,543,000 |   |

| **Senior                secured convertible notes - Promethean** |   | **Six                Months Ended****June                30, 2006** |      | **Six                Months Ended****June                30, 2007** |   | **For                the Period from March 11, 1998 (inception) to June 30,                2007** |   |
|------------------------------------------------------------------|--------|---------------------------------------------------------------------|-----------|---------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|--------|
|                                                             |   |                                                                |      |                                                                |   |                                                                                              |   |
| Interest                expense                                  |   | $                                                                   | 689,927   |                                                                | $      | 899,198                                                                                           |   | $ | 3,715,426 |   |
| Amortization                of deferred financing cost           |   |                                                                | 143,797   |                                                                |   | 765,682                                                                                           |   |   | 7,269,247 |   |
| Amortization                of derivatives                       |   |                                                                | 979,527   |                                                                |   | 4,526,572                                                                                         |   |   | 1,168,313 |   |
| Total                                                            |   | $                                                                   | 1,813,251 |                                                                | $      | 6,191,452                                                                                         |   | $ | 12,152,986 |   |

**NOTE      10. STOCKHOLDERS’ EQUITY**

**Preferred      Stock**

----

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**NOTES      TO FINANCIAL STATEMENTS—(Continued)**

**(UNAUDITED)**

**JUNE      30, 2007**

**Common      Stock **

|                                                  |   | **For                the Year Ended** |                             | **Amount                Converted to Common Stock** |   | **Number                of Shareholders** |   | **Number                of Preferred Stock** |   | **Converted                to Common stock** |   |
|-------------------------------------------------------|--------|---------------------------------------|----------------------------------|-----------------------------------------------------|--------|-------------------------------------------|--------|----------------------------------------------|--------|----------------------------------------------|--------|
| Convertible                preferred shareholders (a) |   |                                  | December                31, 2004 |                                                |   |                                      |   |                                         | 11     |                                         |   | 28,100 |   |   | 2,810,000 |   |
| Convertible                Series I, II, IIa (notes)  |   |                                  | December                31, 2004 |                                                | $      | 4,531,200                                 |   |                                         |   |                                         |   |   |   |   | 1,649,550 |   |
| Convertible                notes payables (b)         |   |                                  | December                31, 2005 |                                                |   |                                      |   |                                         | 9      |                                         |   | 23,250 |   |   | 2,325,000 |   |

**Conversion      of senior secured notes:**
** **

| **Period**                            |    | **Amount of Senior****Secured                Notes****Converted** |    | **Converted to****Number of Shares** |    | **Average Share Price** |    | **Interest Paid During****the                Period with****common                stock** |
|---------------------------------------|--------------|-----------------------------------------------------------------------------|--------------|-----------------------------------------------------|--------------|-----------------------------------|--------------|-----------------------------------------------------------------------------------------------------|
| 3rd                quarter—2006 |    | $                                                                           | 295,723      |                                           | 110,500      |                         | $            | 2.76                                                                                                |    | $ | 7,576 |
| 4th                quarter—2006 |    |                                                                        | 1,601,791    |                                           | 968,971      |                         |         | 1.84                                                                                                |    |   | 25,454 |
| Total—2006                      |    | $                                                                           | 1,897,514    |                                           | 1,079,471    |                         |         |                                                                                                |    | $ | 33,030 |
| 1st quarter—2007           |    |                                                                        | 3,493,266    |                                           | 3,655,993    |                         |         | 1.00                                                                                                |    |   | 72,225 |
| 2nd                quarter—2007 |         |                                                                        | 3,250,441    |                                                | 3,455,148    |                              |         | 0.99                                                                                                |   |   | 32,409 |
| Total—2007                      |    | $                                                                           | 6,743,707    |                                           | 7,111,141    |                         |         |                                                                                                |    | $ | 104,634 |

**Stock      Option Transactions**

**Recent      option and warrant transactions:**

| **Date**                          |   | **Number of Option or****Warrant                Holders** |   | **Number of Options****Exercised** |   | **Number of Warrants Exercised** |   | **Exchange for Shares of****Common                Stock** |    |
|-----------------------------------|--------|--------------------------------------------------------------------------|--------|----------------------------------------------|--------|-------------------------------------------------|--------|--------------------------------------------------------------------------|---------|
| December                2005      |   |                                                                     | 1      |                                         |   | —                                         |   |                                                                     | 933,330 |   |   | 848,482 |   |
| Total-2005                        |   |                                                                     |   |                                         |   |                                       |   |                                                                     | 933,330 |   |   | 848,482 |   |
| 1st                quarter - 2006 |   |                                                                     | 1      |                                         |   | —                                         |   |                                                                     | 100,000 |   |   | 89,116 |   |
| 2nd                quarter - 2006 |   |                                                                     | 2      |                                         |   | 55,000                                          |   |                                                                     | — |   |   | 55,000 |   |
| 3rd                quarter - 2006 |   |                                                                     | 1      |                                         |   | 210,000                                         |   |                                                                     | — |   |   | 210,000 |   |
| 4th                quarter -2006  |   |                                                                     | 1      |                                         |   | 200,000                                         |   |                                                                     | — |   |   | 200,000 |   |
| Total-2006                        |   |                                                                     |   |                                         |   | 465,000                                         |   |                                                                     | 100,000 |   |   | 554,116 |   |
| 1st                quarter - 2007 |   |                                                                     | 1      |                                         |   | 220,000                                         |   |                                                                     | — |   |   | 220,000 |   |
| April                2007         |   |                                                                     | 1      |                                         |   | 60,000                                          |   |                                                                     | — |   |   | 60,000 |   |
| May                2007           |   |                                                                     | 1      |                                         |   | 40,000                                          |   |                                                                     | — |   |   | 40,000 |   |
| June                2007          |   |                                                                     | 1      |                                         |   | 80,000                                          |   |                                                                     | — |   |   | 80,000 |   |
| Total-2007                        |   |                                                                     |   |                                         |   | 400,000                                         |   |                                                                     | — |   |   | 400,000 |   |

----

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**NOTES      TO FINANCIAL STATEMENTS—(Continued)**

**(UNAUDITED)**

**JUNE      30, 2007**

**Stock      option granted for 2006 and 2007:**

| **Stock                Option Transactions** |    | **Options Granted** |    | **Exercise Price** |    | **Estimated Fair Value** |    | **Weighted Average****Expected Life (years)** |    | **Approximate****Volatility (%)** |
|----------------------------------------------|--------------|--------------------------|--------------|-------------------------|--------------|------------------------------------|--------------|--------------------------------------------------------------|--------------|----------------------------------------|
| February                2006 (a)             |    |                     | 50,000       |               | $            | 10.00                              |    | $                                                            | 234,830      |                              | 5 |    | 76 |
| March                2006 (b)                |    |                     | 1,250        |               |         | 10.00                              |    |                                                         | 5,424        |                              | 5 |    | 76 |
| 2nd                quarter - 2006 (b)        |    |                     | 3,000        |               |         | 10.00                              |    |                                                         | 13,270       |                              | 5 |    | 79 |
| 3rd                quarter - 2006 (b)        |    |                     | 4,800        |               |         | 10.00                              |    |                                                         | 11,272       |                              | 10 |    | 77 |
| 4th                quarter - 2006 (b)        |    |                     | 156,000      |               |         | 10.00                              |    |                                                         | 235,920      |                              | 10 |    | 77 |
| Total-2006                                   |    |                     | 215,050      |               |         |                               |    | $                                                            | 500,716      |                              |   |    |   |
|                                         |         |                     |         |                    |         |
| 1st                quarter - 2007 (b)        |    |                     | 500          |               |         | 10.00                              |    |                                                         | 309          |                              | 10 |    | 69 |
| April                2007 (b)                |         |                     | 3,000        |                    |         | 10.00                              |         |                                                         | 1,982        |                                   | 10 |   | 68.28 |
| May-2007                (b)                  |         |                     | —      |                    |         | —                            |         |                                                         | —      |                                   | — |   | — |
| June-2007                (b)                 |         |                     | —      |                    |         | —                            |         |                                                         | —      |                                   | — |   | — |
| Total-2007                                   |    |                     | 3,500        |               |         |                               |    | $                                                            | 2,291        |                              |   |    |   |

| (a) | All                options were issued for the past services and therefore expensed                on the                date of grant. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------|

| (b) | All                options were issued for future services and will be expensed over                the life                of the options. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------|

| **Stock                Option Transactions- Non-Employees** |   | **Number                of Options****Exercised** |    | **Dividend                Yield****%** |   | **Expected                Volatility****%** |   |   **Risk                Free Interest****Rate** |        | **Expected                Remaining Life** |   | **Decrease****In                the FV of Option Derivatives** |   |
|-------------------------------------------------------------|--------|---------------------------------------------------|---------|----------------------------------------|--------|---------------------------------------------|--------|-----------------------------------------------------------|-------------|--------------------------------------------|--------|----------------------------------------------------------------|--------|
| 1st                quarter - 2007                           |   |                                              | 160,000 |                                   |   | 0                                           |   |                                                      | 70.97-71.15 |                                       |   | 4.45-4.87                                                      |   |   | 2.80-3.03 |   | $ | 122,698 |   |
| 2nd                quarter - 2007                           |   |                                              | 180,000 |                                   |   | 0                                           |   |                                                      | 69.58-70.94 |                                       |   | 4.55-4.98                                                      |   |   | 2.50 |   |   | 163,400 |   |
| Total-2007                                                  |   |                                              | 340,000 |                                   |   |                                        |   |                                                      |             |                                       |   |                                                           |   |   |   |   | $ | 286,098 |   |

----

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**NOTES      TO FINANCIAL STATEMENTS—(Continued)**

**(UNAUDITED)**

**JUNE      30, 2007**

**Stock      option transactions for 2005 and prior years:**

| **Stock                Option Transactions- Non-Employees** |    | **Options Granted** |   | **Exercise Price** |   | **Estimated Fair Value** |    | **Weighted Average                Expected Life (years)** |    | **Risk                Free Rate of Interest (%)** |    | **Approximate****Volatility (%)** |    |
|-------------------------------------------------------------|--------------|--------------------------|--------|-------------------------|--------|------------------------------------|--------------|--------------------------------------------------------------------------|--------------|---------------------------------------------------|--------------|----------------------------------------|--------------|
| During                the year ended December 31, 2005 (a)  |         | 550,500                  | $      | 10.00                   | $      | 2,387,574                          |         | 5                                                                        |         | 4.06                                              |         | 76                                     |         |
| During                the year ended December 31, 2004 (b)  |         | 40,000                   |   | —            |   | 57,792                             |         | 5                                                                        |         | 1.03                to 1.50                       |         | 76                                     |         |
| During                the year ended December 31, 2004 (c)  |         | 25,000                   |   | —            |   | 21,385                             |         | 5                                                                        |         | 1.02                                              |         | 76                                     |         |
| During                the year ended December 31, 2003      |         | 90,000                   |   | —            |   | 47,120                             |         | 5                                                                        |         | 1.39                                              |         | 76                                     |         |
| During                the year ended December 31, 2002 (d)  |    | —                  |   | —            |   | —                            |         | —                                                                  |         | —                                           |         | —                                |         |
|                                                        |         |                     |   |                    |   |                               |         |                                                                     |         |                                              |         |                                   |         |

----

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**NOTES      TO FINANCIAL STATEMENTS—(Continued)**

**(UNAUDITED)**

**JUNE      30, 2007**

|                                                             |   |          |      |                    |   |        |   |                    |      |       |   |                    |   |
|------------------------------------------------------------------|--------|---------------|-----------|-------------------------|--------|-------------|--------|-------------------------|-----------|------------|--------|-------------------------|--------|
|                                                             |   | **Employees** |      | **Non-Employees**       |   | **Total**   |   |
|                                                             |   | **Shares**    |      | **Exercise Price** |   | **Shares**  |   | **Exercise Price** |      | **Shares** |   | **Exercise Price** |   |
| **Outstanding                at December 31, 2005**         |   |          | 1,170,500 |                    | $      | 0.30-$10.00 |   |                    | 1,990,500 |       | $      | 0.30-$10.00             |   |   | 3,161,000 |   | $ | 0.30-$10.00 |   |
| Granted                                                          |   |          | 15,050    |                    |   | 10.00       |   |                    | 200,000   |       |   | 10.00                   |   |   | 215,050 |   |   | 10.00 |   |
| Exercised                                                        |   |          | —   |                    |   | —     |   |                    | (465,000  | )          |   | 0.30-0.50               |   |   | (465,000 | ) |   | 0.30-0.50 |   |
| Forfeitures                                                      |   |          | —   |                    |   | —     |   |                    | —   |       |   | —                 |   |   | — |   |   | — |   |
| **Outstanding                at December 31, 2006**         |   |          | 1,185,550 |                    | $      | 0.30-$10.00 |   |                    | 1,725,500 |       | $      | 0.30-$10.00             |   |   | 2,911,050 |   | $ | 0.30-$10.00 |   |
| Granted                                                          |   |          | 3,500     |                    |   | 10.00       |   |                    | —   |       |   | —                 |   |   | 3,500 |   |   | 10.00 |   |
| Reclassified                                                     |   |          | (440,000  | )                       |   | 0.30        |   |                    | 440,000   |       |   | 0.30-0.50               |   |   | — |   |   | 0.30 |   |
| Exercised                                                        |   |          | (60,000   | )                       |   | 0.30        |   |                    | (340,000  | )          |   | 0.30                    |   |   | (400,000 | ) |   | 0.30-0.50 |   |
| Cancelled                                                        |   |          | (2000     | )                       |   | 10.00       |   |                    | (150,000  | )          |   | 10.00                   |   |   | (152,000 | ) |   | 10.00 |   |
| Forfeited                                                        |   |          | —   |                    |   | —     |   |                    | —   |       |   | —                 |   |   | — |   |   | — |   |
| **Outstanding                at June 30, 2007 (Unaudited)** |   |          | 687,050   |                    | $      | 0.30-$10.00 |   |                    | 1,675,500 |       | $      | 0.30-$10.00             |   |   | 2,362,550 |   | $ | 0.30-$10.00 |   |

|                                                                 |    | **Number                of****Shares** |    | **Weighted****Average****Exercise****Price** |    | **Weighted****Average****Remaining****Contractual****Life                Years** |    | **Intrinsic****Value** |
|----------------------------------------------------------------------|--------------|----------------------------------------|--------------|----------------------------------------------|--------------|----------------------------------------------------------------------------------|--------------|------------------------|
| **As                of December 31, 2006**                           |    |                                   |    |                                         |         |                                                                        |         |              |   |   |
| Employees—outstanding                                          |    | 1,185,550                              |    | $                                            | 1.80         |                                                                        | 3.86         |              | $ | 2,133,990 |
| Employees—expected                to vest                      |    | 229,758                                |    |                                         | 1.80         |                                                                        | 3.86         |              |   | 413,564 |
| Employees—exercisable                                          |    | 955,792                                |    |                                         | 1.80         |                                                                        | 3.86         |              |   | 1,720,425 |
| Non-Employees—outstanding                                      |    | 1,725,500                              |    |                                         | 3.61         |                                                                        | 6.21         |              |   | 1,221,300 |
| Non-Employees—expected                to Vest                  |    | 112,500                                |    |                                         | 10.00        |                                                                        | 9.75         |              |   | —   |
| Non                Employees—exercisable                       |    | 1,613,000                              |    |                                         | 3.61         |                                                                        | 6.21         |              |   | 1,221,300 |
| **As                of June 30,****2007                (Unaudited)** |    |                                   |    |                                         |         |                                                                        |         |              |   |   |
| Employees—outstanding                                          |    | 687,050                                |    |                                         | 2.91         |                                                                             | 4.19         |              |   | 295,000 |
| Employees—expected                to vest                      |    | 64,875                                 |    |                                         | 4.55         |                                                                             | 8.33         |              |   | — |
| Employees—exercisable                                          |    | 622,175                                |    |                                         | 2.17         |                                                                             | 4.19         |              |   | 295,000 |
| Non-Employees—outstanding                                      |    | 1,675,500                              |    |                                         | 2.84         |                                                                             | 5.65         |              |   | 669,650 |
| Non-Employees—expected                to vest                  |    | 90,632                                 |    |                                         | 7.39         |                                                                             | 9.44         |              |   | — |
| Non                Employees—exercisable                       |    | 1,584,868                              |    |                                         | 2.63         |                                                                             | 5.65         |              |   | 669,650 |

----

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**NOTES      TO FINANCIAL STATEMENTS—(Continued)**

**(UNAUDITED)**

**JUNE      30, 2007**

**Warrants**

**Warrants      have only been issued to outside parties and have never been issued to      employees: **

| **Warrant                activities prior to 2006** |   | **Warrants                issued for purchase of Common Stock** |    | **Estimated                Fair Value** |   | **Exercise                Price Per Share** |   | **Weighted Average                Expected Life ****(years)** |    | **Risk                Free Rate of Interest (%)** |   | **Approximate****Volatility (%)** |   | **Expected                Dividend Yield** |    |
|-----------------------------------------------------|--------|-----------------------------------------------------------------|---------|-----------------------------------------|--------|---------------------------------------------|--------|------------------------------------------------------------------------------|---------|---------------------------------------------------|--------|----------------------------------------|--------|--------------------------------------------|---------|
| December                2000 (a)                    |   |                                                            | 933,330 |                                    | $      | 115,475                                     |   | $                                                                            | 0.40    |                                              |   | 3.5                                    |   |                                       | 5.02    |   |   | 0 |   |   | 0 |   |
| January                2001 (b)                     |   |                                                            | 100,000 |                                    |   | —                                     |   |                                                                         | 0.80    |                                              |   | 5                                      |   |                                       | 4.89    |   |   | 0 |   |   | 0 |   |
| June                2003 (c)                        |   |                                                            | 200,000 |                                    |   | 119,744                                     |   |                                                                         | 2.00    |                                              |   | 5                                      |   |                                       | 0.94    |   |   | 76 |   |   | 0 |   |
| February                2005 (d)                    |   |                                                            | 75,000  |                                    |   | —                                     |   |                                                                         | — |                                              |   | —                                |   |                                       | — |   |   | — |   |   | — |   |
| April                2006 (e)                       |   |                                                            | 250,000 |                                    |   | 1,602,500                                   |   |                                                                         | 10.00   |                                              |   | 10                                     |   |                                       | 5.12    |   |   | 79 |   |   | 0 |   |

**Warrant      activity for the year ended December 31, 2006 and for the three months      ended June 30, 2007 (unaudited) is as follows:**
** **

|                                                          |    | **Warrants****Outstanding** |   |   | **Weighted****Average****Exercise****Price** |
|---------------------------------------------------------------|--------------|-----------------------------|--------|--------|----------------------------------------------|
| Outstanding                at December 31, 2005          |    | 375,000                     |   |   | $                                            | 3.78 |
| Granted                                                       |    | 250,000                     |   |   |                                         | 10.00 |
| Sold                                                          |    | 705,882                     |   |   |                                         | 8.50 |
| Exercised                                                     |    | (100,000                    | )      |   |                                         | 0.80 |
| Forfeited                                                     |    | —           |   |   |                                         | —   |
| Outstanding                at December 31, 2006          |    | 1,230,882                   |   |   | $                                            | 7.88 |
| Granted                                                       |    | —           |   |   |                                         | —   |
| Sold                / Reissued (a)                            |    | 5,999,997         |   |   |                                         | 1.00   |
| Exercised                                                     |    | —           |   |   |                                         | —   |
| Forfeited                / Cancelled (a)                      |    | (705,882)              |   |   |                                         | 8.50   |
| Outstanding                at June 30, 2007              |    | 6,524,997                   |   |   | $                                            | 1.51 |
| Warrants                exercisable at December 31, 2005 |    | 375,000                     |   |   |                                         | 3.78 |
| Warrants                exercisable at December 31, 2006 |    | 1,168,382                   |   |   |                                         | 7.88 |
| Warrants                exercisable at June 30, 2007     |    | 6,524,997                   |   |   |                                         | 1.51 |

----

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**NOTES      TO FINANCIAL STATEMENTS—(Continued)**

**(UNAUDITED)**

**JUNE      30, 2007**

**The      following table summarizes information about warrants outstanding at      June 30, 2007 (unaudited):**

| **Exercise Prices** |    | **Warrants****Outstanding** |    | **Weighted****Average****Remaining****Life****(Years)** |    | **Weighted****Average****Exercise****Price** |    | **Warrants****Exercisable** |    | **Weighted****Average****Exercise****Price** |
|--------------------------|--------------|-----------------------------|--------------|---------------------------------------------------------|--------------|----------------------------------------------|--------------|-----------------------------|--------------|----------------------------------------------|
| $2.00                    |    | 200,000                     |    | 5.98                                                    |    | $                                            | 2.00         |                   | 200,000      |                                    | $ | 2.00 |
| $1.00                (a) |    | 5,999,997                   |    | 1.72                                                    |    |                                         | 1.00         |                   | 5,999,997    |                                    |   | 1.00 |
| $10.00                   |    | 250,000                     |    | 8.79                                                    |    |                                         | 10.00        |                   | 250,000      |                                    |   | 10.00 |
| $12.50                   |    | 75,000                      |    | 1.63                                                    |    |                                         | 12.50        |                   | 75,000       |                                    |   | 12.50 |
| Total                    |    | 6,524,997                   |    |                                                    |    |                                         |         |                   | 6,524,997    |                                    |   |   |

**Authorized      Shares**

**NOTE 11.      RELATED PARTY TRANSACTIONS**

|                                                                                                                                       |    | **For the Six Month Periods Ended June 30,** |           | **For                the****Period                from****March 11, 1998****(Inception)                to****June                30, 2007** |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------------|---------------------------------------------------------------------------------|---------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                       |    | **2006**                                                                        |           | **2007**                                                                                                                                              |    |   |
| **Fees                Paid to:**                                                                                                           |    | ***(In                thousands)***                                             |           |                                                                                                                                                  |
|                                                                                                                                       |    |                                                                            |                |                                                                                                                                             |   |   |    |   |   |
| Daniel                C. Montano (Chairman of the Board, Co-President and Chief Executive                Office) (a)                       |    | $                                                                               | —   |                                                                                                                                             | $ | —   |    | $ | 200 |
| Daniel                C. Montano (Chairman of the Board, Co-President and Chief Executive                Office) (b)                       |    |                                                                            | 240                 |                                                                                                                                             |   | 240 |   |   | 2,056 |
| Vizier                Management Company (c)                                                                                               |    |                                                                            | —             |                                                                                                                                                  |   | — |    |   | 116 |
| GHL                Financial Services Ltd. (“GHL”) (d)                                                                         |    |                                                                            | 10                  |                                                                                                                                                  |   | 70 |    |   | 2,295 |
| Dr. Thomas                Stegmann M.D. ( the Company’s Co-founder, Co- President, and Chief Medical                Officer (e) |    |                                                                            | 290                 |                                                                                                                                                  |   | 240 |    |   | 1,729 |
| C.K.                Capital International and C&K Capital Corporation (f)                                                              |    |                                                                            | 1,218               |                                                                                                                                                  |   | — |    |   | 1,763 |
| Dr. Wolfgang                Priemer (the Company’s founder) (e)                                                                 |    |                                                                            | 35                  |                                                                                                                                                  |   | 40 |    |   | 322 |
| Total                                                                                                                                      |    | $                                                                               | 1,793               |                                                                                                                                                  |   | 590 |    | $ | 8,481 |

----

| (a) | Consulting                fees |
|-----|--------------------------------|

| (b) | Employment                Services. |
|-----|-------------------------------------|

| (c) | Vizier                Management Company is controlled by Daniel C. Montano. The Company                paid                Vizier for consulting. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------|

| (d) | A                director is a principal and owns 4.12% of the Company for the overseas                sale of the Company’s convertible notes payable and Preferred                Stock. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e) | Fees                were paid for assisting the Company with the European Compliance                Committee                which monitors the Company’s activities in Europe from the legal,                regulatory and tax compliance                perspectives. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f) | C.K.                Capital International and C&K Capital Corporation are controlled by                Alex Montano, son of Daniel C.                Montano |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**NOTES      TO FINANCIAL STATEMENTS—(Continued)**

**(UNAUDITED)**

**JUNE      30, 2007**

**NOTE 12.      INCOME TAXES**

|                                             |   | **As                of****December                31, 2006** |   | **As                of****June                30, 2007** |   |
|--------------------------------------------------|--------|--------------------------------------------------------------|--------|----------------------------------------------------------|--------|
|                                             |   |                                                         |   |                                                     |   |
| Net                Operating Loss carry forward: |   | ***(In                thousands)***                          |   |
|                                             |   |                                                         |   |                                                     |   |
| Federal                income taxes              |   | $                                                            | 45,147 |                                                     | $      | 56,324 |   |
| State                income taxes (California)   |   |                                                         | 44,185 |                                                     |   | 55,361 |   |

|                                                                 |   |                                | **As                of****June                30, 2007** |   |
|----------------------------------------------------------------------|--------|-------------------------------------|----------------------------------------------------------|--------|
|                                                                 |   |                                |                                                     |   |
|                                                                 |   | ***(In                thousands)*** |
|                                                                 |   |                                |                                                     |   |   |
| Federal                research and development credit carry forward |   |                                | $                                                        | 727    |   |

|                                      |   |                                |   | **Three                Months****Ended                June 30, 2007** |   |
|-------------------------------------------|--------|-------------------------------------|--------|-----------------------------------------------------------------------|--------|
|                                      |   |                                |   |                                                                  |   |
|                                      |   | ***(In                thousands)*** |
|                                      |   |                                |   |                                                                  |   |
| Recognized                tax benefit (a) |   |                                | $      | 7,146                                                                 |   |
|                                      |   |                                |   |                                                                  |   |

----

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**NOTES      TO FINANCIAL STATEMENTS—(Continued)**

**(UNAUDITED)**

**JUNE      30, 2007**

**NOTE 13.      COMMITMENTS AND CONTINGENCIES**

**Leases**

| **Paid                rent:**      |   | **Three                Months Ended June 30, 2007** |   | **Three                Months Ended June 30, 2007** |   |
|------------------------------------|--------|-----------------------------------------------------|--------|-----------------------------------------------------|--------|
|                               |   | *(In thousands)*                               |   |
| Total                rent paid (a) |   | $                                                   | 51     |                                                | $      | 126 |   |
|                               |   |                                                |   |                                                |   |   |   |

| **Deferred                rent as of June 30, 2007** |    | **Amount**            |
|------------------------------------------------------|--------------|-----------------------|
|                                                 |    | *(In thousands)* |
| Corporate                headquarter                 |         | $                     | 30 |
| Expanded                space- corporate headquarter |         |                  | 4 |
| San                Diego lab facility                |         |                  | 85 |
|                                                 |         |                  |   |

|       |         |                  |   |
|------------|--------------|-----------------------|--------|
| **Year**   |    | **Amount**            |
|       |    | *(In thousands)* |
| 2007       |    | $                     | 208    |
| 2008       |    |                  | 523    |
| 2009       |    |                  | 541    |
| 2010       |    |                  | 559    |
| 2011       |    |                  | 275    |
| Thereafter |    |                       | 322    |
| Total      |    | $                     | 2,428  |

----

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**NOTES      TO FINANCIAL STATEMENTS—(Continued)**

**(UNAUDITED)**

**JUNE      30, 2007**

**Phage      Lease Guaranty **
**(Now      Terminated)**

**Employment      Agreements**

**Consulting      Agreements**

| **Consulting                fees:**  |                                | **As                of****June                30, 2006** |   | **As                of****June                30,****2007** |   | **For                the Period from March 11, 1998 (inception) to June 30,                2007** |   |
|--------------------------------------|-------------------------------------|----------------------------------------------------------|--------|-------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|--------|
|                                 | ***(In                thousands)*** |
| Consulting                agreements |   $                       | 367                                                      | $      | 1,832                                                       |   | 4,535                                                                                             |   |

----

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**NOTES      TO FINANCIAL STATEMENTS—(Continued)**

**(UNAUDITED)**

**JUNE      30, 2007**

**List      of consulting agreement:**

| **Item #** |   | **Contract**                                |   | **Agreement                Name**                |   | **Start** |   | **End                Date** |
|-----------------|--------|---------------------------------------------|--------|--------------------------------------------------|--------|-----------|--------|-----------------------------|
| 1               |   | Mickael                Flaa                 |   | Chief                Financial Officer           |   | 1-Jun-03  |   | Ongoing                     |
| 2               |   | Investor                relation consultant |   | Investor                Relations                |   | 20-Mar-98 |   | Ongoing                     |
| 3               |   | Investor                awareness           |   | Public                Relation                   |   | 1-Nov-04  |   | 1-Jun-06                    |
| 4               |   | Schwartz                Communications      |   | Public                Relation                   |   | 1-Jul-06  |   | Ongoing                     |
| 5               |   | VP                Corporate Development     |   | VP                Corporate Development          |   | 1-Sep-06  |   | Ongoing                     |
| 6               |   | Marketing                director           |   | Director                of Corporate Development |   | 1-Dec-06  |   | Ongoing                     |
| 7               |   | Medical                consultant           |   | Medical                Expert                    |   | 1-Oct-06  |   | Ongoing                     |
| 8               |   | Medical                consultant           |   | Medical                Expert                    |   | 1-Sep-06  |   | Ongoing                     |

**Service      Agreements**

**The      Company has entered several service agreements as follow:**

| **Item #** |   | **Contract**                                                                                                             |   | **Agreement                Name**                                                                                      |   | **Start** |   | **End                Date** |
|-----------------|--------|--------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------|--------|-----------|--------|-----------------------------|
| 1               |   | Phage                Biotechnology                                                                                       |   | Joint                patent agreement                                                                                  |   | 28-Feb-07 |   | 1-Mar-20                    |
| 2               |   | Cardio                Phage International (“CPI”)                                                            |   | Distribution                agreement                                                                                  |   | 16-Aug-04 |   | 16-Aug-13                   |
| 3               |   | Korea                Bio-Development Corporation                                                                         |   | Manufacturing                and distribution agreement                                                                |   | 15-Dec-00 |   | 15-Dec-99                   |
| 4               |   | Hesperion,                Inc. (TouchStone, formerly “Clinical CardioVascular Research,                LLC”) |   | Clinical                development of investigational drugs and devices for Cardiovascular                indications |   | 24-Oct-01 |   | Ongoing                     |
| 5               |   | CVBT                Founder                                                                                              |   | Royalty                agreement                                                                                       |   | 16-Aug-04 |   | 31-Dec-13                   |
| 6               |   | Catheter                and Disposables Technologies, Inc                                                                |   | Product                development                                                                                     |   | 1-Jun-04  |   | 31-Dec-06                   |

----

| 1) | Cardio                entered into a joint patent agreement with Phage as of February 28,                2007. Cardio plans to develop and commercialize therapeutic methods                related to the induction of angiogenesis or wound healing by                administration of Fibroblast Growth Factor (“FGF”); and, Phage plans to                develop and commercialize recombinant DNA methods for producing                peptides/proteins. Cardio and Phage entered into a joint patent ownership                and license agreement dated as of August 16, 2004, which was later                amended and restated as of May 23, 2006 (the “Joint Ownership                Agreement”), for consideration the sufficiency of which was acknowledged                in each agreement, pursuant to which Phage granted Cardio a 50% ownership                interest in certain patents and patent applications listed in the                Joint                Ownership Agreement, as well as certain future patent rights, and the                parties acknowledge that Cardio would have exclusive rights within                a                defined field, while Phage would have exclusive rights outside that                field.                Cardio and Phage now wish to enter a new agreement superseding the                Joint                Ownership Agreement so as to specify those future patents and patent                applications that are to be subject to joint ownership and so as                to                restate the licenses granted in the Joint Ownership Agreement. Cardio                and                Phage acknowledge that the jointly owned and cross-licensed rights                are                vital to the parties’ respective plans for development and                commercialization and wish to further clarify the parties’ respective                rights and provide for continued access to the necessary rights in                the                event of insolvency. In consideration for the grant of the exclusive                right                to the patent rights in the field, Cardio shall pay a 6% royalty                on the                net sales price of finished product to end customer or distributor.                The                rights and obligations set forth in this agreement shall commence                as of                the effective date of this Agreement and end upon the later of                (a) the expiration of the last to expire Jointly Owned Patent and                (b) the abandonment of the last pending Jointly Patent                Application. |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2) | CPI                will act as distributor for the products of both Phage and Cardio                in                locations throughout the world other than United States, Canada,                Europe,                Japan, China, and the Republic of Korea. CPI is obligated to pay                Cardio an                amount equal to 50% of CPI’s gross revenue from sales of the Company’s                products less CPI’s direct and indirect costs. |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3) | As                part of this agreement, KBDC arranged the purchase of 8,750,000 shares                of                Cardio’s common stock for $3,602,000 by Cardio Korea, Ltd. KBDC agreed to                fund all of the regulatory approval process in Korea for any of the                Company’s products. In addition, KBDC agreed to pay Cardio a royalty of                ten percent net revenue from sales in its Asian territories. |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4) | Hesperion                will assist Cardio with the FDA approval process for our                drug. |
|----|--------------------------------------------------------------------------------------------------------|

| 5) | The                Company’s royalty agreement with its Founder will provide him with a one                percent royalty on net revenue from the sale of the Company’s drug                candidates, if any, measured quarterly and payable 90 days after                quarter                end. |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6) | Catheter                and Disposables Technologies, Inc. will design, develop, and fabricate                two                different prototype catheter products that will facilitate the                administration of CVBT-141A by catheter                delivery. |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**NOTES      TO FINANCIAL STATEMENTS—(Continued)**

**(UNAUDITED)**

**JUNE      30, 2007**

**These      service fees for the obligations below were determined through a process of      competitive bids and negotiation. Our major outstanding contractual obligations      are summarized below (continued):**

|            |   |                                                        |   |                                             |   |      |   |                                                                |
|-----------------|--------|-------------------------------------------------------------|--------|--------------------------------------------------|--------|-----------|--------|---------------------------------------------------------------------|
| **Item #** |   | **Contract**                                                |   | **Agreement                Name**                |   | **Start** |   | **End                Date**                                         |
| 7               |   | bioRASI,                LLC                                 |   | CRO                agreement                     |   | 8-Aug-05  |   | Completion                of clinical trial                         |
| 8               |   | Phage                Biotechnology                          |   | Lease                Guarantee- San Diego        |   | 15-Mar-06 |   | 15-Aug-13                                                           |
| 9               |   | Promethean                                                  |   | Convertible                Notes                 |   | 20-Mar-06 |   | 19-Mar-09                                                           |
| 10              |   | Chief                Executive Officer                      |   | Guarantee                agreement               |   | 20-Mar-06 |   | First date of generatingrevenue                      |
| 11              |   | Chief                Executive Officer                      |   | Guarantee                reimbursement agreement |   | 20-Mar-06 |   | First                date of generating revenue                     |
| 12              |   | Kendle                (formerly Charles River Laboratories) |   | CRO                agreement                     |   | 8-Aug-06  |   | Completion                of Phase II Severe Coronary Heart Disease |
| 13              |   | The                Bruckner Group                           |   | Feasibility                Study                 |   | 4-Aug-06  |   | Upon                completion of study                             |
| 14              |   | Investment                Banker                            |   | Investment                Banker                 |   | 6-Jun-06  |   | Ongoing                                                             |
| 15              |   | Public                Accounting Firm                       |   | Professional                Services             |   | 1-July-06 |   | Ongoing                                                             |

----

| 7) | This                agreement is for the purpose of assisting in the Company’s clinical trials                in Russia. bioRASI is the strategic initiative of the Russian Academy                of                Sciences (RAS) and is responsible for commercializing RAS’ bio-sciences                and clinical resources. bioRASI is a contract research organization                (CRO)                providing services for its collaborative R&D clients in the areas of                drug development, biologicals, and medical                devices. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8) | This                agreement is for a new manufacturing facility in San Diego, CA. The                lease                provides for minimum monthly rent and additional rent for shared                costs,                which aggregate approximately $20,000 per month. |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9) | The                Company entered into a Securities Purchase Agreement with certain                investors to place $20,000,000 of senior secured notes together with                warrants to purchase 705,882 shares of the Company’s common stock.                On                May 21, 2007, the aggregate number of shares acquirable upon exercise                of                such warrants increased to 5,999,997. The notes are convertible into                shares of the Company’s common stock at any time at $12 per share until                the price re-set as of May 21, 2007 at $1.00 per share (the “Fixed                Conversion Price”). In addition, the notes are convertible after five                months from the closing date at 94% of the average of the preceding                five                days weighted average trading price, if the result is lower than                $12 per                share. Conversion of the senior secured notes into the Company’s common                stock at other than the Fixed Conversion Price is limited to no more                than                10% of the original $20,000,000 note balance per calendar month.                The notes                mature in March 2009, and bear a resetting floating interest rate                of three                month LIBOR plus 7%. The warrants may be exercised anytime up to                March                2009. The warrant exercise price is $8.50 per share until the price                was                re-set as of May 21, 2007 at $1.00 per share. Substantially                all of the Company’s assets secure the notes. |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10) | Daniel                C. Montano, our Chairman, Co-President and CEO of the Company, entered                into a Guaranty Agreement whereby he guaranteed any and all of the                Company’s obligations resulting from the sale on March 20, 2006 of                $20,000,000 of senior secured notes and warrants. The guaranty remains                in                effect until the first date on which the Company receives revenue                from the                sale of drugs with FGF-1                141                as API after such drug has been approved by the FDA, provided that                on such                date the Company is not in default of any provisions of the obligations                or                triggering events contained in the agreements for the senior secured                notes                and warrants and such default is not continuing. However, the guaranty                will terminate upon the payment in full of the notes including conversion                of the notes into our common stock. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 11) | After                the Company’s obligations contained in the agreements for the senior                secured notes and warrants have been paid in full, if Daniel C. Montano                was required to make any payments pursuant to this guaranty prior                to the                payment in full of the Company’s obligations, the Company will reimburse                Daniel C. Montano for any such payments plus simple interest at                7% per annum from the date of the advance by Daniel C. Montano to the                date reimbursed by the Company. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 12) | Kendle                (formerly Charles River Laboratories Clinical Services International                Ltd.                or “Charles River Laboratories”) will support the Company in its Phase II                Severe Coronary Heart Disease clinical trial ensuring that the protocol                and study adhere to FDA regulatory requirements. The total direct                and                indirect costs are estimated to be $3,917,810. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 13) | The                Bruckner Group Incorporated will assist us in exploring the potential                economic consequences of applying FGF-1141to                a variety of clinical scenarios and patent types. This project will                take                16 to 20 weeks with approximate total cost of                $475,000. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14) | The                purpose of this agreement is to audit our interim financial reports                for                the purpose of proposed admission document to London Stock Exchange’s                Alternative Investment Market (“AIM”). The Company paid 100,000 GBP before                admission to AIM and another 50,000 GBP in January                2007. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 15) | A                provider of accountancy and business services is assisting Cardio                in                preparation of the admission document for London Stock Exchange’s                Alternative Investment Market, or                AIM. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**CARDIOVASCULAR      BIOTHERAPEUTICS, INC.**

**NOTES      TO FINANCIAL STATEMENTS—(Continued)**

**(UNAUDITED)**

**JUNE      30, 2007**

|                                                                    |         |                                                                     |                     |                                                                                                                                                            |         |                     |         |   |                     |
|-------------------------------------------------------------------------|--------------|--------------------------------------------------------------------------|--------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------|--------------------------|--------------|--------|--------------------------|
|                                                                    |    | **For the                Six Months Ended June 30,** |                | **For                the****Period from****March 11, 1998****(Inception)                to****June 30,                2007****(Unaudited)** |
|                                                                    |    | **2006                (Unaudited)**                                      |                | **2007                (Unaudited)**                                                                                                                             |    |
|                                                                    |    | ***(In thousands)***                                                |                |                                                                                                                                                            |
| **Service                Fees Paid for Major Contractual Obligations:** |    |                                                                     |                     |                                                                                                                                                       |         |                     |         |
| Hesperion                (formerly TouchStone Research, Inc.)           |    | $                                                                        | 1,003                    |                                                                                                                                                       | $            | 293                      |    | $      | 4,841                    |
| Catheter                and Disposables Technologies                    |    |                                                                     | 19                       |                                                                                                                                                       |         | —                  |    |   | 81                       |
| bioRASI                                                                 |    |                                                                     | 448                      |                                                                                                                                                       |         | 160                      |    |   | 1,086                    |
| Kendle                                                                  |    |                                                                     | —                  |                                                                                                                                                       |         | 328                      |    |   | 1,262                    |
| Bruckner                Group                                           |    |                                                                     | —                  |                                                                                                                                                       |         | 617                      |    |   | 854                      |
| Investment                Banker                                        |    |                                                                     | —                  |                                                                                                                                                       |         | 101                      |    |   | 202                      |
| Public                Accounting Firm                                   |    |                                                                     | —                  |                                                                                                                                                       |         | 372                      |    |   | 540                      |
|                                                                    |    |                                                                     |      |                                                                                                                                                       |         |      |    |   |      |
| Total                                                                   |    | $                                                                        | 1,470                    |                                                                                                                                                       | $            | 1,871                    |    | $      | 8,866                    |

**Securities      Act Compliance**

**Government      Regulation**

|           |         |                                                                                                                                                                                                                                                                                                    |
|----------------|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Phase I   |    | Clinical                trials are conducted with a small number of subjects to determine                the                early safety profile, maximum tolerated dose and pharmacokinetics                of the                product in human volunteers.                                         |
|           |         |
| Phase II  |    | Clinical                trials are conducted with groups of patients afflicted with a specific                disease in order to determine preliminary efficacy, optimal dosages                and                expanded evidence of safety.                                                        |
|           |         |
| Phase III |    | Large                scale, multi-center, comparative trials are conducted with patients                afflicted with a target disease in order to provide enough data to                demonstrate with substantial evidence the efficacy and safety the                FDA                requires. |

**Litigation**

----

| **Item 2.** | **Management’s                Discussion and Analysis of Financial Condition and Results of                Operations** |
|------------------|-------------------------------------------------------------------------------------------------------------------------------|

*This      Form 10-Q, including but not limited to this section, may contain      forward-looking statements. These statements relate to future events or our      future financial performance and involve known and unknown risks, uncertainties      and other factors that may cause our or our industry’s actual results, levels of      activity, performance or achievements to be materially different from any future      results, levels of activity, performance or achievements expressed or implied      by      the forward-looking statements. These risks and other factors include those      listed under “Risk Factors” and elsewhere in this Form 10-Q. We believe that the      section entitled “Risk Factors” includes all material risks that could harm our      business. In some cases, you can identify forward-looking statements by      terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,”“believes,” “estimates,” “predicts,” “intends,” “potential,” “continue” or the      negative of these terms or other comparable terminology. These statements are      only predictions. Actual events or results may differ      materially.*

*We      believe it is important to communicate our future expectations to our investors.      However, there may be events in the future that we are not able to accurately      predict or control and that may cause our actual results to differ materially      from the expectations we describe in our forward-looking statements.      Stockholders are cautioned that all forward-looking statements involve risks      and      uncertainties, and actual results may differ materially from those discussed      as      a result of various factors, including those factors described in the “Risk      Factors” section of this Form 10-Q. Stockholders should not place undue reliance      on our forward-looking statements.*

*Although      we believe that the expectations reflected in the forward-looking statements      are      reasonable, we cannot guarantee future results, levels of activity, performance      or achievements.*

*You      should read the following discussion and analysis of our financial condition      and      results of operations together with our financial statements and the related      notes appearing in Item 1 of this Form 10-Q. Some of the information      contained in this discussion and analysis or set forth elsewhere in this Form      10-Q, including information with respect to our plans and strategy for our      business and related financing, includes forward-looking statements that involve      risks and uncertainties. You should review the “Risk Factors” set forth below in      this section of this Form 10-Q for a discussion of important factors that could      cause actual results to differ materially from the results described in or      implied by the forward-looking statements contained in the following discussion      and analysis.*

**Overview**

----

**Results      of Operations **

**Six        months Ended June 30, 2006 and 2007**

**Clinical      Development**
**:      **

*i*
* *

*ii)      *

*iii*
* *

*iv*
* *

*v*
* *

*vi*

----

**Pre-Clinical      Development**
**:**

*i*
*      Bone*

*Diabetes:*

|                                        |         |                                                                            |         |         |         |            |         |            |   |   |   |   |
|---------------------------------------------|--------------|---------------------------------------------------------------------------------|--------------|--------------|--------------|-----------------|--------------|-----------------|--------|--------|--------|--------|
|                                        |    | **For the Six Month Periods Ended June 30,** |         |
|                                        |    | **2006**                                                                        |    | **2007**     |    | **$****Change** |    | **%****Change** |   |
|                                        |    | ***(Dollars                in thousands)***                                     |         |
| Research                and development (a) |    | $                                                                               | 3,201        |    | $            | 3,333           |    | $               | 132    |   | 4      | %      |

|   |   |
|--------|--------|
| (a) | Includes                $806,454 and $927,116 paid to Phage Biotechnology                Corporation. |
|-----|-------------------------------------------------------------------------------------------------------|

|                                          |         |                                                                            |         |         |         |            |         |            |   |   |   |   |
|-----------------------------------------------|--------------|---------------------------------------------------------------------------------|--------------|--------------|--------------|-----------------|--------------|-----------------|--------|--------|--------|--------|
|                                          |    | **For the Six Month Periods Ended June 30,** |         |
|                                          |    | **2006**                                                                        |    | **2007**     |    | **$****Change** |    | **%****Change** |   |
|                                          |    | ***(Dollars                in thousands)***                                     |         |
| General                and administrative (b) |    | $                                                                               | 5,651        |    | $            | 8,167           |         | $               | 2,516  |   | 45     | %      |

|   |   |
|--------|--------|
| (b) | Includes                $96,141 and $25,818 paid to Phage Biotechnology                Corporation. |
|-----|-----------------------------------------------------------------------------------------------------|

----

|                             |         |                                                                            |         |     |         |            |         |            |   |   |   |   |
|----------------------------------|--------------|---------------------------------------------------------------------------------|--------------|----------|--------------|-----------------|--------------|-----------------|--------|--------|--------|--------|
|                             |    | **For the Six Month Periods Ended June 30,** |         |
|                             |    | **2006**                                                                        |    | **2007** |    | **$****Change** |    | **%****Change** |   |
|                             |    | ***(Dollars                  in thousands)***                                   |         |
| Interest                  income |    | $                                                                               | 399          |     | $            | 127             |    | $               | 272    |   | (68)   | %      |

|                            |         |                                                                            |         |     |         |            |         |            |   |         |   |   |
|---------------------------------|--------------|---------------------------------------------------------------------------------|--------------|----------|--------------|-----------------|--------------|-----------------|--------|--------------|--------|--------|
|                            |    | **For the Six Month Periods Ended June 30,** |         |
|                            |    | **2006**                                                                        |    | **2007** |    | **$****Change** |    | **%****Change** |   |
|                            |    | ***(Dollars                in thousands)***                                     |         |
| Interest                expense |    | $                                                                               | 1,813        |     | $            | 6,191           |         | $               | 4,378  |    | 241    | %      |

|                                                          |   | **For                the Six Month Periods Ending June 30,** |   |
|---------------------------------------------------------------|--------|--------------------------------------------------------------|--------|
|                                                          |   | **2006**                                                     |   | **2007** |   |
|                                                          |   | ***(Dollars                in thousands)***                  |   |
| Adjustment                to fair value of derivatives        |   | $                                                            | 3,691  |   | $ | (10,084 | ) |
|                                                          |   |                                                         |   |   |   |   |   |
| Adjustment                to fair value of derivatives- other |   | $                                                            | 4,940  |   | $ | 1,400 |   |

***Three      months Ended June 30, 2006 and 2007***

|                                        |   | **For the Three Month Periods Ended June 30,** |        |
|---------------------------------------------|--------|-----------------------------------------------------------------------------------|-------------|
|                                        |   | **2006**                                                                          |        | **2007** |   | **$****Change** |   |   **%****Change** |   |
|                                        |   | ***(Dollars                in thousands)***                                       |        |
| Research                and development (a) |   |  $                                                                           |  1,732 |   | $ |  1,718 |   | $ |  (14 | ) |  (1 | )% |

|   |                                                                                                  |
|--------|-------------------------------------------------------------------------------------------------------|
| (a)    | Includes                $480,249 and $384,384 paid to Phage Biotechnology                Corporation. |

|                                          |         |                                                                              |         |         |         |            |         |            |   |         |   |   |
|-----------------------------------------------|--------------|-----------------------------------------------------------------------------------|--------------|--------------|--------------|-----------------|--------------|-----------------|--------|--------------|--------|--------|
|                                          |    | **For the Three Month Periods Ended June 30,** |         |
|                                          |    | **2006**                                                                          |    | **2007**     |    | **$****Change** |    | **%****Change** |   |
|                                          |    | ***(Dollars                in thousands)***                                       |         |
| General                and administrative (b) |    | $                                                                                 | 2,992        |    | $            | 4,638           |         | $               | 1,646  |    | 55     | %      |

|   |                                                                                               |
|--------|----------------------------------------------------------------------------------------------------|
| (b)    | Includes                $41,110 and $5,175 paid to Phage Biotechnology                Corporation. |

----

|                           |         |                                                                              |         |         |         |            |         |            |   |         |   |   |
|--------------------------------|--------------|-----------------------------------------------------------------------------------|--------------|--------------|--------------|-----------------|--------------|-----------------|--------|--------------|--------|--------|
|                           |    | **For the Three Month Periods Ended June 30,** |         |
|                           |    | **2006**                                                                          |    | **2007**     |    | **$****Change** |    | **%****Change** |   |
|                           |    | ***(Dollars                in thousands)***                                       |         |
| Interest                income |    | $                                                                                 | 307          |    | $            | 26              |    | $               | 281    |    | (92)   | %      |

|                            |         |                                                                              |         |         |         |            |         |            |   |         |   |   |
|---------------------------------|--------------|-----------------------------------------------------------------------------------|--------------|--------------|--------------|-----------------|--------------|-----------------|--------|--------------|--------|--------|
|                            |    | **For the Three Month Periods Ended June 30,** |         |
|                            |    | **2006**                                                                          |    | **2007**     |    | **$****Change** |    | **%****Change** |   |
|                            |    | ***(Dollars                in thousands)***                                       |         |
| Interest                expense |    | $                                                                                 | 1,609        |    | $            | 2,971           |         | $               | 1,362  |    | 85     | %      |

|                                                          |         | **For                the Three Month Periods Ending June 30,** |         |
|---------------------------------------------------------------|--------------|----------------------------------------------------------------|--------------|
|                                                          |    | **2006**                                                       |    | **2007** |    |
|                                                          |         | ***(Dollars                in thousands)***                    |         |
| Adjustment                to fair value of derivatives        |    | $                                                              | 5,217        |   | $ | (7,958 | ) |
|                                                          |         |                                                           |         |   |   |   |   |
| Adjustment                to fair value of derivatives- other |    | $                                                              | 6,121        |   | $ | 847 |   |

----

| **4.** | **Liquidity                and Capital Resources** |
|--------|----------------------------------------------------|

**Sources      of Liquidity**

| **Security**                                                                                                                                    |         | **Net                Proceeds**        |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--------------|----------------------------------------|--------|
|                                                                                                                                            |         | ***(Dollars in thousands)*** |   |
| Pre                USA IPO                                                                                                                      |         |                                   |   |   |
| Convertible                preferred stock converts to common stock at 100/1, non-voting, no                dividend                            |         | $                                      | 520    |   |
| Common                stock                                                                                                                     |         |                                   | 3,904  |   |
| Total                net proceeds for issuance of our pre-IPO convertible notes                payable                                          |         |                                   | 12,756 |   |
| Post                USA IPO                                                                                                                     |    |                                   |   |   |
| Net                proceeds from the IPO                                                                                                        |    |                                   | 14,682 |   |
| 1,725,000                shares of common stock sold at $10.00 per share net of the options                exercised                            |    |                                   |   |   |
| 988,466                stock option exercised                                                                                                   |    |                                   | 421    |   |
| Net                proceeds from private placement of senior secured convertible note                of                Senior Secured Notes (b) |    |                                   | 18,617 |   |
| Net                proceeds from private placement of common stock at $1.00                (a)                                                  |         |                                   | 1,500  |   |
| Total                net proceeds from financing through June 30, 2007                                                                     |    |                                   | 52,400 |   |
| Deferred                financing cost associated with private placement                                                                        |    |                                   | (530   | ) |
| Net                proceeds from securities sold                                                                                                |    | $                                      | 51,870 |   |

----

| **5.** | **Cash                Flow** |
|--------|------------------------------|

**Six      months ended June 30, 2006 and 2007**

|                                                   |    | **For the Six Month Periods Ended June 30,** |         |
|--------------------------------------------------------|--------------|---------------------------------------------------------------------------------|--------------|
|                                                   |    | **2006**                                                                        |    | **2007** |    | **$****Change** |    | **%****Change** |   |
|                                                   |    | ***(Dollars                in thousands)***                                     |         |
|                                                   |         |                                                                            |         |   |   |   |   |   |   |   |   |   |
| Cash                flow from operating activities     |         | $                                                                               | (8,249       | ) | $ | (9,158 | ) | $ | (909 | ) | 11 | % |
| Cash                flow from investing activities     |         |                                                                            | (535         | ) |   | (59 | ) |   | 476 |   | (89) | % |
| Cash                flow from financing activities (a) |         |                                                                            | 18,474       |    |   | 1,577 |   |   | (16,897 | ) | (91) | % |
|                                                   |    |                                                                            |         |    |   |   |    |   |   |    |   |   |

| **6.** | **Funding                Requirements** |
|--------|-----------------------------------------|

|   | • | our                ability to successfully obtain marketing approval for and to commercially                launch one of our new drug                candidates; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | the                  success of our other pre-clinical and clinical development programs;                  and |
|--------|---------|----------------------------------------------------------------------------------------------------------------|

|   | • | the                    receptivity of the capital markets to financing by biotechnology                    companies. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------|

|   | • | our                      revenues, if any, from successful development and commercialization                      of our                      potential products. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| **7.** | **Contractual                Obligations and Commercial                Commitments** |
|--------|--------------------------------------------------------------------------------------|

**The      following table summarizes our long-term contractual obligations as of      June 30, 2007:**
** **

|                                          |         |                                |         |                                        |         |                |         |               |         |                                         |    |                |         |         |                |
|-----------------------------------------------|--------------|-------------------------------------|--------------|---------------------------------------------|--------------|---------------------|--------------|--------------------|--------------|----------------------------------------------|---------|---------------------|--------------|--------------|---------------------|
|                                          |    | **Total**                           |    | **Less than****1                Year** |    | **1-3 Years**  |    | **3-5 Years** |    | **More than****5                Years** |
|                                          |    | ***(In                thousands)*** |
| Long-term                debt obligations(a)  |    | $                                   | 11,359       |                                   |         | —   |    | $                  | 11,359       |                                    |  $ | —   |    |  $      | —   |
| Operating                lease obligations(b) |         |                           | 2,428        |                                   |         | 221                 |    |               | 982          |                                    |    | 1,100               |    |    | 125                 |
| Total                                         |    | $                                   | 13,787       |                                   | $            | 221                 |    | $                  | 12,341       |                                    | $       | 1,100               |    | $            | 125                 |

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (a)    | The                Company sold $20,000,000 of notes that have a floating interest rate                of 3                month LIBOR plus 7%. The Company has the option to pay the interest                with                registered common stock (see Note 9). During the third quarter of                2006,                note holders converted $295,723 of the convertible senior secured                notes to                110,500 shares of the Company’s common stock for an average share price of                $2.76 (including 28,000 committed shares). During the six months                ended                June 30, 2007, Convertible note holders elected to convert $6,743,707                of their notes receivable to 8,641,221 shares of common stock for                an                average price of $1.00. Should interest rates remain constant and                the                lenders do not convert anymore debt into common stock, and if the                company                chooses to make payments in cash, the company would have a liability                of                approximately $2,385,343.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (b)    | In                November 2005, the Company entered into an operating lease agreement                for                office space in Las Vegas, Nevada, which requires monthly payments                of                approximately $17,900. The Company has one five-year option to renew                the                lease. Building operating expenses are reconciled annually, and any                increase over the base year is billed pro rata among the building’s                tenants. The Company occupied this property in March 2006. Cardio                entered                into a second amendment on September 8, 2006, for the expansion space                use of administrative offices in Las Vegas. The five-year lease obligation                is approximately $1,242,014 including approximately $428,241 in base                rent                for the expanded space throughout the term of the lease. Cardio entered                into a Lease Agreement dated August 7, 2006 with Nancy Ridge LLC, a                Delaware Limited Liability company, for the use of general office                and                laboratory space in San Diego, CA. The lease commences on                September 1, 2006 and expires on May 13, 2013, at which time the                Company will have the option of extending the lease by five years                on the                same terms and conditions of the lease. The Company has paid Nancy                Ridge a                fully refundable security deposit in the amount of $57,804, and further                agrees to pay $15,228 per month for the term of the lease for the                use of                6,768 square feet of general office and laboratory                space. |

**These      service fees for the obligations below were determined through a process of      competitive bids and negotiation. Our major outstanding contractual obligations      are summarized below:**

|            |         |                                                                                                       |         |                                                                                                                   |         |      |         |                                                                     |
|-----------------|--------------|------------------------------------------------------------------------------------------------------------|--------------|------------------------------------------------------------------------------------------------------------------------|--------------|-----------|--------------|--------------------------------------------------------------------------|
| **Item #** |    | **Contract**                                                                                               |    | **Agreement                Name**                                                                                      |    | **Start** |    | **End                Date**                                              |
| 1               |    | Phage Biotechnology                Corporation                                                        |    | Technical Services Agreement                                                                                 |    | 1-Mar-00  |    | 1-Mar-20                                                                 |
| 2               |    | Cardio Phage International                (“CPI”)                                    |    | Distribution                agreement                                                                                  |    | 16-Aug-04 |    | 16-Aug-13                                                                |
| 3               |    | Korea                Bio-Development Corporation                                                           |    | Manufacturing                and distribution agreement                                                                |    | 15-Dec-00 |    | 15-Dec-99                                                                |
| 4               |    | Hesperion,                Inc. (TouchStone, formerly Clinical CardioVascular Research,                LLC) |    | Clinical                development of investigational drugs and devices for Cardiovascular                indications |    | 24-Oct-01 |    | Ongoing                                                                  |
|            |         |                                                                                                       |         |                                                                                                                   |
| 5               |    | CVBT                Founder                                                                                |    | Royalty                agreement                                                                                       |    | 16-Aug-04 |    | 31-Dec-13                                                                |
| 6               |    | Catheter                and Disposables Technologies, Inc.                                                 |    | Product                development                                                                                     |    | 1-Jun-04  |    | Upon delivery of and                payment for catheters |

| 1) | The                Company agreed to jointly own and license from one another the right                to                use certain patents including the patents related to FGF-1141.At                the Company’s election and as part of that agreement, the Company is                obligated to either (i) pay to Phage ten percent of its net sales or                drugs manufactured for the Company by Phage or (ii) pay to Phage a                six percent royalty based on the Company’s drugs which Phage does not                manufacture for us. |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2) | CPI                will act as distributor for the products of both Phage and us in                locations                throughout the world other than United States, Canada, Europe, Japan,                China, and the Republic of Korea. CPI is obligated to pay us an amount                equal to 50% of CPI’s gross revenue from sales of our product less CPI’s                direct and indirect costs. |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3) | As                part of this agreement, KBDC arranged the purchase of 8,750,000 shares                of                our common stock for $3,602,000 by Cardio Korea, Ltd. KBDC agreed                to fund                all of the regulatory approval process in Korea for any of our products.                In addition, KBDC agreed to pay us a royalty of ten percent net revenue                from sales in its Asian territories. |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4) | Hesperion                will assist us with the FDA approval process for our                drug. |
|----|----------------------------------------------------------------------------------------------------|

| 5) | Our                royalty agreement with Dr. Stegmann will provide him with a one                percent royalty on net revenue from the sale of our drug candidates,                if                any, measured quarterly and payable 90 days after quarter                end. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6) | Catheter                and Disposables Technologies, Inc. will assist us to design, develop,                and                fabricate two different prototype catheter products that will allow                the                administration of CVBT-141A by catheter                procedures. |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|            |         |                                                        |         |                                             |         |      |         |                                                                |
|-----------------|--------------|-------------------------------------------------------------|--------------|--------------------------------------------------|--------------|-----------|--------------|---------------------------------------------------------------------|
| **Item #** |    | **Contract**                                                |    | **Agreement                Name**                |    | **Start** |    | **End                Date**                                         |
| 7               |    | bioRASI,                LLC                                 |    | CRO                agreement                     |    | 8-Aug-05  |    | Completion                of clinical trial                         |
| 8               |    | Phage                Biotechnology Corporation              |    | Lease                Guarantee- San Diego        |    | 15-Mar-06 |    | 15-Aug—13                                                     |
| 9               |    | Promethean                                                  |    | Convertible                Notes                 |    | 20-Mar-06 |    | 19-Mar-09                                                           |
| 10              |    | Chief                Executive Officer                      |    | Guarantee                agreement               |    | 20-Mar-06 |    | First                date of generating revenue                     |
| 11              |    | Chief                Executive Officer                      |    | Guarantee                reimbursement agreement |    | 20-Mar-06 |    | First                date of generating revenue                     |
| 12              |    | Kendle                (formerly Charles River Laboratories) |    | CRO                agreement                     |    | 8-Aug-06  |    | Completion                of Phase II Severe Coronary Heart Disease |
| 13              |    | The                Bruckner Group                           |    | Feasibility                Study                 |    | 4-Aug-06  |    | Upon                completion of study                             |
| 14              |    | Investment                banker                            |    | Investment                banking                |    | 6-Jun-06  |    | Ongoing                                                             |
| 15              |    | Public                Accounting Firm                       |    | Professional                Services             |    | 1-July-06 |    | Ongoing                                                             |

| 7) | This                agreement is for the purpose of assisting in our human clinical trials                in                Russia. bioRASI is the strategic initiative of the Russian Academy                of                Sciences (RAS) and is responsible for commercializing RAS’ bio-sciences                and clinical resources. bioRASI is a contract research organization                (CRO)                providing services for its collaborative R&D clients in the areas of                drug development, biologicals, and medical                devices. |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8) | This                agreement is for a new manufacturing facility in San Diego, CA. The                lease                provides for Minimum Monthly Rent and Additional Rent for shared                costs,                which aggregate approximately $20,000 per                month. |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9) | The                Company entered into a Securities Purchase Agreement with certain                investors to place $20,000,000 of senior secured notes together with                warrants to purchase 705,882 shares of our common stock. On                May 21, 2007, the aggregate number of shares acquirable upon exercise                of                such warrants increased to 5,999,997. The notes are convertible into                shares of our common stock at any time at $12 per share until the                price                re-set as of May 21, 2007 at $1.00 per share (the “Fixed Conversion                Price”). In addition, the notes are convertible after five months from                the                closing date at 94% of the average of the preceding five days weighted                average trading price, if the result is lower than $12 per share.                Conversion of the senior secured notes into our common stock at other                than                the Fixed Conversion Price is limited to no more than 10% of the                original                $20,000,000 note balance per calendar month. The notes mature in                March                2009, and bear a resetting floating interest rate of three month                LIBOR                plus 7%. The warrants may be exercised anytime up to March 2009.                The                warrant exercise price is $8.50 per share until the price was re-set                as of                May 21, 2007 at $1.00 per share. Substantially                all of the Company’s assets secure the                notes. |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10) | Daniel                C. Montano, our Chairman, Co-President and CEO, entered into a Guaranty                Agreement whereby he guaranteed any and all of our obligations resulting                from the sale on March 20, 2006 of $20,000,000 of senior secured                notes and warrants. The guaranty remains in effect until the first                date on                which the Company receives revenue from the sale of drugs with                FGF-1                141                as API after such drug has been approved by the FDA, provided that                on such                date the Company is not in default of any provisions of the obligations                or                triggering events contained in the agreements for the senior secured                notes                and warrants and such default is not continuing. However, the guaranty                will terminate upon the payment in full of the notes including conversion                of the notes into our common stock. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 11) | After                our obligations contained in the agreements for the senior secured                notes                and warrants have been paid in full, if Daniel C. Montano was required                to                make any payments pursuant to this guaranty prior to the payment                in full                of our obligations, the Company will reimburse Daniel C. Montano                for any                such payments plus simple interest at 7% per annum from the date of                the advance by Daniel C. Montano to the date reimbursed by                us. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 12) | Kendle                (formerly Charles River Laboratories) will support us in our Phase                II                Severe Coronary Heart Disease clinical trial ensuring that the protocol                and study adhere to FDA regulatory requirements. The total direct                and                indirect costs are estimated to be                $3,917,810. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 13) | The                purpose of this agreement is to assist us in exploring the potential                economic consequences of applying FGF-1141                to a variety of clinical scenarios and patent types. This project                will                take 16 to 20 weeks with approximate total cost of                $475,000. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14) | The                purpose of this agreement is to audit our interim financial reports                for                the purpose of proposed admission document to London Stock Exchange’s                Alternative Investment Market (“AIM”). The Company paid 100,000 GBP before                admission to AIM and another 50,000 GBP in January                2007. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 15) | A                provider of accountancy and business services is assisting Cardio                in                preparation of the admission document for                AIM. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                    |         | **For the Six                Months Ended June 30** |         | **For the**        |
|-------------------------------------------------------------------------|--------------|------------------------------------------------------------------------------|--------------|-------------------------|
|                                                                    |         | **2006****(Unaudited)**                                                      |         | **2007****(Unaudited)** |   | **Period from****March 11, 1998****(Inception)                to****June 30,                2007****(Unaudited** |
|                                                                    |    | ***(In                thousands)***                                          |    |                    |
| **Service                Fees Paid for Major Contractual Obligations:** |    |                                                                         |         |               |   |   |   |
| Hesperion                (formerly TouchStone Research, Inc.)           |    | $                                                                            | 1,003        |               | $ | 293 |    | $ | 4,841 |
| Catheter                and Disposables Technologies                    |    |                                                                         | 19           |               |   | —   |    |   | 81 |
| BioRASI                                                                 |    |                                                                         | 448          |               |   | 160 |    |   | 1,086 |
| Kendle                (formerly Charles River Laboratories)             |    |                                                                         | —      |               |   | 328 |    |   | 1,262 |
| Bruckner                Group Incorporated                              |    |                                                                         | —      |               |   | 617 |    |   | 854 |
| Investment                Banker                                        |         |                                                                         | —      |                    |   | 101 |   |   | 202 |
| Public                Accounting Firm                                   |    |                                                                         | —      |               |   | 372 |    |   | 540 |
| Total                                                                   |    | $                                                                            | 1,470        |               | $ | 1,871 |    | $ | 8,866 |

----

| **8.** | **Off-Balance                Sheet Transactions** |
|--------|---------------------------------------------------|

| **9.** | **Recently                Issued Accounting Pronouncements** |
|--------|--------------------------------------------------------------|

*      Accounting for Uncertainty in Income Taxes — An Interpretation of FASB      Statement No. 109 *
*      Accounting for Income Taxes.*

----

| **Item 3.** | **Quantitative                and Qualitative Disclosures About Market                Risk** |
|------------------|----------------------------------------------------------------------------------------------|

**Interest      Rate Risk**

**Foreign      Currency Risk**

----

**Derivative      Securities Risk**

| **Item 4.** | **Controls                and Procedures** |
|------------------|--------------------------------------------|

**Evaluation      of Disclosure Controls and Procedures**

**Internal      Control Over Financial Reporting**

**Limitations      on Effectiveness of Control**

----

**PART      II. OTHER INFORMATION**

| **Item 1.** | **Legal                Proceedings** |
|------------------|--------------------------------------|

| **Item 1A.** | **Risk                Factors** |
|-------------------|---------------------------------|

**Risks      Related to the Common Shares **

*The      Company has a history of losses and expects to incur substantial losses and      negative operating cash flows for the foreseeable future, and the Company may      never achieve or maintain profitability.*

|   | • | seek                regulatory approvals for our new drug                candidates |
|--------|---------|-------------------------------------------------------------------------------------|

|   | • | develop,                formulate, manufacture and commercialize our new drug                candidates |
|--------|---------|---------------------------------------------------------------------------------------------------------|

|   | • | implement                additional internal systems and                infrastructure |
|--------|---------|----------------------------------------------------------------------------------------|

|   | • | hire                additional clinical, scientific, administrative and sales and marketing                personnel. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------|

----

*If      a triggering event occurred such that would require the Company to pay off      its      convertible notes, the Company may need additional financing to complete the      business plan in a timely manner. Such financing might not be available, or      if      available, the terms might not be satisfactory.*

----

*We      may be subject to claims resulting from our guaranty of Phage’s      leases.*

*Conversion      into common stock of the senior secured notes and warrants that we recently      sold      could also cause substantial dilution.*

**Conversion      of senior secured notes:**

| **Period**                            |    | **Amount of Senior****Secured                Notes****Converted** |    | **Converted to****Number of Shares** |    | **Average Share Price** |    | **Interest Paid During****the                Period with****common                stock** |
|---------------------------------------|--------------|-----------------------------------------------------------------------------|--------------|-----------------------------------------------------|--------------|-----------------------------------|--------------|-----------------------------------------------------------------------------------------------------|
|                                  |         |                                                                        |         |                                                |         |                              |         |                                                                                                |   |   |   |
| 3rd                quarter—2006 |    | $                                                                           | 295,723      |                                           | 110,500      |                         | $            | 2.76                                                                                                |    | $ | 7,576 |
| 4th                quarter—2006 |    |                                                                        | 1,601,791    |                                           | 968,971      |                         |         | 1.84                                                                                                |    |   | 25,454 |
| Total—2006                      |    | $                                                                           | 1,897,514    |                                           | 1,079,471    |                         |         |                                                                                                |    | $ | 33,030 |
| 1st                quarter—2007 |    |                                                                        | 3,493,266    |                                           | 3,655,993    |                         |         | 1.00                                                                                                |    |   | 72,225 |
| 2nd                quarter—2007 |         |                                                                        | 3,250,441    |                                                | 3,455,148    |                              |         | 0.99                                                                                                |   |   | 32,409 |
| Total—2007                      |    | $                                                                           | 6,743,707    |                                           | 7,111,141    |                         |         |                                                                                                |    | $ | 104,634 |

----

| **Item 2.** | **Unregistered                Sales of Equity Securities and Use of                Proceeds** |
|------------------|-----------------------------------------------------------------------------------------------|

**Use      of Proceeds from IPO**

|                                                                                            |    | **As                of June 30, 2007** |
|-------------------------------------------------------------------------------------------------|--------------|----------------------------------------|
|                                                                                            |         |                                   |
|                                                                                            |    | *(In thousands)*                  |
| Use                of proceeds from IPO in pre-clinical and clinical trials                     |         | $                                      | 5,460 |
| Use                of proceeds from IPO in general and administrative                activities |         |                                   | 10,141 |
| Interest                on senior secured notes                                                 |         |                                   | 92 |
| Total                                                                                           |         | $                                      | 15,693 |

**Use      of Proceeds from Private Placement**

|                                                                                                         |    | **As                of June 30, 2007** |
|--------------------------------------------------------------------------------------------------------------|--------------|----------------------------------------|
|                                                                                                         |         |                                   |
|                                                                                                         |    | *(In thousands)*                  |
| Use                of proceeds from Promethean notes in pre-clinical and clinical                trials      |         | $                                      | 4,739 |
| Use                of proceeds from Promethean notes in general and administrative                activities |         |                                   | 11,651 |
| Interest                on senior secured notes                                                              |         |                                   | 2,207 |
| Total                                                                                                        |         | $                                      | 18,597 |

| **Item 3.** | **Defaults                Upon Senior Securities** |
|------------------|----------------------------------------------------|

| **Item 4.** | **Submission                of Matters to a Vote of Security                Holders** |
|------------------|---------------------------------------------------------------------------------------|

----

| **Item 5.** | **Other                Information** |
|------------------|--------------------------------------|

| **Item 6.** | **Exhibits** |
|------------------|--------------|

|            |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|-----------------|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Exhibit**     |    | **Description**                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   3.1 |    | Restated                Certificate of Incorporation, dated July 22, 2004 (incorporated by                reference to Exhibit 3.1 of the Registrant’s Registration Statement on                Form S-1, File No. 333-119199, filed with the Securities and Exchange                Commission on September 23, 2004 (“2004 S-1”)                                                                                                             |
|            |         |
|   4.1 |    | Form                of Series I Convertible Notes outstanding (incorporated by reference                to                Exhibit 3.4 to the 2004 S-1)                                                                                                                                                                                                                                                                                                      |
|            |         |
|   4.2 |    | Form                of Series II Convertible Notes outstanding (incorporated by reference                to                Exhibit 3.5 to the 2004 S-1)                                                                                                                                                                                                                                                                                                     |
|            |         |
|   4.3 |    | Form                of Series IIa Convertible Notes outstanding (incorporated by reference                to                Exhibit 3.6 to the 2004 S-1)                                                                                                                                                                                                                                                                                                         |
|            |         |
| 10.1            |    | Underwriter’s                Warrant (incorporated by reference to Exhibit 10.1 of the Registrant’s                Amended Registration Statement on Form S-1/A, File No. 333-119199,                filed                with the Securities and Exchange Commission on January 13, 2005 (“2004                S-1/A second update”)                                                                                                    |
|            |         |
| 10.2            |    | Joint                Patent Ownership and License Agreement between CardioVascular                BioTherapeutics, Inc. and Phage Biotechnology, Inc., dated August                16, 2004                (incorporated by reference to Exhibit 10.2 to the 2004                S-1)                                                                                                                                                                            |
|            |         |
| 10.3            |    | 2004                Stock Plan and associated form of Stock Option Award Agreement                (incorporated by reference to Exhibit 10.3 to the 2004                S-1)                                                                                                                                                                                                                                                                                     |
|            |         |
| 10.4            |    | Agreement                on Technology & Business Right Transfer between Cardio Vascular                Genetic Engineering, Inc. and Korea Biotechnology Development Co.,                Ltd.,                dated December 15, 2000* (incorporated by reference to Exhibit 10.4                of the                2004 S-1 first amendment)                                                                                                            |
|            |         |
| 10.5            |    | Agreement                between CardioVascular BioTherapeutics, Inc. and Dr. Thomas Joseph                Stegmann, dated August 30, 2004 (incorporated by reference to Exhibit                10.5                to the 2004 S-1)                                                                                                                                                                                                                             |
|            |         |
| 10.6            |    | Tenant’s                Assignment of Lease with Consent by Landlord and Assumption by Assignee,                dated April 30, 2004 and underlying sublease for premises at 1700 W.                Horizon Ridge Parkway, Suite 100, Henderson, Nevada 89012 (incorporated                by                reference to Exhibit 10.6 to the 2004 S-1)                                                                                               |
|            |         |
| 10.7            |    | Guarantee                of Sublease between Phage Biotechnology Corporation and The Regents                of the                University of California, dated August 24, 2004 (incorporated by                reference                to Exhibit 10.7 to the 2004 S-1)                                                                                                                                                                                      |
|            |         |
| 10.8            |    | Distributorship                Agreement among CardioVascular BioTherapeutics, Inc., Phage Biotechnology                Corporation and Cardio Phage International Inc., dated as of August                16,                2004 (incorporated by reference to Exhibit 10.8 to the 2004                S-1)                                                                                                                                                    |
|            |         |
| 10.9            |    | Clinical                Research Services Agreement between Clinical Cardiovascular Research,                LLC                (acquired by Touchstone Research, Inc. nka Hesperion, Inc.) and                CardioVascular Genetic Engineering (nka CardioVascular BioTherapeutics,                Inc.), dated October 24, 2001, and amendments 1, 2 and 3 thereto                (incorporated by reference to Exhibit 10.9 to the 2004                S-1) |
|            |         |
| 10.10           |    | Engagement                Agreement, dated March 2, 2006, between CardioVascular BioTherapeutics,                Inc. and C.K. Cooper & Company, Inc. (incorporated by reference to                Exhibit 10.10 of the Registrant’s Annual Report on Form 10-K, File No.                000-51172, filed with the Securities and Exchange Commission on March                31,                2006 (“2005 10-K”)                        |
|            |         |
| 10.11           |    | Agreement,                dated June 23, 2004, between Catheter and Disposable Technology Inc.                and                CardioVascular BioTherapeutics, Inc. (incorporated by reference to                Exhibit                10.11 to the 2004 S-1)                                                                                                                                                                                                 |
|            |         |
| 10.12           |    | Agreement,                dated February 15, 2004, between DaVinci Biomedical Research Products,                Inc. and CardioVascular Genetic Engineering (nka CardioVascular                BioTherapeutics, Inc.) (incorporated by reference to Exhibit 10.12                to the                2004 S-1)                                                                                                                                                 |

----

|           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|----------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Exhibit**    |   | **Description**                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.13          |   | Agreement,                dated March 11, 2004, between DaVinci Biomedical Research and                CardioVascular Genetic Engineering (nka CardioVascular BioTherapeutics,                Inc.) (incorporated by reference to Exhibit 10.13 to the 2004                S-1)                                                                                                                                                                         |
|           |   |
| 10.14          |   | Master                Agreement between MPI Research, Inc. and Phage Biotechnology Corporation                dated March 2004 (incorporated by reference to Exhibit 10.14 to the                2004                S-1)                                                                                                                                                                                                                                    |
|           |   |
| 10.14 (a) |   | Services                Agreement Addendum No. 1, dated November 17, 2004, between MPI Research,                Inc. and Phage Biotechnology Corporation (incorporated by reference                to                Exhibit 10.14(a) of the 2004 S-1 second amendment)                                                                                                                                                                                      |
|           |   |
| 10.14 (b) |   | Services                Agreement Addendum No. 2, dated December 31, 2004, between MPI Research,                Inc. and Phage Biotechnology Corporation (incorporated by reference                to                Exhibit 10.14(b) to the 2004 S-1 second amendment)                                                                                                                                                                                      |
|           |   |
| 10.15          |   | Lease                Agreement, dated November 1, 2005, between Howard Hughes Properties,                Limited Partnership and CardioVascular BioTherapeutics, Inc. (incorporated                by reference to Exhibit 10.15 to the 2005 10-K)                                                                                                                                                                                                           |
|           |   |
| 10.16          |   | Voting                Agreement and Proxy, dated January 9, 2004, among Daniel Montano,                Cardio                Korea Ltd. and CardioVascular Genetic Engineering (incorporated by                reference to Exhibit 10.16 of the 2004 S-1 third                amendment)                                                                                                                                                                    |
|           |   |
| 10.17          |   | Sublease                Agreement, dated November 2005, between CardioVascular BioTherapeutics,                Inc. and Phage Biotechnology Corporation (incorporated by reference                to                Exhibit 10.17 to the Annual Report on Form 10-K for fiscal year ended                December 31, 2005)                                                                                                                                  |
|           |   |
| 10.18          |   | Securities                Purchase Agreement, dated March 20, 2006 (incorporated by reference                to                Exhibit 10.1 of the March 2006 8-K”)                                                                                                                                                                                                                                                                                    |
|           |   |
| 10.19          |   | Registration                Rights Agreement dated March 20, 2006 (incorporated by reference                to                Exhibit 10.2 to the March 2006 8-K)                                                                                                                                                                                                                                                                                            |
|           |   |
| 10.20          |   | Security                Agreement dated March 20, 2006 (incorporated by reference to Exhibit                10.3                to the March 2006 8-K)                                                                                                                                                                                                                                                                                                       |
|           |   |
| 10.21          |   | Patent                Security Agreement dated March 20, 2006 (incorporated by reference                to                Exhibit 10.4 to the March 2006 8-K)                                                                                                                                                                                                                                                                                                |
|           |   |
| 10.22          |   | Guaranty                of Daniel C. Montano dated March 20, 2006 (incorporated by reference                to                Exhibit 10.5 to the March 2006 8-K)                                                                                                                                                                                                                                                                                            |
|           |   |
| 10.23          |   | Pledge                Agreement dated March 20, 2006 (incorporated by reference to Exhibit                10.6                to the March 2006 8-K)                                                                                                                                                                                                                                                                                                         |
|           |   |
| 10.24          |   | Form                of Note attached as Exhibit A to Exhibit 10.18 (incorporated by reference                to Exhibit 10.7 to the March 2006 8-K)                                                                                                                                                                                                                                                                                                          |
|           |   |
| 10.25          |   | Standard                Industrial Net Lease, dated March 15, 2006, between Canta Rana Ranch,                L.P.                and Phage Biotechnology Corporation (incorporated by reference to                Exhibit                10.1 of the Registrant’s Current Report on Form 8-K, File No. 000-51172,                filed with the Securities and Exchange Commission on March 21, 2006                (“March 21, 2006 8-K”) |
|           |   |
| 10.26          |   | Indemnity                and Reimbursement Agreement for the Standard Industrial Net Lease                of March                15, 2006, dated March 15, 2006, between CardioVascular BioTherapeutics,                Inc., as guarantor, and Phage Biotechnology Corporation (incorporated                by                reference to the March 21, 2006 8-K)                                                                                         |
|           |   |
| 10.27          |   | Controlling                Stockholders Agreement, dated as of August 30, 2004, by and among                each of                the Controlling Stockholders of CardioVascular BioTherapeutics, Inc.                (incorporated by reference to Exhibit 9 to the 2004                S-1)                                                                                                                                                               |

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|        |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|-------------|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Exhibit** |    | **Description**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.28       |    | Amendment                No. 1 to the Controlling Stockholders Agreement, dated as of April                13,                2006, by and among each of the Controlling Stockholders of CardioVascular                BioTherapeutics, Inc. (incorporated by reference to Exhibit 9.1 of                the                Registrant’s Current Report on Form 8-K, File No. 000-51172, filed with                the Securities and Exchange Commission on May 26, 2006 (“May 2006                8-K”) |
|        |         |
| 10.29       |    | Amended                and Restated Joint Patent Ownership and License Agreement, dated                May 23,                2006, between CardioVascular BioTherapeutics, Inc. and Phage Biotechnology                Corporation (incorporated by reference to Exhibit 9.1 of the May                2006                8-K)                                                                                                                                                                                            |
|        |         |
| 10.30       |    | Lease                Agreement, dated August 7, 2006, by and between BMR-6828 Nancy Ridge                LLC                and CardioVascular BioTherapeutics, Inc. (incorporated by reference                to                Exhibit 10.1 of the Registrant’s Current Report on Form 8-K, File No.                000-51172, filed with the Securities and Exchange Commission on August                11,                2006)                                                                                  |
|        |         |
| 10.31       |    | First                Amendment, dated January 11, 2006, to the November 1, 2005 Lease                Agreement                by and between Howard Hughes Properties and CardioVascular                BioTherapeutics, Inc. (incorporated by reference to Exhibit 10.2                of the                Registrant’s Current Report on Form 8-K, File No. 000-51172, filed with                the Securities and Exchange Commission on September 6, 2006 (“September                2006 8-K”)    |
|        |         |
| 10.32       |    | Second                Amendment, dated August 29, 2006, to the November 1, 2005 Lease Agreement                by and between Howard Hughes Properties and CardioVascular                BioTherapeutics, Inc. (incorporated by reference to Exhibit 10.1                of the                September 2006 8-K)                                                                                                                                                                                                          |
|        |         |
| 10.33       |    | First                Amendment, dated September 1, 2006, to the August 7, 2006 Lease Agreement                by and between BMR-6828 Nancy Ridge LLC and CardioVascular                BioTherapeutics, Inc. (incorporated by reference to Exhibit 10.1                of the                Registrant’s Current Report on Form 8-K, File No. 000-51172, filed with                the Securities and Exchange Commission on September 14,                2006)                                                     |
|        |         |
| 10.34       |         | New                Joint Patent Agreement, dated February 28, 2007 between Cardiovascular                BioTherapeutics, Inc. and Phage BioTechnology Corporation (incorporated                by                reference to Exhibit 10.34 on Form 8-K, filed with the Securities                and                Exchange Commission on March 27, 2007).                                                                                                                                                               |
| 10.35       |         | CardioVascular                BioTherapeutics, Inc. engaged in a private placement with FirmInvest,                AG                for the Company’s common stock for a total of $15,000,000 May 21, 2007.                (Incorporated by reference to Exhibit 10.35 on Form 8-K, filed with                the                Securities and Exchange Commission on May 24, 2007.)                                                                                                                                |
| 14          |    | Code                of Ethics (incorporated by reference to Exhibit 99.3 to the 2004                S-1)                                                                                                                                                                                                                                                                                                                                                                                                                    |
|        |         |
| 31.1        |    | Certification                of Principal Executive Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|        |         |
| 31.2        |    | Certification                of Principal Financial Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|        |         |
| 32          |    | Certifications                of Chief Executive Officer and Chief Financial Officer pursuant to                18                U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes Oxley Act of                2002                                                                                                                                                                                                                                                                                    |
|        |         |
| 99.1        |    | Governance                Policies (incorporated by reference from Exhibit 99.1 to 2004                S-1)                                                                                                                                                                                                                                                                                                                                                                                                                 |
|        |         |
| 99.5        |    | Compensation                Committee Charter (incorporated by reference from Exhibit 99.5 to                2004                S-1)                                                                                                                                                                                                                                                                                                                                                                                       |
|        |         |
| 99.6        |    | Nominating                and Corporate Governance Committee Charter (incorporated by reference                from                Exhibit 99.6 to 2004 S-1)                                                                                                                                                                                                                                                                                                                                                           |

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**SIGNATURES**

|                                |   |                                                |   |                                                                                    |
|-------------------------------------|--------|-----------------------------------------------------|--------|-----------------------------------------------------------------------------------------|
|                                |   | CARDIOVASCULAR                BIOTHERAPEUTICS, INC. |
|                                |   |                                                |
| August 14,                2007 |   | By:                                                 |   | /s/                Mickael A. Flaa                                                      |
|                                |   |                                                |   | **Mickael                A. Flaa**                                                      |
|                                |   |                                                |   | **Vice                President, Chief Financial Officer and                Treasurer** |

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