10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended: December 31, 2007

OR

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

Commission File Number: 0-15360

BIOJECT MEDICAL TECHNOLOGIES INC.

(Exact name of registrant as specified in its charter)

Oregon	93-1099680
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
20245 SW 95th Avenue Tualatin, Oregon	97062
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (503) 692-8001

Securities Registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, without par value	NASDAQ Capital Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act:    Yes  ¨    No  x

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act:    Yes  ¨    No  x

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 such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:    Yes  x    No  ¨

Indicate by check mark 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 a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ¨    Accelerated filer  ¨    Non-accelerated filer  ¨ (Do not check if a smaller reporting company)    Smaller reporting company  x

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was $22,604,444, computed by reference to the last sales price ($1.68) as reported by the Nasdaq Capital Market, as of the last business day of the Registrant’s most recently completed second fiscal quarter (June 29, 2007).

The number of shares outstanding of the registrant’s common stock as of March 24, 2008 was 15,594,619 shares.

Documents Incorporated by Reference

Portions of the registrant’s definitive Proxy Statement for the 2008 Annual Shareholders’ Meeting are incorporated by reference into Part III.

BIOJECT MEDICAL TECHNOLOGIES INC.

2007 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business	2
Item 1A.	Risk Factors	12
Item 1B.	Unresolved Staff Comments	19
Item 2.	Properties	19
Item 3.	Legal Proceedings	19
Item 4.	Submission of Matters to a Vote of Security Holders	19
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	20
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 8.	Financial Statements and Supplementary Data	32
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	67
Item 9A(T).	Controls and Procedures	67
Item 9B.	Other Information	67
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	68
Item 11.	Executive Compensation	68
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	68
Item 13.	Certain Relationships and Related Transactions, and Director Independence	68
Item 14.	Principal Accountant Fees and Services	69
PART IV
Item 15.	Exhibits and Financial Statement Schedules	69
Signatures		72

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PART I

ITEM 1. BUSINESS

General

We commenced operations in 1985. We develop needle-free injection systems that improve the way patients take injectable medications and vaccines.

Our long-term goal is to become the leading supplier of needle-free injection systems to the pharmaceutical and biotechnology industries. In 2007, we focused our business development efforts on new and existing licensing and supply agreements with leading pharmaceutical and biotechnology companies. Our pipeline of prospective new partnerships remains active. We are also actively pursuing additional opportunities both domestic and overseas as we expand our current product line.

Our needle-free injection technology works by forcing liquid medication at high speed through a tiny orifice held against the skin. This creates a fine stream of high-pressure medication that penetrates the skin, depositing the medication in the tissue beneath. By bundling customized needle-free delivery systems with partners’ injectable medications and vaccines, we can enhance demand for these products in the healthcare provider and end-user markets.

In 2007, our clinical research efforts were aimed primarily at collaborations in the areas of vaccines and drug delivery. Currently, we are involved in research collaborations with 12 institutions. Further, we continue research efforts in dose sparing and intradermal delivery in collaboration with the World Health Organization (“WHO”) and the Centers for Disease Control and Prevention (“CDC”). We recently presented information on our intradermal clinical studies using Inactivated Polio Vaccine studies in Cuba and Oman with the WHO and influenza study in the Dominican Republic with the CDC.

In 2007, our research and development efforts focused on a next generation spring device with auto-disable syringe and the Iject^® single use disposable product. In addition, we continue to work on product improvements to existing devices and development of products for our strategic partners. We have completed stage one of our project with Program for Appropriate Technology in Health (“PATH”) and are currently in discussion with PATH regarding possible future projects. In addition, we completed the concept phase with our undisclosed European biotech partner. We have also completed several projects with Merial, culminating in the launch of Merial’s Derma-Vac™ needle-free device for swine and the Vitajet3 device for canine melanoma. We are also working with the National Institutes of Health on a program in which we will fill our current polycarbonate B2000 syringe with a DNA vaccine for delivery as a pre-filled syringe.

We began a strategic realignment of our company during 2007 with the singular goal of increasing shareholder value. The realignment has two concurrent phases. Phase One was to reduce our fixed operating expenses, primarily by reducing headcount and related expenses. Phase Two of our realignment campaign is to increase our revenue by increasing product sales and adding license and development agreements. We have successfully completed key milestones with a number of our current partners. We continue to review and discuss our agreements with our partners and may make changes to the agreements in the future based on strategic decisions that we believe are in the best interests of shareholders. As we enter into new agreements or amend existing agreements, we intend to ensure, to the best of our ability, that they are profitable and aligned with the long-term interests of our shareholders. For example, in October 2007, we entered into a new three-year supply agreement with Serono for the delivery of the cool.click™ and Serojet™ spring-powered needle-free device for use with its recombinant human growth hormone drugs on terms more favorable to us than past agreements. We have also initiated new discussions with a number of potential new partners, as well as with past partners.

For 2008, our key initiatives include the following:

• Bring closure to discussions with current partners and new potential partners by securing agreements in the best long-term interests of the company;

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• Complete current ongoing vaccine studies with Program for AppropriateTechnologies in Health (“PATH”), the World Health Organization (“WHO”) and Centers for Disease Control (“CDC”), then, if results are positive, assess our options for moving forward in developing world markets;

• Reach breakeven on a cash operating basis on the current book of business; and

• Continue implementing our new business strategy by (i) focusing our partnerships in areas where our needle-free systems add value; and (ii) securing injectable indications to allow us to create our own drug+device combinations for the market.

We recently completed a business assessment for strategic targeting and focusing on the most promising potential partnership opportunities. We are committed to working with our current partners and assessing ways to ensure continued beneficial long-term partner relationships.

During 2007, we had licensing and/or development agreements, which often included commercial product supply provisions, with Merial, a European biotechnology company, an undisclosed pharmaceutical company, PATH, the Centers for Disease Control and Prevention and Vical Incorporated.

In addition, we currently have significant supply agreements or commitments with Merial, Serono, Ferring Pharmaceuticals Inc. and BioScrip Inc.

See Note 2 of Notes to Consolidated Financial Statements included under Part II, Item 8 of this Annual Report on Form 10-K for detailed descriptions of our agreements or arrangements with these companies.

“Biojector,” “Bioject,” “Vitajet,” “Iject,” “Iject-R,” “Vetjet” and “Q-Cap” are trademarks or registered trademarks of Bioject Inc.

Where You Can Find More Information

We make available, free of charge, on our website at www.bioject.com 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 they are filed electronically with the SEC. You can also obtain copies of these reports by contacting Investor Relations at 503-692-8001 x 4207.

Needle-Free Injection

Medications are currently delivered using various methods, each of which has both advantages and limitations. The most commonly used drug delivery techniques include oral ingestion, intravenous infusion, subcutaneous, intradermal and intramuscular injection, inhalation and transdermal “patch” diffusion. Many drugs are effective only when injected.

Injections using traditional needle-syringes suffer from many shortcomings, including: (i) the risk of needlestick injuries; (ii) the risk of penetrating a patient’s vein; and (iii) the patient’s aversion to needles and discomfort. The most dangerous of these, the contaminated needlestick injury, occurs when a needle that has been exposed to a patient’s blood accidentally penetrates a healthcare worker’s skin. Contaminated needles can transmit deadly blood-borne pathogens including such viruses as HIV and Hepatitis B.

Because of growing awareness in recent years of the danger of blood-borne pathogen transmission, needle safety has become a higher concern for hospitals, healthcare professionals and their patients. As a result, pressure on the healthcare industry to eliminate the risk of contaminated needlestick injuries has increased. For example, the U.S. Occupational Safety and Health Administration (“OSHA”) issued regulations, effective in 1992, which require healthcare institutions to treat all blood and other body fluids as infectious. These regulations were changed by Congress with passage of the Needlestick Safety Prevention Act, which was effective in 2001. These regulations require implementing “engineering and work practice controls” to “isolate or remove blood-borne pathogen hazards from the workplace.” Among the required controls are special handling and disposal of contaminated “sharps” in biohazardous “sharps” containers, safer medical devices, including needleless systems, and follow-up testing for victims of needlestick injuries. To date, more than 30 states and the U.S. Occupational Safety and Health

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Administration have adopted, or have pending, legislation or regulations that require health care providers to utilize systems designed to reduce the risk of needlestick injuries.

The costs resulting from needlestick injuries vary widely. Accidental needlesticks involving sterile needles involve relatively little cost. Needlesticks with contaminated needles require investigation and follow-up. These are much more expensive. Investigation typically includes identifying the source of contamination, testing the source for blood-borne pathogens and repeatedly testing the needlestick victim for infection over an extended period. Some healthcare providers are requiring additional measures, including treating all needlestick injuries as contaminated unless proven otherwise.

In an effort to protect healthcare workers from needlestick injuries, many healthcare facilities have adopted more expensive, alternative technologies. While these technologies can help to reduce accidental needlesticks, they cannot eliminate the risk.

Description of Our Products

Biojector^® 2000

Our Biojector^® 2000 system (B2000) consists of two components: a hand-held, reusable jet injector and a sterile, single-use, disposable plastic syringe capable of delivering variable doses of medication up to 1.0 mL. The B2000 system is a refinement of jet injection technology that enables healthcare professionals to reliably deliver measured variable doses of medication through the skin, either intramuscularly or subcutaneously, without a needle.

The first component of the system, the Biojector^® 2000, is a portable hand-held device, which is approximately the size of a flashlight. It is designed both for ease of use by healthcare professionals, as well as to be attractive and non-threatening to patients. The Biojector^® 2000 injector uses disposable CO₂ cartridges as a power source. The CO₂ cartridges, which are purchased from an outside supplier, give an average of ten injections before requiring replacement. The CO₂ gas provides consistent, reliable pressure on the plunger of the disposable syringe, thereby propelling the medication into the tissue. The CO₂ propellant does not come into contact with either the patient or the medication. The B2000 is also available with a tank adapter which allows the device to be attached to a large volume CO₂ tank. The tank adapter eliminates the need to change CO₂ cartridges after every ten injections and is an attractive option for applications where a large number of injections are given in a relatively short period of time.

The second component of the system, the Biojector^® single-use disposable syringe, is provided in a sterile, peel-open package and consists of a plastic, needle-free, variable dose syringe, Drug Reconstitution System (“DRS” or “Vial Adapter”) needle-free syringe filling device, which is used to fill the syringe, and a safety cap. If requested by a customer, the product can also be supplied with a needle which is used as an alternative to the Vial Adapter for filling the syringe. The body of the syringe is transparent and has graduated markings to aid accurate filling by healthcare workers.

There are five different Biojector^® syringes, each of which is intended for a different injection depth or body type. The syringes are molded using our patented manufacturing process. A trained healthcare worker selects the syringe appropriate for the intended type of injection. One syringe size is for subcutaneous injections, while the others are designed for intramuscular injections, depending on the patient’s body characteristics and the location of the injection.

Giving an injection with a Biojector^® 2000 system is easy and straightforward. The healthcare worker giving the injection checks the CO₂ pressure on an easy-to-read gauge at the rear of the injector, draws medication up into a disposable plastic syringe using either a needle or the needle-free Vial Adapter, inserts the syringe into the Biojector^® 2000, presses the syringe tip against the appropriate disinfected surface on the patient’s skin, and then presses an actuator, thereby injecting the medication. A thin stream of medication is expelled at high velocity through a precision molded, small diameter orifice in the syringe. The medication is injected at a velocity sufficient to penetrate the skin and force the medication into the tissue at the desired depth.

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The current suggested list price for the Biojector^® 2000 professional jet injector is $1,200, and the suggested list price for Biojector^® syringes is $200 for a box of 100 syringes. CO ₂ cartridges are sold for a suggested list price of $8.00 for a box of ten. Discounts are offered for volume purchases.

Drug Reconstitution System

The needle-free drug reconstitution system allows for the transfer of diluents to reconstitute powdered medications into liquid form and withdrawal of liquid medication into a syringe without the use of a needle. Our 13mm Vial Adapter has a compact, polycarbonate spike design to draw up liquid medication and to reconstitute lyophilized (powdered) medication. It allows healthcare workers and patients to access medication without using a needle. The Vial Adapter fits most single and multi-dose medication vials available in the U.S. and European markets, and is widely used in clinics and home healthcare throughout North America. While the Vial Adapter is an integral part of the needle-free syringe packaging for the Biojector^® 2000 needle-free injection system, it functions perfectly with any conventional syringe.

Several pharmaceutical manufacturers include this unique product as part of their drug reconstitution kits. The 13mm Vial Adapter is the ideal solution to the challenges of reconstituting and drawing up medication. It provides clinicians and patients the highest levels of safety, convenience and ease of use.

The suggested list price for the Vial Adapter is $125.00 for a box of 400. Discounts are offered for volume purchases.

Vitajet^®

The Vitajet^® is also composed of two components, a portable injector unit and a disposable syringe. It is smaller and lower in cost than other products in our needle-free offering. The method of operation and drug delivery is similar to the Biojector^®, except that the Vitajet^® is powered by a spring rather than by CO₂. Due to its ease of use and lower cost, it is a good solution for home-use self-injection. Vitajet’s^® regulatory labeling limits its use to the injection of Insulin. A modified Vitajet^®, called the cool.click™, has received regulatory clearance for injection of Serono’s human growth hormone Saizen^® and another modified Vitajet^®, called the SeroJet™, has regulatory clearance for administering Serono’s human growth hormone Serostim^® for the treatment of AIDS wasting. The Vetjet™ is a modified Vitajet^® for use in the veterinary market and is licensed to Merial. We believe that the Vitajet^® has the potential to achieve regulatory labeling for additional subcutaneous injections. Currently, the Vitajet is not sold for insulin use and is only offered in the modified versions of the cool.click™, SeroJet™ and Vetjet™.

We have other products under development, which are intended to address other markets or to enhance the Biojector^® 2000 system. See “Research and Product Development.”

Marketing and Competition

The traditional needle-syringe is currently the primary method for administering intramuscular and subcutaneous injections.

During the last 20 years, there have been many attempts to develop portable one-shot jet injection hypodermic devices. Problems have arisen in the attempts to develop such devices including: (i) inadequate injection power; (ii) little or no control of pressure and depth of penetration; (iii) complexity of design, with related difficulties in cost and performance; (iv) difficulties in use, including filling and cleaning; and (v) the necessity for sterilization between uses.

In recent years, several spring-driven, needle-free injectors have been developed and marketed, primarily for injecting Insulin. We believe that market acceptance of these devices has been limited due to a combination of the cost of the devices coupled with the difficulties of their use.

Also in recent years, various versions of a “safety syringe” have been designed and marketed. Most versions of the safety syringe generally involve a standard or modified needle-syringe with a plastic guard or sheath surrounding the needle. Such covering is usually retracted or removed in order to give an injection. The intent of the safety syringe is to reduce or eliminate needlestick injuries. However, while the safety syringe is in use and before the needle has been covered, a safety syringe still poses a risk of

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needlestick injury. Additionally, some safety syringes require manipulation after injection and pose the risk of needlestick injury during that manipulation. Safety syringes are also often bulky and add to contaminated waste disposal costs.

Our primary sales and marketing objective is to form development, licensing and supply arrangements with leading pharmaceutical, biotechnology and veterinary companies, which would ordinarily include some or all of the following components: i) licensing revenues for full or partially exclusive access to our products for a specific application or medical indication; ii) development fees if we customize one of our products for the customer or develop a new product; iii) milestone payments related to the customer’s progress in developing products to be used in conjunction with our products; iv) royalty revenue derived from strategic partners’ drug sales; and v) product revenues from the sale of our products to the customer pursuant to a supply agreement. Product sales through this channel would ordinarily be made to the pharmaceutical or biotechnology company, whose sales force would then sell that company’s injectable pharmaceutical products, along with our products, to end-users.

Selling to new customers in our target markets is often a lengthy process. A new customer is typically adopting our products as a new technology. Accordingly, the purchase approval process usually involves a lengthy product evaluation process, including testing and approval by several individuals or committees within the potential customer’s organization and a thorough cost-benefit analysis.

The medical equipment market is highly competitive, and competition is likely to intensify. Many of our existing and potential competitors have been in business longer than us and have substantially greater technical, financial, marketing, sales and customer support resources. We believe that the primary competition for the Biojector^® 2000 system, and other needle-free jet injection systems we may develop, is the traditional, disposable needle-syringe and the safety syringe. Leading suppliers of needle-syringes and safety syringes include: Becton-Dickinson & Co., Sherwood Medical Co., a subsidiary of Tyco International, and Terumo Corp. of Japan. Manufacturers of traditional needle-syringes compete primarily on price, which generally ranges from approximately $0.05 to $0.28 per unit. Manufacturers of safety syringes compete on features, quality and price. Safety syringes generally are priced in a range of $0.30 to $0.50 per unit. The average price per injection with the B2000 is approximately $1.40 to $2.08.

We expect to compete with traditional needle-syringes and safety syringes based on issues of healthcare worker safety, ease of use, reduced cost of disposal, patient comfort, and reduced cost of compliance with OSHA regulations and other legislation. Except in the case of certain safety syringes, we do not expect to compete with needle-syringes based on purchase cost alone. However, we believe that the B2000 system will compete effectively based on overall cost when all indirect costs, including disposal of syringes and testing, treatment and workers’ compensation expenses related to needlestick injuries, are considered.

Several companies are developing devices that will likely compete with our jet injection products for certain applications. We are not aware of any current competing products with U.S. regulatory approval that have total features and benefits comparable to the B2000 system.

We are aware of other portable, needle-free injectors currently on the market, which are generally focused on subcutaneous self-injection applications of 0.5 mL or less. These products include: the Medi-Jector Vision^®, which is manufactured by Antares Pharma; and the SQ/Pen 2, which is manufactured by The Medical House. These products compete primarily with our spring-powered product line. Current list prices for such injectors range from approximately $200 to $665 per injector.

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Significant Customers

Product sales to customers accounting for 10% or more of our product sales were as follows:

	Year Ended December 31,
	2007		2006
Merial	35	%	11	%
Serono	16	%	27	%
Amgen	15	%	24	%
BioScrip	7	%	10	%
Ferring	6	%	13	%

Product Line and Geographic Revenue Information

Revenue by product line was as follows:

	Year Ended December 31,
	2007		2006
Biojector® 2000 (or CO2 powered)	$	1,753,956	$	2,205,649
Spring Powered		3,582,198		2,942,022
Vial Adapters		1,436,171		2,941,871
		6,772,325		8,089,542
License and Technology Fees		1,575,465		2,705,810
	$	8,347,790	$	10,795,352

Geographic revenues were as follows:

	Year Ended December 31,
	2007		2006
United States	$	6,317,356	$	8,184,597
All other		2,030,434		2,610,755
	$	8,347,790	$	10,795,352

All of our long-lived assets are located in the United States.

Patents and Proprietary Rights

We believe that the technology incorporated in our currently marketed Biojector^® 2000 and Vitajet^® devices and single-dose disposable plastic syringes, as well as the technology of products under development, give us advantages over both the manufacturers of competing needle-free jet injection systems and over prospective competitors seeking to develop similar systems. We attempt to protect our technology through a combination of patents, trade secrets and confidentiality agreements and practices.

Patent Summary Table				Trademark Summary Table
Item	Issued	Pending	Total	Item	Issued	Pending	Total
U.S. Patents	40	18	58	U.S. Trademarks	6	1	7
Foreign Patents	15	20	35	Foreign Trademarks	10	3	13
Total	55	38	93	Total	16	4	20

Our patents expire between 2008 and 2024.

Patent applications have been filed on matters specifically related to single use, disposable devices currently under development. We generally file patent applications in the U.S., Canada, Europe and Japan at the times and under the circumstances that we deem filing to be appropriate in each of those jurisdictions. There can be no assurance that any patents applied for will be granted or that patents held by us will be valid or sufficiently broad to protect our technology or provide a significant competitive advantage. We also rely on trade secrets and proprietary know-how that we seek to protect through confidentiality agreements with our employees, consultants, suppliers and others. There can be no assurance that these agreements will not be breached, that we would have adequate remedies for any breach, or that our trade secrets will not otherwise become known to, or be developed independently by,

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competitors. In addition, the laws of foreign countries may not protect our proprietary rights to our technology, including patent rights, to the same extent as the laws of the U.S.

We believe that we have independently developed our technology and attempt to assure that our products do not infringe on the proprietary rights of others. However, if infringement of the proprietary rights of others is alleged and proved, there can be no assurance that we could obtain necessary licenses to that technology on terms and conditions that would not have an adverse effect.

Government Regulation

Our products and manufacturing operations are subject to extensive government regulations, both in the U.S. and abroad. In the U.S., the Food and Drug Administration (“FDA”) administers the Federal Food, Drug and Cosmetic Act (“FFDCA”) and has adopted regulations to administer that Act. These regulations include policies that: i) govern the introduction of new medical devices; ii) require observing certain standards and practices in the manufacture and labeling of medical devices; and iii) require medical device companies to maintain certain records and report device-related deaths, serious injuries and certain malfunctions to the FDA. Our manufacturing facilities and certain records are also subject to FDA inspection. The FDA has broad discretion to enforce the FFDCA and related regulations. Noncompliance with the Act or its regulations can result in a variety of regulatory actions including warning letters, product detentions, device alerts or field corrections, voluntary and mandatory recalls, seizures, injunctive actions and civil or criminal penalties.

Unless exempted by regulation, the FFDCA provides that medical devices may not be commercially distributed in the U.S. unless they have been cleared by the FDA. The FFDCA provides two basic review procedures for pre-market clearance of medical devices. Certain products qualify for a submission authorized by Section 510(k) of the FFDCA. Under Section 510(k), manufacturers provide the FDA with a pre-market notification (“510(k) notification”) of the manufacturer’s intent to begin marketing the product. In the 510(k) notification, the manufacturer must establish, among other things, that the product it plans to market is substantially equivalent to another legally marketed product. To be substantially equivalent, a proposed product must have the similar intended use and be determined to be as safe and effective as a legally marketed device. Further, it may not raise questions of safety and effectiveness that are different from those associated with a legally marketed device. Marketing a medical device may commence when the FDA issues correspondence finding substantial equivalence to such a legally marketed device. The FDA may require, in connection with the 510(k) submission, that it be provided with animal and/or human clinical test results.

If a medical device does not qualify for the 510(k) procedure, the manufacturer must file a pre-market approval application (“PMA”). A PMA must show that the device is safe and effective and is generally a much more comprehensive submission than a 510(k) notification. A PMA typically requires more extensive testing before filing with the FDA and a longer FDA review process.

A 510(k) notification is required when a device is being introduced into the market for the first time, when the manufacturer makes a change or modification to an already marketed device that could significantly affect the device’s safety or effectiveness, and when there is a major change or modification in the intended use of the device. When any change or modification is made in a device or its intended use, the manufacturer is expected to make the initial determination as to whether the change or modification is of a kind that would require filing a new 510(k) notification. FDA regulations provide only limited guidance in making this determination.

We are developing the Iject^® Needle-Free Injection System, a single prefilled disposable injector for self injection, and pre-filled Biojector^® syringes. We plan to seek arrangements with pharmaceutical and biologics companies that will enable them to provide medications in pre-filled syringes packaged with the injector device. See “Research and Product Development.” Before pre-filled Iject^® or Biojector^® syringes may be distributed for use in the U.S., the FDA may require tests to prove that the medication will retain its chemical and pharmacological properties when stored in and delivered using a pre-filled needle-free

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syringe. It will be the pharmaceutical or biotechnology company’s responsibility to conduct these clinical tests. It is current FDA policy that such pre-filled syringes are evaluated by the FDA by submitting a Request for Designation (“RFD”) to the Office of Combination Products, (“OCP”). The pharmaceutical or biotechnology company will be responsible for the submission to the OCP. A pre-filled syringe meets the FDA’s definition of a combination product, or a product comprised of two or more regulated components, i.e. drug/device. The OCP will assign a center with primary jurisdiction for a combination product (CDER, CBER, CDRH) and ensure the timely and effective premarket review. The primary or lead review center often will consult or collaborate with other evaluation centers to obtain all the appropriate materials and requirements to process the submission.

We believe that if a drug intended to be used in one of our pre-filled syringes was already the subject of an approved new drug application (“NDA”) or an abbreviated new drug application (“ANDA”) for intramuscular, subcutaneous or intradermal injection, then the main issues affecting clearance for use in the pre-filled syringe would be: i) the ability of the syringe to store the drug; ii) the ability of the manufacturer to assure the drug’s stability until used; and iii) the ability to demonstrate that the needle-free syringe will perform equivalently to a needle and syringe, or is safe and efficacious in its own right. FDA recommends pre-submission discussions with the OCP to clarify submission requirements. An early Request for Designation can avoid costly delays as the primary requirements and the premarket route (510(k), PMA, NDA) will be determined.

The FDA also regulates and monitors our quality assurance and manufacturing practices. The FDA requires us and our contract manufacturers to demonstrate compliance with current Good Manufacturing Practices (“GMP”) Regulations. These regulations require, among other things, that: i) the manufacturing process be regulated and controlled by the use of written procedures; and ii) the ability to produce devices which meet the manufacturer’s specifications be validated by extensive and detailed testing of every aspect of the process. GMPs also require investigating any deficiencies in the manufacturing process or in the products produced and detailed record-keeping. The FDA’s interpretation and enforcement of these requirements has been increasingly strict and will likely continue to be at least as strict in the future. Failure to adhere to GMP requirements would cause the products produced by us to be considered in violation of the FFDCA and subject to enforcement action. The FDA monitors compliance with these requirements by requiring manufacturers to register their establishments with the FDA, and by subjecting their manufacturing facilities to periodic FDA inspections. If the inspector observes conditions that violate the FFDCA or GMP regulations, the manufacturer must correct those conditions or explain them satisfactorily. Otherwise, the manufacturer may face potential regulatory action, which may include warning letters, product detentions, device alerts or field corrections, voluntary and mandatory recalls, seizures, injunctive actions and civil or criminal penalties.

In April 2004, we moved to a larger manufacturing facility and the FDA inspected the facility in August 2004 for compliance with Good Manufacturing Practices, with no observations or official actions were required. The most recent FDA inspection was performed in 2007, with one observation reported. A resolution report to address that observation has been sent to the FDA.

The FDA’s Medical Device Reporting Regulation requires that we provide information to the FDA if any death or serious injury alleged to have been associated with the use of our products occurs. In addition, any product malfunction that would likely cause or contribute to a death or serious injury if the malfunction were to occur must also be reported. FDA regulations prohibit a device from being marketed for unapproved or uncleared indications. If the FDA believes that we are not in compliance with these regulations, it may institute proceedings to detain or seize products, issue a product recall, seek injunctive relief or assess civil and criminal penalties.

The use and manufacture of our products are subject to OSHA and other federal, state and local laws and regulations that relate to such matters as: i) safe working conditions for healthcare workers and other employees; ii) manufacturing practices; iii) environmental protection and disposal of hazardous or potentially hazardous substances; and iv) the policies of hospitals and clinics relating to complying with these laws and regulations. There can be no assurance that we will not be required to incur significant costs to comply with these laws, regulations or policies in the future, or that such laws, regulations or

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policies will not increase the costs or restrictions related to the use of our products or otherwise have a materially adverse effect upon our ability to do business.

Laws and regulations regarding the manufacture, sale and use of medical devices are subject to change and depend heavily on administrative interpretation. There can be no assurance that future changes in regulations or interpretations made by the FDA, OSHA or other domestic and international regulatory bodies will not adversely affect us.

Sales of medical devices outside of the U.S. are subject to foreign regulatory requirements. The requirements for obtaining pre-market clearance by a foreign country may differ from those required for FDA clearance. Devices having an effective 510(k) clearance or PMA may be exported without further FDA authorization. However, certain countries require their own certifications and FDA authorization is generally required in order to export non-cleared or non-approved medical devices.

In June 1998, we first received certification to ISO 9001 (Quality management systems — Requirements) and EN 46001 (Application of EN ISO 9001 to the manufacture of medical devices) from TUV Product Services indicating that we have in place a quality system that conforms to International Standards for medical device manufacturers. Our quality system has maintained continuous certification. In 2005, we changed auditors, to Underwriters Laboratories, and, due to a change in requirements, migrated our quality system certification to the International Standard ISO 13485:2003 (Medical devices — Quality management systems — Requirements for regulatory purposes).

Our quality system is also certified under the Canadian Medical Devices Conformity Assessment System (“CMDCAS”) for compliance to the Canadian Medical Device Regulation (“CMDR”). We first we received certification to the CMDR from TUV in 2003, in accordance with the Standards Council of Canada (“SCC”) standards, and Health Canada’s regulatory requirements. That same certification is currently provided by Underwriters Laboratories. We hold Canadian Medical Devices Licenses and Medical Device Establishment License with Health Canada permitting the importation for sale of some of our medical devices in Canada.

In November 1999, we first received certification from TUV Product Services to EC-Directive 93/42/EEC Annex. II.3 Medical Device Directive, (MDD), which allows us to label selected products with the CE Mark and sell them in the European Community and various non-European countries that recognize the CE Mark. That certification has been continuously maintained. In October 2007 we passed our most recent MDD re-certification audit with Underwriters Laboratories.

Research and Product Development

Research and product development efforts are focused on enhancing our current product offerings and on developing new needle-free injection products. We use clinical magnetic resonance imaging, tissue studies and proprietary in vitro test methods to determine the reliability and performance of new and existing products.

As of March 1, 2008, our research and product development staff, including clinical and regulatory staff members, consisted of five employees. Research and development expense totaled $3.2 million and $4.5 million for the years ended December 31, 2007 and 2006, respectively.

A primary focus of our current research efforts is on clinical research in the area of DNA-based vaccines and medications. Currently, our devices are being used in 12 clinical research projects both within and outside of the United States, six of which are DNA-based. These research projects are being conducted by companies engaged in the development of DNA-based medications as well as by universities and governmental institutions conducting research in this area.

Developing DNA-based preventative and therapeutic treatments for a variety of diseases is a very active and growing area of medical research. Researchers hope to develop DNA-based treatments for diseases that have previously not been treatable as well as DNA-based alternatives to therapies currently used in the treatment of other diseases. Most DNA therapies currently being developed require injecting the

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medication either intramuscularly (into the muscle tissue) or intradermally (just under the skin). We have developed an adapter for the Biojector^® syringe to allow the device to consistently deliver intradermal injections. This adapter is being used in clinical studies to deliver intradermal injections. Initial studies show the adapter to be effective. A published trial with the Naval Medical Research Center using a DNA-based malaria vaccine indicated that the adapter consistently delivered intradermal injections. In addition, pre-clinical testing in animals provided consistent data indicating effective intradermal injections. This adapter has not been cleared by the FDA to be marketed for intradermal injections and is not currently submitted to the FDA to gain clearance for those claims. If our jet injection technology is proven to enhance the performance of DNA-based medications, this area of medicine could present a significant opportunity for us to license our products to pharmaceutical and biotechnology companies for use in conjunction with their DNA-based medications. There can be no assurance that further clinical studies will prove conclusively that our technology is more effective in delivering DNA-based medications than alternative delivery systems that are either currently available or that may be developed in the future. Further, there can be no assurance, should our technology prove to be more effective in delivering DNA-based medications, that regulatory clearance will be gained to deliver any DNA-based medications using our products. Further, should intradermal delivery of DNA-based medications be critical to effective delivery of those compounds, there is no assurance that we will gain regulatory clearance for intradermal delivery of DNA-based medications with our products.

During 2007, our product development efforts focused on a next generation spring device with auto-disable syringe and on a new generation of personal injectors (the “Iject^®”) that are small, disposable and lightweight. We anticipate producing a family of Iject^® devices, each optimized for the delivery of a specific drug or vaccine, which could be licensed to pharmaceutical and biotechnology companies for different non-competing products. In addition, we continued to work on product improvements to existing devices and the development of products for our strategic partners.

The Iject^® device is designed to be pre-filled and target the growing market for patients administering their own injections in the home. Benefits of the Iject^® are: (i) single use; (ii) fully disposable; (iii) minimal patient interaction; (iv) ready to use and (v) safe.

In order to support the pre-filled Iject^® family of devices, and to expand the market opportunities for the Biojector^® 2000, we are developing component processing and packaging methods to enable standardized, high-speed, automated filling of Iject^® and Biojector^® syringes. We intend to outsource the sterile filling process to a contract manufacturing partner.

When the pre-filled technology is perfected, we intend to seek arrangements with pharmaceutical and biotechnology companies under which those companies will sell their medications pre-packaged in Iject^® devices or Biojector syringes. Purchasing Iject^® devices or Biojector^® syringes already filled with medication eliminates the filling and measuring procedures associated with traditional injection of medications and with injections administered with the current Biojector^® syringe. Before pre-filled syringes may be distributed for use in the U.S., pharmaceutical and biotechnology companies wishing to use these syringes must commit to packaging and distributing their products in the pre-filled syringes and to the time and financial resources necessary to gain regulatory clearance to package and market their products in this manner. This process could be lengthy. In addition, the companies will have to establish that their drugs will remain chemically and pharmacologically stable when packaged and stored in a Biojector^® or Iject^® pre-filled syringe and that a drug that is packaged, stored and delivered in this manner is safe and effective for its intended uses. See “Governmental Regulation.”

We are also under contract with several customers to develop custom products suited to specific markets and injectables.

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Manufacturing

We assemble our products and related syringes from components purchased from outside suppliers. Some of these components are currently obtained from single sources, with some components requiring significant production lead times. There can be no assurance that sufficient numbers of qualified manufacturing employees will be available when needed to increase production to meet either foreseen or unforeseen demand for our products. Further, while we believe that we continue to maintain supplier relationships that will provide a sufficient supply of materials to meet demands at full manufacturing capacity, there can be no assurance that such supplier relationships will be sufficient to meet such demand in quantities and at prices and quality levels required for us to operate efficiently and profitably.

Employees

As of March 1, 2008, we had thirty-five full-time employees, one part-time employee and one temporary employee. Of these employees, five were engaged in research and product development, twenty-six in manufacturing and six in administration. As of March 1, 2008, we also had four per diem nurses on contract. None of our employees are represented by a labor union.

Product Liability

We believe that our products reliably inject medications both subcutaneously and intramuscularly when used in accordance with product guidelines. Our current insurance policies provide coverage at least equal to an aggregate of $5 million with respect to certain product liability claims. We have experienced one product liability claim to date, and did not incur a significant liability. There can be no assurance, however, that we will not become subject to more such claims, that our current insurance would cover such claims, or that insurance will continue to be available to us in the future. Our business may be adversely affected by product liability claims.

ITEM 1A. RISK FACTORS

In addition to the other information contained in this Form 10-K, the following risk factors should be considered carefully in evaluating our business. Our business, financial condition, or results of operations could be materially adversely affected by any of these risks. Please note that additional risks not presently known to us or that we currently deem immaterial may also impair our business and operations.

We may need additional funding to support our operations beyond 2008; sufficient funding is subject to conditions and may not be available to us, and the unavailability of funding could adversely affect our business. We require cash for operations, debt service and capital expenditures. We had cash, cash equivalents and marketable securities of $2.4 million at December 31, 2007. If we are unable to enter into anticipated licensing agreements with our current partners or enter into new licensing, development and supply agreements, we may need to do one or more of the following:

• reduce our current expenditure run-rate;

• delay capital and maintenance expenditures;

• restructure current debt financing;

• secure additional short-term debt financing;

• secure additional long-term debt financing;

• secure additional equity financing; or

• secure a strategic partner.

There is no guarantee that such resources will be available to us on terms acceptable to us, or at all, or that such resources will be received in a timely manner, if at all, or that we will be able to reduce our expenditure run-rate without materially and adversely affecting our business. Inability to secure additional resources may result in our defaulting on our debt, resulting in our lender foreclosing on our assets, or may cause us to cease operations, seek bankruptcy protection, turn our assets over to our lender or liquidate.

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We have previously been out of compliance with the covenants in our loan agreements and, if we default under our loan agreements in the future, our lender could foreclose on our assets, which would adversely affect our business. In November 2007, we entered into a Forbearance Agreement with our lender. Under this agreement, our lender agreed not to declare an event of default with respect to certain alleged breaches under our loan agreement through June 1, 2008 and we, in turn, prepaid a portion of a loan and repriced warrants and convertible debt held by the lender. Our obligations to our lender are secured by a pledge of all of our assets. If we are unable to comply with the covenants addressed by the Forbearance Agreement at the end of the forbearance period, or if we otherwise breach our loan agreements, we could be required to negotiate a new forbearance agreement with our lender. If we cannot agree to a new forbearance agreement, or if our lender is unwilling to negotiate a new forbearance agreement, our lender could foreclose on our assets, which would materially and adversely affect our business.

We have a history of losses and may never be profitable. Since our formation in 1985, we have incurred significant annual operating losses and negative cash flow. At December 31, 2007, we had an accumulated deficit of $117.8 million and net working capital of $0.4 million. Due to our limited amount of additional committed capital, recurring losses, negative cash flows and accumulated deficit, the report of our independent registered public accounting firm dated March 28, 2008 expressed substantial doubt about our ability to continue as a going concern. We may never be profitable, which could have a negative effect on our stock price, our business and our ability to continue operations. Our revenues are derived from licensing and technology fees and from product sales. We sell our products to strategic partners, who market our products under their brand name and to end-users such as public health clinics for vaccinations and nursing organizations for flu immunizations. We have not attained profitability at these sales levels. We may never be able to generate significant revenues or achieve profitability. In the future, we are likely to require substantial additional financing. Such financing may not be available on terms acceptable to us, or at all, which would have a material adverse effect on our business. Any future equity financing could result in significant dilution to shareholders.

If our products are not accepted by the market, our business could fail. Our success will depend on market acceptance of our needle-free injection drug delivery systems and on market acceptance of other products under development. If our products do not achieve market acceptance, our business could fail. Currently, the dominant technology used for intramuscular and subcutaneous injections is the hollow-needle syringe, which has a cost per injection that is significantly lower than that of our products. Our products may be unable to compete successfully with needle-syringes.

We may be unable to enter into additional strategic corporate licensing and distribution agreements or maintain existing agreements, which could cause our business to suffer. A key component of our sales and marketing strategy is to enter into licensing and supply arrangements with leading pharmaceutical and biotechnology companies for whose products our technology provides either increased medical effectiveness or a higher degree of market acceptance. If we cannot enter into these agreements on terms favorable to us or at all, our business may suffer.

In prior years, several agreements, including those with Hoffman-La Roche Pharmaceuticals, Merck & Co. and Amgen, have been canceled by our partners prior to completion. These agreements were canceled for various reasons, including, but not limited to, costs related to obtaining regulatory approval, unsuccessful pre-clinical vaccine studies, changes in vaccine development and changes in business development strategies. These agreements resulted in significant short-term revenue. However, none of these agreements developed into the long-term revenue stream anticipated by our strategic partnering strategy. No revenue resulted from any of the canceled agreements in 2007 or 2006.

In addition, in October 2007, Hoffmann-La Roche Inc. and Trimeris Inc. announced that they were not going to continue with their FDA submission for Fuzeon^® to be administered with the B2000. While we did not have a licensing and supply agreement with these parties, this announcement may negatively affect our B2000 sales in future periods.

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We may be unable to enter into future licensing or supply agreements with major pharmaceutical or biotechnology companies. Even if we enter into these agreements, they may not result in sustainable long-term revenues which, when combined with revenues from product sales, could be sufficient for us to operate profitably.

Our drug+device strategy is new and is subject to a number of risks and uncertainties and, as a result, we may not be successful in implementing the strategy. We recently announced a new component of our business strategy pursuant to which we will attempt to secure rights to injectable medications to sell in combination with our products under our own brand. Successfully implementing this strategy is subject to a number of risks. We may not be successful in securing rights to medications we are interested in combining with our products. Even if successful in securing rights, these products would be subject to FDA approval, and it will be our responsibility to obtain such approval. This approval may not be obtained or may take a significant period of time to obtain. In addition, there is a risk that our device will not work for the new drug indication. We may also need to raise additional funds to finance this new strategy, and there is no assurance such funds will be available to us on acceptable terms or at all. We do not have experience manufacturing or marketing to end-users drug+device combinations. In addition, these new products may not be accepted by the market. Accordingly, there is no assurance that our new strategy will be successfully implemented, and failure to successfully implement the strategy could negatively affect our business.

We must retain qualified personnel in a competitive marketplace, or we may not be able to grow our business. Our success depends upon the personal efforts and abilities of our senior management. We may be unable to retain our key employees, namely our management team, or to attract, assimilate or retain other highly qualified employees. Although we have implemented workforce reductions, there remains substantial competition for highly skilled employees. Our key employees are not bound by agreements that could prevent them from terminating their employment at any time. If we fail to attract and retain key employees, our business could be harmed.

We hired a new President and Chief Executive Officer, and our business could be harmed if we fail to assimilate him. On October 1, 2007, we hired Mr. Ralph Makar as our new President and Chief Executive Officer. If we fail to effectively assimilate Mr. Makar, it could be disruptive to our business and negatively impact our operating results and could result in the departure of existing employees and customers.

Our restructuring activities may not result in the expected benefits, which would negatively impact our future results of operations. In March 2007 and 2006, we restructured our operations, which included reducing the size of our workforce. Further headcount reductions were made in January 2008. Despite these efforts, we cannot assure you that we will achieve all of the operating expense reductions and improvements in operating margins and cash flows currently anticipated from these activities in the periods contemplated, or at all. Our inability to realize these benefits, and our failure to appropriately structure our business to meet market conditions, could negatively impact our results of operations. As part of our recent activities, we have reduced the workforce in certain portions of our business. This reduction in staffing levels could require us to forego certain future opportunities due to resource limitations, which could negatively affect our long-term revenues. In addition, these workforce reductions could result in a lack of focus and reduced productivity by remaining employees due to changes in responsibilities or concern about future prospects, which in turn may negatively affect our future revenues. Further, we believe our future success depends, in large part, on our ability to attract and retain highly skilled personnel. Our workforce reduction activities could negatively affect our ability to attract such personnel as a result of perceived risk of future workforce reductions. We cannot assure you that we will not be required to implement further restructuring activities or reductions in our workforce based on changes in the markets and industries in which we compete or that any future restructuring or workforce reduction efforts will be successful.

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We may not be able to comply with Nasdaq listing requirements, which could result in our common stock being delisted from the Nasdaq Capital Market. On November 15, 2007, Nasdaq staff notified us that we had failed to comply with Marketplace Rule 4310(c)(3), which requires us to have a minimum of $2.5 million in stockholders’ equity or $35.0 million market value of listed securities or $0.5 million of net income from continuing operations for the most recently completed fiscal year or two of the three most recently completed fiscal years. On January 22, 2008, we received a letter from the Nasdaq staff extending, until January 23, 2008, the deadline to complete the conversion of our $615,000 Convertible Notes into Series F Convertible Preferred Stock to regain compliance with the rule. This conversion occurred on January 22, 2008. Accordingly, we believe that we are in compliance with the stockholders’ equity requirement of Rule 4310(c)(3). The Nasdaq will continue to monitor our ongoing compliance with the stockholders’ equity requirement and, if at the time of our filing of our periodic report for the year ended December 31, 2007 or the quarter ending March 31, 2008, we are not in compliance with such requirement, we will be subject to delisting.

Also, on November 19, 2007, we received a Nasdaq Staff Deficiency Letter stating that we had failed to comply with the minimum bid price requirement for continued listing set forth in Marketplace Rule 4310(c)(4) because for 30 consecutive business days the bid price of Bioject’s common stock has closed below the minimum $1.00 bid requirement. The letter states that we will be provided 180 calendar days, or until May 19, 2008, to regain compliance with the minimum bid price requirement. If, at any time prior to May 19, 2008, the bid price of our common stock closes at $1.00 per share or more for a minimum of 10 consecutive business days, Nasdaq will notify us that we are in compliance with the minimum bid requirement. Nasdaq may, in its discretion, extend this 10 consecutive business day period, but generally not beyond 20 consecutive business days. If, by May 19, 2008, we have not regained compliance with the minimum bid price, and the Nasdaq Staff determines that we meet the Nasdaq Capital Market initial listing criteria, other than the minimum bid price, then we will be granted an additional 180 days to regain compliance with the minimum bid price requirement. However, we do not expect to be in compliance with the other initial listing criteria.

We are currently taking actions to improve our business prospects, which we believe will help increase our stock price. However, if we feel that such actions will not increase our stock price enough to meet the minimum bid price requirement by May 19, 2008, we will consider additional actions to help us regain compliance. Such actions may include seeking shareholder approval of a reverse stock split at our 2008 Annual Meeting in order to increase our stock price. There is no assurance, however, that shareholder approval will be sought or obtained or, if obtained, will be obtained in time to comply with the Nasdaq compliance deadline.

The fair value of accounting for derivative liabilities may materially impact the results of our operations in future periods. We recorded derivative liabilities in connection with our convertible debt and equity financing agreements at inception in 2006. In accordance with EITF 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Common Stock” and SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” these derivative liabilities are reported at fair value each reporting period. Changes in the fair value are recorded as a component of earnings. Changes in the value of the derivative liabilities may materially impact results of operations in future periods.

We have limited manufacturing experience, and may be unable to produce our products at the unit costs necessary for the products to be competitive in the market, which could cause our financial condition to suffer. We have limited experience manufacturing our products in commercially viable quantities. We have increased our production capacity for the Biojector^® 2000 system and the Vitajet^® product line through automation of, and changes in, production methods, in order to achieve savings through higher volumes of production. If we are unable to achieve these savings, our results of operations and financial condition could suffer. The current cost per injection of the Biojector^® 2000 system and Vitajet^® product line is substantially higher than that of traditional needle-syringes, our principal competition. In order to reduce costs, a key element of our business strategy has been to reduce the overall manufacturing cost through automating production and packaging. There can be no assurance that we will achieve sales and manufacturing volumes necessary to realize cost savings from volume

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production at levels necessary to result in significant unit manufacturing cost reductions. Failure to do so will continue to make competing with needle-syringes on the basis of cost very difficult and will adversely affect our financial condition and results of operations. We may be unable to successfully manufacture devices at a unit cost that will allow the product to be sold profitably. Failure to do so would adversely affect our financial condition and results of operations.

We are subject to extensive government regulation and must continue to comply with these regulations or our business could suffer. Our products and manufacturing operations are subject to extensive government regulation in both the U.S. and abroad. If we cannot comply with these regulations, we may be unable to distribute our products, which could cause our business to suffer or fail. In the U.S., the development, manufacture, marketing and promotion of medical devices are regulated by the Food and Drug Administration (“FDA”) under the Federal Food, Drug, and Cosmetic Act (“FFDCA”). The FFDCA provides that new pre-market notifications under Section 510(k) of the FFDCA are required to be filed when, among other things, there is a major change or modification in the intended use of a device or a change or modification to a legally marketed device that could significantly affect its safety or effectiveness. A device manufacturer is expected to make the initial determination as to whether the change to its device or its intended use is of a kind that would necessitate the filing of a new 510(k) notification. The FDA may not concur with our determination that our current and future products can be qualified by means of a 510(k) submission or that a new 510(k) notification is not required for such products.

Future changes to manufacturing procedures could require that we file a new 510(k) notification. Also, future products, product enhancements or changes, or changes in product use may require clearance under Section 510(k), or they may require FDA pre-market approval (“PMA”) or other regulatory clearances. PMAs and regulatory clearances other than 510(k) clearance generally involve more extensive prefiling testing than a 510(k) clearance and a longer FDA review process. It is current FDA policy that pre-filled syringes are evaluated by the FDA by submitting a Request for Designation (“RFD”) to the Office of Combination Products (“OCP”). The pharmaceutical or biotechnology company with which we partner is responsible for the submission to the OCP, although we will have this responsibility with respect to drug+device combinations produced by us under our new strategy. A pre-filled syringe meets the FDA’s definition of a combination product, or a product comprised of two or more regulated components, i.e. drug/device. The OCP will assign a center with primary jurisdiction for a combination product (CDER, CDRH) to ensure the timely and effective pre-market review of the product. Depending on the circumstances, drug and combination drug/device regulation can be much more extensive and time consuming than device regulation.

FDA regulatory processes are time consuming and expensive. Product applications submitted by us may not be cleared or approved by the FDA. In addition, our products must be manufactured in compliance with Good Manufacturing Practices, as specified in regulations under the FFDCA. The FDA has broad discretion in enforcing the FFDCA, and noncompliance with the FFDCA could result in a variety of regulatory actions ranging from product detentions, device alerts or field corrections, to mandatory recalls, seizures, injunctive actions and civil or criminal penalties.

Sales of our products, including the Iject^® pre-filled syringe, are dependent on regulatory approval being obtained for the product’s use with a given drug to treat a specific condition. It is the responsibility of the strategic partner producing the drug to obtain this approval. The failure of a partner to obtain regulatory approval or to comply with government regulations after approval has been received could harm our business. In order for a strategic partner to sell our devices for delivery of its drug to treat a specific condition, the partner must first obtain government approval. This process is subject to extensive government regulation both in the U.S. and abroad. As a result, sales of our products, including the Iject^® product, to any strategic partner are dependent on that partner’s ability to obtain regulatory approval. Accordingly, delay or failure of a partner to obtain that approval could cause our financial results to suffer. In addition, if a partner fails to comply with governmental regulations after initial regulatory approval has been obtained, sales to that partner may cease, which could cause our financial results to suffer.

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If we cannot meet international product standards, we will be unable to distribute our products outside of the United States, which could cause our business to suffer. Distribution of our products in countries other than the U.S. may be subject to regulation in those countries. Failure to satisfy these regulations would impact our ability to sell our products in these countries and could cause our business to suffer.

We have received the following certifications from Underwriters Laboratories (“UL”) that our products and quality systems meet the applicable requirements, which allows us to label our products with the CE Mark and sell them in the European Community and non-European Community countries.

Certificate	Dated
ISO 13485:2003 and CMDCAS	February 2006
Annex V of the Directive 93/42/EEC on Medical Devices	March 2007
Annex II, section 3 of the Directive 93/42/EEC on Medical Devices	March 2007

If we are unable to continue to meet the standards of ISO 9001 or CE Mark certification, it could have a material adverse effect on our business and cause our financial results to suffer.

If the healthcare industry limits coverage or reimbursement levels, the acceptance of our products could suffer. The price of our products exceeds the price of needle-syringes and, if coverage or reimbursement levels are reduced, market acceptance of our products could be harmed. The healthcare industry is subject to changing political, economic and regulatory influences that may affect the procurement practices and operations of healthcare facilities. During the past several years, the healthcare industry has been subject to increased government regulation of reimbursement rates and capital expenditures. Among other things, third party payers are increasingly attempting to contain or reduce healthcare costs by limiting both coverage and levels of reimbursement for healthcare products and procedures. Because the price of the Biojector^® 2000 system exceeds the price of a needle-syringe, cost control policies of third party payers, including government agencies, may adversely affect acceptance and use of the Biojector^® 2000 system.

We depend on outside suppliers for manufacturing. Our current manufacturing processes for the Biojector^® 2000 jet injector and disposable syringes as well as manufacturing processes to produce our modified Vitajets^® consist primarily of assembling component parts supplied by outside suppliers. Some of these components are currently obtained from single sources, with some components requiring significant production lead times. In the past, we have experienced delays in the delivery of certain components. To date, such delays have not had a material adverse effect on our operations. We may experience delays in the future, and these delays could have a material adverse effect on our financial condition and results of operations.

If we are unable to manage our growth, our results of operations could suffer. If our products achieve market acceptance or if we are successful in entering into significant product supply agreements with major pharmaceutical or biotechnology companies, we expect to experience rapid growth. Such growth would require expanded customer service and support, increased personnel, expanded operational and financial systems, and implementing new and expanded control procedures. We may be unable to attract sufficient qualified personnel or successfully manage expanded operations. As we expand, we may periodically experience constraints that would adversely affect our ability to satisfy customer demand in a timely fashion. Failure to manage growth effectively could adversely affect our financial condition and results of operations.

We may be unable to compete in the medical equipment field, which could cause our business to fail. The medical equipment market is highly competitive and competition is likely to intensify. If we cannot compete, our business will fail. Our products compete primarily with traditional needle-syringes, “safety syringes” and also with other alternative drug delivery systems. In addition, manufacturers of needle-syringes, as well as other companies, may develop new products that compete directly or indirectly with our products. There can be no assurance that we will be able to compete successfully in this market. A variety of new technologies (for example, transdermal patches) are being developed as alternatives to

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injection for drug delivery. While we do not believe such technologies have significantly affected the use of injection for drug delivery to date, there can be no assurance that they will not do so in the future. Many of our competitors have longer operating histories as well as substantially greater financial, technical, marketing and customer support resources.

We are dependent on a single technology, and if it cannot compete or find market acceptance, our business will suffer. Our strategy has been to focus our development and marketing efforts on our needle-free injection technology. Focus on this single technology leaves us vulnerable to competing products and alternative drug delivery systems. If our technology cannot find market acceptance or cannot compete against other technologies, business will suffer. We perceive that healthcare providers’ desire to minimize the use of the traditional needle-syringe has stimulated development of a variety of alternative drug delivery systems such as “safety syringes,” jet injection systems, nasal delivery systems and transdermal diffusion “patches.” In addition, pharmaceutical companies frequently attempt to develop drugs for oral delivery instead of injection. While we believe that for the foreseeable future there will continue to be a significant need for injections, alternative drug delivery methods may be developed which are preferable to injection.

We rely on patents and proprietary rights to protect our technology. We rely on a combination of trade secrets, confidentiality agreements and procedures and patents to protect our proprietary technologies. We have been granted a number of patents in the U.S. and several patents in other countries covering certain technology embodied in our current jet injection system and certain manufacturing processes. Additional patent applications are pending in the U.S. and certain foreign countries. The claims contained in any patent application may not be allowed, or any patent or our patents collectively may not provide adequate protection for our products and technology. In the absence of patent protection, we may be vulnerable to competitors who attempt to copy our products or gain access to our trade secrets and know-how. In addition, the laws of foreign countries may not protect our proprietary rights to this technology to the same extent as the laws of the U.S. We believe we have independently developed our technology and attempt to ensure that our products do not infringe the proprietary rights of others.

If a dispute arises concerning our technology, we could become involved in litigation that might involve substantial cost. Such litigation might also divert substantial management attention away from our operations and into efforts to enforce our patents, protect our trade secrets or know-how or determine the scope of the proprietary rights of others. If a proceeding resulted in adverse findings, we could be subject to significant liabilities to third parties. We might also be required to seek licenses from third parties in order to manufacture or sell our products. Our ability to manufacture and sell our products might also be adversely affected by other unforeseen factors relating to the proceeding or its outcome.

If our products fail or cause harm, we could be subject to substantial product liability, which could cause our business to suffer. Producers of medical devices may face substantial liability for damages in the event of product failure or if it is alleged the product caused harm. We currently maintain product liability insurance and, to date, have experienced one product liability claim. There can be no assurance, however, that we will not be subject to a number of such claims, that our product liability insurance would cover such claims, or that adequate insurance will continue to be available to us on acceptable terms in the future. Our business could be adversely affected by product liability claims or by the cost of insuring against such claims.

There are a large number of shares eligible for sale into the public market, which may reduce the price of our common stock. The market price of our common stock could decline as a result of sales of a large number of shares of our common stock in the market, or the perception that such sales could occur. We have a large number of shares of common stock outstanding and available for resale. These sales also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. For example, since 1996, we have registered approximately 20.9 million shares for resale on Form S-3 registration statements, including approximately 2.4 million shares issuable upon exercise of warrants. In addition, as of December 31, 2007, we had approximately 700,000 shares of common stock available for future issuance under our stock incentive plan and our employee share

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purchase plan combined. As of December 31, 2007, options to purchase approximately 1.4 million shares of common stock were outstanding and approximately 460,000 restricted stock units were outstanding and will be eligible for sale in the public market from time to time subject to vesting. In addition, there are shares issuable upon conversion or exercise of Series F preferred stock, convertible loans and notes and warrants which have not been registered for resale at this time.

Our stock price may be highly volatile, which increases the risk of securities litigation. The market for our common stock and for the securities of other small market-capitalization companies has been highly volatile in recent years. This increases the risk of securities litigation relating to such volatility. We believe that factors such as quarter-to-quarter fluctuations in financial results, new product introductions by us or our competition, public announcements, changing regulatory environments, sales of common stock by certain existing shareholders, substantial product orders and announcement of licensing or product supply agreements with major pharmaceutical or biotechnology companies could contribute to the volatility of the price of our common stock, causing it to fluctuate dramatically. General economic trends such as recessionary cycles and changing interest rates may also adversely affect the market price of our common stock.

Concentration of ownership could delay or prevent a change in control or otherwise influence or control most matters submitted to our shareholders. Certain funds affiliated with Life Sciences Opportunities Fund II (Institutional), L.P. (collectively, the “LOF Funds”) and its affiliates currently own shares of Series D preferred stock, Series E preferred stock, convertible debt and warrants to purchase common stock representing in aggregate approximately 34% of our outstanding voting power (assuming conversion of the debt and exercise of the warrants). As a result, the LOF Funds and their affiliates have the potential to control matters submitted to a vote of shareholders, including a change of control transaction, which could prevent or delay such a transaction.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Our principal manufacturing and support facilities are located in approximately 40,500 square feet of leased office and manufacturing space in Tualatin, Oregon. The manufacturing facilities include a clean room assembly area, assembly line, testing facilities and warehouse area. The lease, which expires October 31, 2014, has one option to extend for an additional five year term. The rent is approximately $30,000 per month averaged over the life of the lease term.

We believe that our facilities are sufficient to support our anticipated manufacturing operations and other needs for at least the next ten years. We believe that, if necessary, we will be able to obtain alternative facilities at rates and terms comparable to those of the current leases.

ITEM 3. LEGAL PROCEEDINGS

As of the date of filing this Form 10-K, we are not a party to any litigation that could have a material adverse effect on our financial position or results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

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PART II

ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Stock Prices and Dividends

Our common stock trades on the NASDAQ Capital Market under the symbol “BJCT.” The following table sets forth the high and low closing sale prices of our common stock for each quarter in the two years ended December 31, 2007.

Year Ended December 31, 2006	High		Low
Quarter 1	$	1.90	$	1.21
Quarter 2		1.75		1.17
Quarter 3		1.50		0.80
Quarter 4		1.31		0.81
Year Ended December 31, 2007	High		Low
Quarter 1	$	1.31	$	1.01
Quarter 2		1.70		1.15
Quarter 3		1.50		1.29
Quarter 4		1.41		0.35

As of March 14, 2008, there were 637 shareholders of record and approximately 5,000 beneficial shareholders.

We have not declared any cash dividends during our history and have no intention of declaring a cash dividend in the foreseeable future. Our term loan agreement and credit agreement prohibit us from paying cash dividends without the lender’s consent.

Equity Compensation Plan Information

See Item 12. for Equity Compensation Plan Information.

Recent Sales of Unregistered Securities

In December 2007, we issued warrants to purchase 40,625 shares of our common stock for $0.75 per share to The Strategic Choice in exchange for services rendered during 2007 related to our strategic plan. The warrants are immediately exercisable and expire four years after the date of grant. The issuance of the warrants was deemed to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act as transactions by an issuer not involving any public offering. The Strategic Choice represented its intention to acquire the warrants for investment only and not with a view for sale in connection with any distribution thereof, and appropriate legends were affixed to the warrants. The sale of the warrants was made without general solicitation or advertising and the offering of the warrants was not underwritten.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements concerning payments to be received under agreements with strategic partners, capital expenditures and cash requirements. Such forward looking statements (often, but not always, using words or phrases such as “expects” or “does not expect,” “is expected,” “anticipates” or “does not anticipate,” “plans,” “estimates” or “intends,” or stating that certain actions, events or results “may,” “could,” “would,” “should,” “might” or “will” be taken, occur or be achieved) involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance, or achievements expressed or implied by such forward looking statements. Such risks, uncertainties and other factors include, without limitation, the risk that we may not enter into anticipated

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licensing, development or supply agreements, the risk that we may not achieve the milestones necessary for us to receive payments under our development agreements, the risk that our products will not be accepted by the market, the risk that we will be unable to obtain needed debt or equity financing on satisfactory terms, or at all, uncertainties related to our dependence on the continued performance of strategic partners and technology and uncertainties related to the time required for us or our strategic partners to complete research and development and obtain necessary clinical data and government clearances.

Forward-looking statements are based on the estimates and opinions of management on the date the statements are made. We assume no obligation to update forward-looking statements if conditions or management’s estimates or opinions should change, even if new information becomes available or other events occur in the future. See also Item 1A. Risk Factors.

OVERVIEW

We develop needle-free injection systems that improve the way patients take injectable medications and vaccines.

Our long-term goal is to become the leading supplier of needle-free injection systems to the pharmaceutical and biotechnology industries. In 2007, we focused our business development efforts on new and existing licensing and supply agreements with leading pharmaceutical and biotechnology companies. Our pipeline of prospective new partnerships remains strong. We are also actively pursuing additional opportunities both domestic and overseas as we expand our current product line.

Our needle-free injection technology works by forcing liquid medication at high speed through a tiny orifice held against the skin. This creates a fine stream of high-pressure medication that penetrates the skin, depositing the medication in the tissue beneath. By bundling customized needle-free delivery systems with partners’ injectable medications and vaccines, we can enhance demand for these products in the healthcare provider and end-user markets.

In 2007, our clinical research efforts were aimed primarily at collaborations in the areas of vaccines and drug delivery. Currently, we are involved in research collaborations with 12 institutions. Further, we continue research efforts in dose sparing and intradermal delivery in collaboration with the World Health Organization (“WHO”) and the Centers for Disease Control and Prevention (“CDC”). We recently presented information on our intradermal clinical studies using Inactivated Polio Vaccine studies in Cuba and Oman with the WHO and influenza study in the Dominican Republic with the CDC.

In 2007, our research and development efforts focused on a next generation spring device with auto-disable syringe and the Iject^® single use disposable product. In addition, we continue to work on product improvements to existing devices and development of products for our strategic partners. We have completed stage one of our current project with Program for Appropriate Technology in Health (“PATH”) and are currently in discussions with PATH regarding possible future stages for this project and additional projects. However, there is no assurance that we will enter into any future projects with PATH. In addition, we completed the concept phase with our undisclosed European biotech partner. We also completed several projects with Merial, culminating in the launch of Merial’s Derma-Vac™ needle-free device for swine and the Vitajet™3 device for canine melanoma. We are also working with the National Institutes of Health on a program in which we will fill our current polycarbonate B2000 syringe with a DNA vaccine for delivery as a pre-filled syringe.

OUTLOOK

We began a strategic realignment of our company during 2007 with the singular goal of increasing shareholder value. The realignment has two concurrent phases. Phase One was to focus on our fixed operating expenses, primarily by reducing headcount and related expenses. Phase Two of our realignment campaign is to increase our revenue by increasing product sales and adding license and development agreements. We have successfully completed key milestones with a number of our current

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partners. We continually review and discuss our agreements with our partners and may make changes to the agreements in the future based on strategic decisions that we believe are in the best interests of our shareholders. As we enter into new agreements or amend existing agreements, we intend to ensure, to the best of our ability, that they are profitable and aligned with the long-term interests of our shareholders. For example, in October 2007, we entered into a new three-year supply agreement with Serono for the delivery of the cool.click™ and Serojet™ spring-powered needle-free device for use with its recombinant human growth hormone drugs on terms more favorable to us than past agreements. We have also initiated new discussions with a number of potential new partners, as well as with past partners.

We intend to achieve future profitability by ensuring that we enter into profitable, revenue-generating agreements and that we do not enter into agreements that we believe will not add to long-term shareholder value. We recently completed a business assessment for strategic targeting and focusing on the most promising potential partnership opportunities. We are committed to working with our current partners and assessing ways to ensure continued beneficial long-term partner relationships. We have recently initiated discussions with new potential partners within the large pharmaceutical market, the biotechnology market, the specialty pharmaceutical market and others.

Revenues and results of operations have fluctuated and can be expected to continue to fluctuate significantly from quarter to quarter and from year to year. Various factors may affect quarterly and yearly operating results including: i) the length of time to close product sales; ii) customer budget cycles; iii) the implementation of cost reduction measures; iv) uncertainties and changes in product sales due to third party payer policies and proposals relating to healthcare cost containment; v) the timing and amount of payments under licensing and technology development agreements; and vi) the timing of new product introductions by us and our competitors.

We do not expect to report net income in 2008.

REDUCTION IN FORCE AND CREATION OF EXECUTIVE COMMITTEE

In March 2007, we announced a reduction in force in order to streamline our operations, which resulted in the elimination of 13 positions. Four of these positions were in research and development, one in sales and marketing and eight in manufacturing. We recorded a charge of $289,000 in the first quarter of 2007 related to these actions. Of the $289,000, $249,000 was for cash severance and related charges and $40,000 was a non-cash charge for the acceleration of vesting of restricted stock awards. We anticipate these charges to be paid through the first quarter of 2008. We realized cost savings of approximately $1.3 million in 2007 and anticipate cost savings of approximately $1.9 million in 2008 related to these actions.

In addition, in April 2007, we entered into a Separation Agreement with Mr. J. Michael Redmond, our Senior Vice President of Business Development, wherein his employment with us terminated effective May 1, 2007. Pursuant to Mr. Redmond’s previously existing employment agreement, he received cash severance benefits of $217,350, which is equal to 12 months of his current base pay, plus approximately $17,000 for certain other benefits, payable over a 12 month period. In addition, 163,508 outstanding, but unvested, restricted stock units vested, resulting in a non-cash charge of $147,000. The total severance charge of $381,000 was recognized as a component of selling, general and administrative expense in the first quarter of 2007.

In March 2007, we restructured our corporate organization and created an executive committee consisting of Dr. Richard Stout, Executive Vice President and Chief Medical Officer, and Christine Farrell, Vice President of Finance, which reported to Mr. Cobbs, Chairman and Interim President and CEO until the hiring of our new President and Chief Executive, Mr. Ralph Makar, in October 2007. The Executive Committee now reports to Mr. Makar.

On January 16, 2008, we eliminated an additional 13 positions. We expect that this reduction in force will result in savings in 2008 of approximately $1.0 million. We incurred approximately $0.1 million for severance and related costs in the first quarter of 2008 related to these actions.

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CONTRACTUAL OBLIGATIONS

A summary of our contractual commitments and obligations as of December 31, 2007 was as follows:

	Payments Due By Period
Contractual Obligation	Total		2008		2009 and 2010		2011 and 2012		2013 and beyond
$2.0 million PFG revolving facility	$	52,475	$	52,475	$	—	$	—	$	—
December 2006 PFG $500,000 term loan		166,667		166,667		—		—		—
August 2007 PFG $500,000 term loan		333,333		333,333		—		—		—
November 2007 $615,000 Edward Flynn and others convertible note(1)		615,000		—		615,000		—		—
December 2007 $600,000 LOF convertible note		600,000		—		600,000		—		—
$1.25 million PFG term loan(2)		1,250,000		—		—		1,250,000		—
Interest on all debt facilities		261,616		140,963		109,673		10,980		—
Operating leases		2,800,432		371,048		770,148		809,140		850,096
Capital leases		107,866		51,819		49,674		6,373		—
Purchase order commitments		1,531,609		1,531,609		—		—		—
	$	7,718,998	$	2,647,914	$	2,144,495	$	2,076,493	$	850,096

(1) This $615,000 convertible note and accrued interest was converted to 8,314 shares of our Series F Convertible Preferred Stock on January 22, 2008.

(2) The accreted value of $441,813 of our $1.25 million term loan is classified as current on our consolidated balance sheet as of December 31, 2007 due to the fact that the agreement contains subjective acceleration clauses, which could result in the debt becoming due at any time. However, since none of the subjective acceleration clauses have been triggered to date, it is included in this table according to its contractual maturity.

Purchase order commitments relate to future raw material inventory purchases, research and development projects and other operating expenses.

FORBEARANCE, LIMITED WAIVER AND MODIFICATION TO LOAN AND SECURITY AGREEMENT

On November 19, 2007, we entered into Forbearance No. 1, Limited Waiver and Modification to Loan and Security Agreement (the “Forbearance Agreement”) with Partners for Growth, L.P. (“PFG”). We are party to a loan term agreement with PFG dated August 31, 2007 with respect to a $500,000 term loan (the “Term Loan”). In November 2007, PFG informed us that we were out of compliance with the financial revenue covenant contained in the Term Loan agreement. Such a default also constituted an event of default under two other loan agreements that we have outstanding with PFG. All such loans are referred to collectively as the “PFG Loans.”

Pursuant to the Forbearance Agreement, PFG agreed to forbear, through no later than June 1, 2008 (the “Forbearance Period”), and not declare an Event of Default or exercise other remedies under the PFG Loans for a Permitted Default, as defined in the Forbearance Agreement.

The Forbearance Agreement required that we consummate a subordinated debt or equity financing of at least $500,000 by December 14, 2007, which requirement was satisfied in November 2007, and requires that we maintain certain minimum levels of cash and cash equivalents and net cash operating loss. We were in compliance with these requirements at December 31, 2007.

We may not borrow under our existing revolving loan with PFG during the Forbearance Period without PFG’s consent.

The Forbearance Agreement also provided that we pay $550,000 to PFG on November 20, 2007. PFG applied the $550,000 to the outstanding revolving loan obligation under the Loan and Security Agreement.

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The Forbearance Agreement also provides for the amendment of the following instruments as follows:

• the warrant dated December 11, 2006 to purchase 200,000 shares of common stock was amended to change the exercise price from $1.37 per share to $0.90 per share;

• the $1.25 million convertible debt financing was amended to adjust the conversion price from $1.37 per share to $0.90 per share, thereby making it convertible into 1,388,889 shares of common stock instead of 912,409 shares;

• the warrant dated December 14, 2004 to purchase 725,000 shares of common stock was amended to change the exercise price from $1.42 per share to $0.90 per share; and

• the warrant dated August 31, 2007 to purchase 71,429 shares of common stock was amended to change the exercise price from $1.40 per share to $0.90 per share.

These exercise and conversion prices are subject to further adjustment in certain events described in the Forbearance Agreement.

In addition, during the Forbearance Period, this Forbearance Agreement amends the PFG Loans, other than the $1.25 million convertible debt financing, by reducing the interest rate specified in each such loan agreement by 3% per annum.

OUTSTANDING DEBT

$1.25 Million Term Loan

We have outstanding a term loan agreement with PFG for $1.25 million of convertible debt financing (the “Debt Financing”). This loan is due in March 2011. However, due to certain subjective acceleration clauses contained in the Debt Financing agreement, the accreted value of the Debt Financing is reflected as current on our balance sheet. The loan bears interest at the prime rate and is convertible at any time by PFG into our common stock at $0.90 per share. In addition, if our common stock trades at a price of $4.11 per share or higher for 20 consecutive trading days, we can force PFG to convert the debt to common stock, subject to certain limitations on trading volume. If we prepay this loan, we will issue PFG a warrant to purchase a number of shares of common stock equal to what it would have received upon conversion at a price of $0.90 per share. As a result of the derivative accounting prescribed by EITF 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Common Stock,” at December 31, 2007, this debt was recorded on our balance sheet at $442,000 and is being accreted on a straight-line basis at the rate of approximately $62,000 per quarter to its face value of $1.25 million over the 60-month contractual term of the debt.

$500,000 Term Loan and $2.0 Million Revolving Loan

We also have outstanding a Loan and Security Agreement (the “Loan Agreement”) with PFG. The Loan Agreement provides for two loan facilities. One facility is a $500,000 term loan (the “Term Loan”), as described below, and the second facility permits us to borrow up to an amount equal to the sum of 75% of our eligible accounts receivable plus 30% of our eligible inventory, up to a maximum of $2.0 million plus any principal amounts of the Term Loan that have been repaid (the “Revolving Loan”). The Revolving Loan matures on June 11, 2008 and bears interest at (i) the greater of 4.5% or the prime rate of Silicon Valley Bank, (ii) plus 2%. Under the Loan Agreement, we are obligated to pay PFG a collateral handling fee of 0.55% per month on the average amount borrowed during that month. If the closing price of our common stock is between $2.00 and $4.00 per share for 30 consecutive trading days, the fee will be reduced to 0.38% per month. If the closing price of our common stock is at or above $4.00 per share for 30 consecutive trading days, the fee will be reduced to 0.22% per month. Under the Loan Agreement, we granted a security interest in substantially all of our assets to PFG to secure our obligations under the Loan Agreement. Our obligations under the Loan Agreement accelerate upon certain events, including a sale or change of control. As of December 31, 2007, we had $52,000 outstanding under the Revolving Loan at an interest rate of 9.25% and, based on borrowing limitations, there was $688,000 available for future borrowings. However, pursuant to the Forbearance Agreement described above, we are not allowed to draw on this line of credit without PFG’s approval. Pursuant to the Forbearance Agreement, the interest rate on this loan is reduced by 3% per annum during the Forbearance Period, making the interest rate 6.25% at December 31, 2007.

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The $500,000 Term Loan is being repaid in 18 equal monthly installments, with a maturity date of June 11, 2008. We borrowed the full amount of the Term Loan on December 12, 2006. The Term Loan bears interest at a monthly rate equal to (i) the greater of 4.5% or the prime rate of Silicon Valley Bank, plus (ii) 1.5%. At December 31, 2007, we had $167,000 outstanding under this Term Loan at an interest rate of 8.75%. Pursuant to the Forbearance Agreement, the interest rate on this loan is reduced by 3% per annum during the Forbearance Period, making the interest rate 5.75% at December 31, 2007.

August 31, 2007 $500,000 Term Loan

On August 31, 2007, we entered into a 2007 Term Loan and Security Agreement (the “2007 Loan Agreement”) with PFG for a $500,000 term loan (the “Loan”). The Loan is due in twelve equal monthly installments of $41,666.67 commencing October 1, 2007 and ending September 1, 2008. Interest accrues at the rate of the prime rate of Silicon Valley Bank plus 2% per annum and is due on the first day of each month for interest accrued during the prior month. Under the 2007 Loan Agreement, we are obligated to pay PFG a collateral handling fee of 0.55% per month on the average amount borrowed during that month. If the closing price of our common stock is between $2.00 and $4.00 per share for 30 consecutive trading days, the fee will be reduced to 0.38% per month. If the closing price of our common stock is at or above $4.00 per share for 30 consecutive trading days, the fee will be reduced to 0.22% per month. Under the Loan Agreement, we granted a security interest in substantially all of our assets to PFG to secure our obligations under the Loan Agreement. The 2007 Loan Agreement contains certain revenue and working capital covenants, which were replaced by the terms of the Forbearance Agreement. At December 31, 2007, $333,333 was outstanding on this Loan at an interest rate of 9.25%. Pursuant to the Forbearance Agreement, the interest rate on this loan is reduced by 3% per annum during the Forbearance Period, making the interest rate 6.25% at December 31, 2007.

$615,000 Convertible Notes

On November 19, 2007, we entered into Convertible Note Purchase and Warrant Agreements pursuant to which we issued Convertible Promissory Notes and warrants to purchase Common Stock. Pursuant to the agreements, we sold a note in the principal amount of $500,000 to Mr. Edward Flynn and sold an aggregate of $115,000 principal amount of notes to Ralph Makar, David Tierney, Richard Stout and Christine Farrell. The notes bore interest at the rate of 8% per annum and were due May 19, 2009. However, all $615,000 of principal and accrued interest were converted to Series F Convertible Preferred Stock on January 22, 2008.

The warrants are exercisable for an aggregate of 82,000 shares of our common stock at an exercise price of $0.75 per share. Each warrant is immediately exercisable and expires four years from the date of issuance.

$600,000 Convertible Notes

On December 5, 2007, we entered into Convertible Note Purchase and Warrant Agreements with each of Life Science Opportunities Fund II, L.P. (“LOF II”) and Life Sciences Opportunities Fund II (Institutional) L.P. (“LOF Institutional” and, together with LOF II, the “Purchasers”) pursuant to which we issued Convertible Promissory Notes and warrants to purchase our common stock. Pursuant to the agreements, we sold a note in the principal amount of $91,104 to LOF II and a note in the principal amount of $508,896 to LOF Institutional. The notes bear interest at the rate of 8% per annum with all principal and interest due May 15, 2009 and may not be prepaid without the written consent of the purchaser holding a given note. The notes are convertible at any time by the purchasers into our common stock at the rate of $0.75 per share. The notes will be automatically converted upon a qualified financing, as defined in the purchase agreement, at a price equal to the financing price.

The warrants are exercisable for an aggregate of 80,000 shares of our common stock at an exercise price of $0.75 per share. Each warrant is immediately exercisable and expires four years from the date of issuance.

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GOING CONCERN AND CASH REQUIREMENTS FOR THE NEXT TWELVE MONTHS

Due to our limited amount of additional committed capital, recurring losses, negative cash flows and accumulated deficit, the report of our independent registered public accounting firm for the year ended December 31, 2007 expressed substantial doubt about our ability to continue as a going concern.

We have historically suffered recurring operating losses and negative cash flows from operations. As of December 31, 2007, we had an accumulated deficit of $117.8 million with total shareholders’ equity of $2.4 million. Our consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, assuming that we will continue as a going concern.

Based on our projected cash required for operations, debt service and capital expenditures for 2008, we believe that our current cash, cash equivalents and marketable securities of $2.4 million at December 31, 2007, and funds available under our Revolving Loan, in conjunction with the anticipated expense reductions related to our 2007 restructuring and our 2008 reduction in force, will be sufficient to fund our operations and anticipated cash expenditures through December 31, 2008, barring any unforeseen expenditures. As of December 31, 2007, $52,000 was outstanding under the Revolving Loan and, based on borrowing limitations, there was $688,000 available for borrowing. However, pursuant to the Forbearance Agreement discussed above, we may not draw on the Revolving Loan without PFG’s consent. The Forbearance Agreement expires June 1, 2008 and, depending upon our financial condition, PFG could require us to pay down outstanding balances on existing debt. In addition, if we do not continue to enter into an adequate number of licensing, development and supply agreements, we may need to do one or more of the following to raise additional resources, or reduce our cash requirements:

• reduce our current expenditure run-rate;

• delay capital and maintenance expenditures;

• restructure current debt financing;

• secure additional short-term debt financing;

• secure additional long-term debt financing;

• secure additional equity financing; or

• secure a strategic partner.

There is no guarantee that such resources will be available to us on terms acceptable to us, or at all, or that such resources will be received in a timely manner, if at all, or that we will be able to reduce our expenditure run-rate without materially and adversely affecting our business. Inability to secure additional resources may result in our defaulting on our debt, resulting in our lender foreclosing on our assets, or may cause us to cease operations, seek bankruptcy protection, turn our assets over to our lender or liquidate.

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RESULTS OF OPERATIONS

The consolidated financial data for the years ended December 31, 2007 and 2006 are presented in the following table:

	Year Ended December 31,
	2007			2006
Revenue:
Net sales of products	$	6,772,325		$	8,089,542
Licensing and technology fees		1,575,465			2,705,810
		8,347,790			10,795,352
Operating expenses:
Manufacturing		5,857,016			7,868,817
Research and development		3,180,454			4,492,824
Selling, general and administrative		3,185,204			4,842,693
Total operating expenses		12,222,674			17,204,334
Operating loss		(3,874,884	)		(6,408,982	)
Interest income		116,917			161,711
Interest expense		(632,840	)		(1,878,412	)
Change in fair value of derivative liabilities		352,468			1,128,915
		(163,455	)		(587,786	)
Net loss		(4,038,339	)		(6,996,768	)
Preferred stock dividend		(393,873	)		(225,500	)
Beneficial conversion on issuance of preferred stock		—			(109,489	)
Net loss allocable to common shareholders	$	(4,432,212	)	$	(7,331,757	)
Basic and diluted net loss per common share allocable to common shareholders	$	(0.29	)	$	(0.51	)
Shares used in per share calculations		15,025,255			14,276,331

Revenue

The $1.3 million, or 16.3%, decrease in product sales in 2007 compared to 2006 was primarily due to the following:

• a $1.6 million decrease in vial adapter sales to Amgen and Ferring; and

• a $1.1 million decrease in sales of cool.click™ product to Serono.

These decreases were partially offset by the following:

• a $1.4 million increase in sales to Merial for companion and production animal products; and

• a per-unit price increase for our B2000 units.

The decrease in product sales in 2007 compared to 2006 was due primarily to a decrease in the number of units sold.

In October 2007, Hoffmann-La Roche Inc. and Trimeris Inc. announced that they were not going to continue with their FDA submission for Fuzeon^® to be administered with the B2000, which we anticipate will negatively affect our B2000 sales in future periods. However, patients currently utilizing the B2000 for administering Fuzeon^® and those in clinical trials may continue using the device under a doctor’s orders.

Also in October 2007, we entered into a three-year supply agreement with Serono for the delivery of the cool.click™ and Serojet™ spring-powered needle-free device for use with its recombinant human growth hormone drugs.

We currently have significant supply agreements or commitments with Serono, Merial, Ferring Pharmaceuticals Inc. and BioScrip Inc. (formerly Chronimed Inc.).

License and technology fees decreased $1.1 million, or 41.8%, in 2007 compared to 2006. This decrease resulted from having fewer active agreements during 2007 compared to 2006.

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We currently have active licensing and/or development agreements, which often include commercial product supply provisions, with Merial, an undisclosed pharmaceutical company, the Centers for Disease Control and Prevention and Vical Incorporated.

Manufacturing Expense

Manufacturing expense is made up of the cost of products sold and manufacturing overhead expense related to excess manufacturing capacity.

Manufacturing expense decreased $2.0 million, or 25.6%, in 2007 compared to 2006. Decreases in product sales contributed approximately $679,000 to the decrease in 2007 compared to 2006. In addition, the second quarter of 2006 included a $915,000 non-cash charge for the write-down of our sterile fill equipment.

Research and Development

Research and development costs include labor, materials and costs associated with clinical studies incurred in the research and development of new products and modifications to existing products.

Research and development expense decreased $1.3 million, or 29.2%, in 2007 compared to 2006. This decrease was due primarily to a $635,000 decrease in labor and related expenses, primarily related to our past restructuring activities. In addition, project materials and tooling expenses decreased $747,000 in 2007 compared to 2006, as a result of the timing of projects.

Current significant projects include a next generation spring-powered device with an auto disable feature and the Iject^® needle-free injection device for an undisclosed company.

Selling, General and Administrative

Selling, general and administrative costs include labor, travel, outside services and overhead incurred in our sales, marketing, management and administrative support functions.

Selling, general and administrative expense decreased $1.7 million, or 34.2%, in 2007 compared to 2006. This decrease was due primarily to $0.8 million in savings related to our past restructuring activities, a $0.7 million decrease in restructuring charges, as well as a $188,000 decrease in insurance, other professional fees and consulting services. These decreases were offset by a $178,000 increase in legal fees, $150,000 of salaries and relocation costs related to the hiring of our new CEO in the fourth quarter of 2007.

Restructuring

Restructuring charges were included as a component of our operating expenses as follows:

	Year Ended December 31,
	2007		2006
Manufacturing	$	55,229	$	108,041
Research and development		38,277		42,742
Selling, general and administrative		576,020		1,274,049
Total	$	669,526	$	1,424,832

The following table rolls forward our restructuring liability in 2007:

Year Ended December 31, 2007	Beginning Accrued Liability		Charged to Expense		Expenditures/ Transfer to Equity			Ending Accrued Liability
Severance and related benefits for terminated employees	$	521,770	$	483,175	$	(875,743	)	$	129,202
Acceleration of vesting to be settled in common stock		315,084		186,351		(501,435	)		—
	$	836,854	$	669,526	$	(1,377,178	)	$	129,202

See Note 14 of Notes to Consolidated Financial Statements for additional information regarding our 2007 restructuring charges.

28

Interest Expense

Interest expense included the following:

	Year Ended December 31,
	2007		2006
Contractual interest expense	$	282,069	$	324,186
Amortization of debt issuance costs		102,099		345,029
Acceleration of amortization of debt issuance costs related to early pay-down of $3.0 million term loan		—		300,236
Accretion of PFG and LOF convertible debt		248,672		308,230
Loss on settlement of LOF debt		—		600,731
	$	632,840	$	1,878,412

In addition to contractual interest expense, in future periods, interest expense will include the following:

• amortization of unamortized debt issuance costs, which totaled $262,000 at December 31, 2007 and are being amortized at the rate of $50,000 per quarter; and

• accretion of the $1.25 million convertible debt at the rate of approximately $62,000 per quarter.

Change in Fair Value of Derivative Liabilities

Our derivative liabilities are recorded at fair value and are marked to market each period. The fair value of each of these instruments is determined using the Black-Scholes valuation model.

LIQUIDITY AND CAPITAL RESOURCES

Since our inception in 1985, we have financed our operations, working capital needs and capital expenditures primarily from private placements of securities, the exercise of warrants, loans, proceeds received from our initial public offering in 1986, proceeds received from a public offering of common stock in 1993, licensing and technology revenues and revenues from sales of products.

We currently have a line of credit agreement for up to $2.0 million of borrowings, which matures on June 11, 2008. As of December 31, 2007, $52,000 was outstanding under our Revolving Loan and, based on borrowing limitations, there was $688,000 available for borrowing. However, pursuant to the Forbearance Agreement discussed above, we may not draw on the Revolving Loan without PFG’s consent.

Total cash, cash equivalents and short-term marketable securities at December 31, 2007 were $2.4 million compared to $3.7 million at December 31, 2006. We had working capital of $0.4 million at December 31, 2007 compared to $1.4 million at December 31, 2006.

The overall decrease in cash, cash equivalents and short-term marketable securities during 2007 resulted from $1.5 million used in operations, $108,000 used for capital expenditures, $271,000 used for other investing activities, primarily patent applications, and $1.1 million used for principal payments on long-term debt and capital leases. These decreases were partially offset by $1.7 million of proceeds from loans received in 2007.

Net accounts receivable decreased $0.5 million to $0.8 million at December 31, 2007 compared to $1.3 million at December 31, 2006. Included in the balance at December 31, 2007 was an aggregate of $487,000 due from our five largest customers. Of the amount due from these customers at December 31, 2007, $381,000 was collected prior to the filing of this Form 10-K. Historically, we have not had collection problems related to our accounts receivable.

Inventories decreased $0.3 million to $0.8 million at December 31, 2007 compared to $1.1 million at December 31, 2006 and primarily included raw materials and finished goods for the Vial Adapter, B2000 Syringe products, and the spring-powered products for forecasted production in the first quarter of 2008.

29

Capital expenditures of $108,000 in 2007 were primarily for the purchase of manufacturing tooling. We anticipate spending up to a total of $50,000 in 2008 for production molds for current research and development projects. We anticipate that we will be reimbursed by our partners for these expenditures.

Accounts payable increased $0.5 million to $1.1 million at December 31, 2007 compared to $0.6 million at December 31, 2006 primarily due to the purchase of inventory for Serono and increased legal and professional fees.

Other accrued liabilities increased $0.6 million to $0.7 million at December 31, 2007 compared to $0.1 million at December 31, 2006 primarily due to $0.6 million received from Serono for prepaid inventory purchases.

Derivative liabilities of $0.5 million at December 31, 2007 reflect the fair value of the derivative liabilities associated with certain of our debt and equity transactions. The fair value of the derivative liabilities is adjusted on a quarterly basis using the Black-Scholes valuation model, with changes in fair value being recorded as a component of earnings.

Deferred revenue totaled $0.4 million at December 31, 2007 compared to $1.2 million at December 31, 2006. The balance at December 31, 2007 included $319,000 received from Serono, $47,000 received from Hoffman-La Roche Inc. and $52,000 received from Vical.

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

NEW ACCOUNTING PRONOUNCEMENTS

See Note 16. of Notes to Consolidated Financial Statements included under Part II, Item 8 of this Annual Report on Form 10-K.

30

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Our estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Our critical accounting policies and estimates include the following:

• revenue recognition for product development and license fee revenues;

• inventory valuation;

• long-lived asset impairment;

• stock-based compensation; and

• fair value of derivative liabilities.

Revenue Recognition for Product Development and License Fee Revenues

In accordance with Staff Accounting Bulletin (“SAB”) 104, “Revenue Recognition,” product development revenue is recognized, to the extent of cash received, on a percentage of completion basis as qualifying expenditures are incurred. Licensing revenues, if separable, are recognized over the term of the license agreement. The FASB’s Emerging Issues Task Force (“EITF”) 00-21 “Accounting for Multiple Element Arrangements” requires arrangements with multiple elements to be broken out as separate units of accounting based on their relative fair values. Revenue for a separate unit of accounting should be recognized only if the amount due can be reliably measured and the earnings process is substantially complete. Any units that can not be separated must be accounted for as a combined unit. Our accounting policy is consistent with EITF 00-21. Should agreements be terminated prior to completion, or our estimates of percentage of completion be incorrect, we could have unanticipated fluctuations in our revenue on a quarterly basis. Amounts received prior to meeting recognition criteria are recorded on our balance sheet as deferred revenues and are recognized according to the terms of the associated agreements. At December 31, 2007, deferred revenues totaled approximately $0.4 million and included amounts received from Serono, Vical and Hoffman-La Roche Inc.

Inventory Valuation

We evaluate the realizability of inventory values based on a combination of factors, including the following: historical and forecasted sales and usage rates, anticipated technology improvements and product upgrades, as well as other factors. All inventories are reviewed quarterly to determine if inventory carrying costs exceed market selling prices and if certain components have become obsolete. We record valuation adjustments for inventory based on the above factors. If circumstances related to our inventories change, our estimates of the realizability of inventory values could materially change.

Long-Lived Asset Impairment

We evaluate our long-lived assets and certain identified intangible assets for impairment in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” whenever events or changes in circumstances indicate that the carrying amount of an asset might not be recoverable utilizing an undiscounted cash flow analysis. Based on these analyses, we recognized a $915,000 loss for the write-down of our sterile fill equipment in the second quarter of 2006 and a $53,000 loss in 2006 related to the write-down of assets held for sale to their estimated fair market value. We did not recognize any other impairment of our long-lived assets during the periods presented. If circumstances related to our long-lived assets change, we may record additional impairment charges in the future.

Stock-Based Compensation

On January 1, 2006, we adopted SFAS No. 123R which requires the measurement and recognition of compensation expense for all share based payment awards granted to our employees and directors, including employee stock options, restricted stock and stock purchases related to our ESPP based on the estimated fair value of the award on the grant date. Upon the adoption of SFAS No. 123R, we maintained our method of valuation for stock option awards using the Black-Scholes valuation model,

31

which has historically been used for the purpose of providing pro-forma financial disclosures in accordance with SFAS No. 123.

The use of the Black-Scholes valuation model to estimate the fair value of stock option awards requires us to make judgments and assumptions regarding the risk-free interest rate, expected dividend yield, expected term and expected volatility over the expected term of the award. The assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates, but these estimates involve inherent uncertainties and the actual amount of expense could be materially different in the future.

Compensation expense is only recognized on awards that ultimately vest. Therefore, for both stock option awards and restricted stock awards, we have reduced the compensation expense to be recognized over the vesting period for anticipated future forfeitures. Forfeiture estimates are based on historical forfeiture patterns. We update our forfeiture estimates annually and recognize any changes to accumulated compensation expense in the period of change. If actual forfeitures differ significantly from our estimates, our results of operations could be materially impacted.

Fair Value of Derivative Liabilities

We recorded derivative liabilities in connection with our convertible debt and equity financing agreements entered into in 2006. Derivative liabilities are presented at fair value each reporting period and changes in fair value are recorded in earnings as a component of interest expense. The fair value of derivative liabilities is determined using the Black-Scholes valuation model.

The use of the Black-Scholes valuation model to estimate fair value requires us to make judgments and assumptions regarding the risk-free interest rate, expected dividend yield, expected term and expected volatility of the instrument over the expected term. The assumptions used in calculating the fair value of derivative liabilities represent management’s best estimates, but these estimates involve inherent uncertainties. Changes in the fair value of these instruments could materially impact the results of operations in future periods.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this item begins on the following page.

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and shareholders

Bioject Medical Technologies Inc.

We have audited the accompanying consolidated balance sheets of Bioject Medical Technologies Inc. (“the Company”) as of December 31, 2007 and 2006, and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the years in the two-year period ended December 31, 2007. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. 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 audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bioject Medical Technologies Inc. as of December 31, 2007 and 2006, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2007, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses, has had significant recurring negative cash flows from operations, and has an accumulated deficit that 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 consolidated financial statements do not include any adjustments that might result form this uncertainty.

/s/ Moss Adams LLP

Portland, Oregon

March 28, 2008

33

BIOJECT MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	December 31,
	2007			2006
ASSETS
Current assets:
Cash and cash equivalents	$	1,722,705		$	1,977,546
Short-term marketable securities		666,534			1,675,000
Accounts receivable, net of allowance for doubtful accounts of $13,702		847,382			1,323,684
Inventories		777,151			1,058,315
Other current assets		323,824			320,580
Total current assets		4,337,596			6,355,125
Property and equipment, net of accumulated depreciation of $6,052,600 and $5,257,662		2,297,262			2,983,925
Goodwill		94,074			94,074
Other assets, net		1,240,319			1,190,997
Total assets	$	7,969,251		$	10,624,121
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term notes payable	$	827,621		$	838,567
Current portion of long-term debt		166,667			333,333
Accounts payable		1,052,364			583,744
Accrued payroll		178,851			333,304
Derivative liabilities		527,650			782,161
Accrued severance and related liabilities		129,123			836,854
Other accrued liabilities		719,882			90,094
Deferred revenue		316,031			1,166,870
Total current liabilities		3,918,189			4,964,927
Long-term liabilities:
Long-term debt		—			166,667
Convertible notes payable		1,224,081			—
Deferred revenue		102,083			52,088
Other long-term liabilities		315,591			358,389
Commitments
Shareholders’ equity:
Preferred stock, no par value, 10,000,000 shares authorized:
Series D Convertible—2,086,957 shares issued and outstanding at December 31, 2007 and 2006, liquidation preference of $1.15 per share		1,878,768			1,878,768
Series E Convertible—3,308,392 shares issued and outstanding at December 31, 2007 and 2006, liquidation preference of $1.37 per share		5,316,106			4,922,233
Common stock, no par value, 100,000,000 shares authorized; 15,403,705 shares and 14,492,838 shares issued and outstanding at December 31, 2007 and 2006		113,018,663			111,653,067
Accumulated deficit		(117,804,230	)		(113,372,018	)
Total shareholders' equity		2,409,307			5,082,050
Total liabilities and shareholders' equity	$	7,969,251		$	10,624,121

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

34

BIOJECT MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	For the year ended December 31,
	2007			2006
Revenue:
Net sales of products	$	6,772,325		$	8,089,542
Licensing and technology fees		1,575,465			2,705,810
		8,347,790			10,795,352
Operating expenses:
Manufacturing		5,857,016			7,868,817
Research and development		3,180,454			4,492,824
Selling, general and administrative		3,185,204			4,842,693
Total operating expenses		12,222,674			17,204,334
Operating loss		(3,874,884	)		(6,408,982	)
Interest income		116,917			161,711
Interest expense		(632,840	)		(1,878,412	)
Change in fair value of derivative liabilities		352,468			1,128,915
		(163,455	)		(587,786	)
Net loss		(4,038,339	)		(6,996,768	)
Preferred stock dividend		(393,873	)		(225,500	)
Beneficial conversion on issuance of preferred stock		—			(109,489	)
Net loss allocable to common shareholders	$	(4,432,212	)	$	(7,331,757	)
Basic and diluted net loss per common share allocable to common shareholders	$	(0.29	)	$	(0.51	)
Shares used in per share calculations		15,025,255			14,276,331

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

35

BIOJECT MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

	Preferred Stock						Common Stock						Total
	Series D			Series E						Accumulated			Shareholders'
	Shares	Amount		Shares	Amount		Shares	Amount		Deficit			Equity
Balance at December 31, 2005	2,086,957	$	1,878,768	—	$	—	13,968,563	$	110,704,560	$	(106,040,261	)	$	6,543,067
Compensation expense related to fair value of stock-based awards, net of awards earned but not issued	—		—	—		—	343,342		674,971		—			674,971
Stock issued in connection with 401(k) and ESPP	—		—	—		—	180,933		193,342		—			193,342
Issuance of Series E Preferred Stock	—		—	3,308,392		4,696,733	—		—		—			4,696,733
Series E Preferred Stock dividends	—		—	—		225,500	—		—		—			225,500
Issuance of warrant in connection with debt financing	—		—	—		—	—		66,030		—			66,030
Issuance of warrant in exchange for services	—		—	—		—	—		14,164		—			14,164
Net loss allocable to common shareholders	—		—	—		—	—		—		(7,331,757	)		(7,331,757	)
Balance at December 31, 2006	2,086,957		1,878,768	3,308,392		4,922,233	14,492,838		111,653,067		(113,372,018	)		5,082,050
Compensation expense related to fair value of stock-based awards, net of awards earned but not issued	—		—	—		—	—		1,119,681		—			1,119,681
Stock issued in connection with 401(k) and ESPP	—		—	—		—	172,960		138,185					138,185
Stock issued in connection with option and warrant exercises	—		—	—		—	1,600		1,616		—			1,616
Restricted stock awards earned pursuant to stock plans	—		—	—		—	736,307		—		—			—
Series E Preferred Stock dividends	—		—	—		393,873	—		—		—			393,873
Issuance of warrants in connection with debt financings	—		—	—		—	—		106,114		—			106,114
Net loss allocable to common shareholders	—		—	—		—	—		—		(4,432,212	)		(4,432,212	)
Balance at December 31, 2007	2,086,957	$	1,878,768	3,308,392	$	5,316,106	15,403,705	$	113,018,663	$	(117,804,230	)	$	2,409,307

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

36

BIOJECT MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOW

	Year ended December 31,
	2007			2006
Cash flows from operating activities:
Net loss	$	(4,038,339	)	$	(6,996,768	)
Adjustments to reconcile net loss to net cash used in operating activities:
Compensation expense related to fair value of stock-based awards		1,119,681			990,055
Stock contributed to 401(k) Plan		88,325			109,230
Contributed capital for services		—			78,662
Depreciation and amortization		1,002,693			1,545,309
Interest expense exchanged for Series E preferred stock		—			32,500
Other non-cash interest expense		349,664			308,230
Loss on settlement of debt		—			600,731
Loss on write-down of property, plant and equipment		—			968,871
Change in fair value of derivative instruments		(254,511	)		(1,128,915	)
Change in deferred revenue		(800,844	)		(1,007,149	)
Change in deferred rent		(288	)		10,149
Changes in operating assets and liabilities:
Accounts receivable, net		476,302			1,066,590
Inventories		281,164			439,559
Other current assets		51,636			(62,109	)
Accounts payable		473,189			(669,217	)
Accrued payroll		(154,453	)		(71,039	)
Accrued severance and related liabilities and other accrued liabilities		(77,943	)		407,575
Net cash used in operating activities		(1,483,724	)		(3,377,736	)
Cash flows from investing activities:
Purchase of marketable securities		—			(1,695,000	)
Maturity of marketable securities		1,008,466			1,520,000
Proceeds from sale of fixed assets		—			1,062,673
Capital expenditures		(108,274	)		(109,737	)
Other assets		(270,632	)		(197,200	)
Net cash provided by investing activities		629,560			580,736
Cash flows from financing activities:
Proceeds from (payments on) revolving note payable, net		(592,951	)		(315,589	)
Proceeds from issuance of short-term notes payable		—			2,750,000
Proceeds from term loan		500,000			500,000
Proceeds from issuance of convertible notes		1,215,000			—
Payments made on long-term debt		(500,000	)		(2,000,004	)
Debt issuance costs		(27,996	)		(235,699	)
Payments made on capital lease obligations		(47,079	)		(55,248	)
Net proceeds from sale of Series E preferred stock		—			3,000,000
Net proceeds from sale of warrants		873			—
Net proceeds from sale of common stock		51,476			85,644
Net cash provided by financing activities		599,323			3,729,104
Increase (decrease) in cash and cash equivalents		(254,841	)		932,104
Cash and cash equivalents:
Beginning of period		1,977,546			1,045,442
End of period	$	1,722,705		$	1,977,546
Supplemental disclosure of cash flow information:
Cash paid for interest	$	282,069		$	302,584
Supplemental non-cash information:
Conversion of short-term debt and accrued interest to preferred stock	$	—		$	1,532,500
Warrants issued in exchange for services and debt financings		106,114			733,142
Severance costs settled in restricted stock		501,435			398,084
Preferred stock dividend to be settled in Series E preferred stock		393,873			225,500
Beneficial conversion on the issuance of Series E preferred stock		—			109,489
Equipment acquired with capital lease		—			48,852

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

37

BIOJECT MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. THE COMPANY:

General

The consolidated financial statements of Bioject Medical Technologies Inc. include the accounts of Bioject Medical Technologies Inc., an Oregon corporation, and its wholly owned subsidiaries. All significant intercompany transactions have been eliminated.

We commenced operations in 1985 for the purpose of developing, manufacturing and distributing needle-free injection systems. Since our formation, we have been engaged principally in organizational, financing, research and development and marketing activities. Our revenues to date have been derived primarily from licensing and technology fees for the jet injection technology and from product sales of the B-2000, Vial Adapter and spring-powered Vitajet^® devices and syringes.

Going Concern and Cash Requirements for 2008

Due to our limited amount of additional committed capital, recurring losses, negative cash flows and accumulated deficit, the report of our independent registered public accounting firm for the years ended December 31, 2007 and 2006 expressed substantial doubt about our ability to continue as a going concern.

We have historically suffered recurring operating losses and negative cash flows from operations. As of December 31, 2007, we had an accumulated deficit of $117.8 million with total shareholders’ equity of $2.4 million. These consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, assuming that we will continue as a going concern.

Based on our projected cash required for operations, debt service and capital expenditures for 2008, we believe that our current cash, cash equivalents and marketable securities of $2.4 million at December 31, 2007, and funds available under our revolving credit facility, in conjunction with the anticipated expense reductions related to our 2007 restructuring and our 2008 reduction in force, as described in Notes 14 and 16, will be sufficient to fund our operations and anticipated cash expenditures through December 31, 2008, barring any unforeseen expenditures. As of December 31, 2007, $52,000 was outstanding under our revolving credit facility and, based on borrowing limitations, there was $688,000 available for borrowing. However, pursuant to the forbearance agreement discussed in Note 12, we may not draw on the revolving credit facility without the issuers consent. The Forbearance Agreement expires June 1, 2008 and, depending upon our financial condition, PFG could require us to pay down outstanding balances on existing debt. In addition, if we do not continue to enter into an adequate number of licensing, development and supply agreements, we may need to do one or more of the following to raise additional resources, or reduce our cash requirements:

• reduce our current expenditure run-rate;

• delay capital and maintenance expenditures;

• restructure current debt financing;

• secure additional short-term debt financing;

• secure additional long-term debt financing;

• secure additional equity financing; or

• secure a strategic partner.

There is no guarantee that such resources will be available to us on terms acceptable to us, or at all, or that such resources will be received in a timely manner, if at all, or that we will be able to reduce our expenditure run-rate without materially and adversely affecting our business. Inability to secure additional resources may result in our defaulting on our debt, resulting in our lender foreclosing on our assets, or may cause us to cease operations, seek bankruptcy protection, turn our assets over to our lender or liquidate.

38

2. SIGNIFICANT ACCOUNTING POLICIES:

Cash Equivalents and Marketable Securities

Cash equivalents consist of highly liquid investments with maturities at the date of purchase of 90 days or less. We had $0.7 million and $0.3 million of cash equivalents as of December 31, 2007 and 2006, respectively.

We account for our marketable securities in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 115, “Accounting for Certain Investments in Debt and Equity Securities.” All of our marketable securities are classified as “available-for-sale” and, accordingly, are recorded at fair market value, with unrealized gains and losses recorded as a separate component of shareholders’ equity. We had $0.7 million and $1.7 million of short-term marketable securities as of December 31, 2007 and 2006, respectively. Marketable securities at December 31, 2007 and 2006 consisted of municipal auction securities. Subsequent to December 31, 2007 all of our municipal auction notes were redeemed for face value and the funds were reinvested in money market funds. We did not have any unrealized gains or losses as of December 31, 2007 or 2006. See Note 3.

Accounts Receivable

Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is our best estimate of the amount of probable credit losses in our existing accounts receivable. We do not have any off-balance sheet credit exposure related to our customers.

Historically, we have not had significant write-offs related to our accounts receivable. Our bad debt reserve totaled $14,000 at both December 31, 2007 and 2006, respectively, and activity related to the bad debt reserve was immaterial in 2007 and 2006. Bad debt expense totaled $0 and $4,000 in 2007 and 2006, respectively.

Inventories

Inventories are stated at the lower of cost or market. Cost is determined in a manner which approximates the first-in, first out (FIFO) method. Costs utilized for inventory valuation purposes include labor, materials and manufacturing overhead. Inventories, net of valuation reserves of $736,000 and $694,000, respectively, at December 31, 2007 and 2006, consisted of the following:

	December 31,
	2007		2006
Raw materials and components	$	502,763	$	485,420
Work in process		83,546		75,355
Finished goods		190,842		497,540
	$	777,151	$	1,058,315

We evaluate the realizability of inventory values based on a combination of factors, including the following: historical and forecasted sales and usage rates, anticipated technology improvements and product upgrades, as well as other factors. All inventories are reviewed quarterly to determine if inventory carrying costs exceed market selling prices and if certain components have become obsolete. We record valuation adjustments for inventory based on the above factors. If circumstances related to our inventories change, our estimates of the realizability of inventory values could materially change.

39

Property and Equipment

Property and equipment are stated at cost. Expenditures for repairs and maintenance are expensed as incurred. We do not accrue for planned major maintenance expenditures. Expenditures that increase useful life or value are capitalized. For financial statement purposes, depreciation expense on property and equipment is computed on the straight-line method using the following lives:

Furniture and Fixtures	5 years
Machinery and Equipment	7 years
Computer Equipment	3 years
Production Molds	5 years

Leasehold improvements are amortized on the straight-line method over the shorter of the remaining term of the related lease or the estimated useful lives of the assets.

Goodwill

Pursuant to SFAS No. 142, “Goodwill and Other Intangible Assets,” goodwill is not amortized, but is instead tested for impairment at least annually in accordance with the provisions of SFAS No. 142. We tested our goodwill in December 2007 for impairment by determining the fair value of the reporting unit and comparing it to its carrying amount and determined that there was no impairment. Our goodwill balance at December 31, 2007 and 2006 was $94,000.

Other Assets

Other assets include costs incurred in the patent application process and debt issuance costs, including amounts related to the value of warrants issued in connection with certain debt facilities (see Note 10). Pursuant to SFAS No. 142, “Goodwill and Other Intangible Assets,” identifiable intangible assets with definite useful lives are amortized over the estimated useful life. We amortize our patent costs on a straight-line basis over the expected life of the patent, not to exceed the statutory life of 17 or 20 years. Our patents are evaluated for impairment as discussed below in “Accounting for Long-Lived Assets.” The debt issuance costs, including the value of the warrants, are being amortized to interest expense over the lives of the related debt.

Accounting for Long-Lived Assets

Our long-lived assets include property, plant and equipment and patents. We account for and review our long-lived assets in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” which requires us to review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset might not be recoverable, utilizing an undiscounted cash flow analysis. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is only recognized to the extent the carrying amount exceeds the fair value of the asset. In the second quarter of 2006, we recorded a $915,000 impairment charge for the write-down of our sterile fill equipment as described in Note 4. In addition, we recorded a $53,000 loss on the disposal of assets held for sale in 2006. No other impairment charges related to our long-lived assets were recorded during the years ended December 31, 2007 or 2006.

Fair Value of Financial Assets and Liabilities

We estimate the fair value of our monetary assets and liabilities, including, but not limited to, accounts receivable, accounts payable and debt, based upon comparison of such assets and liabilities to the current market values for instruments of a similar nature and degree of risk. We estimate that the recorded value of all our monetary assets and liabilities approximates fair value as of December 31, 2007 and 2006.

Fair Value of Derivative Liabilities

We recorded derivative liabilities in connection with our convertible debt and equity financing agreements entered into in 2006. Derivative liabilities are presented at fair value each reporting period and changes in fair value are recorded in earnings. The fair value of derivative liabilities is determined using the Black-Scholes valuation model as described in Note 12.

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Revenue Recognition

Product Sales and Concentrations

We record revenue from sales of our products upon delivery, which is when title and risk of loss have passed to the customer, the price is fixed or determinable and collectibility is assured.

Product sales to customers accounting for 10% or more of our product sales were as follows:

	Year Ended December 31,
	2007		2006
Merial	35	%	11	%
Serono	16	%	27	%
Amgen	15	%	24	%
BioScrip	7	%	10	%
Ferring	6	%	13	%

At December 31, 2007 and 2006, accounts receivable from these five customers accounted for approximately 57% and 92%, respectively, of our total accounts receivable. No other customers accounted for 10% or more of our accounts receivable as of December 31, 2007 or 2006.

License and Development Fees

In accordance with Staff Accounting Bulletin (“SAB”) 104, “Revenue Recognition,” product development revenue is recognized, to the extent of cash received, on a percentage-of-completion basis as qualifying expenditures are incurred. Licensing revenues, if separable, are recognized over the term of the license agreement. The FASB’s Emerging Issues Task Force (“EITF”) 00-21 requires arrangements with multiple elements to be broken out as separate units of accounting based on their relative fair values. Revenue for a separate unit of accounting should be recognized only if the amount due can be reliably measured and the earnings process is substantially complete. Any units that cannot be separated must be accounted for as a combined unit. Our accounting policy is consistent with EITF 00-21. Should agreements be terminated prior to completion, or should we change our estimates of percentage of completion, we could have unanticipated fluctuations in our revenue on a quarterly basis. Amounts received prior to meeting recognition criteria are recorded on our balance sheet as deferred revenues and are recognized according to the terms of the associated agreements. At December 31, 2007, deferred revenues totaled approximately $0.4 million and included amounts received from Serono, Vical and Hoffmann-La Roche Inc.

Licensing and Development Agreements

During 2007, we had licensing and/or development agreements, which often included commercial product supply provisions, with Merial, an undisclosed pharmaceutical company, the Centers for Disease Control and Prevention and Vical. A detailed summary of the agreements follows:

Merial In August 2002, we entered into an exclusive license and supply agreement with Merial, the world’s leading animal health company, for delivery of Merial’s veterinary pharmaceuticals and vaccines utilizing a veterinary-focused needle-free injector system for production animals, which is currently in development. The agreement provides for monthly payments to us for product development, with additional payments when key product development and regulatory milestones are achieved. The agreement had an original term of five years and was extended in August 2007 through December 2009. Commercialization was achieved in February 2007.

In March 2004, we signed a second license and supply agreement with Merial. Under terms of this agreement, we provided Merial with an exclusive license for use of a modified version of our Vitajet^® needle-free injector system for use in veterinary clinics to administer vaccines for the companion animal market. The agreement provides for monthly payments to us for product development, with additional payments when key product development and regulatory milestones are achieved. The agreement has a five-year term with a three-year automatic renewal. This product was commercialized in 2005.

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In November and December 2005, we signed three new agreements with Merial. The agreements were for three projects, which include performing feasibility analyses for a next-generation Vetjet™ device for the companion animal market, as well as for devices for production animal and poultry markets. Each agreement includes the payment of an up-front, non-refundable fee, as well as additional payments dependent upon the achievement of specific milestones. We recognized revenue totaling $855,000 between 2005 and 2007 related to these agreements. As of December 31, 2007, all three of these agreements were completed.

The August 2002 and March 2004 agreements may be terminated by Merial for any reason and all of the agreements may be terminated by either party for failure to meet contractual obligations or for bankruptcy.

In May 2006, we signed an additional agreement with Merial to deliver a modified Vitajet^® 3 for delivery of one of their proprietary vaccines for use in the companion animal market. The agreement provides for milestone payments and delivery of a specified number of devices and disposables through 2008. The agreement may be terminated by either party with a 30-day written notice for a material breach of the agreement by the other. Although we did not enter into a mutually agreed upon development agreement by June 1, 2007, as specified in the agreement, at this time, neither party has terminated the agreement and we continue to supply product to Merial. Either party has the right to terminate the agreement upon either party becoming insolvent or upon bankruptcy.

Revenue on these arrangements has been recognized on the percentage-of-completion method over the development period as costs are incurred with a limitation based on cash payments received to date and receivables for milestones achieved. We are also entitled to receive royalty payments on Merial’s vaccine sales, if and when they occur, which utilize the needle-free injector systems. Any additional indications or drugs will have separately negotiated terms. At December 31, 2007 and 2006, total deferred revenue related to Merial was $0 and $45,000, respectively. We recognized product and development revenue of $65,000 and $0.9 million pursuant to these agreements in 2007 and 2006, respectively.

Agreement with European Biotechnology Company In July 2005, we entered into a development agreement with a leading European biotechnology company under which we developed a new needle-free drug delivery system utilizing our B2000 technology exclusively for an undisclosed indication. We received an up-front development fee of $550,000, with an additional $200,000 received in October and November 2006 upon meeting acceptance criteria as specified in the agreement. In October 2006, we amended the agreement for additional services to be provided by March 2007. The agreement called for an up-front payment of $500,000, which was received in October 2006, and progress payments in February and March 2007 totaling $250,000, both of which were received. While we are currently in negotiations with this company, we do not have a current agreement and we do not expect to generate significant revenue from this company in 2008. Management intends to bring this situation to closure in the best long-term interests of our shareholders.

At December 31, 2007 and 2006, deferred revenue related to this agreement was $0 and $0.4 million, respectively, and we recognized revenue of $0.6 million and $0.8 million, respectively, pursuant to this agreement in 2007 and 2006.

Agreement with an Undisclosed U.S. Pharmaceutical Company In December 2005, we entered into a feasibility study, option and license agreement with an undisclosed pharmaceutical company to design and develop a reliable, cost-effective, pre-filled disposable version of our Iject^® device. The pharmaceutical company will have an exclusive license for the product for certain indications for a specified time period. We received an up-front non-refundable development fee of $500,000 in December 2005, which was recognized on the percentage-of-completion method. In October 2006, we entered into a Concept Phase I agreement and received an up-front, non-refundable fee of $500,000. The agreement also provides for up to $3.75 million to be received in future development phases of the agreement and $3.0 million for the pilot phase. We will also be reimbursed for certain capital expenditures required in the development phase and pilot phase should the agreement continue. We are currently in Concept Phase I of this agreement and there can be no assurance that, upon completion of Concept Phase I, additional

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activities will be undertaken under this agreement. We expect to complete Phase I in the second quarter of 2008.

The pharmaceutical company may terminate this agreement for any reason upon 30 days written notice. We may immediately terminate this agreement if work under the project is interrupted for 10 consecutive months due to reasons within the pharmaceutical company’s reasonable control. Our termination right terminates once project approval for the development phase of the project has been received. Either party has the right to terminate this agreement upon the other party becoming insolvent or upon filing for voluntary or involuntary bankruptcy protection.

At December 31, 2007 and 2006, deferred revenue related to this agreement was $0 and $0.4 million, respectively. Revenue recognized pursuant to this agreement was $0.4 million and $0.6 million, respectively, in 2007 and 2006.

Centers for Disease Control and Prevention In October 2005, we received a Small Business Innovation Research Grant (“SBIR”) from the Centers for Disease Control and Prevention (“CDC”) for the Phase I development of a single-dose injection delivery system. Terms of the agreement included progress billings over the six-month term, which were offset against project costs. In October 2006, we received a Phase II SBIR contract from the CDC for further development of a Disposable Cartridge Jet Injection device for safer, needle-free global immunizations. This Phase II funding is for a two-year period for improvements in product design and the continued development of a spring-powered prototype, which was designed and built in Phase I.

At both December 31, 2007 and 2006, we did not have any deferred revenue related to these agreements. Revenue recognized pursuant to these agreements was $219,000 and $32,000, respectively, in 2007 and 2006. In addition, we were reimbursed for $68,000 of expenses incurred in 2006.

Program for Appropriate Technology in Health In October 2005, we entered into an agreement with PATH for the development of technology to create a needle-free injector that is small, efficient, safe, cost effective and appropriate for immunization programs in developing countries. Pursuant to the agreement, PATH paid us a non-refundable up-front fee of $100,000 in October 2005, which was offset against related expenses over the first stage of the agreement through October 2006. We also directly funded a portion of this project. In addition, we received an additional $150,000 as stage one milestones were met in October 2006. Fees will be negotiated separately for further stages of the agreement and we continue to discuss with PATH how our products could benefit patients in the developing world. Management continues to explore opportunities with PATH that will result in the greatest benefit for all parties, including patients and shareholders. However, we are evaluating other opportunities for providing needle-free devices to the developing world and there is no assurance that we will enter into any future agreements with PATH.

The first stage of this agreement has been completed and, if a second stage is agreed upon, such agreement may be terminated by either party at any time and for any reason, by providing at least 60-days notice to the other.

Vical Inc. In November 2006, we entered into an agreement with Vical Inc. for an option to license our needle-free technology for use with certain of Vical’s DNA-based vaccines. The agreement includes the payment of an upfront fee to us, payments to extend the option term and license additional targets, payments upon the achievement of specific milestones, commercialization terms, transfer pricing and royalties.

The agreement may be terminated by either party for breach of any material provision in the agreement by the other party if not cured within sixty days. Vical may also terminate this Agreement at any time upon sixty (60) days’ written notice to us.

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At December 31, 2007 and 2006, deferred revenue related to this agreement was $52,000 and $115,000, respectively. Revenue recognized pursuant to the agreement was $63,000 and $10,000, respectively, in 2007 and 2006.

Supply Agreements

In addition to agreement with Merial as described above, we currently have significant supply agreements or commitments with Serono, Ferring Pharmaceuticals Inc., and BioScrip Inc.

Serono In October 2007, we entered into a three-year, non-exclusive supply agreement with Serono for the delivery of the cool.click™ and Serojet™ spring-powered needle-free device for use with its recombinant human growth hormone drugs. We believe that the terms of this agreement are more favorable to us than previous agreements with Serono in that it is non-exclusive and the economic terms are more favorable. In accordance with this agreement, Serono prepays us to maintain certain inventory levels in order to have flexibility in its forecasting and ordering. Prepaid inventory totaled $0.6 million at December 31, 2007 and was included as a component of other accrued liabilities. At December 31, 2007 and 2006, deferred revenue related to Serono was $319,000 and $50,000, respectively. We recognized revenue related to this and previous agreements with Serono totaling $1.1 million and $2.2 million in 2007 and 2006, respectively.

Ferring Pharmaceuticals Inc. We had a 30-month agreement with Ferring for Vial Adapters for use with one of its drugs, which expired in January 2007, with Ferring having the ability to extend the agreement for two consecutive 12-month periods. While this agreement has not been formally extended at this time, we continue to receive firm purchase orders from Ferring. Revenue recognized pursuant to this agreement and subsequent product sales totaled $0.4 million and $1.0 million in 2007 and 2006, respectively.

BioScrip Inc. (formerly Chronimed Inc.) We had a one-year supply agreement with BioScrip Inc. for B2000^® devices and syringes, which expired December 31, 2005. While we do not have a current agreement with BioScrip Inc., we continue to receive purchase orders for our B2000^® devices and syringes from BioScrip Inc. Revenue recognized related to BioScrip totaled $0.5 million and $0.8 million in 2007 and 2006, respectively.

Amgen Inc. We had a two-year agreement with Amgen for Vial Adapters for use with one of its drugs. This agreement, which expired in March 2005, was extended to July 2006. We recognized revenue of $1.0 million and $2.0 million in 2007 and 2006, respectively, pursuant to this agreement. However, we anticipate lower revenue during 2008 as a result of Amgen receiving market approval and increasing acceptance of its proprietary pre-filled syringe.

In addition to the above agreements and commitments, we sell our needle-free injection system, the Biojector^® 2000, or B2000, directly to healthcare professionals, which allows clinicians to inject medications through the skin, both intramuscularly and subcutaneously, without a needle. Currently, our Biojector^® 2000 is being utilized by the National Institutes of Health in human trials of vaccines for HIV and the Ebola virus.

Other Revenue Recognition Policies

We provide volume discounts to our customers, which are recorded as a reduction to revenue upon the sale of the related products.

Our return policy allows for unopened merchandise to be returned within 60 days of purchase for a 20% restocking fee. Returns have historically been immaterial and we do not maintain a reserve for returns. Returns are recorded as a reduction to revenue upon receipt and the 20% restocking fee is recorded as revenue at the same time.

We recognize revenue related to products being developed pursuant to license and development agreements upon customer acceptance.

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Research and Development

Expenditures for research and development are charged to expense as incurred.

Income Taxes

We account for income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes.” Under the asset and liability method specified by SFAS No. 109, deferred tax assets and liabilities are recognized for the future consequences of differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases (temporary differences). Deferred tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are recovered or settled. Valuation allowances for deferred tax assets are established when it is more likely than not that some portion or all of the deferred tax assets will not be realized. At December 31, 2007 and 2006, our deferred tax assets had a 100% valuation allowance.

On January 1, 2007, we also adopted the provisions of Interpretation No. 48, “Accounting for Uncertainty in Income Taxes,” which defines the threshold for recognizing the benefits of tax return positions in the financial statements as “more-likely-than-not” to be sustained by the taxing authority. Interpretation No. 48 applies to all tax positions accounted for under SFAS No. 109, “Accounting for Income Taxes.” There was no adjustment required to be made to our opening retained earnings balance upon adoption of Interpretation No. 48. In accordance with paragraph 19 of Interpretation No. 48, we elected to treat interest and penalties accrued on unrecognized tax benefits as tax expense within our financial statements.

Product Warranty

We have a one-year warranty policy for defective products with options to purchase extended warranties for additional years for our B2000 product line and an 18-month warranty policy for the cool.click™ and SeroJet™. We review our accrued warranty on a quarterly basis utilizing recent return rates and sales levels. The estimated warranty is recorded as a reduction of product sales and is reflected on the accompanying consolidated balance sheet in other accrued liabilities. Our warranty accrual totaled $83,000 at both December 31, 2007 and 2006 and there was no significant activity in the warranty accrual in 2007 or 2006.

Taxes Assessed by a Governmental Authority

We account for all taxes assessed by a governmental authority that are directly imposed on a revenue-producing transaction (i.e., sales, use, value added) on a net (excluded from revenues) basis.

Shipping and Handling Costs

Shipping and handling costs are included as a component of manufacturing costs.

Segment Reporting and Enterprise-Wide Disclosures

We comply with SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information.” Based upon definitions contained within SFAS No. 131 and the fact that our chief operating decision maker does not review disaggregated financial information, we have determined that we operated in one segment during 2007 and 2006.

Revenue by product line was as follows:

	Year Ended December 31,
	2007		2006
Biojector® 2000 (or CO2 powered)	$	1,753,956	$	2,205,649
Spring Powered		3,582,198		2,942,022
Vial Adapters		1,436,171		2,941,871
		6,772,325		8,089,542
License and Technology Fees		1,575,465		2,705,810
	$	8,347,790	$	10,795,352

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In 2007 and 2006, we sold previously fully reserved inventory of B2000 devices for approximately $115,000 and $269,000, respectively.

Geographic revenues were as follows:

	Year Ended December 31,
	2007		2006
United States	$	6,317,356	$	8,184,597
All other		2,030,434		2,610,755
	$	8,347,790	$	10,795,352

All of our long-lived assets are located in the United States.

Comprehensive Income Reporting

SFAS No. 130, “Reporting Comprehensive Income,” establishes standards for reporting and displaying comprehensive income and its components in a full set of general purpose financial statements. The objective of SFAS No. 130 is to report a measure of all changes in the equity of an enterprise that result from transactions and other economic events of the period other than transactions with owners. Comprehensive loss did not differ from currently reported net loss in the periods presented. In future periods, comprehensive income (loss) could include unrealized gains and losses, if any, on our available-for-sale securities.

Net Loss Per Share

Basic loss per common share is computed using the weighted average number of shares of common stock outstanding for the period. Diluted loss per common share is computed using the weighted average number of shares of common stock and dilutive common equivalent shares outstanding during the year. Common equivalent shares from stock options and other common stock equivalents are excluded from the computation when their effect is antidilutive.

We were in a loss position for all periods presented and, accordingly, there is no difference between basic loss per share and diluted loss per share since the common stock equivalents and the effect of convertible preferred stock and convertible debt under the “if-converted” method would be antidilutive.

Potentially dilutive securities that were not included in the diluted net loss per share calculations because they would be antidilutive were as follows:

	Year Ended December 31,
	2007	2006
Stock options and warrants	4,559,789	5,111,873
Convertible preferred stock	5,395,349	5,395,349
Preferred dividends	452,097	164,599
Convertible debt	3,008,889	912,409
Total	13,416,124	11,584,230

Stock-Based Compensation

Effective January 1, 2006, we adopted SFAS No. 123R, “Share-Based Payment,” which establishes accounting for equity instruments exchanged for employee services. Under the provisions of SFAS No. 123R, stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity award). Prior to January 1, 2006, we accounted for share-based compensation to employees in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” (“APB 25”) and related interpretations. We also followed the disclosure requirements of SFAS No. 123, “Accounting for Stock-Based Compensation.”

We elected to adopt the modified prospective transition method as provided by SFAS No. 123R and, accordingly, financial statement amounts for the prior periods presented in this Form 10-K have not been restated to reflect the fair value method of expensing stock-based compensation. Under this method, the

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provisions of SFAS No. 123R apply to all awards granted or modified after the date of adoption. In addition, the unrecognized expense of awards not yet vested at the date of adoption is recognized in periods after the date of adoption using the Black-Scholes valuation method over the remainder of the requisite service period. The cumulative effect of the change in accounting principle from APB 25 to SFAS No. 123R was not material.

See Note 11 for additional information regarding stock-based compensation and our stock-based incentive plans.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include the carrying amount of property and equipment, valuation allowances for receivables, inventory, deferred income taxes, the valuation of stock-based compensation and derivative liabilities and revenue recognition. Actual results could differ from those estimates.

3. MARKETABLE SECURITIES:

We classify all of our marketable securities as available-for-sale. Available-for-sale securities are recorded at fair value with unrealized gains and losses reported as a separate component of shareholders’ equity.

Certain information regarding our marketable securities was as follows:

	December 31,
	2007		2006
Available-for-Sale
Fair market value	$	666,534	$	1,675,000
Cost:
Federal Government, State & Local municipalities	$	666,534	$	1,675,000
Maturity Information:
Less than one year	$	666,534	$	1,675,000

Gains and losses on the sale of marketable securities are calculated using the specific identification method. We did not have any realized gains or losses on our available-for-sale securities during 2007 or 2006. We record, as a separate component of shareholders’ equity, any unrealized gains and losses on available-for-sale securities. At December 31, 2007 and 2006, we did not have any unrealized gains or unrealized losses included in our available-for-sale securities balance.

4. PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment consisted of the following:

	December 31,
	2007			2006
Machinery and equipment	$	4,852,178		$	4,797,457
Production molds		2,955,352			2,881,248
Furniture and fixtures		351,719			351,719
Leasehold improvements		142,052			142,052
Assets in process		48,561			69,111
		8,349,862			8,241,587
Less – accumulated depreciation		(6,052,600	)		(5,257,662	)
	$	2,297,262		$	2,983,925

Depreciation expense was $795,000 and $807,000, respectively, in 2007 and 2006.

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Assets in process include capital assets that are not yet ready for production. Assets in process are not depreciated until they are substantially complete and ready to be put into production. We have not recorded any capitalized interest related to our assets in process at December 31, 2007 or 2006. At December 31, 2007 and 2006, assets in process primarily included assets related to manufacturing equipment and tooling.

In the second quarter of 2006, we terminated our agreement for future services with the contract filler of our Iject^® prefilled device. The original agreement, entered into on September 30, 2003, was for the design of a sterile fill suite to house our filling equipment and contract filling services through 2009. This termination, which was effective September 30, 2006, was due to our decision to switch to a more cost effective commercial filling method and the interest of potential customers in doing their own filling. This contract, if not terminated, would have required us to pay approximately $2.1 million for services over the remainder of the contract. We were not required to pay the contract sterile filler any penalties or other amounts related to this early termination. As a result of this termination, we wrote off assets in process located at the contract filler’s facility, which we could no longer use, resulting in a non-cash charge of $915,000 in the second quarter of 2006 recorded as a component of manufacturing expense. Remaining equipment, with a book value of $424,000, was moved to our ISO 7 clean room located in Tualatin, Oregon and is being utilized for small batch and clinical fills.

5. OTHER ASSETS:

Other assets consist of patent costs and debt issuance costs, including amounts related to the value of warrants issued in connection with debt financings (see Note 10). The gross amount of patents and debt issuance costs and the related accumulated amortization were as follows:

	December 31,
	2007			2006
Patents	$	2,070,816		$	1,913,791
Accumulated amortization		(842,205	)		(748,057	)
	$	1,228,611		$	1,165,734
Debt issuance costs	$	1,302,550		$	1,084,730
Accumulated amortization		(1,040,934	)		(947,996	)
	$	261,616		$	136,734

Of the debt issuance costs, $249,908 and $111,471, respectively, were included as a component of other current assets at December 31, 2007 and 2006.

Amortization expense, including $345,036 for the early termination of debt in 2006 and $113,608 and $14,996, respectively, for the write-off of abandoned patents in 2007 and 2006 was as follows:

Year Ended December 31,	Patents		Debt Issuance Costs
2006	$	121,409	$	645,272
2007		207,756		92,938

Debt issuance costs are amortized over the life of the related debt and patents are amortized over their useful lives of 17 years with no residual value. Amortization is as follows over the next five years and thereafter:

Year Ending December 31,	Patents		Debt Issuance Costs
2008	$	111,600	$	140,963
2009		120,000		60,690
2010		120,000		48,983
2011		120,000		10,980
2012		120,000		—
Thereafter		637,011		—

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6. 401(K) RETIREMENT BENEFIT PLAN:

We have a 401(k) Retirement Benefit Plan for our employees. All employees, subject to certain age and length of service requirements, are eligible to participate. The plan permits certain voluntary employee contributions to be excluded from the employees’ current taxable income under provisions of the Internal Revenue Code Section 401(k). We match 62.5% of employee contributions up to 6% of salary with our common stock and may make discretionary profit sharing contributions to all employees, which may either be made in cash or common stock. Participants are allowed to sell our common stock held in their account and reinvest it in other plan options. We issued 85,833 and 101,072 shares, respectively, and recorded an expense of approximately $88,000 and $109,000, respectively, related to employer matches of our stock under the 401(k) Plan related to the years ended December 31, 2007 and 2006. The Board of Directors has reserved up to 500,000 shares of common stock for these voluntary employer matches, of which 485,000 shares have been issued, or were committed to be issued, at December 31, 2007. In January 2008, the Board of Directors increased the total number of shares available to 700,000 from 500,000.

7. INCOME TAXES:

We had the following deferred tax assets and (liabilities):

	December 31,
	2007			2006
Deferred tax assets:
Inventory	$	312,160		$	293,987
Deferred revenue		160,179			463,204
Other accrued liabilities		330,116			535,540
Net operating loss carryforwards and credits		38,201,882			39,395,564
		39,004,337			40,688,295
Deferred tax liabilities:
Depreciation and amortization		(387,486	)		(757,381	)
Total deferred tax assets, net		38,616,851			39,930,914
Less valuation allowance		(38,616,851	)		(39,930,914	)
Net deferred tax assets	$	—		$	—

A full valuation allowance has been recorded against the deferred tax assets because of the uncertainty regarding the realizability of these benefits due to our historical operating losses. The net change in the valuation allowance for deferred tax assets was a decrease of $1.3 million and an increase of $198,000 for the years ended December 31, 2007 and 2006, respectively, mainly due to the change in net operating loss carryforwards. As of December 31, 2007, we had net operating loss carryforwards of approximately $101.7 million and $60.5 million available to reduce future federal and state taxable income, respectively, which expire in 2008 through 2027. Approximately $1.1 million of our carry forwards were generated as a result of deductions related to exercises of stock options. When utilized, this portion of our carry forwards, as tax effected, will be accounted for as a direct increase to contributed capital rather than as a reduction of that year’s provision for income taxes.

As of December 31, 2007, we had unused research tax credits of approximately $1.5 million available to reduce future federal income taxes. If unutilized, the credits begin to expire in 2011.

We did not have any unrecognized tax benefits at December 31, 2007 and we do not expect any significant changes to our unrecognized tax benefits within the next 12 months. We file tax returns in the U.S. and in various state and local taxing jurisdictions. With few exceptions, we are no longer subject to U.S., state or local income tax examinations for years prior to 2003. We did not have any interest or penalties related to our tax positions during 2007 or 2006.

We have not completed a study to assess whether an ownership change has occurred or whether there have been multiple ownership changes since our formation due to the complexity and cost associated with such a study, and the fact that there may be additional such ownership changes in the future. If we have

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experienced an ownership change at any time since our formation, utilization of net operating loss or research and development credit carryforwards would be subject to an annual limitation under Section 382 of the Internal Revenue Code, which is determined by first multiplying the value of our stock at the time of the ownership change by the applicable long-term, tax-exempt rate, and then could be subject to additional adjustments, as required. Any limitation may result in expiration of a portion of the net operating loss or research and development credit carryforwards before utilization. Further, until a study is completed and any limitation known, no amounts are being considered as an uncertain tax position or disclosed as an unrecognized tax benefit. Due to the existence of the valuation allowance, future changes in our unrecognized tax benefits will not impact our effective tax rate. Any carryforwards that will expire prior to utilization as a result of such limitations will be removed from deferred tax assets with a corresponding reduction of the valuation allowance.

8. FORBEARANCE, LIMITED WAIVER AND MODIFICATION TO LOAN AND SECURITY AGREEMENT

On November 19, 2007, we entered into a Forbearance No. 1, Limited Waiver and Modification to Loan and Security Agreement (the “Forbearance Agreement”) with Partners for Growth, L.P. (“PFG”). We are party to a term loan agreement with PFG dated August 31, 2007 with respect to a $500,000 term loan (the “Term Loan”). In November 2007, PFG informed us that we were out of compliance with the financial revenue covenant contained in the Term Loan agreement. Such a default also constituted an event of default under two other loan agreements that we have outstanding with PFG. All such loans are referred to collectively as the “PFG Loans.”

Pursuant to the Forbearance Agreement, PFG agreed to forbear, through no later than June 1, 2008 (the “Forbearance Period”), and not declare an Event of Default or exercise other remedies under the PFG Loans for a Permitted Default, as defined in the Forbearance Agreement.

The Forbearance Agreement required that we consummate a subordinated debt or equity financing of at least $500,000 by December 14, 2007, which requirement was satisfied in November 2007 as described below, and requires that we maintain certain minimum levels of cash and cash equivalents and net cash operating loss.

We may not borrow under our existing revolving loan with PFG during the Forbearance Period without PFG’s consent.

The Forbearance Agreement also provided that we pay $550,000 to PFG on November 20, 2007. PFG applied the $550,000 to the outstanding revolving loan obligation under the Loan and Security Agreement.

The Forbearance Agreement also provides for the amendment of the following instruments as follows:

• the warrant dated December 11, 2006 to purchase 200,000 shares of common stock was amended to change the exercise price from $1.37 per share to $0.90 per share;

• the $1.25 million convertible debt financing was amended to adjust the conversion price from $1.37 per share to $0.90 per share, thereby making it convertible into 1,388,889 shares of common stock instead of 912,409 shares;

• the warrant dated December 14, 2004 to purchase 725,000 shares of common stock was amended to change the exercise price from $1.42 per share to $0.90 per share; and

• the warrant dated August 31, 2007 to purchase 71,429 shares of common stock was amended to change the exercise price from $1.40 per share to $0.90 per share.

These exercise and conversion prices are subject to further adjustment in certain events described in the Forbearance Agreement.

In addition, during the Forbearance Period, this Forbearance Agreement amends the PFG Loans, other than the $1.25 million convertible debt financing, by reducing the interest rate specified in each such loan agreement by 3% per annum.

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9. LINE OF CREDIT:

We also have outstanding a Loan and Security Agreement (the “Loan Agreement”) with PFG. The Loan Agreement provides for two loan facilities. One facility is a $500,000 term loan (the “Term Loan”), as described below, and the second facility permits us to borrow up to an amount equal to the sum of 75% of our eligible accounts receivable plus 30% of our eligible inventory, up to a maximum of $2.0 million plus any principal amounts of the Term Loan that have been repaid (the “Revolving Loan”). The Revolving Loan matures on June 11, 2008 and bears interest at (i) the greater of 4.5% or the prime rate of Silicon Valley Bank, (ii) plus 2%. Under the Loan Agreement, we are obligated to pay PFG a collateral handling fee of 0.55% per month on the average amount borrowed during that month. If the closing price of our common stock is between $2.00 and $4.00 per share for 30 consecutive trading days, the fee will be reduced to 0.38% per month. If the closing price of our common stock is at or above $4.00 per share for 30 consecutive trading days, the fee will be reduced to 0.22% per month. Under the Loan Agreement, we granted a security interest in substantially all of our assets to PFG to secure our obligations under the Loan Agreement. Our obligations under the Loan Agreement accelerate upon certain events, including a sale or change of control. As of December 31, 2007 and 2006, we had $52,000 and $645,000, respectively, outstanding under the Revolving Loan. The interest rate at December 31, 2007 was 9.25% and, based on borrowing limitations, there was $688,000 available for future borrowings. However, pursuant to the Forbearance Agreement described above, we are not allowed to draw on this line of credit without PFG’s approval. Pursuant to the Forbearance Agreement, the interest rate on this loan is reduced by 3% per annum during the Forbearance Period, making the interest rate 6.25% at December 31, 2007.

In connection with the Loan Agreement, on December 11, 2006, we issued PFG a warrant to purchase 200,000 shares of our common stock at an exercise price of $1.37 per share, which was amended, as described above, to $0.90 per share. The warrant expires on December 10, 2011. The warrant grants PFG piggy-back registration rights. The value of the warrant was determined to be $66,000 using the Black-Scholes valuation model and is being amortized as additional interest expense over eighteen months at the rate of approximately $11,000 per quarter. The following assumptions were used in applying the Black-Scholes valuation model:

Risk-free interest rate	4.9	%
Expected dividend yield	0	%
Contractual term (years)	5.0
Expected volatility	80	%

10. SHORT-TERM AND LONG-TERM DEBT:

$500,000 Term Loan

The $500,000 Term Loan is being repaid in 18 equal monthly installments, with a maturity date of June 11, 2008. We borrowed the full amount of the Term Loan on December 12, 2006. The Term Loan bears interest at a monthly rate equal to (i) the greater of 4.5% or the prime rate of Silicon Valley Bank, plus (ii) 1.5%. At December 31, 2007 and 2006, we had $167,000 and $500,000, respectively, outstanding under this Term Loan. The interest rate at December 31, 2007 was 8.75%. Pursuant to the Forbearance Agreement, the interest rate on this loan is reduced by 3% per annum during the Forbearance Period, making the interest rate 5.75% at December 31, 2007.

$1.25 Million Term Loan

We have outstanding a term loan agreement with PFG for $1.25 million of convertible debt financing (the “Debt Financing”). This loan is due in March 2011. However, due to certain subjective acceleration clauses contained in the Debt Financing agreement, the accreted value of the Debt Financing is reflected as current on our balance sheet. The loan bears interest at the prime rate and is convertible at any time by PFG into our common stock at $0.90 per share. In addition, if our common stock trades at a price of $4.11 per share or higher for 20 consecutive trading days, we can require PFG to convert the debt to common stock, subject to certain limitations on trading volume. If we prepay this loan, we will issue PFG a warrant to purchase a number of shares of common stock equal to what it would have received upon conversion at a price of $0.90 per share. As a result of the derivative accounting prescribed by EITF 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s

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Common Stock,” at December 31, 2007, this debt was recorded on our balance sheet at $442,000 and is being accreted on a straight-line basis at the rate of approximately $62,000 per quarter to its face value of $1.25 million over the 60-month contractual term of the debt.

August 31, 2007 $500,000 Term Loan

On August 31, 2007, we entered into a 2007 Term Loan and Security Agreement (the “2007 Loan Agreement”) with PFG for a $500,000 term loan (the “Loan”). The Loan is due in twelve equal monthly installments of $41,666.67 commencing October 1, 2007 and ending September 1, 2008. Interest accrues at the rate of the prime rate of Silicon Valley Bank plus 2% per annum and is due on the first day of each month for interest accrued during the prior month. Under the 2007 Loan Agreement, we are obligated to pay PFG a collateral handling fee of 0.55% per month on the average amount borrowed during that month. If the closing price of our common stock is between $2.00 and $4.00 per share for 30 consecutive trading days, the fee will be reduced to 0.38% per month. If the closing price of our common stock is at or above $4.00 per share for 30 consecutive trading days, the fee will be reduced to 0.22% per month. Under the 2007 Loan Agreement, we granted a security interest in substantially all of our assets to PFG to secure our obligations under the 2007 Loan Agreement. The 2007 Loan Agreement contains certain revenue and working capital covenants. At December 31, 2007, $333,333 was outstanding on this Loan at an interest rate of 9.25%. Pursuant to the Forbearance Agreement, the interest rate on this loan is reduced by 3% per annum during the Forbearance Period, making the interest rate 6.25% at December 31, 2007.

In connection with this 2007 Loan Agreement, we granted PFG a warrant exercisable for 71,429 shares of our common stock at an exercise price of $1.40 per share. The warrant is immediately exercisable and expires seven years from the date of grant. In connection with the Forbearance Agreement, the exercise price of the warrant was reduced to $0.90 per share.

The value of the warrant was determined to be $30,101 using the Black-Scholes valuation model with the following assumptions and was included as a component of debt issuance costs and is being amortized as additional interest expense over the life of the debt:

Risk-free interest rate	4.9	%
Expected dividend yield	0.0	%
Contractual term	7 years
Expected volatility	80.58	%

All of the PFG Loans are collateralized by all of our assets. In addition, the PFG Loans prohibit us from paying cash dividends without the lender’s consent.

$615,000 Convertible Notes

On November 19, 2007, we entered into Convertible Note Purchase and Warrant Agreements pursuant to which we issued Convertible Promissory Notes and warrants to purchase Common Stock. Pursuant to the purchase agreements, we sold a note in the principal amount of $500,000 to Mr. Edward Flynn and sold an aggregate of $115,000 principal amount of notes to Ralph Makar, David Tierney, Richard Stout and Christine Farrell. The notes bore interest at the rate of 8% per annum with all principal and interest due 18 months from the date of issue and may not be prepaid without the written consent of the purchaser holding a given note. The notes were convertible at any time by the purchasers into our common stock at the rate of $0.75 per share. The notes could be automatically converted upon a qualified financing, as defined in the purchase agreement, at a price equal to the financing price.

The warrants are exercisable for an aggregate of 82,000 shares of our common stock at an exercise price of $0.75 per share. Each warrant is immediately exercisable and expires four years from the date of issuance.

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The value of the warrants was determined to be $14,233 using the Black-Scholes valuation model with the following assumptions and was included as a component of debt issuance costs and is being amortized over the life of the debt:

Risk-free interest rate	3.5	%
Expected dividend yield	0.0	%
Contractual term (years)	4 years
Expected volatility	89.40	%

As discussed in Note 17, these notes were converted into Series F Convertible Preferred Stock in January 2008.

$600,000 Convertible Notes

On December 5, 2007, we entered into Convertible Note Purchase and Warrant Agreements with each of Life Science Opportunities Fund II, L.P. (“LOF II”) and Life Sciences Opportunities Fund II (Institutional) L.P. (“LOF Institutional” and, together with LOF II, the “Purchasers”) pursuant to which we issued Convertible Promissory Notes and warrants to purchase our common stock. Pursuant to the purchase agreements, we sold a note in the principal amount of $91,104 to LOF II and a note in the principal amount of $508,896 to LOF Institutional. The notes bear interest at the rate of 8% per annum with all principal and interest due May 15, 2009 and may not be prepaid without the written consent of the Purchaser holding a given note. The notes are convertible at any time by the Purchasers into our common stock at the rate of $0.75 per share. The notes will be automatically converted upon a qualified financing, as defined in the purchase agreement, at a price equal to the financing price.

The warrants are exercisable for an aggregate of 80,000 shares of our common stock at an exercise price of $0.75 per share. Each warrant is immediately exercisable and expires four years from the date of issuance.

The value of the warrant was determined to be $18,803 using the Black-Scholes valuation model with the following assumptions and was included as a component of debt issuance costs and is being amortized over the life of the debt:

Risk-free interest rate	3.26	%
Expected dividend yield	0.0	%
Contractual term (years)	4 years
Expected volatility	89.44	%

Principal Payments on Short-Term and Long-Term Debt Over the Next Five Years

Principal payments at December 31, 2007 were as follows:

Year Ending December 31,
2008	$	500,333
2009(1)		1,215,000
2010		—
2011		1,250,000
2012		—
Thereafter		—
	$	2,965,333

(1) Principal payments of $1,215,000 in 2009 include $615,000 related to convertible notes that were converted to Series F Convertible preferred stock in January 2008. Amounts due in 2009 after the conversion were $600,000.

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11. SHAREHOLDERS’ EQUITY:

Shareholder Rights Plan

On July 1, 2002, we adopted a shareholder rights agreement in order to obtain maximum value for shareholders in the event of an unsolicited acquisition attempt. To implement the agreement, we issued a dividend of one right for each share of our common stock held by shareholders of record as of the close of business on July 19, 2002.

Each right initially entitles shareholders to purchase a fractional share of our preferred stock for $50.00. However, the rights are not immediately exercisable and will become exercisable only if certain events related to an unsolicited acquisition attempt occur. For example, unless earlier redeemed for $0.001 per right, when a person or group acquires 15% or more of our common stock (other than affiliates of Sanders Morris Harris (“SMH”)), all rights holders (except the person or group who acquired the triggering amount of shares) will be able to exercise their rights for our shares having a value of twice the right’s then-current exercise price.

The shareholder rights agreement was amended in March 2006 to exempt shareholders affiliated with Life Science Opportunity Fund II (Institutional), L.P. (“LOF”), which are affiliates of SMH, from the definition of “Acquiring Person” under the rights agreement.

The shareholder rights agreement was also amended as of November 2007 to exempt shareholders affiliated with PFG from the definition of “Acquiring Person” under the rights agreement so long as they do not own more than 19.9% of the shares of our common stock then outstanding.

Preferred Stock

We have authorized 10 million shares of preferred stock to be issued from time to time with such designations and preferences and other special rights and qualifications, limitations and restrictions thereon, as permitted by law and as fixed from time to time by resolution of the Board of Directors.

Series D Preferred Stock

On November 15, 2004, we entered into a Purchase Agreement with Life Sciences Opportunities Fund II, L.P. and Life Sciences Opportunities Fund II (Institutional), L.P. (collectively, the “Investors”) in connection with our sale and issuance to the Investors of an aggregate of 2,086,957 shares of our Series D convertible preferred stock and warrants to purchase an aggregate of 626,087 shares of our common stock at $1.15 per share. The issuance price of the Series D preferred stock was $1.15 per share at an initial conversion rate of one share of Series D preferred stock for one share of common stock, subject to adjustment under certain circumstances. The warrants expire on November 14, 2008. The net proceeds from the sale of the Series D preferred stock totaled $2.3 million. The value of the warrant, $514,000, was allocated on a pro rata basis to Series D preferred stock and common stock.

We entered into a Registration Rights Agreement with the Investors, pursuant to which we filed a registration statement under the Securities Act of 1933 to register the underlying common stock issued or issuable upon conversion of the Series D preferred stock and exercise of the warrants.

The Purchase Agreement provides that one representative of the Investors has the right to attend our board meetings. In addition, the Series D preferred stock has the following rights and preferences:

• Series D preferred stock holders are entitled to receive, pro rata among such holders and on a pari passu basis with the holders of common stock, as if the Series D preferred stock had been converted into common stock, cash dividends at the same rate and in the same amount per share as any and all dividends declared and paid upon the then outstanding shares of our common stock.

• In the event of any voluntary or involuntary liquidation, dissolution, or winding up of Bioject, Series D preferred stock holders are entitled to receive a pro rata distribution of the assets available for distribution to our shareholders, before any payment is made in respect of the common stock or any series of preferred stock or other equity securities with rights junior to the Series D preferred

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stock with respect to liquidation preference, in an amount equal to $1.15 per share plus all accrued but unpaid dividends.

• The Series D preferred stock may be converted into common stock. The initial conversion rate is one share of Series D preferred stock convertible into one share of common stock, subject to adjustment in the event of:

• any merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar event;

• any dividend or other distribution to the common stock holders of cash, other assets, or of notes or other indebtedness, or any other of our securities;

• any acquisition or asset transfer that is not deemed to be a liquidation;

• any stock splits of common stock or stock dividends payable in shares of common stock; or

• any issuance to all common stock holders of rights, options or warrants to subscribe for or purchase shares of common stock.

• Series D preferred stock holders have the right to one vote for each share of common stock into which Series D preferred stock could then be converted, and, with respect to such vote, the Series D preferred stock holders have full voting rights and powers equal to the voting rights and powers of the holders of common stock; provided, however, that for purposes of determining these voting rights, each share of Series D preferred stock will be deemed to be converted into a number of shares equal to $1.15 divided by $1.30.

• We may not, without obtaining the approval of a majority of the outstanding Series D preferred stock:

• take any action that adversely affects the rights, privileges and preferences of the Series D preferred stock;

• amend, alter or repeal any provision of, or add any provision to, our Articles of Incorporation or bylaws to change the rights, powers, or preferences of the Series D preferred stock;

• declare or pay dividends on shares of common stock or preferred stock that is junior to the Series D preferred stock, subject to limited exceptions;

• create any new series or class of preferred stock or other security having a preference or priority as to dividends or upon liquidation senior or pari passu with that of the Series D preferred stock;

• reclassify any class or series of preferred stock into shares with a preference or priority as to dividends or assets superior to or on a parity with that of the Series D preferred stock;

• apply any of our assets to the redemption or acquisition of shares of common stock or preferred stock, which is redeemable by its terms, junior to the Series D preferred stock, subject to limited exceptions;

• increase or decrease the number of authorized shares of any series of preferred stock or our common stock;

• agree to an acquisition of, or sale of all or substantially all of, our assets;

• materially change the nature of our business; or

• liquidate, dissolve or wind up Bioject’s affairs.

Series E Preferred Stock and Related $1.5 Million Convertible Debt Financing

On March 8, 2006, we entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with LOF and several of its affiliates (collectively, the “LOF Affiliates”). Under the Securities Purchase Agreement, upon receiving shareholder approval at our annual meeting in May 2006, and the satisfaction of customary and other closing conditions, the LOF Affiliates purchased approximately $3.0 million of our Series E preferred stock at $1.37 per share. Each share of Series E preferred stock is convertible into one share of common stock. The Series E preferred stock also includes an 8% annual payment-in-kind dividend for 24 months. The Series E preferred stock was recorded at fair value on the date of issuance, approximately $3.1 million, and the difference of $109,000 was charged to net loss allocable to common shareholders as a beneficial conversion.

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At the same time, we also entered into a Note and Warrant Purchase Agreement with certain of the LOF Affiliates for $1.5 million of convertible debt financing (the “Agreement”). Under the terms of this Agreement, we received $1.5 million of debt financing on March 8, 2006. The debt was due April 1, 2007, but was automatically converted, along with $32,500 of accrued interest, to Series E preferred stock, at a conversion rate of $1.37 per share, upon shareholder approval and the closing of our offering of Series E preferred stock under the Securities Purchase Agreement. Interest on debt outstanding under the Agreement was 10% per annum.

For the $3.0 million purchase and the conversion of the $1.5 million convertible debt, along with the $32,500 of accrued interest, a total of 3,308,392 shares of Series E preferred stock were issued to the LOF Affiliates.

In connection with the Agreement, we issued warrants to purchase an aggregate of 656,934 shares of our common stock at $1.37 per share to the lenders. The warrants expire in September 2010. Certain provisions contained in the Agreement precluded equity classification for the warrants under EITF 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Common Stock.” As a result, the fair value of the warrants, which was determined to be $667,000, was recorded as a derivative liability. See Note 12.

The remaining proceeds from the issuance of the convertible debt, totaling $833,000, were recorded as short-term borrowings and were to be accreted to the $1.5 million face amount over the term of the debt. However, upon the closing of the Series E preferred stock as discussed above, the convertible debt under the Agreement was settled and converted to $1.6 million of Series E preferred stock. A settlement loss of $601,000 was recorded as a component of interest expense related to the accelerated accretion of the debt and a beneficial conversion component associated with the conversion of the debt.

The Series E preferred stock has the following additional significant rights and preferences:

• In the event of any voluntary or involuntary liquidation, dissolution, or winding up of Bioject (a “Liquidation”), subject to the rights of any series of Preferred Stock with senior liquidation preferences, issued, or outstanding, the holders of Series E preferred stock then outstanding shall be entitled to receive, out of the assets of Bioject available for distribution to its shareholders (if any), before any payment shall be made in respect of the common stock, the Series D preferred stock or any other series of preferred stock or other equity securities of Bioject with rights junior to the Series E preferred stock with respect to liquidation preference, and pro rata based on the respective liquidation preferences with holders of preferred stock with a liquidation preference pari passu with the Series E preferred stock, an amount per share of Series E preferred stock equal to the Series E stated value, plus all accrued but unpaid dividends thereon to the date fixed for distribution, including specifically and without limitation, the payment-in-kind dividends to the extent not previously issued.

• If, prior to the conversion of all of the Series E preferred stock (including the payment-in-kind dividends), there shall be:

• any merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar event, as a result of which shares of Bioject’s common stock shall be changed into the same or a different number of shares of the same or another class or classes of stock or securities of Bioject or another entity;

• any dividend or other distribution of cash, other assets, or of notes or other indebtedness of Bioject, any other securities of Bioject (except common stock), or rights to the holders of its common stock; or

• any acquisition or asset transfer that does not constitute a Liquidation,

then the holders of Series E preferred stock shall thereafter have the right to receive upon conversion of Series E preferred stock, upon the basis and upon the terms and conditions specified herein and in lieu of shares of common stock, immediately theretofore issuable upon conversion, such cash, stock, securities, rights, and/or other assets that the holder would have

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been entitled to receive in such transaction had the Series E preferred stock been converted immediately prior to such transaction.

• If at any time after the date of the first issuance of Series E preferred stock, Bioject shall subdivide or split-up the outstanding shares of common stock, or shall declare a dividend or other distribution on its outstanding common stock payable in shares of common stock or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional shares of common stock that are not distributed to the holders of Series E preferred stock, without payment of any consideration by such holder for the additional shares of common stock or common stock equivalents (including the additional shares of common stock issuable upon conversion or exercise thereof), the conversion price in effect immediately prior to such subdivision or the declaration of such dividend shall be proportionately decreased so that the number of shares of common stock issuable on conversion of each share of Series E preferred stock shall be increased in proportion to the increase of the aggregate of shares of common stock outstanding and those issuable with respect to such common stock equivalents with the number of shares issuable with respect to common stock equivalents determined from time to time, and in case Bioject shall at any time combine the outstanding shares of common stock, the conversion price in effect immediately prior to such combination shall be proportionately increased, effective at the close of business on the date of such subdivision, dividend or combination, as the case may be.

• Each holder of Series E preferred stock shall have the right to one vote for each share of common stock into which Series E preferred stock could then be converted (excluding any payment-in-kind dividends), and with respect to such vote, such holder shall have full voting rights and powers equal to the voting rights and powers of the holders of common stock, and shall be entitled, notwithstanding any provision hereof, to notice of any shareholders’ meeting in accordance with our bylaws, and shall be entitled to vote, together with the holders of common stock, with respect to any question upon which holders of common stock have the right to vote and shall vote as a series where required by law or as provided below. Shares of Series E preferred stock shall be entitled to vote as a class or series, separate and apart from any other series of preferred stock or any holders of shares of common stock, on any matter as to which class voting (or series voting, as applicable) is required under applicable law. For purposes of determining the number of shares of common stock into which each share of Series E preferred stock could be converted for purposes of determining voting rights, the conversion price shall initially be the greater of (i) $1.37 or (ii) the closing bid price of the common stock on the Nasdaq Capital Market on the trading day immediately prior to the date that the share of Series E preferred stock was issued.

• So long as any of the originally issued shares of Series E preferred stock (subject to adjustment for any stock splits, stock dividends, combinations, recapitalizations, and the like and excluding payment-in-kind dividends) are outstanding as a single class, and except as otherwise mandated by applicable law or the terms of the Articles of Incorporation, Bioject shall not without first obtaining the approval (by vote or written consent, as provided by law) of the holders of not less than a majority of the then outstanding Series E preferred stock, voting as a class:

• take any action (by reclassification, merger, consolidation, reorganization, or otherwise) that adversely affects the rights, preferences and privileges of the holders of the Series E preferred stock;

• amend, alter, or repeal any provision of, or add any provision to the Articles of Incorporation and/or the Articles of Amendment (whether by reclassification, merger, consolidation, reorganization or otherwise) or bylaws of Bioject;

• declare or pay dividends on shares of common stock or preferred stock that is junior to the Series E preferred stock;

• create any new series or class of preferred stock or other security having a preference or priority as to dividends or upon liquidation senior to or pari passu with that of the Series E preferred stock (by reclassification, merger, consolidation, reorganization or otherwise);

• reclassify any class or series of preferred stock into shares with a preference or priority as to dividends or assets superior to or on a parity with that of the Series E preferred stock (by reclassification, merger, consolidation, reorganization, or otherwise);

• apply any of its assets to the redemption or acquisition of shares of common stock or preferred stock, except pursuant to any agreement granting Bioject a right of first refusal or

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similar rights, and except in connection with purchases at fair market value from employees, advisors, officers, directors, consultants, and service providers of Bioject upon termination of employment or service;

• increase or decrease the number of authorized shares of any series of preferred stock or common stock of Bioject;

• agree to an acquisition or asset transfer;

• materially change the nature of Bioject’s business; or

• liquidate, dissolve or windup the affairs of Bioject.

Common Stock

Holders of common stock are entitled to one vote for each share held on all matters to be voted on by shareholders. No shares have been issued subject to assessment, and there are no preemptive or conversion rights and no provision for redemption, purchase or cancellation, surrender or sinking or purchase funds. Holders of common stock are not entitled to cumulate their shares in the election of directors. Certain holders of common stock have certain demand and piggyback registration rights enabling them to register their shares for sale under the 1933 Securities Act.

Stock Plans

Stock-Based Compensation

Certain information regarding our stock-based compensation was as follows:

	Year Ended December 31,
	2007		2006
Grant-date fair value of share options granted	$	38,868	$	191,310
Stock-based compensation recognized in results of operations		1,119,681		990,055
Fair value of restricted stock units that vested during the period		982,181		721,448
Cash received upon exercise of stock options		1,616		—

There was no stock-based compensation capitalized in fixed assets, inventory or other assets during the years ended December 31, 2007 or 2006.

The stock-based compensation was included in our statement of operations as follows:

	Year Ended December 31,
	2007		2006
Manufacturing	$	95,145	$	162,610
Research and development		126,629		141,102
Selling, general and administrative		897,907		686,343
	$	1,119,681	$	990,055

To determine the fair value of stock-based awards granted during the periods presented, we used the Black-Scholes option pricing model and the following weighted average assumptions:

	Year Ended December 31,
	2007		2006
Stock Incentive Plan
Risk-free interest rate	4.90	%	4.60	%
Expected dividend yield	0	%	0	%
Expected term	5 years		5 years
Expected volatility	80	%	73% - 89%
Employee Stock Purchase Plan
Risk-free interest rate	4.80	%	4.60	%
Expected dividend yield	0	%	0	%
Expected term	6 months		6 months
Expected volatility	57% –74%		57% –85%

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We issued 87,127 and 79,861 shares of our stock pursuant to our Employee Stock Purchase Plan (“ESPP”) during 2007 and 2006, respectively. The expense related to our ESPP is recognized based on a fair value calculation. The expense is immaterial and is included in the stock-based compensation expense.

The risk-free rate used is based on the U.S. Treasury yield over the estimated term of the options granted. Our option pricing model utilizes the simplified method accepted under Staff Accounting Bulletin No. 107 to estimate the expected term. The expected volatility is calculated based on the actual volatility of our common stock over a 5 year period. The option pricing model assumes no dividend payments will be made through the expected term.

We amortize stock-based compensation on a straight-line basis over the vesting period of the individual award with estimated forfeitures considered. Shares to be issued upon the exercise of stock options will come from newly issued shares.

Included in stock-based compensation expense in 2007 and 2006 was approximately $982,000 and $643,000, respectively, related to restricted shares, which would have also been recognized pursuant to APB No. 25.

1992 Stock Incentive Plan

Options may be granted to our directors, officers and employees by the Board of Directors under terms of the Bioject Medical Technologies Inc. 1992 Stock Incentive Plan (the “Plan”). The Plan expires June 30, 2010. Under the terms of the Plan, eligible employees may receive statutory and nonstatutory stock options, stock bonuses, stock appreciation rights and restricted stock for purchase of shares of our common stock at prices and vesting as determined by the Board or a committee of the Board. As amended, a total of up to 3,900,000 shares of our common stock, including options outstanding at the date of initial shareholder approval of the Plan, may be granted under the Plan. At December 31, 2007, we had option or restricted share grants covering 479,553 shares of our common stock available for grant and a total of 3.4 million shares of our common stock reserved for issuance.

Stock option activity for the year ended December 31, 2007 was as follows:

	Options		Weighted Average Exercise Price
Outstanding at December 31, 2006	1,758,677		$	4.89
Granted	29,250			1.33
Exercised	(1,600	)		1.01
Forfeited	(341,111	)		2.97
Outstanding at December 31, 2007	1,445,216			5.25

Certain information regarding options outstanding as of December 31, 2007 was as follows:

	Options Outstanding		Options Exercisable
Number		1,445,216		1,322,917
Weighted average exercise price	$	5.25	$	5.61
Aggregate intrinsic value		—		—
Weighted average remaining contractual term		3.9 years		4.7 years

The aggregate intrinsic value in the table above is based on our closing stock price of $0.55 on December 31, 2007. No optionees had options with exercise prices less than $0.55 at December 31, 2007.

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Restricted stock unit activity was as follows:

	Restricted Stock Units		Weighted Average Per Share Grant Date Fair Value
Balances, December 31, 2006	972,813		$	1.33
Granted	560,777			1.19
Vested	(736,307	)		1.17
Forfeited	(337,149	)		1.22
Balances, December 31, 2007	460,134			1.27

As of December 31, 2007, unrecognized stock-based compensation related to outstanding, but unvested options and restricted stock units was $890,000, which will be recognized over the weighted average remaining vesting period of 3 years.

Employee Stock Purchase Plan

Our 2000 Employee Stock Purchase Plan, as amended (the “ESPP”), allows for the issuance of 750,000 shares of our common stock. The ESPP is intended to qualify as an “Employee Stock Purchase Plan” under Section 423 of the Internal Revenue Code of 1986, as amended, and is administered by our Board of Directors. The purchase price for shares purchased under the ESPP is 85% of the lesser of the fair market value at the beginning or end of the purchase period. A total of 87,127 shares were issued pursuant to the ESPP in 2007 at a weighted average price of $0.57 per share, which represented a $0.20 weighted average per share discount from the fair market value. At December 31, 2007, 220,264 shares were available for purchase under the ESPP.

Warrants

Warrant activity is summarized as follows:

	Shares		Exercise Price
Balances, December 31, 2005	2,471,826		$	0.90 – 13.50
Warrant issued in connection with $1.5 million convertible debt financing, expiring September 7, 2010	656,934			1.37
Warrant issued to RCC Ventures, LLC in connection with services provided in 2004, expiring July 31, 2011	13,847			1.32
Warrant issued to PFG in connection with $500,000 Term Loan and $2.0 million Revolving Loan, expiring December 10, 2011	200,000			0.90
Warrants canceled or expired	(962,224	)		9.34
Balances, December 31, 2006	2,380,383			0.90 – 1.92
Warrant issued to PFG in connection with August 2007 $500,000 term loan, expiring August 31, 2014	71,429			0.90
Warrants issued to Mr. Ed Flynn and others in connection with $615,000 convertible note issuance, expiring November 19, 2011	82,000			0.75
Warrant issued to LOF in connection with December 2007 $600,000 convertible note issuance, expiring December 5, 2011	80,000			0.75
Warrant issued to The Strategic Choice in connection with services provided in 2007, expiring December 30, 2011	40,625			0.75
Balances, December 31, 2007	2,654,437			0.75 – 1.92

The value of the warrant issued to The Strategic Choice in 2007 was determined to be $13,290 using the Black-Scholes valuation model with the following assumptions and was expensed as a component of selling, general and administrative:

Risk-free interest rate	3.26	%
Expected dividend yield	0.0	%
Contractual term (years)	4 years
Expected volatility	89.44	%

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12. DERIVATIVE LIABILITIES:

Derivative Liabilities Related to $1.25 Million Convertible Debt

As certain provisions of the PFG $1.25 million convertible debt preclude equity classification for the conversion feature under EITF 00-19, the conversion feature was recorded at fair value at inception, as a derivative liability, and is marked to market on a quarterly basis through earnings, as a component of interest expense, until the debt is settled. The fair value of the derivative liability was determined to be $1.1 million, at inception, using the Black-Scholes valuation model with the following assumptions:

Risk-free interest rate	4.82	%
Expected dividend yield	0.0	%
Contractual term (years)	5.0
Expected volatility	75.36	%

In addition, the convertible interest feature represents an embedded derivative that does not qualify for equity classification under EITF 00-19. As a result, the convertible interest feature was recorded at fair value at inception, as a derivative liability, and is marked to market on a quarterly basis through earnings, as a component of interest expense, until the provision lapses. The fair value at inception was determined to be approximately $130,000 using the Black-Scholes valuation model with the following assumptions:

Risk-free interest rate	4.65%–4.9%
Expected dividend yield	0.0%
Contractual term (years)	0.08 – 2.0
Expected volatility	61.0%–75.0%

After allocation to the derivative liabilities, the remaining proceeds from the PFG $1.25 million convertible debt of approximately $6,000 were recorded as short-term borrowings and will be accreted to the face amount of $1.25 million over the 60-month contractual term of this debt. At December 31, 2007 and 2006, the accreted amount of the debt was $442,000 and $194,000, respectively, and was included as a component of short-term notes payable on our consolidated balance sheets.

Derivative Liability Related to Series E Preferred Stock and $1.5 Million Convertible Debt

Certain provisions contained in the Agreement precluded equity classification for the warrants issued in connection with the $1.5 million convertible debt under EITF 00-19. As a result, the fair value of the warrants was recorded as a derivative liability at inception, and is marked to market through earnings as a component of interest expense until the warrants are settled with common stock or expire.

Upon inception, the warrants were valued at $667,000 using the Black-Scholes valuation model with the following assumptions:

Risk-free interest rate	4.82	%
Expected dividend yield	0.0	%
Contractual term (years)	4.5
Expected volatility	76.11	%

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Summary

The following table summarizes the Black-Scholes assumptions used to determine fair value and certain other fair value information for each of the instruments:

	Warrants issued in connection with March 2006 $1.5 million bridge loan			$1.25 million convertible debt conversion feature			$1.25 million convertible debt convertible interest feature
Black-Scholes Assumptions
Risk-free interest rate		5.10	%		5.1	%		5.03%–5.33	%
Expected dividend yield		0	%		0	%		0	%
Contractual term (years)		4.25			4.75			.06 – 1.75
Expected volatility		78.60	%		73.0	%		73%–63	%
Certain Other Information
Fair value at inception	$	667,112		$	1,114,014		$	129,950
Fair value at December 31, 2006	$	300,626		$	459,614		$	21,921
Change in fair value from inception to December 31, 2006	$	366,486		$	654,400		$	108,029
	Warrants issued in connection with March 2006 $1.5 million bridge loan			$1.25 million convertible debt conversion feature			$1.25 million convertible debt convertible interest feature
Black-Scholes Assumptions
Risk-free interest rate		4.1	%		4.1	%		4.1	%
Expected dividend yield		0	%		0	%		0	%
Contractual term (years)		3.02			3.52			0.50
Expected volatility		75.78	%		74.81	%		59.36%–86.05	%
Certain Other Information
Fair value at December 31, 2006	$	300,626		$	459,614		$	21,921
Fair value at December 31, 2007	$	127,823		$	400,139		$	(312	)
Change in fair value from December 31, 2006 to December 31, 2007	$	172,803		$	59,475		$	22,233

Included in the change in fair value during 2007 was a $97,957 loss related to the revaluation of the $1.25 million convertible debt feature upon the revaluation of the conversion price from $1.37 per share to $0.90 per share in connection with the Forbearance Agreement. This amount was included as debt issuance costs and is being amortized as additional interest expense over the life of the related debt.

13. COMMITMENTS:

Leases

In October 2003, we entered into a 10-year facility lease for space to house our Tualatin, Oregon based research and development, manufacturing and administration functions. This lease has one, five-year renewal option. We also lease office equipment under operating leases for periods up to five years and certain equipment under capital leases. At December 31, 2007, future minimum payments under noncancellable operating and capital leases with terms in excess of one year were as follows:

For the year ending December 31,	Operating		Capital
2008	$	371,048	$	51,819
2009		380,320		32,239
2010		389,828		17,435
2011		399,576		6,373
2012		409,564		—
Thereafter		850,096		—
Total minimum lease payments	$	2,800,432		107,866
Less amounts representing interest				(11,358	)
Present value of future minimum lease payments			$	96,508

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At December 31, 2007 and 2006, the gross amount of assets on our balance sheet under capital leases was $261,000. Lease expense for the years ended December 31, 2007 and 2006 totaled $371,000 and $365,000 respectively. Included in long-term lease payable on our balance sheet at December 31, 2007 was $268,000 related to deferred rent payable on our Tualatin, Oregon facility operating lease.

Purchase Order Commitments

At December 31, 2007, we had open purchase order commitments totaling approximately $1.5 million through 2008, primarily related to inventory purchases for firm customer orders.

14. RESTRUCTURING AND REORGANIZATION:

2006 Activities

On March 3, 2006, our Board of Directors approved a plan of restructuring, which included reorganizing our corporate organization, closing and selling our New Jersey administrative office and reducing operations headcount and research and development costs at our Portland, Oregon facility. Also, John Gandolfo, our Chief Financial Officer, ceased to be employed by us effective May 3, 2006. During the first quarter of 2006, we recognized a charge of approximately $720,000 associated with severance costs for terminated employees and non-cash charges for stock-based compensation related to the acceleration of certain restricted stock awards as part of the restructuring. The cash portion of the charge will be paid out over a 14 month period. The non-cash charges for stock-based compensation were settled through issuance of 41,125 shares of our common stock in the second quarter of 2006. We realized annual cost savings in excess of $1.2 million in 2006 and anticipate annual cost savings of approximately $1.4 million in 2007 in connection with these expense reductions.

In addition, Jim O’Shea, our President and Chief Executive Officer, retired effective December 31, 2006. In connection with his retirement, Mr. O’Shea received 12 months severance and the acceleration of vesting of restricted stock units totaling $705,000. Of the $705,000, $315,000 was a non-cash expense related to the acceleration of vesting of Mr. O’Shea’s restricted stock units. These units were recognized in equity upon issuance in the first quarter of 2007.

The following table summarizes the charges and expenditures related to our restructuring in 2006:

Year Ended December 31, 2006	Beginning Accrued Liability		Charged to Expense		Expenditures			Ending Accrued Liability
Severance and related benefits for terminated employees	$	—	$	1,026,748	$	(504,978	)	$	521,770
Acceleration of vesting to be settled in common stock		—		398,084		(83,000	)		315,084
	$	—	$	1,424,832	$	(587,978	)	$	836,854

2007 Activities

In March 2007, we restructured our corporate organization and created an executive committee consisting of Dr. Richard Stout, Executive Vice President and Chief Medical Officer, and Christine Farrell, Vice President of Finance, which reported to Mr. Cobbs, Chairman and Interim President and CEO until the hiring of our new President and Chief Executive, Mr. Ralph Makar, in October 2007. The Executive Committee now reports to Mr. Makar. In connection with the restructuring, on March 23, 2007, our Board of Directors authorized the elimination of 13 positions to reduce expenses and streamline operations. We recorded a charge of $289,000 in the first quarter of 2007 related to these actions. Of the $289,000, $249,000 was cash severance and related charges and $40,000 was a non-cash charge for the acceleration of vesting of restricted stock awards. We anticipate these charges to be paid through the first quarter of 2008. We realized cost savings of approximately $1.3 million in 2007.

In addition, on April 12, 2007, we entered into a Separation Agreement with Mr. J. Michael Redmond, our Senior Vice President of Business Development, wherein his employment with us terminated effective May 1, 2007. Pursuant to Mr. Redmond’s previously existing employment agreement, he received cash severance benefits of $217,350, which is equal to 12 months of his current base pay, plus approximately $17,000 for certain other benefits, to be paid over a 12 month period. In addition, 163,508 outstanding, but unvested, restricted stock units vested, resulting in a non-cash charge of $147,000.

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The following table summarizes the charges and expenditures related to our restructurings in 2007:

Year Ended December 31, 2007	Beginning Accrued Liability		Charged to Expense		Expenditures/ Transfer to Equity			Ending Accrued Liability
Severance and related benefits for terminated employees	$	521,770	$	483,175	$	(875,743	)	$	129,202
Acceleration of vesting to be settled in common stock		315,084		186,351		(501,435	)		—
	$	836,854	$	669,526	$	(1,377,178	)	$	129,202

Restructuring charges were included as a component of our operating expenses as follows:

	Year Ended December 31,
	2007		2006
Manufacturing	$	55,229	$	108,041
Research and development		38,277		42,742
Selling, general and administrative		576,020		1,274,049
Total	$	669,526	$	1,424,832

See also Note 17 Subsequent Events for a discussion of our January 2008 reduction in force.

15. RELATED PARTY TRANSACTIONS:

Mr. Gerald Cobbs, a member of our Board of Directors, is the Managing Director of Signet Healthcare Partners (formerly Sanders Morris Harris) (“Signet”). LOF and several of its affiliates are affiliates of Signet. As of December 31, 2007, LOF and several of its affiliates held 3,541,575 shares of our Series E preferred stock. The 3,541,575 shares of our Series E preferred stock held by LOF and several of its affiliates are convertible into 3,541,575 shares of our common stock. The Series E preferred stock includes an 8% annual payment-in-kind dividend for 24 months.

Certain funds affiliated with LOF and several of its affiliates also own 2,086,957 shares of our Series D preferred stock. The 2,086,957 shares of our Series D preferred stock held by LOF and several of its affiliates are convertible into 2,086,957 shares of our common stock.

In addition LOF and its affiliates hold a $600,000 convertible note due May 15, 2009.

In connection with the preferred stock and note issuances, we issued warrants to LOF and several of its affiliates to purchase an aggregate of 656,934 shares of our common stock at $1.37 per share, 626,087 shares of our common stock at $1.15 per share and 80,000 shares of our common stock at $0.75 per share. The warrants expire in September 2010, November 2008 and December 2011, respectively.

The transactions with LOF were all deemed to be made at arms-length rates.

16. NEW ACCOUNTING PRONOUNCEMENTS:

SFAS No. 141R and SFAS No. 160

In December 2007, the FASB issued SFAS No. 141R, “Business Combinations,” and SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements.” SFAS Nos. 141R and 160 require most identifiable assets, liabilities, noncontrolling interests and goodwill acquired in a business combination to be recorded at “full fair value” and require noncontrolling interests (previously referred to as minority interests) to be reported as a component of equity, which changes the accounting for transactions with noncontrolling interest holders. Both statements are effective for periods beginning on or after December 15, 2008 and earlier adoption is prohibited. SFAS No. 141R will be applied to business combinations occurring after the effective date and SFAS No. 160 will be applied prospectively to all noncontrolling interests, including any that arose before the effective date. We do not expect the adoption of SFAS Nos. 141R and 160 to have a material effect on our financial position or results of operations.

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EITF 07-3

In June 2007, the EITF issued EITF 07-3, “Accounting for Advance Payments for Goods or Services to Be Used in Future Research and Development Activities,” which states that non-refundable advance payments for services that will be consumed or performed in a future period in conducting research and development activities on behalf of the company should be recorded as an asset when the advance payment is made and then recognized as an expense when the research and development activities are performed. EITF 07-3 is applicable prospectively to new contractual arrangement entered into in fiscal years beginning after December 15, 2007. We do not expect the adoption of EITF 07-3 to have a material effect on our financial position or results of operations.

EITF Abstracts, Topic No. D-98

In June 2007, the SEC announced revisions to EITF Topic No. D-98 related to the release of SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” The revisions indicated that liability classification for financial instruments that meet the conditions for temporary equity classification is no longer acceptable. As a consequence, the fair value option under SFAS No. 159 may not be applied to any financial instrument that qualifies as temporary equity. Registrants that do not choose retrospective application should apply EITF Topic No. D-98 prospectively to all affected instruments entered into, modified or otherwise subject to a remeasurement event in the first fiscal quarter beginning after September 15, 2007. The adoption of EITF D-98 did not have a material effect on our financial position or results of operations.

SFAS No. 159

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” which permits entities to choose to measure many financial instruments and certain other items at fair value. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. While we are still analyzing the effects of applying SFAS No. 159, we believe that the adoption of SFAS No. 159 will not have a material effect on our financial position or results of operations.

SFAS No. 157

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” which establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosures about fair-value measurements. SFAS No. 157 is effective for financial assets and liabilities for fiscal years beginning after November 15, 2007. The effective date for non-financial assets and liabilities that are not required or permitted to be recognized or disclosed at fair value on a recurring basis has been deferred to fiscal years beginning after November 15, 2008. While we are still analyzing the effects of applying SFAS No. 157, we believe that the adoption of SFAS No. 157 will not have a material effect on our financial position or results of operations.

17. SUBSEQUENT EVENTS:

Series F Convertible Preferred Stock

On January 22, 2008, we amended our Articles of Incorporation to designate 9,645 shares of our authorized preferred stock as Series F Convertible Preferred Stock (the “Series F Preferred Stock”). A description of the material rights and preferences of the Series F Preferred Stock is as follows:

• Receive 8% annual payment-in-kind dividends (“PIK Dividends”) for 24 months following January 22, 2008 (while these dividends will accrue, they will only be paid in connection with certain liquidation events or conversion of the Series F Preferred Stock);

• Receive on a pari passu basis with the holders of common stock, as if the Series F Preferred Stock had been converted into common stock immediately before the applicable record date, cash dividends at the same rate and in the same amount per share as any and all dividends declared and paid upon the then outstanding shares of common stock;

• Receive, in the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Company and before any payment is made in respect of the common stock, the Series E

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Convertible Preferred Stock or the Series D Convertible Preferred Stock, an amount per share of Series F Preferred Stock equal to $75 (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like), plus all accrued but unpaid dividends thereon to the date fixed for distribution, including, without limitation, the PIK Dividends to the extent not previously issued (if our assets available for distribution to shareholders are insufficient to pay the holders of Series F Preferred Stock the full amount to which they are entitled, then all the assets available for distribution to our shareholders shall be distributed ratably first to the holders of the Series F Preferred Stock);

• Be convertible, at any time at the option of the holder, into common stock at a conversion rate of one share of Series F Preferred Stock being convertible into one hundred (100) shares of common stock (subject to anti-dilution adjustments);

• One vote for each share of common stock into which Series F Preferred Stock could then be converted (excluding any PIK Dividends), and with respect to such vote, full voting rights and powers equal to the voting rights and powers of the holders of common stock;

• Consent rights with respect to certain extraordinary transactions; and

• Registration rights with respect to the shares of common stock issuable upon conversion of such shares of Series F Preferred Stock.

There is no restriction on the repurchase or redemption of the Series F Preferred Stock while there is an arrearage in the payment of dividends.

Conversion of $615,000 Convertible Note

On January 22, 2008, we entered into a Purchase Agreement with each of Edward Flynn, Ralph Makar, David Tierney, Richard Stout and Christine Farrell (each a “Purchaser” and collectively, the “Purchasers”) for the purchase of an aggregate of 8,314 shares of our Series F Preferred Stock at a price of $75 per share. Gross proceeds from the sale were $623,550, payable by cancellation of the outstanding $615,000 principal amount of, and accrued interest on, promissory notes issued by the Company to each of the Purchasers in November 2007.

Reduction in Force

On January 16, 2008, we eliminated an additional 13 positions. We incurred approximately $0.1 million for severance and related costs in the first quarter of 2008 related to these actions.

Issuance of Warrant

On February 8, 2008, we issued a warrant exercisable for 31,875 shares of our common stock at $0.75 per share to The Strategic Choice in exchange for services provided. The warrant is immediately exercisable and expires four years from the date of grant. The value of the warrant was determined to be $8,158 using the Black-Scholes valuation model with the following assumptions and was expensed as a component of selling, general and administrative expense in the first quarter of 2008:

Risk-free interest rate	2.69	%
Expected dividend yield	0.0	%
Contractual term (years)	4 years
Expected volatility	89.55	%

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A(T). CONTROLS AND PROCEDURES

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a –15(f). Under the supervision and with the participation of our management, including our President and Chief Executive Officer and our principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2007.

This Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this Annual Report on Form 10-K.

Disclosure Controls and Procedures

Our management has evaluated, under the supervision and with the participation of our President and Chief Executive Officer and principal financial officer, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”). Based on that evaluation, our President and Chief Executive Officer and principal financial officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective in ensuring that information required to be disclosed in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner, and (2) accumulated and communicated to our management, including our President and Chief Executive Officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

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PART III

We have omitted from Part III the information that will appear in our definitive proxy statement for our 2008 Annual Meeting of Shareholders (the “Proxy Statement”), which will be filed within 120 days after the end of our year ended December 31, 2007 pursuant to Regulation 14A.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this item will be included in our Proxy Statement for our 2008 Annual Meeting of Shareholders and is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item will be included in our Proxy Statement for our 2008 Annual Meeting of Shareholders and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Equity Compensation Plan Information

The following table summarizes equity securities authorized for issuance pursuant to compensation plans as of December 31, 2007.

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by shareholders	1,445,216	$	5.25	699,817	(1)
Equity compensation plans not approved by shareholders(2)	362,987		1.44	650,000	(3)
Total	1,808,203	$	4.49	1,349,817

(1) Represents 479,553 shares of common stock available for issuance under our 1992 Stock Incentive Plan and 220,264 shares of common stock available for purchase under our 2000 Employee Stock Purchase Plan. Under the terms of 1992 Stock Incentive Plan, a committee of the Board of Directors may authorize the sales of common stock, grant incentive stock options or non-statutory stock options, and award stock bonuses and stock appreciation rights to eligible employees, officers and directors and eligible non-employee agents, consultants, advisers and independent contractors of Bioject or any parent or subsidiary.

(2) We have issued and outstanding warrants to purchase an aggregate of 212,987 shares of common stock to various non-employee consultants and advisors. The warrants are fully exercisable and have grant dates ranging from November 2004 to December 2007, with five and seven year terms and exercise prices ranging from $0.75 to $1.92. (3) Mr. Makar is entitled to receive up to an additional 650,000 shares of stock pursuant to his employment agreement if certain events or milestones are achieved. These awards are inducement grants made outside of the 1992 Stock Incentive Plan.

Additional information required by this item is included in our Proxy Statement for our 2008 Annual Meeting of Shareholders and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this item will be included in our Proxy Statement for our 2008 Annual Meeting of Shareholders and is incorporated herein by reference.

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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this item will be included in our Proxy Statement for our 2008 Annual Meeting of Shareholders and is incorporated herein by reference.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Financial Statements and Schedules

The Consolidated Financial Statements, together with the report thereon of Moss Adams LLP, are included on the pages indicated below:

	Page
Report of Moss Adams LLP, Independent Registered Public Accounting Firm	33
Consolidated Balance Sheets as of December 31, 2007 and 2006	34
Consolidated Statements of Operations for the years ended December 31, 2007 and 2006	35
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2007 and 2006	36
Consolidated Statements of Cash Flows for the years ended December 31, 2007 and 2006	37
Notes to Consolidated Financial Statements	38

There are no schedules required to be filed herewith.

Exhibits

The following exhibits are filed herewith and this list is intended to constitute the exhibit index. Exhibit numbers marked with an asterisk (*) represent management or compensatory arrangements.

Exhibit No.	Description
3.1	2002 Restated Articles of Incorporation of Bioject Medical Technologies Inc., as amended. Incorporated by reference to Form 8-K dated November 15, 2004.
3.1.1	Articles of Amendment to 2002 Restated Articles of Incorporation. Incorporated by reference to Form 8-K dated May 30, 2006 and filed June 5, 2006.
3.1.2	Articles of Amendment to 2002 Restated Articles of Incorporation. Incorporated by reference to Exhibit 3.1 in the Form 8-K filed January 23, 2008.
3.2	Second Amended and Restated Bylaws of Bioject Medical Technologies, Inc. Incorporated by reference to Form 10-Q for the quarter ended December 31, 2000.
4.1	Form of Rights Agreement dated as of July 1, 2002 between the Company and American Stock Transfer & Trust Company, including Exhibit A, Terms of the Preferred Stock, Exhibit B, Form of Rights Certificate, and Exhibit C, Summary of the Right To Purchase Preferred Stock. Incorporated by reference to Form 8-K dated July 2, 2002.
4.1.1	First Amendment, dated October 8, 2002, to Rights Agreement dated July 1, 2002 between Bioject and American Stock Transfer & Trust Company. Incorporated by reference to registration statement on Form 8-A/A filed with the Commission on October 8, 2002.
4.1.2	Second Amendment, dated November 15, 2004, to Rights Agreement dated July 1, 2002 between Bioject and American Stock Transfer & Trust Company. Incorporated by reference to Form 8-K dated November 15, 2004.
4.1.3	Third Amendment to Rights Agreement, dated March 8, 2006, between Bioject Medical Technologies Inc. and American Stock Transfer & Trust Company. Incorporated by reference to Form 8-K dated March 3, 2006 and filed March 9, 2006.
4.1.4	Fourth Amendment to Rights Agreement, dated March 8, 2006, between Bioject Medical Technologies Inc. and American Stock Transfer & Trust Company. Incorporated by reference to Form 8-K dated December 19, 2007 and filed December 20, 2007.
10.1*	Executive employment agreement, dated March 13, 2003, between Bioject Medical Technologies Inc. and J. Michael Redmond. Incorporated by reference to Form 8-K dated April 13, 2005 and filed April 19, 2005.
10.1.1*	Amendment, dated April 13, 2005, to executive employment agreement, dated March 13, 2003, between Bioject Medical Technologies Inc. and J. Michael Redmond. Incorporated by reference to Form 8-K dated April 13, 2005 and filed April 19, 2005.

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Exhibit No.	Description
10.2*	Standard Employment with Christine Farrell, dated January 21, 1997. Incorporated by reference to Form 10-K for the year ended December 31, 2005.
10.2.1*	First Amendment to Standard Employment Agreement with Christine Farrell, dated November 2004. Incorporated by reference to Form 10-K for the year ended December 31, 2005.
10.3*	Restated 1992 Stock Incentive Plan, as amended. Incorporated by reference to Form 8-K dated June 9, 2005 and filed June 13, 2005.
10.3.1*	Standard Form of Stock Option Agreement.
10.3.2*	Form of Restricted Stock Unit Grant Agreement. Incorporated by reference to Form 8-K dated March 11, 2005 and filed March 17, 2005.
10.3.3*	Form of Restricted Stock Unit Award Agreement for January 19, 2006 grants (time-based vesting and performance-based vesting). Incorporated by reference to Form 8-K dated January 19, 2006 and filed on June 15, 2006.
10.3.4*	Form of Restricted Stock Unit Award Agreement for June 1, 2006 grants (time-based vesting if performance measures achieved). Incorporated by reference to Form 8-K dated January 19, 2006 and filed on June 15, 2006.
10.3.5*	Form of Restricted Stock Unit Award Agreement for May 24, 2006 grants (time-based vesting). Incorporated by reference to Form 8-K dated January 19, 2006 and filed on June 15, 2006.
10.4*	2000 Employee Stock Purchase Plan, as amended. Incorporated by reference to Form 8-K dated June 9, 2005 and filed June 13, 2005.
10.5	Industrial Lease dated October 2003 between Multi-Employer Property Trust, and Bioject Medical Technologies, Inc., an Oregon corporation. Incorporated by reference to Form 10-K for the nine-month transition period ended December 31, 2002.
10.6	License and Distribution Agreement dated December 21, 1999 between Bioject, Inc. and Serono Laboratories, Inc. Confidential treatment has been granted with respect to certain portions of this exhibit pursuant to an Application for Confidential Treatment filed with the Commission under Rule 24b-2 under the Securities Exchange Act of 1934, as amended. Incorporated by reference to Form 10-Q for the quarter ended December 31, 1999.
10.6.1	Amendment dated March 15, 2000 to License and Distribution Agreement dated December 21, 1999 between Bioject, Inc. and Serono Laboratories, Inc. Incorporated by reference to Form 10-K for the year ended March 31, 2000.
10.7	Purchase Agreement dated November 15, 2004 between Bioject Medical Technologies Inc., Life Sciences Opportunities Fund II, L.P. and Life Sciences Opportunities Fund II (Institutional), L.P. Incorporated by reference to Form 8-K dated November 15, 2004.
10.8	Registration Rights Agreement dated November 15, 2004 between Bioject Medical Technologies Inc., Life Sciences Opportunities Fund II, L.P. and Life Sciences Opportunities Fund II (Institutional), L.P. Incorporated by reference to our Form 8-K dated November 15, 2004.
10.9	Form of Series “BB” Warrant, dated November 15, 2004, issued to Life Sciences Opportunities Fund II, L.P. and Life Sciences Opportunities Fund II (Institutional), L.P. Incorporated by reference to Form 8-K dated November 15, 2004.
10.10	Loan and Security Agreement dated December 11, 2006 between Bioject Medical Technologies Inc., Bioject, Inc. and Partners for Growth, L.P. Incorporated by reference to Form 8-K dated December 11, 2006 and filed on December 15, 2006.
10.11	Warrant, dated December 11, 2006, issued to Partners for Growth, L.P. Incorporated by reference to Form 8-K dated December 11, 2006 and filed on December 15, 2006.
10.12	Warrant, dated December 15, 2004, issued to Partners for Growth, L.P. Incorporated by reference to Form 8-K dated December 15, 2004.
10.13	Series “DD” Common Stock Purchase Warrant, dated June 20, 2005, issued to the Maxim Group. Incorporated by reference to Form 8-K dated June 20, 2005 and filed June 21, 2005.
10.14	Series “EE-1” Common Stock Purchase Warrant, dated June 20, 2005, issued to RCC Ventures, LLC. Incorporated by reference to Form 8-K dated June 20, 2005 and filed June 21, 2005.
10.15	Series “EE-2” Common Stock Purchase Warrant, dated July 26, 2005, issued to RCC Ventures, LLC. Incorporated by reference to Exhibit 10.15 in the Form 10-K filed April 2, 2007.
10.16	Series “EE-3” Common Stock Purchase Warrant, dated August 21, 2006, issued to RCC Ventures, LLC. Incorporated by reference to Exhibit 10.16 in the Form 10-K filed April 2, 2007.
10.17	Agreement of Sale between Bioject Medical Technologies Inc. and Stickel Investments, LLC, dated January 31, 2006. Incorporated by reference to Form 8-K dated January 31, 2006 and filed February 2, 2006.
10.18	Note and Warrant Purchase Agreement dated March 8, 2006, by and among Bioject Medical Technologies Inc. and the Purchasers Listed on Schedule I thereto. Incorporated by reference to Form 8-K dated March 3, 2006 and filed March 9, 2006.
10.19	Form of Warrant related to Note and Warrant Purchase Agreement dated March 8, 2006. Incorporated by reference to Form 8-K dated March 3, 2006 and filed March 9, 2006.

70

Exhibit No.	Description
10.20	Security Agreement dated March 8, 2006, by and among Bioject Medical Technologies Inc., Bioject Inc. and the Secured Parties listed on the signature pages thereto. Incorporated by reference to Form 8-K dated March 3, 2006 and filed March 9, 2006.
10.21	Securities Purchase Agreement dated March 8, 2006, by and among Bioject Medical Technologies Inc. and the Purchasers listed on Exhibit A thereto. Incorporated by reference to Form 8-K dated March 3, 2006 and filed March 9, 2006.
10.22	Indemnity Agreement between Bioject Medical Technologies Inc. and Jerald S. Cobbs dated as of March 8, 2006. Incorporated by reference to Form 10-K for the year ended December 31, 2005.
10.23	2006 Term Loan and Security Agreement dated March 29, 2006 between the Company, Bioject, Inc. and Partners for Growth, L.P. Incorporated by reference to Form 8-K dated March 29, 2006 and filed on April 3, 2006.
10.24	2007 Term Loan and Security Agreement dated August 31, 2007 between Bioject Medical Technologies Inc., Bioject, Inc. and Partners for Growth, L.P. Incorporated by reference to Form 8-K dated August 31, 2007 and filed September 7, 2007.
10.24.1	Warrant, dated August 31, 2007, issued to Partners For Growth, L.P. Incorporated by reference to Form 8-K dated August 31, 2007 and filed September 7, 2007.
10.25	Forbearance No. 1, Limited Waiver and Modification to Loan and Security Agreement dated November 19, 2007 between Bioject Medical Technologies Inc. and Partners For Growth II, L.P. Incorporated by reference to Exhibit 10.1 in the Form 8-K filed November 21, 2007.
10.26	Convertible Note Purchase and Warrant Agreement dated November 19, 2007 between Bioject Medical Technologies Inc. and Edward Flynn. Incorporated by reference to Exhibit 10.2 in the Form 8-K filed November 21, 2007.
10.26.1	Form of Convertible Note Purchase and Warrant Agreement between Bioject Medical Technologies Inc. and each of Ralph Makar, David Tierney, Richard Stout and Christine Farrell. Incorporated by reference to Exhibit 10.3 in the Form 8-K filed November 21, 2007.
10.26.2	Form of Warrant issued by Bioject Medical Technologies Inc. to the Purchasers. Incorporated by reference to Exhibit 10.4 in the Form 8-K filed November 21, 2007.
10.26.3	Form of Convertible Promissory Note issued by Bioject Medical Technologies Inc. to the Purchasers. Incorporated by reference to Exhibit 10.5 in the Form 8-K filed November 21, 2007.
10.26.4	Form of Registration Rights Agreement between Bioject Medical Technologies Inc. and the Purchasers. Incorporated by reference to Exhibit 10.6 in the Form 8-K filed November 21, 2007.
10.27	Form of Convertible Note Purchase and Warrant Agreement dated December 5, 2007 between Bioject Medical Technologies Inc. and the Purchasers. Incorporated by reference to Exhibit 10.1 in the Form 8-K filed December 11, 2007.
10.27.1	Form of Warrant issued by Bioject Medical Technologies Inc. to the Purchasers. Incorporated by reference to Exhibit 10.2 in the Form 8-K filed December 11, 2007.
10.27.2	Form of Convertible Promissory Note issued by Bioject Medical Technologies Inc. to the Purchasers. Incorporated by reference to Exhibit 10.3 in the Form 8-K filed December 11, 2007.
10.27.3	Form of Registration Rights Agreement between Bioject Medical Technologies Inc. and the Purchasers. Incorporated by reference to Exhibit 10.5 in the Form 8-K filed November 21, 2007.
10.28	Series F Convertible Preferred Stock Purchase Agreement between Bioject Medical Technologies Inc. and Edward Flynn, Ralph Makar, David Tierney, Richard Stout and Christine Farrell. Incorporated by reference to Exhibit 10.1 in the Form 8-K filed January 23, 2008.
10.28.1	Registration Rights Agreement dated January 22, 2008 between the Company, Edward Flynn, Ralph Makar, David Tierney, Richard Stout and Christine Farrell. Incorporated by reference to Exhibit 10.2 in the Form 8-K filed January 23, 2008.
10.29*	Employment Agreement, dated October 1, 2007, between Bioject Medical Technologies Inc. and Ralph Makar.(1)
10.29.1*	Amendment to Executive Employment Agreement, dated November 13, 2007 between Bioject Medical Technologies Inc. and Ralph Makar.
14	Code of Ethics. Incorporated by reference to Form 10-K for the year ended December 31, 2003.
21	List of Subsidiaries. Incorporated by reference to Form 10-K for the year ended March 31, 1999.
23	Consent of Moss Adams LLP, Independent Registered Public Accounting Firm
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.
32.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
32.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.

(1) Certain portions of this exhibit have been omitted based on a request for confidential treatment; these portions have been filed separately with the Securities and Exchange Commission.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Bioject Medical Technologies Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on March 28, 2008:

BIOJECT MEDICAL TECHNOLOGIES INC.
(Registrant)
By:	/s/ RALPH MAKAR
	Ralph Makar
	President and Chief Executive Officer
	(Principal Executive Officer)

Pursuant to the request of the Securities Exchange Act of 1934, this report has been signed below on behalf of the Registrant and in the capacities indicated on March 28, 2008.

SIGNATURE	TITLE
/s/ RALPH MAKAR	Director and President
Ralph Makar	and Chief Executive Officer
	(Principal Executive Officer)
/s/ CHRISTINE M. FARRELL	Vice President of Finance
Christine M. Farrell	(Principal Financial and Accounting Officer)
/s/ DAVID S. TIERNEY	Chairman of the Board
David S. Tierney
/s/ JOSEPH F. BOHAN III	Director
Joseph F. Bohan III
/s/ RANDAL D. CHASE	Director
Randal D. Chase
/s/ JERALD S. COBBS	Director
Jerald S. Cobbs
/s/ EDWARD L. FLYNN	Director
Edward L. Flynn
/s/ BRIGID A. MAKES	Director
Brigid A. Makes
/s/ JOHN RUEDY, M.D.	Director
John Ruedy, M.D.

72

EX-10.3.1

EXHIBIT 10.3.1

DATE

BETWEEN:

BIOJECT MEDICAL TECHNOLOGIES INC.

AND:

EMPLOYEE NAME

A BIOJECT EMPLOYEE

STOCK OPTION AGREEMENT

SO-XXXX

BIOJECT EMPLOYEE

STOCK OPTION AGREEMENT

THIS BIOJECT EMPLOYEE STOCK OPTION AGREEMENT is made as of the _______ day of ________________.

BETWEEN:

BIOJECT MEDICAL TECHNOLOGIES INC.
20245 SW 95th Ave.
Tualatin, Oregon 97062	(“BMT”)

AND:

EMPLOYEE
Address
Address	(“Optionee”)

WHEREAS the Board of Directors and the shareholders of BMT have adopted BMT’s 1992 Stock Incentive Plan (the “Plan”) to attract and retain the services of selected employees, officers and directors of BMT and its subsidiaries (collectively the “Company”);

WHEREAS, outside of the Plan, but on terms and conditions identical to an option grant made pursuant to the Plan, BMT desires to grant to the Optionee an option to purchase shares of BMT’s Common Stock, without par value, in the amount indicated below (the “Option”);

WHEREAS, the Optionee is an employee of the Company, and BMT desires to advance its interests by affording the Optionee an opportunity to purchase shares in its capital stock as hereinafter provided; and

WHEREAS, the Option is being granted pursuant to the Executive Employment Agreement of even date herewith between the Optionee and BMT (the “Employment Agreement”);

NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties hereto agree as follows:

1. Shares, Option Price, Tax Status. BMT grants to the Optionee the right and option to purchase on the terms and conditions hereinafter set forth all or any part of an aggregate of XXX shares of the Common Stock of BMT at the price of $XXX per share. This Option is not intended to be an Incentive Stock Option, as defined under Section 422 of the Internal Revenue Code of 1986.

2. Option Term, Times of Exercise. The term during which the Option granted hereby may become exercisable shall commence on the date of this Agreement and shall end on DATE XX, 20XX (the “Expiration Date”), subject to earlier termination as provided herein. Subject to any vesting schedule described in paragraph 3, below, and except as specified in paragraph 5, below, the Option granted herein may be exercised and the shares purchased at any time during the Option term. Unless otherwise determined by the Stock Option Committee of the Board of Directors of BMT (the “Committee”), vesting of the Option shall not continue during an absence or leave, including an extended illness or on account of disability.

3. 3. Vesting Schedule.

(a) Optionee acknowledges his/her understanding that this Option is granted as an incentive for the satisfactory future performance by the Optionee of his/her assigned responsibilities and duties.

1

Accordingly, the Option granted hereby shall become vested and exercisable according to the following schedule: XXX shares on _____, XX, 20XX; XXX shares on _____, XX, 20XX; and XXX shares on _____, XX, 20XX.

Any Options that do not vest for any reason, for example, a service date is not reached or a performance level is not reached, will be forfeited to the Company and will again be available for issuance under the Plan.

In the event the Optionee ceases to be a full-time employee of the Company, any unvested portion of the Option will be deemed terminated effective on the last date of employment. Vesting will accelerate, and the Option shall be deemed earned and 100% vested, upon the occurrence of any of the following events:

(a) The approval by the shareholders of BMT of:

(1) any consolidation, merger or plan of share exchange involving BMT (a “Merger”) as a result of which the holders of outstanding securities of BMT ordinarily having the right to vote for the election of directors (“Voting Securities”) immediately prior to the Merger do not continue to hold at least 50% of the combined voting power of the outstanding Voting Securities of the surviving or continuing corporation immediately after the Merger, disregarding any Voting Securities issued or retained by such holders in respect of securities of any other party to the Merger;

(2) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, the assets of BMT; or

(3) the adoption of any plan or proposal for the liquidation or dissolution of BMT; or

(b) Any “person” or “group” (within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Act”)) shall, as a result of a tender or exchange offer, open market purchases or privately negotiated purchases from anyone other than BMT, have become the beneficial owner (within the meaning of Rule 13d-3 under the Act), directly or indirectly, of Voting Securities representing fifty percent (50%) or more of the combined voting power of the then outstanding Voting Securities.

4. Manner of Exercise. Shares may be acquired pursuant to the Option granted herein only upon receipt by BMT of notice in writing from the Optionee of the Optionee’s binding commitment to exercise the Option, specifying the number of shares which the Optionee desires to purchase and the date on which the Optionee agrees to complete the transaction, and, if required to comply with the Securities Act of 1933, as amended, or state securities laws, the notice shall include a representation that it is the Optionee’s present intention to acquire the shares for investment and not with a view to distribution. The certificates representing the shares shall bear any legends required by the Committee. On or before the date specified for completion of the purchase of shares pursuant to the Option, the Optionee must have paid BMT the full purchase price of such shares in cash or by check. No shares shall be issued until full payment has been made for such shares.

5. Option Right as Affected by Termination of Employment, Disability, or Death.

(a) Except as provided in the Employment Agreement, if the Optionee ceases to be an employee of the Company for any reason other than his/her death or disability, the Optionee may exercise the Option in whole or in part at any time prior to the Expiration Date or the expiration of three months after such termination, whichever shall first occur, but only if and to the extent the Optionee was entitled to exercise the Option at the date of such termination.

(b) In the event the Optionee’s employment with the Company terminates because the Optionee becomes disabled (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986), the Option granted herein may be exercised by the Optionee at any time prior to the Expiration Date or the

2

expiration of one year after the date of such termination, whichever first occurs, but only if and to the extent the Optionee was entitled to exercise the Option at the date of such termination.

(c) If the Optionee dies while employed by the Company, the Option granted herein may be exercised at any time prior to the Expiration Date or the expiration of one year after the date of death, whichever first occurs, but only if and to the extent the Optionee was entitled to exercise the Option on the date of death, and only by the person or persons to whom the Optionee’s rights under the Option shall pass by the Optionee’s will or by the laws of descent and distribution of the state or country of domicile at the time of death.

(d) To the extent that all or any portion of the Option is not exercised within the applicable period provided for in this paragraph 5, all further rights to purchase shares pursuant to the Option shall cease and terminate.

6. Non-Transferability of Option. The Option granted hereunder and the rights and privileges conferred hereby shall not be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of the Option or any right or privilege conferred hereby, contrary to the provisions hereof, or upon the levy of any attachment or similar process upon the rights and privileges conferred hereby, the Option and the rights and privileges conferred hereby shall immediately become null and void. Vested portions of this Option may be exercised during the lifetime of the Optionee only by the Optionee, or within the period after the Optionee’s death (described in paragraph 5, above), by the Optionee’s transferees by will or by the laws of descent and distribution, and not otherwise, regardless of any community property interest therein of the spouse of the Optionee, or such spouse’s successor in interest.

7. Changes in Capital Structure. If the outstanding shares of Common Stock of BMT are hereafter increased or decreased or changed into or exchanged for a different number or kind of shares or other securities of BMT or of another corporation by reason of any recapitalization, reclassification, stock split, combination or shares or dividend payable in shares, and if paragraph 10 does not apply, the Committee may unilaterally amend this Agreement to make appropriate adjustment in the number and kind of shares as to which the Option shall be exercisable, to the end that the Optionee’s proportionate interest is maintained as before the occurrence of such event. Notwithstanding the foregoing, the Committee shall have no obligation to effect any adjustment that would or might result in the issuance of fractional shares, and any fractional shares resulting from any adjustment may be disregarded or provided for in any manner determined by the Committee.

8. Rights of Optionee in Shares. Neither the Optionee nor his/her executor, administrators, heirs or legatees shall have any rights or privileges of a shareholder of BMT with respect to any shares issuable upon exercise of the Option, unless and until certificate(s) representing such shares shall have been issued and delivered.

9. Withholding Obligations. The Optionee shall, upon notification by BMT of any such amount due and prior to or concurrently with delivery of the certificate representing the shares, pay to BMT any amounts necessary to satisfy applicable federal, state and local tax withholding requirements. If additional withholding is or becomes required beyond any amount deposited before delivery of the certificates, the Optionee shall pay such amount to BMT on demand. If the Optionee fails to pay the amount demanded, the Company may withhold that amount from other amounts payable to the Optionee by the Company, including salary, subject to applicable law.

10. Effect of Reorganization or Liquidation.

(a) Cash, Stock, or Other Property for Stock. Except as provided in subparagraph (b), below, upon a merger, consolidation, reorganization, plan of exchange or liquidation involving BMT, as a result of which

3

the shareholders of BMT receive cash, stock or other property in exchange for or in connection with their Common Stock (any such transaction to be referred to in this paragraph as an “Accelerating Event”), the Option shall terminate, except as specified below, but the Optionee shall have the right during a 30-day period immediately prior to any such Accelerating Event (but following notice to Optionee), to exercise the Option in whole or in part, without any limitation on exercisability if full vesting occurs pursuant to the Employment Agreement.

(b) Stock for Stock. If the shareholders of BMT receive capital stock of another corporation (“Exchange Stock”) in exchange for their Common Stock in any transaction involving a merger, consolidation, reorganization, or plan of exchange, the Option shall be converted into an option to purchase shares of Exchange Stock, unless the Committee, in its sole discretion, determines that the Option shall not be converted, but instead shall terminate in accordance with the provisions of subparagraph (a) hereof. The amount and price of the converted option shall be determined by adjusting the amount and price of this Option to take into account the relative values of the Exchange Stock and the Common Stock in the transaction.

11. Notices. Any notice to be given under the terms of this Agreement shall be addressed to BMT in care of its President or Secretary at its office in Portland, Oregon, and any notice to be given to the Optionee shall be addressed to the Optionee at the address given on the first page of this Agreement, or at such other address as either party may hereafter designate in writing to the other. Any such notice shall have been duly given when enclosed in a properly sealed envelope addressed as aforesaid, registered or certified, and deposited (postage and registry or certification fee prepaid) in a post office branch regularly maintained by the Government of the jurisdiction in which the notice is mailed.

12. Effect of Agreement. This Agreement shall be binding upon and inure to the benefit of any successor or successors of BMT.

13. No Right to Employment. Nothing contained in this Agreement shall confer upon the Optionee any right with respect to the continuation of the Optionee’s office or employment nor shall anything contained in this Agreement interfere in any way with the right of BMT to adjust Optionee’s compensation from the level in existence at the time of the grant hereof. Nothing contained in this Agreement shall interfere in any way with the right of BMT or the Optionee to terminate Optionee’s employment with BMT.

14. Laws Applicable to Construction. This Option has been granted, executed and delivered as of the day and year first above written at Portland, Oregon, and the interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Oregon. The parties agree that the forum for resolution of any dispute arising out of, or relating to, the Agreement shall be by arbitration in Multnomah County, Oregon in accordance with the provisions of the Arbitration Services of Portland, Inc. The prevailing party will be entitled to recover from the other party an amount determined reasonable as attorney fees.

15. General. BMT shall, at all times during the term of the Option, reserve and maintain such numbers of shares in its capital stock as will be sufficient to satisfy the requirements of this Option, shall pay all original issue and transfer taxes with respect to the issue and transfer of shares pursuant hereto and all other fees and expenses necessarily incurred by BMT in connection therewith, and will use its best efforts to comply with all laws and regulations which shall be applicable thereto.

16. Agreement Subject to Plan. The Option and this Agreement are subject to all the provisions of the Plan (even though the Option is made outside of the Plan), the provisions of which are hereby made a part of this Agreement, and are further subject to all interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant to the Plan. In the event of any conflict between the provisions of this Agreement and those of the Plan, the provisions of the Plan shall control. Optionee, by execution hereof, acknowledges receipt of the Plan and any interpretations, amendments, rules and

4

regulations adopted pursuant to the Plan as they currently exist and acceptance of the terms and conditions of the Plan, such interpretations, amendments, rules and regulations and of this Agreement.

17. Integration. This Agreement, the Employment Agreement and the Plan contain the entire agreement among the parties with respect to the matters referred to herein and supersede all previous negotiations, agreements, commitments and writings of any nature whatsoever.

IN WITNESS WHEREOF, the parties have executed this Agreement in duplicate.

BIOJECT MEDICAL TECHNOLOGIES INC.

By:

Christine M. Farrell

Vice President of Finance

OPTIONEE

EMPLOYEE

SSN

5

EX-10.29

EXHIBIT 10.29

EXECUTIVE EMPLOYMENT AGREEMENT

This Executive Employment Agreement (the “Agreement”) is dated October 1, 2007 (the “Effective Date”) between:

BIOJECT MEDICAL TECHNOLOGIES INC. (“BMT”), a Corporation incorporated under the laws of the State of Oregon having its principal offices at 20245 SW 95^th Ave, Tualatin, Oregon 97062

BIOJECT INC. (“Bioject”), a Corporation incorporated under the laws of the State of Oregon having its principal offices at 20245 SW 95^th Ave, Tualatin, Oregon 97062 (collectively referred to herein as the “Company”)

AND:

Ralph Makar
	(“Executive”).

RECITALS

1. The Company desires to secure the services and expertise of Executive and to ensure the availability of Executive to the Company; and

2. Executive desires to serve in the employ of the Company on a full-time basis for the period and upon the terms and conditions provided for in this Agreement.

NOW THEREFORE, in consideration of the premises and mutual covenants contained herein, the parties noted above agree as follows:

Section 1 - Employment, Duties and Term

1.1 Employment. Effective as of the first date set forth above, the Company agrees to employ Executive in the position of President and Chief Executive Officer, and Executive hereby accepts such employment, on the terms and conditions set forth herein. Executive’s first day of employment hereunder shall be October 1, 2007 (the “Initial Employment Date”).

1.2 Approval by the Board. The Company represents that the appointment of Executive to the position referred to in Section 1.1 has been approved by the Board of Directors of the Company (the “Board”) and that all corporate action required to effect the appointment has been taken.

1.3 Duties. The Executive shall devote his full-time and best efforts to the Company and to fulfilling the duties of his position which shall include all duties commonly incident to the offices of President and Chief Executive Officer. The Executive hereby accepts and agrees to such engagement of services, and will devote himself to the operation of the Company’s business. Executive has disclosed to the Company his involvement in and with the entities listed on Exhibit C hereto. In no event shall Executive’s interest in or involvement with any entity listed on Exhibit C be deemed a violation of this Section 1.3. The Executive shall comply with the Company’s policies and procedures to the extent they are not inconsistent with this Agreement, in which case the provisions of this Agreement shall prevail. Executive shall comply with all legal requirements applicable to his position, including without limitation, requirements arising out of the Sarbanes-Oxley Act of 2002. The Company shall provide Executive with ongoing training and legal counsel with respect to his Sarbanes-Oxley Act of 2002 responsibilities.

1.4 Reporting. In conducting Executive’s duties under this Agreement, Executive shall report to the Company’s Board of Directors.

Page 1

Executive Employment Agreement

1.5 Location of Employment. The Executive shall conduct his duties under this Agreement primarily at the offices of the Company in Tualatin, Oregon, or such other geographical locations as shall be reasonably required in order to assure the efficient and proper operation of the Company. In the event that the primary location for the conduct of Executive’s duties is moved more than thirty (30) miles outside Tualatin, Oregon, Executive will be offered a choice to either relocate to the new location, or to accept severance benefits as described in Section 4.4, subject to Executive’s compliance with Section 4.4.4.

Section 2 - Base Compensation and Benefits

2.1 Base Salary. For all services rendered under this Agreement, the Company shall pay Executive a Base Salary at an annual rate of $300,000, commencing as of the Initial Employment Date. Company shall pay Executive in approximately equal monthly amounts pursuant to its standard payroll schedule. All amounts paid to Executive under this Agreement shall be reduced by such amounts as are required or permitted to be withheld by law. Executive’s Base Salary shall be subject to periodic adjustment by the Board. The Board will perform performance reviews with respect to the periods ending December 31, 2007, June 30, 2008, December 31, 2008 and annually thereafter, provided that the Board shall be under no obligation to increase Executive’s Base Salary in connection with any such review. For purposes of this Agreement, “Base Salary” shall mean regular salary paid on a periodic basis exclusive of benefits, bonuses, stock options, restricted stock unit awards or incentive payments.

2.2 Benefits. Subject to eligibility requirements, Executive shall be entitled to receive such insurance and other employment benefits as are available to other executive officers of Company under the same terms and conditions applicable to such other executive officers, which shall initially consist of medical insurance, dental and vision insurance, participation in the Company’s flexible spending account (with an employer contribution), short- and long-term disability insurance, life insurance, supplemental life insurance, supplemental medical expense insurance (AFLAC), participation in the Company’s 401(k) plan and employee stock purchase plan, and credit union and Costco membership. Such benefits may change from time to time or may be eliminated by Company. In addition, the Company shall pay the premiums for $1 million in supplemental life, death and disability insurance on behalf of Executive.

2.3 Business Expenses. The Company shall, in accordance with, and to the extent of, its policies in effect from time to time, reimburse all ordinary and necessary business expenses reasonably incurred by Executive in performing his duties as an employee of the Company, provided that Executive accounts promptly for such expenses to the Company in the manner prescribed from time to time by the Company.

2.4 Vacation. Executive shall be entitled to vacation, flexible time off, paid holidays and sick leave according to the standard policies and procedures of the Company; provided that Executive shall be entitled to 25 vacation days per year, with the unused vacation in any year to be available for use in subsequent years.

2.5 Disability. Should Executive become Disabled and unable to perform substantially all of his duties under this Agreement, as documented by an independent physician selected jointly by Executive and the Company, the Company will continue paying Executive seventy-five percent (75%) of Executive’s then-current Base Salary for a period of not greater than six (6) months from the Disability date. Should the Disability continue beyond the initial six (6) months, payments by the Company will then be reduced to fifty percent (50%) of Base Salary for any remaining period of Disability not to exceed an additional six (6) months. Health and dental insurance and other benefit coverage will continue for the duration of these payments, for a maximum time period not to exceed twelve (12) months. Should payments to Executive under worker’s compensation and/or disability insurance programs, when combined with Company payments, exceed seventy-five percent (75%) of Executive’s Base Salary, the Company will reduce its payment by the excess amount. For purposes of this Agreement, “Disability” or “Disabled” shall mean the inability of Executive to perform the essential functions of his position under this Agreement, with or without reasonable accommodation, because of physical or mental incapacity for 180 days during any consecutive twelve-month period, as reasonably determined by the Board after consultation with a qualified physician selected by the Board.

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Executive Employment Agreement

2.6 Relocation Expenses. The Company shall pay to relocate Executive and his immediate family from Executive’s home in Morris Plains/Parsippany, New Jersey to the Portland, Oregon area, provided that the Company’s obligations for such relocation shall not exceed $30,000. The Company shall provide Executive with home search assistance.

Section 3 - Equity Awards; Incentive Compensation

3.1 Stock Options. Effective on the Initial Employment Date, the Company will grant Executive a non-qualified stock option outside of, but on terms and conditions substantially identical to, the terms and conditions of the Bioject Medical Technologies, Inc. Restated 1992 Stock Incentive Plan, as amended (the “Plan”), to purchase 150,000 shares of BMT Common Stock (the “Option”). The exercise price of the Option shall be the 10-day Volume Weighted Average Price of BMT Common Stock as reported by Bloomberg for the ten trading days ending on the Initial Employment Date. The Option will vest 1/3 annually on each of the first three anniversaries of the Initial Employment Date and have a term of 10 years. BMT will provide Executive with a Stock Option Agreement that evidences the Option. The Stock Option Agreement sets forth the specific terms and conditions of the Option, including, without limitation, the vesting schedule and the terms under which Executive will forfeit the Option (including termination of Executive’s employment with the Company pursuant to Section 4.2). The grant is subject to Executive’s execution of the Stock Option Agreement. In the event that there is any inconsistency between the Stock Option Agreement and this Agreement, this Agreement shall control.

3.2 Restricted Stock Units. Effective on the Initial Employment Date, the Company will grant Executive a restricted stock unit of 100,000 units (the “Award”), with each unit representing the right to receive one share of BMT Common Stock, subject to certain vesting conditions and forfeiture provisions. The Award will be made outside of, but on terms and conditions substantially identical to, the Plan. The Award shall vest as to 1/3 of the units annually on each of the first three anniversaries of the Initial Employment Date. Following the Initial Employment Date, BMT will provide Executive with a Restricted Stock Unit Grant Agreement that evidences the Award. The Restricted Stock Unit Grant Agreement sets forth the specific terms and conditions of the Award, including, without limitation, the vesting conditions as well as the terms under which Executive will forfeit the Award (including termination of Executive’s employment with the Company pursuant to Section 4.2). The Award is subject to Executive’s execution of the Restricted Stock Unit Grant Agreement. In the event that there is any inconsistency between the Restricted Stock Unit Agreement and this Agreement, this Agreement shall control.

3.3 Incentive Compensation. Executive shall be entitled to the following incentive compensation:

(i) with respect to the period commencing on the Initial Employment Date and ending December 31, 2007, Executive shall be eligible to receive a target of 150,000 restricted stock units and a target of 25% of his then-current Base Salary based upon his achievement of the milestones for such period set forth on Exhibit A as determined by the Board in its sole discretion which shall be exercised reasonably;

(ii) with respect to each of (A) the period commencing January 1, 2008 and ending December 31, 2008 and (B) the period commencing January 1, 2009 and ending December 31, 2009, Executive shall be eligible to receive a target of 200,000 restricted stock units and a target of 25% of his then-current Base Salary for each such period based upon his achievement of the milestones for such period set forth on Exhibit A as determined by the Board in its sole discretion (it being understood that the Board may in its discretion elect to award up to 150,000 of the possible 200,000 restricted stock unit target relating to 2008 in connection with Executive’s mid-year performance review for such year and the degree of achievement of Executive’s milestones at such time.

Any restricted stock units awarded pursuant to this Section 3.3 will be made outside of, but on terms and conditions substantially identical to, the Plan, will vest 1/3 annually on the first three anniversaries of the date of grant of such awards and shall be evidenced by a Restricted Stock Unit Award Agreement. None of the restricted stock units described in this Section 3.3 shall be deemed granted, awarded or outstanding

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Executive Employment Agreement

until such time as the Board has awarded such restricted stock units based on Executive’s achievement of the applicable milestones. The Restricted Stock Unit Grant Agreement sets forth the specific terms and conditions of the award, including, without limitation, the vesting conditions as well as the terms under which Executive will forfeit the award (including termination of Executive’s employment with the Company pursuant to Section 4.2). The award is subject to Executive’s execution of the Restricted Stock Unit Grant Agreement. In the event that there is any inconsistency between the Restricted Stock Unit Agreement and this Agreement, this Agreement shall control.

3.4 Effect of Change of Control. Immediately prior to the consummation of any of the transactions described in Sections 4.7.1.1, 4.7.1.2 or 4.7.1.3 (i) all outstanding stock options held by Executive shall vest and Executive shall have until the third anniversary of the date of such acceleration (but not later than the original term of the option) to exercise such options, at which time the options will terminate and (ii) all outstanding restricted stock units held by Executive shall vest. In addition, immediately prior to the consummation of any of the transactions described in Sections 4.7.1.1, 4.7.1.2 or 4.7.1.3 BMT shall award Executive additional shares of BMT Common Stock as a stock bonus under the Plan payable immediately (the “CIC Bonus”). The maximum number of shares subject to the CIC Bonus shall be equal to 650,000 less the number of restricted stock units granted prior to the payment date of the CIC Bonus pursuant to Sections 3.2 and 3.3 of this Agreement (the “Cap”). The Board, in its sole discretion, shall elect to pay the CIC Bonus pursuant to one of the following alternatives:

(A) Issuing a stock bonus for a number of shares equal to two times the aggregate number of options and restricted stock units previously awarded pursuant to Sections 3.1, 3.2 and 3.3, subject to the Cap; or

(B) If BMT Common Stock is valued at more than $3.00 per share in the Change of Control transaction, issuing a stock bonus for a number of shares equal to the Cap.

Section 4 - Term, Termination

4.1 Term. The term of this Agreement shall commence on the date first written above (the “Effective Date”). It shall continue for an initial term of one (1) year, subject to the early termination provisions set forth in this Section 4. Upon expiration of the initial term, this Agreement will be automatically extended for additional one-year terms unless Executive or the Company shall, upon 120 days written notice to the other, elect not to extend this Agreement for an additional one-year term. Non-renewal of the Agreement by the Company shall be deemed a termination pursuant to Section 4.3 and shall be subject to the severance benefits related to termination under Section 4.4.

4.2 Termination by the Company For Cause. At any time during the term of this Agreement, the Company may terminate this Agreement and Executive’s employment immediately for “Cause” as that term is defined herein, upon written notice to Executive.

4.2.1. “Cause” means any one of the following: (a) a material breach of Executive’s duties hereunder, followed by Executive’s failure to cure such breach within a reasonable period of time after a written demand for such satisfactory performance which specifically and with reasonable detail identifies the manner in which it is alleged that Executive has not satisfactorily performed such duties, provided, however, that no termination for Cause pursuant to this subparagraph 4.2.1 will be effective until after Executive, together with Executive’s counsel, have had an opportunity to be heard before the Board; (b) a criminal act (excluding motor vehicle violations) by the Executive reflecting adversely on the business or reputation of the Company; or (c) Executive, in his personal capacity, is indicted or sanctioned or enters into a consent decree, in connection with any investigation of, allegation of wrongdoing by, or other formal proceeding against Executive, by the United States Food and Drug Administration or the United States Securities and Exchange Commission, whether related to the business of the Company or to any other past employment or activity of Executive.

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Executive Employment Agreement

4.2.2. In the event of Executive’s termination for Cause pursuant to Section 4.2, Executive shall be paid Base Salary and Company-sponsored benefits in effect at the time of termination for sixty (60) days following the date of termination. All other forms of compensation payable to Executive pursuant to Section 3 shall terminate on the date of termination. Executive shall not be entitled to any additional compensation or severance.

4.3 Termination by the Company Without Cause; Termination by Executive for Good Reason. The Company may terminate this Agreement and Executive’s employment at any time without Cause upon giving Executive at least 120 days written notice; provided, however, that the Company shall have the option of making termination of the Agreement and termination of Executive’s employment effective immediately upon notice, in which case, in addition to the payments provided for by Section 4.4 below, Executive shall be paid his Base Salary through a notice period of 120 days. Executive may terminate this Agreement and his Employment for Good Reason upon giving the Company at least 120 days written notice specifying the reason and failure of the Company to remedy the condition within 30 days. “Good Reason” means a material reduction in Executive’s title or duties. Termination of employment because of disability under Section 2.5 and termination of employment because of death under 4.1 are not terminations under this Section 4.3 or Section 4.4.

4.4 Severance Benefits. If (i) the Company gives notice pursuant to Section 4.1 that the term of this Agreement shall not be extended or shall not be renewed, (ii) this Agreement and Executive’s employment are terminated by the Company pursuant to Section 4.3, or (iii) Executive terminates his employment for Good Reason pursuant to Section 4.3, then as of the effective date of Executive’s termination:

4.4.1. The Company shall pay Executive as severance pay an amount equivalent to twelve (12) months of Executive’s then-current Base Salary plus accrued and unused vacation (the “Severance Pay”). The Company may pay such Severance Pay on dates generally coinciding with its regular payroll schedule or in a single lump sum payment in its sole discretion; and

4.4.2. An amount equivalent to the premium Executive would pay if Executive were to elect to continue Executive’s group health benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) for a period of twelve (12) months; and

4.4.3. Unless already accelerated pursuant to Section 3.4 and notwithstanding any provision in any award agreement to the contrary, all outstanding stock options and restricted stock unit awards held by Executive as the effective date of Executive’s termination shall become fully vested and Executive shall have two years from the date of termination to exercise such options (but not later than the original term of the option); and

4.4.4. As a condition of receiving the compensation and other benefits pursuant to this Section 4.4, Executive shall sign, deliver and not revoke a release of claims in a reasonable form to be provided by the Company at the time of termination.

4.5 Termination by Executive. The Executive may terminate this Agreement at any time by giving 120 days prior written notice to the Company. Upon termination of this Agreement by Executive pursuant to this Section 4.5, Executive shall be paid unpaid salary and accrued and unpaid vacation through the date of termination. All other forms of compensation payable to Executive pursuant to Section 2 shall terminate on the date of termination. Executive shall not be entitled to any additional compensation or severance.

4.6 Termination Upon Death. This Agreement shall terminate immediately upon Executive’s death. In the event of Executive’s death:

4.6.1. The Company shall pay to Executive’s estate the Base Salary otherwise payable to Executive through the last day of the calendar month in which Executive’s death occurs and for a period of sixty (60) days thereafter.

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Executive Employment Agreement

4.6.2. As expeditiously as possible after Executive’s death the Company shall pay or reimburse Executive’s estate for all expenses incurred pursuant to Section 2.3 prior to such death.

4.7 Change in Control. If at any time during the term of this Agreement a Change in Control (as defined below) of the Company occurs, then, as to such Change in Control, the Company will utilize its best efforts to make appropriate provisions to preserve the rights and interests of Executive pursuant to this Agreement. For purposes of this Agreement, a “Change in Control” shall mean the occurrence of any of the following events:

4.7.1. The approval by the shareholders of BMT of:

4.7.1.1. any consolidation, merger or plan of share exchange involving BMT (a “Merger”) as a result of which the holders of outstanding securities of BMT ordinarily having the right to vote for the election of directors (“Voting Securities”) immediately prior to the Merger do not continue to hold at least 50% of the combined voting power of the outstanding Voting Securities of the surviving or continuing corporation immediately after the Merger, disregarding any Voting Securities issued or retained by such holders in respect of securities of any other party to the Merger;

4.7.1.2. any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, the assets of BMT; or

4.7.1.3. the adoption of any plan or proposal for the liquidation or dissolution of BMT.

4.7.2. Any “person” or “group” (within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Act”)) shall, as a result of a tender or exchange offer, open market purchases or privately negotiated purchases from anyone other than BMT, have become the beneficial owner (within the meaning of Rule 13d-3 under the Act), directly or indirectly, of Voting Securities representing fifty percent (50%) or more of the combined voting power of the then outstanding Voting Securities.

4.8 Acts Upon Termination. Upon termination of Executive’s employment with the Company, all computers, equipment, documents, records, notebooks, and similar repositories of or containing Confidential Information, including copies thereof, then in Executive’s possession, whether prepared by Executive or others, will be delivered to the Company within thirty (30) days of such termination. The obligations of Executive in Section 5 of this Agreement shall survive any termination of Executive.

4.9 Entire Termination Payment. The compensation provided for in this Section 4 shall constitute Executive’s sole remedy for termination of this Agreement by either party.

4.10 Resignation from the Board. Upon termination of Executive’s employment with Company for any reason, Executive shall offer his resignation as a member of the Board and as an officer or director of any subsidiary or affiliate of the Company in which he/she holds such positions.

Section 5 - Confidentiality, Invention Ownership Agreement and Noncompetition Agreement

5.1 Executive agrees to execute and deliver and abide by the Confidentiality, Invention Ownership Agreement and Noncompetition Agreement in the form attached hereto as Exhibit B (the “Confidentiality and Noncompetition Agreement”). Upon the termination of Executive’s employment, Executive shall return all confidential information of any type that that belongs to the Company, or any other related or affiliated entity, or a third party. Executive acknowledges that Executive’s obligations of confidentiality extend beyond the termination of Executive’s employment as dictated by the Confidentiality and Noncompetition Agreement. Executive acknowledges and agrees that upon Executive’s termination of employment with the Company for any reason, Executive shall be bound by the provisions set forth in the Confidentiality and Noncompetition Agreement as if those provisions were set forth herein. Executive also acknowledges that

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Executive Employment Agreement

Executive’s obligations of noncompetition and nonsolicitation extend beyond the termination of Executive’s employment for any reason as dictated by the Confidentiality and Noncompetition Agreement.

Section 6 - General Provisions

6.1 Notices. All notices, requests and demands given to or made pursuant hereto shall, except as otherwise specified herein, be in writing and shall be deemed to have been duly given to any party when delivered personally (by courier service or otherwise), when delivered by facsimile and confirmed by return facsimile, or three days after being mailed by first-class mail, postage prepaid and return receipt requested in each case to the applicable address as set forth at the beginning of this Agreement. Either party may change its address, by notice to the other party given in the manner set forth in this Section.

6.2 Caption. The various headings or captions in this Agreement are for convenience only and shall not affect the meaning or interpretation of this Agreement.

6.3 Venue and Jurisdiction/Controlling Law. For any claim or cause of action arising under or relating to this Agreement, the Company and Executive consent to the exclusive jurisdiction of the Multnomah County, Oregon Superior Court, or a federal court serving Portland, Oregon, and waive any objection based on jurisdiction or venue, including forum non conveniens; provided, however, if the Company seeks injunctive relief, it may file such action wherever in its judgment relief might most effectively be obtained. Oregon law shall apply.

6.4 Mediation. In case of any dispute arising under this Agreement which cannot be settled by reasonable discussion, except for Company’s right to seek injunctive relief pursuant to the terms of the Confidentiality and Noncompetition Agreement attached hereto as Exhibit B, the parties agree that, prior to commencing litigation, they will first engage the services of a professional mediator agreed upon by the parties and attempt in good faith to resolve the dispute through confidential nonbinding mediation. Each party shall bear one-half of the mediator’s fees and expenses and shall pay all of its own attorneys’ fees and expenses related to the mediation.

6.5 Attorney Fees. If any action at law, in equity or by arbitration is taken to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled, including fees and expenses on appeal.

6.6 Construction. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this Agreement.

6.7 Waivers. No failure on the part of either party to exercise, and no delay in exercising, any right or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right or remedy granted hereby or by any related document or by law.

6.8 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns, and shall be binding upon Executive, his administrators, executors, legatees, and heirs. In that this Agreement is a personal services contract, it shall not be assigned by Executive.

6.9 Exhibits. The following exhibits are attached hereto and by this reference incorporated herein:

Exhibit A – Performance Milestones

Exhibit B – Confidentiality and Noncompetition Agreement

Exhibit C – Summary of Outside Involvement.

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Executive Employment Agreement

6.10 Modification. This Agreement may not be and shall not be modified or amended except by written instrument signed by the parties hereto.

6.11 Entire Agreement. This Agreement constitutes the entire agreement and understanding between the parties hereto in reference to all the matters herein agreed upon. This Agreement replaces and supersedes all prior agreements or understandings of the parties hereto with respect to the subject matter hereof.

In witness whereof, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written.

Bioject Inc. Bioject Medical Technologies, Inc.		Executive
By:	/s/ Christine M. Farrell	/s/ Ralph Makar
Title: Date:	Vice President of Finance October 1, 2007	Date: October 1, 2007

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Executive Employment Agreement

EXHIBIT A

Business Goals for Bioject:

Milestones for Enhanced Incentives for CEO Start Date to Year-End 2007

Programs under direct control of CEO

• Identify focused list (e.g., 2 to 5) of potential drug candidates for consideration as Development Product (DP = device + drug) for own account [Present to Board in Q4 07]

• Measurement – Hard copy of presentation for the Board [Level 1]

• Measurement – Agreement of Board to pursue at least one target (could be previously recognized potential target, e.g., *, *, *, etc) [Level 2]

• Measurement – Agreement of Board to pursue new targets, not previously identified [Level 3-5]

30% total weight

• Finalize (e.g., both party sign off) all current ongoing negotiations

• Measurement – At least one agreement signed (*, * * *, or *) [Level 1]

• Measurement – Two agreements signed [Level 2]

• Measurement – All agreements signed with clear Iject development strategy [Level 3]

50% total weight

• Establish new business and partnership agreements

• Objective Measurement – Deliver agreed to deal term-sheet [Level 1]

• Objective Measurement – Signed agreement by both parties [Level 2]

10% total weight

• Begin institutional, investor presentations [ Level 1]

5% total weight

• M&A discussions [ Identification, Level 1, Term sheet, Level 2, Deal, Level 3]

5% total weight

Total levels = 14

* This material has been omitted pursuant to a request for confidential treatment and has been filed separately with the Commission.

Exhibit A - Page 1

Executive Employment Agreement

The higher the Level, the greater the incentive (cash/stock/options) granted for achieving the particular goal.

Upon completion of each time period, the BOD directors (Compensation Committee) will review all the levels achieved for each weighting and based upon a comprehensive assessment decide to award up to an additional 20% of the additional restricted stock unit award for year-end 2007 and up to an additional 50% of the additional restricted stock units award for all other time periods. Greater than 100% percentage allocations would allow for a larger amount of awards to be granted when there has been less than 100% earned in previous periods (e.g., allows for slippage of goals into the next period) and/or when goals have been exceeded (as decided by the BOD) in the current period. However, the total number of restricted stock units allocated will not exceed the maximum of 650,000 restricted shares in the time period specified (2007 to 2009). See Tables at end of document for calculations of incentive bonuses and additional incentive bonuses

Performance Review First Half of 2008 (January to June 2008):

• Maintain organization in the black per existing business plan (e.g., positive cash flow) on an operating cash basis

• Measurement – P&L, Financial Statements [Level 1 maintain plan]

• Measurement – Improvements over existing business plan [Incentive Levels 2-5]

• Additional incentives for any new profitable agreements signed

• Initiate Development Product (DP = device + drug) for own account

• Measurement – Agreement from Board on the plan of action for previously identified candidates [Level 1]

• Measurement – Term sheet(s) established for 1-3 new product(s)/drug(s) [Level 2-4]

• Measurement – Development plan established [Level 5]

• Explore offshore outsource production for Spring device

• Measurement – Identify one or more potential production partner for Spring device [Level 1]

• Measurement – Initiate production term-sheet [Level 2]

• Measurement – Definitive production agreement [Level 3]

• Take action on agreed upon priorities [From Q4 2007 Above]

• Measurement – execution of business plan (e.g., M&A discussions, progress on new business agreements and partnerships, new target identification, improve product quality, expand intellectual property base, etc.)

• Measurement – Levels vary based upon degree of accomplishment as agreed to with the Board in Q4 of 2007 (Levels 1-7)

Total levels 20

g Upon completion of mid-year 2008 (June 30, 2008) performance review, the BOD may decide to allocate enhanced incentives (e.g., Restricted Stock Units) for CEO and/or a permanent merit increase in salary and/or percentage cash bonus allocation.

Exhibit A - Page 2

Executive Employment Agreement

Milestones for Enhanced Incentives for CEO for 2008

• Increase sales and profitability over 2007 existing plan

• Measurement – P&L, Financial Statements [Level 1: QTR 08 vs QTR 07 above existing plan]

• Measurement – P&L, Financial Statements [Level 2: Year 08 vs Year 07 above existing plan]

• Measurement – P&L, Financial Statements [Levels 3-7: 5% – 25% increase above existing plan]

• Measurement – Additional incentives for new business that increases above 25% in either target (Level 8)

• Additional incentives for any new profitable agreements signed (Levels 9-10)

25% total weight

• Continue Development Product (DP = device + drug) for own account

• Measurement – Present DP business plan to investment community [Level 1]

• Measurement – Raise capital to secure Development Product(s) based on higher market value[Level 2]

• Measurement – Initiate development program [Level 3]

• Measurement – Additional incentives for the amount of capital raised & the value of the buy-in share price for new investors (Levels 4-5)

30% total weight

• Initiate offshore outsource production for Spring device

• Measurement – Signed agreement & product production initiated [Level 1]

• Measurement – Additional incentives based on the scale of cost reductions and increased product margin (Levels 2-3)

20% total weight

• Increase in shareholder value based upon the success of the CEO to implement the vision, strategy and execution elements since starting the job

• Measurement – Promote “new company” and value of Specialty Pharma organization at major investor/pharma/biotech meetings (Level 1)

• Measurement – Linked CEO initiatives to the total increase in share price [e.g., compare the VWAP (Volume Weighted Average Price) in the last month of 2008 to volume weighted average price (VWAP) over the last month of 2007 (Level 2)

• Measurement – Level 1 to 10 based on share price increase of 25%, 50%, 75%, 100%, 150%, 200%, 250%, 300%, 400%, 500%; Additional incentives for share price increases above 500% (Levels 3-12)

25% total weight

Total Levels = 30

Exhibit A - Page 3

Executive Employment Agreement

2009 (January to December 2009):

• Increase sales and profitability over existing 2008 plan

• Measurement – P&L, Financial Statements [Level 1: existing plan QTR 09 vs QTR 08]

• Measurement – P&L, Financial Statements [Level 2: existing plan Year 09 vs Year 08]

• Measurement – P&L, Financial Statements [Levels 3-7: 5%—25% increase] Measurement – Additional incentives for increases above 25% in either target (Level 8)

• Additional incentives for any new agreements signed (Level 9-10)

25% total weight

• Continue Development Product (DP = device + drug) for own account and leverage in order to maximize shareholder value (e.g., exit strategy via merger, sale of company)

• Measurement – Continue DP process with necessary outsourcing [Level 1]

• Measurement – Promote “new company” and value of Specialty Pharma organization at major investor/pharma/biotech meetings [Level 2]

• Measurement – Explore strategies for added shareholder value creation (e.g., exit strategy via merger/sale of company with potential partner/acquirer) [Level 3]

• Measurement – Complete exit strategy (e.g., merger, sale of company, etc., in order to maximize shareholder value) [Level 4]

30% total weight

• Continue offshore outsource production for Spring device(s)

• Measurement – Additional incentives based on the scale of cost reductions and increased product margin for additional device(s) (Levels 1-3)

20% total weight

• Increase in shareholder value based upon the success of the CEO to implement the vision, strategy and execution elements from 2008

• Measurement – Linked to the total increase in share price [e.g., compare VWAP for December 09 to December 08VWAP (Level 1-3)

• Measurement – Level based on share price increase of 25%, 50%, 75%, 100%, 150%, 200%, 250%, 300%, 400%, 500% for 2009 vs. 2008; Additional incentives for share price increases above 500%. For company sale or merger, then the measurement used would be the closing share price as compared to the December 08 VWAP (e.g., VWAP for the last month of the prior year). (Levels 4-13)

25% total weight

Total levels = 30

TABLE 1

Incentive award granted if goals below cutpoint for 100% are achieved

Period	% of bonus incentive per each level achieved
2007	9	%
First half 2008	7	%
2008	5	%
2009	5	%

Example of calculation of incentive awards for CEO for 2008 if levels below the cutpoint for additional awards are not achieved

Exhibit A - Page 4

Executive Employment Agreement

Goal Achieved	Level achieved
P&L, Financials	6
Product Development	3
Offshore Outsourcing Plus Significant cost reductions and increased product margin	1
Shareholder value	4
TOTAL	14

CEO would be awarded 70% (14 X 5%) of 200,000 restricted stock units (the maximum) = 140,000 and a cash bonus equal to 17.5% (70% X 25% ) of base salary assuming that no incentive awards had been granted at midyear 2008.

TABLE 2

Example of calculations of additional incentive awards when additional goals are achieved beyond those that merit a 100% award

Period	Number of levels	Cut point for 100% award Number of levels	% additional award for each level above cutpoint		Range of additional awards expressed as %
2007	14	11	7	%	107-121	%
First half 2008	20	14	8	%	108-148	%
2008	30	20	5	%	105-150	%
2009	30	20	5	%	105-150	%

Exhibit A - Page 5

Executive Employment Agreement

EXHIBIT B

Confidentiality, Non-Compete, Non-Solicitation and Inventions Agreement

The undersigned, Ralph Makar (the “Employee”), acknowledges, as of the date of this Agreement, that (a) during the course of Employee’s employment with Bioject Medical Technologies, Inc. and Bioject Inc. (collectively, the “Company”), Employee has had and will continue to have access to confidential information of the Company not readily available to the public and (b) Employee has been and will continue to be employed in a position of trust and confidence. In consideration of such employment by the Company and access to confidential information of the Company, Employee agrees as follows:

1. Confidential Information. As used herein, the term “Confidential Information” means: (a) proprietary information of the Company such as any information which constitutes, represents, evidences or records a secret scientific, technical, marketing, production or management information, design, process, procedure, formula, invention or improvement; (b) information designated by the Company as confidential or which Employee knows or should know is confidential; and (c) information provided to Company by third parties which Company is obligated to keep confidential. It also includes, but is not limited to, trade secrets as defined under the Uniform Trade Secrets Act, all information relating to Company’s suppliers and customers, business strategies, pricing, technology, methods, techniques, procedures, products, costs, employee compensation, marketing plans, leases, computer programs or systems, inventions, developments, and trade secrets of every kind and character. “Confidential Information” shall not include information that Employee can establish (i) was known in the public domain prior to the time of disclosure to Employee by the Company; (ii) becomes publicly known and made generally available after disclosure to Employee by the Company through no action or inaction of Employee; and (iii) is in the possession of Employee, without confidentiality restrictions, at the time of disclosure by the Company as shown by Employee’s files and records immediately prior to the time of disclosure. Employee acknowledges that all Confidential Information is a valuable asset of the Company and shall continue to be the exclusive property of the Company whether or not prepared in whole or in part by Employee and whether or not disclosed to Employee or entrusted to his or her custody in connection with his or her employment by the Company.

2. Nondisclosure and Nonuse. Unless authorized or instructed in writing by the Company, or required by law, Employee will not, except as required in the course of the Company’s business, during or after his or her employment, disclose to others or use any Confidential Information, unless and until, and then only to the extent that, such items become available to the public, other than by Employee’s act or failure to act. In addition, Employee agrees to use his or her best efforts to prevent accidental or negligent loss or release to any unauthorized person of the Confidential Information. Employee will deliver immediately to the Company upon its request all Confidential Information and all copies thereof. Employee will retain no excerpts, notes, photographs, reproductions, or copies of any Confidential Information.

3. Work Made for Hire. Employee agrees that at any time during Employee’s employment, if Employee makes, conceives, discovers or reduces to practice any invention, modification, discovery, design, development, improvement, process, software program, work of authorship, documentation, formula, data, technique, know-how, secret or intellectual property

Exhibit B - Page 1

Executive Employment Agreement

right whatsoever or any interest therein (whether or not patentable or registrable under copyright or similar statutes or subject to analogous protection) (each herein called a “Development”) that (a) relates to the business of the Company or any customer of or supplier to the Company or any of the products or services being developed, manufactured or sold by the Company or which may be used in relation therewith, (b) results from tasks assigned to Employee by the Company or (c) results from the use of premises or personal property (whether tangible or intangible) owned, leased or contracted for by the Company, each such Development and the benefits thereof shall immediately become the sole and absolute property of the Company and its assigns. Employee will promptly disclose to the Company (or any persons designated by it) each such Development and, by virtue of Employee signing this Agreement, hereby assign any and all rights and interests resulting therefrom to the Company and it assigns without further compensation. Employee will communicate to the Company, without cost or delay, and without publishing the same, all available information relating to the Developments (with all plans and models).

Each copyrightable Development authored or created by Employee under this Agreement shall be deemed “work made for hire” as defined in the U.S. Copyright Act, as amended, and all right, title and interest therein shall vest with the Company. If any copyrightable Development is not considered to be included in the categories of works covered by the “work made for hire” doctrine, such Developments shall be deemed to be assigned and transferred completely and exclusively to the Company by virtue of the execution of this Agreement.

Employee agrees to, at the request and cost of the Company, execute and do all such deeds and acts as the Company may reasonably require to (a) apply for and obtain, in the name of the Company, patents, copyrights, or other analogous protection in any country throughout the world and when so obtained or vested, to renew or restore the same, and (b) to defend in any opposition proceedings with respect to such applications or revocation of those applications. In the event the Company is unable, after reasonable effort, to secure Employee’s signature on any patents, copyright or other analogous protection relating to a Development, whether because of Employee’s physical or mental incapacity or any other reason, Employee hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Employee’s agent and attorney-in-fact, to act for and in Employee’s behalf to execute any such applications and do all other lawfully permitted acts to further the prosecution and issuance of letters patent, copyright or other analogous protection thereon with the same legal force and effect as if executed by Employee.

4. Ownership of Inventions. Employee agrees that (a) he or she will disclose immediately to the Company all inventions, discoveries, improvements, trade secrets, formulae, techniques, processes, know-how and computer programs, whether or not patentable and whether or not reduced to practice, conceived by Employee during employment by the Company, either alone or jointly with others, which relate to or result from the actual or anticipated business, work, research or investigations of the Company or which result to any extent from the use of the Company’s premises or tangible or intangible property (herein collectively referred to as “Inventions”), and (b) that all such Inventions shall be owned exclusively by the Company. Employee hereby assigns to the Company all of Employee’s right, title and interest in and to all such Inventions, and Employee agrees that the Company shall be the sole owner of all domestic and foreign patent or other rights pertaining thereto. Employee also agrees, during the term of his or her employment and thereafter, to execute all documents which the Company reasonably

Exhibit B - Page 2

Executive Employment Agreement

determines to be necessary or convenient for use in applying for, perfecting, or enforcing patents or other intellectual property rights in the Inventions.

5. Non-Solicitation of Customers. Employee agrees that for the one (1) year period immediately following termination of Employee’s employment with the Company, for whatever reason, whether that termination is effected by the Employee or the Company; Employee shall not, directly or indirectly, on behalf of any person or business, solicit, contact, or call upon any customer or customer prospect of the Company, or any representative of the same, with a view toward the sale or providing of any service or product competitive with any service or product sold or provided by the Company during Employee’s employment with the Company; provided, however, the restrictions set forth in this Section shall apply only to customers or prospects, or representatives of the same, with which the Employee had business contact during the last twelve (12) months of Employee’s employment with the Company.

6. Non-Solicitation of Employees. Employee agrees that, for the one (1) year period immediately following termination of Employee’s employment with the Company, for whatever reason, whether that termination is effected by the Employee or the Company, Employee shall not, directly or indirectly, solicit, recruit, or induce any employee of the Company to work for any person or business which competes with the Company in its business.

7. Non-Compete. Employee agrees that at all times during his employment with the Company, and for twelve (12) full calendar months after its termination for any reason, or the maximum period of time permitted by applicable law, whichever is less, Employee will not, directly or indirectly (i) develop needle-free injection systems for parenteral injectables or (ii) own any interest in, manage, control, participate in, consult with, or render services for any person, firm or entity that develops needle-free injection systems for parenteral injectables anywhere in the world. Nothing herein shall prohibit Employee from being an owner of not more than five percent (5%) of the outstanding stock of any class of corporation which is publicly traded, so long as Employee has no active participation in the business of such corporation. Nothing herein shall prohibit or restrict Employee from being employed by, participating in, consulting with, or rendering services to any person, firm or entity that develops needle-free injection systems for parenteral injectables if the employment, consulting, participation, or rendering of services exclusively involves other products or services.

If at the time of enforcement of this Section 7 a court holds that the restrictions stated herein are unreasonable, and/or unenforceable, under circumstances then existing, Employee agrees that the maximum period, scope or geographical areas reasonable under such circumstances shall be substituted for the stated period, scope or area. Employee agrees that the restrictions contained in this Section 7 are reasonable.

8. Obligations to Others. Employee warrants that (a) his or her employment by the Company does not violate any agreement with any prior employer or other person or firm, (b) he or she is not subject to any existing confidentiality or noncompetition agreement or obligation, except as has been fully disclosed in writing to the Company, and (c) Employee will not use or disclose in connection with his or her employment by the Company any confidential information belonging to any other person or firm. Employee also agrees to be bound by all confidentiality and invention obligations and restrictions of the Company to third parties if Employee is

Exhibit B - Page 3

Executive Employment Agreement

informed of such by the Company and agrees to take all action necessary to discharge the obligations of the Company thereunder.

9. Remedies. Employee acknowledges that breach of this Agreement will cause irreparable harm to the Company and agrees to the entry of a temporary restraining order, permanent injunction or other equitable relief by any court of competent jurisdiction to prevent breach or further breach of this Agreement, in addition to any other remedy available to the Company at law or in equity.

10. Severability of Provisions. The provisions hereof are severable, and if any provision is held invalid or unenforceable, it shall be enforced to the maximum extent permissible, and the remaining provisions shall continue in full force and effect.

11. Oregon Law to be Applied. The interpretation of and performance under this Agreement shall be governed by the laws of the State of Oregon, exclusive of choice of law rules.

12. Attorneys Fees. If any action or suit is instituted to enforce Employee’s obligations hereunder, the prevailing party shall be entitled to recover from the other party, in addition to any other rights and remedies it may have, all reasonable expenses and attorneys’ fees at trial, on appeal, and in connection with any petition for review.

13. No Further Rights. Nothing in this Agreement shall be construed to vary the employment relationship or to confer any rights to continued employment by the Company. Unless otherwise specified, Employee’s employment by the Company is strictly “at-will” and may be terminated at any time for any reason with or without cause or notice.

14. Waiver. Any waiver by the Company of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach of such provision or any other provision hereof.

Notice To Employee:

THIS AGREEMENT REQUIRES TRANSFER TO THE COMPANY OF CERTAIN INVENTIONS OR WORKS OF AUTHORSHIP. YOU MAY WISH TO CONSULT YOUR LEGAL COUNSEL FOR ADVICE.

/s/ Ralph Makar	October 1, 2007
Signature of Employee	Date
Ralph Makar
Please Print Name

Exhibit B - Page 4

Executive Employment Agreement

EXHIBIT C

(Summary of Outside Involvement)

Disclosure Summary for Outside Interests of Ralph Makar

1) Mesa Therapeutics – Co-Founder and Corporate Officer – Mesa Therapeutics is an emerging specialty pharmaceutical company focused on acquiring branded prescription products with additional market potential. Signed Confidentiality Agreement in place.

+ Upon Joining Bioject as CEO: Will relinquish corporate officer role and maintain a minority ownership interest and status as a Strategic Advisor.

2) Keisense Ltd. – A privately held startup company that is researching and developing technologies to enhance communication on mobile devices. Signed Confidentiality Agreement in place.

+ Upon Joining Bioject as CEO: Will retain a minority share as a result of completed work assisting with business planning, business development and fund raising. May retain status as a Strategic Advisor.

3) Anharico – A privately held Belgium based international cosmetic manufacturer. Developed Business plan and strategy for entry into US market. Engaged major US distributor in early Stage discussions.

+ Upon Joining Bioject as CEO: Will relinquish role as US lead for Anhairco business. May collect subsequent royalties based upon future US sales.

4) Consulting Engagements – Confidentiality agreements and ongoing contract in place regarding specific Pharmaceutical consulting services. Can be terminated with 15 days notice.

+ Upon Joining Bioject as CEO: Will terminate any such agreements.

Exhibit C - Page 1

Executive Employment Agreement

EX-10.29.1

EXHIBIT 10.29.1

AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT

This Amendment to Executive Employment Agreement (the “Amendment”) is made as of November 13, 2007 between Bioject Medical Technologies, Inc. and Bioject Inc. (collectively, the “Company”) and Ralph Makar (“Executive”).

Pursuant to an Executive Employment Agreement dated as of October 1, 2007 (the “Employment Agreement”) between the Company and Executive, the Company agreed to employ Executive, and Executive agreed to provide his services and expertise in the position of President and Chief Executive Officer.

WHEREAS, the parties wish to amend the Employment Agreement to make certain provisions compliant with Section 409A of the Internal Revenue Code of 1986, as amended.

NOW, THEREFORE, the parties agree as follows:

1. Capitalized terms used herein and not defined herein shall have the meanings assigned to such terms in the Employment Agreement.

2. Section 3.1 of the Employment Agreement is amended in its entirety to read as follows:

“Section 3.1 Stock Options. Effective on the Initial Employment Date, the Company will grant Executive a non-qualified stock option outside of, but on terms and conditions substantially identical to, the terms and conditions of the Bioject Medical Technologies, Inc. Restated 1992 Stock Incentive Plan, as amended (the “Plan”), to purchase 150,000 shares of BMT Common Stock (the “Option”). The exercise price of the Option shall be the last sale price of the Company’s common stock on the NASDAQ Capital Market on the date of grant of the Option, which is the Initial Employment Date. The Option will vest 1/3 annually on each of the first three anniversaries of the Initial Employment Date and have a term of 10 years. BMT will provide Executive with a Stock Option Agreement that evidences the Option. The Stock Option Agreement sets forth the specific terms and conditions of the Option, including, without limitation, the vesting schedule and the terms under which Executive will forfeit the Option (including termination of Executive’s employment with the Company pursuant to Section 4.2). The grant is subject to Executive’s execution of the Stock Option Agreement. In the event that there is any inconsistency between the Stock Option Agreement and this Agreement, this Agreement shall control.”

3. Section 4.4.1 of the Employment Agreement is amended in its entirety to read as follows:

“4.1.1 The Company shall pay Executive as severance pay an amount equivalent to twelve (12) months of Executive’s then-current Base Salary plus accrued and unused vacation (the “Severance Pay”). The Company shall pay such Severance Pay on dates generally coinciding with its regularly scheduled payroll; and”

4. A new section 6.12 shall be inserted and shall read as follows:

Section 6.12 Section 409A. The compensation payable to Executive pursuant to this Agreement (including options and restricted stock units) is intended not to constitute a “nonqualified deferred compensation plan” within the meaning of Section 409A the Internal Revenue Code of 1986, as amended, and instead is intended to be exempt from the application of Section 409A. To the extent that any such compensation is nevertheless deemed to be subject to Section 409A, such compensation shall be interpreted in accordance with Section 409A and Treasury regulations and other interpretive guidance issued thereunder, including without

limitation any such regulations or other guidance issued after the date of this Agreement. Notwithstanding any provision of this Agreement or the award agreement to the contrary, in the event that the Company determines that any compensation is or may be subject to Section 409A, the Company may adopt such amendments to this Agreement or the award agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Company determines are necessary or appropriate to (i) exempt the compensation from the application of Section 409A or preserve the intended tax treatment of the benefits provided with respect to the award, or (ii) comply with the requirements of Section 409A.

5. Except as modified hereby, the Employment Agreement remains in full force and effect.

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date and year first written above.

BIOJECT MEDICAL TECHNOLOGIES, INC.
By:	/s/ Christine M. Farrell
Name:	Christine M. Farrell
Title:	Vice President of Finance

BIOJECT INC.
By:	/s/ Christine M. Farrell
Name:	Christine M. Farrell
Title:	Vice President of Finance

/s/ Ralph Makar

Ralph Makar, Executive

EX-23.1

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to incorporation by reference in the registration statements on Form S-3 (Nos. 033-80679, 333-18933, 333-30955, 333-39421, 333-62889, 333-31542, 333-94907, 333-32848, 333-44556, 333-63568, 333-81752, 333-122640 and 333-135432) and registration statements on Form S-8 (Nos. 033-94400, 033-56454, 033-42156, 333-37017, 333-38206, 333-38212, 333-48632, 333-48634, 333-73868, 333-108514 and 333-128618) of Bioject Medical Technologies Inc. of our report dated March 28, 2008, related to the consolidated balance sheets of Bioject Medical Technologies Inc. as of December 31, 2007 and 2006, and the related consolidated statements of operations, shareholders’ equity and cash flows for each of the years in the two-year period ended December 31, 2007, which appears in the December 31, 2007 Annual Report on Form 10-K of Bioject Medical Technologies Inc.

Our audit report dated March 28, 2008, contains an explanatory paragraph that states that the Company’s recurring losses, negative cash flows from operations, and accumulated deficit raise substantial doubt about the entity’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of that uncertainty.

/s/ Moss Adams LLP

Portland, Oregon

March 28, 2008

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14(a) OR RULE 15d-14(a)

OF THE SECURITIES EXCHANGE ACT OF 1934

I, Ralph Makar, certify that:

1. I have reviewed this annual report on Form 10-K of Bioject Medical Technologies Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 28, 2008

/s/ Ralph Makar

Ralph Makar

Director and President and Chief Executive Officer

Bioject Medical Technologies Inc.

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO RULE 13a-14(a) OR RULE 15d-14(a)

OF THE SECURITIES EXCHANGE ACT OF 1934

I, Christine M. Farrell, certify that:

1. I have reviewed this annual report on Form 10-K of Bioject Medical Technologies Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 28, 2008

/s/ Christine M. Farrell

Christine M. Farrell

Vice President of Finance and Principal Financial Officer

Bioject Medical Technologies Inc.

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14(b) OR RULE 15d-14(b)

OF THE SECURITIES EXCHANGE ACT OF 1934 AND 18 U.S.C. SECTION 1350

In connection with the Annual Report of Bioject Medical Technologies Inc. (the “Company”) on Form 10-K for the year ended December 31, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ralph Makar, Director and President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge,:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Ralph Makar

Ralph Makar

Director and President and Chief Executive Officer

Bioject Medical Technologies Inc.

March 28, 2008

This certification is made solely for the purpose of 18 U.S.C. Section 1350, and not for any other purpose. A signed original of this written statement required by Section 906 has been provided to Bioject Medical Technologies Inc. and will be retained by Bioject Medical Technologies Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO RULE 13a-14(b) OR RULE 15d-14(b)

OF THE SECURITIES EXCHANGE ACT OF 1934 AND 18 U.S.C. SECTION 1350

In connection with the Annual Report of Bioject Medical Technologies Inc. (the “Company”) on Form 10-K for the period ended December 31, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Christine M. Farrell, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge,:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Christine M. Farrell

Christine M. Farrell

Vice President of Finance and Principal Financial Officer

Bioject Medical Technologies Inc.

March 28, 2008

This certification is made solely for the purpose of 18 U.S.C. Section 1350, and not for any other purpose. A signed original of this written statement required by Section 906 has been provided to Bioject Medical Technologies Inc. and will be retained by Bioject Medical Technologies Inc. and furnished to the Securities and Exchange Commission or its staff upon request.