<PAGE>

                     U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                 Form 10-KSB/A3

[X]   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934 for the fiscal year ended September 30, 2000

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934 For the transition period from _____ to _____

                         Commission file number 0-11480

                          BIOVEST INTERNATIONAL, INC.
                      (formerly Cellex Biosciences, Inc.)
                            ------------------------
                 (Name of small business issuer in its charter)

           Minnesota                                 41-1412084
           ---------                                 ----------
  (State or other jurisdiction                    (I.R.S. Employer
of incorporation or organization)               Identification Number)


                  540 Sylvan Avenue, Englewood Cliffs, NJ 07632
                  ---------------------------------------------
               (Address of principal executive offices) (Zip Code)


Issuer's telephone number:  (201) 816-8900


Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: Common Stock,
                                                               no par value
                                                               ------------
                                                             (Title of class)

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

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will 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-KSB or any
amendment to this Form 10-KSB. [ ]

State issuer's revenues for its most recent fiscal year: $5,863,000

The aggregate market value of voting common stock held by nonaffiliates of the
registrant as of December 29, 2000 was approximately $ N/A (Cannot be determined
because the common stock has not begun trading since the Company's
reorganization effective July 30, 1999. The number of shares of common stock
held by non-affiliates is 4,387,542.

The number of shares outstanding of each of the registrant's classes of common
stock, as of December 29, 2000 was:

                  Common Stock, no par value: 9,140,390 shares

Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [X] No [ ]

Transitional Small Business Disclosure format (check one) Yes [ ] No [X]

Documents Incorporated by Reference: Certain information in the registrant's
Proxy Statement for the 2001 annual meeting of shareholders (the" Proxy
Statement"), which was filed on March 2, 2001 is incorporated into Part III.

                                       1

<PAGE>

     The purpose of this amendment is to place on file, previously unavailable,
audited financial statements for the Predecessor Company for the ten month
period ended July 30, 1999. These statements replace those unaudited statements
for the period ended July 30, 1999 originally filed with the Company's report on
form 10-KSB for the year ended September 30, 1999.


<PAGE>


INDEX TO FINANCIAL STATEMENTS
CELLEX BIOSCIENCES, INC.

                                                                           Page
                                                                           ----
Report of Independent Certified Public Accountants.........................F-2

Balance Sheet as of September 30, 2000... .................................F-3

Statements of Operations for the year ended September 30, 2000
   and the two months ended September 30, 1999.............................F-4

Statements of Cash Flows for the year ended September 30, 2000
   and the two months ended September 30, 1999.............................F-5

Statements of Changes in Shareholders' Equity for the year ended
   September 30, 2000 and the two months ended September 30, 1999..........F-6

Notes to Financial Statements..............................................F-7

Predecessor Company Financial Statements

   Report of Independent Certified Public Accountants......................F-19

   Predecessor Company Financial Statements

      Statement of Operations..............................................F-20

      Statement of Cash Flows..............................................F-21

      Statement of Changes in Shareholders' Equity.........................F-22

      Notes to Financial Statements........................................F-23






                                      F-1

<PAGE>


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Shareholders
CELLEX BIOSCIENCES, Inc.

We have audited the accompanying balance sheet of CELLEX BIOSCIENCES, Inc. as of
September 30, 2000, and the related statements of operations, shareholders'
equity, and cash flows for the year ended September 30, 2000 and the two months
ended September 30, 1999. 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our 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 CELLEX BIOSCIENCES, Inc. as of
September 30, 2000, and the results of its operations and its cash flows for the
year ended September 30, 2000 and the two months ended in September 30, 1999, in
conformity with accounting principles generally accepted in the United States of
America.



                                                  GRANT THORNTON LLP


Minneapolis, Minnesota
December 15, 2000 (except for Notes 8 and 13,
as to which the date is January 5, 2001)




                                      F-2
<PAGE>




PART I - FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                       CELLEX BIOSCIENCES, INC.

                                                            BALANCE SHEET                                  SEPTEMBER 30,
                                     ASSETS                                                                    2000
                                                                                                         -----------------
<S>                                                                                                           <C>
Current assets:
Cash                                                                                                          $   548,000
Accounts receivable, net of $189,000 allowance for doubtful accounts                                            1,669,000
Costs and estimated earnings in excess of billings on uncompleted contracts                                       539,000
Inventories                                                                                                     2,302,000
Prepaid consulting                                                                                                302,000
Other                                                                                                             201,000
                                                                                                         -----------------
     Total current assets                                                                                       5,561,000

Property, plant and equipment, net                                                                                768,000

Other assets:
  Inventories                                                                                                     153,000
  Patents and trademarks, net                                                                                   1,000,000
  Other                                                                                                            21,000
  Reorganization value in excess of amounts allocable to
      identifiable assets, net                                                                                  2,378,000
                                                                                                         -----------------
                                                                                                              $ 9,881,000
                                                                                                         =================
                      LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Current portion of long-term debt                                                                           $   129,000
  Accounts payable                                                                                                812,000
  Customer deposits                                                                                                69,000
  Accrued liabilities:
    Reorganization costs                                                                                           20,000
    Compensation and related taxes                                                                                175,000
    Other                                                                                                         375,000
    Billings in excess of costs and estimated earnings on uncompleted contracts                                    36,000
                                                                                                         -----------------
     Total current liabilities                                                                                  1,616,000

Long-term debt                                                                                                    485,000
                                                                                                         -----------------
     Total liabilities                                                                                          2,101,000

Commitments and contingencies

Shareholders' equity:
  Common Stock, no par value, 10,000,000 shares authorized; 9,100,390
     shares issued and outstanding.                                                                            10,059,000
  Accumulated deficit (accumulated since July 31, 1999, the effective
    Date of the Company's Amended Plan of Reorganization)                                                     (2,081,000)
  Stock subscription receivable                                                                                 (198,000)
                                                                                                         -----------------
     Total shareholders' equity                                                                                 7,780,000
                                                                                                         -----------------
                                                                                                              $ 9,881,000
                                                                                                         -----------------
</TABLE>

The accompanying notes are an integral part of this financial statement.



                                      F-3
<PAGE>

                               CELLEX BIOSCIENCES, INC.
                               STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                      YEAR ENDED        TWO MONTHS ENDED
                                                  SEPTEMBER 30, 2000   SEPTEMBER 30, 1999
                                                  ------------------   ------------------
<S>                                                 <C>                 <C>
Revenues:
  Contract production services                      $  3,396,000        $       345,000
  Consumable sales                                     1,461,000                320,000
  System sales                                           812,000                173,000
  Other                                                  194,000                 31,000
                                                    -------------       ----------------
  Total revenues                                       5,863,000                869,000


Operating costs and expenses:
  Cost of sales                                        3,970,000                674,000
  Research and development                               491,000                 42,000
  Marketing, general and administrative                3,171,000                293,000
                                                    -------------       ----------------
Total operating costs and expenses                     7,632,000              1,009,000
                                                    -------------       ----------------


Loss from operations                                  (1,769,000)              (140,000)
Other income (expense):
  Interest expense                                      (152,000)               (57,000)
  Other income (expense), net                             37,000                  (----)
                                                    -------------       ----------------
                                                        (115,000)               (57,000)

Net loss                                            $ (1,884,000)       $      (197,000)
                                                    -------------       ----------------
Net loss per common share-basic and diluted         $      (0.38)       $         (0.19)
                                                    =============       ================
Weighted average number of common shares
   outstanding-basic and diluted
                                                       4,956,631              1,026,839
                                                    =============       ================
</TABLE>



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



                                      F-4
<PAGE>






                                                       CELLEX BIOSCIENCES, INC.
                                                       STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                         Year Ended             Two Months Ended
                                                                                     September 30, 2000        September 30, 1999
                                                                                    ---------------------    -----------------------
<S>                                                                                   <C>                         <C>
Cash flows from operating activities:
   Net loss                                                                           $    (1,884,000)            $     (197,000)
  Adjustments to reconcile net loss to net cash
    provided by (used in) operating activities:
      Depreciation                                                                             53,000                      4,000
      Amortization                                                                            252,000                     46,000
      Issuance of common stock and warrants for services                                      343,000                       --
 Changes in current operating items, net of acquisition
    Accounts receivable                                                                        26,000                    164,000
    Costs and estimated earnings in excess of billings on uncompleted contracts              (276,000)                  (104,000)
    Inventories                                                                              (518,000)                   140,000
    Other                                                                                     (30,000)                     1,000
    Accounts payable and accrued liabilities                                                 (151,000)                    60,000
    Customer deposits                                                                         (21,000)                  (125,000)
    Billings in excess of costs and estimated earnings on uncompleted contracts               (10,000)                    46,000
                                                                                    ------------------           ----------------
Net cash provided by (used in) operating activities                                        (2,216,000)                    35,000
                                                                                    ------------------           ----------------

Cash flow from investing activities, net of acquisition
  Capital expenditures                                                                       (257,000)                    (7,000)
  Other                                                                                         8,000                     (6,000)
                                                                                    ------------------           ----------------
Net cash used in investing activities                                                        (249,000)                   (13,000)
                                                                                    ------------------           ----------------
Cash flow from financing activities:
  Proceeds from short-term borrowings                                                         255,000                       --
  Repayment of short-term borrowings                                                         (150,000)                      --
  Principal payments on long-term debt                                                       (637,000)                    (7,000)
  Net proceeds from sale of common stock                                                    3,715,000                       --
  Stock subscription                                                                         (198,000)                      --
                                                                                    ------------------           ----------------
Net cash provided by (used in) financing activities                                         2,985,000                     (7,000)
                                                                                    ------------------           ----------------
Net increase cash                                                                             520,000                     15,000
Cash at beginning of period                                                                    28,000                     13,000
                                                                                    ------------------           ----------------
Cash at end of period                                                                 $       548,000             $       28,000
                                                                                    ==================           ================


Cash paid for interest during the period                                              $       108,000             $       42,000
                                                                                    ==================           ================
</TABLE>

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



                                      F-5
<PAGE>




<TABLE>
<CAPTION>
                                                       CELLEX BIOSCIENCES, INC.
                                             STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY


                                                      Common Stock                                                     Total
                                            --------------------------------    Accumulated   Stock Subscription    Shareholders'
                                                Shares            Amount           Deficit         Receivable          Equity
                                            -------------    ---------------  --------------  -------------------  ---------------
<S>                                            <C>           <C>                 <C>             <C>                <C>
Balance at July 31, 1999                       1,026,839     $   1,394,000    $      -----    $      -----         $    1,394,000

Net loss for the two months                    -----              -----            (197,000)         -----               (197,000)
                                            -------------    ---------------  --------------  -------------------  ---------------

Balance at September 30,1999                   1,026,839         1,394,000         (197,000)         -----              1,197,000
  Net proceeds from sale of
     common stock                              3,185,200         3,715,000           -----           -----              3,715,000
   Stock issuance in accordance with
     stipulation agreement (Note 8)            1,204,401          -----              -----           -----               -----
   Stock issued for services rendered            239,998           300,000           -----           -----                300,000
   Stock issued for acquisition                  930,000         1,163,000           -----         (198,000)              965,000
   Warrants issued for services rendered       -----               345,000           -----           -----                345,000
   Stock issued for conversion of debt to
     equity                                    2,508,952         3,136,000           -----           -----              3,136,000
   Other                                           5,000             6,000           -----           -----                  6,000
   Net loss for the year                       -----              -----          (1,884,000)         -----             (1,884,000)
                                            -------------    ---------------  --------------  -------------------  ---------------
Balance of September 30, 2000                  9,100,390     $  10,059,000    $  (2,081,000)  $    (198,000)       $    7,780,000
                                            =============    ===============  ==============  ===================  ===============
</TABLE>


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


                                      F-6
<PAGE>


CELLEX BIOSCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS

(1)      DESCRIPTION OF THE COMPANY

         Except as indicated otherwise, the term the "Company" refers to CELLEX
BIOSCIENCES, Inc.

         The Company provides advanced cell culture technology to
pharmaceutical, diagnostic and biotechnology companies, as well as leading
research institutions, worldwide. The Company develops, manufactures and markets
patented perfusion systems and performs contract production services including
cell line selection, optimization and subcloning, whole cell and secreted
protein production and cell banking. Cell culture is a key process used by these
organizations for the creation of novel proteins and monoclonal antibodies
needed to detect and treat human diseases such as cancer and AIDS.

         On July 7, 1999, the United States Bankruptcy Court, District of
Minnesota, Third Division, entered the order confirming the Company's Modified
First Amended Plan of Reorganization dated June 28, 1999 (the "Plan") which
became effective July 30, 1999. (See Note 4.)

         Effective as of the close of business on May 25, 2000, the Company
acquired certain assets and technology, and assumed certain liabilities from
Unisyn Technologies, Inc. ("Unisyn"), a wholly owned subsidiary of Medi-Cult
A/S, a Danish biotechnology corporation. Unisyn develops, manufactures and
markets products and contract services that produce antibodies. Unisyn also
provides research and development services related to these products. (See Note
5).

(2)      SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

         The Company emerged from a Chapter 11 Reorganization effective July 30,
1999. For financial reporting purposes, the effective date of the Plan was
considered to be July 31, 1999 (the "Effective Date"). The results of operations
for the period July 30, 1999 through July 31, 1999 were not considered material.

         As of July 31, 1999, the Company adopted fresh start reporting in
accordance with the American Institute of Certified Public Accountants'
Statement of Position 90-7 Financial Reporting by Entities in Reorganization
Under the Bankruptcy Code ("SOP 90-7"). SOP 90-7 calls for the adoption of
"fresh-start reporting" if the reorganization value of the emerging entity
immediately before the effective date is less than the total of all
post-petition liabilities and pre-petition allowed claims and if holders of
existing voting shares immediately before confirmation receive less than 50% of
the voting shares of the emerging entity, both conditions of which were
satisfied by the Company. (See Note 4.)

         Due to the Company's emergence from Chapter 11 Reorganization and
implementation of fresh- start reporting, the financial statements for the
reorganized company (the "Reorganized Company" or the "New Cellex") are not
comparable to those of the Company for the periods prior to July 31, 1999 (the
"Predecessor Company" or the "Old Cellex"). The results of the periods shown for
the Predecessor Company are not considered to be indicative of the results of
operations that are expected for the Reorganized Company.



                                      F-7
<PAGE>


CELLEX BIOSCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS - CONTINUED

         Fresh-start reporting resulted in material changes to the Company's
balance sheet, including valuation of assets at fair value in accordance with
principles of the purchase method of accounting, valuation of liabilities
pursuant to provisions of the Plan and valuation of equity based on the
reorganization value of the ongoing business. In accordance with fresh-start
reporting, the gain on discharge of debt resulting from the reorganization
proceedings was reflected in the financial statements of the Predecessor Company
for the period ended July 30, 1999. In addition, the accumulated deficit of the
Predecessor Company was eliminated and at July 31, 1999, the Reorganized
Company's financial statements reflected no beginning retained earnings or
deficit. In addition, the Company's capital structure was recast in conformity
with the Plan. (See Note 4.)

          The Company has included in its financial statements the assets and
liabilities recorded in connection with the acquisition of certain assets and
assumption of certain liabilities of Unisyn Technologies, Inc. The results of
operations related to Unisyn since May 25, 2000, the effective date, have been
included in the Company's statement of operations. (See Note 5.)

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

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

PROPERTY AND EQUIPMENT

         Property and equipment are recorded at the net book value, which
approximates fair value, of the Predecessor Company at July 31, 1999 and at cost
for additions subsequent to July 31, 1999. Depreciation for property and
equipment is computed using the straight-line method over the estimated useful
lives of three to seven years.

         Major replacements and improvements are capitalized. Repair and
maintenance costs are charged to expense as incurred. Any gains or losses on the
disposal of property and equipment are charged to operations.

INVENTORIES

         Inventories are at the lower of cost or market with cost determined
using the first-in, first-out ("FIFO") method. The cost of inventories on hand
at July 31, 1999 approximated fair value as of that date.

PATENTS AND TRADEMARKS

         Costs incurred in relation to patent applications are capitalized as
deferred patent costs. If and when a patent is issued, the related patent
application costs are transferred to the patent account and amortized over the
legal life of the patent. If it is determined that a patent will not be issued,
the related patent application costs are charged to expense at the time such
determination is made.

         Patent and trademark costs are recorded at fair value at July 31, 1999
and at cost for additions subsequent to July 31, 1999. Patent and trademark
costs are being amortized using the straight-line method over six years for
patents and twenty years for trademarks. Accumulated amortization was $142,000
at September 30, 2000.



                                      F-8
<PAGE>



CELLEX BIOSCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS - CONTINUED

SOFTWARE DEVELOPMENT COSTS

         All costs incurred to establish the technological feasibility of a
computer software product to be sold separately or as part of another product
are expensed as incurred. Although the Company does not have any capitalized
software development costs at September 30, 2000, the Company plans to
capitalize software development costs pertaining to enhanced software design of
certain of the Company's instrument products that are incurred subsequent to the
establishment of technological feasibility. These costs will be amortized using
the straight-line method over the estimated economic life that the software
enhancement will benefit the related product.

REORGANIZATION VALUE IN EXCESS OF AMOUNTS ALLOCABLE TO IDENTIFIABLE ASSETS

         Reorganization value arising from the reorganization of the Company in
the amount of $2,532,000 is being amortized on a straight-line basis over twenty
years. Accumulated amortization was $154,000 at September 30, 2000.
(See Note 4.)

CARRYING VALUE OF LONG-LIVED ASSETS

         The carrying value of each long-lived asset is evaluated based upon
management's experience in the industry, historical and projected sales, current
backlog and expectations of undiscounted cash flows. On an on-going basis, the
Company reviews the valuation and amortization of long-lived assets to determine
possible impairment by comparing the carrying value to projected undiscounted
future cash flows of the related assets.

REVENUE RECOGNITION

         System and consumable sales are recognized in the period in which the
applicable products are shipped. The Company does not provide its customers with
a right of return, however, deposits made by customers must be returned to
customers in the event of non-performance by the Company. Revenues from contract
cell production services are recognized using the percentage-of-completion
method, measured by the percentage of contract costs incurred to date to
estimated total contract costs for each contract.

         Contract costs include all direct material, subcontract and labor costs
and those indirect costs related to contract performance, such as indirect
labor, insurance, supplies and tools. General and administrative costs are
charged to operations as incurred. Provisions for estimated losses on
uncompleted contracts are made in the year in which such losses are determined.
Changes in job performance, job conditions, estimated profitability and final
contract settlements may result in revisions to revenues, costs and profits and
are recognized in the year such revisions are determined.

         The asset "costs and estimated earnings in excess of billings on
uncompleted contracts" represents revenues recognized in excess of amounts
billed. Such revenues are expected to be billed and collected within one year on
uncompleted contracts. The liability "billings in excess of costs and estimated
earnings on uncompleted contracts" represents billings in excess of revenue
recognized.

         Grant revenue is recognized during the period in which the related
activities are conducted.

NET INCOME (LOSS) PER COMMON SHARE

         Basic net income (loss) per share of common stock is computed by
dividing net income (loss) by the weighted average number of outstanding common
shares. Diluted net income (loss) per common share is computed by dividing net
income (loss) by the weighted average number of outstanding common shares and
common share equivalents relating to stock options and warrants, when dilutive.
For the fiscal year ended September 30, 2000 the common share equivalents that
would have been included in the computation of diluted net income per share were
21,145, had net income achieved. Warrants to purchase 350,000 and 100,000 shares
of common stock with a weighted average exercise price of $4.29 and $10.00 were
outstanding at September 30, 2000 and 1999, but were excluded from the
computation of common stock equivalents because their exercise price was higher
than the average market price of the common shares during the reporting period.

Additionally, 2,200,000 stock options at $1.50 and 140,000 stock options have
been granted by the Company, subject to shareholder approval. See Note 8.


                                      F-9
<PAGE>


CELLEX BIOSCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS - CONTINUED

(3)      LIQUIDITY

         The Company has incurred significant operating losses and cash flow
deficits in previous years. During 2000 the Company experienced $2,216,000 of
negative cash flow from operations and met its cash requirements through the
sale of equity securities. Management expects the Company's core business to
improve, but to continue to utilize cash, though at a significantly reduced
level. The Company is currently in the process of exploring various financing
alternatives to meet its cash needs, including short-term loans from its
shareholders. Management believes that the Company has sufficient cash and
borrowing capacity to ensure the Company will continue operations in the near
term.

     However, if the Company is successful in entering into the Cooperative
Research and Development Agreement ("CRADA") for Phase-III clinical trials and
ultimate commercialization of a patient-specific vaccine for non-Hodgkin's
low-grade follicular lymphoma, the Company would need to obtain significant
additional funding. (See Note 13) Such additional financing could be sought from
a number of sources, including the sale of equity or debt securities, strategic
collaborations or recognized research funding programs. No assurance can be
given that the Company would be able to obtain such additional funds on terms
acceptable or favorable to the Company, if at all. Substantial delays in
obtaining such financing would have an adverse effect on the Company's ability
to perform under the CRADA.

(4)      REORGANIZATION AND FRESH-START REPORTING

         The Company's Plan of Reorganization was consummated subject to the
cash investment by Biovest, L.L.C. ("Biovest") of $1,015,000 and the payment of
approximately $675,000 to a financial institution, a secured creditor of the
Company. Pursuant to the Plan, on the Effective Date, the $1,015,000 of
Debtor-In-Possession financing provided by Biovest, together with the accrued
interest of $30,000, was converted to common stock of the Reorganized Company.

         Pursuant to the Plan, as of the Effective Date, the Company's existing
common stock, preferred stock, options and warrants were deemed canceled and
1,000,003 shares of new common stock were deemed issued, of which 520,000 shares
(52%) were issued to Biovest and 250,003 shares (25%) were issued to the
Company's unsecured creditors. Until March 15, 2000, the remaining 230,000
shares were held in escrow to be released to Biovest or the Schuster Group,
secured creditors of the Company, pursuant to an agreement which was
incorporated into the Plan. During 2000, Biovest paid or obtained the release of
direct claims and indirect guarantee claims of the Schuster Group in the
approximate amount of $2,300,000 and the escrowed shares were released to
Biovest.

         As of July 31, 1999, the Company accounted for the reorganization using
fresh-start reporting. Accordingly, all assets and liabilities were restated to
reflect their reorganization value which approximates the fair value at the
Effective Date. The portion of the reorganization value which could not be
attributed to specific tangible and identified intangible assets of the
Reorganized Company in the amount of $2,532,000 has been recognized as
"Reorganization Value in Excess of Amounts Allocable to Identifiable Assets" and
is being amortized over a period of 20 years.

         After consideration of the Company's debt capacity, projected future
earnings and cash flows, and after extensive negotiations among parties in
interest, it was determined that the reorganization value should approximate the
amount a willing buyer would pay for the assets of the Company immediately after
the reorganization in addition to the amount of resources available and to
become available for the satisfaction of post-petition liabilities and allowed
claims as negotiated between the Company and its creditors. Pursuant to the
Plan, the Company's senior secured creditors, Biovest and the Schuster Group,
paid an aggregate of $1,045,000 to receive 75% of the Company's new common
stock, which results in a total equity value of $1,394,000.







                                      F-10
<PAGE>


CELLEX BIOSCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS - CONTINUED

         When added to the post-petition liabilities, the reorganization value
and excess reorganization value was determined as follows:

            Post-petition current liabilities                  $1,143,000
            Secured debt                                        3,519,000
            Subordinated debt                                     234,000
            New equity investment                               1,394,000
                                                               ----------
            Total reorganization value                          6,290,000

            Less: Fair market value of
              the Reorganized Company's assets                  3,758,000
                                                               ----------

            Reorganization Value in Excess of
            Amounts Allocable to Identifiable Assets           $2,532,000
                                                               ==========

(5)      ACQUISITION OF UNISYN

         Effective May 25, 2000, the Company acquired substantially all of the
assets and technology and assumed certain liabilities from Unisyn Technologies,
Inc. ("Unisyn") pursuant to an asset purchase agreement (the "Asset Purchase
Agreement").

         In consideration, the Company issued 70,000 shares of common stock to
Unisyn's parent company. Pursuant to settlement agreements, 127,000 additional
shares of the Company's common stock were issued to settle approximately
$1,000,000 in obligations to two creditors of Unisyn. An additional 733,000
shares of the Company's common stock have been issued to settle approximately
$800,000 in additional liabilities. In addition, during the period from February
18, 2000 to May 25, 2000, the Company provided cash advances to Unisyn
aggregating approximately $450,000; these obligations were cancelled pursuant to
the Asset Purchase Agreement.

         The assets purchased include accounts receivable, inventory, equipment,
licenses, proprietary software, certain prepaid expenses and other assets, and
intangible assets including patents, trademarks, trade names, service names,
copyrights and other intangibles.

         The Company also assumed certain rights and obligations of Unisyn
pursuant to contracts and agreements with customers of Unisyn and pursuant to
real property leases and purchased contracts. The Company also assumed certain
liabilities, including certain accounts payable, deferred revenue and severance
obligations to certain employees totaling approximately $553,000.

         On September 10, 1999, the Company had commenced an adversary
proceeding against Unisyn relating to the unilateral termination by Unisyn of an
Agreement and Plan of Merger dated October 10, 1997 between the Company and
Unisyn. The Asset Purchase Agreement provided for the dismissal of all claims in
the litigation.



                                      F-11
<PAGE>



CELLEX BIOSCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS - CONTINUED

The recorded value and purchase price of the assets acquired and liabilities
assumed are as follows:

         Accounts receivable, net                          $ 1,110,000
         Inventories                                           562,000
         Property, plant and equipment                         449,000
         Costs and estimated earnings in excess
          of billings on uncompleted contracts                 159,000
         Other assets                                           29,000
                                                           ------------
               Allocation of Purchase Price                $ 2,309,000
                                                           ------------

         Value of common stock issued
             (930,000 shares at $1.25 per share)           $ 1,163,000
         Fair value of liabilities assumed                     553,000
         Cancellation of cash advances to Unisyn               450,000
         Transaction costs                                     143,000
                                                           ------------
               Total Purchase Price                        $ 2,309,000
                                                           ------------


         The operations of Unisyn are included in the statement of operations
only from the date of acquisition, May 25, 2000. Pro forma results of operations
(unaudited) as if the acquisition had occurred as of October 1, 1999 and 1998
are as follows:

                                             Fiscal Year ended September 30,
                                             -------------------------------
                                                  2000               1999
                                                  ----               ----
         Revenues                            $   8,940,000      $  8,197,000
         Net loss                            $  (2,924,000)     $ (5,537,000)
         Net loss per share                  $       (0.59)           N/A

         The loss per common share above for twelve months ended September 30,
1999 has not been computed because the information is not considered meaningful.




                                      F-12
<PAGE>




CELLEX BIOSCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS - CONTINUED

(6)      DETAILS TO BALANCE SHEET

INVENTORIES

         Inventories consist of the following:

                                                      SEPTEMBER 30,
                                                          2000
                                                   -------------------
         Finished goods.................           $         806,000
         Work-in-process................                     437,000
         Raw materials..................                   1,212,000
                                                   -------------------
                                                           2,455,000
         Less non-current portion.......                     153,000
                                                   -------------------
                                                   $       2,302,000
                                                   ===================

         The Company has inventory quantities in excess of anticipated sales
requirements for the twelve months subsequent to September 30, 2000.
Accordingly, a portion of the Company's inventory balance is classified as a
non-current asset as of that date.

PROPERTY AND EQUIPMENT

         Property and equipment consist of the following:

                                                    SEPTEMBER 30,
                                                        2000
                                                  -----------------
         Furniture and fixtures..........         $          40,000
         Leasehold improvements......                       220,000
         Machinery and equipment......                      565,000
                                                  -----------------
                                                            825,000
                                                            (57,000)
                                                  -----------------
         Less accumulated depreciation
         And amortization................         $         768,000
                                                  =================

CONCENTRATION OF CREDIT RISK

         The Company grants credit to customers in the normal course of
business, but generally does not require collateral or any other security to
support amounts due. Management performs on-going credit evaluations of its
customers.

         Two customers accounted for approximately 16% and 21%, respectively, of
total revenues for the two months ended September 30, 1999, respectively. One of
these customers accounted for 19% of the Company's accounts receivable balance
at September 30, 1999. In fiscal year ended September 30, 2000 no customer
accounted for 10% of revenues. One customer accounted for 14% of the Companies'
accounts receivable balance at September 30, 2000.

         A significant amount of the Company's revenue has been derived from
export sales. The Company's export sales, principally to European customers,
were 50% and 30% of total revenues for the two months ended September 30, 1999
and fiscal year ended September 30, 2000, respectively.




                                      F-13
<PAGE>

CELLEX BIOSCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS - CONTINUED

FAIR VALUE OF FINANCIAL INSTRUMENTS

         The carrying amounts of current assets and current liabilities such as
cash, accounts receivable, accounts payable, customer deposits and accrued
liabilities approximate fair value because of the short maturity of these items.
The carrying value of the Company's long-term debt is estimated using discounted
cash flow analysis, based on the Company's incremental borrowing rates for
similar types of borrowing agreements. As a result of the Company's
reorganization, the carrying amounts of long-term debt approximate fair value.

(7)      LONG-TERM DEBT

         Long-term debt was entered into pursuant to the Company's
reorganization and consists of the following at September 30, 2000



  Promissory note payable to Internal Revenue Service, with
  interest of 8% per annum, payable in monthly installments of
  $11,095, including interest through February 1, 2004 and $320
  per month thereafter through February 1, 2005.....................  $ 398,000

  Promissory note payable to State of Minnesota, with interest
  of 8% per annum, payable in monthly installments of $2,700,
  including interest, beginning
  December 1, 1999 through February 1, 2005.........................    120,000

  Amounts payable to regulatory agencies (i)........................     95,000

  Other.............................................................      1,000
                                                                      ---------
                                                                        614,000

  Less current portion of long-term debt............................    129,000
                                                                      ----------
                                                                      $ 485,000
                                                                      ----------




                                      F-14
<PAGE>



CELLEX BIOSCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS - CONTINUED

         (i) Pursuant to the Plan, the Company is obligated to repay certain
regulatory agencies an aggregate amount of $95,000 in equal monthly installments
for six years from the date of assessment with interest at the rate of 8% per
annum. As of September 30, 2000, the Company has not been assessed by these
agencies and promissory notes have not been signed.

         At September 30, 2000, the aggregate maturities of long-term debt by
fiscal year are as follows: 2001 - $129,000; 2002 - $139,000; 2003 - $151,000;
2004 - $86,000; 2005-$ 14,000 and subsequent years - $95,000.

(8)      SHAREHOLDERS' EQUITY

PLAN OF REORGANIZATION

         Pursuant to the Company's Plan of Reorganization, all equity securities
of the Predecessor Company were canceled and 1,000,003 shares of new common
stock were deemed issued, of which 520,000 shares (52%) were issued to Biovest
and 250,003 shares (25%) were issued to the Company's unsecured creditors. Until
March 15, 2000, the remaining 230,000 shares were held in escrow to be released
to Biovest or the Schuster Group, secured creditors of the Company, pursuant to
an agreement which was incorporated into the Plan. Such agreement provided that,
in the event that Biovest or the Company had paid or obtained the release of
direct claims and indirect guarantee claims of the Schuster Group in the
approximate amount of $2,300,000, then the escrowed shares would be released to
Biovest; otherwise, such shares would be released to the Schuster Group. (See
Note 4.) During 2000, Biovest paid the direct claims and indirect guarantee
claims on behalf of the Company. Pursuant to the agreement incorporated into the
Plan, Biovest received 1,434,402 shares of common stock which represented 23% of
the total shares outstanding at March 15, 2000. Such shares consisted of
1,204,402 newly issued shares plus the 230,000 shares held in escrow.

         In addition, pursuant to the Plan of Reorganization, four warrants were
issued to the Company's investment banker as compensation for services in
assisting the Company to accomplish the reorganization. Each warrant to purchase
25,000 shares of the Company's new common stock is exercisable July 30, 2000 at
an exercise price per share of $2.50, $7.50, $10.00 and $20.00 and expires July
31, 2002. The Company has reserved 100,000 common shares for future issuance for
these warrants.

         In addition, pursuant to the reorganization, 26,836 shares of the
Company's new common stock were issued to employees of the Company and former
officers of the Predecessor Company for compensation and severance pay.

         Pursuant to the Company's Plan of Reorganization, the Company is
authorized to establish a stock option plan within two years of the Effective
Date of the Plan. A plan has not been established as of September 30, 2000.

PRIVATE PLACEMENT OFFERING

         From February to May 31, 2000, the Company sold 2,785,200 shares of the
Company's common stock at $1.25 per share for approximately $3,481,000 pursuant
to a private placement offering. The proceeds from this offering were
$3,215,000, net of issuance costs of $266,000.

STOCK PURCHASE AGREEMENTS

         During 2000 the Company entered into agreements with the Company's two
executive officers, whereby 239,998 shares of the Company's common stock were
purchased for an aggregate purchase price of $300,000 ($1.25 per share) by
cancellation of all of the Company's indebtedness to these two officers for
salary and bonuses accrued but not yet paid through March 31, 2000.



                                      F-15
<PAGE>


CELLEX BIOSCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS - CONTINUED

ACQUISITION OF UNISYN

         Effective May 25, 2000, the Company completed its acquisition of Unisyn
pursuant to an asset purchase agreement. In consideration, the Company issued a
total of 930,000 shares of its common stock. (See Note 5.)

FINANCIAL ADVISOR AGREEMENT

         During 2000, the Company entered into an agreement with a group of
investment advisors under which the advisors purchased 400,000 shares of the
Company at $1.25 per share during August 2000 and agreed to provide financial
consulting services in exchange for equity interests in the Company. On January
5, 2001, a new agreement was entered into that defined the equity interests to
be provided in exchange for the consulting services to be rendered. Under the
terms of the new agreement, the advisors are to provide consulting services to
the Company for a one-year period from August 15, 2000 to August 15, 2001 in
exchange for 800,000 irrevocable warrants. The warrants are exercisable at any
time within five years from January 5, 2001; 550,000 warrants have an exercise
price of $1.25 per share and 250,000 warrants have an exercise price of $2.00.

         The warrants have been valued through September 30, 2000 at
approximately $345,000 using the Black-Scholes pricing model. This amount is
being recognized ratably over the twelve months of service being provided by the
investment advisors, which resulted in $43,000 of expense for the year ended
September 30, 2000. In valuing the warrants issued under the Black-Scholes
pricing model, the following assumptions were used: zero dividend yield;
risk-free interest rate of 6.98%; expected volatility of 48%; and expected life
of three years.

         The warrants will be revalued through the measurement date, January 5,
2001, which could result in significant expense to the Company.

         STOCK OPTIONS

         During 2000, the Company's Board of Directors approved the granting of
2,200,000 stock options to its executive officers and directors. The options
have an exercise price of $1.50 per share and have a five year term; half are
exercisable six months from the date of grant and the remaining half are
exercisable one year from the date of the grant. The stock option grants are
subject to shareholder approval of a stock option plan for the Company.

         The Board also approved the issuance of 140,000 stock options to an
outside advisor for services rendered at the then market price, subject to
shareholder approval of an option plan for the Company. Upon approval of the
stock option plan by the Company's shareholders, compensation expense for
services rendered will be recognized based upon the fair value of the options at
that date.

(9)      INCOME TAXES

         No provision for income taxes has been recorded for the year ended or
two months ended September 30, 2000 and 1999 due to losses incurred during the
periods. At September 30, 2000, the Company has net operating loss carryforwards
of approximately $41,000,000 (expiring 2002 to 2019) and a capital loss
carryforward of approximately $14,000,000 (expiring in 2003). Due to various
changes in ownership of the Company, virtually all of these carryforwards are
subject to significant restrictions with respect to the ability of the Company
to use these amounts to offset future taxable income. The Company has fully
offset deferred tax assets resulting from differences in accounting between
income tax and financial statement treatment with a valuation allowance. These
differences consist almost entirely of net operating and capital loss
carryforwards.

         A reconciliation of the U.S. Federal statutory rate to the effective
tax rate is as follows:

                                          Year ended         Two months ended
                                      September 30, 2000    September 30, 1999
                                     --------------------  --------------------
Federal statutory rate                        (34)%                (34)%
State taxes                                    (2)                  (2)
Effect of valuation allowance                  36                   36
                                     --------------------  --------------------
Net actual effective rate                       - %                  - %
                                     ====================  ====================

(10)     RETIREMENT PLANS

         The Company has a retirement savings plan covering all employees
eligible to participate in the plan (Employees of the Company scheduled to
provide at least 1,000 hours of service during their first year of employment
are eligible as of a date no later than six months after employment and
employees scheduled to provide less than 1,000 hours of service become eligible
after completing a year of service.). Eligible employees may make annual
earnings reduction contributions of up to the maximum percentage allowable by
Code Sections 401(k), 404 and 415, presently 14% of compensation, limited to
$10,500 for 2001, on a pre-tax basis to their plan accounts. The Company may
also make discretionary contributions to this plan, subject to approval by the
Board of Directors, which are allocated to the accounts of the participants in
proportion to each participant's annual compensation from the Company. The
Company has made no discretionary contributions pursuant to the plan.


                                      F-16
<PAGE>



CELLEX BIOSCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS - CONTINUED

(11)     COMMITMENTS AND CONTINGENCIES

LEASES

         The Company leases office and manufacturing space pursuant to 5
non-cancelable operating leases. Rent expense pertaining to these leases was
$471,000 for the year ended September 30, 2000 and $40,000 for the two months
ended September 30, 1999. The following is a schedule of the future minimum
rental payments required pursuant to these leases for the fiscal years ended
September 30:

             2001....................                   $     622,000
             2002....................                         553,000
             2003....................                         512,000
             2004....................                         296,000
             2005....................                         255,000
             Thereafter..............                         106,000

LEGAL PROCEEDINGS

         The Company is engaged in various litigation matters. Management
believes the ultimate outcome of these litigation matters will not have a
material adverse effect on the Company's financial position, liquidity or
results of operations.

(12)     RELATED PARTY TRANSACTIONS

         Pursuant to the Company's reorganization effective July 31, 1999,
520,000 shares (approximately 52%) of the Company's new common stock was issued
to Biovest, L.L.C., of which the Company's Chairman of the Board and Chief
Executive Officer is also Chairman and Chief Executive Officer and of which the
Company's President and is also President. Also pursuant to the reorganization,
upon the occurrence of certain events, effective March 15, 2000, 1,434,402
additional shares were issued to Biovest pursuant to the Company's plan of
Reorganization, comprised of 230,000 shares, which were held in escrow since
July 31, 1999 and 1,204,402 shares issued on March 15, 2000.

         During 1999, Biovest purchased the debt held by the Company's secured
lender in the amount of approximately $676,000 and made advances to the Company
of $185,000. During 2000, Biovest made working capital advances to the Company
in the amount of $255,000 of which $150,000 was repaid by the Company. In
addition, Biovest paid general and administrative expenses, expenses of the
private placement offering, deferred acquisition costs and other expenses on
behalf of the Company in the aggregate amount of approximately $377,000. During
2000, Biovest paid approximately $1,745,000 to settle debt and accrued interest
on the Company's behalf. Accrued interest on the outstanding debt totaled
$48,000. During 2000, Biovest received 2,508,952 shares of the Company's common
stock in exchange for cancellation of $3,136,000 in liabilities payable by the
Company to Biovest.

         At September 30, 2000, Biovest holds 4,463,354 shares of the Company's
Common Stock or 49% of the Company's outstanding common stock and the Company's
chairman and president each own 119,999 shares or 1% of the Company's
outstanding common stock . ( See Notes 5 and 6.)





                                      F-17
<PAGE>

CELLEX BIOSCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS - CONTINUED

(13)     SUBSEQUENT EVENTS

         On November 14, 2000 the Company received notice from the National
Cancer Institute ("NCI") that the Company had been invited to enter into a
Cooperative Research and Development Agreement ("CRADA") for the development of
idiotype tumor vaccines for the treatment of B-cell lymphomas. The Company has
begun negotiations with the NCI to assist in the production of a workable
vaccine which may be further developed for commercialization. Successful
negotiations and development of this vaccine from Phase III clinical trials
through commercialization will likely commit the Company to several years of
significant expenditures before revenues, will be realized, if ever.

         On January 5, 2001 the Company entered into a new agreement with a
group of investment advisors. (See Note 8.)





                                      F-18
<PAGE>


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
               --------------------------------------------------

Board of Directors and Shareholders
Biovest International, Inc.

     We have audited the statements of operations, changes in shareholders'
equity, and cash flows for the ten months ended July 30, 1999 for Biovest
International, Inc. (the Company, formerly Cellex Biosciences, Inc.). These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of Biovest
International, Inc. for the ten months ended July 30, 1999, in conformity with
accounting principles generally accepted in the United States of America.



                                                  GRANT THORNTON LLP


Minneapolis, Minnesota
June 14, 2001


                                      F-19
<PAGE>


                           BIOVEST INTERNATIONAL, INC.
                       (FORMERLY CELLEX BIOSCIENCES, INC.)

                   PREDECESSOR COMPANY STATEMENT OF OPERATIONS

                         TEN MONTHS ENDED JULY 30, 1999

<TABLE>
<CAPTION>
<S>                                                                         <C>
Revenues
   Contract production services                                             $ 2,250,383
   Consumable sales                                                           1,180,274
   System sales                                                                 542,398
   Grant revenue                                                                 54,628
   Other                                                                        145,309
                                                                            -----------
                                                                              4,172,992

Operating costs and expenses
   Cost of sales                                                              2,819,035
   Research and development                                                     319,987
   Marketing, general and administrative                                      1,281,379
                                                                            -----------
                Total operating costs and expenses                            4,420,401
                                                                            -----------
                Loss from operations                                           (247,409)

Other income (expense)
   Interest income                                                                2,530
   Interest expense                                                            (423,438)
                                                                            -----------
                Other income (expense), net                                    (420,908)
                                                                            -----------

   Net loss before reorganization items and extraordinary item                 (668,317)
      Reorganization items                                                   (2,601,424)
                                                                            -----------
   Net loss before extraordinary item                                        (3,269,741)
      Gain on discharge of debt                                               9,013,888
                                                                            -----------
                NET INCOME                                                  $ 5,744,147
                                                                            ===========
</TABLE>



                                      F-20
<PAGE>

                           BIOVEST INTERNATIONAL, INC.
                       (FORMERLY CELLEX BIOSCIENCES, INC.)

                   PREDECESSOR COMPANY STATEMENT OF CASH FLOWS

                         TEN MONTHS ENDED JULY 30, 1999

<TABLE>
<CAPTION>
<S>                                                                            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                                  $ 5,744,147
   Adjustments to reconcile net income to cash
     used in operating activities:
       Depreciation                                                                 52,691
       Amortization                                                                 31,762
       Gain on discharge of debt                                                (9,013,888)
       Changes in operating items:
          Accounts receivable                                                     (288,156)
          Inventories                                                              111,109
          Accounts payable and accrued liabilities                               2,471,691
          Customer deposits                                                       (174,955)
          Other                                                                     (8,944)
                                                                              -------------

                Net cash used in operating activities                           (1,074,543)

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from short term borrowings                                           1,200,000
   Principal payments on long-term debt                                           (112,820)
                                                                              -------------
                Net cash provided by financing activities                        1,087,180
                                                                              -------------

                Net increase in cash                                                12,637

Cash at beginning of the period                                                         -
                                                                              -------------

Cash at end of the period                                                         $ 12,637
                                                                              =============

Cash paid during the period for interest                                          $ 57,666
                                                                              =============
</TABLE>


The accompanying notes are an integral part of this statement.


                                      F-21
<PAGE>

                           BIOVEST INTERNATIONAL, INC.
                       (FORMERLY CELLEX BIOSCIENCES, INC.)

        PREDECESSOR COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

                         TEN MONTHS ENDED JULY 30, 1999

<TABLE>
<CAPTION>
                                                                                                         Foreign          Total
                                        Preferred              Common Stock                              Currency      Shareholders'
                                          Stock        ----------------------------     Accumulated     Translation       Equity
                                          Amount          Shares          Amount         Deficit        Adjustment      (Deficit)
                                       ------------    ------------    ------------    ------------    ------------    ------------
<S>                                   <C>                <C>          <C>             <C>             <C>             <C>
Balance at September 30, 1998          $  2,232,500       6,887,489    $ 25,580,842    $(37,173,716)   $   (180,649)   $ (9,541,023)

Net income                                     --              --              --         5,744,147            --         5,744,147

Reorganization adjustments

   Cancellation of predecessor stock     (2,232,500)     (6,887,489)    (25,580,842)     31,429,569         180,649       3,796,876

   Issuance of new common stock                --         1,026,839       1,393,968            --              --         1,393,968
                                       ------------    ------------    ------------    ------------    ------------    ------------

Balance at July 30, 1999               $       --         1,026,839    $  1,393,968    $       --      $       --      $  1,393,968
                                       ============    ============    ============    ============    ============    ============
</TABLE>

The accompanying notes are an integral part of this statement.


                                      F-22
<PAGE>

                           BIOVEST INTERNATIONAL, INC.
                       (FORMERLY CELLEX BIOSCIENCES, INC.)

                PREDECESSOR COMPANY NOTES TO FINANCIAL STATEMENTS

                         TEN MONTHS ENDED JULY 30, 1999

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Description of the Company

     Except as indicated otherwise, the term the "Company" refers to Biovest
     International, Inc. (formerly Cellex Biosciences, Inc.) or the "Predecessor
     Company" on or before July 30, 1999. The "Reorganized Company" refers to
     Biovest International on or after July 31, 1999.

     The Company provides advanced cell culture technology to pharmaceutical,
     diagnostic and biotechnology companies, as well as leading research
     institutions, worldwide. The Company develops, manufactures and markets
     patented perfusion systems and performs contract production services
     including cell line selection, optimization and subcloning, whole cell and
     secreted protein production and cell banking. Cell culture is a key process
     used by these organizations for the creation of novel proteins and
     monoclonal antibodies needed to detect and treat human diseases such as
     cancer and AIDS.

     Chapter 11 Reorganization

     The Company was the subject of an involuntary bankruptcy petition filed
     with the United States Bankruptcy Court, District of Minnesota, Third
     Division, by three of the Company's unsecured creditors. By request of the
     petitioning creditors and by a stipulation, the Company was granted until
     December 4, 1998 to file its answer to the involuntary petition. The
     Company filed a Consent to order for relief with the Bankruptcy Court on
     December 8, 1998 and operated as a debtor-in-possession pursuant to Chapter
     11 through July 7, 1999 when the Bankruptcy Court entered the order
     confirming the Company's Modified First Amended Plan of Reorganization
     dated June 28, 1999 (the "Plan") which became effective July 30, 1999. For
     financial reporting purposes, the effective date of the Plan is considered
     to be July 31, 1999 (the "Effective Date"). The results of operations for
     the period July 30, 1999 through July 31, 1999 are not considered material.

     The Company's Plan of Reorganization was consummated subject to the cash
     investment by Biovest, L.L.C. ("LLC") of $1,015,000 and the payment of
     approximately $675,000 to a financial institution, a secured creditor of
     the Company. Pursuant to the Plan, on the Effective Date, the $1,015,000 of
     Debtor-In-Possession financing provided by LLC together with the accrued
     interest of $30,000, was converted to common stock of the Reorganized
     Company.




                                      F-23
<PAGE>

                           BIOVEST INTERNATIONAL, INC.
                       (FORMERLY CELLEX BIOSCIENCES, INC.)

          PREDECESSOR COMPANY NOTES TO FINANCIAL STATEMENTS - CONTINUED

                         TEN MONTHS ENDED JULY 30, 1999

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

     Pursuant to the Plan, as of the Effective Date, the Company's existing
     common stock, preferred stock, options and warrants were deemed canceled
     and 1,000,003 shares of new common stock were deemed issued, of which
     520,000 shares (52%) were issued to LLC and 250,003 shares (25%) were
     issued to the Company's unsecured creditors. Until March 15, 2000, the
     remaining 230,000 shares were held in escrow to be released to LLC or the
     Schuster Group, secured creditors of the Company, pursuant to an agreement
     which was incorporated into the Plan. During 2000, LLC paid or obtained the
     release of direct claims and indirect guarantee claims of the Schuster
     Group in the approximate amount of $2,300,000 and the escrowed shares were
     released to LLC.

     Settlements with holders of debt claims were as follows:

     -   Certain claims were not classified. Unclassified administrative expense
         claims, including professional fees, are to be paid in full in cash.
         Post-petition claims incurred in the ordinary course of business during
         the pendency of the Reorganization proceedings were paid on a current
         basis. Certain taxes and accrued interest, totaling $233,622 are to be
         paid in monthly installments for six years from the date of assessment
         with interest at the rate of 8% per annum. After the Effective Date,
         the Company shall continue to pay fees of approximately $5,000 per
         quarter to the U.S. Trustee through the pendency of the bankruptcy
         court proceedings.

     -   Class A-1 secured claims of the Company's financial institution in the
         approximate amount of $675,000 were paid in full by LLC pursuant to the
         Plan and will be repaid monthly with a 15-year amortization with
         interest at 7% per annum. The obligation is payable to LLC in full on
         or before July 30, 2002, provided that Class A-3 Claims of the Schuster
         Group have been paid in full or released.

     -   Class A-2 includes $185,000 payable to LLC, plus interest accrued
         during the period February 9, 1999 through July 30, 1999 ($8,856), and
         are subject to the same treatment discussed above for Class A-1.



                                      F-24
<PAGE>

                           BIOVEST INTERNATIONAL, INC.
                       (FORMERLY CELLEX BIOSCIENCES, INC.)

          PREDECESSOR COMPANY NOTES TO FINANCIAL STATEMENTS - CONTINUED

                         TEN MONTHS ENDED JULY 30, 1999


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

     -   Class A-3 consists of direct and indirect guarantee claims of the
         Schuster Group totaling approximately $2,300,000. Such claims will be
         paid pursuant to a Credit and Stipulation Agreement between LLC and
         Schuster Group which was incorporated into the Plan. Under such
         agreement, during the period from the Effective Date, the Company will
         pay the Schuster Group, on a monthly basis, accrued interest at rates
         ranging from 10% to 12% per annum and certain principal payments, based
         on a 7-year amortization with a three-year balloon, provided that,
         until the Schuster Group claims are paid or released, the aggregate
         monthly debt service payments by the Company, including payments to the
         Schuster Group, cannot exceed $25,000 per month.

     -   Class A-4 consists of an $80,000 certificate of deposit held as a lien
         interest by Norwest Bank, a.k.a. Wells Fargo. Norwest will retain its
         interest in such security; however, with the consent of the Company's
         landlord and Norwest, $68,000 of such security may be applied to
         obligations owed by the Company to the landlord.

     -   Class A-5 is secured by certain assets of the Company relating to the
         Company's fluidized bed technology. In full satisfaction, the Company
         abandoned all interest in such asset and such claim was reclassified by
         the creditor to an unsecured claim.

     -   Class A-6 consists of $501,532 owed to the Internal Revenue Service
         which will be paid in full in monthly installments for six years from
         the date of assessment with interest at the rate of 8% per annum.

     -   Class B consists of the unsecured creditors who received approximately
         250,000 shares of the outstanding common stock of the Reorganized
         Company in full satisfaction and release of their claims.




                                      F-25
<PAGE>

                           BIOVEST INTERNATIONAL, INC.
                       (FORMERLY CELLEX BIOSCIENCES, INC.)

          PREDECESSOR COMPANY NOTES TO FINANCIAL STATEMENTS - CONTINUED

                         TEN MONTHS ENDED JULY 30, 1999

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

     Basis of Presentation

     During the ten months ended July 30, 1999, the Predecessor Company prepared
     its financial statements in accordance with the American Institute of
     Certified Public Accountants' Statement of Position 90-7, "Financial
     Reporting by Entities in Reorganization Under the Bankruptcy Code" ("SOP
     90-7"). The financial statements for the ten months ended July 30, 1999
     distinguish transactions that were directly associated with the
     reorganization from the ongoing operations of the business. Professional
     fees and similar types of expenditures relating to the reorganization
     proceedings were expensed as incurred and reported as reorganization items.
     Interest expense was reported only to the extent that it was paid during
     the proceeding or that it was probable that it would be an allowed priority
     or secured claim.

     SOP 90-7 also calls for the adoption of "fresh-start reporting" if the
     reorganization value of the emerging entity immediately before the
     effective date is less than the total of all post-petition liabilities and
     pre-petition allowed claims and if holders of existing voting shares
     immediately before confirmation receive less than 50% of the voting shares
     of the emerging entity, both conditions of which were satisfied by the
     Company. Fresh-start reporting resulted in material changes to the
     Company's balance sheet, including valuation of assets at fair value in
     accordance with principles of the purchase method of accounting, valuation
     of liabilities pursuant to provisions of the Plan and valuation of equity
     based on the reorganization value of the ongoing business. In accordance
     with fresh-start reporting, the gain on discharge of debt of $9,013,888
     resulting from the reorganization proceedings was reflected as an
     extraordinary item in the statement of operations of the Predecessor
     Company for the ten months ended July 30, 1999.

     After consideration of the Company's debt capacity, projected future
     earnings and cash flows, and after extensive negotiations among parties in
     interest, it was determined that the reorganization value should
     approximate the amount a willing buyer would pay for the assets of the
     Company immediately after the reorganization in addition to the amount of
     resources available and to become available for the satisfaction of
     post-petition liabilities and allowed claims as negotiated between the
     Company and its creditors. Pursuant to the Plan, the Company's senior
     secured creditors, LLC and the Schuster Group, paid an aggregate of
     $1,045,000 to receive 75% of the Company's new common stock, which results
     in a total equity value of $1,394,000.


                                      F-26
<PAGE>

                           BIOVEST INTERNATIONAL, INC.
                       (FORMERLY CELLEX BIOSCIENCES, INC.)

          PREDECESSOR COMPANY NOTES TO FINANCIAL STATEMENTS - CONTINUED

                         TEN MONTHS ENDED JULY 30, 1999

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

     The results of the period shown for the Predecessor Company are not to be
     considered as being indicative of the results of operations that are
     expected for the Reorganized Company. The results of the Predecessor
     Company are not comparable to those of the Reorganized Company.

     Use of Estimates

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

     Property and Equipment

     Depreciation for property and equipment is computed using the straight-line
     method over the estimated useful lives of three to seven years. Repair and
     maintenance costs are charged to expense as incurred. Any gains or losses
     on the disposal of property and equipment are charged to operations.

     Patents and Trademarks

     Costs incurred in relation to patent applications are capitalized as
     deferred patent costs. If and when a patent is issued, the related patent
     application costs are transferred to the patent account and amortized over
     the legal life of the patent. If it is determined that a patent will not be
     issued, the related patent application costs are charged to expense at the
     time such determination is made. Patent and trademark costs are being
     amortized using the straight-line method over periods ranging from ten to
     17 years.


                                      F-27
<PAGE>

                           BIOVEST INTERNATIONAL, INC.
                       (FORMERLY CELLEX BIOSCIENCES, INC.)

          PREDECESSOR COMPANY NOTES TO FINANCIAL STATEMENTS - CONTINUED

                         TEN MONTHS ENDED JULY 30, 1999


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

     Revenue Recognition

     System and consumable sales are recognized in the period in which the
     applicable products are shipped. The Company does not provide its customers
     with a right of return, however, deposits made by customers must be
     returned to customers in the event of non-performance by the Company.
     Revenues from contract cell production services are recognized during the
     period the applicable product is shipped, or in the case of a service, when
     the applicable service is performed. Grant revenue is recognized during the
     period in which the related activities are conducted.

     Net Income (Loss) Per Common Share

     Pursuant to the Plan, as of the Effective Date, the Predecessor Company's
     existing common stock, preferred stock, options and warrants were deemed
     canceled and 1,000,000 shares of new common stock were deemed issued to the
     Company's new investors and creditors. Loss per common share has not been
     computed because such information is not considered meaningful.

2.   CONCENTRATION OF CREDIT RISK

     One customer accounted for approximately 19% of total revenues for the ten
     months ended July 30, 1999.

     A significant amount of the Predecessor Company's revenues was derived from
     export sales. The Predecessor Company's export sales were 38% of the total
     revenues for the ten months ended July 30, 1999.

3.   RENT EXPENSE

     Rent expense was $201,901 for the ten months ended July 30, 1999.


                                      F-28
<PAGE>

                           BIOVEST INTERNATIONAL, INC.
                       (FORMERLY CELLEX BIOSCIENCES, INC.)

          PREDECESSOR COMPANY NOTES TO FINANCIAL STATEMENTS - CONTINUED

                         TEN MONTHS ENDED JULY 30, 1999


4.   INCOME TAXES

     No provision for income taxes was recorded for the ten months ended July
     30, 1999 as the gain on discharge of debt was excluded from taxable income
     which resulted in a taxable loss for the period.

5.   REORGANIZATION ITEMS

     Reorganization items consists of costs related to severance payments to two
     former executive officers and directors of the Predecessor Company and
     payments to certain employees; professional fees and services and; claims
     allowed by the bankruptcy court which were originally obligations of LSL
     Group and LSL Biolafitte SA, former subsidiaries of the Predecessor
     Company, but became direct obligations of the Company pursuant to guarantee
     and reimbursement agreements.

6.   GAIN ON DISCHARGE OF DEBT

     Pursuant to SOP 90-7, the gain on the discharge of debt of $9,013,888
     resulting from the reorganization proceedings was reflected as an
     extraordinary item in the statement of operations of the Company for the
     ten months ended July 30, 1999.


                                      F-29