U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   -----------

                                  FORM 10-KSB/A

                                (Amendment No. 1)

                                   (Mark One)
         [X] ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
                       EXCHANGE ACT OF 1934 (FEE REQUIRED)

                   For the fiscal year ended December 31, 2000

                                       or

       [ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
                     EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

                        For the transition period from to

                        Commission file number 333-34765

                            IXION BIOTECHNOLOGY, INC.
              (Exact Name of Small Business Issuer in Its Charter)


              DELAWARE                                    59-3174033

      (State or Other Jurisdiction of                (I.R.S. Employer
       Incorporation or Organization)                 Identification No.)

        13709 PROGRESS BLVD., BOX 13, Alachua, Florida       32615
            ALACHUA, FL 32615

         (Address of Principal Executive Offices)          (Zip Code)

                                  386-418-1428

                (Issuer's Telephone Number, Including Area Code)

         Securities registered under Section 12(b) of the Exchange Act:

                                      None

         Securities registered under Section 12(g) of the Exchange Act:

                                      None
<PAGE>

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

          Check if there is no disclosure of delinquent filers in response to
     Item 405 of Regulation S-B contained in this form, and no disclosure will
     be contained, to the best of registrant's knowledge, in definitive proxy or
     information statements incorporated by reference in Part III of this Form
     10-KSB or any amendment to this Form 10-KSB. _X__ -

          The issuer's revenue for the most recent fiscal year, ending December
     31, 2000, was $403,782.

     The aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of March
15, 2001, was approximately $ 4,200,000 based on the most recent sales of
newly-issued common equity. There is no public market for the issuer's common
stock.

     The number of shares of the issuers common stock, par value $.01 per share,
outstanding as of March 15, 2001, was 6,861,791.

                      DOCUMENTS INCORPORATED BY REFERENCE:

                  DOCUMENT                          PART INTO WHICH INCORPORATED
                  --------                          ----------------------------
The Proxy Statement to be used in connection with             Part III
the annual meeting of stockholders to be held
June 15, 2001 (the "Proxy Statement"),
to be filed with the Commission prior to April
30, 2001, pursuant to Rule 14a-101, Schedule 14A
of the  Exchange Act.


<PAGE>


     The undersigned registrant hereby amends Item 5 and Item 6 of its Form
10-KSB for the fiscal year ended December 31, 2000, as filed with the Securities
and Exchange Commission on March 30, 2001, to clarify its disclosure regarding
the sale of unregistered shares to Q-Med, AB (publ) and its U.S. subsidiary,
Qvestor, LLC..

                                     Part II

Item 5.  Market for Common Equity and Related Stockholder Matters.

Unregistered Sales of Securities

     Set forth below is information as to securities sold by Ixion within the
past three years that were not registered under the Securities Act of 1933 (the
"Act"). No underwriters were involved in any of the sales, so there were no
underwriting discounts or commissions. All outstanding securities are deemed to
be restricted securities for the purposes of the Act. All certificates
representing our issued and outstanding restricted securities have been properly
legended and we have issued "stop transfer" instructions to our transfer agent
with respect to such securities, which legends and stop transfer instructions
are presently in effect unless such securities have been registered under the
Act or have been transferred pursuant to an appropriate exemption from the
registration provisions of the Act.

     Restricted shares of common stock have been issued to members of the board
of directors, members of the Scientific Advisory Board, and employees and
consultants under our Stock Compensation Plan as follows:

     On July 1, 1998, 23,450 shares (1,000 shares to each of two directors,
5,000 shares to a newly-elected director, 1,000 shares to each of five members
of the Scientific Advisory Board, 5,000 shares to a newly-appointed member of
the Scientific Advisory Board, and 6,450 shares to employees and officers for
services, in aggregate, valued at $234,500 (a portion of which is unearned
compensation) or $10.00 per share;

     On July 12, 1999, 22,400 shares (1,000 shares to each of three directors,
     5,000 shares to each of two newly-elected directors, 1,000 shares to each
     of six members of the Scientific Advisory Board, and 3,400 shares to
     employees and officers for services, in aggregate, valued at $89,600 (a
     portion of which is unearned compensation) or $4.00 per share;

     In January, March, June and December of 2000, an aggregate of 1,493 shares
     to our Associate Director of Research, Diabetes Division, for services, in
     the aggregate, valued at $5,972 (a portion of which is unearned
     compensation) or $4.00 per share;

     In August, 2000 25,000 shares (1,000 shares to each of five directors,
     5,000 shares to a newly-elected director, 1,000 shares to each of seven
     members of the Scientific Advisory Board, and 8,000 shares to employees and
     officers for services, in aggregate, valued at $100,000 (a portion of which
     is unearned compensation) or $4.00 per share;

     From September to December of 2000, 20,940 shares to employees and officers
     for services, in aggregate, valued at $83,760 (a portion of which is
     unearned compensation) or $4.00 per share;

     On October 16, 2000, 5,000 shares to a newly-appointed member of the
     Scientific Advisory Board valued at $20,000 (a portion of which is unearned
     compensation) or $4.00 per share.

We issued the above securities without registration in reliance upon the
exemption provided by Section 4(2) of the Act as a transaction to a limited
number of sophisticated investors which did not involve a public offering,
general solicitation, or general advertisement and the exemption provided by
Rule 701 promulgated under the Act.

     On April 16, 1999, we entered into an agreement in principle with Q-Med, AB
(publ), a biotechnology company with headquarters and operations in Uppsala,
Sweden. This agreement was amended on September 9, 1999. Pursuant to the
agreement in principle, we issued a promissory note in the amount of $300,000,
convertible into shares of common stock at a price of $2.00 per share. The
promissory note was converted into 150,000 shares of restricted common stock on
July 7, 1999. The agreement in principle granted Q-Med an option to purchase

<PAGE>

37,500 shares of additional shares of common stock monthly as well as up to a
total of 3,900,000 shares by July 15, 2000. Pursuant to the option in the
agreement in principle we issued 412,500 additional shares of restricted common
stock for $825,000, or $2.00 per share, as follows:

                  September 7, 1999         37,500 shares at $2.00 per share
                  September 10, 1999        37,500 shares at $2.00 per share
                  October 18, 1999          37,500 shares at $2.00 per share
                  November 18, 1999         37,500 shares at $2.00 per share
                  December 10, 1999         37,500 shares at $2.00 per share
                  January 12, 2000          37,500 shares at $2.00 per share
                  February 10, 2000         37,500 shares at $2.00 per share
                  March 14, 2000            37,500 shares at $2.00 per share
                  April, 12, 2000           37,500 shares at $2.00 per share
                  May 12, 2000              37,500 shares at $2.00 per share
                  June 19, 2000             37,500 shares at $2.00 per share

We issued the above securities without registration in reliance upon the
exemption provided by Section 4(2) of the Act as a transaction to a single
sophisticated corporate investor that did not involve a public offering, general
solicitation, or general advertisement and in reliance on the exemption provided
by the provisions of Regulation S.

     On July 14, 2000, we entered into a stock purchase agreement with Qvestor,
LLC, a Delaware limited liability company and a wholly-owned subsidiary of Q-Med
AB (publ). Pursuant to the stock purchase agreement, we issued restricted common
stock as follows:

     3,337,500 shares to Qvestor, LLC, in exchange for cash of $6,675,000
     and non-cash consideration described below. The Company obtained the
     right to receive a royalty-free license for certain Q-Med intellectual
     property in non-animal stabilized hyaluronic acid (NASHA). The Company also
     gave Q-Med a right of first refusal to offer to redeem, at the maturity
     date on August 31, 2001, from all holders electing not to convert, up to
     $787,270 in face amount of our convertible unsecured notes  The
     offered redemption price would be par, in the case of 10% notes, or at 1.5
     times par for variable notes. Thereafter Q-Med would have the option, for
     any redeemed notes acquired, to convert variable notes at a price of $2.10
     per share, and 10% notes at a price of $4.20 per share. Cash of $3,321,697
     was paid at closing, and the balance of $3,353,303, is due on or before
     July 14, 2001.(See "The Q-Med Transaction " below) 257,192 shares of common
     stock to the chairman and chief executive officer, the president and chief
     financial officer, and an employee, in satisfaction of $1,028,768 in
     deferred fees and salaries, or $4.00 per share.


We issued the above securities without registration in reliance upon the
exemption provided by Section 4(2) of the Act as a transaction to a limited
number of sophisticated investors that did not involve a public offering,
general solicitation, or general advertisement.

     At various dates between November 6, 1995, to August 31, 2000, we issued
warrants to purchase an aggregate of 20,672 shares of restricted common stock,
at an exercise price of $2.00 per share, expiring August 31, 2000, to an
accredited investor and to the University of Florida Research Foundation.
Pursuant to the exercise of those warrants, we issued restricted common stock as
follows:

     20,672 shares (18,672 shares to The University of Florida Research
     Foundation and 2,000 shares to the individual accredited investor for total
     consideration of $41,440 or $2.00 per share.

We issued the above securities without registration in reliance upon the
exemption provided by Section 4(2) of the Act as a transaction to a limited
number of sophisticated investors that did not involve a public offering,
general solicitation, or general advertisement.

Registered sales of securities:
<PAGE>

     In December, 1997, we commenced the public offering of 400,000 units, for
an aggregate of $4,000,000. Each unit consisted of one share of common stock and
0.25 charitable benefit warrant. Each whole charitable benefit warrant entitled
someone to purchase one share of common stock at a price of $20.00 per share. On
December 10, 1998, we extended the offering through December 10, 1999, and
thereafter through March 31,2000.

     In early 1999, we temporarily suspended the offering, converted the
securities offered from units to shares, retroactively reduced the offering
price from $10.00 per unit to $4.00 per share, and withdrew 250,000 shares and
all unsold charitable benefit warrants from registration. We also adjusted the
exercise price for outstanding charitable benefit warrants from $20 per share to
$8 per share and increased the number of shares purchasable upon exercise of
those warrants from 8,605 shares to 21,513 shares. As a result, a total of
51,630 shares were issued to purchasers in the public offering for no additional
consideration. There is no minimum number of shares to be sold in the Offering,
and all funds received have gone immediately to the Company.

     The offering terminated on March 31, 2000. We sold the securities directly
(except when sales were to Florida residents, in which case sales were made
through Unified Management Corporation, a Florida-registered broker dealer).

     We received proceeds of $516,000 in connection with the public offering.
Offering costs of $124,680 have been offset against the proceeds of the offering
through December 31, 2000. As of March 23, 2000, we had sold a total of 129,000
shares and 21, 513 charitable benefits warrants at an aggregate price of
$516,000. No payments were made to our directors or officers, or to their
associates in connection with the offering.

     The net proceeds from the offering were used entirely to fund our
operations during 1998, 1999, and 2000.

Other:
         There is no public trading market for our securities.

     As of March 23, 2000, there were approximately 180 shareholders of record
of our common stock.

     We have never declared or paid any cash dividends on our common stock and
do not intend to pay any cash dividends on our common stock for the foreseeable
future.

Item 6.  Management's Discussion and Analysis or Plan of Operations

     The following discussion and analysis should be read in conjunction with
the financial statements and the related notes thereto included elsewhere in
this report. This report contains forward-looking statements that involve risks
and uncertainties. Our actual results may differ significantly from the results
discussed in the forward-looking statements. Factors that might cause such a
difference include, but are not limited to, those discussed in "Special Note
Regarding Forward-Looking Statements."

Overview

Economic and Industry Outlook

     U.S. economic activity seemed to decline toward the end of 2000, with the
first decline in real business equipment investment in several years. While GDP
continued to increase throughout 2000, fourth-quarter growth was the lowest
since 1995. Early indications are that the downward trend will continue at lease
into 2001. Projections, though, are for a steady increase in total U.S.
employment through 2008, with health services listed as one of the five
fastest-growing industries. Research and testing services are projected to grow
by 40% through 2008.

     In a highly volatile investment climate, biotechnology companies still
managed to raise about $40 billion in 2000, in investments; more than the
previous three years combined. Annual product approvals have been steadily
<PAGE>

increasing, with the largest increase experienced in the last two years. There
is a substantial pipeline of products in clinical trials which may also benefit
the industry.

     Funds available to biotechnology companies through the National Institutes
of Health have increased $4 billion in the last two years. However,
biopharmaceuticals have received only about 3% of total venture capital
investment. Continued uncertainty in the public markets will most likely have a
negative impact total biotechnology investment from all sources.

The Company

     Since our founding in 1993 and until last year, we were principally
involved in research and development, securing patent protection, and raising
capital. In July 2000, with the Q-Med transaction, described below, we have been
able to change our emphasis to product development, with less attention paid to
capital raising. Through 1999 we operated as a development stage company, but in
2000 we commenced our principal operations, being the development and
commercialization of biopharmaceuticals and medical devices. We have not
received any material revenues, however, from the sale of products. We do not
expect any of our drug or device product candidates (which require regulatory
approval) to be commercially available for at least several years.

     We expect to continue to incur substantial research and development costs
resulting from

    o    ongoing development programs,
    o    expansion of current and new research and development programs, and
    o    manufacturing of products for use in clinical trials and preclinical
         and clinical testing of our products.

     We also expect that operating, general and administrative costs, including

    o    costs of additional administrative personnel,
    o    legal and regulatory costs necessary to support preclinical development
         and clinical trials, and
    o    costs associated with the creation of a marketing and sales
         organization, if warranted,

will increase in the future, assuming we can finance the increased requirements.
Accordingly, we expect to incur operating losses for the foreseeable future.

     Our operating expenses will depend on several factors, including the pace
of research and development. Research and development expenses will depend on
the progress and results of our product development efforts, which we cannot
predict. We may sometimes be able to control the timing of development expenses
in part by accelerating or decelerating preclinical testing and clinical trial
activities. As a result of these factors, we believe that period-to-period
comparisons in the future may not necessarily be meaningful.

Results of Operations


Years Ended December 31, 2000 and 1999
<TABLE>
<S>                  <C>                    <C>                      <C>

                                                                       Percent
                       2000                    1999                    Change
                    ____________            ____________              _________
Revenues:           $  403,782              $   99,486                305.87%
Expenses:            1,851,129               1,225,276                 51.08%
                    ____________            ____________              _________
NET LOSS            $(1,477,347)            $(1,125,790)               28.57%

</TABLE>



Graphics omitted
<PAGE>

     Total revenues increased by 306% from $99,486 for the year ended December
31, 1999 to $403,782 for the year ended December 31, 2000 mainly as a result of
the following:

     o   Two active NIH research contracts:
         o   "Enteric Elimination of Oxalic Acid",
         o   "Islets from Islet Progenitor/Stem Cells for Implantation", and
     o   Three new NIH research grants, all beginning on September 1, 2000:
         o    "M3 Receptor: Diagnostic Marker for Sjogren's Syndrome",
         o    "Oxalobacter Formigenes Diagnostic Kit Development",
         o    "Coating of Urinary Protheses to Prevent Encrustation".

      We expect revenue to continue to increase in 2001 because of:

     o    the renewal of the "Islets from Islet Progenitor/Stem Cells for
          Implantation" NIH grant for an additional $100,000 which began on
          September 1, 2000,

     o    NIH grant, entitled "M3 Receptor: Diagnostic Marker for Sjogren's
          Syndrome,"  with payments which began on September 1, 2000,
          for $100,000,
     o    NIH grant entitled "Oxalobacter Formigenes Diagnostic Kit Development"
          with payments which began on September 1, 2000, for $99,958,

     o    NIH grant entitled "Coating of Urinary Protheses to Prevent
          Encrustation" with payments which began on September 1, 2000,
          for $99,958,

Comparison of G&A Expenses - 2000 vs. 1999
<TABLE>
<S>                        <C>                 <C>                <C>

                                                                    Percent
                                2000                 1999            Change
                           ----------------    -----------------  --------------

Personnel-Related                  286,422              212,888        34.5414%
Professional                        69,263               44,606        55.2779%
Rent &Utilities                     21,654               14,150        53.0343%
Advertising                         20,297                4,896       314.5543%
Consultants                         37,309               61,253       -39.0900%
Other G&A                          163,385              109,608        49.0631%

</TABLE>


         [GRAHICS OMITTED]

Operating, general, and administrative expenses increased 34% from $447,400 for
the year ended December 31, 1999 to $598,330 for the year ended December 31,
2000. These increased expenses reflect:

      o        increased personnel and related payroll taxes,
      o        increased rental space and associated utilities usage,
      o        increased professional fees,
      o        increase in other miscellaneous G&A expenses, and
      o        support of increased research activities,

     offset somewhat by a reduction in consulting and travel-related expenses.

     Although, our policy is to keep administrative costs as low as possible, we
expect our operating, general and administrative expenses to continue to
increase in 2001 as a result of increased research activities resulting in a
need for increased administrative personnel.
<PAGE>

Comparison of R&D Expenses - 2000 vs. 1999
<TABLE>
<S>                       <C>                                 <C>

                                 2000                                1999
                          ------------------                  ------------------
Personnel-related                399,803                             237,150
Consultants                      356,771                             112,834
Supplies and animal costs        172,333                              64,852
Rent & Utilities                 100,413                              77,287
Deprec & Amort                    63,946                              29,951
Other misc R&D                   116,431.19                          103,254.81

</TABLE>

[GRAHICS OMITTED]

          Research and development expenditures consist primarily of:

o        payroll-related expenses of  research and development personnel,
o        laboratory and animal maintenance and supplies,
o        laboratory rent and associated utilities,
o        depreciation on laboratory equipment,
o        development activities,
o        payments for sponsored research,
o        scientific advisors,
o        regulatory consultants fees,
o        interest on research and development equipment,
o        amortization of capitalized patent costs.

     Research and development expenses increased 93% from $625,329 for the year
ended December 31, 1999 to $1,209,698 for the year ended December 31, 2000.
These increased expenses reflect:

o         increased laboratory personnel,
o         increased consultant's fees, including new project and quality
          management,
o         increased laboratory space and associated utilities,
o         interest charges on the purchase of lab equipment and on deferred fees
          and salaries, and
o         increased laboratory-related supplies and miscellaneous research and
          development expenses.

Our research and development expenses will continue to increase in 2001 due to
an increase in the scale of operations as a result of the Q-Med transaction,
described below, and the receipt of the research grants referred to above.
<PAGE>


Comparison of Interest Income and Expense 2000 vs. 1999
<TABLE>
<S>                            <C>                 <C>


                                    2000                 1999
                               ----------------    -----------------
Interest Income                      83,919                2,121
Interest Expense                    127,096              155,697

</TABLE>

[GRAHICS OMITTED]
     Interest expense decreased 18% from $155,697 for the year ended December
31, 1999 to $127,096 for the year ended December 31, 2000 due primarily to the
re-payment of bridge loans to officers in July and the conversion of deferred
administrative fees and salaries, including deferred interest, payable to
related parties, into restricted common shares, also in July, 2000.

     Interest Income increased 3,857% from $2,121 for the year ended December
31, 1999 to $83,919 for the year ended December 31, 2000 due to the investment
of the cash in excess of operating needs provided by the Q-Med transaction
described below.

Liquidity and Capital Resources

     A total of 129,000 shares were sold and $516,000 raised in the public
offering, which commenced in December, 1997 and terminated on March 31, 2000.
These shares are included in the outstanding shares at December 31, 2000.

     A summarization of the grants received from the National Institutes of
Health for the year 2000 follows

o    On June 5, 1999, we were awarded a $100,000 Phase I grant under the Small
     Business Technology Transfer Program for research in our oxalate technology
     entitled "Enteric Elimination of Oxalic Acid". We began drawing on these
     funds in July, 1999. We subcontracted a large portion of the grant to the
     University of California, Irvine but drew down approximately $14,000 of the
     remaining funds in 2000. The grant period ended in June 2000.

o    In September 1999 we also received an award of $200,000 (covering a
     23-month period) from the NIH to support our diabetes research entitled
     "Islets from Islet Progenitor/Stem Cells for Implantation". We
     subcontracted $25,000 under this grant, but have utilized approximately
     $130,000 through December 31, 2000, leaving $70,000 available to support
     diabetes research through August 31, 2001, when the grant period expires.

o    In February 2000 we were awarded another $100,000 NIH Phase I grant under
     the SBIR program for research in our oxalate technology entitled "Digestion
     of Food Oxalate". We began drawing on these funds in February, 2000. We
     subcontracted approximately $30,000 to Wake Forest University, and have
     received all of the funds available under this grant in the year 2000.

o    In September 2000 we were awarded another NIH SBIR award for research
     entitled "M3 Receptor: Diagnostic Marker for Sjogren's Syndrome". We
     subcontracted about $45,000 to the
<PAGE>

      University of Florida and additionally drew on approximately $30,000 of
      the funds available in 2000, leaving $25,000 to support research through
      February, 2001.

o    Also in September, 2000, we received notice that we had been awarded
     another NIH SBIR grant, for $99,958 and entitled "Coating of Urinary
     Protheses to Prevent Encrustation". We subcontracted $25,000 to the
     University of Florida, and received another $23,000, leaving approximately
     $50,000 to support research through August of 2001.

o    Also in September, 2000, we received notice that we had been awarded
     another NIH SBIR grant, for $99,958 and entitled "Oxalobactor Formigenes
     Diagnostic Kit Development". We received approximately $17,000 in grant
     revenues for 2000, leaving approximately $78,000 to support research
     through August of 2001.

o    We have other grant applications pending.

     Operations during 2000 were funded primarily from $3,771,697 in the form of
equity investments by Q-Med in connection with the Q-Med transaction described
below, as well as funds from NIH grants. Bridge loans and accrued interest on
bridge loans totaling approximately $443,000 were paid in July, 2000 as part of
the Q-Med transaction. We do not have any bank financing arrangements, other
than business credit cards.

     In connection with the Q-Med transaction, a total of $1,028,768 in deferred
fees and salaries payable to related individuals were satisfied through the
issuance of 257,192 shares of restricted common stock reducing our long-term
indebtedness. Q-Med has an option to offer to purchase from any holder electing
not to convert, our unsecured convertible notes, which mature on August 31,
2001. Should no holders convert, and should Q-Med not offer to acquire and
convert unsecured notes, we could be required to redeem up to $787,270 of our
unsecured notes.

     At December 31, 2000, we had $2,160,278 in cash and cash equivalents. Until
required for operations, our policy is to invest any excess cash reserves in
bank deposits, money market funds, certificates of deposit, commercial paper,
corporate notes, U.S. government instruments and other investment-grade quality
instruments.

     In connection with a sponsored research agreement with Genetics Institute,
Inc. that was concluded during 1997, some patent-related expenses were
reimbursed by Genetics Institute. We may be contractually obligated to repay
these reimbursed expenses in installments over a 36 month period upon a notice
to or by Genetics Institute to the effect that their option to negotiate for a
license to our technology, contained in the sponsored research agreement has
expired. We have not given nor received such notice, and, accordingly,
reimbursement has not commenced. We have accrued $42,317 as a long-term
liability pending final notice under the agreement.

     Annual expenses during 2000 for our current three-year lease (with two
one-year renewal options), were approximately $112,000, compared to $95,800 for
1999. Additionally, repayment of funds provided by lessor for tenant
improvements and an emergency generator, were approximately $10,200 in each
year. We expect that annual lease expenses will increase to around $128,000 for
2001 as a result of additions to our rented facilities. We will continue to have
a need to purchase additional laboratory equipment. We estimate that we will
need to purchase at least $500,000 of capital laboratory equipment and
improvements in 2001.

     We incurred negative cash flows from operations in 1999 of approximately
$550,000 and approximately 1,125,000 in 2000. We have spent and expect to
continue to spend, substantial funds to complete our planned product development
efforts, commence clinical trials, and diversify our technology. Our future
capital requirements and the adequacy of available funds will depend on numerous
factors, including

o        receipt of the balance of the payment from the Q-Med transaction
         described below,
o        the successful commercialization of Ox-Control(TM) (our nutritional
         supplement) the XEntrIx  (TM) Oxalobacter formigenes Monitor (our
         diagnostic test), and IxC1-62/47 (our lead therapeutic compound),
o        the successful commercialization of our islet replacement therapy
         products,
o        progress in our product development efforts,
<PAGE>

o        the magnitude and scope of development efforts,
o        progress with preclinical studies and clinical trials,
o        the cost of contract manufacturing and research organizations,
o        cost of filing, prosecuting, defending, and enforcing patent claims
         and other intellectual property rights,
o        competing technological and market developments, and
o        the development of strategic alliances for the development and
         marketing of our products

The Q-Med Transaction

     On April 16, 1999, we entered into an agreement in principle with Q-Med AB
(publ), a biotechnology company based in Uppsala, Sweden. This agreement was
amended on September 9, 1999. Pursuant to the agreement in principle, from April
1999 through June 19, 2000, we received $1,125,000 in cash in exchange for
562,500 shares of restricted common stock, at a cash price of $2.00 per share.
On July 14, 2000, Qvestor, LLC ("Qvestor"), a Delaware subsidiary of Q-Med AB
exercised the option granted in September 1999 and entered into a stock purchase
agreement pursuant to which,,


o    We issued 3,337,500 shares to Qvestor in exchange for cash of $6,675,000
     and non-cash consideration described below. Cash of $3,321,697 was paid at
     closing, and the balance of $3,353,303, is due on or before July 14, 2001.


o    The Company obtained the right to a royalty-free license to Q-Med's
     intellectual property in non-animal, stabilized hyaluronic acid (NASHA) on
     the following terms:

     o    the license will be exclusive and worldwide for the use of NASHA for
          the encapsulation of insulin-producing cells, without right of
          sublicense;
     o    any improvements (to which we will also have rights) will belong
          exclusively to Q-Med; and
     o    we will not have the right to manufacture NASHA

     o    The Company gave Q-Med a right of first refusal to offer to redeem, at
          the maturity date on August 31, 2001, from all holders electing not to
          convert, up to $787,270 in face amount of our convertible unsecured
          notes. The offered redemption price would be par, in the case of 10%
          notes, or at 1.5 times par for variable notes. Thereafter Q-Med would
          have the option, for any redeemed notes acquired, to convert variable
          notes at a price of $2.10 per share, and 10% notes at a price of $4.20
          per share.


     Q-Med, a growing, profitable Swedish company, develops, manufactures, and
sells natural, specialized medical implants. Q-Med's shares are listed on the
Stockholm stock exchange, and it is not related to or affiliated in any way with
Q-Med, Inc., a Delaware corporation whose shares are listed on the Nasdaq small
cap market. All of Q-Med's products are constructed using a proprietary form of
non-animal, stabilized hyaluronic acid. Hyaluronic acid is a natural
polysaccharide, first isolated in 1934. Its main function in the body is to
lubricate moveable parts like joints and muscles and to transport substances to
and within cells. The majority of Q-Med's revenues are accounted for by
Restylane(R) for the filling out of lips, facial wrinkles, and facial folds.

     By virtue of its stock ownership and that of its subsidiary, Qvestor LLC,
Q-Med may be deemed to be the parent of the Company.

     We will continue to be required to obtain additional funds through equity
or debt financing, strategic alliances with corporate partners and others,
mergers or the sale of substantially all our assets, or through other sources in
order to bring our drug and device products through regulatory approval to
commercialization. We do not have any material committed sources of additional
financing. We cannot assure you that additional funding, consolidation, or
alliance, if necessary, will be available on acceptable terms, if at all. If
adequate funds are not available, we may be required to delay, scale-back, or
eliminate certain aspects of our operations or attempt to obtain funds through
arrangements with collaborative partners or others that may require us to
relinquish rights to certain of our technologies, product candidates, products,
or potential markets. If adequate funds are not available, our business,
financial condition, and results of operations will be materially and adversely
affected.

                                   Signatures

     In accordance with Section 13 or 15(d) of the Exchange Act, the Company
caused this amendmentt to be signed on its behalf by the undersigned, thereunto
duly authorized.

                                             Ixion Biotechnology, Inc.

                                            By:  /S/ Weaver H. Gaines
Dated:  August 13, 2001                         --------------------------
                                                 Weaver H. Gaines, Chairman and
                                                 Chief Executive Officer