<PAGE>


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


(Mark One)

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

          For the quarterly period ended March 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)

                  540 Sylvan Avenue, Englewood Cliffs, NJ 07632
                  ---------------------------------------------
                    (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 May 13, 2002, there were 9,629,696 shares of the registrant's Common
Stock, no 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 March 31, 2002..............................................................  3

          Statements of Operations for the Three Months and Six Months ended March 31, 2002 and 2001......  4

          Statements of Cash Flows for the Six Months ended March 31, 2002 and 2001.......................  5

          Notes to Financial Statements...................................................................  6


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


PART II.   OTHER INFORMATION

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

              Signatures................................................................................. 20
</TABLE>

















                                                                               2
<PAGE>

 PART I - FINANCIAL INFORMATION

     ITEM 1. FINANCIAL STATEMENTS - BIOVEST INTERNATIONAL, INC.

<TABLE>
<CAPTION>
                                           BALANCE SHEET                                   MARCH 31, 2002
                                              ASSETS                                         (UNAUDITED)
                                           -------------                                   --------------
<S>                                                                                        <C>
 Current assets
   Cash                                                                                    $      194,000
   Accounts receivable, net of $110,000 allowance for doubtful accounts                         1,444,000
   Costs and estimated earnings in excess of billings on uncompleted contracts                    285,000
   Inventories                                                                                  1,785,000
   Other                                                                                          225,000
                                                                                          ----------------
     Total current assets                                                                       3,933,000
 Property, plant and equipment, net                                                             1,161,000
 Other assets:
   Inventories                                                                                    159,000
   Patents and trademarks, net                                                                    818,000
   Other assets                                                                                     9,000
   Reorganization value in excess of amounts allocable to identifiable assets, net              2,194,000
                                                                                          ----------------
                                                                                           $    8,274,000
                                                                                          =================
                        LIABILITIES AND SHAREHOLDERS' EQUITY
 Current liabilities
   Notes payable                                                                           $    2,446,000
   Current portion of long-term debt                                                              145,000
   Accounts payable                                                                             1,046,000
   Customer deposits                                                                              527,000
   Accrued liabilities
      Compensation and related taxes                                                            1,475,000
      Other                                                                                       604,000
   Billings in excess of costs and estimated earnings on uncompleted contracts                    211,000
                                                                                          ----------------
      Total current liabilities                                                                 6,454,000
 Long-term debt                                                                                   265,000
 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;
      9,629,696 shares issued and outstanding                                                      96,000
   Additional paid-in capital                                                                  12,083,000
   Accumulated deficit                                                                        (10,374,000)
   Stock subscription receivable                                                                 (250,000)
                                                                                          ----------------
    Total shareholders' equity
                                                                                                1,555,000
                                                                                          ----------------
                                                                                          $     8,274,000
                                                                                          ================
</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           SIX MONTHS            SIX MONTHS
                                                    ENDED                  ENDED                 ENDED                 ENDED
                                                MARCH 31, 2002         MARCH 31, 2001        MARCH 31, 2002        MARCH 31, 2001
                                             -------------------   -------------------   -------------------   -------------------
<S>                                          <C>                   <C>                         <C>                   <C>
Revenues
  Contract production services               $        1,232,000    $        1,365,000          $  3,049,000          $  3,034,000
  Consumable sales                                    1,041,000               457,000             1,332,000               914,000
  System sales                                          486,000               410,000               950,000               878,000
  Other                                                  86,000                90,000               180,000               234,000
                                             -------------------   -------------------   -------------------   -------------------

  Total revenues                                      2,845,000             2,322,000             5,511,000             5,060,000

Operating costs and expenses
  Cost of sales                                       2,192,000             1,789,000             4,138,000             3,518,000
  Research and development                              448,000               578,000             1,501,000               920,000
  Marketing, general and administrative               1,007,000             1,539,000             2,101,000             2,576,000
                                             -------------------   -------------------   -------------------   -------------------

  Total operating costs and expenses                  3,647,000             3,906,000             7,740,000             7,014,000
                                             -------------------   -------------------   -------------------   -------------------

Loss from operations                                   (802,000)           (1,584,000)           (2,229,000)           (1,954,000)

Other income (expense)
  Interest expense, net                                (126,000)              (28,000)             (232,000)              (39,000)
                                             -------------------   -------------------   -------------------   -------------------

Net loss                                     $         (928,000)    $      (1,612,000)         $ (2,461,000)         $ (1,993,000)
                                             ===================   ===================   ===================   ===================

Net loss per common share-basic and diluted  $             (.10)    $            (.18)         $       (.26)         $       (.22)
                                             ===================   ===================   ===================   ===================
Weighted average number of common shares
  outstanding- basic and diluted                      9,629,696             9,163,879             9,629,147             9,151,291
                                             ===================   ===================   ===================   ===================
</TABLE>



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


                                                                               4
<PAGE>




                           BIOVEST INTERNATIONAL, INC.
                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                          SIX MONTHS ENDED     SIX MONTHS ENDED
                                                                                           MARCH 31, 2002       MARCH 31, 2001
                                                                                           --------------       --------------
<S>                                                                                         <C>                 <C>
Cash flows from operating activities
   Net loss                                                                                 $(2,461,000)        $(1,993,000)
   Adjustments to reconcile net loss to net cash (used in) operating activities
     Depreciation                                                                                96,000              59,000
     Amortization                                                                               124,000             131,000
     Issuance of common stock, options and warrants for services                                 55,000             416,000
     Amortization of warrants related to debt                                                   148,000                --
     Changes in operating items:
         Accounts receivable                                                                    147,000            (290,000)
         Costs and estimated earnings in excess of billings on uncompleted contracts            303,000             163,000
         Inventories                                                                            102,000            (172,000)
         Other                                                                                  267,000              32,000
         Accounts payable and accrued liabilities                                               129,000             711,000
         Customer deposits                                                                      481,000               1,000
         Billings in excess of costs and estimated earnings on uncompleted contracts             94,000             323,000
                                                                                            -----------         -----------
           Net cash used in operating activities                                               (515,000)           (619,000)
                                                                                            -----------         -----------
Cash flows from investing activities
   Capital expenditures                                                                        (243,000)           (184,000)
                                                                                            -----------         -----------
           Net cash used in investing activities                                               (243,000)           (184,000)
                                                                                            -----------         -----------
Cash flows from financing activities
   Proceeds from short-term borrowings                                                        1,250,000             500,000
   Repayment of short-term borrowings                                                          (200,000)               --
   Principal payments on long-term debt                                                         (68,000)            (70,000)
   Financing Costs                                                                              (30,000)               --
   Stock subscription                                                                              --               (33,000)
                                                                                            -----------         -----------
          Net cash provided by financing activities                                             952,000             397,000
                                                                                            -----------         -----------
Net increase (decrease) in cash                                                                 194,000            (406,000)
Cash at beginning of period                                                                        --               548,000
                                                                                            -----------         -----------
Cash at end of period                                                                       $   194,000         $   142,000
                                                                                            -----------         -----------
Cash paid for interest                                                                      $    28,000         $    21,000
                                                                                            ===========         ===========
</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
immunotherapeutic 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 financial statements have been derived from
unaudited interim financial information prepared in accordance with the rules
and regulations of the Securities and Exchange Commission. 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 and six months ended March 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/A for
the fiscal year ended September 30, 2001.

         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").

         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,

                                                                               6
<PAGE>

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

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.

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 LOSS PER COMMON SHARE

         Net loss per share of common stock is computed using the weighted
average number of outstanding common shares. Common equivalent shares from stock
options and warrants are excluded, as their effect is antidilutive.

RECENT ACCOUNTING PRONOUNCEMENTS

         On July 20, 2001, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) 142, Goodwill and
Intangible Assets. SFAS 142 is effective for fiscal years beginning after
December 15, 2001, though earlier adoption is permitted. Under the new
pronouncement, among other provisions, goodwill, including reorganization value
in excess of amounts allocable to identifiable assets, and intangible assets
with indefinite lives will no longer be amortized and will be tested for
impairment annually and whenever there is an impairment indicator.

         The Company will continue to amortize the reorganization value in
excess of amounts allocable to identifiable assets under its current method
until the date of adoption, which will be October 1, 2002, at which time
amortization will no longer be recognized. By the end of the year of
implementation the Company will have completed a transitional fair value based
impairment test of goodwill. Impairment losses, if any, resulting from the
transitional testing will be recognized as a cumulative effect of a change in
accounting principle.

         On October 3, 2001, the FASB issued Statement of Financial Accounting
Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets ("SFAS 144"), that is applicable to financial statements issued for
fiscal years beginning after December 15, 2001. The FASB's new rules on asset
impairment supersede SFAS 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of, and portions of Accounting
Principles Board Opinion 30,

                                                                               7
<PAGE>
BIOVEST INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)

Reporting the Results of Operations. This Standard provides a single accounting
model for long-lived assets to be disposed of and significantly changes the
criteria that would have to be met to classify an asset held-for-sale.
Classification as held-for-sale is an important distinction since such assets
are not depreciated and are stated at the lower of fair value and carrying
amount. This Standard also requires expected future operating losses from
discontinued operations to be displayed in the period(s) in which the losses are
incurred, rather than as of the measurement date as presently required. The
adoption of SFAS 144 will have no impact on the Company's operating results or
financial position.

(3) GOING CONCERN

         During the six months ended March 31, 2002 the Company incurred a net
loss of $2,461,000. At March 31, 2002 the Company had a deficit in working
capital of $2,521,000. The Company has been meeting its cash requirements
through the use of cash on hand, the sale of common stock 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 a
patient-specific immunotherapeutic for the treatment of non-Hodgkin's low-grade
follicular lymphoma. The terms of the CRADA include, among other things, a
requirement for the Company to pay $530,000 quarterly to the 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 requires a
single payment of $350,000, due on September 30, 2002, in lieu of the quarterly
payments of the original agreement. Successful development of the
immunotherapeutic, if approved by the FDA, from Phase III clinical trials
through commercialization, will commit the Company to several years of
significant expenditures before revenues are expected to be realized.

         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. 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.

                                                                               8

<PAGE>

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

(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. One customer accounted for 14% of revenues for the six months ended
March 31, 2002, a different customer accounted for 10% of the Company's trade
accounts receivable balance at March 31, 2002. Two customers accounted for 12%
and 11% of revenues for the six months ended March 31, 2001.

         A significant amount of the Company's revenue has been derived from
export sales. The Company's export sales were 49% and 42% for the six months
ended March 31, 2002, and 2001, respectively. For the six months ended March 31,
2002, two foreign countries accounted for 16% and 11% of total revenues. For the
six months ended March 31, 2001, two foreign countries accounted for 12% and 11%
of total revenues.


INVENTORIES

          Inventories consist of the following:

                                                   MARCH 31, 2002
                                                   --------------

               Finished goods.........               $ 292,000
               Work-in-process........                 118,000
               Raw materials..........               1,534,000
                                                    ----------
                                                     1,944,000
               Less non-current portion               (159,000)
                                                    ----------

                                                    $1,785,000
                                                    ==========

         The Company has inventory quantities in excess of anticipated sales
requirements for the twelve months subsequent to March 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 the three month periods ended March 31, 2002 and December 31,
2001, the Company obtained additional loans, with a term of one year,
aggregating approximately $475,000 and $625,000,

                                                                               9
<PAGE>

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

respectively; these loans bear interest at 7.5%, are due on various dates
through January 31, 2003 and are also convertible into shares of the Company's
common stock at $3.00 per share, at the holder's option, if the Company wishes
to pay amounts under the loans before maturity. The Company issued 100,000
warrants with an exercise price of $2.50 per share and 100,000 warrants with an
exercise price of $5.00 per share to a third party who assisted in the
financing. The warrants are exercisable immediately and have a term of five
years. The aggregate value of the warrants using the Black-Scholes pricing
model, assuming zero dividend yield; risk-free interest rates ranging from 3.47%
to 4.38%; expected volatility of 100%; and term of five years, was estimated to
be $154,000. The Company also paid a commission of $30,000 to the third party
who assisted with the financing. The value of the warrants and commission are
being amortized over the life of the loans which results in a higher effective
interest rate.

         In December 2001, an individual loaned the Company $150,000, under a
note payable that bears interest at 7.5%, is due December 19, 2003 and is
convertible into shares of the Company's common stock at $3.00 per share at the
holder's option, if the Company wishes to pay amounts under the loan before
maturity. In connection with the note, the Company issued warrants to purchase
50,000 shares of the Company's common stock at $5.00 per share. The warrants are
exercisable immediately and have a term of five years. The aggregate value of
the warrants using the Black-Scholes pricing model, assuming zero dividend
yield; a risk-free interest rate of 4.45%; expected volatility of 100%; and a
term of five years, was estimated to be $35,000 and is being amortized over the
life of the loans which results in a higher effective interest rate.

(6) LONG-TERM DEBT

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

                                                                              10
<PAGE>
BIOVEST INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)

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..................      $ 239,000
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....................         84,000
Amounts payable to regulatory agencies (i)......................         87,000
                                                                       --------

                                                                        410,000

Less current portion of long-term debt..........................        145,000
                                                                       --------
                                                                       $265,000
                                                                       ========

(i)  Pursuant to the Plan, the Company is obligated to repay certain regulatory
     agencies an aggregate amount of $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 March 31, 2002, the aggregate maturities of long-term debt by fiscal
year are as follows: remainder of 2002-$71,000; 2003-$151,000; 2004-$86,000;
2005-$14,000; 2006-none and subsequent years- $88,000.


(7) SHAREHOLDERS' EQUITY

STOCK OPTIONS AND WARRANTS

         During the three months ended December 31, 2001 the Company granted
2,084,000 stock options to certain executive officers and employees. The options
have an exercise price of $1.50 per share and a five year term. With respect to
the options granted to certain executive officers, half are exercisable six
months from the date of grant and the remaining options are exercisable one year
from the date of the grant. Those granted to other employees are exercisable
over a ten year term and vest one- third each year, on the anniversary of the
grant, after the first year.

         During October 2001 the Company granted 100,000 stock options to an
outside director for


                                                                              11

<PAGE>

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

consulting services rendered during fiscal 2001. The options have an exercise
price of $1.50 per share and a five year term; half are exercisable six months
from the date of grant and the remaining options are exercisable one year from
the date of grant. Compensation expense for services rendered was recognized in
the amount of $82,000 during the year ended September 30, 2001 based upon the
estimated fair value of the options. The options were valued using the
Black-Scholes pricing model with the following assumptions: zero dividend yield;
risk-free interest rate of 3.94%; expected volatility of 84%; and expected life
of five years.

         During December 2001 the Company's Board of Directors approved the
issuance of warrants to purchase 50,000 shares of its common stock at $2.50 per
share to a shareholder for consulting services to the Company. The warrants are
exercisable immediately and have a term of five years. The warrants were valued
using the Black-Scholes pricing model with the following assumptions: zero
dividend yield; risk-free interest rate of 4.49%; expected volatility of 100%;
and expected life of five years. Based upon the fair value of the warrants, the
Company recorded $42,000 of expense as the total value of services rendered. The
Board of Directors also approved entering into an agreement with the consultant
whereby the consultant would be issued additional warrants if certain events
occur.

         During the six months ended March 31, 2002 the Company issued
250,000 warrants in connection with various notes payable - see Note 5.

         During February 2002, the Company granted a total of 100,000 stock
options to purchase common stock to 21 employees. The options have an exercise
price of $2.25 per share and a ten year term; one third are exercisable each
year on the anniversary date of the grant. Distribution of these option grants
will be delayed until the Company receives stockholder approval for an increase
in the number of shares authorized under the 2000 Stock Option Plan.

COMMON STOCK ISSUED FOR SERVICES

         During the three months ended December 31, 2001, the Company issued
10,000 shares of common stock as employee compensation. The shares were valued
at $1.25 per share, which resulted in approximately $13,000 of expense.

(8) INCOME TAXES

         No provision for income taxes has been recorded for the six months
ended March 31, 2002 and 2001 due to the losses incurred during the periods. At
March 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 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

                                                                              12
<PAGE>

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

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

COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENT

         In September 2001 the Company successfully entered into a definitive
CRADA with the NCI for the development and ultimate commercialization of a
patient-specific immunotherapeutic for the treatment of non-Hodgkin's low-grade
follicular lymphoma. The terms of the CRADA include, among other things, a
requirement for the Company to pay $530,000 quarterly to NCI for expenses
incurred in connection with the ongoing Phase III clinical trials and a
requirement to meet certain staffing commitments. 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 requires a single payment of
$350,000, due on September 30, 2002, in lieu of the quarterly payments of the
original agreement. The terms of the CRADA provide for the Company to be granted
an exclusive option to negotiate with the NCI for a license to commercialize
certain intellectual property resulting from the research conducted pursuant to
the CRADA. There can be no assurance that research under the CRADA will be
successful or, if it is successful, that the Company will be able to negotiate a
license on favorable terms. In addition, the Company may not be able to derive
any revenue from a license for a number of years.

         The agreement expires in September 2009, but may be unilaterally
terminated by either party by giving thirty days written notice. Certain
termination costs, as defined in the CRADA, will be the Company's responsibility
if the CRADA is terminated.

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 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.

                                                                              13
<PAGE>
BIOVEST INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)


         During fiscal 2001 the Company received one payment of $50,000, which
was recorded as other income in the statement of operations. The Company also
recorded $50,000 of other expense related to professional fees that were
contingent upon a settlement being negotiated and paid.

         During fiscal 2002 the Company received one payment of $100,000, which
was recorded as other income in the statement of operations. The Company also
recorded $80,000 of other expense related to professional fees.

         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
were no product sales through the quarter ended March 31, 2002.

         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.

          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.







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<PAGE>






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

OVERVIEW

         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.

         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.

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:


                                                                              15
<PAGE>

         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.

RESULTS OF OPERATIONS

         REVENUES. Revenues for the three and six months ended March 31, 2002 of
$2,845,000 and $5,511,000 were up 23% and 9% from $2,322,000 and $5,060,000 for
the three and six months ended March 31, 2001. Contract cell culture production
services for the three months ended March 31, 2002 decreased 10% from $1,365,000
to $1,232,000, while for the six months ended March 31,2002 revenues from these
services increased marginally. Consumable sales for the three and six months
ended March 31, 2002 increased 128% and 46% from $457,000 and $914,000 to
$1,041,000 and $1,332,000, respectively.

                                                                              16
<PAGE>

         GROSS MARGIN. The overall gross margin for the second quarter of fiscal
year 2002 and the comparable quarter last year was 23%. The lack of improvement
is due to the change in product mix for the second quarter of fiscal 2002
compared to a year ago and continuing facility rearrangements. The overall gross
margin for the six months of fiscal year 2002 decreased versus the comparable
period last year from 31% to 25%. The decrease is primarily the result of
production interruptions initiated by customers combined with certain facility
rearrangements.

         OPERATING EXPENSES. Research and development expenses for the three and
six months ended March 31, 2002 decreased approximately $130,000 and increased
$581,000 or approximately 22% and 63% versus last year, due to increased
expenses for the CRADA, offset by the effect of the amendment, amounting to
$566,000, and reflected in the quarter ended March 31, 2002. CRADA expenses for
the three and six months ended March 31, 2002 were approximately $270,000 and
$1,263,000, respectively. These expenses are associated primarily with designing
a more efficient bioreactor for vaccine production and administrative expense
associated with the Phase III clinical trial. Marketing, general and
administrative expenses decreased $532,000 in the three months ended March 31,
2002 versus the same period in fiscal 2001. The decrease is attributed largely
to reduced professional services and consulting expenses and expenses related to
the Company's financing activities. Marketing, general and administrative
expenses decreased $475,000 in the six months ended March 31, 2002 as a result
of the reduction of expenses in the second fiscal quarter described above.

         OTHER EXPENSE, NET. Other Expense, Net consists of interest expense on
the Company's long-term debt that was assumed pursuant to the Company's
reorganization and interest on the short-term loans from affiliates. Interest
expense for the first half of fiscal 2002 was $193,000 higher than for the first
half of fiscal 2001 due to the increase in the amount of debt and higher
interest amortization from the value of the additional warrants issued between
the periods.


LIQUIDITY AND CAPITAL RESOURCES

         On March 31, 2002 the Company had a working capital deficit of
$2,521,000 compared to a working capital deficit of $126,000 at September 30,
2001. Current assets decreased by $706,000 at March 31, 2002 versus September
30, 2001, while current liabilities increased $1,689,000 comparing the same
periods. Notes payable increased $1,000,000 and accrued liabilities increased
$557,000 in the six month period ending March 31, 2002.

         During the six months ended March 31, 2002 and 2001, we utilized
$243,000 and $184,000 of cash for capital expenditures.

         We have incurred significant losses and cash flow deficits in previous
years. During fiscal year 2001 and 2000 we incurred losses of $5,832,000 and
$1,884,000. During fiscal year 2001 and 2000, we used $2,070,000 and $2,216,000
of cash flow for operations. During the six months ended March 31, 2002 we
incurred a loss of $2,461,000 and used $515,000 of cash flow for operations. We
have been

                                                                              17
<PAGE>

meeting our cash requirements through the use of cash on hand, the sale of
common stock and short-term borrowings, primarily from affiliates.

         During the three month periods ended March 31, 2002 and December 31,
2001 the Company obtained additional loans, with a one year term, aggregating
approximately $475,000 and $625,000, respectively; these loans bear interest at
7.5%, are due on various dates through January 31, 2003 and are also convertible
into shares of the Company's common stock at $3.00 per share, at the holder's
option, if the Company wishes to pay amounts under the loans before maturity.
The Company issued 100,000 warrants with an exercise price of $2.50 per share
and 100,000 warrants with an exercise price of $5.00 per share to a third party
who assisted in the financing.

         In December 2001 an individual loaned the Company $150,000, under a
note payable that bears interest at 7.5%, is due December 19, 2003 and is
convertible into shares of the Company's common stock at $3.00 per share at the
holder's option, if the Company wishes to pay amounts under the loan before
maturity. In connection with the note the Company issued warrants to purchase
50,000 shares of the Company's common stock at $5.00 per share.

         In September 2001, we successfully entered into a definitive CRADA with
the NCI for the development and ultimate commercialization of a patient specific
immunotherapeutic for the treatment of non-Hodgkin's low-grade follicular
lymphoma. The terms of the CRADA include, 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 requires a single payment of $350,000,
due on September 30, 2002, in lieu of the quarterly payments of the original
agreement. Successful development of the immunotherapeutic, if approved by the
FDA, from Phase III clinical trials through commercialization will commit us to
several years of significant expenditures before revenues are expected to be
realized.

         Our ability to continue our present operations and meet our obligations
under the CRADA is dependent upon our 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 our cash needs, including
additional short-term loans from our shareholders and others and the sale of
equity securities. We believe that we will be able to raise the necessary funds
to continue operations in the near term.

         There is no assurance that the additional funds, which are required,
can be obtained on terms acceptable or favorable to us. 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.






































                                                                              19
<PAGE>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits

         None

         (b)      Reports on Form 8-K.

         Report on Form 8-K filed on April 3, 2002, regarding change in
Registrant's certifying accountant.


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.
                             ---------------------------
                             (Registrant)



Date: May 24, 2002              /s/ Dr. Christopher Kyriakides
                                ------------------------------------------------
                                 Dr. Christopher Kyriakides
                                  Chief Executive Officer and Director
                                  (Principal Executive Officer)

Date: May 24, 2002              /s/ Thomas F. Belleau
                                ------------------------------------------------
                                  Thomas F. Belleau
                                  Chief Financial Officer
                                  (Principal Financial and Accounting Officer)







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