Nanobac Pharmaceuticals Inc · 10KSB · For 12/31/03

Filed On 3/30/04 4:40pm ET   ·   SEC File 33-80612   ·   Accession Number 1000096-4-119

Annual Report -- Small Business   ·   Form 10-KSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10KSB       Form 10-Ksb (12-31-2003)                              76    307K 
 2: EX-3.1      Amendment                                              2±     8K 
 3: EX-10.4     Agreement and Plan of Reorganization                  33     77K 
 4: EX-10.10    Loan Agreement                                         2     11K 
 5: EX-10.11    Employment Agreement                                  16     76K 
 6: EX-21.1     List of Subsidiaries                                   1      5K 
 7: EX-23.1     Consent                                                1      6K 
 8: EX-23.2     Consent                                                1      6K 
 9: EX-31.A     Certifications Required Under Section 302              2±    10K 
10: EX-31.B     Certifications Required Under Section 302              2±    10K 

10KSB   ·   Form 10-Ksb (12-31-2003)
Document Table of Contents

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------

 FORM 10-KSB

Annual Report Pursuant to Section 13 or 15(d) of
 the Securities Exchange Act of 1934 For the
fiscal year ended December 31 2003

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

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

2727 W. Martin Luther King Blvd, Suite 850, Tampa, Florida 33607
----------------------------------------------------------------
(Address of Principal Executive Office) (Zip Code)

(813) 264-2241
--------------
(Registrant's telephone number, including area code)

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

Securities registered under Section 12(g) of the Exchange Act:
 Common Stock, without par value
(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for a shorter period that the registrant was        
required to file such reports), and (2) has been subject to such filing         
requirements for the past 90 days. Yes [ ] No [X]                               

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405  
of Regulation S-K is not contained herein, and will not be contained, to the    
best of registrant's knowledge, in definitive proxy or information statements   
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]                                                                  

Indicate by check mark whether the Registrant is an accelerated filer (as       
defined in Rule 12b-2 of the Act): Yes [ ] No [X]                               

State issuer's revenue for its most recent fiscal year:  $482,815               

The approximate aggregate market value of voting and non-voting stock held by   
non-affiliates of the registrant was $54,341,752 as of March 26, 2004. The      
shares of Common Stock held by each current executive officer and director and  
by each person who is known to the Company to own 5% or more of the outstanding 
Common Stock have been excluded from this computation on the basis that such    
persons may be deemed affiliates. The determination of affiliate status is not a
conclusive determination for other purposes.                                    

As of March 26, 2004 there were 139,517,285 shares of the Registrant's Common   
Stock outstanding.                                                              

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 DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement to be delivered to shareholders in   
connection with the Annual Meeting of Shareholders to be held on or about May   
31, 2004 are incorporated by reference into Part III.                           

 Nanobac Pharmaceuticals, Incorporated

 Form 10-KSB
For the Year Ended December 31, 2003

 Table of Contents
                                                                          Page

Part I                                                                          
          Item 1.    Business                                              3
          Item 2.    Properties                                           22
          Item 3.    Legal Proceedings                                    22
Item 4.    Submission of Matters to a Vote of           
                       the Security Holders                               22

Part II                                                                         
Item 5.    Market for Registrant's Common Stock         
                       and Related Shareholder Matters                    23
          Item 6.    Selected Consolidated Financial Data                 26
    Item 7.    Management's Discussion and Analysis of Financial
                       Condition and Results of Operations                27
          Item 8.    Financial Statements and Supplementary Data          48
Item 9.    Changes in and Disagreements with            
Independent Auditors on       
                       Accounting and Financial Disclosure                48

Part III                                                                        
          Item 10.   Directors and Executive Officers of the Registrant   49
          Item 11.   Executive Compensation                               49
      Item 12.   Security Ownership of Certain Beneficial Owners and
                       Management and Related Stockholder Matters         49
          Item 13.   Certain Relationships and Related Transactions       49
          Item 14.   Controls and Procedures                              50

Part IV                                                                         
Part 15.   Exhibits, Financial Statements, Schedules and
                       Reports on Form 8-K                                51

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PART I

Item 1. The Business                                                            
------------                                                    

Overview                                                                        

Nanobac is a biolifescience company. Our business is the study and development  
of therapeutic and diagnostic technologies related to the novel pleomorphic     
pathogen known as nanobacterium sanguineum ("Nanobacteria"). Our primary purpose
is to use our discoveries, science and innovation to dramatically improve       
people's lives. Our corporate goals are to launch a stream of products that will
impact the delivery of healthcare.                                              

Business Applications                                                           

 [Graphic Omitted]

Building a Leading Company in Nanobacteria Applications 

Healthcare                                                                      
Prevention, detection, treatment, and management of illness at the point of     
patient care through the services offered by the medical and allied health      
professions.                                                                    

Biomedical                                                                      
Application of biological and physiological principles to healthcare.           

Bioindustrial                                                                   
Application of biological and physiological principles to the biomedical        
industry.                                                                       

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Healthcare Strategy                                                             

We are currently pursuing concurrent paths to provide earlier, easier and more  
accurate diagnosis and treatment of degenerative and other pathologic           
calcification diseases. Taking advantage of our diagnostic assays, combined with
our potential therapies, we will offer a change to the way pathological         
calcifications are managed. The cost savings from our products occur at every   
stage of the disease progression:                                               

 [GRAPHIC OMITTED]

o    Earlier screening allows:                                                  
(a)  Earlier diagnosis                                                
(b)  fewer physician office visits, less expensive, more accurate care
(c)  medical management rather than surgical intervention             

o    Definitive nanobacterial diagnosis allows:                                 
(a)  earlier referral of diseased patients                            
(b)  earlier initiation of the proper therapy                         

o    Determination of nanobiotic therapy allows:                                
(a)  more targeted and cost-effective therapy                         
(b)  better clinical outcomes                                         

o    Monitoring nanobacterial progression/regression allows:                    
(a)  optimization of therapeutic regimen for best clinical outcome    
(b)  prophylactic treatment and disease prevention                    

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Initially, use of our diagnostic and therapeutic products will be adjunctive    
with current procedures. Over time, as the value of the proprietary serological 
tests are established and the product line expands to include further           
serological and genetic diagnostic technology, our diagnostic work-ups may      
reduce costly and time consuming protocols.                                     

Market Positioning                                                              

Our products and services will be marketed as follows:                          

o Unique. We believe that our test for diagnosing nanobacteria is simpler and   
more cost effective than our competitors.                                       

o Expert Source. Remaining closely involved on a continuing basis with physician
and scientific thought leaders will be a cornerstone of our philosophy and      
continued product development. We will support and present a broad number of    
clinical studies which create publications and the adoption of products by the  
physician results. The clinical results and patient reports will contain        
in-depth analyses and discussion of the diagnoses as well as prescribed therapy 
recommended by our medical advisory staff.                                      

o Patented Technology. The initial test for diagnosing nanobacteria was         
developed by two scientists in the area of bacteriology research. While the     
underlying tests used to diagnose nanobacteria are relatively straight forward, 
their application for disease states relies on the specificity of proprietary   
reagents isolated and developed by Neva Ciftcioglu, PhD and Olavi Kajander, MD, 
PhD. We own these patents as a result of our acquisition of Nanobac OY.         

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Products                                                                        

 [GRAPHIC OMITTED]
Diagnostic Development Strategy 

Diagnostic - The Company's diagnostic products will be developed in three       
phases:                                                                         

Phase I: Nanobac has a commercially available serology test for the             
identification of nanobacterial antibodies and antigens. Oxoid is the           
distributor in the UK, Europe, Brazil and Australia. With combined research and 
commercial results, Nanobac has established a database of serum specimens and   
clinical data related to the diagnosis of nanobacteria. These technologies were 
developed by Neva Ciftcioglu, PhD and Olavi Kajander, MD, PhD. at the University
of Kuopio in Finland, and Nanobac OY of Finland. Under Dr. Kajander's           
supervision and using protocols he established, the Company utilizes its        
database to provide a detailed diagnostic analysis. The analysis includes       
reference to research studies, observations from similar and contrasting sets of
samples. The initial tests are the only simple blood serum tests commercially   
available for clinicians and researchers for screening for Nanobacterium        
sanguineum. Nanobac is consulting with a Contract Research Organization in order
to reach 510k status. 510k status is the premarket notification provisions of   
the 1976 Medical Device Amendments to the Food, Drug, and Cosmetic (FD&C) Act as
amended by the Safe medical Devices Act of 1990 and is intended to serve as a   
screening mechanism to allow for marketing of medical devices with a reasonable 
assurance of safety and effectiveness.                                          

Phase II: We will broaden the general cardiovascular serological products with  
our proprietary serology product. Our diagnostic will become a key metric in the
work up of cardiovascular patients. The current serodiagnostic cardiovascular   
market is expansive. and does not have a stand alone predictive or diagnostic   
marker. Nanobac will pursue a pre-market approval (PMA) from the FDA specific to
the cardiac marker claim.                                                       

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Phase III: Promotion in other disease sites. With a preeminent position in      
defining nanobacteria clinical pathways of care, we will support and present a  
broad number of clinical studies on other disease sites. This will lead to the  
adoption of products by the appropriate physician specialist. We intend to      
pursue the urology market with a strategy similar to cardiology.                

We are fortunate to have an ISO 9000 facility, in Finland, that produces our    
antibodies and antigens for the nanobacteria diagnostic serology test. The      
components that are required to complete the Elisa test kit are commercially    
available throughout the world. We are not dependent on any customer or vendor  
at this time.                                                                   

Therapeutic                                                                     

 [GRAPHIC OMITTED]
Therapeutic Development Strategy

We intend to capitalize on our patent for the eradication of nanobacteria. The  
therapies that evolve from the patent to treat Nanobacterium Sanguineum         
infection, may contribute to the treatment of cardiovascular, urologic, and     
other degenerative diseases. The Nanobiotic therapy previously identified as    
NanobacTx, Urobac, and Dermabac have been discontinued. NanobacTX was launched  
by the predecessor company approximately three years ago. The previous          
management team at Nanobaclabs reasoned that they were following the tenets of  
Section 503a of the Federal Food, Drug and Cosmetic Act concerning "pharmacy    
compounding", and that utilization of previously approved drugs was exempt from 
the IND process. The new management, after legal, government, regulatory, and   
industry consultations, voluntarily withdrew the aforementioned Nanobiotic      
therapies from the market. New management regarded the previous management's    
view as not supported by the FDA's current interpretation of section 503a.      
NanobacTX had grown to 14,000 prescriptions since inception.                    

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Licensing of late stage development compounds is also a strategy that we will   
employ for compounds that require minimal development for filing to obtain FDA  
approval. The lower cost and lower risk of this strategy coupled with the short 
time to market for these compounds, is aligned with the overall Nanobac business
plan. We are also seeking better delivery methods that will improve patient     
compliance.                                                                     

Our ongoing therapeutic development strategy will include our proprietary       
compounds as well as identification of compounds and projects that are in Phase 
III (see government regulation for description of Phase III). Compounds and     
projects can include mechanisms of action and mechanisms of drug delivery. We   
provide unique opportunities for these companies to realize the significant     
potential of their various antibiotic projects.                                 

Healthcare Market                                                               

Market Size                                                                     

Pathologic calcifications are treated in a number of ways, depending on the     
seriousness of the disease. For example, Coronary Heart Disease (CHD),          
Polycystic Kidney Disease (PKD), and Kidney Stone patients are managed with     
lifestyle changes and medications. Others with severe CHD or PKD may need       
surgery. In any case, once CHD or PKD develop, they require lifelong management.
Listed below are the costs associated with these disease states.                

                            Health Dollars Spent
 Disease Site                           (in millions of US$)      Source

Coronary Heart Disease (CHD)               325,000,000,000       AHA  
Kidney Stones                                1,830,000,000       NIDDK
Polycystic Kidney Disease (PKD)              1,000,000,000       NIDDK
Prostatitus                                  1,330,000,000       NAMCS
                            ------------------
                               329,160,000,000
                            ==================

Additional biomedical research and clinical studies are planned or underway to  
document nanobacteria's role in the development of Atherosclerosis, Gall Stones,
Chronic Prostatitis, Diabetes, Arthritic Spurs, Cataracts, Scleroderma, Kidney  
Cysts and Kidney Stones, certain Breast Pathology, Polycystic Kidney Disease    
(PKD), Solid Tumor Pathologies, Immunosuppressed Conditions, Dental Pulp Stone, 
and Neurodegenerative Disease.                                                  

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Cardiac                                                                         

The most serious and widespread of the diseases caused by calcified plaque are  
atherosclerosis (hardening of the arteries) and coronary heart disease (CHD).   
Coronary artery disease (CAD) is CHD of the heart's arteries. Atherosclerosis in
the carotid arteries, the primary blood supply to the brain, affects more than  
one-third of individuals 51 to 55 years old and over half of individuals 61-65  
years of age. CAD begins as coronary artery calcification that leads to         
atherosclerosis before developing into CAD. This process is generally slow and  
can begin in childhood. Coronary artery disease remains the #1 killer of adult  
males in the U.S. Cardiovascular diseases represent 26.7% of all physician      
visits and 26.1% of all scripts in the United States. CAD is the most common    
form of heart disease affecting approximately 1.3 million Americans. Over 50% of
the people who die suddenly of CAD had no symptoms. These major public health   
issues, in the U.S. and worldwide, were chosen as the focus of our initial      
research and development efforts.                                               

Chest pain (angina) or shortness of breath may be the earliest signs of CAD. A  
person may feel heaviness, tightness, pain, burning, pressure, or squeezing,    
usually behind the breastbone but sometimes also in the arms, neck, or jaws.    
These signs usually bring the patient to a doctor for the first time. In fact,  
50% of the people having heart attacks, the heart attack was the first symptom  
of heart disease. It is important to know that there is a wide range of severity
for CAD. Some people have no symptoms at all, some have mild intermittent chest 
pain, and some have more pronounced and steady pain. Still others have CAD that 
is severe enough to make normal everyday activities, like walking to the        
mailbox, difficult. Because CAD varies so much from one person to another, the  
way a doctor diagnoses and treats CAD will also vary a lot.                     

CAD is normally diagnosed using one or a combination of several diagnostic tests
Electron Beam Computed Tomographic Imaging (EBCT), Echocardiography,            
Ventriculogram, Electrocardiogram (ECG or EKG), Coronary angiography, exercise  
thallium test, or Positron emission tomography (PET) scanning. CAD can be       
controlled or treated with various techniques: i) medication (beta blockers,    
calcium channel blockers, or nitroglycerine), ii) transcatherter interventions  
(Percutaneous transmyocardial revascularization (PTMR), Atherectomy,            
Angioplasty, Stent, or Laser ablation), or iii) surgery (coronary artery bypass 
or Transmyocardial laser revascularization (TMLR)). With nanobacteria being     
present in atherosclerosis one may ask themselves if the current diagnostic     
tools and therapeutic treatments available for CAD are insufficient to address  
the problem. The nanobacterial blood test, NB2, may prove to be a new metric in 
the diagnosis and treatment of CAD.                                             

CAD is treated in a number of ways, depending on the seriousness of the disease.
For many people, CAD is managed with lifestyle changes and medications. Others  
with severe CAD may need surgery. In any case, once CAD develops, it requires   
lifelong management.                                                            

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Urological                                                                      

Kidney stones are one of the most common disorders of the urinary tract;        
patients made more than 1.3 million visits to health care providers to have     
their stones treated in 1997. In 1999, more than a quarter million hospitalized 
patients had a diagnosis of kidney stones. An estimated 10 percent of people in 
the United States will have a kidney stone at some point in their lives. Men    
tend to be affected more frequently than women.                                 

A kidney stone is a solid piece of material that forms in the kidney out of     
substances in the urine. A stone may stay in the kidney or break loose and      
travel down the urinary tract. A small stone may pass all the way out of the    
body without causing too much pain. A larger stone may get stuck in a ureter,   
the bladder, or the urethra. A problem stone can block the flow of urine and    
cause great pain. Stone that will not pass by itself may require: extracorporeal
shockwave lithotripsy, tunnel surgery (percutaneous nephrolithotomy), or        
ureteroscope extraction. Kidney stones are diagnosed by x ray, sonogram, or IVP 
(intravenous pyelogram).                                                        

Greater than 90% of human kidney stones are positive for nanobacteria. It is    
interesting to note that astronauts have preponderance for kidney stone         
formation. Lack of gravity causes bone loss causing increased calcium in the    
blood therefore nanobacteria is an important catalyst for stone formation. Not  
only in astronauts is nanobacteria important in stone formation but it has also 
been shown to cause stone formation in rats. With further studies Nanobac       
Pharmaceuticals intends to change the course of diagnosing and treating the many
patients with these painful kidney stones. Polycystic kidney disease (PKD) is a 
genetic disorder characterized by the growth of numerous cysts in the kidneys.  
The cysts are filled with fluid. PKD cysts can slowly replace much of the mass  
of the kidneys, reducing kidney function and leading to kidney failure. PKD can 
cause cysts in the liver and problems in other organs, such as the heart and    
blood vessels in the brain. These complications help doctors distinguish PKD    
from the usually harmless "simple" cysts that often form in the kidneys in later
years of life.                                                                  

In the United States, about 500,000 people have PKD, and it is the fourth       
leading cause of kidney failure. Medical professionals describe two major       
inherited forms of PKD and a noninherited form. The signs of PKD include: pain  
in the back and lower sides, headaches, urinary tract infections, blood in the  
urine and cysts in the kidneys and other organs. Diagnosis of PKD is obtained   
by: ultrasound imaging of kidney cysts, ultrasound imaging of cysts in other    
organs, family medical history (genetic testing). PKD has no cure. Treatments   
include: medicine and surgery to reduce pain, antibiotics to resolve infections,
dialysis and transplantation to replace functions of failed kidneys.            

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Studies have shown that in PKD patients 100% of kidney cyst fluids and urine    
were positive for nanobacteria. Nanobacteria may cause damage to kidney cells   
allowing cysts to form in these PKD patients that have defective tissue         
regeneration. Again with nanobacteria being present in PKD patients one may ask 
themselves if the current diagnostic tools and therapeutic treatments available 
for PKD are insufficient to address the problem. Nanobac Pharmaceuticals plans  
to initiate research trials that will evaluate the link between nanobacteria and
PKD. We are positioned to provide novel diagnostics and research potential      
nanobacterial treatments for this disease with limited and costly treatment     
options.                                                                        

Prostatitis is a painful inflammation of the prostate gland. Prostatitis' cause 
is not known, but can be classified as acute or chronic bacteria prostatitis.   
Symptoms may include pain while urinating or ejaculating, chills or fever,      
perineal, testicular, bladder or low back pain. Some common methods for         
diagnosis are a digital rectal exam (DRE), transrectal ultrasound or a Prostate 
Specific Antigen (PSA) test. Other methods are urine samples to determine       
inflammation or infection, cystoscopy or urine flow studies to measure the      
strength of the flow. Treatment usually includes prolonged antibiotic           
treatments, alpha-blockers, anti-inflammatory drugs, vitamins, repetitive       
prostatic massage or heat therapies. If antibiotic treatment is unsuccessful,   
surgery (transurethral resection or TURP) may be done. This delicate surgery can
cause sterility, impotence, and/or incontinence. Prostatitis is difficult to    
diagnose and is therefore difficult to treat. Some patients may never experience
relief and may have to cope with the condition for the remainder of their lives.
According to urologist Thomas Stamey, up to 50% of all men experience symptoms  
of prostatitis during their lifetimes.                                          

Competition                                                                     

Competition in the biotechnology and pharmaceutical industries is intense and   
comes from many and varied sources. We do not believe that any of the industry  
leaders can be considered dominant in view of the rapid technological change in 
the industry. Many of these companies have substantially greater financial,     
marketing, research and development and human resources than us. Most large     
pharmaceutical companies have considerable experience in undertaking clinical   
trials and in obtaining regulatory approval to market pharmaceutical products.  

The market for providing physicians and managed care organizations with         
nanobacteria related disease management and services are just emerging, and we  
are among the leaders in providing a comprehensive approach to managing         
nanobacterial diseases.                                                         

The general market for providing primary care physicians, cardiologists, and    
urologists with specialized serological diagnostic services for detection,      
diagnosis, prognosis and monitoring is highly competitive and dominated by Quest
and Labcorp. Their competitive strength lies in their service capabilities, i.e.
to provide local couriers for specimen pickup and broad-based contracting       
ability with managed care organizations.                                        

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The general market for providing primary care physicians, cardiologists, and    
urologists with therapies for cardiovascular disease is also highly competitive 
and includes both pharmaceutical and medical device companies. The treatment of 
nanobacteria infection is a paradigm shift for these physicians as was h.Pylori 
for the practicing gastroenterologist.                                          

We believe that we will be able to grow and defend our specialized nanobacteria 
related disease market niche due to our expertise in the field, our disease     
management approach, and our technology leadership.                             

Patents and Intellectual Property                                               

We have filed three patents, and received allowance on all three filings. We    
intend to try to take steps to aggressively protect and expand our intellectual 
property, which is a core strength. Our patents are summarized below.           

Patent Antibody Extraction Protocol - Growth factor preparation of thymocyte    
cell culture medium its production and use [US 5,776,778; WO9534317]            

The present invention relates to a growth factor preparation derived from a     
mixed lymphocyte culture, and a process for its production. The invention also  
relates to a cell culture medium containing said growth factor preparation. The 
invention further relates to a process for culturing plasma cells and producing 
antibodies by using said cell culture medium.                                   

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Patent Diagnostic - Culture and detection method for sterile-filterable         
autonomously replicating biological particles. [US 5,135,851,2008; EU 0460414,  
(valid in 13 EU countries),2010]                                                

Novel autonomously replicating biological particles resembling bacteria and     
having most surprising properties were discovered from cell culture sera and    
other biological samples alleged to be sterile according to the current testing 
methods. These slowly growing agents named nanobacteria are smaller than any    
known cell-walled bacteria. They pass through sterile filters, even with pore   
sizes smaller than their diameter. They cannot be cultured on any standard      
microbiological media. With the isolation and detection methods provided here   
they are commonly detectable in animal or human serum. This patent holds for    
methods of their culture, detection, purification, and elimination and described
the necessary reagents for that. Autonomously replicating particles can be      
cultured in RPMI 1640, or in DMEM, or in other cell culture media. Optimal      
growth can be obtained by supplementing the culture medium with 10-20% sterile  
fetal bovine serum. Addition of small amounts of D,L or L selenomethionine      
together with nucleotide precursors may improve growth. Culture is started by   
addition of the test sample to the medium in a cell culture vial which is       
thereafter incubated under standard mammalian cell culture conditions for at    
least 15 days. Biological samples are preferably sterile-filtered before culture
through 0.22 micron filters. The growth of nanobacteria, if present, can be seen
using microscopy at high magnification. The organisms can be made more visible  
by DNA staining and immunostaining done either separately or simultaneously to a
fixed preparation. Nanobacteria can be cultured without mammalian cells, but    
co-culture together with an adherent cell line like 3T6 is useful because 3T6   
cells can take nanobacteria inside the cells. This aids the staining of the     
preparations. Intracellular agents are not lost during fixation and staining.   
Nanobacterial antigens can be prepared by specific culture, harvest,            
purification and solubilization methods. Immunization of rabbits with the       
solubilized antigen (treatment with proteinase K and with 1 N HCI) produces     
highly specific antibodies to nanobacteria. Gamma-irradiation of culture serum  
at 2.5-4.0 megarads, preferably in addition with treatment using solid-phase    
bound antibodies enables preparation of nanobacteria-free serum. Use of this    
serum creates sterile culture medium for the culture and detection of           
nanobacteria. Double staining combining Hoechst No. 33258 stain and             
immunofluorescence specifically distinguishes nanobacteria from other cell      
culture contaminants.                                                           

Patent Therapeutic - [US Patent 6,706,290; EP 1094711] Methods for eradication  
of Nanobacteria                                                                 

Nanobacteria contribute to pathological calcification in the human and animal   
body, including diseases such as kidney stones, salivary gland stones, dental   
pulp stones and atherosclerosis. The present invention provides methods for     
sterilizing articles contaminated with nanobacteria. The present invention also 
provides methods of treating patients infected with nanobacteria. In particular,
the present invention provides a method for preventing the recurrence of kidney 
stones in a patient that has suffered from kidney stones, comprising            
administration of an antibiotic, a bisphosphonate, or a calcium chelator, either
alone or in combination, in an amount effective to inhibit or prevent the growth
and development of nanobacteria.                                                

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Our Science                                                                     

The term "nanobacteria" is short for its scientific name Nanobacterium          
sanguineum, a Latin term for blood nanobacteria. Though the human body does not 
recognize nanobacteria as harmful, it has been shown to be implicated in the    
formation of disease-causing calcified plaque in the circulatory system and     
vital organs. We conduct research of degenerative diseases stemming from        
nanobacterial infections. We are developing unique technologies for early       
accurate diagnoses of nanobacterial infection, and eradication methods which    
allow physicians to effectively manage the clinical symptoms of the disease,    
improve therapeutic results, and as an outcome, lower overall medical costs.    

We have patents with respect to the identification and eradication of the       
pathogen Nanobacterium Sanguineum. Although we possess intellectual property    
with Bioindustrial, Biomedical and Healthcare implications, we will focus       
initially on Healthcare.                                                        

We plan to leverage our intellectual property and proprietary technology to     
establish value and credibility with clinicians and researchers specializing in 
cardiovascular and other diseases. From that base, we will broaden our reach by 
setting up a secured wide area network which will increase clinicians' access to
our extensive database of information and clinical experience for the management
of a full range of diseases. We believe our products and services can greatly   
reduce the cost and increase the quality of life for the patients. To bring our 
products to the market, Nanobac will form a proprietary reference laboratory    
that offers physicians a comprehensive patient analysis and a Nanobiotic        
therapeutic.                                                                    

Nanobacterium Sanguineum Background and Description:                            

Nanobacterium sanguineum (nanobacteria) was discovered in 1988 by Finnish       
researcher Olavi Kajander, M.D., Ph.D.. Dr. Kajander was carrying out mammalian 
cell research when a routine mammalian cell culture experiment, using           
commercially available fetal bovine serum as the growth media, just wasn't      
getting off the ground. The cells weren't thriving and dividing like they       
should; the cells were sickly and died off before any study could be done.      
Strange vacuoles were forming up in many of the cells, and these cells          
subsequently died. Dr. Kajander, like all basic cell researchers, had           
encountered this problem before; sometimes their cell cultures worked, and      
sometimes they didn't. Thankfully, Dr. Kajander researched this further and     
after several weeks of culture, turbidity developed in one of the flasks. This  
represented the first isolation of Nanobacterium sanguineum.                    

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In 1991 Dr. Kajander was joined by microbiologist Neva Ciftcioglu, Ph.D. at the 
University of Kuopio, Finland. Nanobacteria was the first nano-sized,           
autonomous, self-replicating organism ever detected. Their research established 
that the blood-borne nanobacteria forms slow-growing calcified colonies in      
arteries and organs, much as coral reefs are formed. Nanobacteria have been     
found in human and animal blood, urine and saliva. The name "nanobacteria" was  
introduced and patented by Dr. Olavi Kajander as the name for very small        
mineral-associated bacteria-like life forms. Nanobacteria produce apatite       
minerals by building apatite envelopes or "castles" around themselves. They seem
to play a role in the formation of kidney stones and other calcification        
diseases. Nanobacteria may be involved in biofilm formation, a common problem in
urinary stents and catheters. They may also cause chronic infections in humans  
and animals.                                                                    

Nanobacterium sanguineum is a small, slowly growing bacterium that can be found 
in human blood, kidney stones, and arterial wall plaques. Nanobacteria are      
10,000 to 100,000 times smaller than typical bacteria and, until recently, were 
not detectable using conventional sterility testing methods. These bacteria tend
to cluster and form a protective calcium shell that shelters them from the      
immune system and most antibiotics. Nanobacteria are cytotoxic (can cause damage
to cells), resistant to heat, hydrocholic acid, high-dose radiation, and most   
antibiotics (See Table 1).                                                      

Nanobacteria are carbonate apatite forming bacteria and have the unique         
capability to fix calcium and prothrombin upon their cell membrance, ultimately 
forming a porous protective calcium encasement. Within this encasement, they    
become semi-dormant (multiple slowly) and can build upon themselves somewhat    
like a coral reef might enlarge upon itself. Their rate of replication is       
approximately 44% annually. Nanobacteria are pleomorphic which means that they  
have different physical forms and shapes during their life cycle. They can also 
change appearance, form and alter function in response to various changing      
environmental factors.                                                          

Nanobacteria in mammalian cells leads to abnormal cell growth, growth rates or  
cell death and may lead to genetic alteration (mutations). Nanobacteria cannot  
be grown in standard culture media but grow well in media supplemented with     
mammalian blood or serum. Nanobacteria have been found in various mammalian     
serum-derived or serum-supplemented products, such as fetal bovine serum and    
vaccines. As these organisms pass through most sterilization filters in use     
today, novel sterilization techniques are needed. These may include improved    
filtration, radiation and chemical treatments. Due to their extremely small     
size, nanobacteria can only be studied using scanning and transmission electron 
microscopes or other recently developed high-resolution microscopes.            

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Table 1: Unique Properties of Nanobacteria

---------------------------- ---------------------------------------------------
Property             Description                    
---------------------------- ---------------------------------------------------
Size:                0.05-0.5 nm                  
---------------------------- ---------------------------------------------------
Doubling Time:           3-6 days                         
---------------------------- ---------------------------------------------------
Morphology:      Coccoid to coccobacillar               
Cell wall 20-200nm
---------------------------- ---------------------------------------------------
Isolated From:             Vaccines                           
Fetal Bovine Serum
Calcified carotid arteries
Aortic aneurysms
Cardiac valves
---------------------------- ---------------------------------------------------
Antibiotic           Penicillin                       
sensitivity           Macrolides                        
Quinolones
---------------------------- ---------------------------------------------------
Resistant to:     Heat: 100(0)C for 1 hr                  
 pH Change
UV radiation
Gamma-Irraditaion: 1 megarad
Formaldehyde, glutaraldehyde
---------------------------- ---------------------------------------------------
Sensitivity:              5-FU                          
Tetracycline HCl
Cytosine-arabinoside
 Gamma-Irraditaion: >2.5 megarad
 0.02 micron/20nm filter
 1% Virkon(R) (disinfectant)
---------------------------- ---------------------------------------------------

Nanocteria may be a primitive life form. One recent study examining upper       
urinary tract stones found particles resembling nanobacteria by scanning        
electronic microscopy. A second study confirmed the existence of nanobacterial  
particles isolated from human saliva and dental plaque that were culturable.    
Some groups have confirmed the existence of nanobacteria by identification of   
the organisms in polycystic kidney disease, in a North Carolina beef herd, in   
human pineal tissue, in human atherosclerotic plaques, in calcified carotid     
arteries, aortic aneurysms, caridac valves, cardiac stents, and ovarian cancer. 
Nanobacteria are present in many isolates of pathological calcification (calcium
build ups in areas of the body where calcium should not be present). Therefore, 
nanobacteria may be implicated in multiple diseases including but not limited   
to: cardiac disease, kidney stones, polycystic kidney disease, arthritis,       
ovarian cancer, and prostatitis.                                                

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Nanotechnology is the creation of useful, functional materials, devices, and    
systems through controlling and manipulating matter on the nanometer-length     
scale (1-100 nanometers), and exploiting novel phenomena and properties         
(physical, chemical, biological, mechanical, electrical) at that length scale.  
The prefix "nano" means a billionth - a nanosecond is one-billionth of a second,
a nanometer is one billionth of a meter, and so on. For comparison, the head of 
a pin measures one million nanometers across. A red blood cell has a diameter in
the range of thousands of nanometers. Ten nanometers is 1,000 times smaller than
the diameter of a human hair. DNA molecules are about 2.5 nanometers wide. An   
individual atom measures a few tenths of a nanometer in diameter.               

There are medical professionals who assert that nanobacteria do not exist. They 
contend that nanobacteria are artifacts, contaminants or crystalline growths. We
disagree with this contention. Our business model is based on the existence of  
nanobacteria.                                                                   

Research and Development                                                        

Our lead scientists Olavi Kajander, and Neva Ciftcioglu NASA/USRA, have formed  
multidisciplinary alliances with renown researchers including: Hojatollah Vali, 
McGill University, Canada; Mayo Clinic, Rochester; Garcia-Cuerpo, Spain; China  
Changsha group; Sommer, Univ. of Ulm; Pretorius, South-Africa; G. Epstein/J.T.  
Salonen; Tom & Marcia Hjelle, Univ. of Illinois; S. Epstein, Washington Hospital
Center, Washington DC; R. Berger, Miami Heart Institute, Miami FL; Y. Av-Gay,   
University of British Columbia; and H. Gomez, Genbiomics.                       

To date, this collaboration has published over 80 articles, numerous abstracts  
and book chapters. Example publications since 1998 include articles in Science, 
Nature and Nature Medicine, Proceedings of the National Academy of Sciences,    
Lancet, New Scientist, Molecular Medicine, PDA Journal, Kidney International,   
Circulation, and American Society for Microbiology.                             

Biomedical Strategy                                                             

Potential biomedical applications include screening for and biosterilization of 
nanobacterial contamination in products that will be used treating patients.    
Injectable medical applications such as vaccines, blood products,               
immunoglobulin, and IV fluids must be free of contaminants. Screening of        
diagnostic support media such as culture media, and growth preparations is      
critical in order to get the correct diagnosis. Biosterilization of Medical exam
equipment at the point of patient care and of implantable durable medical       
devices such as hip replacements, cardiac valves, and stents will perhaps       
mitigate or prolong the effectiveness of the device.                            

Bioindustrial Strategy                                                          

Potential bioindustrial applications include screening and biosterilization of  
production line environments used for the preparation of cultures, vaccines, and
implantable durable medical equipment.                                          

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Government Regulation                                                           

Diagnostic laboratory operations are not regulated by the FDA. Our diagnostic   
business is subject to regulation under the federal Clinical Laboratory         
Improvement Act (CLIA). We will seek FDA guidance for our unique nanobiotic     
therapeutic. We will comply with all FDA regulatory requirements.               

Our contemplated activities and the products and processes that will result from
such activities will be subject to substantial government regulation.           

Before new pharmaceutical products may be sold in the U.S. and other countries, 
clinical trials of the products must be conducted and the results submitted to  
appropriate regulatory agencies for approval. These clinical trial programs     
generally involve a three-phase process.                                        

Phase 1 includes the initial introduction of an investigational new drug into   
humans. These studies are closely monitored and may be conducted in patients,   
but are usually conducted in healthy volunteer subjects. These studies are      
designed to determine the metabolic and pharmacologic actions of the drug in    
humans, the side effects associated with increasing doses, and, if possible, to 
gain early evidence on effectiveness. During Phase 1, sufficient information    
about the drug's pharmacokinetics and pharmacological effects should be obtained
to permit the design of well-controlled, scientifically valid, Phase 2 studies. 

Phase 1 studies also evaluate drug metabolism, structure-activity relationships,
and the mechanism of action in humans. These studies also determine which       
investigational drugs are used as research tools to explore biological phenomena
or disease processes. The total number of subjects included in Phase 1 studies  
varies with the drug, but is generally in the range of twenty to eighty.        

In Phase 1 studies, CDER can impose a clinical hold (i.e., prohibit the study   
from proceeding or stop a trial that has started) for reasons of safety, or     
because of a sponsor's failure to accurately disclose the risk of study to      
investigators. Although CDER routinely provides advice in such cases,           
investigators may choose to ignore any advice regarding the design of Phase 1   
studies in areas other than patient safety.                                     

Phase 2 includes the early controlled clinical studies conducted to obtain some 
preliminary data on the effectiveness of the drug for a particular indication or
indications in patients with the disease or condition. This phase of testing    
also helps determine the common short-term side effects and risks associated    
with the drug. Phase 2 studies are typically well-controlled, closely monitored,
and conducted in a relatively small number of patients, usually involving       
several hundred people.                                                         

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Phase 3 studies are expanded controlled and uncontrolled trials. They are       
performed after preliminary evidence suggesting effectiveness of the drug has   
been obtained in Phase 2, and are intended to gather the additional information 
about effectiveness and safety that is needed to evaluate the overall           
benefit-risk relationship of the drug. Phase 3 studies also provide an adequate 
basis for extrapolating the results to the general population and transmitting  
that information in the physician labeling. Phase 3 studies usually include     
several hundred to several thousand people.                                     

In both Phase 2 and 3, CDER can impose a clinical hold if a study is unsafe (as 
in Phase 1), or if the protocol is clearly deficient in design in meeting its   
stated objectives. Great care is taken to ensure that this determination is not 
made in isolation, but reflects current scientific knowledge, agency experience 
with the design of clinical trials, and experience with the class of drugs under
investigation.                                                                  

The results of the preclinical and clinical testing of a biologic product are   
then submitted to the FDA in the form of an Application to Market a New Drug,   
Biologic or an Antibiotic Drug for Human Use (Title 21, Code of Federal         
Regulations, 314 & 601) or Biologics Licensing Application (BLA). In response to
a BLA, the FDA may grant marketing approval, request additional information or  
deny the application if it determines the application does not provide adequate 
basis for approval. The receipt of regulatory approval often takes a number of  
years, involving the expenditure of substantial resources and depends on a      
number of factors, including the severity of the disease in question, the       
availability of alternative treatments and the risks and benefits demonstrated  
in clinical trials. On occasion, regulatory authorities may require larger or   
additional studies, leading to unanticipated delay or expense. Even after       
initial FDA approval has been obtained, further clinical trials may be required 
to provide additional data on safety and effectiveness and are required to gain 
clearance for the use of a product as a treatment for indications other than    
those initially approved. In addition, side effects or adverse events that are  
reported during clinical trials can delay, impede, or prevent marketing         
approval. Similarly, adverse events that are reported after marketing approval  
can result in additional limitations being placed on the product's use and,     
potentially, withdrawal of the product from the market. Any adverse event,      
either before or after marketing approval, could result in product liability    
claims against us.                                                              

In connection with the commercialization of products, it is necessary, in a     
number of countries, to comply with certain regulations relating to the         
manufacturing and marketing of such products and to the products themselves. For
example, the commercial manufacturing, marketing and exporting of pharmaceutical
products require the approval of the FDA in the U.S. and of comparable agencies 
in other countries. The FDA has established mandatory procedures and safety     
standards which apply to the manufacture, clinical testing and marketing of     
pharmaceutical products in the U.S. An example of this is the FDA's current Good
Manufacturing Practices (or GMP). Before approval of a product, the FDA will    
perform a pre-licensing inspection of the manufacturing facilities to determine 
their compliance with GMP and other rules and regulations. In complying with    
GMP, manufacturers must continue to expend time, money and effort in the area of
production and quality control to ensure full compliance. After the             
establishment is licensed for the manufacture of any product, manufacturers are 
subject to periodic inspections by the FDA. Any determination by the FDA of     
manufacturing related deficiencies could have a material adverse effect on our  
business.                                                                       

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The regulatory requirements and approval processes for new products in the EU   
and Canada operate under similar principles as those applied in the U.S. The    
process of seeking and obtaining approval of the FDA or regulatory authorities  
in the EU or other regulatory authorities worldwide for a new product and       
licensing of the facilities in which the product is produced takes a number of  
years and involves the expenditure of substantial resources. In addition, the   
regulatory approval processes for products in the U.S., the countries of the EU 
and other countries around the world are undergoing or may undergo changes. We  
cannot determine what effect any changes in regulatory approval processes may   
have on our business.                                                           

Environmental Matters                                                           

We have not been impacted financially or operationally by environmental laws.   

HealthCentrics Business Unit                                                    

Prior to acquiring NanobacLabs Pharmaceuticals, Inc., our sole operating        
business unit was HealthCentrics. This Business unit develops and markets       
web-based medical accounting, billing and management information services to    
third party billing companies, practice management and healthcare provider      
organizations.                                                                  

During October 2003 we decided to sell our HealthCentrics subsidiary, because of
our decision to focus on nanobacteria,. In addition, earlier plans to develop   
multiple initiatives in healthcare, building products, and waste solutions will 
not be pursued. We believe that a total focus on nanobacteria will maximize     
shareholder value. During March 2004, HealthCentrics was sold to an affiliate of
the Chairman and CEO for $250,000.                                              

Geographic                                                                      

We will initially focus our business in the United States and Canada. To date,  
over 95% of our revenue is from the United States. We also plan to develop our  
markets in the European Union through the operations of our Finnish Subsidiary, 
Nanobac OY.                                                                     

Employees                                                                       

We have seven employees in our corporate headquarters in Tampa, Florida and five
employees in Finland. There are currently no employees in the HealthCentrics    
business unit.                                                                  

Factors That May Affect NNBP                                                    

We operate in a rapidly changing environment that involves a number of risks,   
uncertainties, and assumptions, many of which are beyond our control. For a     
discussion of some of these risks, see "--Risk Factors" in the MD&A section of  
this report included under Item 7. Other risks are discussed elsewhere in this  
Form 10-K.                                                                      

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Investor Information                                                            

We are subject to the information requirements of the Securities Exchange Act of
1934 (the "Exchange Act"). Therefore, we file periodic reports, proxy           
statements, and other information with the Securities and Exchange Commission   
(the "SEC"). Such reports, proxy statements, and other information may be       
obtained by visiting the Public Reference Room of the SEC at 450 Fifth Street,  
NW, Washington, DC 20549 or by calling the SEC at 1-800-SEC-0330. In addition,  
the SEC maintains an Internet site (http://www.sec.gov) that contains reports,  
proxy and information statements, and other information regarding issuers that  
file electronically.                                                            

Financial and other information about NNBP is available on our website          
(http://www.nanobaclabs.com). We make available on our website, through links to
the SEC website, copies of our annual report on Form 10-K, quarterly reports on 
Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or
furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as     
reasonably practicable after filing such material electronically or otherwise   
furnishing it to the SEC.                                                       

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Item 2.  Properties                                                             
----------                                                    

The following table sets forth a description of our facilities:                 

Square Feet           
Location            (Approx)    Lease Expiration             Function     
------------------  -----------  -------------------   ------------------       

Tampa, Florida          7,700      June 2007 -         Headquarters for Nanobac 
                                   June 2010           operations (approximately
                                           50% occupied)

Tampa, Florida          1,600      January 2005        Vacant                   

Koupio, Finland         1,500      3 months notice     Research and laboratory  
                                      facility

Item 3.  Legal Proceedings                                                      
-----------------                                             

During January 2003 we engaged in arbitration with a software outsourcing firm, 
AdiTech, Inc. over disputes arising from programming services in our            
HealthCentrics' business unit. As a result of arbitration, our liability to     
AdiTech was determined to be approximately $160,000. This liability has been    
accrued by the HealthCentrics segment at December 31, 2003.                     

On May 1, 2001, the Company (named American Enterprise.Com, Corp at the time)   
filed for voluntary reorganization under Chapter 11 of the Bankruptcy Code. On  
November 20, 2002, the Middle District of Florida Court confirmed our Plan of   
Reorganization (the "Plan"). At the time of Plan confirmation (November 20,     
2002), we had no assets and no liabilities. Administrative fees including legal,
accounting and consulting were paid by Mr. John Stanton, our Chairman of the    
Board and Chief Executive Officer. There were no priority creditors. Equipment  
leases were treated as unsecured creditors. Unsecured creditors determined to   
represent approximately $7,000,000 were allowed to choose between (a) a cash    
payment on a pro rata basis from a $50,000 unsecured claim fund, or (b) a stock 
payment on a pro rata basis from a 4,500,000 common share unsecured claim       
treasury stock fund. All unsecured creditors opted to receive a pro rata portion
of the $50,000 cash unsecured claim fund. None of the unsecured creditors opted 
to accept any of the 4,500,000 shares allocated to the treasury stock fund. We  
have filed objections to a number of the unsecured creditors seeking their pro  
rata portion of the $50,000 cash unsecured claim fund. We are unable at this    
time to predict the outcome of these objections. However, the $50,000 cash      
unsecured claim fund has already been provided to an escrow account established 
for these purposes and the outcome of the objections to claims will have no     
further impact on us.                                                           

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

No matters were submitted to a vote of the Company's shareholders during the    
fourth quarter of the year ended December 31, 2003.                             

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 PART II

Item 5.  Market for Registrant's Common Stock and Related Shareholder Matters   
      --------------------------------------------------------------------

Our common stock is traded under the symbol "NNBP".                             

From October 12, 1994 through August 18, 1997, the Company's Common Shares were 
traded in the NASDAQ SmallCap Market under the symbol "NATD". Beginning August  
18, 1997 the Company's Common Shares were traded on the Over The Counter        
Bulletin Board. Effective March 27, 2000, the trade symbol was changed to       
"AMER". Effective July 21, 2003, the trade symbol was changed to "NNBP". Since  
March, 2001, our Common Shares have traded through the Over The Counter Pink    
Sheets. The following table sets forth the high and low bid prices for Common   
Shares as reported by NASDAQ and OTC Pink Sheets for the periods indicated.     
Quotations on the NASDAQ OTC Pink Sheets reflect inter-dealer prices, without   
retail mark-up, mark-down or commission and may not represent actual            
transactions.                                                                   

                               High                    Low
                               ----                    ---
2002(1)                                                                         
-------                                                                         
First Quarter                            $0.05                    $0.05         
Second Quarter                           $0.04                    $0.02         
Third Quarter                            $0.17                    $0.12         
Fourth Quarter                           $2.15                    $0.40         

2003                                                                            
----                                                                            
First Quarter                            $1.70                    $0.50         
Second Quarter                           $0.69                    $0.24         
Third Quarter                            $1.34                    $0.62         
Fourth Quarter                           $1.05                    $0.49         

(1) On May 21, 2001, the Company filed for voluntary reorganization under       
Chapter 11 of the Bankruptcy Code. On November 20, 2002, the Company emerged    
from bankruptcy when the Middle District of Florida Court confirmed the         
Company's Plan of Reorganization. On March 26, 2004, the closing bid quote for  
the Common Shares was $.61 per share, and there were 217 holders of record of   
Common Shares.                                                                  

We have not paid cash dividends on our Common Shares and we do not anticipate   
doing so in the foreseeable future. The Company intends to retain earnings, if  
any, for future growth and expansion opportunities. Payment of cash dividends in
the future, as to which there can be no assurance, will be dependent upon the   
Company's earnings, financial condition, capital requirements and other factors 
determined by the Board of Directors.                                           

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Changes in Securities                                                           

From May 2001 through November 2002, the Company was in bankruptcy. Throughout  
bankruptcy, the Chairman, Secretary and CEO (collectively "NNBP Officers")      
funded the Company's administrative costs and provided management to the        
Company. During 2003, the Board of Directors authorized the issuance of stock in
satisfaction of the $750,000 liability. The liability was to be settled through 
the issuance of up to 75.0 million shares of the Company's stock. The 75.0      
million shares was based on the $750,000 at the then value of the stock ($.01   
per share average price during the bankruptcy period). This obligation has been 
recorded at $750,000 (based on the value at the measurement date) although      
shares were issued periodically throughout 2003. Certain shares were issued as  
preferred shares (at an equivalent value based on the conversion ratio of $44.11
per share) as the authorized shares of the Company did not permit such issuance.
Subsequent to December 31, 2003, the number of authorized shares was increased  
to 250,000,000, at which time preferred stock was converted to 35,048,445 shares
of Common stock.                                                                

As discussed in Note 2, an aggregate 30,998,000 shares were issued in connection
with the LABS acquisition. In addition, $159,200 of acquisition costs for LABS  
relates to an issuance of 4.0 million common shares to an entity controlled by  
the Chief Executive Officer and Chairman in connection with the facilitation and
bridge funding for the acquisition of LABS.                                     

An aggregate of 3,644,000 shares of stock were issued during 2003 in connection 
with the conversion of $728,800 in related party debt to equity. On November 18,
2003, we issued 25,000 shares of NNBP to an attorney in exchange for services.  
The shares were valued at $.60 per share. On December 21, 2003, we issued 25,000
shares of NNBP to a medical professional in exchange for services. The shares   
were valued at $.61 per share.                                                  

In addition, the Company sold 1,690,000 shares of stock at prices ranging from  
$.20 to $.40 for aggregate proceeds of $548,000 and 368,815 shares of preferred 
stock were converted to 16,268,430 shares of common stock.                      

In June 2003, we issued 24,400,000 shares in connection with the acquisition of 
approximately 74.4% of NanobacLabs Pharmaceuticals, Inc. From June5, 2003       
through July 21, 2003, we acquired an additional 20.2% in exchange for 6,598,000
shares of common stock.                                                         

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Selected Quarterly Financial Data                                               

                                                                · Download Table


                          Mar 31        Jun 30      Sep 30        Dec 31    
                          ------        ------      ------        ------    
                                                                            
2003 Quarter ended                                                          
------------------                                                          
       Revenue                   $0     $77,637      $241,340      $163,838 
       Net loss        ($1,234,083)  ($468,666)     ($929,230)  ($1,067,512)
      Loss per share:                                                       
          Basic             ($0.03)     ($0.01)        ($0.01)       ($0.01)
          Diluted           ($0.03)     ($0.01)        ($0.01)       ($0.01)

                          Mar 31        Jun 30      Sep 30       Dec 31     
                          ------        ------      ------        ------    
2002 Quarter ended                                                          
------------------                                                          
       Revenue                   $0             $0          $0            $0
       Net loss           ($31,301)     ($572,910)  ($388,666)    ($482,422)
      Loss per share:                                                       
          Basic               $0.00        ($0.05)     ($0.03)       ($0.03)
          Diluted             $0.00        ($0.05)     ($0.03)       ($0.03)

The 2003 results include the acquisition of LABS in June 2003. The 2003 and 2002
results reflect the removal of HealthCentrics' operations from continuing       
operations based on the October 2003 decision to dispose of this business       
segment.                                                                        

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ITEM 6. Selected Financial Data                                                 
-----------------------                                         

The following selected consolidated financial data has been derived from our    
consolidated financial statements. The information below should be read in      
conjuncture with "Management's Discussion and Analysis of Financial Condition   
and Results of Operations" and our Consolidated Financial Statements and related
notes. The following information is presented as of and for the period from     
February 22, 2002 (date of inception) through December 31, 2002 and as of and   
for the year ended December 31, 2003.                                           

                                                   2003             2002
                                                   ----             ----

Consolidated Balance Sheet Data:                                                
     Working Capital                                (6,763,635)        (340,922)
    Total assets                                    8,244,089            5,223
  Long-term debt, net of current                       --               --
     Shareholders' equity (deficit)                   (806,156)        (340,922)
    Shares outstanding at period end               99,968,840       19,982,965

Consolidated Statement of Operation Data:                                       
  Revenue                                           482,815             --
  Gross profit                                      149,693             --
     Operating loss                                 (2,700,211)         (43,621)
     Net loss                                       (3,699,491)      (1,475,299)
     Diluted earnings per share                          (0.05)           (0.11)
  Cash dividends                                       --               --
  Cash dividends per share                             --               --
    Weighted average common shares                 67,489,524       13,941,197

(1)  Consolidated Balance Sheet and Consolidated Statement of Operation data for
the year ended December 31, 2003 give effect to our acquisition of    
   NanobacLabs Pharmaceuticals, Inc. in June 2003 and Nanobac OY in November
  2003. Revenue for the year ended December 31, 2003 attributable to these
acquisitions was approximately $483,000.                              

(2)  Consolidated Statement of Operation data for the year ended December 31,   
2003 give effect for the October 2003 decision to dispose of the      
   HealthCentrics business Unit. Accordingly, HealthCentrics' operations for
2002 and 2003 have been removed from continuing operations.           

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Item 7. Management's Discussion and Analysis of Financial Condition and Results 
of Operation                                                    
        ------------------------------------------------------------------------

Overview                                                                        

With the June 2003 and November 2003 acquisitions of NanobacLabs                
Pharmaceuticals, Inc. ("LABS") and Nanobac OY ("OY"), our business is the study 
and development of therapeutic and diagnostic technologies related to the novel 
plemorphic pathogen known as nanobacterium sanguineum ("Nanobacteria").         

Background                                                                      

A schematic of our background is as follows:                                    

          ----------------------------------------------------------------
         November 2002
         Emerged from Bankruptcy
        as American Enterprise Corporation
        (trading symbol: AMER)
          ----------------------------------------------------------------
         I
          ----------------------------------------------------------------
         December 2002
         Acquired HealthCentrics, Inc.
        (Reverse merger accounting used)
          ----------------------------------------------------------------
         I
          ----------------------------------------------------------------
         June 2003
         Acquired majority interest in
        NanobacLabs Pharmaceuticals, Inc. ("LABS")
          ----------------------------------------------------------------
         I
          ----------------------------------------------------------------
         June 2003 - July 2003
         Changed name to Nanobac Pharmaceuticals, Incorporated
        Changed trading symbol to NNBP
          ----------------------------------------------------------------
         I
          ----------------------------------------------------------------
         July 2003 - December 2003
        Acquisition of minority shareholders
         of LABS
          ----------------------------------------------------------------
         I
          ----------------------------------------------------------------
         November 2003
         Acquired majority interest in
        Nanobac OY
          ----------------------------------------------------------------
         I
          ----------------------------------------------------------------
         January 2004 - March 2004
        Acquisition of minority shareholders
         Of Nanobac OY
          ----------------------------------------------------------------
         I
          ----------------------------------------------------------------
        March 2004
         Disposition of HealthCentrics
         to affiliates of Chairman and CEO
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Background                                                                      

Nanobac Pharmaceuticals, Incorporated, (f/k/a American Enterprise Corporation)  
("we", "our", "us" the "Company", "AMER", "NNBP") was formed as a Florida       
corporation during June 1994. At that time, our corporate name was National     
Diagnostics, Inc. and through our wholly-owned subsidiaries, we provided        
diagnostic imaging services through several outpatient centers in Florida.      
During 1998, we changed our corporate name to American Enterprise.Com, Corp.    

On May 1, 2001, American Enterprise.Com, Corp filed for voluntary reorganization
under Chapter 11 of the Bankruptcy Code. On November 20, 2002, we emerged from  
bankruptcy when the Middle District of Florida Court confirmed AMER's Plan of   
Reorganization (the "Confirmed Plan" or "Plan"). At time of the Plan            
confirmation, AMER had no assets and no liabilities. During the two-year period 
of our bankruptcy we conducted no activities except those matters required to   
complete the bankruptcy process.                                                

During December 2002, we acquired HealthCentrics, Inc., a privately-held Florida
corporation in exchange for 17.7 million share of stock. After this acquisition,
the former shareholders of HealthCentrics owned 99.7% of AMER. Since            
HealthCentrics is considered the acquirer for accounting and financial reporting
purposes, the transaction has been accounted for in accordance with reverse     
acquisition accounting principles as though it were a recapitalization of       
American Enterprise.Com, Corp. and a sale of shares by HealthCentrics, Inc. in  
exchange for the net assets of the Company. The financial statements include the
historical results of operations and cash flows of HealthCentrics, Inc. from    
inception.                                                                      

HealthCentrics is a development-stage Florida corporation formed February 22,   
2002 to organize, develop and market a suite of Web-based medical accounting,   
billing and management information services to third party billing companies,   
practice management and healthcare provider organizations. HealthCentrics has   
generated less than $100,000 revenue to date and has sustained losses in excess 
of $2 million since its inception. Because of the decision to focus on          
nanobacteria, the company decided to sell HealthCentrics during October 2003.   

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Current Developments                                                            

Acquisition of NanobacLabs Pharmaceuticals, Inc. - On June 4, 2003, we acquired 
approximately 74.4% of LABS from Gary S. Mezo and Nancy M. Schriewer-Mezo in    
exchange for 24,400,000 restricted shares of NNBP. From June 5, 2003 through    
July 21, 2003, we acquired an additional 20.2% of LABS from various stockholders
in exchange for 6,598,000 shares of NNBP, bringing our total ownership to 94.6% 
of LABS.                                                                        

Two entities ("Minority Stockholders") owned the remaining 5.4% of LABS. These  
two entities also had options to acquire an additional 5.4% of LABS in exchange 
for a cash contribution of $500,000 ("Minority Option"), which expired on March 
31, 2004. Except for their stock ownership, these Minority Stockholders are not 
affiliated with the Company. During October 2003, the Minority Stockholders     
exercised $100,000 of their Minority Option. Simultaneously with this           
transaction, we agreed to acquire the remaining outstanding shares of LABS from 
the Minority Stockholders plus the stock issued for the $100,000 Minority Option
exercise in exchange for 3,240,000 shares of NNBP. On December 31, 2003, the    
Minority Stockholders exercised the remaining $400,000 of their Minority        
Options. After further negotiations, the Minority shareholders agreed to sell   
the LABS' stock received for this option exercise in exchange for an additional 
2,820,000 shares of NNBP. After the conclusion of these transactions, the total 
shares due to the Minority Stockholders was 6,060,000 shares of NNBP. The       
obligation to issue the Minority Stockholders 6,060,000 shares of NNBP was      
settled by an entity controlled by the our Chairman and CEO ("Escape Velocity").
In exchange for the above, Escape Velocity was due $4.1 million which is        
included in shareholder loans at December 31, 2003.                             

As of December 31, 2003, we owned 100% of LABS and the former stockholders of   
LABS have received 37,058,000 shares of NNBP, which represents approximately 37%
of our common stock outstanding as of December 31, 2003.                        

The acquisition has been accounted for as a purchase business combination. Under
the purchase method of accounting, the assets acquired and liabilities assumed  
from LABS are recorded at the date of acquisition, at their respective fair     
values. Financial statements and reported results of operations of NNBP issued  
after completion of the acquisition will reflect these values, but will not be  
restated retroactively to reflect the historical financial position or results  
of operations of LABS.                                                          

Acquisition of Nanobac OY - Pursuant to a Share Purchase Agreement dated        
September 25, 2002, a Convertible Promissory Note Loans Purchase Agreement dated
September 25, 2002 (collectively, the "Acquisition Agreements"), LABS, agreed to
acquire a majority ownership of Nanobac Oy (a Finnish company) for approximately
697,000 Euros plus interest calculated at 7% per annum. Majority ownership would
only be obtained upon the conversion of the convertible promissory notes. In    
accordance with the terms of the agreements, the ownership of the stock and     
convertible notes would not be transferred until all payments were remitted by  
Nanobac.                                                                        

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Acquisition of Nanobac OY(continued)                                            

Pursuant to a Closing Agreement dated November 5, 2003, the final payment for   
Nanobac Oy was remitted on November 11, 2003. Immediately after the final       
payment was received, we exercised our conversion rights under the convertible  
notes. As a result of the above conversion, we owned 65% of Nanobac Oy. The     
remaining 35% was acquired from Dr. Kajander and Dr. Ciftcioglu in January 2004 
and March 2004 in exchange for 10 million shares of NNBP.                       

Nanobac Oy's assets consist of cash, property and equipment, and other tangible 
and intangible assets. Nanobac Oy's liabilities consist primarily of trade      
payables and other accruals. The purchase price and associated charges have been
allocated among the identifiable tangible and intangible assets of Nanobac Oy   
based on their fair market value at the acquisition date under the purchase     
method of accounting for business combinations.                                 

Nanobac OY is located in Kuopio, Finland and was created in partnership with the
Finnish government. Prior to the acquisition, Nanobac OY provided scientific    
research and diagnostic technology for nanobacteria. Nanobac OY holds US and EU 
patents for methods for eradication of nanobacteria [US Patent No. 6,706,290    
printed on March 16, 2004; EP 1094711].                                         

Disposition of HealthCentrics                                                   

Pursuant to a Share Purchase Agreement dated March 30, 2004, ("Agreement"),     
Nanobac Pharmaceuticals, Incorporated ("NNBP"), agreed to sell its entire       
interest in HealthCentrics, Inc. to Escape Velocity of Tampa Bay, Inc. ("Escape 
Velocity") in exchange for consideration of $250,000. NNBP decided in October   
2003 to divest its HealthCentrics Business Unit to focus exclusively on the     
development of its Nanobac business unit. NNBP has actively search for a buyer  
of its HealthCentrics business unit since October 2003 without success.         

Escape Velocity is an affiliate of NNBP as it is controlled by NNBP's Chairman  
and CEO. The consideration to be paid by Escape Velocity will be in the form of 
a reduction of its loan currently due from NNBP. It is management's belief that 
the sale price of $250,000 is an arm's length transaction. At December 31, 2003,
the book value of HealthCentrics' assets was less than $10,000 (primarily cash  
and receivables), while HealthCentrics liabilities to non-affiliates were       
approximately $450,000 (primarily accounts payable and accrued wages). As a     
result of the above transaction, NNBP is expected to recognize a one-time gain  
of approximately $690,000. Given the related party nature of the transaction,   
any gain will be treated as a capital contribution in 2004.                     

Since October 2003, the operations of HealthCentrics have been minimized until a
buyer was found. NNBP and/or Escape Velocity contributed approximately $5,000   
per month to fund the reduced operations of HealthCentrics.                     

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Stock Issuances to Officers - From May 2001 through November 2002, the Company  
was in bankruptcy. Throughout bankruptcy, the Chairman, Secretary and CEO       
(collectively "NNBP Officers") funded the Company's administrative costs and    
provided management to the Company. During 2003, the Board of Directors         
authorized the issuance of stock in satisfaction of the $750,000 liability. The 
liability was to be settled through the issuance of up to 75.0 million shares of
the Company's stock. The 75.0 million shares was based on the $750,000 at the   
then value of the stock ($.01 per share average price during the bankruptcy     
period). This obligation has been recorded at $750,000 (based on the value at   
the measurement date) although shares were issued periodically throughout 2003. 
Certain shares were issued as preferred shares (at an equivalent value based on 
the conversion ratio of $44.11 per share) as the authorized shares of the       
Company did not permit such issuance. Subsequent to December 31, 2003, the      
number of authorized shares was increased to 250,000,000, at which time         
preferred stock was converted to 35,048,445 shares of Common stock.             

The $750,000 value of the above issuances is included in general and            
administrative expenses for the year ended December 31, 2003.                   

In addition, 4.0 million common shares were issued to entities controlled by the
Chief Executive Officer and Chairman in connection with the facilitation and    
bridge funding for the acquisition of LABS.                                     

Change of Name - Effective June 20, 2003, we changed our name from American     
Enterprise Corporation to Nanobac Pharmaceuticals, Incorporated Effective July  
21, 2003, Nanobac Pharmaceuticals, Incorporated, began trading under the symbol 
"NNBP."                                                                         

Authorized Shares - Effective January 5, 2004, we increased our authorized      
shares of common stock from 100,000,000 shares to 250,000,000 shares. This      
increase in authorized shares was done in anticipation of approval from our     
stockholders at our annual meeting in May 2004.                                 

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Current Operations                                                              

As a result of the LABS and Nanobac OY acquisitions and the HealthCentrics      
disposition, our business is the study and development of therapeutic and       
diagnostic technologies related to the novel plemorphic pathogen known as       
nanobacterium sanguineum. We specialize in the following areas, utilizing       
clinical and scientific researchers, physicians and scientific collaborators:   

o        Healthcare                                         
>>    Medical diagnostics       
>>    Innovative therapeutics   
o        Bio-medical                                        
o        Bio-industrial                                     

The term "nanobacteria" is short for its scientific name Nanobacterium          
sanguineum, a Latin term for blood. Nanobacteria are "nano"-sized in that they  
are from 20-200 nanometers in size, which is 1/100th to 1/1,000th the size of   
regular bacteria. Compared to other bacteria, nanobacteria grow very slowly,    
only reproducing every three to six days. Consequently, it often takes many     
years for nanobacterial disease effects to develop. As a result of their        
extremely small size and slow growth rate, Nanobacteria had avoided detection   
and scientific study until they were discovered by Neva Ciftcioglu, PhD and     
Olavi Kajander, MD, PhD. Nanobacteria form a calcium coating around themselves  
that provides protection, and prevents them from being recognized as foreign    
substances or pathogens by the human body. Dr. Kajander has theorized that the  
human body does not recognize nanobacteria as harmful, and accordingly,         
nanobacteria could be the cause of pathological disease causing calcification   
found in multiple diseases. This theory has been disputed by several members in 
the scientific community. The Company is conducting studies to determine the    
extent, if any, that this theory is correct.                                    

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Results of Operation                                                            

The following table presents the                                                
percentage of period-over-period dollar change for the line items in our        
Condensed Consolidated Statements of Operations for the year ended December 31, 
2003 and the period from February 22, 2002 (date of inception) through December 
31, 2002. Due to the significance of the LABS and OY acquisitions, we are also  
presenting the proforma percentage of total revenue and the proforma percentage 
of period-over-period dollar change for the line items in our Condensed         
Consolidated Statements of Operations on the basis that the LABS and OY         
acquisitions had taken place at the beginning of the each period presented.     
These comparisons of financial results are not necessarily indicative of future 
results.                                                                        

                                                        · Enlarge/Download Table


                                                                Year ended December 31, 2003                             
                                     ------------------------------------------------------------------------------------
                                                                              Proforma         Proforma                  
                                            2003            2002                2003             2002         % change   
                                            ----            ----                ----             ----         --------   

                                                                                                                         
Revenue                                        $482,815           $0             $1,193,770     $2,712,366          -56% 
Cost of revenue                                 333,122            0                741,897        839,871          -12% 

                                     -------------------------------    ---------------------------------                
     Gross Profit                               149,693            0                451,873      1,872,495          -76% 
     Gross Profit percentage                        31%                                 38%            69%               

Bankruptcy-related stock based                                                                                           
compensation                                    750,000                             750,000                              
Selling, general and administrative           1,378,375       43,621              2,807,752      2,337,953           20% 
Research and development                        540,426            0                761,406         99,744          663% 
Depreciation and amortization                   181,103            0                430,535        369,909           16% 

                                     -------------------------------    ---------------------------------                
     Operating loss from continuing                                                                                      
     operations                            ($2,700,211)    ($43,621)           ($4,297,819)     ($935,111)          360% 
                                     ===============================    =================== =============                

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Year ended December 31, 2003 Compared to February 22, 2002 (date of inception)  
Through December 31, 2002                                                       

Revenue                                                                         

Revenue for the year ended December 31, 2003 reflects the acquisition of LABS in
June 2003 and OY in November 2003. On a proforma basis (assuming LABS and OY    
were acquired on the first date of each reporting period), Revenue decreased 56%
for the year ended December 31, 2003 compared to 2002. During the fourth quarter
of 2002, LABS decided to concentrate their resources on scientific research to  
provide validation and further credibility to our nanobacteria products. As a   
result of this change in focus, several revenue sources significantly declined. 

During December 2003, we voluntarily discontinued offering NanobacTX(TM), which 
accounted for approximately 80% of our revenue for the year ended December 31,  
2003. Accordingly, our revenue for the first quarter of 2004 will be            
significantly reduced from the level experienced in 2003. During February 2004, 
we licensed an over the counter product that is similar to Nanobac TX except    
that tetracycline (prescription drug component in Nanobac TX) has been removed  
from the product we are licensing. While we anticipate that the license revenue 
from this new product will replace the revenue we lost from discontinuance of   
Nanobac TX, we are not able to determine if this will actually occur during     
2004. We are also in the process of accelerating our research and developing new
products for better patient acceptance and compliance with governmental         
regulations.                                                                    

Cost of revenue                                                                 

Virtually all of the cost of revenue for the year ended December 31, 2003       
reflects the acquisition of LABS on June 4, 2003. Cost of revenue was           
approximately 69% of revenue for the year ended December 31, 2003. This compares
to a proforma cost of revenue of 31% of revenue for 2002 (assuming LABS and OY  
were acquired in the first date of each reporting period). The increase of cost 
of revenue as a percentage of revenue primarily reflects fixed costs of $37,500 
per month for lab work from July 2003 through October 2003. This contract was   
terminated in October 2003 so that future lab work will be more of a variable   
cost.                                                                           

Gross Profit                                                                    

Gross profit is 31% for the year ended December 31, 2003. Proforma gross profit 
(assuming LABS and OY were acquired at the beginning of each reporting period)  
decreased to 38% for the year ended December 31, 2003 compared to 69% in 2002.  
The decrease reflects lower sales volume and $37,500 of fixed lab costs from    
July 2003 through October 2003.                                                 

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Selling, General and Administrative                                             

Selling, general and administrative ("SG&A") expenses include a $750,000 charge 
for stock issuances to our officers associated with services performed during   
the period of the bankruptcy. Excluding these one-time charges, SG&A expenses   
increased $1.3 million for the year ended December 31, 2003 compared to 2002.   
This increase reflects the June 4, 2003 acquisition of LABS.                    

On a proforma basis (assuming LABS and OY were acquired on the first date of    
each reporting period) and excluding one-time charges, SG&A expenses increased  
20% for the year ended December 31, 2003 compared 2002. This increase reflects  
LABS plan of marketing its pharmaceutical products to the medical community.    

Research and Development                                                        

Proforma research & development ("R&D"), assuming LABS and OY were acquired on  
the first date of each reporting period, for the years ended December 31, 2003  
and 2002 is summarized as follows:                                              

                                   2003          2002       % change
                                   ----          ----       --------

Research and Development           $761,406       $99,744       663%    

As demonstrated above, we are increasing our investment in nanobacteria R&D.    

We intend to continue to expand our nanobacteria R&D investment in the coming   
year. We have recently announced two new epidemiological research studies on    
nanobacteria that we are conducting with Stephen E. Epstein, MD, Director of the
Cardiovascular Research Institute, Washington Hospital Center, Washington, D.C. 
and E. Olavi Kajander, MD, Phd, Director of research and science for NNBP in    
Finland and the United States.                                                  

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Minority Interest                                                               

The minority interest gain represents that portion of the LABS loss that is     
allocated to minority stockholders of LABS and OY. The gain is limited to the   
amount of minority interest recorded in the initial acquisition. During October 
2003, we acquired the remaining ownership of LABS. During January through March,
2004, we acquired the remaining interest of OY. Accordingly, minority interest  
will be eliminated in the future unless another acquisition takes place.        

Discontinued Operations                                                         

During October 2003, we decided to divest our HealthCentrics' business unit to  
focus exclusively on our nanobacteria business unit. We were unsuccessful in    
finding a buyer in 2003 for this Business Unit. During March 2004, this business
unit was sold to an affiliate of the Chairman and CEO for consideration of      
$250,000. We expect to recognize a gain of approximately $690,000 in the first  
quarter of 2004 as a result of this disposition, which will be accounted for as 
a capital contribution given the related party nature of the contract.          

As a result of our decision to dispose of the HealthCentrics business unit, the 
operations of HealthCentrics are retroactively removed from continuing          
operations and disclosed as a single line item on the statements of operations. 
The loss from discontinued operations for the period from February 22, 2002     
(date of inception) through December 31, 2002 and the year ended December 31,   
2003 is summarized as follows:                                                  

                                                   2003               2002
                                                   ----               ----

Revenue                                           $    19,970       $    11,555 
Cost of revenue                                        62,570             4,316 

                                                 -----------       -----------
 Gross profit (loss)                                 (42,600)            7,239

Selling, general & administrative                     692,407           994,999 
Research and development                              203,351           443,918 

                                                 -----------       -----------
  Net loss                                        ($  938,358)      ($1,431,678)
                                                 ===========       ===========

Net Loss                                                                        

Our net loss was $3.7 million for the year ended December 31, 2003. Excluding   
the one-time charge for the bankruptcy-related common stock issuances and       
discontinued operations, our net loss was approximately $2.0 million for the    
year ended December 31, 2003.                                                   

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Liquidity and Capital Resources                                                 

Since emerging from Chapter 11, we have financed our activities primarily from  
advances from affiliates of our Chairman and CEO, and from other shareholders,  
and from private placements of NNBP's common stock. As of December 31, 2003 the 
stockholder loan was approximately $5.6 million, which is due to Escape         
velocity, an affiliate of our Chairman and CEO. For the year ended December 31, 
2003, $728,800 of shareholder advances were converted into 3,644,000 shares of  
common stock. An additional $548,000 of cash was received for the direct sale of
1,690,000 shares of restricted common stock to outside investors.               

As of December 31, 2003, we had total assets of $8.2 million of which $287,000  
were current assets. At December 31, 2003, we had total current liabilities of  
$6.9 million and no long-term liabilities other than deferred taxes. Our working
capital deficit at December 31, 2003 was $6.8 million and we had a retained     
deficit of $17.2 million.                                                       

Net cash used in operations was $2.2 million for the year ended December 31,    
2003. The negative cash flow from operations reflects the $3.7 million net loss 
for the period offset by the one-time non-cash charge of $780,000 for common    
stock issued to our affiliates of our officers, depreciation and amortization of
$181,000 and an increase in accounts payable and accrued expenses of            
approximately $424,000.                                                         

Net cash provided by investing activities was approximately $198,000 for the    
year ended December 31, 2003 which reflects the receipt of $300,000 from the    
exercise of the Minority Options in Labs by the Minority Stockholders offset by 
our purchase of fixed assets of $18,000 and our acquisition of Nanobac OY (net  
of the cash balance in LABS and OY as of the acquisition dates).                

Net cash provided by financing activities was $2.0 million for the year ended   
December 31, 2003. This primarily reflects advances and capital contributions by
stockholders of $2.5 million offset by $486,000 of payments on the Nanobac OY   
note payable.                                                                   

We are dependent on raising additional funding necessary to implement its       
business plan as outlined above. Should we not be successful in raising cash    
from our Chairman and CEO and other investors, we are unlikely to continue as a 
going concern.                                                                  

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Recent Accounting Pronouncements                                                

In December 2003, the FASB issued FASB Interpretation No. 46, Consolidation of  
Valuable Interest Entities(Amended). This interpretation clarifies rules        
relating to consolidation where entities are controlled by means other than a   
majority voting interest and instances in which equity investors do not bear the
residual economic risks. This interpretation was originally effective           
immediately for variable interest entities created after January 31, 2003 and   
for interim periods beginning after June 15, 2003 for interests acquired prior  
to February 1, 2003. However, the FASB is reviewing certain provisions of the   
standard and has deferred the effective date for public companies to periods    
ending after December 15, 2003. The Company currently has no ownership in       
variable interest entities and therefore adoption of this standard currently has
no financial reporting implications.                                            

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on      
Derivative Instruments and Hedging Activities. The statement amends and         
clarifies accounting and reporting for derivative instruments, including certain
derivative instruments embedded in other contracts, and hedging activities. This
statement is designed to improve financial reporting such that contracts with   
comparable characteristics are accounted for similarly. The statement, which is 
generally effective for contracts entered into or modified after June 30, 2003, 
did not have impact on The Company's financial position or results of           
operations.                                                                     

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial     
Instruments with Characteristics of Both Liabilities and Equity. This statement 
establishes standards for how an issuer classifies and measures certain         
financial instruments with characteristics of both liabilities and equity. This 
statement is effective for financial instruments entered into or modified after 
May 31, 2003, and is otherwise effective at the beginning of the first interim  
period beginning after June 15, 2003. At December 31, 2003, The Company had no  
such financial instruments outstanding and therefore adoption of this standard  
had no financial reporting implications.                                        

Critical accounting policies                                                    

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

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Contractual obligations                                                         

At December 31, 2003, the Company's contractual cash obligations, with initial  
or remaining terms in excess of one year, were as follows:                      

                    Amount of Commitment ($)
                  Expired by Year Ended December 31,
                  ----------------------------------

                 Long-term     Operating      Annual
                    Debt       Leases          Total
                   --------     --------      --------

Less than 1 year            $   --      $192,099      $192,099        
2 - 3 years                     --       341,040       341,040        
3 - 5 years                     --       155,513       155,513        
5 - 7 years                     --        81,134       81,134         
                 --------      --------     --------
Total                            $   --      $769,787     $769,787              
                 ========      ========     ========

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Forward Looking Statements                                                      

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

Risk Factors                                                                    

Trends, Risks and Uncertainties                                                 

We have sought to identify what we believe to be the most significant risks to  
our business. However, we cannot predict whether, or to what extent, any of such
risks may be realized nor can we guarantee that we have identified all possible 
risks that might arise. Investors should carefully consider all of such risk    
factors before making an investment decision with respect to our Common Stock.  

Cautionary Factors that may Affect Future Results                               

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

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Item 7.  Management's Discussion and Analysis of Financial Condition and Results
of Operation (continued)                                      
         -----------------------------------------------------------------------

Risk Factors (continued)                                                        

Reliance on our Chairman of the Board, Chief Executive Officer and Majority     
Shareholder; Possible Future Dilution                                           

We have limited working capital and are primarily relying upon borrowed funds to
operate. The operations of Nanobac and HealthCentrics are generating a financial
and cash loss. Throughout 2003, affiliates of our Chairman of the Board, Chief  
Executive Officer and major shareholders, Mr. John Stanton and Mr. Alexander    
Edwards III, have provided our capital needs through loans to both of these     
business segments. While our Chairman and CEO continue to provide for the       
majority of our capital requirements, they are under no obligation to continue  
such financing and/or strategic guidance. In the event our Chairman and CEO     
should discontinue his support, we may have difficulty in continuing our        
operations. In such an event, shareholders could lose their investment in its   
entirety. Historically, our Chairman and CEO have provided capital to us on a   
demand debt basis after which they may convert debt into shares of our common   
stock. If, in the future we require additional capital, our Chairman and CEO may
contribute some or all of our requirements. We anticipate that as a part of any 
such loan, our Chairman and CEO would have rights to convert into additional    
shares of our common stock. In such an event and to the degree of which we      
require our Chairman and CEO's support, shareholders may experience dilution. At
present, we do not maintain key man insurance for our Chairman and CEO.         

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

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

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Item 7.  Management's Discussion and Analysis of Financial Condition and Results
of Operation (continued)                                      
         -----------------------------------------------------------------------

Limited Operating History Anticipated Losses; Uncertainty of Future Results     

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

Federal Food and Drug Administration                                            

Some or all of our pharmaceutical products may be governed by rules and         
regulations established by the United States Food and Drug Administration       
("FDA"). Changes in FDA regulations and the enforcement thereof may affect our  
biolife science business.                                                       

Data Obtained Through Clinical Trials.                                          

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

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Item 7.  Management's Discussion and Analysis of Financial Condition and Results
of Operation (continued)                                      
         -----------------------------------------------------------------------

Competitors in the Pharmaceutical Industry May Develop Competing Technologies   

Drug companies and/or other health care companies may seek to develop and market
technologies which may compete with our Company's technology. While we believe  
that our technology regarding the prescription treatment of nanobacterial       
infections caused by nanobacterium sanguineum is unique, other competitors may  
develop similar or different treatments which may become more accepted by the   
marketplace.                                                                    

Acceptance of Products in the Marketplace is Uncertain.                         

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

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

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Item 7.  Management's Discussion and Analysis of Financial Condition and Results
of Operation (continued)                                      
         -----------------------------------------------------------------------

Government Regulation                                                           

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

Intellectual Property Rights                                                    

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

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

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

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Item 7.  Management's Discussion and Analysis of Financial Condition and Results
of Operation (continued)                                      
         -----------------------------------------------------------------------

Competition                                                                     

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

Potential Fluctuations in Quarterly Operating Results                           

Our quarterly operating results may fluctuate significantly in the future as a  
result of a variety of factors, most of which are outside of our control,       
including: the demand for our software; seasonal trends in purchasing; the      
amount and timing of capital expenditures and other costs relating to the       
development of our software; price competition or pricing changes in the        
industry; technical difficulties or system downtime; general economic           
conditions, and economic conditions specific to the healthcare industry. Our    
quarterly results may also be significantly impacted by the accounting treatment
of acquisitions, financing transactions or other matters. Particularly at our   
early stage of development, such accounting treatment can have a material impact
on the results for any quarter. Due to the foregoing factors, among others, it  
is likely our operating results will fall below our expectations or those of    
investors in some future quarter.                                               

Lack of Independent Directors                                                   

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

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Item 7.  Management's Discussion and Analysis of Financial Condition and Results
of Operation (continued)                                      
         -----------------------------------------------------------------------

Limitation of Liability and Indemnification of Officers and Directors           

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

Continued Control by Current Officers and Directors                             

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

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Item 7.  Management's Discussion and Analysis of Financial Condition and Results
of Operation (continued)                                      
         -----------------------------------------------------------------------

Limited Market Due To Penny Stock                                               

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

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Item 7.  Management's Discussion and Analysis of Financial Condition and Results
of Operation (continued)                                      
         -----------------------------------------------------------------------

Item 7a: Quantitative and Qualitative Risk                                      
---------------------------------                             

Virtually all of our operations are conducted in the United States. However, the
acquisition of Nanobac OY, which was concluded in November 2003, is structured  
in Euros. Accordingly, we are exposed to market risk from changes in exchange   
rates between the U.S. dollar and the Euro on the balance sheet of Nanobac OY   
and on future transactions of Nanobac OY.                                       

We do not engage in hedging transactions and are not a party to any leveraged   
derivatives.                                                                    

ITEM 8.  Financial Statements and Supplementary Data                            
-------------------------------------------                   

The information required by this item is incorporated herein by reference to  
the financial statements listed in Item 15(a) of Part IV of this Form 10-K      
Annual Report.                                                                  

ITEM 9.  Changes in and Disagreements with Independent Auditors on Accounting   
and Financial Disclosures                                     
         -----------------------------------------------------------------------

There have been no disagreements with any of our accountants on any matter of   
accounting principles or practices, financial statement disclosure, or auditing 
scope or procedure. On January 30, 2004, we appointed Aidman Piser & Company as 
the independent accounting firm engaged as the principal accounting firm to     
audit our financial statements for the year ended December 31, 2003. The        
decision to change the principal accounting firm was approved by our Board of   
Directors on January 30, 2004. For further information relating to our change in
certifying accountants, please refer to our Current Report on Form 8-K dated    
January 30, 2004 on file with the Commission.                                   

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PART III

We will file with the Securities and Exchange Commission a definitive Proxy     
Statement, pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended, not later than 120 days after the end of its fiscal year.           
Accordingly, certain information required by Part III has been omitted under    
Item G of the general Instructions for Form 10-K. Only these sections of the    
definitive Proxy Statement which specifically address the items set forth herein
are incorporated by reference.                                                  

ITEM 10.  Directors and Executive Officers of the registrant                    
--------------------------------------------------          

The sections entitled "Election of Directors" and "Section 16(a) Beneficial     
Ownership Reporting Compliance" in our definitive proxy statement for our 2004  
Annual Meeting of Stockholders, which we intend to file with the Securities and 
Exchange Commission ("SEC") no later than April 30, 2004, are incorporated by   
reference into this Annual Report on Form 10-K. Information concerning our      
Executive Officers is set forth in Item 1 of Part I of this Annual Report on    
Form 10-K.                                                                      

ITEM 11. Executive Compensation                                                 
----------------------                                        
The section entitled "Executive Compensation" in our definitive proxy statement 
for our 2004 Annual Meeting of Stockholders, which we intend to file with the   
SEC no later than April 30, 2004, is incorporated by reference into this Annual 
Report on Form 10-K.                                                            

ITEM 12.  Security Ownership of Certain Beneficial Owners and Management and    
Related Stockholder Matters                                 
      ------------------------------------------------------------------

The section entitled "Share Ownership" in our definitive proxy statement for our
2004 Annual Meeting of Stockholders, which we intend to file with the SEC no    
later than April 30, 2004, are incorporated by reference into this Annual Report
on Form 10-K.                                                                   

ITEM 13. Certain Relationships and Related Transactions                         
----------------------------------------------                

The sections entitled "Executive Compensation" and "Related Party Transactions" 
in our definitive proxy statement for our 2004 Annual Meeting of Stockholders,  
which we intend to file with the SEC no later than April 30, 2004, are          
incorporated by reference into this Annual Report on Form 10-K.                 

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ITEM 14.  Controls and Procedures                                               
-----------------------                                     

(a) Under the supervision and with the participation of our management,         
including our principal executive officer and principal financial officer, we   
have evaluated the effectiveness of the design and operation of our disclosure  
controls and procedures within 90 days of the filing date of this report, and,  
based on their evaluation, our principal executive officer and principal        
financial officer have concluded that these controls and procedures are         
effective. There were no significant changes in our internal controls or in     
other factors that could significantly affect these controls subsequent to the  
date of their evaluation.                                                       

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

(b) Changes in Internal Controls. There were no significant changes in our      
internal controls or in other factors that could significantly affect these     
controls subsequent to the date of their evaluation, nor were there any         
significant deficiencies or material weaknesses in our internal controls.       
Accordingly, no corrective actions were required or undertaken.                 

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 PART IV

ITEM 15.  Exhibits, Financial Statement Schedules and Reports on Form 8-K       

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

(1)   Financial Statements                                                
---------------------                                         
The following Financial Statements are included herein:                         
                                                                        Page
                                                                        Number
                                                                        ------

o    Report of Aidman Piser & Company, Independent Auditors                F-1  
o    Report of Baumann, Raymondo & Company, P.A.                           F-2  
o    Consolidated Statements of Operations for the year                         
ended December 31, 2003 and the period from February 22, 2002         
   (date of inception) through December 31, 2002                         F-3
o    Consolidated Balance Sheets at December 31, 2003 and 2002             F-4  
o    Consolidated Statements of Stockholders' Equity (Deficit)                  
for the year ended December 31, 2003 and the period from              
   February 22, 2002 (date of inception) through December 31, 2002       F-5
o    Consolidated Statements of Cash Flows for the year ended                   
December 31, 2003 and the period from February 22, 2002               
   (date of inception) through December 31, 2002                         F-6
o    Notes to Consolidated Financial Statements                         F-7-F-20

(2)   Financial Statement Schedules                                       
-----------------------------                                 

        Financial Statement Schedules have been omitted because they are not
        applicable or are not required or the information required to be set
         forth therein is included in the consolidated financial statements or
notes thereto.                                              

(b)   Form 8-K                                                                  
--------                                                            

   (1) Reports on Form 8-K filed during the quarter ended December 31, 2003:

         The Registrant filed a report on Form 8-KA on November 26, 2003 under
     Item 2 and Item 7 announcing its conclusion of the acquisition of
Nanobac OY.                                                 

(c)   Exhibits                                                                  
--------                                                            

The following exhibits are filed as a part of, or are incorporated by 
reference into, this Report on Form 10-K:                             

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 EXHIBIT INDEX

Exhibit                                                                         
Number                               Description                                
-------    ---------------------------------------------------------------------

3.1        Restated Articles of Incorporation                                   

3.2        By-Laws (Previously filed with the SEC as an exhibit to the          
   Registrant's Annual Report on Form 10-KSB fore the year ended
December 31, 2002)                                        

10.1       First Amended Plan of Reorganization of American Enterprise.com Corp.
      (Previously filed with the SEC as an exhibit to the Registrant's
          Current Report on Form 8-K dated December 10, 2002, and incorporated
herein by reference)                                      

10.2       Acquisition Agreement dated December 6, 2002, between American       
          Enterprise Corporation and HealthCentrics, Inc. and its shareholders
      (Previously filed with the SEC as an exhibit to the Registrant's
            Current Report on Form 8-K dated December 13, 2002, and incorporated
herein by reference)                                  

10.3       License agreement dated February 1, 2002 between HealthCentrics, Inc.
         and MRX-NET.COM (Previously filed with the SEC as an exhibit to the
   Registrant's Annual Report on Form 10-KSB fore the year ended
December 31, 2002)                                        

10.4       Agreement and Plan of Reorganization dated June 1, 2003 between      
         Nanobac Pharmaceuticals, Inc. and NanobacLabs Pharmaceuticals, Inc.

10.5       Share Purchase Agreement dated September 25, 2002 between            
 NanobacLabs, L.L.C. and selected shareholders of Nanobac OY
      (Previously filed with the SEC as an exhibit to the Registrant's
          Current Report on Form 8-K dated November 26, 2003, and incorporated
herein by reference)                                      

10.6       Convertible Promissory Note Loans Purchase Agreement dated           
 September 25, 2002 between NanobacLabs, L.L.C. and selected
     shareholders of Nanobac OY (Previously filed with the SEC as an
           exhibit to the Registrant's Current Report on Form 8-K dated November
26, 2003, and incorporated herein by reference)           

10.7       Closing Agreement dated November 5, 2003 between NanobacLabs, L.L.C. 
        and selected shareholders of Nanobac OY (Previously filed with the
      SEC as an exhibit to the Registrant's Current Report on Form 8-K
    dated November 26, 2003, and incorporated herein by reference)

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10.10      Loan Agreement dated December 31, 2003 between Nanobac               
Pharmaceuticals, Inc. and Escape Velocity, Inc.           

10.11      Employment by and between Nanobac Pharmaceuticals, Inc. and Alex H.  
Edwards III dated January 26, 2004                        

16.1       Baumann, Raymondo & Company, P.A. letter to the Securities and       
       Exchange Commission dated February 3, 2004 (Previously filed with
          the SEC as an exhibit to the Registrant's Current Report on Form 8-K
   dated January 30, 2004, and incorporated herein by reference)

21.1       List of Subsidiaries                                                 

23.1       Consent of Aidman Piser & Company                                    
23.2       Consent of Baumann, Raymondo and Company, P.A.                       

31(a)      Certifications pursuant to 29 U.S.C. Section 1350, as                
adopted pursuant to Section 906 of the Sarbanes-Oxley Act 
of 2002 - Chairman and Chief Executive Officer            

31(b)      Certifications pursuant to 29 U.S.C. Section 1350, as                
adopted pursuant to Section 906 of the Sarbanes-Oxley Act 
of 2002 - Chief Financial Officer                         

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SIGNATURES                                                                      

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange  
Act of 1934, the Registrant has duly caused this report to be signed on its     
behalf by the undersigned; thereunto duly authorized, on this 31st day of March,
2004.                                                                           

                                     Nanobac Pharmaceuticals, Incorporated

                             By: /s/ Alexander Edwards III
                                           -----------------------------------
                             Alexander Edwards III
                               Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of Registrant and in   
the capacities indicated on March 31, 2004.                                     

Signature                                   Title           
---------                                   -----           

/s/  John D. Stanton                        Chairman of the Board of Directors  
-------------------------------             (Principal Financial and Accounting 
John D. Stanton                        Officer)                       

/s/  Alexander Edwards III                  Chief Executive Officer (Principal  
-------------------------------             Executive Officer) and Director     
Alexander Edwards III                                                 

/s/  Jan Egberts                            Director                            
-------------------------------                                                 
Jan Egberts, M.D.                                                     

/s/  Stephan Rechtschaffen                  Director                            
-------------------------------                                                 
Stephan Rechtschaffen, M.D.                                           

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Independent Auditors' Report
----------------------------

Board of Directors                                                              
Nanobac Pharmaceuticals, Incorporated and Subsidiaries                          
Tampa, Florida                                                                  

We have audited the accompanying consolidated balance sheet of Nanobac          
Pharmaceuticals, Inc. and Subsidiaries (F/K/A American Enterprise Corporation)  
(the "Company"), as of December 31, 2003, and the related consolidated          
statements of operations, stockholders' deficit and cash flows for the year then
ended. These financial statements are the responsibility of the Company's       
management. Our responsibility is to express an opinion on these financial      
statements based on our audit.                                                  

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

In our opinion, the consolidated financial statements referred to above present 
fairly, in all material respects, the consolidated financial position of Nanobac
Pharmaceuticals, Inc. and Subsidiaries, at December 31, 2003, and the           
consolidated results of their operations and their cash flows for the year then 
ended in conformity with accounting principles generally accepted in the United 
States of America.                                                              

The accompanying financial statements have been prepared assuming that the      
Company will continue as a going concern. As discussed in Note 1 to the         
financial statements, the Company has suffered recurring losses from operations,
has working capital and net capital deficiencies and is dependent upon continued
financing from stockholders and outside investors, all of which raise           
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 1. The financial    
statements do not include any adjustments that might result from the outcome of 
this uncertainty.                                                               

                                           /s/ Aidman, Piser & Company, P.A.
                                           ---------------------------------
                                       Aidman, Piser & Company, P.A.

March 26, 2004, except for Note 3, for which                                    
the date is March 30, 2004                                                
Tampa, Florida                                                                  

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INDEPENDENT AUDITORS' REPORT
----------------------------

To the Board of Directors and Stockholders                                      
American Enterprise Corporation (A Development Stage Company)                   
Tampa, Florida                                                                  

We have audited the accompanying consolidated balance sheet of American         
Enterprise Corporation (formerly American Enterprise.Com Corporation) as of     
December 31, 2002, and the related consolidated statements of operations, cash  
flows and stockholders' (deficit) for the period then ended. These consolidated 
financial statements are the responsibility of the Company's management. Our    
responsibility is to express an opinion on these consolidated financial         
statements based on our audit.                                                  

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

In our opinion, the consolidated financial statements referred to above present 
fairly in all material respects, the financial position of American Enterprise  
Corporation at December 31, 2002, and the result of its operations, and its cash
flows for the period then ended in conformity with accounting principles        
generally accepted in the United States of America.                             

As discussed in Note 1, the Company has been in the development stage since its 
inception on February 22, 2002. Realization of a major portion of the assets is 
dependent upon the Company's ability to meet its future financing requirements, 
and the success of future operations. These factors raise substantial doubt     
about the Company's ability to continue as a going concern                      

/s/ BAUMANN, RAYMONDO & COMPANY, P.A.                                           
-------------------------------------                                           
BAUMANN, RAYMONDO & COMPANY, P.A.                                               
Tampa, Florida                                                                  
January 31, 2003                                                                

F-2 

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                  NANOBAC PHARMACEUTICALS INC. AND SUBSIDIARIES                                                
                           CONSOLIDATED BALANCE SHEET                                                          

                                                                 December 31, 2003                             
                                                                 -----------------                             
                                     ASSETS                                                                    
CURRENT ASSETS                                                                                                 
                                                                                                               
     Cash                                                           $    49,755                                
     Account receivable                                                   5,765                                
     Inventory                                                           16,211                                
     Other current assets                                                14,880                                
                                                                    -----------                                
        Total current assets                                             86,611                                
                                                                    -----------                                

FIXED ASSETS, less accumulated depreciation                             135,259                                

OTHER ASSETS                                                                                                   
     Security deposits                                                   70,110                                
     Intangible assets, less accumulated amortization                                                          
        of $162,926                                                   2,136,717                                
     Goodwill                                                         5,815,393                                
                                                                    -----------                                
        Total other assets                                            8,022,220                                
                                                                    -----------                                

            TOTAL ASSETS                                            $ 8,244,090                                
                                                                    ===========                                

                     LIABILITIES AND STOCKHOLDERS' DEFICIT                                                     

CURRENT LIABILITIES                                                                                            
     Accounts payable                                               $   752,600                                
     Accrued expenses                                                   367,637                                
     Short-term note payable                                             90,000                                
     Stockholder loans                                                5,640,009                                
                                                                    -----------                                
        Total current liabilities                                     6,850,246                                

OTHER LIABILITIES                                                                                              
     Deferred tax liability                                           2,200,000                                
                                                                    -----------                                
            TOTAL LIABILITIES                                         9,050,246                                
                                                                    -----------                                

COMMITMENTS (Note 12)                                                      --                                  

STOCKHOLDERS' DEFICIT                                                                                          
     Common stock, no par value, 100,000,000                                                                   
        shares authorized, 99,968,840 issued and outstanding          4,233,788                                
     Preferred stock, no par value, 1,000,000                                                                  
        shares authorized, 794,569 shares issued and outstanding        350,484                                
     Due from option exercise (Note 2)                                 (200,000)                               
     Accumulated deficit                                             (5,174,790)                               
     Accumulated other comprehensive loss                               (15,638)                               
                                                                    -----------                                
        Total stockholders' deficit                                    (806,156)                               
                                                                    -----------                                

            TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT             $ 8,244,090                                
                                                                    ===========                                

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

                                      F-3                                                                      

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                             NANOBAC PHARMACEUTICALS INC. AND SUBSIDIARIES                                     
                                 CONSOLIDATED STATEMENTS OF OPERATIONS                                         

                                                                                  February 22, 2002            
                                                              Year               (date of inception)           
                                                              ended                    through                 
                                                        December 31, 2003         December 31, 2002            
                                                        -----------------         -----------------            

REVENUE                                                   $    482,815              $       --                 

COST OF REVENUE                                                333,122                      --                 
                                                          ------------              ------------               

GROSS PROFIT                                                   149,693                      --                 
                                                          ------------              ------------               

OPERATING EXPENSES                                                                                             
     Sales, general and administrative                       2,128,375                    43,621               
     Research and development                                  540,426                      --                 
     Depreciation and amortization                             181,103                                         
                                                          ------------              ------------               
        Total Operating Expenses                             2,849,904                    43,621               
                                                          ------------              ------------               

OPERATING LOSS                                              (2,700,211)                  (43,621)              

NET OTHER EXPENSES                                                                                             
     Interest expense                                          (42,934)                     --                 
     Other, net                                                (21,533)                     --                 
                                                          ------------              ------------               

LOSS FROM CONTINUING OPERATIONS BEFORE                                                                         
      INCOME TAXES & MINORITY INTEREST                      (2,764,678)                  (43,621)              

PROVISION FOR INCOME TAXES                                        --                        --                 
                                                          ------------              ------------               

LOSS FROM CONTINUING OPERATIONS BEFORE                                                                         
     MINORITY INTEREST                                      (2,764,678)                  (43,621)              

MINORITY INTEREST                                                3,545                      --                 
                                                          ------------              ------------               

LOSS FROM CONTINUING OPERATIONS                             (2,761,133)                  (43,621)              

DISCONTINUED OPERATIONS:                                                                                       
     Loss from discontinued operations (no applicable                                                          
        income taxes)                                         (938,358)               (1,431,678)              
                                                          ------------              ------------               

NET LOSS                                                  $ (3,699,491)             $ (1,475,299)              
                                                          ============              ============               

NET LOSS PER COMMON SHARE                                                                                      

     Basic                                                $      (0.05)             $      (0.11)              
                                                          ------------              ------------               

     Diluted                                              $      (0.05)             $      (0.11)              
                                                          ------------              ------------               

WEIGHTED AVERAGE NUMBER OF                                                                                     
     COMMON SHARES OUTSTANDING                                                                                 

     Basic                                                  67,489,524                13,941,197               
                                                          ------------              ------------               

     Diluted                                                67,489,524                13,941,197               
                                                          ------------              ------------               

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

                                                  F-4                                                          

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                                NANOBAC PHARMACEUTICALS INC. AND SUBSIDIARIES                                  
                          CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)                             
                              FOR THE PERIODS ENDED DECEMBER 31, 2003 AND 2002                                 

                                       Common          Stock        Preferred          Stock       Additional  
                                    ----------------------------   ----------------------------     Paid-in    
                                       Shares          Value          Shares           Value        Capital    
                                    ------------    ------------   ------------    ------------   ------------ 

 Balance, February 22, 2002                 --      $       --             --      $       --     $       --   

Common stock issued for cash                                                                                   
     upon incorporation               11,373,642          11,374           --              --          363,295 

Sale of common stock at $0.10                                                                                  
      to $.20 per share                5,802,240           5,802           --              --          671,198 

Common stock issued                                                                                            
      for services at                                                                                          
      $0.10 to $.20 per share            557,083             557           --              --           64,151 

Capital contribution                        --              --             --              --           18,000 

Issuance of common shares                                                                                      
     pursuant to exchange of                                                                                   
     preacquisition shares             2,250,000       1,116,644        368,815            --       (1,116,644)

Net loss                                    --              --             --              --             --   

                                    ------------    ------------   ------------    ------------   ------------ 
December 31, 2002 Balance             19,982,965       1,134,377        368,815            --             --   
                                    ------------    ------------   ------------    ------------   ------------ 

Conversion of  preferred stock                                                                                 
    to common stock                   16,268,430            --         (368,815)           --                  

Stock issued for services in                                                                                   
    connection with bankruptcy        23,335,445         399,516        794,569         350,484           --   

Stock issues for other services           50,000          30,175           --              --             --   

Conversion of stockholder                                                                                      
      loans to shares of common                                                                                
      stock at $0.20 per share         3,644,000         728,800           --              --             --   

Sale of common stock at $0.20                                                                                  
      to $.40 per share                1,690,000         548,000           --              --             --   

Common stock issued in                                                                                         
      acquisition of NanobacLabs                                                                               
      Pharmaceuticals, Inc.           34,998,000       1,392,920           --              --             --   

Comprehensive loss:                                                                                            
     Net Loss                               --              --             --              --             --   

     Foreign currency translation                                                                              
          adjustment                        --              --             --              --             --   

     Comprehensive loss                                                                                        

                                    ------------    ------------   ------------    ------------   ------------ 
Balance, December 31, 2003            99,968,840    $  4,233,788        794,569    $    350,484   $       --   
                                    ============    ============   ============    ============   ============ 

Table continues on following page.                                                                             

                                                     F-5                                                       

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                          NANOBAC PHARMACEUTICALS INC. AND SUBSIDIARIES                                        
                    CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)                                   
                  FOR THE PERIODS ENDED DECEMBER 31, 2003 AND 2002 (Continued)                                 

                                                                     Accumulated                               
                                      Due from                          Other                                  
                                       Option       Accumulated     Comprehensive                              
                                      Exercise        Deficit           Loss           Total                   
                                    ------------    ------------    ------------    ------------               

 Balance, February 22, 2002         $       --      $       --      $       --      $       --                 

Common stock issued for cash                                                                                   
     upon incorporation                     --              --              --           374,669               

Sale of common stock at $0.10                                                                                  
      to $.20 per share                     --              --              --           677,000               

Common stock issued                                                                                            
      for services at                                                                                          
      $0.10 to $.20 per share               --              --              --            64,708               

Capital contribution                        --              --              --            18,000               

Issuance of common shares                                                                                      
     pursuant to exchange of                                                                                   
     preacquisition shares                  --              --              --              --                 

Net loss                                    --        (1,475,299)           --        (1,475,299)              

                                    ------------    ------------    ------------    ------------               
December 31, 2002 Balance                   --        (1,475,299)           --          (340,922)              
                                    ------------    ------------    ------------    ------------               

Conversion of  preferred stock                                                                                 
    to common stock                         --                                              --                 

Stock issued for services in                                                                                   
    connection with bankruptcy              --              --              --           750,000               

Stock issues for other services             --              --              --            30,175               

Conversion of stockholder                                                                                      
      loans to shares of common                                                                                
      stock at $0.20 per share              --              --              --           728,800               

Sale of common stock at $0.20                                                                                  
      to $.40 per share                     --              --              --           548,000               

Common stock issued in                                                                                         
      acquisition of NanobacLabs                                                                               
      Pharmaceuticals, Inc.             (200,000)           --              --         1,192,920               

Comprehensive loss:                                                                                            
     Net Loss                               --        (3,699,491)           --        (3,699,491)              

     Foreign currency translation                                                                              
          adjustment                        --              --           (15,638)        (15,638)              

                                                                                    ------------               
     Comprehensive loss                                                             ($ 3,715,129)              
                                                                                    ============               

                                    ------------    ------------    ------------    ------------               
Balance, December 31, 2003          $   (200,000)   $ (5,174,790)   $    (15,638)   $   (806,156)              
                                    ============    ============    ============    ============               

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

                                         F-5 (Continued)                                                       

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                               NANOBAC PHARMACEUTICALS INC. AND SUBSIDIARIES                                   
                                   CONSOLIDATED STATEMENTS OF CASH FLOWS                                       

                                                                                             February 22, 2002 
                                                                             Year           (date of inception)
                                                                             ended                through      
                                                                       December 31, 2003     December 31, 2002 
                                                                       -----------------     ----------------- 
CASH FLOWS FROM OPERATING ACTIVITIES                                                                           
Net Loss                                                                  $(3,699,491)          $(1,475,299)   
Adjustments to reconcile net loss to cash                                                                      
    (used) in operating activities                                                                             
    Depreciation and amortization                                             181,103                  --      
    Loss on disposition of assets                                               7,659                          
    Common stock issued for services                                          780,175                64,708    
    Minority interest in net loss                                              (3,545)                 --      
    Net (increase) decrease in assets:                                                                         
       Accounts receivable                                                      9,125                (5,223)   
       Inventory                                                               67,286                  --      
       Other assets                                                            78,383                  --      
    Net increase (decrease) in liabilities:                                                                    
       Accounts payable                                                       278,107               263,916    
       Accrued expenses                                                       145,876                82,228    
                                                                          -----------           -----------    
    Total adjustments                                                       1,544,169               405,629    
                                                                          -----------           -----------    
Net cash flows from operating activities                                   (2,155,322)           (1,069,670)   
                                                                          -----------           -----------    

CASH FLOWS FROM INVESTING ACTIVITIES                                                                           
    Acquisition of fixed assets                                               (18,157)                 --      
    Security deposits                                                          (2,932)                 --      
    Acquisition of subsidiaries, net of cash received                         (81,022)                 --      
    Cash received from exercise of stock option in subsidiary                 300,000                  --      
                                                                          -----------           -----------    
Net cash flows from investing activities                                      197,889                  --      
                                                                          -----------           -----------    

CASH FLOWS FROM FINANCING ACTIVITIES                                                                           
    Repayment of line of credit, net                                          (36,453)                 --      
    Proceeds from stockholder loans                                         1,997,467                  --      
    Payment of notes payable                                                 (486,188)                 --      
    Proceeds from issuance of common stock                                    548,000             1,069,670    
                                                                          -----------           -----------    
Net cash flows from financing activities                                    2,022,826             1,069,670    
                                                                          -----------           -----------    

Effect of exchange rate changes                                               (15,638)                 --      

       Net change in cash                                                      49,755                  --      
    Cash balance, beginning of period                                            --                    --      
                                                                          -----------           -----------    
    Cash balance, end of period                                           $    49,755           $      --      
                                                                          ===========           ===========    

Supplemental disclosures of cash flow information:                                                             
    Cash paid for interest expense                                        $    42,934           $      --      

Supplemental schedule of non-cash investing and financing activities:                                          
    Common stock issued for the conversion of debt                        $   728,800           $      --      
    Common stock issued in acquisition                                    $ 1,392,920           $      --      
    Shareholder loan used for acquisition                                 $ 4,071,342           $      --      

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

                                                   F-6                                                         

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NANOBAC PHARMACEUTICALS, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2003 AND 2002

1. Nature of operations and summary of significant accounting polices           

Nature of business                                                              

Effective June 20, 2003, Nanobac Pharmaceuticals, Incorporated ("NNBP" or the   
"Company") announced a name change from American Enterprise Corporation ("AMER")
to Nanobac Pharmaceuticals, Incorporated. Effective July 21, 2003, Nanobac      
Pharmaceuticals, Incorporated began trading under the symbol "NNBP."            

During June 2003, NNBP acquired a controlling interest of NanobacLabs           
Pharmaceutical, Inc. ("LABS") and during November 2003, NNBP acquired a         
controlling interest in Nanobac OY ("OY") - see note 2, "Acquisitions".         

As a result of the above acquisitions, NNBP's primary business is the study and 
development of therapeutic and diagnostic technologies related to the novel     
plemorphic pathogen known as nanobacterium sanguineum. NNBP has developed       
therapeutic treatments, for the eradication or reduction of nanobacteria in the 
human body.                                                                     

Prior to the above acquisitions, the Company's sole operating subsidiary was    
HealthCentrics, Inc., a development-stage enterprise formed on February 22, 2002
to organize, develop and market a suite of Web-based medical accounting, billing
and management information services to third party billing companies, practice  
management and healthcare provider organizations. The Company emerged from the  
development stage in the third quarter of 2003.                                 

During December 2002, NNBP acquired HealthCentrics in exchange for 17.7 million 
share of stock. After this acquisition, the former shareholders of              
HealthCentrics owned 99.7% of AMER. Since HealthCentrics is considered the      
acquirer for accounting and financial reporting purposes, the transaction has   
been accounted for in accordance with reverse acquisition accounting principles 
as though it were a recapitalization of NNBP and a sale of shares by            
HealthCentrics in exchange for the net assets of the Company. The financial     
statements include the historical results of operations and cash flows of       
HealthCentrics from inception.                                                  

During October 2003, management decided to divest itself of its HealthCentrics  
business unit (see Note 3).                                                     

Liquidity and Management Plans                                                  

The accompanying financial statements have been prepared assuming that NNBP will
continue as a going concern. The Company has incurred recurring losses and has  
equity and working capital deficiencies at December 31, 2003. The Company is    
dependent on the continued financing from outside investors including additional
shareholder loans. All of these matters raise substantial doubt about the       
ability of the Company to continue as a going concern. Management believes that 
NNBP will need to raise additional capital in order to launch new clinical      
trials, fund research and development for new treatment areas, and general      
working capital requirements. Capital may be raised through further sales of    
equity securities, which may result in dilution of the position of current      
shareholders. At this time, there are no firm commitments to invest in NNBP. If 
NNBP is unable to obtain such financing, the business might not attain          
profitability.                                                                  

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NANOBAC PHARMACEUTICALS, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2003 AND 2002

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

Liquidity and Managements' Plans (continued):                                   

There can be no assurances that NNBP will be successful in obtaining debt or    
equity financing in order to achieve its financial objectives and continue as a 
going concern. The financial statements do not include any adjustments to the   
carrying amount of assets and the amounts and classifications of liabilities    
that might result from the outcome of this uncertainty.                         

Principles of Consolidation                                                     

The consolidated financial statements include the accounts of the Company and   
its wholly-owned subsidiaries as well as affiliated companies in which the      
Company has a controlling financial interest and exercises control over their   
operations. All material intercompany transactions and balances have been       
eliminated in consolidation. On June 4, 2003, the Company acquired a majority   
interest in LABS and on November 11, 2003, the Company acquired 65% of OY (see  
Note 2, "Acquisitions"). In accordance with Statement of Financial Accounting   
Standards ("SFAS") No. 141, "Business Combinations", NNBP has included in its   
results of operations for the year ended December 31, 2003, the results of      
operations of LABS from June 4, 2003 and the results of operations of OY from   
November 11, 2003.                                                              

Revenue Recognition                                                             

Sales of the Company's products are recognized when shipped and title has       
passed. Revenue is recorded net of reserves for estimated discounts and         
incentives.                                                                     

Use of estimates                                                                

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

Financial instruments                                                           

The carrying value of NNBP's financial instruments, including cash, accounts    
receivable, accounts payable, short-term note payable and stockholder loans     
approximate their fair market values.                                           

Inventory                                                                       

Inventory is stated at the lower of cost or market. Cost is determined in a     
manner which approximates the first-in, first-out (FIFO) method. Inventory      
consists of raw materials for currently marketed products. Inventory is shown   
net of applicable reserves and allowances.                                      

Fixed Assets                                                                    

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

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NANOBAC PHARMACEUTICALS, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2003 AND 2002

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

Intangible assets and goodwill                                                  

Intangible assets are recorded at cost, less accumulated amortization.          
Intangible assets consist of acquired technology rights obtained in the         
acquisition of LABS and OY (see Note 2). Amortization of intangible assets is   
provided over the following estimated useful lives on a straight-line basis:    

Patents                           12 years                    
Product rights                     5 years                    

In accordance with SFAS No. 142, "Goodwill and Other Intangible Assets",        
goodwill is not amortized, but is subject to periodic impairment tests.         

Research and development expenses                                               

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

Income taxes                                                                    

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

Net loss per share                                                              

Net loss per share represents the net loss attributable to common stockholders  
divided by the weighted average number of common shares outstanding during the  
period. The effect of incremental shares from common stock equivalents is not   
included in the calculation of net loss per share as the inclusion of such      
common stock equivalents would be anti-dilutive. Accordingly, fully dilutive    
shares outstanding equal basic shares outstanding as of December 31, 2003 and   
2002.                                                                           

Concentration of credit risk                                                    

NNBP has no individual customers which constitute a significant concentration   

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NANOBAC PHARMACEUTICALS, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2003 AND 2002

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

Recent accounting pronouncements                                                

In December 2003, the FASB issued Interpretation No. 46, Consolidation of       
Valuable Interest Entities (Amended). This interpretation clarifies rules       
relating to consolidation where entities are controlled by means other than a   
majority voting interest and instances in which equity investors do not bear the
residual economic risks. The Company currently has no ownership in variable     
interest entities and, therefore, adoption of this standard currently has no    
financial reporting implications.                                               

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on      
Derivative Instruments and Hedging Activities. The statement amends and         
clarifies accounting and reporting for derivative instruments, including certain
derivative instruments embedded in other contracts, and hedging activities. This
statement is designed to improve financial reporting such that contracts with   
comparable characteristics are accounted for similarly. The statement, which was
generally effective for contracts entered into or modified after June 30, 2003, 
is not anticipated to have a significant effect on the Company's financial      
position or results of operations.                                              

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial     
Instruments with Characteristics of Both Liabilities and Equity. This statement 
establishes standards for how an issuer classifies and measures certain         
financial instruments with characteristics of both liabilities and equity. This 
statement is effective for financial instruments entered into or modified after 
May 31, 2003, and is otherwise effective at the beginning of the first interim  
period beginning after June 15, 2003. The Company currently has no such         
financial instruments outstanding or under consideration and therefore adoption 
of this standard currently has no financial reporting implications.             

Reclassifications                                                               

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

2. Acquisitions                                                                 

NanobacLabs Pharmaceuticals, Inc.                                               

On June 4, 2003, NNBP acquired approximately 74.4% of LABS in exchange for      
24,400,000 restricted shares of NNBP. From June 5, 2003 through July 21, 2003,  
NNBP acquired an additional 20.2% of LABS from various stockholders in exchange 
for 6,598,000 shares of NNBP, bringing its total ownership to 94.6% of LABS.    

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NANOBAC PHARMACEUTICALS, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2003 AND 2002

2. Acquisitions (continued):                                                    

NanobacLabs Pharmaceuticals, Inc. (continued):                                  

Two entities ("Minority Stockholders") owned the remaining 5.4% of LABS. These  
two entities also had options to acquire an additional 5.4% of LABS in exchange 
for a cash contribution of $500,000 ("Minority Option"), which expired on March 
31, 2004. Except for their stock ownership, these Minority Stockholders are not 
affiliated with the Company. During October 2003, the Minority Stockholders     
exercised $100,000 of their Minority Option. Simultaneously with this           
transaction, NNBP agreed to acquire the remaining outstanding shares of LABS    
from the Minority Stockholders plus the stock issued for the $100,000 Minority  
Option exercise in exchange for 3,240,000 shares of NNBP. On December 31, 2003, 
the Minority Stockholders exercised the remaining $400,000 of their Minority    
Options ($200,000 was collected in 2003 and the remaining $200,000 was collected
in 2004). After further negotiations, the Minority shareholders agreed to sell  
the LABS' stock received for this option exercise in exchange for an additional 
2,820,000 shares of NNBP. After the conclusion of these transactions, the total 
shares due to the Minority Stockholders was 6,060,000 shares of NNBP. The       
obligation to issue the Minority Stockholders 6,060,000 shares of NNBP was      
settled by an entity controlled by the Company's Chairman and CEO ("Related     
Entity"). In exchange for the above settlement on behalf of the Company, the    
Related Entity was due $4.1 million which is included in shareholder loans at   
December 31, 2003.                                                              

As of December 31, 2003, NNBP owned 100% of LABS and the former stockholders of 
LABS have received 37,058,000 shares of NNBP (including shares issued by the    
Related Entity discussed above), which represents approximately 37% of NNBP's   
common stock outstanding as of December 31, 2003.                               

The total consideration for LABS was approximately $5.5 million, which included 
the fair value of NNBP common stock issued, approximately $4.1 million due to   
funding provided by the entity controlled by the Company's Chairman of the Board
as well as direct transaction costs. The following table summarizes the         
estimated fair values of the assets acquired and liabilities assumed as of the  
acquisition date                                                                

Current assets                   $   895,058  
Investment in OY                     693,778  
Fixed assets                         113,651  
Identifiable intangible assets     1,350,000  
Goodwill                           5,815,393  
Other assets                          62,500  
Current liabilities                 (768,280) 
Note payable                        (486,188) 
Deferred tax liability            (2,200,000) 
                               -----------
                               $ 5,475,912
                               ===========

Acquired identifiable intangible assets consist of product rights for the       
treatment of nanobacteria. Amortization of this asset commenced as of the       
acquisition date. Amortization expense for the year ended December 31, 2003 was 
$157,500.                                                                       

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NANOBAC PHARMACEUTICALS, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2003 AND 2002

2. Acquisitions (continued)                                                     

Nanobac OY                                                                      

On September 25, 2002, LABS entered into an agreement to purchase 4,500 shares  
or 27% of Nanobac OY from three Finnish entities for 11,430 Euros. Nanobac OY is
a Finnish company that performs similar research to that of the Company in      
nanobacteria infection. A separate agreement also required LABS to acquire      
convertible promissory notes in Nanobac OY in the amount of 686,000 Euros plus  
interest. The promissory notes had a conversion feature that allows the         
promissory notes to convert into 17,723 shares of Nanobac OY. The title to the  
4,500 shares did not transfer until such time as LABS had fully paid for the    
convertible promissory notes. The convertible promissory notes had a stated     
interest of 7.5% until the purchase price had been paid. Until the transaction  
was completed, the investment was recorded under the cost basis.                

On November 11, 2003, NNBP completed the acquisition of Nanobac OY when the     
final payment was made and the Company exercised the conversion option in the   
convertible promissory notes. Upon the conclusion of this transaction, the      
Company owned 65% of OY. The acquisition has been accounted for as a purchase   
business combination.                                                           

The total consideration for OY was $781,196, which included cash payments (made 
before and after the acquisition of LABS) as well as direct transaction costs.  
The following table summarizes the estimated fair values of the assets acquired 
and liabilities assumed as of the acquisition date:                             

Current assets                   $  37,535  
Fixed assets                        29,287  
Identifiable intangible assets     949,643  
Other assets                         4,732  
Current liabilities                (11,883) 
Advances from the Company         (228,118) 
                               ---------
                               $ 781,196
                               =========

Acquired identifiable intangible assets primarily are patents related to the    
discovery of nanobacteria. Amortization of this asset commenced as of the       
acquisition date. Amortization expense for the year ended December 31, 2003 was 
$5,426.                                                                         

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NANOBAC PHARMACEUTICALS, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2003 AND 2002

2. Acquisitions (continued)                                                     

The following unaudited table compares NNBP's reported operating results to pro 
forma information prepared on the basis that the above acquisitions had taken   
place at January 1, 2002. In management's opinion, the unaudited pro forma      
combined results of operations are not indicative of the actual results that    
would have occurred had the acquisitions been consummated at the beginning of   
2002 or 2003 or of future operations of the combined companies under the        
ownership and management of NNBP.                                               

                           Year ended December 31,
                            ------------------------------
                             2003             2002
                            -------------    -------------
As Reported:                                                  
 Revenue                  $     482,815    $        --
    Net loss                 $  (3,699,491)   $  (1,475,299)
    Basic loss per share     $       (0.05)   $       (0.11)
    Diluted loss per share   $       (0.05)   $       (0.11)

Proforma:                                                     
   Revenue                  $   1,193,770    $   2,712,366
    Net loss                 $  (5,319,465)   $  (2,229,126)
    Basic loss per share     $       (0.07)   $       (0.16)
    Diluted loss per share   $       (0.07)   $       (0.16)

3. Discontinued Operations                                                      

During October 2003, NNBP decided to divest its HealthCentrics business unit to 
focus exclusively on its nanobacteria business unit. NNBP was unsuccessful in   
finding a buyer in 2003 for this Business Unit. During March 2004, this business
unit was sold to an affiliate of the Chairman and CEO for consideration of      
$250,000 (a reduction in amounts otherwise owed to the affiliate). NNBP expects 
to recognize a gain on disposal of approximately $690,000, which will be        
accounted for as a capital contribution given the related party nature of the   
arrangement. Summary operating results for the discontinued operations for the  
periods ended December 31, 2003 and 2002 are as follows:                        

                             2003           2002
                            -----------    -----------

Revenue                      $    19,970    $    11,555 
                            ===========    ===========

Loss before income taxes     ($  938,358)   ($1,431,678)
Provision for income taxes          --             --   
                            -----------    -----------

Net loss                     ($  938,358)   ($1,431,678)
                            ===========    ===========

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NANOBAC PHARMACEUTICALS, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2003 AND 2002

4. Fixed Assets                                                                 

Fixed assets at December 31, 2003 are summarized as follows:                    

                          2003
                         ---------

Computer equipment         $  18,645  
Computer software             16,666  
Lab equipment                 43,588  
Office equipment              25,605  
Furniture and fixtures        21,728  
Leasehold improvements        47,385  
                         ---------
                           173,617

Accumulated Depreciation     (38,358) 
                         ---------
                         $ 135,259
                         =========

Depreciation expense for the year ended December 31, 2003 was $18,177.          

5. Intangible Assets                                                            

Intangible assets as of December 31, 2003 are summarized as follows:            

Product rights             $ 1,350,000  
Patents                        949,643  
                         -----------
                           2,299,643
Accumulated amortization      (162,926) 
                         -----------

                         $ 2,136,717
                         ===========

Expected future amortization is summarized as follows:                          

Year ending December 31,                                
------------------------                                
        2004                              $  349,137
        2005                                 349,137
        2006                                 349,137
        2007                                 349,137
        2008                                 349,137
        2009                                  79,137
        Thereafter                           311,895
                                          ----------

                                          $2,136,717
                                          ==========

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NANOBAC PHARMACEUTICALS, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2003 AND 2002

6. Accrued Expenses                                                             

Accrued expenses as of December 31, 2003 are summarized as follows:             

                                    2003
                                    --------

Accrued professional fees           $156,077
Accrued royalty                      120,718
Accrued payroll and payroll taxes     46,658
Employee expense reports              13,018
Other                                 31,166
                                    --------
                                    $367,637
                                    ========

7. Short-term note payable:                                                     

Short-term note payable consists of unsecured, non-interest bearing advances due
on demand.                                                                      

8. Segment Information                                                          

With the disposition of its HealthCentrics business unit (see Note 3), NNBP     
operates a single business segment.                                             

Virtually all of the Company's operations are within the United States for the  
years ended December 31, 2003 and 2002. The geographic classification of revenue
was based upon the domicile of the entity from which the revenues were earned:  

                                 Period ended December 31,
                                 -------------------------
                                 2003         2002
                                 ----------   ----------
Revenue:                                                
 United States                 $  472,735   $     --
 Foreign countries                 10,080         --
                                 ----------   ----------

                               $  482,815   $     --
                                 ==========   ==========
Assets:                                                 
United States                 $5,026,630          
Foreign countries (Finland)    1,017,460          
                    ----------

                    $6,044,090
                    ==========

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NANOBAC PHARMACEUTICALS, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2003 AND 2002

9. Income taxes                                                                 

There was no current or deferred provision or benefit for income taxes for the  
years ended December 31, 2003 and 2002. The components of deferred tax asset as 
of December 31, 2003 and 2002 are as follows:                                   

                                               2003           2002
                                              -----------    -----------
Deferred tax asset:                                                         
Net operating loss carryforwards                $ 2,487,000    $   443,000  
Valuation allowance                                (287,000)      (443,000) 
Deferred tax liability (a)                       (2,200,000)                
                                              -----------    -----------

Deferred tax asset net of valuation allowance   $      --      $      --    
                                              ===========    ===========

(a)  Deferred tax liabilities are associated with the acquisition of intangible 
assets and goodwill.                                                  

As of December 31, 2003, the Company had approximately $6.4 million of net      
operating loss carryovers which expire between 2016 and 2023.                   

The following table accounts for the differences between the actual tax         
provision and the amounts obtained by applying the statutory U.S. federal income
tax rates of 35% to the loss from continuing operations before income taxes and 
minority interest:                                                              

                                     2003         2002
                                    ---------    ---------

Statutory tax benefit                 $ 967,000    $ 443,000  
State taxes, net of federal benefit      72,000         --    
Nondeductible expense for                                     
common stock issued for Services     (292,000)        --  
Increase in valuation allowance        (715,000)    (443,000) 
Other, net                              (32,000)        --    
                                    ---------    ---------

Provision for taxes                 $    --      $    --  
                                    =========    =========

Changes in the valuation allowance during the year were as follows:             

                                         2003           2002
                                        -----------    -----------

Valuation allowance, beginning of year   ($  443,000)   $         0 

Acquired deferred tax liability            1,237,000              0 
Discontinued operations                     (366,000)      (430,000)
Increase from continuing operations         (715,000)       (13,000)
                                        -----------    -----------
Valuation allowance, end of year         ($  287,000)  ($   443,000)
                                        ===========    ===========

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NANOBAC PHARMACEUTICALS, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2003 AND 2002

10. Stockholders' deficit                                                       

Preferred stock:                                                                

The holder(s) of preferred shares are entitled to receive non-cumulative        
dividends not to exceed $.10 per share when and as declared by the Board of     
Directors. In the event of any liquidation, dissolution or winding down of the  
company, either voluntary or involuntary, the holder(s) of each preferred share 
shall be entitled to be paid on an amount equal to $4.00 per share. In the event
that the Company authorizes the redemption of all or any preferred shares, the  
redemption price shall be $4.30 per share. The preferred shares are convertible 
at any time into common at the ratio of 44.11 common shares to one preferred    
share. Holders of preferred shares have a right to cast eight votes per         
preferred share and the right to elect fifty percent of the authorized members  
of the board of directors.                                                      

Common stock and preferred stock issuances:                                     

Issuances in 2003:                                                              

From May 2001 through November 2002, the Company was in bankruptcy. Throughout  
the bankruptcy proceedings, the Chairman, Secretary and CEO (collectively "NNBP 
Officers") funded the Company's administrative costs and provided management to 
the Company. During January 2003, the Company's Board of Directors authorized   
compensation to these NNBP Officers in the aggregate amount of $750,000 for     
services rendered during the bankruptcy. Further, the Board of Directors        
authorized the issuance of stock in satisfaction of the $750,000 liability. The 
liability was to be settled through the issuance of up to 75 million shares of  
the Company's stock ($.01 per share fair value at the date of the award). This  
obligation has been recorded at $750,000 (based on the value at the measurement 
date) although shares were issued periodically throughout 2003. Certain shares  
were issued as preferred shares (at an equivalent value based on the conversion 
ratio of 44.11 per share). Subsequent to December 31, 2003, the number of       
authorized shares was increased to 250,000,000, at which time the previously    
issued preferred stock was converted to 35,048,445 shares of Common stock.      

As discussed in Note 2, an aggregate 30,998,000 shares were issued in connection
with the LABS acquisition. In addition, $159,200 of acquisition costs for LABS  
relates to an issuance of 4.0 million common shares to an entity controlled by  
the Chief Executive Officer and Chairman in connection with the facilitation and
bridge funding for the acquisition of LABS.                                     

An aggregate of 3,644,000 shares of stock were issued during 2003 in connection 
with the conversion of $728,800 in related party debt to equity. Stock issued   
for services in addition to the bankruptcy-related services discussed above     
aggregated 50,000 shares valued at $30,175.                                     

In addition, the Company sold 1,690,000 shares of stock at prices ranging from  
$.20 to $.40 for aggregate proceeds of $548,000 and 368,815 shares of preferred 
stock were converted to 16,268,430 shares of common stock.                      

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NANOBAC PHARMACEUTICALS, INCRPORATED AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2003 AND 2002

10. Stockholders' deficit (continued)                                           

Common stock and preferred stock issuances (continued):                         

Issuances in 2002:                                                              

During 2002, the Company issued common shares for services: a) 90,000 shares    
valued at $18,000 ($.20 per share) and b) 467,083 shares valued at $46,708 ($.10
per share).                                                                     

The Company also issued common shares for cash in the following denominations:  
(a) 11,373,642 shares issued during incorporation for $374,669; (b) 4,115,990   
shares issued for $399,750 ($.10 per share); (c) 600,000 shares issued for      
$60,000 ($.10 per share); and (d) 1,086,250 shares issued for $217,250 ($.20 per
share)                                                                          

11. Related Party Transactions:                                                 

Stockholder Loan                                                                
----------------                                                                

An entity controlled by the Chairman and Chief Executive Officer (who are also  
the largest stockholders of NNBP), has loaned NNBP $1.6 million as of December  
31, 2003 to fund the operating cash flow requirements of NNBP. In addition, $4.1
million is due to this same entity in connection with the acquisition of the    
Minority Stockholders equity interests in the LABS acquisition (see Note 2).    
These loans bear interest at 5% and are due on demand. Interest expense for the 
above loans for the year ended December 31, 2003 was $23,703.                   

Royalty Agreement                                                               
-----------------                                                               

The Company was a party to a royalty agreement with the former majority owner of
LABS who, along with his spouse, owns approximately 24% of NNBP as of December  
31, 2003. Under the terms of the royalty agreement, this stockholder would      
receive an annual fee of $50,000 plus ten percent of gross sales from applicable
products. For the year ended, December 31, 2003, $24,000 has been expensed in   
relation to this royalty agreement. As of December 31, 2003, accrued expenses   
include approximately $121,000 payable to this stockholder for current and prior
royalty agreements. On March 16, 2004, the U.S. Patent Office printed Patent    
6,706,290 "Methods for Eradication of Nanobacteria". With the approval of this  
patent, management believes that the above royalty agreement is not valid and no
amounts are due under the above royalty agreement.                              

Stock Transactions                                                              
------------------                                                              

Of the 17,732,965 common shares the Company issued to acquire HealthCentrics,   
Mr. John Stanton, Chief Executive Officer and Chairman of the Board of          
Directors, directly owned 8,601,299 (through Escape Velocity) or 48.5% and Mr.  
Chuck Broes, Vice-Chairman of the Board of Directors, owned 2,143,179 (through  
TB, LLC) or 12.1%. On an equal basis with all other HealthCentrics shareholders 
of record, Mr. Stanton and Mr. Broes received a share for share exchange in the 
course of the Company acquiring HealthCentrics.                                 

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NANOBAC PHARMACEUTICALS, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2003 AND 2002

11. Related Party Transactions (continued):                                     

MRX - NET.com License Agreement                                                 
-------------------------------                                                 

The Company had an irrevocable perpetual license agreement with a company       
affiliated with certain of its directors/shareholders. The license agreement    
grants an irrevocable, perpetual license for any and all Intellectual Property  
Rights owned or otherwise assertable by the licensor to use the licensed        
materials.                                                                      

The licensed materials consist of a suite of web-native and browser-based       
practice management applications and include all HTML, XML, other Source Code,  
Object Code, database architectures and system documentation related to the     
MedBillRx medical billing and practice management application, and ComplyMD, a  
physician monitoring program to meet compliance issues, as well as any rights   
the licensor has to SnaPPnet, a credentialing system.                           

The terms of the license agreement stipulate a one-time license fee plus a      
percentage of the gross revenues derived from the use of the licensed materials.

The Company held a secured note from the licensor that was assigned to it from  
certain shareholders/directors of the Company. The Company has forgiven the note
as payment for the one-time license fee and all future royalties. The basis of  
this note to the Company is considered to be zero, and consequently there have  
been no amounts booked to the financial statements as a result of this          
transaction.                                                                    

XBZ Consulting Agreement                                                        
------------------------                                                        

The Company entered into a consulting agreement in April 2002 with a company    
affiliated with certain of its directors/shareholders. This agreement required  
services to be provided by the consulting firm consisting of technical and      
architectural support, design and development of the Company's products and     
services. The fees for these services were $10,000 per month plus expenses      
approved by the Company in advance, for a term of one year, automatically       
renewable upon mutual consent of the parties. This agreement was cancelled in   
December 2002 by the mutual consent of both parties.                            

EliteCorp Consulting Agreement                                                  
------------------------------                                                  

The Company entered into a consulting agreement in 2002 with a company          
affiliated with certain of its directors/shareholders. This agreement required  
those services generally performed by a chief executive officer to be provided  
to the Company by the consulting firm. The fees for these services were $11,000 
per month plus expenses approved by the Company in advance, for a term of one   
year, automatically renewable upon mutual consent of the parties. This agreement
was cancelled in 2003.                                                          

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NANOBAC PHARMACEUTICALS, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2003 AND 2002

11. Related Party Transactions (continued):                                     

Taina Broes Consulting Agreement                                                
--------------------------------                                                

The Company entered into a consulting agreement in July 2002 with an individual 
affiliated with certain of it directors/shareholders. This agreement required   
services to be provided by the individual consisting of customer training and   
deployments, customer support, system testing, and miscellaneous healthcare     
domain consulting. The fees for these services were $25/hour plus expenses      
approved by the Company in advance, for a term of one year, automatically       
renewable upon mutual consent of the parties. This agreement was cancelled in   
2003.                                                                           

Patient Care Technologies Lease                                                 
-------------------------------                                                 

The Company leased office space from a company affiliated with certain of its   
directors/shareholders from February 1, 2002 through July 31, 2002 for an amount
of $2,124 per month, which is a fair rental value for the space leased.         

On July 26, 2002, the Company renewed this lease for a six-month period for the 
same amount as above. The lease commenced on August 1, 2002 and ends on January 
31, 2003. Upon maturity, the term may be extended for additional six-month      
periods with mutual written consent of both parties. This lease was cancelled in
2003.                                                                           

12. Commitments                                                                 

The Company leases certain administrative and laboratory facilities under       
non-cancelable operating leases that expire through June 2010. The following    
table summarizes the minimum future rental commitments under non-cancelable     
operating leases at December 31, 2003:                                          

Year ending December 31,                        
------------------------                        

2004                          $192,099          
2005                           169,109          
2006                           171,931          
2007                           102,748          
2008                            52,765          
2009                            53,900          
2010                            27,235          
                    --------
                    $769,787
                    ========

Rental expense on operating leases for the years ended December 31, 2003 and    
2002 was $167,000 and $0, respectively.                                         

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2003 AND 2002

13. Subsequent events                                                           

On January 26, 2004, NNBP filed Articles of Amendment increasing authorized     
shares from 100,000,000 to 250,000,000.                                         

During January through March 2004, NNBP acquired the remaining 35% of Nanobac OY
in exchange for 10 million shares of common stock valued at $3.8 million. The   
purchase price will be allocated to intangible assets.                          

On March 30, 2004, NNBP sold its HealthCentrics business unit to an affiliate   
controlled by the Chairman and CEO for consideration of $250,000 (see Note 3 -  
Discontinued Operations).                                                       

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                NANOBAC PHARMACEUTICALS, INCORPORATED AND SUBSIDIARIES                
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                      
                        YEARS ENDED DECEMBER 31, 2003 AND 2002                        

14. Quarterly Data                                                                    
                                 Mar 31         Jun 30        Sep 30        Dec 31    
                              -----------    -----------    -----------   ----------- 
2003 Quarter ended                                                                    
------------------                                                                    
                                                                                      
       Revenue                $         0    $    77,637    $   241,340   $   163,838 
       Gross profit           $         0    $    17,174    $    63,932   $    68,587 
       Net loss               ($1,234,083)   ($  468,666)   ($  929,230)  ($1,067,512)
      Loss per share:                                                                 
          Basic               ($     0.03)   ($     0.01)   ($     0.01)  ($     0.01)
          Diluted             ($     0.03)   ($     0.01)   ($     0.01)  ($     0.01)

2002 Quarter ended                                                                    
------------------                                                                    
       Revenue                $         0    $         0    $         0   $         0 
       Gross profit           $         0    $         0    $         0   $         0 
       Net loss               ($   31,301)   ($  572,910)   ($  388,666)  ($  482,422)
      Loss per share:                                                                 
          Basic               $      0.00    ($     0.05)   ($     0.03)  ($     0.03)

LABS was acquired during June 2003 - See Note 2.                                      

Reconciliation of 2003 Quarterly Data to Forms 10-QSB as filed                        

                                               Mar 31         Jun 30         Sep 30   
                                             -----------    -----------   ----------- 
Revenue                                                                               
      Revenue as reported on Form 10Q        $     5,812    $    84,049   $   244,616 
      Discontinued operations                     (5,812)        (6,412)       (3,276)
                                             -----------    -----------   ----------- 

        Revenue per above                    $         0    $    77,637   $   241,340 
                                             ===========    ===========   =========== 

Gross Profit                                                                          
      Gross profit as reported on Form 10Q   ($   10,300)   $     3,034   $    38,503 
      Discontinued operations                     10,300         14,140        25,429 
                                             -----------    -----------   ----------- 

        Gross profit per above               $         0    $    17,174   $    63,932 
                                             ===========    ===========   =========== 

Net loss                                                                              
      Net loss as reported on Form 10Q       ($  595,222)   ($  449,924)  ($  913,780)
      Amortization of intangible assets             --          (18,742)      (90,000)
      Charge or reversal thereof for stock                                            
      issuances to affiliates of officers       (650,000)                      74,550 
      Other                                       11,139           --            --   
                                             -----------    -----------   ----------- 
        Net loss per above                   ($1,234,083)   ($  468,666)  ($  929,230)
                                             ===========    ===========   =========== 

                                         F-22                                         

Dates Referenced Herein   and   Documents Incorporated By Reference

				Referenced-On Page
This 10KSB Filing		Date		First		Last			Other Filings
		10/12/94		23
		8/18/97		23
		3/27/00		23
		5/1/01		22		28
		5/21/01		23
		1/1/02		67
		2/1/02		52		74
		2/22/02		26		61
		7/26/02		74
		7/31/02		74
		8/1/02		74
		9/25/02		29		66
		11/20/02		22		28			8-K
		12/6/02		52
		12/10/02		52					8-K
		12/13/02		52					8-K
		12/31/02		26		76			10KSB, 10KSB/A
		1/31/03		38		74
		2/1/03		38
		5/31/03		38		64
		6/1/03		52
		6/4/03		29		64			8-K
		6/5/03		29		64
		6/15/03		38		64
		6/20/03		31		61
		6/30/03		38		64			10QSB, NT 10-Q
		7/21/03		23		64
		11/5/03		30		52
		11/11/03		30		66			8-K
		11/18/03		24
		11/26/03		51		52			8-K
		12/15/03		38
		12/21/03		24
For The Period Ended		12/31/03		2		76			10KSB/A
		1/5/04		31
		1/26/04		53		75
		1/30/04		48		53			8-K
		2/3/04		53
		3/16/04		30		72
		3/26/04		1		55
Filed On / Filed As Of		3/30/04		30		75			10KSB/A, 8-K
		3/31/04		29		65			10QSB, 8-K
		4/30/04		49
		5/31/04		2
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