<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 June 30, 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 August 12, 2002, there were 9,816,363 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 June 30, 2002...............................................................  3

          Statements of Operations for the Three and Nine Months ended June 30, 2002 and 2001.............  4

          Statements of Cash Flows for the Nine Months ended June 30, 2002 and 2001.......................  5

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


     ITEM 2.  Management's Discussion and Analysis or Plan
              of Operations............................................................................... 18


PART II.   OTHER INFORMATION

      ITEM  6.  Exhibits and Reports on Form 8-K.......................................................... 23
                Signatures................................................................................ 23
</TABLE>












                                                                               2


<PAGE>


 PART I - FINANCIAL INFORMATION
     ITEM 1.  FINANCIAL STATEMENTS - BIOVEST INTERNATIONAL, INC.

<TABLE>
<CAPTION>
                                           BALANCE SHEET                                              JUNE 30, 2002
                                              ASSETS                                                   (UNAUDITED)
                                              ------                                                 --------------
<S>                                                                                                 <C>
 Current assets
   Cash                                                                                              $     554,000
   Accounts receivable, net of $110,000 allowance for doubtful accounts                                  2,135,000
   Costs and estimated earnings in excess of billings on uncompleted contracts                              94,000
   Inventories                                                                                           1,512,000
   Stock subscription receivable                                                                           200,000
   Other                                                                                                   162,000
                                                                                                     -------------
     Total current assets                                                                                4,657,000
 Property, plant and equipment, net                                                                      1,190,000
 Other assets:
   Inventories                                                                                            135,0000
   Patents and trademarks, net                                                                             787,000
   Other assets                                                                                                  -
   Reorganization value in excess of amounts allocable to identifiable assets, net                       2,163,000
                                                                                                     -------------
                                                                                                     $   8,932,000
                                                                                                     =============
                        LIABILITIES AND SHAREHOLDERS' EQUITY
                        ------------------------------------
 Current liabilities
   Notes payable                                                                                     $   2,482,000
   Current portion of long-term debt                                                                        27,000
   Accounts payable                                                                                      1,283,000
   Customer deposits                                                                                       159,000
   Accrued liabilities
      Compensation and related taxes                                                                     1,744,000
      Other                                                                                                753,000
   Billings in excess of costs and estimated earnings on uncompleted contracts                             492,000
                                                                                                     -------------
      Total current liabilities                                                                          6,940,000
 Long-term debt                                                                                            137,000
 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;
      9,816,363 shares issued and outstanding                                                               98,000
   Additional paid-in capital                                                                           13,426,000
   Accumulated deficit                                                                                 (11,419,000)
   Stock subscription receivable                                                                          (250,000)
                                                                                                     -------------
    Total shareholders' equity                                                                           1,855,000
                                                                                                     -------------
                                                                                                     $   8,932,000
                                                                                                     =============
</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         NINE MONTHS        NINE MONTHS
                                                           ENDED                  ENDED               ENDED              ENDED
                                                       JUNE 30, 2002          JUNE 30, 2001       JUNE 30, 2002      JUNE 30, 2001
                                                      ---------------        ---------------     ---------------    ---------------
<S>                                                  <C>                    <C>                  <C>                <C>
Revenues
  Contract production services                        $    2,335,000         $    1,661,000       $  5,384,000       $  4,695,000
  Consumable sales                                           775,000                579,000          2,107,000          1,493,000
  System sales                                               317,000                366,000          1,267,000          1,244,000
  Other                                                       93,000                157,000            273,000            391,000
                                                      --------------         --------------       ------------       ------------
  Total revenues                                           3,520,000              2,763,000          9,031,000          7,823,000
                                                      --------------         --------------       ------------       ------------

Operating costs and expenses
  Cost of sales                                            2,423,000              1,867,000          6,561,000          5,385,000
  Research and development                                   557,000                988,000          2,058,000          1,908,000
  Marketing, general and administrative                    1,638,000              1,413,000          3,739,000          3,989,000

                                                      --------------         --------------       ------------       ------------
  Total operating costs and expenses                       4,618,000              4,268,000         12,358,000         11,282,000
                                                      --------------         --------------       ------------       ------------
Loss from operations                                      (1,098,000)            (1,505,000)        (3,327,000)        (3,459,000)


Other income (expense)
  Sale of trademark                                          175,000                     --            175,000                 --
  Interest expense, net                                     (122,000)               (60,000)          (354,000)           (99,000)
                                                      --------------         --------------       ------------       ------------
Net loss                                              $   (1,045,000)        $   (1,565,000)      $ (3,506,000)      $ (3,558,000)
                                                      ==============         ==============       ============       ============
Net loss per common share-basic and diluted           $         (.11)        $         (.17)      $       (.36)      $       (.39)
                                                      ==============         ==============       ============       ============
Weighted average number of common shares
  outstanding- basic and diluted                           9,663,469              9,260,423          9,640,587          9,187,668
                                                      ==============         ==============       ============       ============
</TABLE>



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




                                                                               4

<PAGE>


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

<TABLE>
<CAPTION>
                                                                                         NINE MONTHS            NINE MONTHS
                                                                                            ENDED                  ENDED
                                                                                        JUNE 30, 2002          JUNE 30, 2001
                                                                                        -------------          -------------
<S>                                                                                     <C>                    <C>
Cash flows from operating activities
   Net loss                                                                              $(3,506,000)           $(3,558,000)
   Adjustments to reconcile net loss to net cash (used in) operating activities
     Depreciation                                                                            175,000                 88,000
     Amortization                                                                            186,000                230,000
     Issuance of common stock, options and warrants for services                             790,000              1,038,000
     Amortization of warrants related to debt                                                293,000                     --
     Gain on sale of subsidiary assets                                                      (321,000)                    --
     Changes in operating items:
         Accounts receivable                                                                (544,000)              (210,000)
         Costs and estimated earnings in excess of billings on uncompleted contracts         494,000                 34,000
         Inventories                                                                         399,000                 78,000
         Other                                                                               339,000                 96,000
         Accounts payable and accrued liabilities                                            763,000              1,137,000
         Customer deposits                                                                   113,000                (23,000)
         Billings in excess of costs and estimated earnings on uncompleted contracts         375,000                488,000
                                                                                         -----------            -----------
           Net cash used in operating activities                                            (444,000)              (602,000)
                                                                                         -----------            -----------
Cash flows from investing activities
   Capital expenditures                                                                     (350,000)              (274,000)
    Proceeds from sale of assets                                                             342,000                     --
                                                                                         -----------            -----------
           Net cash used in investing activities                                              (8,000)              (274,000)
                                                                                         -----------            -----------
Cash flows from financing activities
   Proceeds from short-term borrowings                                                     1,250,000                600,000
   Repayment of short-term borrowings                                                       (200,000)                    --
   Proceeds from sale of common stock                                                        500,000                510,000
   Principal payments on long-term debt                                                     (314,000)              (103,000)
   Financing costs                                                                           (30,000)                    --
   Stock subscription                                                                       (200,000)               (33,000)
                                                                                         -----------            -----------
          Net cash provided by financing activities                                        1,006,000                974,000
                                                                                         -----------            -----------
Net increase in cash                                                                         554,000                 98,000
Cash at beginning of period                                                                       --                548,000
                                                                                         -----------            -----------
Cash at end of period                                                                    $   554,000            $   646,000
                                                                                         ===========            ===========
Cash paid for interest                                                                   $    43,000            $    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 nine months ended June 30, 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



                                                                               6

<PAGE>


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


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, 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




                                                                               7

<PAGE>


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


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, 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 nine months ended June 30, 2002 the Company incurred a net
loss of $3,506,000. At June 30, 2002 the Company had a deficit in working
capital of $2,283,000. 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 included, 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 required 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




                                                                               8

<PAGE>


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


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.


(4)      CONCENTRATION OF CREDIT RISK/GEOGRAPHIC INFORMATION

         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 nine months ended
June 30, 2002, two different customers accounted for 31% and 19% of the
Company's trade accounts receivable balance at June 30, 2002. One customer
accounted for 24% of revenues for the nine months ended June 30, 2001.

         A significant amount of the Company's revenue has been derived from
export sales. The Company's export sales were 46% and 27% for the nine months
ended June 30, 2002, and 2001, respectively. For the nine months ended June 30,
2002, two foreign countries accounted for 10% and 11% of total revenues. For the
nine months ended June 30, 2001, no foreign countries accounted for 10% or more
of total revenues.









                                                                               9

<PAGE>


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


(5)      INVENTORIES


          Inventories consist of the following:

                                                   JUNE 30, 2002
                                                   -------------

                    Finished goods..........        $  320,000
                    Work-in-process........            121,000
                    Raw materials...........         1,206,000
                                                    ----------
                                                     1,647,000
                    Less non-current portion          (135,000)
                                                    ----------
                                                    $1,512,000
                                                    ==========

         The Company has inventory quantities in excess of anticipated sales
requirements for the twelve months subsequent to June 30, 2002. Accordingly, a
portion of the Company's inventory balance is classified as a non-current asset
as of that date.

(6)      NOTES PAYABLE

         During the nine month period ended June 30, 2002, the Company obtained
additional loans, with a term of one year, aggregating approximately $1,100,000;
these loans bear interest at 7.5% per annum, and mature on various dates through
January 31, 2003. These notes 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 obtaining
this 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% per annum, 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




                                                                              10

<PAGE>


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


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.

(7)      LONG-TERM DEBT

         Long-term debt was entered into pursuant to the Company's
reorganization and consists of the following at June 30, 2002:


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...................      77,000
Amounts payable to regulatory agencies (a).....................      87,000
                                                                   --------
                                                                    164,000
Less current portion of long-term debt.........................      27,000
                                                                   --------
                                                                   $137,000
                                                                   ========

(a)      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.

         During the fiscal quarter ended June 30, 2002 the Company paid $226,000
to completely extinguish the remaining balance on an 8% per annum promissory
note payable to the Internal Revenue Service. The note was paid as part of the
conditions to a sale of assets completed in the current quarter. See Note 8.

         At June 30, 2002, the aggregate maturities of long-term debt by fiscal
year are as follows: remainder of 2002-$6,000; 2003-$28,000; 2004-$30,000;
2005-$12,000; 2006-none and subsequent years- $88,000.




                                                                              11

<PAGE>


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


(8)      SALE OF ASSETS

         During the quarter ended June 30, 2002 the Company consummated a sale
of assets in an unconsolidated subsidiary, LSL Biolafitte, Inc., for $342,000.
Since the reorganization the Company has sought to sell the assets of the
subsidiary, but because of the foreign origin of the subsidiary's parent and the
bankruptcy laws of that country, Biovest's title to the assets was unclear and
in doubt. Given those circumstances, Biovest elected not to consolidate the
operations and assets and liabilities of the subsidiary into their consolidated
financial statements for fiscal year end 2000.

         When the ownership issues were finally resolved in early fiscal 2001,
the Company entered into negotiations to sell the assets. Since the Company had
a non-binding letter of intent, that was not finalized, the Company deemed
control of the subsidiary temporary and operations of the subsidiary to be
immaterial and did not consolidate it into the Company's financial statements
for fiscal year end 2001.

         Final agreements were reached and the transaction was closed in June
2002. Clear title to a trademark sold as part of the assets could not be given
until the lien on assets by the Internal Revenue Service (See Note 7.)was paid
in full. Part of the proceeds of this transaction were paid directly to the IRS.
The proceeds received and recorded values of the assets sold are as follows:


Cash in LSL Biolafitte, Inc.                   $ 4,000
Cash paid to Biovest                            84,000
Cash paid to IRS                               226,000
Accounts Receivable                             28,000
                                              --------
      Total Purchase Consideration            $342,000
                                              ========
Sale of Trademark                             $175,000
Receivable from LSL                            167,000
                                              --------
      Assets Sold                             $342,000
                                              ========

         A gain on sale of $321,000 was recorded in the quarter ended June 30,
2002; $175,000 from the sale of a trademark, which is reflected as "Other
income" on the accompanying financial statements; $146,000 as a reversal of a
previously recorded reserve for amounts owed to the Company by Biolafitte.



                                                                              12

<PAGE>


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


(9)      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 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 6.

         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



                                                                              13

<PAGE>


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


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.

         In May 2002, the stockholder, who purchased additional common stock
(See below), was hired as a consultant. He will receive $30,000 per year in cash
compensation and a sign-on bonus of 250,000 warrants to purchase common stock at
an exercise price of $1.50 per share. 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 4.52%; expected volatility of 75.9%; and expected life of three
years. Based upon the fair value of the warrants, the Company recorded $412,500
of expense as the total value of the warrants.

         In May 2002, the Board of Directors voted to reprice warrants which
were issued in connection with a one year, $1,000,000 loan made in August 2001.
The original warrants were exercisable immediately over five years and were
priced; 100,000 warrants at $5.00 per share and 100,000 at $10.00 per share. All
other provisions of the warrant remain the same, but the exercise price in both
tranches was reduced to $2.50 per share. The repricing of the warrants generates
an additional expense which was calculated based upon the fair value of the new
warrants as compared to the fair value of the original warrants on the date of
the repricing. Accordingly, the Company recorded $109,000 of expense as the
total additional value of the warrants.

         In May 2002, the Company granted 95,000 stock options to two employees.
The Options have exercise prices of $1.50 to $2.75 per share, have a ten year
term and are exercisable one-third each year on the anniversary of the grant
date. Since the exercise prices are below the presumed market price of $3.00 per
share there is potential compensation expense to the employees. However, since
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, any compensation expense will be determined by the
market price of the common stock at time of distribution of the grants.

         In June 2002, as part of the compensation associated with certain
employment agreements, the Board of Directors granted options to purchase
960,000 shares of common stock. Exercise prices for 460,000 of the options are
priced at $3.00 per share, have a ten year term, and are exercisable one-third
each year on the anniversary date of the grant. Exercise prices for 500,000 of
the options are priced at $3.30 per share, have a five year life, with half the
options exercisable six months from the date of the grant and the remaining
options exercisable one year from the date of the grant. Distribution of these
options will be delayed until the Company



                                                                              14

<PAGE>


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

receives stockholder approval for an increase in the number of shares authorized
under the 2000 Stock Option Plan.

         In June 2002, the Company entered into a consulting agreement with an
individual whose immediate compensation consists of a warrant to purchase 20,000
shares of common stock, vesting six months after the date of the agreement with
a five year term. The warrants are exercisable as follows: 10,000 shares at
$3.00 per share, 6,000 shares at $4.00 per share and 4,000 shares at $5.00 per
share. The warrants were valued using the Black-Scholes pricing model with the
following assumptions: zero dividend yield; risk-free interest rate of 4.10%;
expected volatility of 75.9%; and expected life of four years. Based upon the
fair value of the warrants, the Company recorded $26,000 as the total value of
the warrants which will be amortized over the life of the consulting agreement.

COMMON STOCK PURCHASE

         In May 2002, a stockholder agreed to purchase 166,667 shares of common
stock, together with 166,667 warrants to purchase shares of common stock at
$3.00 per share, for $500,000. An initial payment of $300,000 was made in May
2002 and the remaining $200,000 prior to the issuance of these financial
statements. 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 4.52%;
expected volatility of 75.9%; and expected life of four years. Based upon the
fair value of the warrants, the Company recorded $237,000 of expense in
conjunction with this transaction.

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.

         During the three months ended June 30, 2002, the Company issued 20,000
shares of common stock as employee compensation. The shares were valued at $3.00
per share, which resulted in $60,000 of expense.


(10)     INCOME TAXES

         No provision for income taxes has been recorded for the nine months
ended June 30, 2002 and 2001 due to the losses incurred during the periods. At
June 30, 2002, the Company has



                                                                              15

<PAGE>


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

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 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.

(11)     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.


EMPLOYMENT AGREEMENTS

         In June 2002, the Company entered into several employment agreements
with certain




                                                                              16

<PAGE>


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


employees. The agreements have terms of from two to five years, include options
to purchase 960,000 shares of common stock and provide for annual salaries of
from $65,000 to $360,000. First year annual salary compensation under the
contracts is approximately $1,150,000 and approximately $5,290,000 over the
terms of the contracts.


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.

         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 June 30, 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.



                                                                              17

<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




                                                                              18

<PAGE>


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.

RESULTS OF OPERATIONS

         REVENUES. Revenues for the three and nine months ended June 30, 2002 of
$3,520,000 and $9,031,000 were up 27% and 15% from $2,763,000 and $7,823,000 for
the three and nine




                                                                              19

<PAGE>


months ended June 30, 2001. Contract cell culture production services for the
three months ended June 30, 2002 increased 41% from $1,661,000 to $2,335,000,
while for the nine months ended June 30, 2002 revenues from these services
increased $689,000 or 15%. Consumable sales for the three and nine months ended
June 30, 2002 increased 34% and 41% from $579,000 and $1,493,000 to $775,000 and
$2,107,000, respectively.

         GROSS MARGIN. The overall gross margin for the third quarter of fiscal
year 2002 and the comparable quarter last year was 31% versus 32%. Sales and
gross margin were adversely effected by a $598,000 write-down of sales due to a
contamination discovered in a customer's product. The Company is in the process
of determining the extent of the contamination and whether there will be further
charges to the financial statements as a result. The overall gross margin for
the nine months of fiscal year 2002 decreased versus the comparable period last
year from 31% to 27%. The decrease is primarily the result of the third fiscal
quarter contamination combined with the effect of certain facility
rearrangements during the first two fiscal quarters of this year.

         OPERATING EXPENSES. Research and development expenses for the three
months ended June 30, 2002 decreased $431,000 or approximately 44% versus last
year, due to increased startup expenses for the CRADA last year versus this
year. Research and development expenses for the nine months ended June 30, 2002
increased $150,000 or approximately 8% versus last year, due to the
administrative costs of the clinical trial and fees to the NCI. CRADA expenses
for the three and nine months ended June 30, 2002 were approximately $301,000
and $1,563,000, 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 increased $225,000 in the three months ended June 30,
2002 versus the same period in fiscal 2001 due primarily to higher financing
costs associated with warrant expense versus last year. Marketing, general and
administrative expenses decreased $250,000 in the nine months ended June 30,
2002 as a result of the reduction in professional services expenses in the first
fiscal half this year versus the same period last fiscal year.

         OTHER INCOME/EXPENSE. Other income includes $175,000 from the sale of a
trademark which was part of the LSL Biolafitte, Inc. sale in the quarter ended
June 30, 2002. Other expense consists of interest expense on the Company's
short-term loans from affiliates. Interest expense for the three and nine months
of fiscal 2002 was $62,000 and $255,000 higher than for the same periods 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.



                                                                              20

<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

         On June 30, 2002, the Company had a working capital deficit of
$2,283,000 compared to a working capital deficit of $126,000 at September 30,
2001. Current assets increased by $18,000 at June 30, 2002 versus September 30,
2001, however current liabilities increased $2,175,000 comparing the same
periods. Stock subscription receivable increased by $200,000, while notes
payable increased $1,016,000 and accrued liabilities increased $763,000 in the
nine month period ending June 30, 2002.

         During the nine months ended June 30, 2002 and 2001, we utilized
$350,000 and $274,000 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 nine months ended June 30, 2002 we
incurred a loss of $3,506,000 and used $444,000 of cash flow for operations. We
have been 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 nine month period ended June 30, 2002, the Company obtained
additional loans, with a one year term, aggregating approximately $1,100,000;
these loans bear interest at 7.5%, are due on various dates through January,
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 May 2002, a stockholder purchased 166,667 shares of common stock,
together with 166,667 warrants to purchase shares of common stock at $3.00 per
share, for $500,000.

         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




                                                                              21

<PAGE>


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.

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.





                                                                              22

<PAGE>



ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)Exhibits

99.1   Chief Executive Officer certification pursuant to 18 U.S.C. Section 1350,
       as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99.2   Chief Financial Officer certification pursuant to 18 U.S.C. Section 1350,
       as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(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:    August 19, 2002                   /s/ Dr. Christopher Kyriakides
         ---------------                   -------------------------------
                                           Dr. Christopher Kyriakides
                                           Chief Executive Officer and Director
                                           (Principal Executive Officer)

Date:    August 19, 2002                   /s/ Thomas F. Belleau
         ---------------                   ----------------------
                                           Thomas F. Belleau
                                           Chief Financial Officer
                                           (Principal Financial and Accounting





                                                                              23