================================================================================

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

                                  -------------

                                   FORM 10-QSB

   [X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
                                   ACT OF 1934
                  For the quarterly period ended March 31, 2002

                                       or

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

                                  -------------

                        Commission file number: 333-34765

                            Ixion Biotechnology, Inc.
        (Exact Name of Small Business Issuer as Specified in Its Charter)


                                  -------------

                               Delaware 59-3174033

          (State of incorporation) (I.R.S. Employer Identification No.)

                          13709 Progress Blvd., Box 13

                                Alachua, FL 32615
                    (Address of principal executive offices)

                   Registrant's telephone number: 386-418-1428

                                  -------------

     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

     The number of shares of the registrant's  common stock, par value $0.01 per
share, outstanding as of April 30, 2002 was 7,218,177.

================================================================================


<TABLE>

                                              Ixion Biotechnology, Inc
                                                 Index to Form 10QSB

               <S>                                                                                             <C>

Part I - Financial Information                                                                                 Page

Item 1.  Financial Statements (unaudited)

         Condensed Balance Sheet - March 31, 2002.................................................................2

         Condensed Statements of Operations - Three Months Ended
         March 31, 2002 and 2001..................................................................................3

         Condensed Statements of Cash Flows - Three Months Ended
         March 31, 2002 and 2001..................................................................................4

         Notes to Condensed Financial Statements..................................................................5

Item 2.  Management's Discussion and Analysis or Plan of Operations...............................................9

Part II - Other Information

Item 2. Changes in Securities and Use of Proceeds................................................................14

Item 6.  Exhibits and Reports on Form 8-K........................................................................14

Signatures.......................................................................................................15

Exhibit Index....................................................................................................15

</TABLE>
<PAGE>

Part I.  Financial Information
Item 1.  Financial Statements

Ixion Biotechnology, Inc.
Condensed Balance Sheet
March 31, 2002
Unaudited

<TABLE>

       <S>                                                                                             <C>
                                                                          Assets

Current  Assets:
   Cash and cash equivalents                                                                  $       615,161
   Short-term investments                                                                           1,422,875
   Accounts receivable, net                                                                            59,079
   Prepaid expenses                                                                                    64,720
   Other current assets                                                                                 2,750
                                                                                              ----------------
         Total current assets                                                                       2,164,585
                                                                                              ----------------
Property and equipment, net                                                                           353,350
                                                                                              ----------------
Other Assets:
    Patents and patents pending, net                                                                  464,849
                                                                                              ----------------
                Total Assets                                                                  $     2,982,784

                      Liabilities and Stockholders' Equity

Current Liabilities:
    Accounts payable                                                                           $      180,686
    Note payable, current portion                                                                       6,000
    Accrued expenses                                                                                  155,953
                                                                                               ---------------
           Total current liabilities                                                                  342,639
                                                                                               ===============
Long-Term Liabilities:
    Liability under research agreement                                                                 42,317
     Note payable                                                                                      24,000
    Deferred rent, including accrued interest                                                          29,508
                                                                                               ----------------
                  Total long-term liabilities                                                          95,825
                                                                                               ----------------
                  Total liabilities                                                                   438,464
                                                                                               ----------------
Commitments (Note 5)

Stockholders' Equity:
    Common stock, $.01 par value; authorized 20,000,000, issued and
       outstanding 7,218,177 shares                                                                    72,182
     Additional paid-in capital                                                                    11,931,041
    Accumulated deficit                                                                            (9,106,781)
    Less unearned compensation                                                                       (352,122)
                                                                                                ----------------
                  Total stockholders' equity                                                        2,544,320
                                                                                                ----------------
Total Liabilities and Stockholders' Equity                                                      $   2,982,784
                                                                                                ================
</TABLE>

See accompanying notes to condensed financial statements
                                       2
<PAGE>

<TABLE>

Ixion Biotechnology, Inc.
Condensed Statements of Operations
           <S>                                                        <C>                               <C>

..........
..........                                                     Three Months Ended
..........                                                           March 31,
      ...                                                            2002                                2001
    .....                                                                         Unaudited
Revenues:
 Income under research agreement                              $              0                $         3,913
 Income from research grants                                            53,361                        136,793
                                                              -----------------                ----------------
            Total revenues                                              53,361                        140,706
                                                              -----------------                ----------------
Expenses:
  Operating, general and administrative                                210,004                        207,915
  Research and development                                             508,098                        547,233
                                                              -----------------                ----------------
  .......Total operating expenses                                      718,102                        755,148
                                                              -----------------                ----------------
Other income (expense):
  Interest expense                                                        (184)                       (19,968)
  Interest income                                                       12,381                         26,988
                                                              -----------------                ----------------
     ....Other income, net                                              12,197                          7,020
                                                              -----------------                ----------------
Net Loss.                                                     $       (652,544)                $     (607,422)
                                                              =================                ================
Basic and diluted net loss per share                          $          (0.09)                $        (0.09)
                                                              =================                ================
Weighted average common shares - basic and diluted                   7,190,926                      6,861,791
                                                              =================                ================
</TABLE>
See accompanying notes to condensed financial statements
                                       3
<PAGE>
<TABLE>

                   <S>                                               <C>                          <C>

Ixion Biotechnology, Inc.
Condensed Statements of Cash Flows
..........
..........                                                                     Three Months
..........                                                                    Ended March 31,
..........                                                          __2002__                     __2001__
                                                                                Unaudited

Cash Flows from Operating Activities:
    Net loss                                                  $    (652,544)                $      (607,422)
    Adjustments to reconcile net loss to net cash used in
        operating activities:
..........Depreciation                                                25,592                          21,510
..........Amortization                                                 1,346                           3,807
..........Amortization of debt discount                                  -                            14,290
..........Stock, options and warrants issued for
                consulting services                                   1,260                           1,260
..........Stock compensation expense                                  57,727                          37,245
..........Decrease (increase) in prepaid expenses and
..........       other current assets                                  3,914                          11,928
..........Decrease (increase) in accounts receivable
                 and other assets                                    12,119                         (27,346)
         Decrease in deferred revenue                                  -                             (1,281)
..........Increase (decrease) in accounts payable and
..........       accrued expenses                                    105,739                         109,445
..........Decrease in liability under funded research program       (187,000)                            -
..........Increase in deferred rent                                     -                                703
..........Increase (decrease) in interest payable                        788                          (7,731)
                                                               --------------                 ---------------
             Net cash used in operating activities                  (631,059)                      (443,592)
                                                               --------------                 ---------------
Cash Flows from Investing Activities:
     Purchase of property and equipment                               (32,097)                      (23,551)
     Payments for patents and patents pending                         (12,993)                          -
     Redemption of short-term investments                             300,000                           -
                                                                --------------                 --------------
             Net cash provided by (used in) investing activities      254,910                       (23,551)
                                                                --------------                 --------------
Cash Flows from Financing Activities:
     Proceeds from (principal reductions in) notes payable             30,000                          (780)
                                                                --------------                 --------------
             Net cash provided by (used in)
                        financing activities                           30,000                          (780)
                                                                --------------                 --------------
Net Decrease In Cash and Cash Equivalents                            (346,149)                     (467,923)

Cash and Cash Equivalents at Beginning of Period                      961,310                     2,160,278
                                                                --------------                 --------------
Cash and Cash Equivalents at End of Period                      $      615,161                 $   1,692,355
                                                                ==============                 =============
</TABLE>

See accompanying notes to condensed financial statements
                                       4
<PAGE>
Ixion Biotechnology, Inc.
Notes to Condensed Financial Statements
Three  Month Period Ended March 31, 2002 and 2001

1.       Basis Of Presentation:

     The accompanying  unaudited  condensed  financial  statements for the three
     months ended March 31, 2002 and 2001,  respectively  have been  prepared in
     accordance  with  generally  accepted  accounting  principles  for  interim
     financial information. Accordingly, they do not include all the information
     and footnotes  required by generally  accepted  accounting  principles  for
     complete financial statements. These interim financial statements should be
     read in  conjunction  with the December 31, 2001  financial  statements and
     related notes  included in the  Company's  Annual Report on Form 10-KSB for
     the year ended  December  31,  2001.  In the  opinion of the  Company,  the
     accompanying   unaudited   condensed   financial   statements  contain  all
     adjustments,  consisting only of normal  recurring  accruals,  necessary to
     present fairly the Company's financial position, results of operations, and
     cash flows for the periods  presented.  The results of  operations  for the
     interim period ended March 31, 2002 are not  necessarily  indicative of the
     results to be expected for the full year.

     The accompanying  financial  statements have been prepared on a basis which
     assumes  that the  Company  will  continue  as a going  concern  and  which
     contemplates  the realization of assets and the satisfaction of liabilities
     and commitments in the normal course of business.

     The  Company  incurred a net loss of $652,544  for the  quarter  ended
     March 31, 2002, and as of March 31, 2002, had a total  accumulated  deficit
     of   $9,106,781.   The  Company  had  deficit  cash  from   operations   of
     approximately $631,059 and $443,592 for the first quarter of 2002 and 2001,
     respectively.

     The  $3,353,300  received  from  Qvestor in July 2001 is being used to
     fund continuing  operations and the planned  expansion of the Company.  The
     Company expects to incur  additional  operating losses for the next several
     years and will require additional financing to continue its development and
     commercialization of products.  These circumstances raise substantial doubt
     about the  Company's  ability to  continue as a going  concern.  Management
     plans to seek significant  additional equity investment from  institutional
     investors commencing in the second quarter of 2002. If additional financing
     is not available,  management believes that the cash on hand and cash flows
     from operations  including  additional SBIR grants,  during 2002, should be
     sufficient to meet its cash  requirements  in the coming year. If the funds
     available to the Company are not  sufficient,  management  believes that it
     can take certain  actions such as  undertaking  certain  expense  reduction
     actions to mitigate  the impact.  Although  management  continues to pursue
     these plans,  there is no assurance  that the Company will be successful in
     obtaining  financing  on terms  acceptable  to the  Company or at all.  The
     financial  statements do not include any adjustments that might result from
     the outcome of this uncertainty.

     Recent Accounting Pronouncement

     In June 2001, the Financial  Accounting  Standards  Board  ("FASB")  issued
     Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and
     Other   Intangible   Assets".   SFAS  No.  142   requires   the  use  of  a
     non-amortization  approach to account for  purchased  goodwill  and certain
     intangibles.  Under  a  non-amortization  approach,  goodwill  and  certain
     intangibles  will not be amortized into results of operations,  but instead
     would be reviewed for impairment and written down and charged to results of
     operations  only in the periods in which the recorded value of goodwill and
     certain intangibles is more than its fair value. The provisions of SFAS No.
     142 were  effective  for the  Company  beginning  on January  1, 2002  and
     implementation  did not have a material effect on its results of operations
     or financial position.

     In June 2001, the FASB issued SFAS No. 143 "Accounting for Asset Retirement
     Obligations".  The
                                       5
<PAGE>

     statement  addresses  financial  accounting  and reporting for  obligations
     associated  with the  retirement  of  tangible  long-lived  assets  and teh
     associated asset  retirement  costs. The provisions of SFAS No. 143 were 1.
     Basis Of Presentation - Continued:

     Recent Accounting Pronouncements - Continued

     effective for the Company beginning January 1, 2002 and  implementation did
     not have a  material  effect on the  Company's  results  of  operations  or
     financial position.

     In  August  2001,  the  FASB  issued  SFAS  No.  144,  "Accounting  for the
     Impairment or Disposal of Long-Lived Assets".  SFAS No. 144 supersedes SFAS
     No.  121  "Accountinf  for the  Impairment  of  Long-Lived  Assets  and for
     Long-Lived  Assets to be Disposed  of", and the  accounting  and  reporting
     provisions  of  Accounting   Principles   Board  ("APB")  Opinion  No.  30,
     "Reporting the Results of Operations - Reporting the Effects of Disposal of
     a Segment  of a  Business,  and  Extraordinary,  Unusual  and  Infrequently
     Occurring  Events and  Transactions".  The  provisions of SFAS No. 144 were
     effective for the Company beginning January 1, 2002 and  implementation did
     not have a  material  effect on its  results  of  operations  or  financial
     position.

     On  April  30,  2002  the  FASB  Statement  No.  145,  "Rescission  of FASB
     Statements  No. 4, 44,  and 64,  Amendment  of FASB  Statement  No. 13, and
     Technical  Corrections".  This statement  eliminates the  requirement  that
     gains and losses  from the  extinguishment  of debt be  aggregated  and, if
     material,  classified as an  extraordinary  item, net of the related income
     tax effect and  eliminates  an  inconsistency  between the  accounting  for
     sale-leaseback  transactions  and  certain  lease  modifications  that have
     economic   effects  that  are  similar  to   sale-leaseback   transactions.
     Generally,  Statement No. 145 is effective for transactions occurring after
     May 15,  2002.  The  adoption  of the  standard  will have no impact to the
     Company.


2.       Notes Payable:

     In September 1996, the Company  completed the private placement of $787,270
     in Convertible  Unsecured Notes due in 2001.  During 2001,  $650,262 of the
     outstanding  notes were  converted  into 288,936 shares of common stock and
     $128,608  was  repaid  by  the  Company.   In  February  and  March,  2002,
     documentation  relating  to  conversion  of  the  remaining  $8,400  of the
     Variable Notes was completed and 4,000 shares of common stock were issued.

     On March 5, 2002,  the Company signed a note for $30,000 with its bank, the
     funds of which are collateralized by newly-purchased office equipment.  The
     terms of the loan require sixty equal monthly payments of principal plus 7%
     interest.


3.       Income Taxes:

     The  components of the Company's net deferred tax asset and the tax effects
     of the primary temporary  differences giving rise to the Company's deferred
     tax asset are as follows as of March 31, 2002:

                Net operating loss carryforward             $3,600,000
                                                          ----------------

                Deferred tax asset                           3,600,000
                Valuation Allowance                         (3,600,000)
                                                          ----------------
                                       6
<PAGE>

                Net deferred tax asset                    $       -
                                                          ================

4.       Stockholders' Equity:

         Common Stock Warrants

     On February 10, 2002  warrants to purchase  3,000 shares of common stock at
     an exercise of price of $5.00 per share expired, unexercised.

4.       Stockholders' Equity - Continued:

         Common Stock Warrants - Continued

     Common stock warrants outstanding at March 31, 2002 are as follows:

        Number              Exercise Price                     Expiration Date

        3000                     $5.00                         October 23, 2002

     Stock Options

     On February 15, 2002 the Company granted  ten-year  incentive stock options
     under the 1994 Stock  Option Plan to purchase  5,000 shares of Common Stock
     at an exercise  price of $4.00 per share to an officer of the  Company,  in
     connection with an employment package.

     On March 19, 2002 the Company  granted  ten-year  incentive  stock  options
     under the 1994 Stock  Option Plan to purchase 500 shares of Common Stock at
     an exercise  price of $4.00 per share to an employee  of the  Company.  The
     options vest at a rate of 20% per year.

     Also,  on March 19,  2002 the  Company  granted  ten-year  incentive  stock
     options  under the 1994 Stock  Option  Plan to  purchase  21,000  shares of
     Common  Stock at an exercise  price of $4.20 per share to  employees of the
     Company. The options vest at a rate of 20% per year.

     Stock Compensation Plan

     At March 31,  2002 a total of  237,783  shares had been  granted  under the
     stock compensation plan. Compensation expense recognized in connection with
     such awards under the stock compensation  plan for the quarters ended March
     31, 2002 and 2001 was $57,727 and  $37,245,  respectively.  Total  unearned
     compensation  related to stock  compensation  plan  awards was  $352,124 at
     March 31, 2002 and will be  recognized  as expense  over future  periods of
     service.


5.   Commitments:
                                       7
<PAGE>

     Lease

     In April 2002,  the Company  signed a lease  modification  to increase  its
     rental space to 12,221 square feet and includes an extension of its current
     term through October 31, 2005.  Future minimum annual rental payments under
     this lease are approximately $173,000.

6.   Segment Data:

     As a result of certain organizational changes, the Company has divided it's
     business into two core units, oxalate control and stem cell/diabetes. These
     changes result in the  identification  of two reportable  business segments
     under the  requirements of SFAS No. 131,  Disclosures  about Segments of an
     Enterprise and Related Information, commencing with the quarter ended March
     31, 2002.

     Ixion's two core business units are:

   ss.    Oxalate  Control:  therapies  for Primary  Hyperoxaluria  (an "orphan"
          disease),   recurrent   kidney  stones,   and  other   oxalate-related
          conditions,  based on our proprietary use of unique  oxalate-degrading
          bacteria; and

6.       Segment Data - Continued:

   ss.    Stem Cell / Diabetes:  somatic  cellular  therapies to treat diabetes,
          based on selecting,  proliferating,  and directing the differentiation
          of adult stem  cells into  insulin-producing  islet  preparations  for
          transplantation

          The following table sets forth selected income  statement data for the
          quarters  ended  March 31,  2002 and 2001  (restated  to  reflect  the
          revised  segments)and  selected  asset  items as of March 31, 2002 for
          each segment:

<TABLE>

<S>                <C>           <C>           <C>           <C>            <C>            <C>

                     Oxalate Control            Stem Cell/Diabetes                  G&A                           Total
                --------------------------- ---------------------------- --------------------------- -------------------------------
                    2002          2001          2002          2001           2002          2001            2002            2001
                ------------- ------------- ------------- -------------- -------------- ------------ ----------------- -------------



Grant Revenues   $    53,361   $     61,483  $      -      $   79,223     $   -         $  -         $      53,361     $    140,706

Expenses             238,919        243,626    269,179        303,607        197,807     200,895           705,905          748,128

                ------------- ------------- ------------- -------------- -------------- ------------ ----------------- -------------

Net Loss         $  (185,558)     $(182,143) $(269,179)    $ (224,384)    $ (197,807)  $(200,895)    $    (652,544)    $   (607,422)
                ============= ============= ============= ============== ============== ============ ================= =============
Segment Assets   $  442,884                  $ 364,318                    $ 2,175,582                $   2,982,784
                =============               =============                ==============              =================
</TABLE>

Segment  assets  include  specifically  identifiable  fixed assets,  capitalized
patent costs and receivables. Segment asset information not available for 2001.
Total assets at March 31, 2002 are not  significantly  different  from the prior
year.
                                       8
<PAGE>


                  Special Note Regarding Forward-Looking Statements

     This quarterly report on Form 10-QSB of Ixion  Biotechnology,  Inc. for the
quarter ended March 31, 2002 contains certain forward-looking  statements within
the  meaning of Section  27A of the  Securities  Act of 1933,  as  amended,  and
Section  21E of the  Securities  Exchange  Act of 1934, as  amended,  which  are
intended to be covered by the safe harbors created  thereby.  To the extent that
such  statements  are  not  recitations  of  historical  fact,  such  statements
constitute  forward-looking  statements which, by definition,  involve risks and
uncertainties. In particular, without limitation,  statements under Part I, Item
2,  Management's  Discussion  and  Analysis  or  Plan  of  operations,   contain
forward-looking  statements.  Where,  in any  forward-looking  statement,  Ixion
expresses  an  expectation  or belief  as to  future  results  or  events,  such
expectation or belief is expressed in good faith and believed to have reasonable
basis, but there can be no assurance that the statement of expectation or belief
will result or be achieved or accomplished.

     Statements  regarding our research and  development  plans also  constitute
forward-looking statements.  Actual research and development activities may vary
significantly from the current plans depending on numerous factors including

    o changes in the costs of such activities from current estimates,
    o the results of the  programs,
    o the results of clinical  studies  referred to above,
    o the timing of regulatory submissions, technological advances,
    o determinations as to commercial potential, and
    o the status of competitive products.

     All of the above  estimates  are based on the current  expectations  of our
management  team,  which  may  change  in the  future  due to a large  number of
potential events, including unanticipated future developments.

     The following factors are factors that could cause actual results or events
to differ materially from those  anticipated,  and include,  but are not limited
to: general economic,  financial and business  conditions;  labor  difficulties;
competition for customers in the  biotechnology and  pharmaceutical  industries;
the costs of research and  development of chemical  compounds and products;  and
changes in and compliance with governmental regulations.

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

     The following  discussion and analysis  should be read in conjunction  with
the  Condensed  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.  These  and
additional  risk factors are  identified in our annual report to the  Securities
and Exchange Commission filed on Form 10-KSB and in other SEC filings.

Results of Operations

Three Months Ended March 31, 2002 and 2001
<TABLE>
                 <S>                                  <C>            <C>          <C>

               -------------------------------------------------------------------------
               Summary of Operations - Three Months Ended March 31,
               -------------------------------------------------------------------------
                                                                                Percent

                                                       2002           2001      Change
               -------------------------------- -------------- ------------- -----------
               Revenues                               $53,361      $140,706     -62.08%
               Operating Expenses                   ($718,102)    ($755,148)     -4.91%
               Other Income, net                      $12,197        $7,020      73.75%
                                                -------------- ------------- -----------
               Net Loss                             ($652,544)    ($607,422)       7.43%
               -------------------------------- -------------- ------------- -----------
</TABLE>
                                       9
<PAGE>

     Total  revenues  decreased  approximately  62% from  $140,706  in the first
quarter of 2001 to $53,361  in the first  quarter of 2002  mainly as a result of
the delay of funding under new NIH grants and completion of the following  three
research contracts:

o    "Islets from Islet Progenitor/Stem Cells for Implantation";
o    "Oxalobacter Formigenes Diagnostic Kit Development"; and
o    "Coating of Urinary Protheses to Prevent Encrustation";

     We expect  revenues to begin to increase in the second  quarter of 2002 due
to:

o    the commencement of funding under:

o    A two-year NIH Phase II Small Business  Technology  Transfer ("STTR") grant
     entitled  "Enteric  Elimination and Degradation of Oxalic Acid" (awarded in
     2001) for a total of approximately $500,000;

o    A two-year NIH Phase II Small Business  Innovative  Research ("SBIR") grant
     entitled  "Digestion  of Food  Oxalate"  (awarded  in 2001)  for a total of
     approximately $783,000; and

o    A six-month NIH Phase I SBIR grant entitled
     "Differentiating  Bone Marrow  Stem Cells To Cure  Diabetes"  for  $99,000.

     [GRAPHIC OMITTED]

Comparison of G&A Expenses of Q1 2002 vs. Q1 2001

                                       2002                 2001
Personnel-related                   105,312.84            106,072.36
Capital Raising                      27,324.59              2,272.16
Office & Supplies                    14,791.42              9,575.34
Other G&A                            62,575.21             89,994.69

     Operating,  general and  administrative  expenses  increased  slightly from
$207,915 in the first  quarter of 2001 to $210,004 in the first quarter of 2002.
The increased expenses reflect:

o    increased capital raising efforts;
o    increased supplies related to increased laboratory personnel; and
o    increased miscellaneous general and administrative expenses;

offset,  somewhat,  by a reduction in personnel-related and other administrative
expenses.

     As we  continue  to expand our  research  and  development  activities  and
commence  with  clinical  trials in the second  quarter  of 2002,  we expect our
general and  administrative  expenses  will  continue to increase  reflecting  a
concurrent demand for increased administrative support.

                                       10
<PAGE>

[GRAPHIC OMITTED]

                  Comparison of R&D expenses Q1 2002 vs. Q1 2001

                                 2002                       2001
Personnel-related            222,056.09                 157,972.66
Consultants & Subs            40,137.22                 136,520.35
Supplies and animal costs     67,376.41                 141,083.86
Rent & Utilities              52,299.78                  30,890.28
Regulatory & Quality          32,027.78                   4,000.00
Scientific Advisors           33,533.34                  12,833.34
Other misc R&D                60,667.39                  63,932.66


    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    clinical and pre-clinical expenses;
o    payments made for sponsored research;
o    scientific advisors fees;
o    regulatory consultants fees;
o    interest on the purchase of laboratory equipment; and
o    amortization of capitalized patent costs.

     Research and development  expenses  decreased 7% from $547,233 in the first
quarter of 2001 to $508,098 in the first quarter of 2002. The decreased expenses
reflect:

o     decreased laboratory-related supplies and animal expenses;
o     decreased consultants and subcontractors fees; and
o     a decrease in other miscellaneous laboratory expenses;

offset,  somewhat, by an increase in laboratory personnel,  increased laboratory
space and rent, an increase in regulatory  and quality  activities and expenses,
and an increase in scientific advisors' fees.

     We expect our research and development  expenses to increase in 2002 due to
an increase in the scale of  operations,  the addition of regulatory and quality
assurance  personnel,  the  planned  commencement  of clinical  trials,  and the
receipt of the research grants referred to above.

                                       11
<PAGE>

[GRAPHIC  OMITTED]

                   Comparison of Interest Expense and Income
                              Q1 2002 vs. Q1 2001

                                 2002                2001
Interest Expense                 183.63            19,967.78
Interest Income               12,380.78            26,987.55


     Interest  expense  decreased  over 99% from $19,968 in the first quarter of
2001 to $184 in the first quarter of 2002 due primarily to the re-payment of the
officers'  bridge loans and the conversion of deferred  administrative  fees and
salaries in mid 2000 and the maturity of $787,720 of our  convertible  unsecured
notes in September 2001.  Interest expense should increase in future quarters of
fiscal 2002 under financing  arrangements  made during the first quarter of 2002
for the purchase of office and laboratory equipment.

     Interest income  decreased 54% from $26,988 in the first quarter of 2001 to
$12,381 in the first  quarter of 2002,  due to a  decrease  in overall  interest
rates and a decreased cash balance in excess of operating needs. Interest income
should continue to decrease in 2002 as we utilize our cash resources.

Liquidity and Capital Resources

     For the first quarter of 2002, we had deficit cash flows from operations of
$631,059  compared to deficit  cash flows of  $443,592  in the first  quarter of
2001.  The increased  use of cash relates to the  increased  scale of operations
without increased revenues.

     We expect  annual  lease  expense to increase to a minimum of $173,000  for
2002 as a result of additions to our rented facilities and an increase in rental
rates.

     During the first  quarter of 2002, we entered into  financing  arrangements
for the  purchase  of office  equipment  with  aggregate  principal  amounts  of
$30,000.  These  obligations  will be repaid in sixty equal monthly  payments of
principal plus a 7% interest rate.

     At March  31,  2002,  we have  $615,161  in cash and cash  equivalents  and
$1,422,875 in  short-term  investments,for a total of  $2,038,036  compared to
$1,692,355 in cash and short-term  investments at March 31, 2001. 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

     A summary of grant funds  received  from the National  Institutes of Health
during the first quarter of 2002 follows

o    In  September,  2001 NIH  awarded us a two-year  Phase II STTR  grant,  for
     $500,000  entitled  "Enteric  Elimination  and Degradation of Oxalic Acid".
     Approximately  $15,000 in revenues  were  utilized  under this grant in the
     first quarter of 2002.

                                       12
<PAGE>

o    Also,  in  September,  2001 NIH  awarded us a two-year  Phase II SBIR grant
     entitled "Digestion of Food Oxalate" for a total of approximately $783,000.
     Approximately  $38,000 in revenues  were  utilized  under this grant in the
     first quarter of 2002.

o    In March  2002,  the NIH  awarded  us a  six-month  Phase I SBIR  grant for
     $100,000  entitled   "Differentiating   Bone  Marrow  Stem  Cells  to  Cure
     Diabetes." We may begin  utilizing funds under this grant during the second
     quarter of 2002.

o    We have other grant applications pending.

     The Company incurred a net loss of $652,544 for the quarter ended March 31,
2002, and as of March 31, 2002, had a total  accumulated  deficit of $9,106,781.
The Company had deficit  cash from  operations  of $631,059 and $443,592 for the
first quarter of 2002 and 2001, respectively.

     The $3,353,300  received from Qvestor in July 2001 is being
used to fund continuing operations and the planned expansion of the Company. The
Company expects to incur additional  operating losses for the next several years
will   require   additional   financing   to  continue   its   development   and
commercialization of products. These circumstances raise substantial doubt about
the Company's  ability to continue as a going concern.  Management plans to seek
significant additional equity investment from institutional investors commencing
in the  second  quarter  of 2002.  If  additional  financing  is not  available,
management  believes  that  the  cash on hand and  cash  flows  from  operations
including additional SBIR grants,  during 2002, should be sufficient to meet its
cash  requirements in the coming year. If the funds available to the Company are
not  sufficient,  management  believes that it can take certain  actions such as
undertaking  certain expense reduction actions to mitigate the impact.  Although
management  continues  to pursue these  plans,  there is no  assurance  that the
Company will be  successful  in obtaining  financing on terms  acceptable to the
Company or at all. The financial  statements do not include any adjustments that
might result from the outcome of this uncertainty.

Recent Accounting Pronouncements

     In June 2001, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards  ("SFAS") No. 142,  "Goodwill  and
Other Intangible  Assets".  SFAS No. 142 requires the use of a  non-amortization
approach to account for  purchased  goodwill  and certain  intangibles.  Under a
non-amortization  approach,   goodwill  and  certain  intangibles  will  not  be
amortized  into  results  of  operations,  but  instead  would be  reviewed  for
impairment  and written  down and charged to results of  operations  only in the
periods in which the recorded value of goodwill and certain  intangibles is more
than its fair  value.  The  provisions  of SFAS No. 142 were  effective  for the
Company beginning on January 1, 2002 and  implementation did not have a material
effect on its results of operations or financial position.

     In June 2001, the FASB issued SFAS No. 143 "Accounting for Asset Retirement
Obligations".  The statement  addresses  financial  accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and teh
associated asset retirement costs. The provisions of SFAS No. 143 were effective
for the  Company  beginning  January 1, 2002 and  implementation  did not have a
material effect on the Company's results of operations or financial position.

     In  August  2001,  the  FASB  issued  SFAS  No.  144,  "Accounting  for the
Impairment or Disposal of Long Lived Assets".  SFAS No. 144 supersedes  SFAS No.
121  "Accountinf  for the  Impairment  of Long-Lived  Assets and for  Long-Lived
Assets to be Disposed  of",  and the  accounting  and  reporting  provisions  of
Accounting  Principles  Board ("APB") Opinion No. 30,  "Reporting the Results of
Operations - Reporting  the Effects of Disposal of a Segment of a Business,  and
Extraordinary,  Unusual and Infrequently Occurring Events and Transactions". The
provisions of SFAS No. 144 were effective for the Company  beginning  January 1,
2002 and  implementation  did not  have a  material  effect  on its  results  of
operations or financial position.
                                       13
<PAGE>

     On  April  30,  2002  the  FASB  Statement  No.  145,  "Rescission  of FASB
Statements No. 4, 44, and 64,  Amendment of FASB Statement No. 13, and Technical
Corrections".  This statement  eliminates the requirement  that gains and losses
from the extinguishment of debt be aggregated and, if material, classified as an
extraordinary  item,  net of the  related  income tax effect and  eliminates  an
inconsistency between the accounting for sale-leaseback transactions and certain
lease   modifications   that  have   economic   effects   that  are  similar  to
sale-leaseback  transactions.  Generally,  Statement  No. 145 is  effective  for
transactions  occurring  after May 15, 2002.  The adoption of the standard  will
have no impact to the Company.


Contractual Obligations and Commercial Commitments

     As of March 31, 2002, the Company's contractual  obligations and commercial
commitments are limited to:

          o An operating  lease  agreement  with minimum  annual  future rent of
          approximately $173,000 that runs through October 31, 2005; and

          o A debt  obligation  on purchased  equipment of $30,000 with payments
          that extend through March 5, 2007.

Part II - Other Information

Item 2.  Changes in Securities and Use of Proceeds

Unregistered Sales of Securities

     Set forth below is  information  as to securities  sold by Ixion during the
quarter ended March 31, 2002 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 employees  under our
Stock Compensation Plan as follows:

     On March 19,  2002,  28,700  shares to employees  in  aggregate,  valued at
$120,540 (a portion of which is unearned compensation) or $4.20 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.

Item 6.  Exhibits and Reports on Form 8-K
<TABLE>
<S>                             <C>                                                     <C>

         (a)     Exhibits

Exhibit           Description                                                           Page

(2)               Plan of Acquisition, Reorganization, Arrangement,
                  Liquidation or Succession                                             None
                                       14
<PAGE>

    (3)           Articles of Incorporation                                             None

    (4)           Instruments defining the Rights of Security Holders                   None

    (9)           Voting Trust Agreement

    (11)          Statement re: Computation of Per Share Earnings                       None

    (15)          Letter re: Unaudited Interim Financial Information                    None

    (18)          Letter re: Change in Accounting Principles                            None

    (19)          Report Furnished to Security Holders                                  None

    (22)          Published Report re: Matters Submitted to Vote of
                  Security Holders                                                      None

    (23)          Consents of Experts and Counsel                                       None

    (24)          Power of Attorney                                                     None
    (99)          Additional Exhibits                                                   None


   *Filed herewith

         (b)     Reports on Form 8-K
                  None

                                                     Signatures

</TABLE>

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


                            Ixion Biotechnology, Inc.

Dated: May 2, 2002         By: /s/ Weaver H. Gaines
                                           Weaver H. Gaines
                                          Chairman and Chief  Executive Officer

Dated: May 2, 2001         By: /s/ Kimberly A. Ramsey
                                         Kimberly A. Ramsey
                                         Vice President and Controller
                                         (Principal Accounting Officer)

<TABLE>

<S>                             <C>                                                    <C>

         Exhibit Index

Exhibit           Description                                                           Page

    (2)           Plan of Acquisition, Reorganization, Arrangement,
<PAGE>

                 Liquidation or Succession                                             None

    (3)           Articles of Incorporation                                             None


    (4)           Instruments defining the Rights of Security Holders                   None

    (10.45)       Consulting Agreement with Dr. Ammon B. Peck,
                  dated March 6, 2000

     (11)         Statement re: Computation of Per Share Earnings                       None

     (15)         Letter re: Unaudited Interim Financial Information                    None

     (18)         Letter re: Change in Accounting Principles                            None

     (19)         Report Furnished to Security Holders                                  None
                  Published Report re: Matters Submitted to Vote of

     (22)         Security Holders                                                      None

     (23)         Consents of Experts and Counsel                                       None

     (24)         Power of Attorney                                                     None

     (99)         Additional Exhibits                                                   None

</TABLE>


   *Filed herewith
                                       15
<PAGE>