<PAGE>


                     U.S. Securities and Exchange Commission
                             Washington, D.C. 20549
                                   Form 10-QSB


(Mark One)

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

         For the quarterly period ended December 31, 2002

         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT
 ---
         For the transition period from               to
                                        --------------    ----------------

                         Commission file number 0-11480

                           BIOVEST INTERNATIONAL, INC.
         (Exact name of small business issuer as specified in its charter)

              Delaware                                  41-1412084
              --------                                  ----------
(State or other jurisdiction                (IRS Employer Identification Number)
of incorporation or organization)

                   8500 Evergreen Blvd., Minneapolis, MN 55433
                   -------------------------------------------
                    (Address of principal executive offices)

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

         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
                                                                       ---

         At February 17, 2003, there were 9,796,363 shares of the registrant's
Common Stock, $.01 par value, issued and outstanding.

                  Transitional Small Business Disclosure Format
                              (check one) Yes   No X
                                                  ---





<PAGE>



INDEX
BIOVEST INTERNATIONAL, INC.

<TABLE>
<CAPTION>

                                                                                                          PAGE
                                                                                                          ----
<S>                                                                                                       <C>
PART I.  FINANCIAL INFORMATION

     ITEM 1. Financial Statements

         Balance Sheet as of December 31, 2002 (unaudited)...............................................  3

         Statements of Operations for the Three Months ended December 31, 2002 and 2001 (unaudited)......  4

         Statements of Cash Flows for the Three Months ended December 31, 2002 and 2001 (unaudited)......  5

         Notes to Financial Statements (unaudited).......................................................  6

     ITEM 2. Management's Discussion and Analysis or Plan
                  of Operations.......................................................................... 15

     ITEM 3. Controls and Procedures..................................................................... 19

PART II. OTHER INFORMATION

     ITEM 6. Exhibits and Reports on Form 8-K........... ................................................ 20

             Signatures.................... ............................................................. 20

             Certifications.............................................................................. 21

</TABLE>











                                                                               2
<PAGE>


<TABLE>
<CAPTION>

 PART I - FINANCIAL INFORMATION
     ITEM 1. FINANCIAL STATEMENTS - BIOVEST INTERNATIONAL, INC.
                                     BALANCE SHEET                                                    DECEMBER 31, 2002
                                         ASSETS                                                       (UNAUDITED)
                                         ------                                                ------------------------
<S>                                                                                            <C>
 Current assets
   Cash                                                                                         $               259,000
   Accounts receivable, net of $125,000 allowance for doubtful accounts                                         995,000
   Costs and estimated earnings in excess of billings on uncompleted contracts                                   51,000
   Inventories                                                                                                1,035,000
   Other                                                                                                        162,000
                                                                                                ------------------------
     Total current assets                                                                                     2,502,000
 Property, plant and equipment, net                                                                           1,120,000
 Other assets
   Inventories                                                                                                  245,000
   Patents and trademarks, net                                                                                  727,000
   Reorganization value in excess of amounts allocable to identifiable assets, net                            2,131,000
                                                                                                ------------------------
                                                                                                $             6,725,000
                                                                                                ========================
                            LIABILITIES AND SHAREHOLDERS' EQUITY
                            ------------------------------------

 Current liabilities
   Current portion of notes payable                                                             $               509,000
   Current portion of long-term debt                                                                             28,000
   Accounts payable                                                                                           1,290,000
   Customer deposits                                                                                            286,000
   Deferred revenue                                                                                              27,000
   Accrued liabilities
      Compensation and related taxes                                                                          1,877,000
      Other                                                                                                     466,000
   Billings in excess of costs and estimated earnings on uncompleted contracts                                  416,000
                                                                                                ------------------------
     Total current liabilities                                                                                4,899,000
 Long-term notes payable                                                                                      1,976,000
 Long-term debt                                                                                                 123,000
 Commitments and contingencies                                                                                       --
 Shareholders' equity
    Preferred stock, $ .01 par value, 10,000,000 shares authorized; none issued and
      outstanding                                                                                                    --
   Common stock, $.01 par value, 50,000,000 shares authorized;
      9,796,363 shares issued and outstanding                                                                    98,000
   Additional paid-in capital                                                                                13,194,000
   Accumulated deficit                                                                                      (13,315,000)
   Stock subscription receivable                                                                               (250,000)
                                                                                                -----------------------
     Total shareholders' equity                                                                                (273,000)
                                                                                                ------------------------
                                                                                                $             6,725,000
                                                                                                ========================
</TABLE>


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


                                                                               3

<PAGE>



                           BIOVEST INTERNATIONAL, INC.
                            STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
<TABLE>
<CAPTION>


                                                         THREE MONTHS          THREE MONTHS
                                                             ENDED                 ENDED
                                                       DECEMBER 31, 2002     DECEMBER 31, 2001
                                                       ------------------    ------------------
<S>                                                    <C>                   <C>
Revenues
  Contract production services                         $         905,000        $    1,817,000
  Consumable sales                                               468,000               291,000
  System sales                                                    83,000               464,000
  Other                                                           88,000                94,000
                                                       ------------------    ------------------

  Total revenues                                               1,544,000             2,666,000
                                                       ------------------    ------------------

Operating costs and expenses
  Cost of sales                                                1,468,000             1,946,000
  Research and development                                       426,000             1,053,000
  Marketing, general and administrative                          790,000             1,094,000
                                                       ------------------    ------------------

  Total operating costs and expenses                           2,684,000             4,093,000
                                                       ------------------    ------------------

Loss from operations                                          (1,140,000)           (1,427,000)

Other income (expense)
  Interest expense                                              (112,000)             (106,000)
  Other income                                                    50,000                     -
                                                       ------------------    ------------------

Net loss                                               $      (1,202,000)       $   (1,533,000)
                                                       ==================    ==================

Net loss per common share-basic and diluted            $            (.12)       $         (.16)
                                                       ==================    ==================

Weighted average number of common shares
  outstanding- basic and diluted                               9,796,363             9,628,609
                                                       ==================    ==================

</TABLE>


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


                                                                               4



<PAGE>



                           BIOVEST INTERNATIONAL, INC.
                            STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                THREE MONTHS ENDED     THREE MONTHS ENDED
                                                                                DECEMBER 31, 2002      DECEMBER 31, 2001
                                                                                ------------------     ------------------
<S>                                                                             <C>                      <C>
Cash flows from operating activities
   Net loss                                                                       $   (1,202,000)        $    (1,533,000)
   Adjustments to reconcile net loss to net cash used in operating activities
     Depreciation                                                                         60,000                  48,000
     Amortization                                                                         30,000                  63,000
     Issuance of common stock, options and warrants for services                           -----                  55,000
     Amortization of warrants related to debt                                             30,000                  58,000
     Changes in current operating items
         Accounts receivable                                                             298,000                (451,000)
         Costs and estimated earnings in excess of billings on uncompleted
           contracts                                                                     (23,000)                451,000
         Inventories                                                                      34,000                  41,000
         Other                                                                            41,000                 239,000
         Accounts payable and accrued liabilities                                        209,000                 496,000
         Customer deposits                                                               109,000                 354,000
         Billings in excess of costs and estimated earnings on uncompleted
         contracts                                                                       129,000                 (44,000)
                                                                                ----------------         ---------------
           Net cash used in operating activities                                        (285,000)               (223,000)
                                                                                ----------------         ---------------
Cash flows from investing activities
   Capital expenditures                                                                    -----                 (38,000)
                                                                                ----------------         ---------------
           Net cash used in investing activities                                           -----                 (38,000)
                                                                                ----------------         ---------------
Cash flows from financing activities
   Proceeds from short-term borrowings                                                     -----                 775,000
   Repayment of short-term borrowings                                                      -----                (200,000)
   Principal payments on long-term debt                                                    -----                 (34,000)
   Financing costs                                                                         -----                 (16,000)
   Proceeds from long-term debt                                                           50,000                   -----
                                                                                ----------------         ---------------
           Net cash provided by financing activities                                      50,000                 525,000
                                                                                ----------------         ---------------
Net increase (decrease) in cash                                                         (235,000                 264,000
Cash at beginning of period                                                              494,000                   -----
                                                                                ----------------         ---------------
Cash at end of period                                                             $      259,000         $       264,000
                                                                                ----------------         ---------------
Cash paid for interest                                                            $       13,000         $        21,000
                                                                                ================         ===============

Non-cash disclosure of investing and financing activities:
         During the quarter ended December 31, 2002, the Company recorded $ 319,000 as additional paid-in capital
 to reflect the issuance of warrants.

</TABLE>


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

                                                                               5


<PAGE>


BIOVEST INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)




(1)      DESCRIPTION OF THE COMPANY

         Except as indicated otherwise, the term the "Company" refers to Biovest
International, Inc.

         The Company is a biotechnology company focused on production and
contract manufacturing of biologic drugs and products from small through
commercial scale. It has historically developed, manufactured and marketed
patented cell culture systems and equipment to pharmaceutical, diagnostic and
biotechnology companies, as well as leading research institutions worldwide, and
has provided contract cell production services to those institutions. While
continuing this business, management has chosen to re-orient the Company's
focus, assets and operations to increase contract cell production and biologic
drug development and ownership. The Company's first drug product, a personalized
vaccine for the most common and fastest-growing form of hematologic cancer,
known as B-cell Non-Hodgkin's lymphoma, is currently in a Phase III FDA-approved
pivotal licensing trial.

(2)      SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

         The accompanying unaudited condensed financial statements have been
derived from unaudited interim financial information prepared in accordance with
the rules and regulations of the Securities and Exchange Commission for
quarterly financial statements. Certain information and note disclosures
normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted pursuant to those rules and regulations, although the
Company believes that the disclosures made are adequate to make the information
presented not misleading. The financial statements of the Company, in the
opinion of management, include all normal and recurring adjustments necessary
for a fair presentation of results as of the dates and for the periods covered
by the financial statements.

         Operating results for the three months ended December 31, 2002 are not
necessarily indicative of the results that may be expected for the entire fiscal
year. For further information, refer to the financial statements and footnotes
thereto included in the Company's Annual Report on Form 10-KSB for the fiscal
year ended September 30, 2002.

         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.

                                                                               6

<PAGE>


BIOVEST INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)




         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 Company's Modified First Amended Plan of
Reorganization ("Plan") and valuation of equity based on the reorganization
value of the ongoing business.

         As of the first fiscal quarter, the Company adopted SFAS 142 under
which amortization of goodwill is no longer permitted. Intangible assets such as
goodwill are to be tested for impairment annually and whenever there is an
impairment indicator. Any impairment losses resulting from testing will be
recognized as a cumulative effect of a change in accounting principle. During
the comparable quarter last year, $33,000 or less than $.01 per share was
recognized as amortization and reported as general and administrative expense.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

         The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures 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.

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 three months ended December 31, 2002 and 2001 no common share
equivalents would have been included in the computation of diluted net income
(loss) per share because there were losses in both years and the effect would
have been antidilutive.

 RECENT ACCOUNTING PRONOUNCEMENT

         On July 30, 2002, the FASB issued Statement of Financial Accounting
Standards No. 146, "Accounting for Costs Associated with Exit or Disposal
Activities" ("SFAS 146"), that is applicable to exit or disposal activities
initiated after December 31, 2002. This standard requires companies to recognize
costs associated with exit or disposal activities when they are incurred rather
than at the date of


                                                                               7

<PAGE>



BIOVEST INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)




a commitment to an exit or disposal plan. This standard does not apply where
SFAS 144 is applicable.

         In the quarter ended December 31, 2002, the Company closed its
corporate headquarters in Englewood Cliffs, New Jersey and relocated to existing
Company facilities in Minneapolis, Minnesota. At the closed facility the lease
had expired before December 31, 2002. Termination benefits amounting to $14,000
were paid in the quarter ended December 31, 2002. Costs to consolidate the
facility will be recognized in the quarter ended March 31, 2003 when fully
determined.

         On December 31, 2002, the FASB issued Statement of Financial Accounting
Standards No. 148, "Accounting for Stock-Based Compensation-Transition and
Disclosure" ("SFAS 148"), that is applicable to financial statements issued for
fiscal years ending after December 15, 2002. In addition, interim disclosure
provisions are applicable for financial statements issued for interim periods
beginning after December 15, 2002. This standard amends SFAS 123 and provides
guidance to companies electing to voluntarily change to the fair value method of
accounting for stock-based compensation. In addition, this standard amends SFAS
123 to require more prominent and more frequent disclosures in financial
statements regarding the effects of stock-based compensation.


 (3)     GOING CONCERN

         During the three months ended December 31, 2002 the Company incurred a
net loss of $1,202,000. At December 31, 2002 the Company had a deficit in
working capital of approximately $2,400,000. The Company has been meeting its
cash requirements through the use of cash on hand and short-term borrowings,
primarily from affiliates.

         In September 2001 the Company successfully entered into a definitive
Cooperative Research and Development Agreement ("CRADA") with the National
Cancer Institute ("NCI") for the development and ultimate commercialization of
patient-specific vaccines for the treatment of non-Hodgkin's low-grade
follicular lymphoma. The terms of the CRADA included, among other things, a
requirement for us to pay $530,000 quarterly to NCI for expenses incurred in
connection with the ongoing Phase III clinical trials. The Company made the
first payment in the quarter ended September 30, 2001. On May 8, 2002 the
Company and the NCI executed an amendment to the CRADA, which require a single
payment of $350,000, due on September 30, 2002, in lieu of the quarterly
payments of the original agreement. Under the amendment, quarterly payments of
$530,000 will resume on October 1, 2002. On October 15, 2002 a new amendment to
the CRADA was executed under which the Company is not required to make the
$350,000 payment due to the NCI on September 30, 2002 nor the $530,000 payment
due on October 1, 2002. The next payment due from the Company is $530,000 within
30 days of the April 1, 2003 due date. Failure to remit this payment will
constitute the Company's unilateral termination of the CRADA


                                                                               8


<PAGE>



BIOVEST INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)




and we will lose the rights to commercialize the results of our research with
the NCI. Successful development of the vaccine, if approved by the FDA, from
Phase III clinical trials through commercialization will commit the Company to
several years of significant expenditures before revenues will be realized, if
ever.

         The Company's ability to continue its present operations and meet its
obligations under the CRADA is dependent upon its ability to obtain significant
additional funding. 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. Management is currently
in the process of exploring various financing alternatives to meet the Company's
cash needs, including additional short-term loans from shareholders and others
and the sale of equity securities. Management believes they will be able to
raise the necessary funds to continue operations in the near term.

         There is no assurance that the additional required funds can be
obtained on terms acceptable or favorable to the Company, if at all. The net
losses incurred and the need for additional funding raise substantial doubt
about the Company's ability to continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

(4)      DETAILS TO BALANCE SHEET

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 valuations of its
customers. Two customers accounted for 12% and 13% of revenues for the three
months ended December 31, 2002. These customers accounted for 26% and 11% of the
Company's trade accounts receivable balance at December 31, 2002. Two customers
accounted for 23% and 12% of revenues for the three months ended December 31,
2001.

         A significant amount of the Company's revenue has been derived from
export sales. The Company's export sales were 33% and 47% for the three months
ended December 31, 2002, and 2001, respectively. For the three months ended
December 31, 2002, one foreign country accounted for 13% of total revenues. For
the three months ended December 31, 2001, one foreign country accounted for 14%
of total revenues.


                                                                               9

<PAGE>



BIOVEST INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)




INVENTORIES


         Inventories consist of the following:


                                                      DECEMBER 31, 2002
                                                      -----------------
                    Finished goods..........               $170,000
                    Work-in-process........                 115,000
                    Raw materials...........                995,000
                                                      -----------------
                                                          1,280,000
                    Less non-current portion               (245,000)
                                                      -----------------
                                                        $ 1,035,000
                                                      =================


         The Company has inventory quantities in excess of anticipated sales
requirements for the twelve months subsequent to December 31, 2002. Accordingly,
a portion of the Company's inventory balance is classified as a non-current
asset as of that date.

(5)      NOTES PAYABLE

         During September 2002, two of the four existing loans, that remained
from the original seven loans entered into in fiscal 2000, were renewed with new
loans bearing interest at 10%, due on September 1, 2004, one loan was renewed at
the same rate with a due date of September 1, 2003 and the other note was
redeemed. All three remaining loans are convertible into shares of the Company's
common stock at $1.00 per share at the holder's option versus the original price
of $3.00 per share. In connection with the two renewals for a term of two years,
the Company issued each party additional warrants to purchase 25,000 shares of
the Company's common stock with an exercise price of $1.25 per share,
exercisable from September 1, 2002 through September 30, 2007. The aggregate
value of the warrants using the Black-Scholes pricing model, assuming zero
dividend yield; a risk-free rate of 3.28%; expected volatility of 92.92%; and
term of five years, was estimated to be $25,000 and is being amortized over the
life of the loans which results in a higher effective interest rate.

         During the period from October 1, 2002 through December 19, 2002 the
Company negotiated extensions on 13 individual loans maturing at various times
within the first four months of fiscal 2003 aggregating $1,100,000. These loans
bear interest at 7.5% and are also convertible into shares of the Company's
common stock at $1.00 per share, at the holder's option, if the Company wishes
to pay amounts under the loan before maturity. Nine of the loans aggregating
$950,000 were extended for two additional years. Two of these nine loans
increased the amount loaned by $25,000 each. In so doing


                                                                              10


<PAGE>



BIOVEST INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)




they also become a secured creditor with respect to the new loan, will receive
interest on the increment at 7% and warrants exercisable at $1.25 for five years
in an amount equal to 25% of the number of shares into which their total
investment is convertible. By agreeing to extend the nine maturing loans for two
years, all investors received warrants to purchase 25% of the number of shares
of common stock that they are entitled to convert their investment into, at
$1.25 per share for five years.

         The remaining four notes payable aggregating $150,000 were extended for
one year, bear interest at 7.5%, and are convertible into shares of the
Company's common stock at $1.00 per share, at the holder's option, if the
Company wishes to pay amounts under the loan before maturity. One of these
loans, amounting to $50,000, includes the provision that the Company will begin
repaying the principal at the rate of $2,000 per month beginning December 16,
2002 and each month thereafter until the maturity date when the remaining
principal and accrued interest will be payable. In the event the Company should
realize proceeds from any source in the amount of at least $200,000, the Company
shall repay the balance of the note then outstanding within 15 days of receipt
of the proceeds. Further, in the event of any closing of a financing of capital
proceeds in an amount of $25,000 or more, the Company agrees to repay the loan
in the amount of 25% of the amount of the financing or the amount owed whichever
is smaller, within 15 days of the closing of the financing. Any event of default
in payments or other terms and conditions of this loan shall constitute a
material default in this loan and an affiliated loan for $50,000 due on October
11, 2003. Both loans would then be accelerated and subject to such remedies as a
money judgment and enforced collection of all remaining principal and accrued
interest owing at that time.

         For assistance with the negotiations of the above extensions, the
Company repriced the 100,000 warrants, previously issued with an exercise price
of $2.50 per share, and the 100,000 warrants previously issued with an exercise
price of $5.00 per share, to a third party to $1.25 and $1.50 per share,
respectively. The warrants are exercisable immediately and have a term of five
years. The aggregate additional value of the repriced warrants using the
Black-Scholes pricing model, assuming zero dividend yield; risk-free interest
rate of 3.18%; expected volatility of 87.98%; and term of five years, was
estimated to be $27,000 and was expensed in the quarter.

(6)      LONG-TERM DEBT

         Long-term debt was entered into pursuant to the Company's
reorganization and consists of the following at December 31, 2002:

                                                                              11

<PAGE>



BIOVEST INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)


<TABLE>
<CAPTION>
<S>                                                                                   <C>
Promissory note payable to State of Minnesota, with interest of 8% per annum,
   payable in monthly installments of $2,700,
   including interest through February 1, 2005............                             64,000
Amounts payable to regulatory agencies (i)...........                                  87,000
                                                                                     ---------
                                                                                      151,000

Less current portion of long-term debt..........                                       28,000
                                                                                     ---------
                                                                                     $123,000
                                                                                     =========
</TABLE>

(i)      Pursuant to the Plan, the Company was obligated to repay certain
         regulatory agencies an aggregate amount of approximately $94,000 in
         equal monthly installments for six years from the date of assessment
         with interest at the rate of 8% per annum. During fiscal 2001, the
         Company was assessed $7,000, which was paid in full, by one of these
         agencies, but promissory notes with the others have not been signed.


         At December 31, 2002, the aggregate maturities of long-term debt by
fiscal year are as follows: remainder of 2003-$21,000; 2004-$30,000;
2005-$13,000; and subsequent years- $87,000.


(7)      SHAREHOLDERS' EQUITY

         STOCK OPTIONS AND WARRANTS

         During the three months ended December 31, 2002, the Company granted
550,000 warrants to existing creditors to the Company as part of their incentive
to extend their existing loans for two years. The warrants have an exercise
price of $1.25 per share and a five-year term.

 (8)     INCOME TAXES

         No provision for income taxes has been recorded for the three months
ended December 31, 2002 and 2001 due to the losses incurred during the periods.
At December 31, 2002, the Company has net operating loss carryforwards of
approximately $48,000,000 (expiring 2003 to 2020) and a capital loss
carryforward of approximately $14,000,000 (expiring in 2003). Due to various
changes in ownership of the Company, a significant portion of these
carryforwards are subject to significant restrictions with


                                                                              12


<PAGE>



BIOVEST INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)




respect to the ability of the Company to use these amounts to offset future
taxable income. Use of the Company's net operating loss carryforwards may be
further limited as a result of future equity transactions. 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.

(9)      COMMITMENTS AND CONTINGENCIES

LEGAL PROCEEDINGS

         During fiscal 2001 the Company entered into a settlement agreement in
connection with a legal matter. The terms of the settlement agreement provide
for the Company and another plaintiff to be jointly paid an aggregate principal
amount of $1,000,000 plus interest at prime. The principal amount is to be paid
in increments of $50,000, $100,000 and $200,000 payable on various dates
beginning July 2001 and ending June 2004, when all interest accrued on the
principal shall be due and payable. The $100,000 payment due on August 15, 2002
was paid on October 10, 2002. The $100,000 payment due on January 15, 2003 has
not been paid and is under renegotiation per the terms of the note. An
additional $450,000 is due in future periods, of which $375,000 is due to the
Company.

         The payments received from the defendant are to be shared by the
Company and the other plaintiff pursuant to a separate agreement, which provides
for the other plaintiff to receive up to $350,000 in the aggregate.

         The Company and the defendant also entered into a royalty agreement
whereby the defendant is to pay a royalty to the Company of three percent of its
product sales up to an aggregate of $3,000,000 in total royalty payments. There
have been no product sales and no accrual for royalties has been recorded.

         The Company is uncertain about future collections and is not able to
assess the defendant's ability to perform under the settlement agreement. As a
result, the Company will record additional payments as income when received. In
the quarter ended December 31, 2002 the Company received a payment under the
agreement amounting to $50,000 which was reported as other income.

          From time to time the Company is subject to various legal proceedings
in the normal course of business. Management believes that these proceedings
will not have a material adverse effect on the financial statements.


                                                                              13

<PAGE>



BIOVEST INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)




(10)     SUBSEQUENT EVENTS

         In January 2003, a $300,000 loan was negotiated which provided for
three $100,000 installments to be made per week beginning on January 13, 2003.
The loan, in the form of a promissory note, is secured by a $500,000 receivable
from a customer. The creditor also received 200,000 shares of Company stock and
is to receive 1% simple interest for two months. The loan and interest is also
convertible into common stock in the Company at $0.50 per share during the term
of the note. Warrants to purchase 200,000 shares of common stock at $0.50 per
share exercisable within five years were also included.




















                                                                              14

<PAGE>



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

OVERVIEW

     On July 31, 1999, we emerged from Chapter 11 Bankruptcy Reorganization with
new management, officers and directors.

     As of July 31, 1999, we 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".

     Fresh-start reporting resulted in material changes to our 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 addition, our capital structure was recast in conformity
with the Plan.

     In September 2001 the Company successfully entered into a definitive
Cooperative Research and Development Agreement ("CRADA") with the National
Cancer Institute ("NCI") for the development and ultimate commercialization of
patient-specific vaccines for the treatment of non-Hodgkin's low-grade
follicular lymphoma. The terms of the CRADA included, among other things, a
requirement for us to pay $530,000 quarterly to NCI for expenses incurred in
connection with the ongoing Phase III clinical trials. The Company made the
first payment in the quarter ended September 30, 2001. On May 8, 2002 the
Company and the NCI executed an amendment to the CRADA, which required a single
payment of $350,000, due on September 30, 2002, in lieu of the quarterly
payments of the original agreement. Under the amendment, quarterly payments of
$530,000 will resume on October 1, 2002. On October 15, 2002 a new amendment to
the CRADA was executed under which the Company is not required to make the
$350,000 payment due to the NCI on September 30, 2002 nor the $530,000 payment
due on October 1, 2002. The next payment due from the Company is $530,000 within
30 days of the April 1, 2003 due date. Failure to remit this payment will
constitute the Company's unilateral termination of the CRADA and we will lose
the rights to commercialize the results of our research with the NCI. Successful
development of the vaccine, if approved by the FDA, from Phase III clinical
trials through commercialization will commit the Company to several years of
significant expenditures before revenues will be realized, if ever.

     Our ability to continue our present operations and meet our obligations
under the CRADA is dependent upon our ability to obtain significant additional
funding. We are currently in the process of exploring various financing
alternatives to meet our cash needs, including additional short-term loans from
shareholders and others and the sale of equity securities. Our management
believes we will be able to raise the necessary funds to continue operations in
the near term.

     There is no assurance that the additional required funds can be obtained on
terms acceptable or favorable to the Company, if at all. The net losses we have
incurred and the need for additional funding raise substantial doubt about our
ability to continue as a going concern. Our financial statements do not include
any adjustments that might result from the outcome of this uncertainty.



                                                                              15

<PAGE>



CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     Our financial statements have been prepared in accordance with accounting
principles generally accepted in the United States. The preparation of these
financial statements requires the Company to make significant estimates and
judgments that affect the reported amounts of assets, liabilities, revenues,
expenses and related disclosure of contingent assets and liabilities. The
Company evaluates its estimates, including those related to bad debts,
inventories, intangible assets, contingencies and litigation on an ongoing
basis. The Company bases its estimates 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. Actual results may differ from these estimates under different
assumptions or conditions.

     The Company believes the following critical accounting policies, among
others, involve the more significant judgments and estimates used in the
preparation of our consolidated financial statements:

     The Company maintains allowances for doubtful accounts for estimated losses
resulting from the inability of its customers to make required payments. If the
condition of our customers were to deteriorate, resulting in an impairment of
their ability to make payments, additional allowances may be required.

     Inventories are recorded at the lower of cost or market. Write-downs of
inventories to market value are based upon contractual provisions and
obsolescence, as well as assumptions about future demand and market conditions.
If assumptions about future demand change and/or actual market conditions are
less favorable than those projected by management, additional write-downs of
inventories may be required.

     In assessing the recoverability of the Company's amounts recorded as
reorganization value in excess of amounts allocable to identifiable assets,
significant assumptions regarding the estimated future cash flows and other
factors to determine the fair value of the respective assets must be made, as
well as the related estimated useful lives. If these estimates or their related
assumptions change in the future as a result of changes in strategy and/or
market conditions, the Company may be required to record impairment charges for
these assets.


INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS

     This report includes forward-looking statements that are subject to certain
risks and uncertainties which could cause actual results or facts to differ
materially from such statements for a variety of reasons, including, but not
limited to: industry conditions, changes in product supply, pricing and consumer
demand, competition, other uncertainties in the markets for biotechnology
products and changes in relationships with key suppliers. Shareholders and other
readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date on which they are made. The Company
undertakes no obligation to update publicly or revise any forward-looking
statements.



                                                                              16

<PAGE>



RESULTS OF OPERATIONS

     REVENUES. Revenues for the three months ended December 31, 2002 of
$1,544,000 were down 42% from $2,666,000 for the three months ended December 31,
2001. Contract cell culture production services for the three months ended
December 31, 2002 decreased 50% from $1,817,000 to $905,000. The decreases are
primarily due to fewer contracts and delays in starting new projects. Consumable
sales for the three months ended December 31, 2002 increased 61% from $291,000
to $468,000 when compared with last year. Much of the increase in consumable
revenues in the first fiscal quarter versus last year is due to customers
anticipation of delivery delays associated with the relocation of consumable
operations at the end of December 2002. Systems sales decreased 82% from the
prior year due to the timing of delivery schedules between the periods.

     GROSS MARGIN. The overall gross margin for the first quarter of fiscal year
2003 decreased versus the comparable quarter last year from 27% to 5%. The
decreased gross margin for the first fiscal quarter of 2003 is due primarily to
the reduced contract cell culture production volume. This volume was
insufficient to absorb the fixed overhead of the Company.

     OPERATING EXPENSES. Research and development expenses for the three months
ended December 31, 2002 decreased approximately $627,000 or 60% from the
comparable quarter, reflecting decreased expenses for the CRADA. CRADA expenses
for the three months ended December 31, 2002 were approximately $169,000 versus
$992,000 for the comparable period. CRADA related expenses would need to
increase substantially this fiscal year versus last year, if our plan is
realized. These expenses would be associated primarily with increased patient
accrual expenses for the clinical trial and increased administration payments to
the NCI.

     Marketing, general and administrative expenses decreased $304,000 in the
three months ended December 31, 2002 versus the same period in fiscal 2001. The
decrease is attributed largely to decreased compensation costs and professional
services expenses. The comparable period in fiscal 2001 included $33,000 of
amortization of goodwill which is not included in the comparable period of
fiscal 2002 due to the adoption of SFAS 142 which eliminated amortization in
favor of the fair value method for testing for impairment. The three months
ended December 31, 2002 included approximately $14,000 of termination benefits
associated with the close and relocation of our corporate headquarters to
another existing facility within the Company. Additional cost of relocating this
facility will be recognized in the quarter ended March 31, 2003.

     OTHER EXPENSE, NET. Other Expense, Net consists primarily of interest
expense on the Company's long-term and short-term loans, primarily from
affiliates. Interest expense for the first three months of fiscal 2002 was
$6,000 higher than for the first three months of fiscal 2001. Partially
offsetting this expense was the receipt of $50,000 as proceeds from the legal
settlement in October 2001.


LIQUIDITY AND CAPITAL RESOURCES

     On December 31, 2002 the Company had a working capital deficit of
$2,397,000 compared to a working


                                                                              17


<PAGE>



capital deficit of $1,061,000 at September 30, 2002.

     During the three months ended December 31, 2002 and 2001, we utilized zero
and $38,000 of cash for capital expenditures.

     We have incurred significant losses and cash flow deficits in previous
years. During fiscal year 2002 and 2001 we incurred losses of $4,200,000 and
$5,832,000. During fiscal year 2002 and 2001, we used $297,000 and $2,070,000 of
cash flow for operations. During the quarter ended December 31, 2002 we incurred
a loss of $1,202,000 and used $285,000 of cash flow for operations. We have been
meeting our cash requirements through the use of cash on hand and short-term
borrowings, primarily from affiliates.

     During the three months ended December 31, 2002 the Company obtained
$50,000 in additional loans and extended approximately $2,400,000 of the
existing loans for two years. The new loans bear interest at 7.0%, are due in
November 2004 and are also convertible into shares of the Company's common stock
at $1.00 per share, at the holder's option, if the Company wishes to pay amounts
under the loans before maturity. The Company also issued to the holders of each
of these new loans 25,000 additional warrants with an exercise price of $1.25
per share and a term of five years. All extended loans were renewed at the same
interest rate, conversion was reduced to $1.00 per share and 500,000 additional
five-year warrants, exercisable at $1.25 per share, were issued.

     In September 2001 the Company successfully entered into a definitive
Cooperative Research and Development Agreement ("CRADA") with the National
Cancer Institute ("NCI") for the development and ultimate commercialization of
patient-specific vaccines for the treatment of non-Hodgkin's low-grade
follicular lymphoma. The terms of the CRADA included, among other things, a
requirement for us to pay $530,000 quarterly to NCI for expenses incurred in
connection with the ongoing Phase III clinical trials. The Company made the
first payment in the quarter ended September 30, 2001. On May 8, 2002 the
Company and the NCI executed an amendment to the CRADA, which require a single
payment of $350,000, due on September 30, 2002, in lieu of the quarterly
payments of the original agreement. Under the amendment, quarterly payments of
$530,000 will resume on October 1, 2002. On October 15, 2002 a new amendment to
the CRADA was executed under which the Company is not required to make the
$350,000 payment due to the NCI on September 30, 2002 nor the $530,000 payment
due on October 1, 2002. The next payment due from the Company is $530,000 within
30 days of the April 1, 2003 due date. Failure to remit this payment will
constitute the Company's unilateral termination of the CRADA and we will lose
the rights to commercialize the results of our research with the NCI. Successful
development of the vaccine, if approved by the FDA, from Phase III clinical
trials through commercialization will commit the Company to several years of
significant expenditures before revenues will be realized, if ever.

     There is no assurance that the additional funds, which are required, can be
obtained on terms acceptable or favorable to us, if at all. Substantial delays
in obtaining such financing would have an adverse effect on our ability to
perform under the CRADA.


                                                                              18

<PAGE>



FLUCTUATIONS IN OPERATING RESULTS

     The Company's operating results may vary significantly from quarter to
quarter or year to year, depending on factors such as timing of
biopharmaceutical development and commercialization of products by the Company's
customers, the timing of increased research and development and sales and
marketing expenditures, the timing and size of orders and the introduction of
new products or processes by the Company. Consequently, revenues, profits or
losses may vary significantly from quarter to quarter or year to year, and
revenue or profits in any period will not necessarily be indicative of results
in subsequent periods.

ITEM 3.       CONTROLS AND PROCEDURES

            Within 90 days prior to the date of this report, we carried out an
evaluation, under the supervision and with the participation of our management,
including our chief executive officer and chief financial officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures. Based on this evaluation, our chief executive officer and chief
financial officer concluded that our disclosure controls and procedures are
effective in timely accumulating and communicating to them material information
required to be disclosed in our reports filed with the Securities and Exchange
Commission. As of the date of this report there have been no significant changes
in our internal controls or in other factors that could significantly affect
those controls subsequent to the date of their last evaluation.


                                                                              19

<PAGE>


PART II.     OTHER INFORMATION

    ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

    (a)      Exhibits

             99.1 Certification of Chief Executive Officer.
             99.2 Certification of Chief Financial Officer.

       (b)   Reports on Form 8-K

             None



SIGNATURES
----------


     In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereto duly
authorized.



                                BIOVEST INTERNATIONAL, INC.
                                ---------------------------

Date:   February 18, 2002           /s/ Dr. Christopher Kyriakides
        -----------------           -------------------------------
                                    Dr. Christopher Kyriakides
                                    Chief Executive Officer and Director
                                    (Principal Executive Officer)

Date:   February 18, 2002           /s/ Thomas F. Belleau
        -----------------           ----------------------
                                    Thomas F. Belleau
                                    Chief Financial Officer
                                    (Principal Financial and Accounting Officer)






                                                                              20

<PAGE>


I, Christopher Kyriakides, certify that:

      1.  I have reviewed this quarterly report on Form 10-QSB of Biovest
International, Inc.;

      2.  Based on my knowledge, this quarterly 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
quarterly report;

      3.  Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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 quarterly report;

      4.  The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

          a) designed such disclosure controls and procedures 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 quarterly report is
      being prepared;

          b) evaluated the effectiveness of the registrant's disclosure
      controls and procedures as of a date within 90 days prior to the filing
      date of this quarterly report (the "Evaluation Date"); and

          c) presented in this quarterlyl report our conclusions about the
      effectiveness of the disclosure controls and procedures based on our
      evaluation as of the Evaluation Date;

      5.  The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

          a) all significant deficiencies in the design or operation of
      internal controls which could adversely affect the registrant's ability to
      record, process, summarize and report financial data and have identified
      for the registrant's auditors any material weaknesses in internal
      controls; and

          b) any fraud, whether or not material, that involves management or
      other employees who have a significant role in the registrant's internal
      controls; and

      6.  The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.


Dated: February 18, 2003               By:   /s/ Christopher Kyriakides
                                             -----------------------------------
                                             Christopher Kyriakides
                                             Chief Executive Officer


                                                                              21

<PAGE>



      I, Thomas F. Belleau, certify that:

      1.  I have reviewed this quarterly report on Form 10-QSB of Biovest
International, Inc.;

      2.  Based on my knowledge, this quarterly 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
quarterly report;

      3.  Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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 quarterly report;

      4.  The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

          a) designed such disclosure controls and procedures 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 quarterly report is
      being prepared;

          b) evaluated the effectiveness of the registrant's disclosure
      controls and procedures as of a date within 90 days prior to the filing
      date of this quarterly report (the "Evaluation Date"); and

          c) presented in this quarterly report our conclusions about the
      effectiveness of the disclosure controls and procedures based on our
      evaluation as of the Evaluation Date;

      5.  The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

          a) all significant deficiencies in the design or operation of
      internal controls which could adversely affect the registrant's ability to
      record, process, summarize and report financial data and have identified
      for the registrant's auditors any material weaknesses in internal
      controls; and

          b) any fraud, whether or not material, that involves management or
      other employees who have a significant role in the registrant's internal
      controls; and

      6.  The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.



Dated: February 18, 2003                   By:   /s/ Thomas F. Belleau
                                                 -------------------------------
                                                 Thomas F. Belleau
                                                 Chief Financial Officer

                                                                              22