<PAGE>
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                   FORM 10-K

(Mark One)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the Fiscal Year ended December 31, 2001

                                       OR

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period
from        to

                        Commission File Number 001-13835

                                HEMOXYMED, INC.
                                --------------
             (Exact name of Registrant as specified in its Charter)

                  Delaware                         39-1661164
                  --------                         ----------
              (State or Other Jurisdiction of   (IRS Employer
              Incorporation or Organization)    Identification No.)

                  325 Barracks Hill, Charlottesville, VA  22901
                  ---------------------------------------------
              (Address of Principal Executive Offices and Zip Code)

                                 (434) 984-2409
                                 --------------
              (Registrant's Telephone Number, Including Area Code)

       Securities registered pursuant to Section 12 (b) of the Act:  None

          Securities registered pursuant to Section 12 (g) of the Act:

                                (Title of Class)
                        Common Stock, $0.0025 par value
                         Common Stock purchase warrants

Check whether the issuer (1) filed all reports required to be filed by section
13 or 15(d) of the Exchange Act of 1934 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 disclosure of delinquent filers in response to Item 405 of Regulation
S-K is not 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-K or any amendment to
this Form 10-K. [X]

State issuer's revenues for its most recent fiscal year: $0

As of March 12, 2002, the aggregate market value of voting common equity held
by non-affiliates of the Registrant (7,287,603 shares) was approximately
$1,894,777. The aggregate market value was computed by reference to the "Close"
price of such common equity as of that date.

As of March 12, 2002, the Registrant had 24,255,151 shares of Common Stock
issued and outstanding.

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                                     INDEX
                                     -----

                                                                           PAGE
                                                                           ----
PART I
   Item 1.     Business...................................................   1
   Item 2.     Description of properties..................................  11
   Item 3.     Legal proceedings..........................................  11
   Item 4.     Submission of matters to a vote of stockholders............  12
PART II
   Item 5.     Market for common equity and related stockholder matters...  12
   Item 6.     Selected financial data....................................  13
   Item 7.     Management's discussion and analysis of financial
               condition and results of operations........................  13
   Item 7(a).  Quantitative and qualitative disclosures about market risk
   Item 8.     Financial statements and supplementary data................  17
   Item 9.     Changes in and disagreements with accountants on accounting
               and financial disclosure...................................  17
PART III
   Item 10.    Directors, executive officers, promoters and control
               persons; compliance with section 16(a) of the exchange act.  17
   Item 11.    Executive compensation.....................................  19
   Item 12.    Security ownership of certain beneficial owners and
               management.................................................  21
   Item 13.    Certain relationships and related transactions.............  22
   Item 14.    Exhibits, financial statement schedules and reports on
               form 8-K...................................................  24

SIGNATURES                                                                  26

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                                     PART I

FORWARD-LOOKING STATEMENTS

          This Annual Report on Form 10-K for HEMOXymed, Inc. (hereafter, the
"Company", the "Registrant" or "HEMOXymed") contains certain "forward-looking"
statements that involve risks and uncertainties. These risks and uncertainties
include, but are not limited to, those risks and uncertainties previously
identified by the Company from time to time in the Company's prior filings with
the Securities and Exchange Commission. To the extent that statements in this
Annual Report involve, without limitation, potential business combinations,
expectations for growth, market value, dividends, or any other estimates or
guidance on future periods, these statements are forward-looking statements.
The Company's actual results may differ significantly from the results
projected in the forward-looking statements. The Company assumes no obligation
to update forward-looking statements.

ITEM 1.     DESCRIPTION OF BUSINESS

MERGER OF HEMOXYMED, INC. AND OPHIDIAN PHARMACEUTICALS, INC.

          On August 21, 2001, HEMOXymed, Inc. ("HEMOXymed" or the "Company")
and Ophidian Pharmaceuticals, Inc. ("Ophidian"), executed an Agreement and Plan
of Merger (the "Plan"), whereby Ophidian acquired 100% of the outstanding
equity securities of HEMOXymed from its stockholders. On November 14, 2001 the
merged-company name was changed from Ophidian Pharmaceuticals, Inc. to
HEMOXymed, Inc.

          The Plan provided for the issuance and exchange of 19,000,000
shares of Ophidian's common stock for the outstanding common stock of
HEMOXymed, which shares of common stock of Ophidian were "restricted
securities" under the Securities Act of 1933, as amended. Immediately following
the merger there were 20,199,915 issued and outstanding shares of common stock
of Ophidian. The board of directors and management of the resultant company are
that of HEMOXymed.

          This transaction is commonly referred to as a "reverse acquisition"
where 100% of HEMOXymed's stock was effectively exchanged for a controlling
interest in a publicly held "shell" corporation, Ophidian. For financial
accounting purposes, this transaction has been treated as the issuance of stock
for the net monetary assets of Ophidian, with no goodwill or other intangible
assets recorded. Because this transaction is being accounted for as a "reverse
acquisition" whereby HEMOXymed acquired 100% of Ophidian, the historical
operating results prior to August 21, 2001 are those of HEMOXymed.

          Prior to the merger, Ophidian's year-end was September 30th. The
resultant company has chosen to change its year-end to that of HEMOXymed, which
is December 31st.

GENERAL

          HEMOXymed, Inc. was founded in 1995 to leverage significant prior
investment in a novel platform technology for increasing the amount of oxygen
carried to the body's tissues using either a patient's own red blood cells or
banked blood. The terms "HEMOXymed" and the "Company" or "us" and "we" as used
herein include its subsidiary, HEMOX Therapeutics, SARL and Ophidian Holdings,
Inc. Since its inception, HEMOXymed has acquired the exclusive worldwide
licenses to this novel technology, advanced the development of its therapeutic
process, HEMOXygenation(TM), and has positioned itself to enter Phase I
clinical trials. As a reminder to the reader, following the merger in August
2001, the business and history of HEMOXymed is now our business and our history.

          The scientific founders, at the French National Blood Transfusion
Foundation (Foundation National de Transfusion Sanguinaire, "FNTS") in the
Regional Blood Transfusion Center of Tours, France, developed the technological
basis for HEMOXymed, with assistance from the Max-Planck Institute in Mulheim,
Germany. The initial premise of their work was to investigate the use of red
blood cells as drug delivery carriers. A significant focus of these initial
efforts was HEMOXygenation - Oxygen Release Modification through the use of red
blood

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cells.The founders completed the preclinical development on the process. The
funding for this initial work came from the Republic of France and the European
Union, which invested approximately $8 million in direct costs in the program.
However, due to programmatic changes at the FNTS, funding for the Regional Blood
Transfusion Center was suspended and all research programs interrupted.

          HEMOXymed was founded to acquire the exclusive worldwide rights held
in abeyance by the FNTS for the use of RBCs as a carrier for therapeutics to
improve oxygenation. The founders of HEMOXymed recognized the potential for
advancing the core process to rapid commercialization in major markets.
HEMOXymed had also observed a significant shift in the marketplace due to
advancements in blood transfusion therapies and profoundly underserved clinical
needs - a marketplace demanding novel and advanced therapies to improve tissue
oxygenation. HEMOXymed has been able to acquire the base intellectual property;
build upon the preclinical and clinical development efforts of the founders and
leverage the $8 million previously invested in the process.

TECHNOLOGY DESCRIPTION

Oxygenation
-----------
          Oxygenation is the core life sustaining process whereby oxygen enters
the lungs, is attached to hemoglobin in red blood cells for distribution
throughout the body, and ultimately released to the tissues. Improved
oxygenation may provide for a unique therapeutic approach to a number of
diseases and circumstances where insufficient oxygen is reaching the tissues or
where increased oxygen would have a therapeutic benefit.

          There are a number of clinical conditions and diseases which involve
ischemia (reduced blood flow to tissues), hypoxemia (reduced levels of oxygen
carried in the blood) or reduced tissue oxygenation. These conditions all
require treatment to increase tissue oxygenation. Current therapies do not
fully address the needs of the patients suffering from these diseases. We
believe that increased oxygenation through HEMOXygenation can significantly
improve the clinical outcomes of these patients.

HEMOXygenation
--------------
          The process of HEMOXygenation improves delivery of oxygen to the
tissues and addresses the clinical needs dependent upon improved oxygenation.
The core of the HEMOXygenation process consists of a machine - the
HEMOXygenator(TM) - and an oxygen release enhancer - ORMin(TM).

          Human hemoglobin contains four sites to which oxygen molecules attach
during the transfer from the lungs to red blood cells. Hemoglobin is a protein
that allows for the release of oxygen, utilizing another molecule, 2,3
diphosphoglycerate, popularly referred to as 2,3-DPG for short. 2,3-DPG is an
Oxygen Release Modifier which is the 'glue' that holds the oxygen molecules to
hemoglobin and allows oxygen release to the tissues. Despite its ability to
carry four oxygen molecules, human hemoglobin normally releases only one oxygen
molecule or 20-30% of transported oxygen to tissues.

          In contrast to man, birds have Inositol Pentaphosphate (IPP) rather
than 2,3-DPG as an Oxygen Release Modifier. IPP is more efficient than 2,3-DPG
because more of the contained oxygen is released to tissues from bird
hemoglobin than from human hemoglobin. ORMin is a proprietary formulation of
Inositol Hexaphosphate, a compound with chemical properties very similar to
that of IPP. When ORMin replaces 2,3-DPG as the oxygen release modifier in
human hemoglobin, the human hemoglobin releases 2 or 3 oxygen molecules,
similar to the way IPP releases oxygen in birds.

          HEMOXygenation consists of the following steps:

1.   Collection: Blood is taken from the patient by standard blood
     collection methods and drawn into the HEMOXygenator.
2.   Separation: In the HEMOXygenator, the red blood cells are separated
     from the plasma and white blood cells. The cells are then washed with
     saline and ORMin is added.
3.   Poration: The ORMin and red blood cell mixture is cooled and directed
     into the Porator, where a specified osmotic pressure is applied, causing
     the red cells to swell and pores on the surface of the cells to open. The
     ORMin enters the red blood cells through these pores.

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4.   Rejuvenation: The red blood cells, now containing ORMin, are warmed.
     The rejuvenation solution, including adenosine tri-phosphate and saline,
     is applied to the cells, causing the pores on the surface of the red
     blood cells to decrease in size and returns the cells to normal function.
5.   Return: The rejuvenated red blood cells are now ready for their return
     to the patient. The cells will either be collected for later transfusion,
     or remixed with plasma or a plasma extender/substitute and transfused
     directly from the HEMOXygenator back to the patient.

MARKETS

          HEMOXygenation treats people suffering from ischemia, which is
decreased delivery of blood to the tissues, or hypoxemia, which is the
inability to effectively transport oxygen from the lungs to the red blood
cells. There are at least five major clinical indications, paralleling the
major stages of oxygenation. Each indication deals with a relative or absolute
oxygen deficiency that can be addressed with improvement in release of oxygen
to the tissues.

Chronic Obstructive Pulmonary Disease (COPD)
--------------------------------------------
          COPD is any progressive disease of the lungs that reduces the amount
of oxygen available for passage on to red blood cells. Emphysema and chronic
bronchitis are the two most common forms of COPD. As reported by the National
Center for Health Statistics in Current Estimates from the National Health
Interview Survey, COPD affects approximately 20.4 million patients in the US
and an estimated 32.4 million patients in Europe and 8.2 million patients in
Japan.

          COPD is typically an irreversible lung condition because it results
from damage to the respiratory tract. This damage is usually in the alveoli,
preventing the normal transfer of oxygen from the lungs to the red blood cells.
Treatment includes a number of medications to open the airways and reduce
inflammation. In addition, patients receive inhaled oxygen and physical
therapy. The oxygen reduces the strain on the body and increases energy
available for daily activities. There is clinical evidence that patients who
undergo oxygen therapy live longer.

Chronic Heart Failure (CHF)
---------------------------
          CHF is a progressive disease causing weakness of the heart muscle and
results in decreased circulation to the tissues. The inability of patients
suffering from CHF to adequately pump blood significantly affects their daily
life. Even routine stress, such as household chores, can lead to heart attacks
and exhaustion. Heart disease is the leading cause of death in the US, and
ischemic heart disease, a form of CHF, comprises 25% of all heart disease
related deaths. According to the National Health and Nutrition Examination
Surveys, CHF affects approximately 5.8 million people in the US, 9.1 million
patients in Europe, and 2.3 million patients in Japan.

Anemia
------
          Anemia is a decrease in the amount of normal hemoglobin that leads to
a corresponding decrease in the oxygen carrying capacity of blood. As reported
by the National Center for Health Statistics in Current Estimates from the
National Health Interview Survey, anemia affects 6.1 million patients in the
US, 9.6 million patients in Europe, and 2.5 million patients in Japan. There
are many types of anemia, and they have various causes. Some anemias may be
caused by infection, disease, reduction in hematocrit or bone marrow problems.
Others result from medication problems or poor nutrition. Anemia causes
fatigue, which can often be extreme, due to the lack of hemoglobin to transport
oxygen to the tissues. Anemia is treated primarily with oxygen therapy and
blood transfusions.

Peripheral Vascular Diseases (PVD)
----------------------------------
          PVD are conditions that narrow or block blood vessels, reducing the
blood flow through the circulatory system. PVD includes conditions such as
atherosclerosis and arteriosclerosis. As reported by the National Center for
Health Statistics in Current Estimates from the National Health Interview
Survey, PVD affects a very large population, occurring in about 12 percent of
people age 65 to 70 and in about 20 percent of those over age 75. However,
those patients suffering from chronic PVD, where the symptoms have become
extremely painful and detrimental to the patients' health, affects
approximately 540,000 patients in the US, 950,000 patients in Europe, and
220,000 patients in Japan.

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          The reduction of blood flow decreases the amount of oxygen that
reaches the tissues. PVD often results in extreme discomfort and pain. The leg
pain is called "intermittent claudication." It is a cramp-like pain that occurs
during walking. It may worsen when walking fast or uphill but stops with rest.
As the arteries become more narrowed, the pain may even occur at rest. In the
most severe cases, blood-starved tissues can begin to die. This can lead to
painful sores or ulcers on the lower leg, toes or ankle and may lead to
gangrene. If left untreated, toes or a whole foot may need to be amputated.

Transfusion
-----------
          There are other applications for HEMOXygenation such as
allotransfusion, which is the traditional collection and storage of single
units of blood for subsequent transfusion; autotransfusion, which is real time
or planned processing and return of a patient's own blood; blood recovery
during surgery; and, treatment of donated blood.

Allotransfusion & Donated Blood
-------------------------------
          There is a growing demand for blood stored for subsequent
transfusion. However, the amount of blood and number of blood donors is
decreasing. The World Health Organization estimates that the worldwide demand
for banked blood is 100 million units per year. According to the American
Association of Blood Banks, approximately 14 million units, including 1 million
autologous, of blood are donated annually in the US by about 8 million
volunteers. These donated units are transfused into over 4 million patients.

          Increasing the utility of the declining supply of banked blood
through HEMOXygenation could reduce the amount of blood necessary to satisfy
the demand for blood. A patient could receive less than one unit of blood worth
of HEMOXygenated red blood cells, in combination with natural plasma or
synthetic plasma substitutes, to receive the benefit of a whole unit of blood.
This also has applications for military use, where storage and movement of
blood supplies has crucial logistical implications. HEMOXygenating banked blood
can reduce the amount of blood that needs to be stored and transported.

Auto-Transfusion (Real-Time & Stored)
-------------------------------------
          Autologous blood transfusion is the collection and reinfusion of the
patient's own blood or blood components. Concerns about the transmission of
disease through allogeneic blood transfusion, the transfusion of blood from a
donor other than the patient, has resulted in a dramatic increase in autologous
blood transfusion. Autologous blood transfusion is used mostly for patients
undergoing planned surgical procedures where blood loss is anticipated to be
high. The National Institutes of Health has suggested guidelines for the use of
autotransfusion. It is recommended that patients planning to undergo surgery
for coronary artery bypass grafts, total knee replacement, total hip
replacement, major spine surgery, major vascular surgery and other planned,
highly invasive surgeries, such as prostatectomies, should consider
autotransfusion in preparation for surgery. According to the American
Association of Blood Banks, it is estimated that 1.9 million of these planned,
invasive surgical procedures were conducted in 1999 in the US, 3 million in
Europe and 800,000 in Japan.

DISTRIBUTION, MARKETING AND SALES

          HEMOXymed is has three distinct parties to which it can market and
sell HEMOXygenators and disposable kits: Prescriber, Provider, and Patient.

          .    Prescriber
               ----------
               The Prescriber is the physician or health care practitioner who
          would recommend HEMOXygenation as a treatment for patients with
          specific disease states. Physicians will be the most important
          component of the HEMOXymed marketing plan.

          .    Provider
               --------
               The Provider is the hospital based transfusion center or
          independent clinic performing the transfusion and blood processing
          services. The Provider would also perform the blood collection and
          storage services. Patients who would benefit from HEMOXygenation
          would receive their treatment through the Provider. Providers will
          be a target of HEMOXymed's marketing efforts, as they will
          understand the utility of the treatment, adopt the machines and
          begin to implement the therapy.

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          .    Patient
               -------
               Although it is impractical to educate individual patients about
          HEMOXygenation, there are certain disease related patient groups and
          organizations that would be interested in HEMOXygenation. Given the
          increasing use of 'direct to consumer' advertising, these groups
          could be instrumental in encouraging adoption of HEMOXygenation as a
          standard of care for specific diseases.

We intend to develop an independent marketing and sales force focused on
providers (hospital based or affiliated blood banks or infusion therapy centers
and independent clinics) and prescribers (physicians treating patients with
inadequate oxygenation). We will not be involved in the reimbursement process,
but will sell HEMOXygenators and disposable kits directly at prices targeted to
allow the providers and prescribers to be covered by the various health
insurance schemes. Finally, we intend to use direct-to-consumer marketing and
other efforts to target certain patient groups who have organized themselves
due to their particular disease and who would benefit from HEMOXygenation.

COMPETITION

          There are four categories we have identified where companies are
developing technologies and therapeutics that may be considered competitive to
HEMOXygenation.

          .         Blood and Hemoglobin Substitutes
                    --------------------------------
               The hemoglobin and blood substitutes are intended to provide a
     patient with both blood volume and an increase in oxygenation capability.
     The substitutes are derived either from bovine or human hemoglobin. The
     hemoglobin is collected, purified and cleaned. It is often linked with
     other materials such as a polymer because raw hemoglobin outside the red
     blood cells is toxic to the kidneys and can cause vasoconstriction.
     Companies that have blood and hemoglobin substitutes in development or
     commercialization include: Apex Bioscience, Baxter Healthcare
     Corporation, BioPure, Enzon, Hemosol and Northfield Laboratories.

          .         Oxygen Therapeutics
                    -------------------
               A number of companies are focusing on the development of oxygen
     carrying emulsions. Oxygen emulsions are different from compressed oxygen
     canisters that supply oxygen gas for standard oxygen therapy. The
     emulsion preparations are intended to be injected and contain higher
     levels of oxygen than available from gas. The emulsion preparations
     increase the amount of oxygen available in the blood stream for delivery
     to the tissues. However, in lung, blood and cardiovascular diseases there
     remains an underlying abnormality affecting the uptake or delivery of
     oxygen to the tissues, which this process does not address. Companies
     that have oxygen therapeutics in development or commercialization
     include: Alliance Pharmaceutical Corporation, Perftoran and Synthetic
     Blood International, Inc.

          .         Hemoglobin Enhancers
                    --------------------
               The hemoglobin enhancers are the most similar to HEMOXygenation
     and we view this category of products as our most direct competition.
     Hemoglobin enhancers are intended to affect how natural human hemoglobin
     interacts with oxygen molecules in order to increase oxygenation.
     Companies that have oxygen therapeutics in development include: Allos
     Therapeutics, MaxCyte and GMP Companies Inc./OxyCell.

          .         Oxygen Therapy
                    --------------
               Standard oxygen therapy, whereby a patient is treated with oxygen
          from a pressurized oxygen cylinder, is most often used to enhance
          the oxygen blood level. Although standard oxygen therapy is the most
          common method to increase blood oxygen levels, it does not
          adequately address the physiological restrictions that can prevent
          delivery of that oxygen to the tissues.

          The principal factors affecting the biotechnology market include
scientific and technological factors, the availability of patent and other
protection for technology and products, the ability and length of time required
to obtain governmental approval for testing, manufacturing, marketing and
physician acceptance. Most competitors have substantially greater capital
resources, research and development capabilities, manufacturing and marketing
resources and experience than HEMOXymed. These companies may represent
significant long-term competition for us. Our competitors may succeed in
developing products that are more effective or less costly than any that may be
developed by us, or that gain regulatory approval prior to our products.

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          There can be no assurance that developments by other biotechnology
companies will not render our products or technologies obsolete or
noncompetitive or that we will be able to keep pace with technological
developments of our competitors. We believe that some of our competitors are in
the process of developing technologies that are, or in the future may be, the
basis for competitive products. Some of these products may have an entirely
different approach or means of accomplishing the desired therapeutic effect
than products being developed by us. These competing products may be more
effective and less costly than the products developed by us.

PATENTS

          We strongly believe in securing and maintaining a strong competitive
position through the filing and prosecution of patents. To date, we have
received three issued US patents with corresponding foreign filings and
issuances in many major jurisdictions.

Name                                             US Patent  Date of Issuance
----                                             ---------  ----------------
Apparatus for Causing Medicinal Products to
Penetrate into Red Blood Cells                   5,589,389  December 31, 1996
Apparatus for Encapsulating Biological Active
Substances Into Erythrocytes                     4,752,586  June 21, 1988
Encapsulating Biological Active Substances
into Erythrocytes                                4,652,449  March 24, 1987

TRADEMARKS

          We maintain trademark rights to HEMOXymed, HEMOXygenation,
HEMOXygenator and ORMin and we may adopt other trademarks for potential
products in the future.

GOVERNMENT REGULATION

          The research, development, manufacture, and marketing of our
potential products are subject to substantial regulation by the FDA in the
United States and by comparable authorities in other countries. These national
agencies and other federal, state, and local entities regulate, among other
things, research and development activities and the testing, manufacture,
safety, effectiveness, labeling, storage, record keeping, approval,
advertising, and promotion of our potential products.

          Our product candidates associated with HEMOXygenation may be
regulated by the FDA as drugs, biologics and medical devices. New drugs and
medical devices are subject to regulation under the Federal Food, Drug, and
Cosmetic Act, and biological products, in addition to being subject to certain
provisions of that Act, are primarily regulated under the Public Health Service
Act.

          Obtaining FDA approval has historically been a costly and
time-consuming process. Generally, in order to gain FDA approval, a developer
first must conduct preclinical studies in the laboratory and in animal model
systems to gain preliminary information on a product's effectiveness and to
identify any safety problems. The results of these studies are submitted as a
part of an investigational new drug application (IND) for a drug or biologic or
an investigational device exemption (IDE) for a device, which the FDA must
review before human clinical trials of an investigational drug or device can
start. The IND or IDE includes a detailed description of the further clinical
investigations to be undertaken.

          In order to commercialize any products, we must sponsor and file an
IND or, if applicable, IDE and be responsible for initiating and overseeing the
clinical studies to demonstrate the safety, effectiveness, and potency that are
necessary to obtain FDA approval of any such products. For IND's or IDE's we
will be required to select qualified investigators to supervise the
administration of the products, and ensure that the investigations are
conducted and monitored in accordance with FDA regulations, including the
general investigational plan and protocols contained in the IND or IDE.

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          Clinical trials of drugs or biologics are typically conducted in
three sequential phases that may overlap. Phase I involves the initial
introduction of the drug into healthy human subjects where the product is
tested for safety, dosage tolerance, absorption, metabolism distribution and
excretion. Phase II involves studies in a limited patient population to:

     .    determine the efficacy of the product for specific,  targeted
          indications;
     .    determine  dosage  tolerance and optimal dosage; and
          identify possible adverse effects and safety risks.

          When Phase II evaluations demonstrate that the product is effective
and has an acceptable safety profile, Phase III trials are undertaken to further
evaluate dose ranging and clinical efficacy and to further test for safety in an
expanded patient population at geographically dispersed clinical study sites.
Clinical trials generally take two to five years to complete, but may take
longer. The FDA receives reports on the progress of each phase of clinical
testing, and it may require the modification, suspension, or termination of
clinical trials if it concludes that an unwarranted risk is presented to
patients, or, in Phase II and III, if it concludes that the study protocols are
deficient in design to meet their stated objectives.

          If clinical trials of a new product are completed successfully, the
sponsor of the product may seek FDA marketing approval. If the product is
regulated as a biologic, the FDA will require the submission and approval of a
Biologics License Application (BLA) before commercial marketing of the
biologic. If the product is classified as a new drug, an applicant must file a
New Drug Application (NDA) with the FDA and receive approval before commercial
marketing of the drug. If the product is classified as a medical device and it
is not substantially equivalent to a device already on the market, a premarket
approval application (PMA) must be submitted before marketing. The NDA, BLA or
PMA must include detailed information about the product and its manufacture and
the results of product development, preclinical studies and clinical trials.
The testing and approval processes require substantial time and effort and
there can be no assurance that any approval will be granted on a timely basis,
if at all. NDA's, BLA's and PMA's submitted to the FDA can take up to two to
five years to receive approval. If questions arise during the FDA review
process, approval can take more than five years. Notwithstanding the submission
of relevant data, the FDA may ultimately decide that the NDA, BLA or PMA does
not satisfy its regulatory criteria for approval and deny approval or require
additional clinical studies. In addition, the FDA may condition marketing
approval on the conduct of specific post-marketing studies to further evaluate
safety and effectiveness. Even if FDA regulatory clearances are obtained, a
marketed product is subject to continual regulatory requirements and review
relating to Good Manufacturing Processes, adverse event reporting, promotion
and advertising, and other matters. Later discovery of previously unknown
problems or failure to comply with the applicable regulatory requirements may
result in restrictions on the marketing of a product or withdrawal of the
product from the market as well as possible civil or criminal sanctions.

          HEMOXygenation technology will most likely be regulated by the FDA's
Center for Biologics Evaluation and Research (CBER). The HEMOXygenator and
disposables will be reviewed as medical devices under the Premarket Application
(PMA) provisions of the Federal Food, Drug and Cosmetic Act. Historically, the
Office of Blood Research and Review in the Center for Biologics Evaluation and
Research has had the most expertise and experience in regulating blood
apheresis equipment and disposables associated with the processing of human
blood. ORMin, a chemical additive and therapeutic treatment in the
HEMOXygenation process, will likely be regulated by the FDA as a drug and
therefore will require an IND submission to be reviewed by CBER.

          Further development for our products is expected to follow a similar
path to that of any therapeutic biologic, with successful completion of Phase
I, Phase II and Phase III trials required to precede the filing of a PMA. The
collection of blood from patients, the handling of blood cells and the
reinfusion of cells is required to be done in compliance with procedures used
for blood component collection. That regulation is designed to protect both
donors and recipients of blood products and involves significant record-keeping
and other burdens.

ENVIRONMENTAL REGULATION

          In connection with our research and development activities, our
business is and will be subject to regulation under various state and federal
environmental laws. These laws and regulations govern our use, handling and
disposal of various biological and chemical substances used in our operations.
Although we believe that we have

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complied with these laws and regulations in all material respects and we have
not been required to take any action to correct any noncompliance, there can be
no assurance that we will not be required to incur significant costs to comply
with health and safety regulations in the future.

EMPLOYEES

          In order to keep our operations viable as we seek investment capital,
we are currently operating with a limited staff. As of December 31, 2001, we
had three full-time employees. One of these employees is dedicated to research
and development. The other two employees are the CEO and CFO responsible for
raising investment capital and company administration. None of our employees
are covered by a collective bargaining agreement and we believe all relations
with our employees are satisfactory. Upon raising additional investment capital
we intend to hire additional research and development personnel in addition to
utilizing consultants.

RISK FACTORS RELATED TO OUR BUSINESS

          Factors that could cause or contribute to differences in our actual
results include those discussed in the following section, as well as those
discussed in other parts of this Annual Report on Form 10-K. You should
consider carefully the following risk factors, together with all of the other
information included in this Annual Report on Form 10-K. Each of these risk
factors could adversely affect our business, operating results and financial
condition, as well as adversely affect the value of an investment in our common
stock.

1.   We are a development stage company with a limited operating history and no
     product revenues so it is difficult to evaluate if we are a good
     investment.

          Because our products are in an early stage of development, we have
not received regulatory approval for any of our products nor have we released
any products for commercial sale; therefore we can give you no assurances that
we will succeed in commercializing our products. Our long-term viability and
growth will depend on the successful commercialization of our HEMOXygenation
process.

2.   We have a history of losses and our existence will be dependent on our
     ability to raise capital which may not be readily available.

          We have experienced losses since inception. From our inception in
February 1995 through December 31, 2001 we have incurred net losses of $2.8
million. We expect to continue to incur losses for at least the next 5 years as
we expend substantial resources on research and clinical development. The
process of developing our products requires significant pre-clinical testing
and clinical trials as well as regulatory approvals for commercialization and
marketing before we can begin to generate any revenue from product sales. In
addition, commercialization of our products will require us to establish a
sales and marketing organization and contractual relationships to enable
product manufacturing and other related activity.

          We will need significant additional funding in the future to continue
our operations. From inception, we have generated funds primarily through the
sale of securities. We may seek additional funding through additional private
sales of our securities, public sales of our securities, strategic alliances or
by licensing all or a portion of our technology. Such funding will
significantly dilute existing shareholders or may limit our rights to our
technology. There can be no assurances that we will be able raise additional
funding. If we fail to raise additional funding you may lose all or a
substantial portion of your investment.

3.   We have a dependence on and need for third party relationships to develop,
     produce and market our product without which we will fail.

          Our business strategy is to utilize the expertise and resources of
third parties in a number of areas including:
          .    pre-clinical and clinical trials
          .    regulatory approvals
          .    development and manufacture of the HEMOXygenator(TM)
          .    manufacture of kits and solutions

                                        8

<PAGE>

          .    sales and marketing of our products.
This strategy of reliance on third party relationships creates risks to us by
placing critical aspects of our business in the hands of third parties who we
may not be able to control as effectively as our own personnel. If these third
parties do not perform in a timely and satisfactory manner, we may incur
additional costs and lose time in our development and clinical programs as well
as commercializing our products.

          We do not have the ability to conduct all facets of our clinical
trials independently. We intend to rely on clinical investigators and
third-party clinical research organizations to perform a significant portion of
these functions. There can be problems with using third party clinical research
organizations such as:
          .    we are not able to locate acceptable contractors to run this
               portion of our clinical trials
          .    we can not enter into favorable agreements with them
          .    third parties may not successfully carrying out their
               contractual duties
          .    third parties may not meet expected deadlines
If any of these problems occur, we will be unable to obtain required approvals
and will be unable to commercialize our products on a timely basis, if at all.

4.   There is a need for acceptable clinical data in order to obtain
     regulatory approval which is necessary to market our product.

          In order to sell our products, we must receive regulatory approval
for our products. Before obtaining regulatory approvals for the commercial sale
of any of our products under development, we must demonstrate through
pre-clinical studies and clinical trials that the product is safe and effective
for use in each target indication. If our products fail in clinical trials, you
may lose all or a substantial portion of your investment.

          In addition, the results from pre-clinical testing and early clinical
trials may not be predictive of results obtained in later clinical trials.
There can be no assurance that our clinical trials will demonstrate sufficient
safety and effectiveness to obtain regulatory approvals. The completion rate of
our clinical trials is dependent on, among other factors, the patient
enrollment rate. Patient enrollment is a function of many factors including:
          .    patient population size
          .    the nature of the protocol to be used in the trial
          .    patient proximity to clinical sites
          .    eligibility criteria for the study.
We believe our planned procedures for enrolling patients are appropriate.
However, delays in patient enrollment would increase costs and delay ultimate
sales, if any, of our products.

5.   There is no assurance we will obtain regulatory approval for our product.

          The regulatory process takes many years and requires the expenditure
of substantial resources. Data obtained from pre-clinical and clinical
activities are subject to varying interpretations that could delay, limit or
prevent regulatory agency approval. We may also encounter delays or rejections
based on changes in regulatory agency policies during the period in which we
develop our products and/or the period required for review of any application
for regulatory agency approval of a particular product. Delays in obtaining
regulatory agency approvals will make the project more costly and adversely
affect our business, putting your investment at greater risk.

          If the FDA grants approval for a drug or device, such approval may
limit the indicated uses for which we may market the drug or device and this
could limit the potential market for such drug or device. Furthermore, if we
obtain approval for any of our products, the marketing and manufacture of such
products remain subject to extensive regulatory requirements. Even if the FDA
grants approval, such approval would be subject to continual review, and later
discovery of unknown problems could restrict the products future use or cause
their withdrawal from the market. Failure to comply with regulatory
requirements could, among other things:
          .    result in fines
          .    suspension of regulatory approvals
          .    operating restrictions and criminal prosecution.

                                        9

<PAGE>

          In addition, many countries require regulatory agency approval of
pricing and may also require approval for the marketing in such countries of
any drugs or devices we develop. We cannot be certain that we will obtain any
regulatory approvals in other countries and the failure to obtain such
approvals may materially adversely affect our business. In order to market our
products outside of the United States, we must comply with numerous and varying
regulatory requirements of other countries regarding safety and quality. The
approval procedures vary among countries and can involve additional product
testing and administrative review periods. The time required to obtain approval
in other countries might differ from that required to obtain FDA approval. The
regulatory approval process in other countries includes all of the risks
associated with obtaining FDA approval detailed above. Approval by the FDA does
not ensure approval by the regulatory authorities of other countries.

6.   We may not be able to obtain and maintain patent protection for our
     technologies which will leave us vulnerable to competitors.

          Our success will depend in part on our ability to obtain and maintain
patent protection for our technologies and to preserve our trade secrets. It is
our policy to file patent applications in the United States and selected
foreign jurisdictions. We currently hold and maintain 3 issued United States
patents and various related foreign patents. No assurance can be given that our
issued patents will provide competitive advantages for our technologies or will
not be challenged or circumvented by competitors. With respect to already
issued patents, there can be no assurance that any patents issued to us will
not be challenged, invalidated, circumvented or that the patents will provide
us proprietary protection or a commercial advantage. We also rely on trade
secrets and proprietary know-how which we seek to protect, in part, through
confidentiality agreements with employees, consultants, collaborative partners
and others. There can be no assurance that these agreements will not be
breached.

          The ability to develop our technologies and to commercialize products
will depend on avoiding patents of others. Although we are not aware of any
claim of patent infringement against us, claims concerning us infringing
patents and proprietary technologies could have a material adverse effect on
our business. In addition, litigation may also be necessary to enforce any of
our patents or to determine the scope and validity of third-party proprietary
rights. There can be no assurance that our patents would be held valid by a
court of competent jurisdiction. We could incur substantial costs in defending
ourselves in suits that may be brought against us claiming infringement of the
patent rights of others or in asserting our patent rights in a suit against
another party. Costs associated with patent litigation could materially
adversely affect our business.

7.   There is uncertainty regarding third-party reimbursement which is
     necessary for our success.

          If we succeed in bringing any of our products to the market, we
cannot assure you that third parties will consider the products cost-effective
or provide reimbursement in whole or in part for their use. Our commercial
success will depend in part on third-party payers agreeing to reimburse
patients for the costs of products. Government health administration
authorities, private health insurers and other organizations generally provide
reimbursement. These organizations frequently challenge the pricing of new
drugs and devices. Significant uncertainty exists as to the reimbursement
status of newly approved healthcare products. Therefore, third-party payers may
not approve our products for reimbursement. If third-party payers do not
approve our products for reimbursement, sales will suffer, as some patients
will opt for a competing product that is approved for reimbursement. Even if
third-party payers make reimbursement available, these payer's reimbursement
policies may adversely affect our ability to sell such products on a profitable
basis. The trend in medicine in the United States is toward managed healthcare.
This trend includes:
          .    the growth of organizations such as health maintenance
               organizations (HMO's)
          .    legislative proposals to reform healthcare
          .    changes in government insurance programs
These factors could significantly influence the purchase of healthcare services
and products, resulting in lower prices and reducing demand for our products,
which could adversely affect our business.

8.   We depend upon key scientific personnel to develop our product

          We highly depend on the principal members of our scientific and
management staff, the loss of whose services might significantly delay or
prevent the achievement of research, development, or business objectives and

                                       10

<PAGE>

would materially adversely affect our business. Our success depends, in large
part, on our ability to continue to attract and retain qualified management,
scientific and medical personnel.

          We expect that our potential expansion into areas and activities
requiring additional expertise, such as clinical trials, governmental
approvals, contract and internal manufacturing and sales and marketing, will
place additional requirements on our management. We expect these demands will
require an increase in management and scientific personnel and the development
of additional expertise by existing management personnel. The failure to
attract and retain such personnel or to develop such expertise could materially
adversely affect prospects for our success.

9.   We have a concentration of ownership which can limit your ability to
     influence management

          Prism Ventures, LLC beneficially owns 15,295,083 shares of our common
stock or approximately 63.1% of the 24,255,151 outstanding shares at March 15,
2002. Accordingly, Prism Ventures LLC may be able to influence the outcome of
shareholder votes including:
          .    the election of directors
          .    the adoption of amendments to the Company's Articles of
               Incorporation and Bylaws
          .    approval of mergers
          .    other significant transactions.

10.  We have potential liability from product liability claims

          In testing, manufacturing and marketing our products, we risk
liability from the failure of products to perform as we expect. Such risks
exist even with respect to those potential products, if any, that receive
regulatory approval for commercial sale. Although we intend to have product
liability insurance and seek to obtain indemnification from licensees of the
products, obtaining insurance or indemnification may be inadequate,
unobtainable or prohibitively expensive. Our inability to obtain sufficient
insurance coverage on reasonable terms, or otherwise protect ourselves against
potential product liability claims in excess of our insurance coverage could
materially adversely affect our business.

ITEM 2.   DESCRIPTION OF PROPERTY

          We lease 2,350 square feet of laboratory space in Lyon, France at an
annual rental of 24,200 Euros, or approximately $21,750. We also lease 250
square feet of office space in New York City at an annual rental of $36,120. We
believe that we can acquire additional space, if needed, on acceptable terms.

ITEM 3.   LEGAL PROCEEDINGS

          We are not currently involved in any legal proceedings.

          Dr. Sean Carroll, one of our co-founders and a former Scientific
Advisor, delivered on December 22, 2000, a claim under the terms of an
indemnification agreement entered into in connection with his services to us as
an advisor. The terms of the indemnification agreement included standard
language intended to indemnify an advisor from any claims arising from advice
given by him. His claim is for a portion of his legal fees incurred in
litigation with his former spouse, totaling $51,200. Thereafter, on February
22, 2001, Dr. Margaret van Boldrik, one of our co-founders and former Vice
President, and director, delivered her claim for damages arising from an
alleged conspiracy between Dr. Sean Carroll, her former husband, and us, to,
among other things, terminate her employment with us. Dr. van Boldrik claims an
amount equal to that claimed by her former husband, Dr. Carroll.

          At the February 23, 2001, meeting of our board of directors, the
board authorized the retention of Michael Zaleski, Esq. of the firm of Quarles
& Brady, Madison, Wisconsin, to assess and address the claims of Drs. Carroll
and van Boldrik. Mr. Zaleski advised the board that both claims are without
merit. We expect to vigorously contest both claims if legal proceedings are
ever commenced against us.

                                       11

<PAGE>

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS

          Information required by this item is incorporated by reference to
Form 14C Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934 filed on October 25, 2001.

                                    PART II

ITEM 5.     MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

          Our common stock is quoted on the OTC (Over-the-Counter) Bulletin
Board and traded under the symbol, "HMYD". Prior to February 5, 2002, our
common stock was traded on the OTC Bulletin Board under the symbol "OPHD". Our
common stock was previously traded on the NASDAQ SmallCap Market under the
symbol "OPHD" and on the Pacific Exchange under the symbol, "OPD" prior to its
delisting from those exchanges. Our common stock was delisted from the NASDAQ
SmallCap Market effective November 7, 2000, because the aggregate value of the
public float fell below the NASDAQ requirement of $1,000,000. Our common stock
was delisted from the Pacific Exchange effective November 10, 2000, based on
our announcement of stockholder approval of proposals to sell substantially all
of our assets and to authorize the board of directors to implement a plan to
liquidate, wind up, and dissolve. Ultimately, we were not dissolved but rather
merged with HEMOXymed, Inc. on August 21, 2001, retaining our status as a
publicly traded company.

          The following table sets forth the range of high and low bid
quotations or high and low sales prices for our common stock from January 1,
2000, for each of the quarterly periods indicated as reported by the OTC
Bulletin Board or NASDAQ SmallCap Market, as applicable. Bid quotations reflect
interdealer prices without retail markup, markdown, or commission and may not
represent actual transactions.

                                                     High          Low
                                                     ----          ---
2000:
  First quarter............................... $    20.000     $     3.000
  Second quarter..............................       8.000           0.250
  Third quarter...............................       1.609           0.375
  Fourth quarter..............................       1.327           0.845
2001:
  First quarter............................... $     1.297     $     0.845
  Second quarter..............................       1.351           0.241
  Third quarter...............................       0.724           0.350
  Fourth quarter..............................       0.620           0.340
2002:
  First quarter (through March 13, 2002)...... $     0.400     $     0.260

          As of December 31, 2001, we had approximately 144 record holders of
our common stock. We estimate that as of such date there were more than 700
beneficial holders of our common stock.

          As required by the Agreement and Plan of Merger between us and
HEMOXymed, Inc, we paid dividends to the pre-merger shareholders of Ophidian of
as follows:

                                   Number of      Total
Date                Per Share       Shares       Dividend
----                ---------       ------       --------
April 23, 2001       $0.830        1,158,229     $961,330
November 15, 2001    $0.230        1,158,229     $266,393

          We do not intend to pay dividends for the foreseeable future.

                                       12

<PAGE>

          The Company issued 3,955,236 shares of common stock at $0.50 per
share and 100,000 shares of common stock at $0.25 per share in a private
placement on November 15, 2001. The private placement consisted of a $1,602,043
cash investment and the conversion of $400,575 of debt to equity. On March 15,
2002, we filed a registration statement on Form SB-2 with the SEC registering
the 4,055,236 shares of common stock in addition to 17,537,495 shares of common
stock previously issued.

ITEM 6.   SELECTED FINANCIAL DATA

          The following selected consolidated financial data set forth below
has been derived from our audited consolidated financial statements for the
years ended December 31, 2001, 2000, 1999 and 1998. The selected consolidated
financial data set forth below for the year ended December 31, 1997 is
unaudited. The data should be read in conjunction with the consolidated
financial statements and related notes, Management's Discussion and Analysis of
Financial Condition and Results of Operations in Item 7 and other financial
information included elsewhere in this annual report on Form 10-K.

<TABLE>
<CAPTION>
                                           2001           2000            1999            1998            1997
                                         audited        audited         audited         audited        unaudited
                                         -------        -------         -------         -------        ---------
<S>                                    <C>            <C>             <C>             <C>             <C>
Statements of Operations Data
Grant revenues.....................    $          -   $           -   $      14,963   $           -   $           -
Operating expenses
    Research and development.......               -         119,374         762,349         446,717           6,753
    General and administrative.....         528,649          86,978         195,966          89,021          13,940
    Merger costs...................         612,024               -               -               -               -
Other (income) expense
    Interest expense...............          30,569           1,470             408           5,367               -
    Interest income................          (3,953)            (11)         (8,706)        (25,303)              -
    Other (income) expense.........          (8,325)         (9,189)        (18,014)            (81)              -
Net loss...........................    $ (1,158,964)  $    (198,642)  $    (918,761)  $    (516,411)  $     (20,693)
Net loss per share.................    $      (0.06)  $       (0.01)   $      (0.05)   $      (0.03)   $      (0.00)
Weighted average number of shares
   outstanding.....................      20,050,994      18,943,906      18,820,632      17,577,328      17,094,030

Balance Sheet Data
Cash and cash equivalents..........    $    858,943   $      23,535   $      32,405   $     788,863   $       1,000
Working capital/(deficit)..........         560,795        (601,645)       (257,302)        602,494         (33,560)
Total assets.......................       1,059,204         224,566          93,077         860,019           7,916
Deficit accumulated during the
   development stage...............      (2,821,475)     (1,664,390)     (1,465,748)       (546,987)        (30,575)
Total stockholders' equity/
   (deficit).......................    $    736,052   $    (407,389)  $    (238,324)  $     613,692   $     (29,369)
</TABLE>

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

                Special note regarding forward-looking statements

          Some of the statements in this Form 10-K are forward-looking
statements that involve risks and uncertainties. These forward-looking
statements include statements about our plans, objectives, expectations,
intentions and assumptions and other statements contained in this prospectus
that are not statements of historical fact. You can identify these statements
by words such as "may," "will," "should," "estimates," "plans," "expects,"
"believes," "intends" and similar expressions. We cannot guarantee future
results, levels of activity, performance or achievements. Our actual results
and the timing of certain events may differ significantly from the results
discussed in the forward-looking statements. Factors that might cause such a
discrepancy include those discussed in "Risk factors" and elsewhere in this
prospectus. You are cautioned not to place undue reliance on any
forward-looking statements.

                                       13

<PAGE>

                                Plan of operation

          The following discussion of the financial condition and results of
operations should be read in conjunction with the Consolidated Financial
Statements and notes thereto included in this document.

OVERVIEW

MERGER OF HEMOXYMED, INC. AND OPHIDIAN PHARMACEUTICALS, INC.

          On August 21, 2001, we acquired 100% of the outstanding equity
securities of HEMOXymed, Inc., a privately held non-reporting company, from its
stockholders. On November 14, 2001 our name was changed from Ophidian
Pharmaceuticals, Inc. to HEMOXymed, Inc.

          The acquisition, through a merger, provided for the issuance and
exchange of 19,000,000 shares of our common stock for all of the outstanding
common stock of HEMOXymed. The shares of our common stock were "restricted
securities" under the Securities Act of 1933, as amended. Immediately following
the merger there were 20,199,915 issued and outstanding shares of our common
stock. The terms of the merger also provided that the board of directors and
management of the merged company are that of HEMOXymed.

          This transaction is commonly referred to as a "reverse acquisition"
where 100% of HEMOXymed's stock was effectively exchanged for a controlling
interest in a publicly held "shell" corporation, in this case, our stock. For
financial accounting purposes, this transaction has been treated as the
issuance of stock for the net monetary assets of Ophidian, with no goodwill or
other intangible assets recorded. Because this transaction is being accounted
for as a "reverse acquisition" whereby HEMOXymed acquired 100% of Ophidian, the
historical operating results prior to August 21, 2001 are those of HEMOXymed.

          Prior to the merger, our year-end was September 30th. As part of the
merger we have chosen to change our year-end to that of HEMOXymed, which is
December 31st.

          Any forward-looking statements refer to our post-merger operations,
which are those of HEMOXymed. Prior to the merger HEMOXymed was, and following
the merger we now are, a development stage biopharmaceutical company conducting
research and development aimed at improving tissue oxygenation by increasing
oxygen release from hemoglobin to provide therapeutic value to patients with
serious, although unmet or underserved medical needs.

          We have had a limited operating history, a history of operating
losses and expect to generate operating losses for the foreseeable future. As
of December 31, 2001, HEMOXymed's accumulated deficit was $2,821,475. We
anticipate that we will continue to incur significant losses until successful
commercialization of our technology generates sufficient net revenues to cover
all costs of operation.

CRITICAL ACCOUNTING POLICIES

Research and development
          Research and development (or R&D) expenses include related salaries,
contractor fees, building costs, utilities, administrative expenses and
allocations of corporate costs. R&D expenses also include activities such as
investigator sponsored trials. All such costs are charged to R&D expense as
incurred. The Company had no R&D expenses during 2001 due to the lack of
adequate financing and the dissolution of its French subsidiary. R&D in 2000
and 1999 totaled $119,374 and $762,349, respectively.

Stock-based compensation
          The Company regularly issues common stock to its employees in lieu
of cash compensation in order to conserve cash reserves. The Company intends to
continue this practice until adequate funds are raised and/or the Company is
generating revenues to sustain operations. The Company recognizes expense for
stock-based compensation in accordance with the provisions of Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and
related Interpretations. Accordingly, compensation cost is recognized for the
excess
                                       14

<PAGE>

of the estimated fair value of the stock at the grant date over the
exercise price, if any. The Company recorded compensation expense of $105,000
in the year ended December 31, 2001 for 300,000 shares of common stock issued
to employees at less than fair market value.

Long-lived assets
          We evaluate our long-lived assets, including patents, for impairment
whenever indicators of impairment exist. Our current estimates of
recoverability are based on the Company's product obtaining commercial
viability in the future or the Company's ability to recover its cost related to
these assets through sale to a competitor at a price in excess of their
carrying value. The Company has recorded no impairment losses related to these
assets.

RESULTS OF OPERATIONS

RESEARCH AND DEVELOPMENT

          Research and development expenses consist primarily of personnel
costs, clinical and regulatory consultants, equipment and supplies and
laboratory facility costs.

         Due to lack of financing, there were no research activities in the year
ended December 31, 2001. Research and development expenses for the year ended
December 31, 2000 decreased from the year ended December 31, 1999 by $642,975,
from $762,349 to $119,374. This decrease was due to lack of financing. In
November 2001, we raised equity financing of approximately $2 million. We
resumed research and development activities in January 2002 and opened a
research and clinical development laboratory in Lyon, France in February 2002.

GENERAL AND ADMINISTRATION

         General and administration expenses consist primarily of personnel
costs, legal and accounting, business development, amortization of patents and
patent maintenance. General and administrative expenses for the year ended
December 31, 2001 increased from the year ended December 31, 2000 by $441,671,
from $86,978 to $528,649. This increase is primarily due to stock paid to
employees for compensation, professional fees associated with being a public
company and amortization of patents. Generally accepted accounting principles
require that compensation expense be recognized in the financial statements
based on the difference between the issuance price and current market price of
the underlying stock issued to employees as compensation.

         General and administration expenses for the year ended December 31,
2000 decreased from the year ended December 31, 1999 by $108,988, from $195,966
to $86,978. This decrease is primarily due to reduced personnel costs, reduced
travel and reduced costs associated with raising equity investment. These
decreases were partially offset by increased non-cash expenses charged for
contributed services by employee/shareholders.

MERGER COSTS

         Prior to the completion of the merger, we had 1,158,245 outstanding
shares of common stock. Per the plan of merger, our pre-closing shareholders
received a stock dividend of 0.036046. Giving effect to the issuance of the
shares outlined above, immediately following the merger we had 20,199,915 issued
and outstanding shares of common stock. Also, our pre-closing shareholders were
entitled to a cash dividend of our pre-close cash balances less any cash used to
pay pre-close liabilities. That dividend was paid on December 14, 2001 in the
amount of $266,393.

         For financial accounting purposes, this transaction is treated as the
issuance of stock for the net monetary assets of Ophidian, with no goodwill or
other intangible assets recorded. The purchase price was valued at $405,386 and
was immediately expensed. There were also transaction costs of $206,638 which
were expensed at the date of the merger.

         On November 14, 2001 the merged-company name was changed from Ophidian
Pharmaceuticals, Inc. to HEMOXymed, Inc. On February 5, 2002 the Company's
ticker symbol was changed on the Over-the- Counter: Bulletin Board (OTC:BB) from
OPHD to HMYD.

                                       15

<PAGE>

REASONS FOR THE MERGER
----------------------

Ophidian
--------
         Following the distribution in April 2001 of most of the proceeds from
the sale in November 2000 of substantially all of Ophidian's assets, the only
remaining asset of Ophidian--aside from a limited pool of funds retained to
cover remaining expenses--was Ophidian's status as a publicly-traded
corporation. The principal purpose of the merger was to allow the Ophidian
stockholders the potential to realize some value from this remaining asset.

HEMOXymed
---------
HEMOXymed's merger with Ophidian, a publicly traded corporation, gives HEMOXymed
an opportunity to access public capital markets and provided greater liquidity
for the HEMOXymed stockholders.

INTEREST AND OTHER (INCOME) EXPENSE

         Interest expense was $30,569, $1,470 and $408 for the years ended
December 31, 2001, 2000 and 1999, respectively. The increase for the year ended
December 31, 2001 is due to interest expense associated with notes payable. The
increase for the year ended December 31, 2000 is due to interest expense
associated with officers notes payable.

         Interest income for the year ended December 31, 2001 increased from the
year ended December 31, 2000 by $3,942, from $11 to $3,953. This increase is due
to interest earned on investment of the proceeds of the $2.0 million equity
financing on November 15, 2001. Interest income for the year ended December 31,
2000 decreased from the year ended December 31, 1999 by $8,695, from $8,706 to
$11. This decrease is due to reduced cash balances in the year ended December
31, 2000.

         Other income of $8,325, $9,189 and $18,014 for the years ended December
31, 2001, 2000 and 1999, respectively, includes foreign currency transaction
gains. We currently do not hedge foreign exchange transaction exposures. To the
extent we have assets and liabilities denominated in foreign currencies that are
not hedged, we are subject to foreign currency gains and losses.

PLAN OF OPERATIONS

         Until a minimum of $1 million additional investment capital is raised,
our activities will be limited to pre-clinical development in Europe and
investment raising activities in the United States and Europe. To minimize cash
burn, our officers have agreed to defer 50% to 100% of compensation until cash
balances are sufficient to pay compensation. Our efforts to raise investment
capital consist of:
          .     presenting Hemoxymed as an investment opportunity to:
                .    angel investors and angel investor groups
                .    small and large venture capital firms
                .    other investment groups
          .     seeking government investment and/or collaboration with
                both the United States and France
          .     seeking strategic corporate alliances or joint ventures
                with biotechnology and pharmaceutical companies who have
                products that may benefit from such arrangements

         If we are successful in raising investment in 2002, we intend to begin
a combined Phase I-II clinical trial in France within 6 months of the financing.
Phase II of this initial clinical trial will included patients with one type of
disease, for example, arteriosclerosis. This clinical trial is designed to see
if we can prove the efficacy of our technology on humans. If these clinical
results are favorable, we will advance to Phase III clinical trials in France
for that disease. We will also begin additional Phase I-II clinical trials
involving other diseases such as Chronic Obstructive Pulmonary Disease and
Chronic Heart Failure. These additional Phase I-II clinical trials will be in
the United States, Europe and Japan. Beginning the initial Phase III clinical
trial and additional Phase I-II clinical trials will take significant capital
investment. We estimate we will require financing of approximately $20 million
over a

                                       16

<PAGE>

five-year period. We believe that with favorable clinical data from our initial
Phase I-II clinical trial, we will be able to raise the additional investment
capital.

         We do not expect revenues from our HEMOXygenation technology for at
least 3 years after raising our next round of financing which needs to be a
minimum of $1 million. There can be no assurance that we will raise a minimum of
$1 million investment capital in 2002 or that adequate funds on acceptable terms
will be available in the future when we need them. If at any time we are unable
to obtain sufficient additional investment capital, we will be required to
delay, restrict or eliminate some or all of our research or development
programs, dispose of assets or technology or cease operations.

CAPITAL RESOURCES AND LIQUIDITY

         At December 31, 2001, our cash and cash equivalents were $858,943 and
were invested in money market instruments. On November 15, 2001, we completed an
equity financing of $2,002,618. The financing consisted of a cash investment of
$1,424,978 and conversion of debt to equity of $577,640. A portion of the cash
investment was used to pay existing debt at November 15, 2001. As stated above
in our Plan of operations, we require a minimum capital investment of $1 million
to commence a Phase I-II clinical trial in France. We believe we have enough
cash to continue our current operations into year 2003. Our current operations
consist of limited pre-clinical activities in France and investment capital
raising activities in the United States and France.

ITEM 7(A).  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

          The primary objective of our investment activities is to
preserve our capital until it is required to fund operations while at the same
time maximizing the income we receive from our investments without incurring
investment market volatility risk. Our investment income is sensitive to the
general level of U.S. interest rates. In this regard, changes in the U.S.
interest rates affect the interest earned on our cash and cash equivalents. Due
to the short term nature of our cash and cash equivalent holdings, a 10%
movement in market interest rates would not materially impact on the total fair
market value of our portfolio as of December 31, 2001.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

          The Company's Financial Statements and Supplementary Data required by
this item are listed in Item 13 and included in this document at pages F-1 to
F-14.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         None

                                    PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

         Our executive officers and directors, and their ages as of March 15,
2002, are as follows:

Name                    Age     Position with the Company
----                    ---     -------------------------

Stephen K. Parks         48     Director, President and Chief Executive Officer

Judson A. Cooper         43     Director

Joshua D. Schein         41     Director

Edward J. Leary          42     Chief Financial Officer

                                       17

<PAGE>

     Stephen K. Parks has been the President ,Chief Executive Officer and
Chairman of the Board of Directors of Hemoxymed since January 1997 and continued
in such positions following the merger in August 2001. Mr. Parks has extensive
experience in managing and leading successful medical device companies.  Mr.
Parks was President and CEO of Medical Innovations Corporation from inception in
1986 through its sale to Ballard Medical Products in 1993.  He continued as
President of the Medical Innovations Corporation subsidiary of Ballard Medical
Products through 1996. Previously, Mr. Parks was the Quality Control Manager at
HDC Corporation, a start-up manufacturer of implantable blood access devices.
Prior to that, Mr. Parks was a Regulatory Affairs Officer with Abbott
Laboratories parenteral solutions group and a Microbiologist with Baxter
Travenol.  He holds a B.S. in Microbiology from Auburn University.

     Judson A. Cooper has been a Director since August 2001. Mr. Cooper is a
founder of SIGA Technologies, Inc., a publicly traded biotechnology company, and
served as its Chairman of the Board of Directors from August 1998 to April 2001.
 Mr. Cooper also served as SIGA's acting Chairman of the Board of Directors from
April 1998 to August 1998, as a Director from December 1995 to April 2001, and
as Executive Vice President from November 1996 to April 2001, and as its
founding President from December 1995 to November 1996.  Mr. Cooper is also a
founder of DepoMed, Inc., a publicly traded drug delivery company and served as
a Director of DepoMed, Inc. from December 1995 to June 1998. From January 1996
to August 1998, Mr. Cooper was an executive officer and a Director of Virologix
Corporation, a private biotechnology company which he co-founded and
subsequently was acquired by Access Pharmaceuticals, a publicly traded
biotechnology company. From June 1996 to September 1998, Mr. Cooper was an
executive officer and a Director of Callisto Pharmaceuticals, Inc., a private
biotechnology company which he co-founded. Since 1997, Mr. Cooper has been a
principal of Prism Ventures, LLC, a privately held limited liability company
focused on the biotechnology industry.  From September 1993 to December 1995,
Mr. Cooper was a private investor. From 1991 to 1993, Mr. Cooper was a Vice
President at D. Blech & Company, Incorporated, a merchant and investment banking
firm focused on the biopharmaceutical industry. Mr. Cooper is a graduate of the
Kellogg School of Management.

     Joshua D. Schein Ph.D. has been a Director of the Company since August
2001. Dr. Schein is a founder of SIGA Technologies, Inc., a publicly traded
biotechnology company, and served as its Chief Executive Officer from August
1998 to April 2001.  Dr. Schein also served as SIGA's acting Chief Executive
Officer from April 1998 to August 1998, as Secretary and a Director from
December 1995 to April 2001, and as Chief Financial Officer from December 1995
until April 1998. Dr. Schein is also a founder of DepoMed, Inc., a publicly
traded drug delivery company and served as a director of DepoMed, Inc. from
December 1995 to June 1998. From January 1996 to August 1998, Dr. Schein was an
executive officer and a Director of Virologix Corporation, a private
biotechnology company which he co-founded and subsequently was acquired by
Access Pharmaceuticals, a publicly traded biotechnology company. From June 1996
to September 1998, Dr. Schein was an executive officer and a Director of
Callisto Pharmaceuticals, Inc., a private biotechnology company which he
co-founded. Since 1997, Dr. Schein has been a principal of Prism Ventures, LLC,
a privately held limited liability company focused on the biotechnology
industry.  From 1994 to 1995, Dr. Schein served as a Vice President of
Investment Banking at Josephthal, Lyon and Ross, Incorporated, an investment
banking firm. From 1991 to 1994, Dr. Schein was a Vice President at D. Blech &
Company, Incorporated, a merchant and investment banking firm focused on the
biopharmaceutical industry. Dr. Schein received a Ph.D. in neuroscience from the
Albert Einstein College of Medicine, an MBA from the Columbia Graduate School of
Business, and a B.A. in biochemistry from Brandeis University.

     Edward J. Leary has been the Chief Financial Officer of Hemoxymed since
August  1998 and continued in such position following the merger in August 2001.
Mr. Leary has been a key manager in creation of value at a series of
high-profile ventures.  From 1993 to 1998, Mr. Leary was Controller of Visio
Corporation of Seattle, Washington, a software developer, assisting in its IPO
in 1995 as well as six acquisitions of other firms.  Prior to that, Mr. Leary
held the position of Chief Financial Officer with Medical Innovations
Corporation from 1987 to 1993.  Mr. Leary was also a Financial Analyst with
Advanced Micro Devices, a semiconductor manufacturer.  Mr. Leary holds a B.S. in
Business Administration from Indiana University of Pennsylvania and is a
certified public accountant.

                                       18

<PAGE>

BOARD OF DIRECTORS COMMITTEES AND OTHER INFORMATION

     The Company's directors serve staggered three year terms and hold office
until the third annual meeting of stockholders of the Company following their
election to the Board and until their respective successors have been qualified
and elected.  Officers are elected by, and serve at the discretion of, the Board
of Directors.

SECTION 16(A) BENEFICIAL REPORTING COMPLIANCE

     The Company's executive officers, directors and shareholders beneficially
owning more than 10% of the Company's Common Stock are required under the
Exchange Act to file reports of ownership of Common Stock of the Company with
the Securities and Exchange Commission.  Copies of those reports must also be
furnished to the Company. The Company believes that during the preceding year
all filing requirements applicable to executive officers, directors and
shareholders beneficially owning more than 10% of the Company's Common Stock
have been complied with.

COMMITTEES

     In February 2002, the Board of Directors appointed Joshua D. Schein and
Stephen K. Parks to the Audit Committee. The Audit Committee reviews the scope
and results of the Company's financial statements conducted by the Company's
independent accountants.  The Committee also reviews the scope of other services
provided by the Company's independent accountants, proposed changes in the
Company's financial and accounting standards and principles, and the Company's
policies and procedures with respect to its internal accounting, and auditing
and financial controls.  The Committee makes recommendations to the Board of
Directors on the engagement of the independent accountants, as well as other
matters which may come before it or as directed by the Board of Directors.

ITEM 11. EXECUTIVE COMPENSATION

COMPENSATION OF DIRECTORS

     Directors do not receive any standard compensation for services.

EXECUTIVE COMPENSATION

     The following table sets forth all compensation awarded to, earned by, or
paid for services rendered to Hemoxymed and then to us following the merger in
all capacities during Fiscal 2001, 2000, and 1999 by our President and Chief
Executive Officer, who is the only executive officer earning in excess of
$100,000 annually.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
                                                               Long Term Compensation            All
                                                         ----------------------------------     Other
                               Annual Compensation               Awards            Payouts    Compensa-
-------------------------------------------------------------------------------------------      ion
                                                Other                 Securities
                                                Annual    Restricted    Under-
 Name and                                      Compensa-    Stock       lying       LTIP
 Principle Position  Year   Salary    Bonus      tion       Awards     Options     Payouts
---------------------------------------------------------------------------------------------------------

<S>                  <C>   <C>       <C>         <C>          <C>        <C>         <C>         <C>
 Stephen K. Parks    2001  $ 12,500  $ 50,000    $ 0          0          0           0           $0
    President and    2000  $      0  $      0    $ 0          0          0           0           $0
    CEO/(1)/         1999  $100,000  $      0    $ 0          0          0           0           $0
---------------------------------------------------------------------------------------------------------
</TABLE>

/(1)/  $30,000 of Stephen K. Parks' bonus was paid in stock at a fair market
value of $0.50 per share. The balance of  $20,000 was paid in cash.

                                       19

<PAGE>

EMPLOYMENT AGREEMENTS

     Stephen K. Parks is employed pursuant to an agreement which provides for a
base salary of $150,000 per year. Due to financial constraints of Hemoxymed and
continuing following the merger, Mr. Parks worked without salary from September
1999 to November 2001. The salary for this period has not been accrued and will
not be paid to Mr. Parks.

     Edward J. Leary, the Chief Financial Officer, is employed pursuant to an
agreement which provides for a base salary of $125,000 per year. Due to
financial constraints of the Company, Mr. Leary worked without salary from
September 1999 to August 2001. The salary for this period has not been accrued
and will not be paid to Mr. Leary.

COMPENSATION OF DIRECTORS

     Directors do not currently receive any compensation for their service as
members of the board of directors.

BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION

       Our Board of Directors is comprised of two non-employee directors and our
Chief Executive Officer. All three members participate in the executive
compensation decisions of the Company. It is their responsibility to:

       -  Make decisions concerning matters of executive compensation;

       -  Administer the Company's executive incentive plans;

       -  Review compensation plans, programs and policies; and

       -  Monitor the performance and compensation of executive officers.

       The goal of our Board of Directors executive compensation policy is to
ensure that an appropriate relationship exists between executive compensation
and the creation of stockholder value, while at the same time attracting,
motivating and retaining senior management. The Board of Directors informal
executive compensation philosophy (which applies generally to all management,
including the Chief Executive Officer, Stephen K. Parks) considers a number of
factors, which may include:

       -  Providing levels of compensation competitive with companies at a
          comparable stage of development and in our geographic area;

       -  Integrating management's compensation with the achievement of
          performance goals;

       -  Maintaining an appropriate balance between base salary and
          performance-based compensation, with a higher proportion of
          compensation being performance-based.

       The compensation structure of our executive officers, including our Chief
Executive Officer, is based on competitive, market-based pay practices,
performance evaluations and generally includes a combination of base salary,
discretionary bonuses and stock options or warrants. In setting compensation
levels, the Board of Directors considers data regarding compensation practices
from a group of biotechnology and pharmaceutical companies that are believed to
be generally comparable to the Company.

       Base salary is not targeted at any particular level within the group of
companies considered. Instead, total salary is determined based on a subjective
assessment of the executive's performance and the Company's needs.

       The Board of Directors has deferred consideration of cash bonuses for the
year ended December 31, 2001. There were no stock or equity bonuses in 2001.

                                       20

<PAGE>

       Consistent with its belief that equity ownership by senior management is
beneficial in aligning the interests of senior management with those of the
stockholders, we provide potentially significant long-term incentive
opportunities to our senior management through discretionary grants of stock
options or warrants, thereby emphasizing the potential creation of long-term
stockholder value. The Board of Directors considers stock options and warrants
effective long-term incentives because an executive can profit only if the value
of the Common Stock increases. In making these grants, the Board of Directors
considers its subjective assessment of our past financial performance and future
prospects, an executive officer's current level of ownership of the Common
Stock, the period during which an executive officer has been in a key position
with us, individual performance and competitive practices within the comparative
group of companies. The Board of Directors views management's ability to raise
investment capital as a significant asset to the Company. The Board of Directors
intends on compensating executive management with equity ownership for
successfully obtaining investment capital for the Company.

By the Board of Directors:
Stephen K. Parks, Chairman
Judson A. Cooper
Joshua D. Schein

STOCK PRICE PERFORMANCE PRESENTATION

     As stated in the footnotes to the consolidate financial statements and in
management's discussion and analysis of financial condition and results of
operations contained in this annual report on Form 10-K, Hemoxymed merged with
Ophidian Pharmaceuticals, Inc., a publicly held "shell" corporation on August
21, 2001. Because this transaction is being accounted for as a "reverse
acquisition" whereby HEMOXymed acquired 100% of Ophidian Pharmaceuticals, Inc.,
the historical operating results contained in this annual report on Form 10-K
prior to August 21, 2001 are those of HEMOXymed. We feel it would be misleading
to include a historical stock performance presentation of Ophidian
Pharmaceuticals, Inc. because the financial statements of Hemoxymed contained in
this annual report on Form 10-K had no impact on the historical stock
performance of Ophidian Pharmaceuticals, Inc.

STOCK OPTION PLANS

     The Company has a 1992 Employee Stock Option Plan, and a 1998 Incentive
Stock Option Plan (collectively, the "Stock Option Plans") in force for its
employees, advisors and directors.  The 1998 Incentive Stock Option Plan was
adopted by stockholders on March 23, 1999, to supplement the 1990 Incentive
Stock Option Plan.  The Stock Option Plans provide for the grant of options to
purchase shares, in the case of the 1992 Employee Stock Option Plan, at a value
determined by the Stock Option Committee, and in the case of the 1990 and 1998
Incentive Stock Option Plans, at not less than fair market value as of the date
options are granted. The Stock Option Plans are administered by a committee
("Stock Option Committee") made up of at least two members of the Company's
Board of Directors who are not officers, employees, or consultants of the
Company.  On December 1, 1992, by a vote of stockholders, the number of shares
available for employee stock options was increased by 25,000 shares, for a total
of 82,145.  On March 23, 1999, the stockholders voted to adopt the 1998
Incentive Stock Option Plan and to increase the number of shares available for
stock options by 39,730 shares, for a total of 121,875. At December 31, 2001
there were no stock options outstanding and 41,759 available for grant.

OPTION GRANTS

     There were no option grants to executives or directors in the years ended
December 31, 2001, 2000 or 1999.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth the beneficial ownership of our securities
as of February 28, 2002, by (a) each person known by us to be the beneficial
owner of more than 5% of any class of our securities, (b) our directors, (c) our
executive officers, and (d) all directors and executive officers as a group.  As
of February 28, 2002, a total of 24,255,151 shares of our common stock, all of
which are voting shares, 241,636 of our Common Stock ($55.615) Purchase
Warrants, and 12,500 of our Common Stock ($36.00) Purchase Warrants were issued
and outstanding.

                                       21

<PAGE>

<TABLE>
<CAPTION>
                                                                                     Common Stock
                                                              Common Stock             Warrants
                                                              ------------             --------
                                                        Number of    Percent of    Number of       Percent of
Name                                                     Shares         Class       Warrants          Class
----                                                     ------         -----       --------          -----
<S>                                                   <C>               <C>             <C>             <C>
Stephen K. Parks /(1)/                                 1,332,990         5.5%           0               0.0%
Edward J. Leary /(2)/                                    339,475         1.4%           0               0.0%
Judson A. Cooper /(3)/                                15,121,920        62.3%           0               0.0%
Joshua D. Schein Ph.D. /(4)/                          15,121,920        62.3%           0               0.0%
Prism Ventures, LLC /(5)/                             15,295,083        63.1%           0               0.0%
All Directors and Officers as a group (5 persons)     16,967,548        70.0%           0               0.0%
</TABLE>

/(1)/  The address for Mr. Parks is c/o HEMOXymed, Inc. 325 Barracks Hill,
       Charlottesville, VA  22901.

/(2)/  The address for Mr. Leary is c/o HEMOXymed, Inc. 325 Barracks Hill,
       Charlottesville, VA  22901.

/(3)/  Includes 14,948,757 shares held by Prism Ventures, LLC.  Mr. Cooper is a
       member of Prism Ventures LLC and has voting and/or investment control
       over the shares held by it. Mr. Cooper's address is c/o HEMOXymed, Inc.,
       420 Lexington Ave., Suite 300, New York, NY 10170.

/(4)/  Includes 14,948,757 shares held by Prism Ventures, LLC.  Dr. Schein is a
       member of Prism Ventures LLC and has voting and/or investment control
       over the shares held by it. Dr. Schein's address is c/o HEMOXymed, Inc.,
       420 Lexington Ave., Suite 300, New York, NY 10170.

/(5)/  Prism Ventures LLC is jointly owned by Mr. Cooper and Dr. Schein.  The
       address for Prism Ventures LLC is c/o HEMOXymed, Inc., 420 Lexington
       Ave., Suite 300, New York, NY 10170.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     On October 14, 1999, Stephen K. Parks, President and CEO, loaned HEMOXymed
$9,750.  The note accrues interest at a rate of five percent per annum and is
payable on demand. Interest expense related to this note was $1,463, $1,467 and
$106 for the years ended December 31, 2001, 2000 and 1999, respectively. None of
the accrued interest was paid by March 15, 2002.

     In February 2001, the board of directors of HEMOXymed approved the
reorganization of HEMOXymed, per the terms of the Prism Ventures, LLC -
HEMOXymed, Inc. agreement dated September 29, 2000. This agreement called for
the issuance of common stock at a price of $0.0001 per share to: (1) Prism
Ventures, LLC, -- 14,700,000 shares; (2) Stephen K. Parks, President and CEO -
1,000,000 shares; and (3) Edward J. Leary, Chief Financial Officer - 275,000
shares. These shares were all issued in 2001.

     In April 2001, HEMOXymed issued 300,000 shares of common stock at a price
of $0.0001 to employees as compensation for services that were not compensated
with cash. Edward J. Leary, our Chief Financial Officer, received 70,000 shares
of common stock at a price of $0.0001 in this transaction.

     We believe that each of the transactions set forth above as well as those
currently in effect were entered into on (i) terms as fair as those that could
be obtained from independent third parties, and (ii) were ratified by a majority
(but no less than two) of our independent directors who did not have an interest
in the transaction and who had access to our counsel at our expense.  All future
transactions with us in which a director, officer or 5% shareholder has a direct
or indirect interest must (i) be on terms no less favorable to us than could be
obtained from unaffiliated third parties, and (ii) be approved by a majority of
directors who have no direct or indirect interest in the transaction and who
have access at our expense to our counsel or independent counsel.

                                       22

<PAGE>

LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS

     Under our bylaws and the Delaware General Corporation Law, directors and
officers are entitled to mandatory indemnification from us against certain
liabilities and expenses to the extent such officers or directors are successful
in the defense of a proceeding.  In all other circumstances, the Delaware
General Corporation Law permits indemnification for expenses incurred in the
defense or settlement of a derivative or third-party action if there is a
determination by a majority vote of the directors who are not parties to such
action, even though less than a quorum, or, if there are no such directors or if
such directors so direct, by independent legal counsel in a written opinion, or
by the stockholders, that the person seeking indemnification acted in good faith
and in a manner reasonably believed to be in or not opposed to our best
interests, and with respect to any criminal action, had no reasonable cause to
believe his or her conduct was unlawful.  Without court approval, however, no
indemnification may be made in respect of any derivative action in which such
person is adjudged liable for negligence or misconduct in the performance of his
or her duty to us.  Our Certificate of Incorporation permits indemnification to
the fullest extent permitted by the Delaware General Corporation Law, except
that in an action initiated by an officer or director, we are only required to
provide indemnification if the action was first authorized by the Board of
Directors.  The Certificate of Incorporation further provides that expenses
incurred by an individual in his or her capacity as a director or in certain
other capacities in defending a civil or criminal action shall be paid by us in
advance of the final disposition of the matter upon receipt of an undertaking
from the director to repay the sum advanced if it shall ultimately be determined
that he or she is not entitled to be indemnified by us pursuant to the terms of
the Delaware General Corporation Law.

     The Delaware General Corporation Law further states that the
indemnification provided by statute is not exclusive of any other rights or
remedies that directors, officers, employees, or agents may have under any
bylaw, agreement, vote of stockholders or disinterested directors, or otherwise.
Accordingly, under the Delaware General Corporation Law and our bylaws, we are
authorized to enter into separate indemnification agreements with our directors,
officers, employees, or agents.  Our bylaws further provide that we may purchase
and maintain insurance on behalf of an individual who is a director or officer
against liability asserted against or incurred by such individual in his or her
capacity as a director or officer regardless of whether we would have the
capacity to indemnify or allow expenses to the individual against the same
liability under the provisions of the Delaware General Corporation Law.

     The Delaware General Corporation Law permits a corporation to include a
provision in its Certificate of Incorporation which eliminates the personal
liability of a director for monetary damages arising from breaches of his or her
fiduciary duties to us or our stockholders, subject to the following exceptions:
(i) a breach of the director's duty of loyalty to the Company or its
stockholders; (ii) acts or omissions not in good faith or involving intentional
misconduct or a knowing violation of the law; (iii) willful or negligent conduct
in paying dividends or repurchasing stock out of other than lawfully available
funds (a violation of Section 174 of the Delaware General Corporation Law); and
(iv) any transaction from which the director derives an improper personal
benefit.  Our certificate of incorporation includes such a limitation of
liability provision, including the foregoing exceptions. In addition, under the
Delaware General Corporation Law, a limitation of liability provision may not
relieve directors from the obligation to comply with any law, including federal
and state securities laws, or from the availability of non-monetary remedies
such as injunctive relief or rescission.  Finally, the liability limitation
provision in our certificate of incorporation does not extend to acts or
omissions of a director which occurred before the date on which the certificate
of incorporation became effective.  In general, under the Delaware General
Corporation Law and our  certificate of incorporation, a director may not be
held liable by us or to our stockholders for monetary damages arising out of the
director's negligence, gross negligence, or lack of due care in carrying out his
or her fiduciary duties as a director. These provisions pertain only to breaches
of duty by directors as directors and not in any other corporate capacity, such
as officers.  As a result of such provisions, stockholders may be unable to
recover monetary damages against directors for actions taken by such directors
which constitute negligence or gross negligence or which are in violation of
such directors' fiduciary duties, although it may be possible to obtain
injunctive or other equitable relief with respect to such actions.  If equitable
remedies are found not to be available to stockholders in any particular case,
stockholders may not have any effective remedy against the challenged
conduct.

                                       23

<PAGE>

                                   PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) Documents filed as a part of this report.

     1. List of Financial Statements.

             The following financial statements of HEMOXymed, Inc. and Report
     of Ernst & Young LLP, Independent Auditors, are included in this report:

     .  Report of Ernst & Young LLP, Independent Auditors.
     .  Consolidated Balance Sheets at December 31, 2001 and 2000
     .  Consolidated Statements of Operations for the years ended December 31,
        2001, 2000 and 1999 and for the period from February 22, 1995
        (inception) to December 31, 2001
     .  Consolidated Statements of Stockholders' Equity/(Deficit) for the period
        from February 22, 1995 (inception) to December 31, 2001
     .  Consolidated Statements of Cash Flows for the years ended December 31,
        2001, 2000 and 1999 and for the period from February 22, 1995
        (inception) to December 31, 2001
     .  Notes to Consolidated Financial Statements.

     2. List of all Financial Statement Schedules.

             All schedules are omitted because they are not applicable or the
     required information is shown in  the financial statements or notes
     thereto.

     3. Exhibits required by Item 601 of Regulation S-K. The following exhibits
        are filed as a part of, or incorporated by reference into, this Report:

   Number    Description
   ------    -----------

    3.1      Certificate of Incorporation, filed as Exhibit C to the Company
             Proxy Statement, filed on February 23, 1999 (the "Proxy
             Statement"), and hereby incorporated by reference.

    3.1.1    Certificate of Amendment of Certificate of Incorporation, filed as
             Exhibit A to the Company's Proxy Statement, filed on June 29, 1999,
             and hereby incorporated by reference.

    3.1.2    Certificate of Amendment of Certificate of Incorporation, filed as
             Exhibit 3.1.2 to our Registration Statement on Form SB-2 dated
             March 15, 2002 and hereby incorporated by reference.

    3.2      Company Bylaws, filed as Exhibit D to the Proxy Statement and
             hereby incorporated by reference.

    4.1      Specimen Common Stock Certificate, filed as Exhibit 4.1 to the
             Company's Registration Statement on Form S-1, as amended, effective
             May 7, 1998, Registration Number 333-33219 (the "Registration
             Statement"), and hereby incorporated by reference.

    4.1.1    Specimen Common Stock Certificate, identifying the Company name
             change from Ophidian Pharmaceuticals, Inc. to HEMOXymed, Inc.,
             filed as Exhibit 4.1.1 to our Registration Statement on Form SB-2
             dated March 15, 2002 and hereby incorporated by reference.

    4.2      Specimen Warrant Certificate, filed as Exhibit 4.2 to the
             Registration Statement, and hereby incorporated by reference.

    4.3      Form of Representatives' Warrant Agreement, including Specimen
             Representatives' Warrant, filed as Exhibit 4.3, to the Registration
             Statement, and hereby incorporated by reference.

                                       24

<PAGE>

   Number    Description
   ------    -----------

    4.4      Form of Warrant Agreement, filed as Exhibit 4.4, to the
             Registration Statement and hereby incorporated by reference.

    4.5      Specimen Unit Certificate, filed as Exhibit 4.5 to the Registration
             Statement, and hereby incorporated by reference.

    10.1     1998 Incentive Stock Option Plan, filed as Exhibit A to the Proxy
             Statement, and hereby incorporated by reference.

    10.2     1990 Incentive Stock Option Plan, filed as Exhibit 10.3 to the
             Registration Statement, and hereby incorporated by reference.

    10.3     1992 Employee Stock Option Plan, filed as Exhibit 10.4 to the
             Registration Statement, and hereby incorporated by reference.

    10.4     Agreement and Plan of Merger made as of April 16, 2001, by and
             among the Company, Ophidian Holdings, Inc., a wholly owned
             subsidiary of the Company, and HEMOXymed, Inc., filed as Exhibit A
             to the Company's Information Statement on Form 14f-1 filed on
             August 8, 2001, and hereby incorporated by reference.

    21       Subsidiaries of the Company

(b) Reports on Form 8-K  filed by the Company during the last quarter covered
by this Report.

         1. The Company filed a Form 8-K/A with the SEC on November 5, 2001,
containing the financial statements and pro forma financial information of the
August 21, 2001 acquisition of HEMOXymed, Inc. by Ophidian Pharmaceuticals,
Inc., as required by item 7.

         2. The Company filed a Form 8-K with the SEC on November 13, 2001,
reporting that on April 16, 2001,  Ophidian Pharmaceuticals, Inc. entered into
an Agreement and Plan of Merger by and among Ophidian Pharmaceuticals, Inc.,
Ophidian Holdings, Inc., the wholly owned subsidiary of Ophidian
Pharmaceuticals, Inc. and HEMOXymed, Inc. which agreement was executed by all
the parties. On November 1, 2001, the Board of Directors of the Company approved
a change in its fiscal year end from September 30 to December 31.  Since
HEMOXymed, Inc. was the accounting acquiror in the merger and its fiscal year
end was December 31, no transition report is required.

                                       25

<PAGE>

                                  SIGNATURES
                                  ----------

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.

March 28, 2002                             HEMOXymed, Inc.

                                           By:  /s/ Edward J. Leary
                                           --------------------------------
                                           Edward J. Leary
                                           Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual
Report has been signed by the following persons in the capacities and on the
dates indicated.

March 28, 2002                             By:  /s/ Stephen K. Parks
                                           ---------------------------------
                                           Stephen K. Parks
                                           President, Chief Executive Officer &
                                           Chairman of the Board of Directors

March 28, 2002                             By:  /s/ Edward J. Leary
                                           ---------------------------------
                                           Edward J. Leary
                                           Chief Financial Officer
                                           (Principle Financial Officer and
                                           Principle Accounting Officer)

March 28, 2002                             By:  /s/ Judson A. Cooper
                                           ---------------------------------
                                           Judson A. Cooper
                                           Director

March 28, 2002                             By:  /s/ Joshua D. Schein
                                           ---------------------------------
                                           Joshua D. Schein
                                           Director

                                       26

<PAGE>
                                HEMOXYMED, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                              FINANCIAL STATEMENTS

            FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999 AND
         PERIOD FROM FEBRUARY 22, 1995 (INCEPTION) TO DECEMBER 31, 2001

                                    Contents

                                                                      Page
                                                                      ----

Report of Independent Auditors......................................   F1

Consolidated Balance Sheets.........................................   F2

Consolidated Statements of Operations...............................   F3

Consolidated Statements of Stockholders' Equity/(Deficit)...........   F4

Consolidated Statements of Cash Flows...............................   F6

Notes to Consolidated Financial Statements..........................   F7

<PAGE>


                         REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Hemoxymed, Inc.

We have audited the accompanying consolidated balance sheets of Hemoxymed, Inc
(a development stage company) as of December 31, 2001 and 2000, and the related
consolidated statements of operations, stockholders' equity/(deficit), and cash
flows for each of the three years in the period ended December 31, 2001, and for
the period February 22, 1995 (inception) through December 31, 2001. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Hemoxymed, Inc. at
December 31, 2001 and 2000, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended December 31,
2001, and for the period February 22, 1995 (inception) through December 31,
2001, in conformity with accounting principles generally accepted in the United
States.

The accompanying financial statements have been prepared assuming that
Hemoxymed, Inc. will continue as a going concern. As more fully described in
Note 1, the Company has incurred recurring operating losses. This condition
raises substantial doubt about the Company's ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note 1. The financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of assets or
the amounts and classification of liabilities that may result from the outcome
of this uncertainty.

Richmond, Virginia
March 5, 2002

                                      F1

<PAGE>


                                HEMOXYMED, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                   December 31,
                                                                         ---------------------------------
                                                                                2001             2000
<S>                                                                          <C>              <C>
Assets
Current assets:
   Cash and cash equivalents..........................................       $   858,943      $    23,535
   Prepaids and other current assets..................................            25,004            6,775
                                                                             -----------      -----------
     Total current assets.............................................           883,947           30,310
                                                                             -----------      -----------

Property and equipment:
   Furniture and equipment............................................             7,489           22,135
   Accumulated depreciation...........................................            (7,143)         (13,128)
                                                                             -----------     ------------
     Net property and equipment.......................................               346            9,007
                                                                             -----------      -----------

Other assets:
   Patents, net.......................................................           168,891          183,063
   Other..............................................................             6,020            2,186
                                                                             -----------      -----------
     Total other assets...............................................           174,911          185,249
                                                                             -----------      -----------

        Total assets..................................................       $ 1,059,204      $   224,566
                                                                             ===========      ===========

Liabilities and stockholders' equity/(deficit)
Current liabilities:
   Accounts payable...................................................       $    85,153      $   224,102
   Accrued compensation and benefits..................................           102,431           61,437
   Accrued patent costs...............................................            33,000           33,000
   Accrued professional fees..........................................            49,300           28,300
   Other accrued liabilities..........................................            24,018           73,887
   Income taxes payable...............................................                 -            1,979
   Note payable - officers............................................            29,250           29,250
   Note payable - others..............................................                 -          180,000
                                                                             -----------      -----------
     Total current liabilities .......................................           323,152          631,955
                                                                             -----------      -----------

Stockholders' equity/(deficit):
   Common Stock, par value $0.0025: authorized shares, 50,000,000;
     Issued and outstanding shares, 24,255,151 and 2,968,906 in 2001
     and 2000, respectively...........................................            60,638            7,422
   Additional paid in capital ........................................         3,496,889        1,249,769
   Deficit accumulated during the development stage ..................        (2,821,475)      (1,664,390)
   Accumulated other comprehensive income ............................                 -             (190)
                                                                             -----------      -----------
   Total stockholders' deficit........................................           736,052         (407,389)
                                                                             -----------      -----------

        Total liabilities and stockholders' equity/(deficit)..........       $ 1,059,204      $   224,566
                                                                             ===========      ===========
</TABLE>

   See accompanying notes to consolidated financial statements.

                                      F2

<PAGE>


                                HEMOXYMED, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                                    Period from
                                                                                                    Feb 22, 1995
                                                              Year Ended December 31,               (inception) to
                                               --------------------------------------------------
                                                          2001             2000             1999    Dec. 31, 2001
                                                          ----             ----             ----    -------------
<S>                                               <C>               <C>              <C>            <C>
Grant revenues..................................  $         -       $         -      $     14,963   $       14,963

Operating expenses:
   Research and development.....................            -           119,374           762,349        1,336,521
   General and administrative...................      528,649            86,978           195,966          922,909
   Merger costs.................................      612,024                 -                 -          612,024
                                                  -----------       -----------      ------------   --------------
      Total operating expenses..................    1,140,673           206,352           958,315        2,871,454
                                                  -----------       -----------      ------------   --------------

Operating loss .................................   (1,140,673)         (206,352)         (943,352)      (2,856,491)
                                                  -----------       -----------      ------------   --------------

Other (income) expense:
   Interest expense.............................       30,569             1,470               408           37,814
   Interest income..............................       (3,953)              (11)           (8,706)         (37,973)
   Other (income) expense.......................       (8,325)           (9,189)          (18,014)         (35,609)
                                                  -----------       -----------      ------------   --------------
     Total other (income) expense...............       18,291            (7,730)          (26,312)         (35,768)
                                                  -----------       -----------      ------------   --------------

Loss before income taxes........................   (1,158,964)         (198,622)         (917,040)      (2,820,723)
Provision for income taxes......................       (1,879)               20             1,721              552
                                                  -----------       -----------      ------------   --------------
Net loss........................................  $(1,157,085)      $. (198,642)      $  (918,761)  $   (2,821,275)
                                                  ===========       ===========      ============   ==============

Basic & diluted:
   Net loss per share...........................      $ (0.06)          $ (0.01)          $ (0.05)         $ (0.16)
   Weighted average shares......................   20,050,994        18,943,906        18,820,632       18,054,684
</TABLE>

See accompanying notes to consolidated financial statements

                                      F3

<PAGE>



                                HEMOXYMED, INC.
                          (A DEVELOPMENT STAGE COMPANY)
            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY/(DEFICIT)
     FOR THE PERIOD FROM FEBRUARY 22, 1995 (INCEPTION) TO DECEMBER 31, 2001

<TABLE>
<CAPTION>
                                                                                             Deficit
                                                                                           Accumulated      Accum.
                                                                            Additional      During the      Other          Total
                                                                Common        Paid in      Development      Comp.       Stockholders
                                                  Shares        Stock         Capital         Stage         Income         Equity
                                                  ------        -----         -------         -----         ------         ------

<S>                                              <C>         <C>           <C>            <C>              <C>         <C>
Issuance of stock for cash....................     805,000   $     2,013   $    (1,208)   $          -     $     -     $       805
Net loss for the period February 22, 1995
   (inception) to December 31, 1995...........           -             -             -          (2,644)          -          (2,644)
                                               -----------   -----------   -----------    ------------     -------     -----------
Balance at December 31, 1995..................     805,000         2,013        (1,208)         (2,644)          -          (1,839)
Issuance of stock for cash....................     195,000           488          (293)              -           -             195
Net loss for 1996.............................           -             -             -          (7,039)          -          (7,039)
                                               -----------   -----------   -----------    ------------     -------     -----------
Balance at December 31, 1996..................   1,000,000         2,501        (1,501)         (9,683)          -          (8,683)
Issuance of stock for assignment of patent
   rights.....................................       6,250            16           (10)              -           -               6
Stock dividend ...............................     200,041           500          (300)           (200)          -               -
Net loss for 1997.............................           -             -             -         (20,693)          -         (20,693)
                                               -----------   -----------   -----------    ------------     -------     -----------
Balance at December 31, 1997..................   1,206,291         3,017        (1,811)        (30,576)          -         (29,370)
Issuance of stock for cash net of offering
   costs of $141,924..........................     963,690         2,408     1,156,886               -           -       1,159,294
Issuance of stock for broker services
   associated with 1998 financing.............     520,487         1,301        (1,301)              -           -               -
Net loss for 1998.............................           -             -             -        (516,411)          -        (516,411)
Foreign currency translation adjustment.......           -             -             -               -         178             178
                                                                                                                       -----------
Total comprehensive loss                                 -             -             -               -           -        (516,233)
                                               -----------   -----------   -----------    ------------     -------     -----------
Balance at December 31, 1998..................   2,690,468         6,726     1,153,774        (546,987)        178         613,691
Issuance of stock upon exercise of stock
   options....................................     228,438           571          (380)              -           -             191
Issuance of stock for services................      50,000           125        66,375               -           -          66,500
Net loss for 1999.............................           -             -             -        (918,761)          -        (918,761)
Foreign currency translation adjustment.......           -             -             -               -          55              55
                                                                                                                       -----------
Total comprehensive loss                                 -             -             -               -           -        (918,706)
                                               -----------   -----------   -----------    ------------     -------     -----------
Balance at December 31, 1999..................   2,968,906         7,422     1,219,769      (1,465,748)        233        (238,324)
Services contributed by stockholder...........           -             -        30,000               -           -          30,000
Net loss for 2000.............................           -             -             -        (198,642)          -        (198,642)
Foreign currency translation adjustment.......           -             -             -               -        (423)           (423)
                                                                                                                       ------------
Total comprehensive loss                                 -             -             -               -           -        (199,065)
                                               -----------   -----------   -----------    ------------     -------     -----------
Balance at December 31, 2000..................   2,968,906   $     7,422   $ 1,249,769    $ (1,664,390)    $  (190)    $  (407,389)
</TABLE>

                                      F4

<PAGE>


                                HEMOXYMED, INC.
                          (A DEVELOPMENT STAGE COMPANY)
      CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY/(DEFICIT) (CONTINUED)
     FOR THE PERIOD FROM FEBRUARY 22, 1995 (INCEPTION) TO DECEMBER 31, 2001

<TABLE>
<CAPTION>
                                                                                             Deficit
                                                                                           Accumulated      Accum.
                                                                            Additional      During the      Other          Total
                                                                Common        Paid in      Development      Comp.       Stockholders
                                                  Shares        Stock         Capital         Stage         Income         Equity
                                                  ------        -----         -------         -----         ------         ------

<S>                                             <C>          <C>           <C>            <C>              <C>         <C>
Services contributed by stockholder...........           -             -        27,500              -            -          27,500
Issuance of stock upon exercise of stock
   options....................................      65,268           163           (97)             -            -              66
Issuance of stock to employees and
   consultants................................     300,000           750       104,280              -            -         105,030
Issuance of stock to Prism Ventures and
   HEMOXymed officers associated with the
   HEMOXymed reorganization per the
   HEMOXymed, Inc. - Prism Ventures, LLC
   agreement..................................  15,975,000        39,938       (38,341)             -            -           1,597
Exchange of stock per the HEMOXymed, Inc.
   Ophidian Pharmaceuticals, Inc. merger
   agreement..................................   1,199,932         3,000       402,386              -            -         405,386
Reduction of outstanding shares per the
   exchange ratio of the HEMOXymed, Inc. -
   Ophidian Pharmaceuticals, Inc. merger
   agreement..................................    (309,191)         (773)          773              -            -               -
Issuance of stock associated with the $2.0
   million private financing  on November
   15, 2001 net of offering costs of             4,055,236        10,138     1,750,619              -            -       1,760,757
   $241,861...................................
Net loss for 2001.............................           -             -             -     (1,157,085)           -      (1,157,085)
Foreign currency translation adjustment.......           -             -             -              -          190             190
                                                                                                                       -----------
Total comprehensive loss                                 -             -             -              -            -      (1,156,895)
                                                ----------   -----------   -----------    -----------      -------     -----------
Balance at December 31, 2001..................  24,255,151   $    60,638   $ 3,496,889    $(2,821,475)     $     -     $   736,052
                                                ==========   ===========   ===========    ===========      =======     ===========
</TABLE>

See accompanying notes to consolidated financial statements

                                      F5

<PAGE>

                                HEMOXYMED, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                                          Period from
                                                                  Year Ended December 31,                 Feb. 22, 1995
                                                       ----------------------------------------------     (inception) to
                                                            2001            2000            1999          Dec. 31, 2001
                                                       ----------------------------------------------    ------------------
<S>                                                    <C>              <C>              <C>               <C>
Operating activities
Net loss                                               $ (1,157,085)    $  (198,642)     $ (918,761)       $  (2,821,275)
Adjustments to reconcile net loss to net cash used in
   operating activities:
    Depreciation and amortization ....................       19,671          15,221           8,932               52,334
    Issuance of stock for services....................      135,000               -          66,500              201,500
    Non-cash merger cost..............................      405,386               -               -              405,386
    Issuance of stock for interest on loans...........       20,000               -               -               20,000
    Services contributed by shareholder ..............       27,500          30,000               -               57,500
    Changes is operating assets and liabilities ......
      Prepaids and other current assets ..............      (18,229)         34,919          18,264              (25,004)
      Accounts payable................................     (138,949)         (8,853)        183,708               85,153
      Accrued compensation and benefits...............       40,994          18,662          (3,599)             102,431
      Other accrued liabilities ......................       54,531          77,859        (125,689)             156,717
      Income taxes payable ...........................       (1,979)           (114)          1,404                    -
                                                       ------------     -----------      ----------        --------------
Net cash used in operating activities ................     (613,160)        (30,948)       (769,241)          (1,765,258)
                                                       ------------     -----------      ----------        --------------

Investing activities
Purchases of property and equipment ..................            -               -         (19,161)             (26,110)
Purchase of patents ..................................            -        (158,331)              -             (158,325)
Other ................................................       (3,834)            151             372              (16,077)
                                                       ------------     -----------      ----------        --------------
Net cash used for investing activities................       (3,834)       (158,180)        (18,789)            (200,512)
                                                       ------------     -----------      ----------        --------------

Financing activities
Proceeds from issueance of common stock, net of
   offering costs ....................................    1,274,810               -             191            2,435,295
Proceeds from notes payable ..........................      177,065         180,000          29,250              386,315
                                                       ------------     -----------      ----------        --------------
Net cash provided by financing activities.............    1,451,875         180,000          29,441            2,821,610
                                                       ------------     -----------      ----------        --------------

Effects of exchange rates on cash and cash
   equivalents........................................          527             258           2,131                3,103
                                                       ------------     -----------      ----------        --------------
Increase (decrease) in cash and cash equivalents .....      835,408          (8,870)       (756,458)             858,943
                                                       ------------     -----------      ----------        --------------

Cash and cash equivalents at beginning of period......       23,535          32,405         788,863                    -
                                                       ------------     -----------      ----------        --------------
Cash and cash equivalents at end of period............  $   858,943     $    23,535      $   32,405         $    858,943
                                                       ============     ===========      ==========        =============

Supplemental cash flow information
Interest paid ........................................  $         -     $         -      $      750         $      5,548
Non-cash financing activities
Issuance of common stock for consulting fees related
   to common stock financing..........................  $    90,000     $         -      $        -         $     90,000
Issuance of common stock as payment of note
   payable............................................  $   180,000     $         -      $        -         $    180,000
</TABLE>

See accompanying notes to consolidated financial statements.

                                      F6

<PAGE>

                                 HEMOXYMED, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

Business
HEMOXymed, Inc. ("HEMOXymed" or the "Company") is a development stage
biopharmaceutical company incorporated in February 1995 to conduct research and
development aimed at improving tissue oxygenation by increasing oxygen release
from hemoglobin to provide therapeutic value to patients with serious, although
unmet or underserved, medical needs. Due to lack of financing, HEMOXymed did not
conduct any research and development activities from September 2000 through
December 2001. Following a $2.0 million financing in November 2001, the Company
resumed research and clinical development activities in January 2002.

On August 21, 2001, HEMOXymed and Ophidian Pharmaceuticals, Inc. ("Ophidian"),
executed an Agreement and Plan of Merger (the "Plan"), whereby Ophidian acquired
100% of the outstanding equity securities of HEMOXymed from its stockholders.
The Plan provided for the issuance and exchange of approximately 19,000,000
shares of Ophidian's common stock for the outstanding common stock of HEMOXymed,
which shares of common stock of Ophidian were "restricted securities" under the
Securities Act of 1933, as amended. The board of directors and management of the
resultant company are that of HEMOXymed.

Prior to the completion of the Plan, there were 1,158,245 outstanding shares of
common stock of Ophidian. Per the Plan, pre-closing shareholders of Ophidian
received a stock dividend of 0.036046. Giving effect to the issuance of the
shares outlined above, immediately following the merger there were 20,199,915
issued and outstanding shares of common stock of Ophidian. The pre-closing
shareholders of Ophidian were entitled to a cash dividend of the pre-close cash
balances of Ophidian less any cash used to pay pre-close liabilities. That
dividend was paid on December 14, 2001 in the amount of $266,393.

This transaction is commonly referred to as a "reverse acquisition" where 100%
of HEMOXymed's stock was effectively exchanged for a controlling interest in a
publicly held "shell" corporation, Ophidian. For financial accounting purposes,
this transaction has been treated as the issuance of stock for the net monetary
assets of Ophidian, with no goodwill or other intangible assets recorded. The
purchase price was valued at $405,386 and was immediately expensed. There were
also transaction costs of $206,638 which were expensed at the date of the
merger.

Because this transaction is being accounted for as a "reverse acquisition"
whereby HEMOXymed acquired 100% of Ophidian, the historical operating results
prior to August 21, 2001 are those of HEMOXymed. Prior to the merger, Ophidian's
year-end was September 30th. The resultant company has chosen to change its
year-end to that of HEMOXymed, which is December 31st.

On July 29, 2001, in contemplation of the merger, HEMOXymed issued 14,700,000
shares of common stock at a price of $0.0001 to Prism Ventures, LLC as part of a
reorganization of HEMOXymed, per the terms of the Prism Ventures, LLC -
HEMOXymed, Inc. agreement dated September 29, 2000.

Ophidian was incorporated November 10, 1989, and commenced business operations
on January 17, 1990. Primary business efforts were directed at the design,
development and commercialization of cost-effective therapeutic and diagnostic
products for human and animal use, focusing principally on products for the
prevention and treatment of infectious diseases. On May 26, 2000, due to lack of
financing, Ophidian's Board of Directors took action to cease operations as a
going concern, reducing Ophidian's workforce 80% by laying off research,
development and operations personnel. From August 2000 to the merger in August
2001, Ophidian retained only one Board-appointed administrative staff member to
execute operations. On August 28, 2000, Ophidian's Board of Directors adopted
resolutions to approve an Asset Purchase Agreement and to effect the subsequent
dissolution of Ophidian. On September 1, 2000, Ophidian executed an asset
purchase agreement to sell substantially all of its fixed assets,

                                      F7

<PAGE>

and this sale closed on November 16, 2000. The bulk of the proceeds of this
asset sale were distributed to stockholders in April 2001. Since May 26, 2000,
Ophidian has not conducted any active business operations.

On November 14, 2001 the merged-company name was changed from Ophidian
Pharmaceuticals, Inc. to HEMOXymed, Inc. The following is a description of the
Company's more significant accounting policies:

Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its subsidiaries, HEMOX Therapeutics, SARL and Ophidian Holdings, Inc. In 2001,
HEMOX Therapeutics, SARL was dissolved as research and development activities in
France were terminated. The Company established HEMOXymed Europe, SAS in Lyon,
France in February 2002. All significant intercompany balances and transactions
have been eliminated.

Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

Foreign Currency
Foreign currency transactions and financial statements are translated into U.S.
dollars following the provisions of Statement of Financial Accounting Standards
(SFAS) No. 52, "Foreign Currency Translation." Accordingly, assets and
liabilities of foreign subsidiaries are translated into U.S. dollars at exchange
rates in effect at year-end. Revenues and expenses are translated at average
rates in effect during the year. The effects of exchange rate changes on the
Company's assets and liabilities are reflected as a separate component of
comprehensive income. Foreign currency exchange gains in 2001, 2000 and 1999 are
$8,325, $9,189 and $18,014, respectively and are included in the consolidated
statements of operations.

Cash and Cash Equivalents
The Company considers liquid investments with maturities of three months or less
when purchased to be cash equivalents. Substantially all cash equivalents are
held in a short-term money market account with a bank.

Property and Equipment
Property and equipment is stated at cost. Depreciation is provided using the
straight-line method over periods ranging from three to five years. Depreciation
expense was $5,499, $6,784 and $6,920 for the years ended December 31, 2001,
2000 and 1999, respectively.

Derivatives
During June 1998, the Financial Accounting Standards Board (FASB) issued
statement of Financial Accounting Standards (SFAS) No. 133, Accounting for
Derivatives and Hedging Activities, and in June 2000 issued SFAS 138, Accounting
for Certain Derivative Instruments and Certain Hedging Activities, an amendment
of SFAS 133. These new standards require companies to record derivative
financial instruments on the balance sheet as assets or liabilities, measured at
fair value. Gains or losses resulting from changes in the fair value of those
derivatives would be accounted for based on the use of the derivative and
whether the instrument qualified for hedge accounting, as defined in SFAS 133
and 138. The Company was required to adopt the provisions of SFAS 133 and 138 on
January 1, 2001, the first day of fiscal 2001. The Company currently has no
derivative financial instruments subject to the provisions of this statement.

Long-Lived Assets
Long-Lived assets to be held and used are reviewed for impairment whenever
events or changes in circumstances indicate the related carrying amount may not
be recoverable. When required, impairment losses on assets to be held and used
are recognized based on the excess of the assets carrying value over the fair
value of the asset less cost to sell. No impairment losses were recorded during
the period presented. There were no assets held for sale at December 31, 2001.

                                      F8

<PAGE>

Patents
Patents are stated at cost. Amortization is provided using the straight-line
method over the life of the patents, approximately 13 years. Amortization
expense was $14,172, $8,267 and $0 for the years ended December 31, 2001, 2000
and 1999, respectively.

Stock-Based Compensation
The Company recognizes expense for stock-based compensation in accordance with
the provisions of Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employees, and related Interpretations. Accordingly,
compensation cost is recognized for the excess of the estimated fair value of
the stock at the grant date over the exercise price, if any. The Company
recorded compensation expense of $105,000 in the year ended December 31, 2001
for stock issued to employees at less than fair market value. Disclosures
regarding alternative fair value measurement and recognition methods prescribed
by Financial Accounting Standards Board Statement No. 123, Accounting for
Stock-Based Compensation, are presented in Note 5.

Revenue Recognition
The Company received a grant of $14,963 in 1999 from L'Agence Nationale De
Valorisation De La Recherche in Paris, France. Grant revenues are recognized as
the related work is performed.

Income Taxes
Income taxes are accounted for using the liability method. Deferred tax assets
and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases and operating loss carryforwards.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.

Net Loss Per Share
Basic net loss per share is computed based upon the weighted average number of
common shares outstanding during the period. The Company's diluted net loss per
share is the same as its basic net loss per share because all stock options,
warrants, and other potentially dilutive securities are antidilutive and,
therefore, excluded from the calculation of diluted net loss per share. In 2001,
HEMOXymed issued 15,975,000 shares of common stock as part of a reorganization
of HEMOXymed. Generally accepted accounting principles require that for the
purpose of calculating earnings (loss) per share, the effect of the
reorganization is to be retroactively applied to all periods presented.

Basis of Presentation
The Company has experienced losses since inception and had a working capital
balance of $560,795 at December 31, 2001. These circumstances indicate the
Company may be unable to continue as a going concern. HEMOXymed raised $2
million of funding in November 2001. This funding has allowed the Company to
resume clinical development activities in France and to actively pursue
additional funding. The Company's ability to continue as a going concern is
dependent on obtaining adequate funding and ultimately achieving profitable
operations. The accompanying financial statements have been prepared assuming
the Company will continue as a going concern and do not include any adjustments
that may result from the outcome of this uncertainty.

2. OPHIDIAN MERGER WITH HEMOXYMED
Pro forma condensed consolidated statements of operations for the years ended
December 31, 2001 and 2000 are included below. These statements give effect to
the acquisition of HEMOXymed by Ophidian and related transactions as if such
transactions had occurred on January 1, 2000 for the periods presented.

                                      F9

<PAGE>

<TABLE>
<CAPTION>
                                                                          December 31,
                                                                 ---------------------------------
                                                                      2001             2000
                                                                      ----             ----
<S>                                                               <C>                 <C>
Revenues:
   Sale of patents............................................    $         0         $ 1,300,000
   Other revenue..............................................              0             368,534
                                                                  -----------       -------------
      Total revenues..........................................              0           1,668,534
                                                                  -----------       -------------

Operating expenses:
   Research and development...................................              0           1,291,964
   General and administrative.................................        626,985           1,463,127
   Cost of patents............................................              0              83,481
   Loss on early extinguishment of debt.......................              0             361,506
   Impairment charge..........................................        (57,124)          2,066,907
                                                                  -----------       -------------
      Total operating expenses................................        569,861           5,266,985
                                                                  -----------       -------------

Operating loss ...............................................       (569,861)         (3,598,451)

Total other (income) expense..................................        (20,744)             56,322
                                                                  -----------       -------------

Loss before income taxes......................................       (549,117)         (3,654,773)
Provision for income taxes....................................         (1,879)                 20
                                                                  -----------       -------------
Net loss......................................................    $  (547,238)      $  (3,654,793)
                                                                  ===========       =============

Basic & Diluted:
   Net loss per share.........................................        $ (0.02)             $(0.18)
   Weighted average shares....................................     24,255,151          19,834,647
</TABLE>

The pro forma financial statements have eliminated merger costs since such costs
are directly attributable to the transaction and do not have an on-going impact.

3. ROYALTY AGREEMENT

In 1996, the Company entered into a royalty agreement with an assignor
("Assignor") as consideration for the assignment of his rights and title to
certain patents, trade secrets and scientific assets. The Assignor is to receive
royalty payments in the amount of one percent of the net income of the Company
resulting from the sale of products utilizing the assigned patents, trade
secrets or scientific assets, up to $1 million. After the Assignor has received
royalty payments of $1 million, he is to receive royalty payments in the amount
of one-half of one percent of the net income of the Company, until the Assignor
has received an aggregate of $2 million. As of December 31, 2001, no royalty
liability has been accrued and no payments have been made.

4. COMMITMENTS

HEMOXymed entered into operating leases to rent office and laboratory facilities
beginning in January 2002. Certain facility leases contain renewal provisions.
Future minimum lease payments under non-cancelable operating leases are:

Year                                                 Amount
----                                                 ------
2002 .............................................  $  38,488
2003 and thereafter ..............................          -
                                                    ---------
Total minimum lease payments......................  $  38,488
                                                    ---------

Rental expenses under operating leases totaled $0, $0 and $16,648 in the years
ended December 31, 2001, 2000 and 1999, respectively.

                                      F10

<PAGE>

5. STOCKHOLDERS' EQUITY

COMMON STOCK

As disclosed in Note 1, on August 21, 2001, HEMOXymed and Ophidian executed an
Agreement and Plan of Merger whereby Ophidian acquired 100% of the 19,309,174
outstanding shares of common stock of HEMOXymed from its stockholders in
exchange for 19,000,000 shares of Ophidian common stock. Giving effect to all
merger related stock transactions, immediately following the merger there were
20,199,915 issued and outstanding shares of common stock of Ophidian.

Periodically, the Company has issued shares of common stock in exchange for
services provided by stockholders and others. These issuances have been recorded
at their estimated fair value at the time of the respective transactions and
corresponding amounts have been reflected as compensation expense in the
accompanying consolidated statements of operations.

In 1997, the Company's Board of Directors declared a stock dividend of .198801
shares of common stock for every one share of common stock outstanding on April
20, 1997. All share activity before the split and all stock option data have
been restated to reflect the stock split.

STOCK OPTION PLANS

At the merger date of August 21, 2001, both HEMOXymed and Ophidian had stock
option plans in effect. Since Ophidian was the legal acquirer, the Ophidian
securities including the stock option plans survived the merger and the
Hemoxymed securities and stock option plans were terminated. Both pre-merger
companies stock option plans are discussed below. For the purposes of this
footnote, "Pre-merger Hemoxymed" is the company that merged into Ophidian,
defined here as "Pre-merger Ophidian". It is the stock option plans and warrants
of Pre-merger Ophidian that survived the merger and were in effect at December
31, 2001.

Pre-merger Hemoxymed Stock Option Plans- terminated at merger
-------------------------------------------------------------

In 1997, Pre-merger Hemoxymed's stockholders approved the adoption of a stock
option plan for its key employees, directors, and consultants. The plan provides
for issuance of options to purchase up to 293,706 shares of common stock. At the
merger date, August 21, 2001, no options were available for new grants under the
plan. Options have been granted at the discretion of the Board of Directors at
exercise prices not less than the estimated fair value of such shares at the
date of grant, expire after ten years and vest ratably over a period of three
years.

In 1998, Pre-merger Hemoxymed's stockholders approved the adoption of a stock
option plan for its key employees, directors, and consultants. The plan provides
for issuance of options to purchase up to 300,000 shares of common stock. At the
merger date, August 21, 2001, 300,000 options were available for new grants
under the plan. As a result of the merger, this stock option plan was
terminated. Therefore, no stock options were ever issued from the 1998 Stock
Option Plan.

                                      F11

<PAGE>

A summary of stock option activity since inception of Pre-merger Hemoxymed is as
follows:

<TABLE>
<CAPTION>
                                                                            Weighted
                                                                             Average
                                                            Shares       Exercise Price
                                                       ----------------------------------

<S>                                                          <C>              <C>
Balance at Plan inception, January 30, 1997............            -          $    -
    Granted............................................      293,706            0.001
    Exercised..........................................            -            0.001
                                                             -------
Outstanding at December 31, 1997.......................      293,706            0.001

    Granted............................................            -               -
    Exercised..........................................            -               -
                                                             -------
Outstanding at December 31, 1998.......................      293,706            0.001

    Granted............................................            -               -
    Exercised..........................................     (228,438)           0.001
                                                             -------
Outstanding at December 31, 1999.......................       65,268            0.001

    Granted............................................            -               -
    Exercised..........................................            -               -
                                                             -------
Outstanding at December 31, 2000.......................       65,268          $ 0.001

    Granted............................................            -               -
    Exercised..........................................      (65,268)           0.001
                                                             -------
Outstanding at August 21, 2001                                     -               -
                                                             =======
</TABLE>

As permitted by Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation," (FAS No. 123), the Company elected to continue to
follow Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued
to Employees" (APB No. 25), in accounting for its stock option plan. Since there
were no options granted in the years ended December 31, 2001, 2000 and 1999,
there is no compensation expense to be determined based upon the fair value at
the grant date. Accordingly, there would be no change to the financial
statements contained in this annual report.

Pre-merger Ophidian Stock Option Plans- the surviving stock option plans
-------------------------------------------------------------------------

The pre-merger Ophidian 1998 Stock Option plan is the surviving stock option
plan. At December 31, 2001 there were no options outstanding and 41,759 options
available for grant.

STOCK WARRANTS

In 1994, Ophidian granted a consultant, Burrill & Craves, stock warrants as a
performance incentive related to their business development services. The stock
warrants grant an option to purchase 12,500 shares of the Company's common stock
at a price of $36 per share exercisable until May 1, 2004.

In connection with Ophidian's initial public offering in 1998, the Company
issued warrants for the purchase of 241,637 shares of common stock. The number
of warrants increased to 254,431 in 1999 because anti-dilution provisions were
triggered when certain warrants were issued on June 7, 1999. Each warrant
entitles the registered holder thereof to purchase, at any time commencing May
7, 1999, until May 7, 2003, one share of common stock at a price of $55.62 per
share. Commencing May 7, 2000, the warrants became subject to redemption by the
Company, in whole, but not in part, at $.80 per warrant, provided that the
average closing bid price the common stock as

                                      F12

<PAGE>

reported on Nasdaq SmallCap equals or exceeds $117.12 per share for any 20
trading days within a period of 30 consecutive trading days ending on the fifth
trading day prior to the date of the notice of redemption.

6.  INCOME TAXES

Income taxes payable of $1,979 at December 31, 2000 were for foreign taxes
payable by HEMOXymed's subsidiary HEMOX Therapeutics, SARL. These income taxes
were not required to be paid as a result of the dissolution of HEMOX
Therapeutics, SARL in 2001.

At December 31, 2001, for federal tax purposes the Company has net operating
loss carryforwards of approximately $2,500,000 which expire in varying amounts
from 2007 through 2021. In addition, the Company has research and other tax
credit carryforwards of approximately $907,000. Valuation allowances have been
recorded to offset the net deferred tax assets attributable to all of these
carryforwards due to uncertainty regarding their realization.

The types of temporary differences between tax bases of assets and liabilities
and their financial reporting amounts that give rise to the deferred tax asset
(liability) and their approximate tax effects are as follows at December 31:

<TABLE>
<CAPTION>
                                                               2001                              2000
                                                  --------------------------------  -----------------------------
                                                    Temporary           Tax          Temporary           Tax
                                                   Difference         Effect         Difference         Effect
                                                   ----------         ------         ----------         ------

<S>                                              <C>               <C>               <C>             <C>
Expenses not currently deductible                $    181,000      $       72,000    $   236,000     $    97,000
Acquisition costs                                     571,000             228,000              -               -
Net operating loss carryforwards                    2,500,000             988,000      1,394,000         572,000
Research and AMT credit carryforwards                                     907,000                         36,000
                                                                   --------------                    -----------
Deferred tax assets, net                                           $    2,195,000                    $   705,000
Valuation allowance                                                $(   2,195,000)                   $  (705,000)
                                                                   --------------                    -----------
                                                                   $            -                    $         -
                                                                   ==============                    ===========
</TABLE>

Utilization of the net operating losses and credits may be subject to an annual
limitation due to the ownership change limitations provided by the Internal
Revenue Code. The annual limitation may result in the expiration of net
operating losses and credits before utilization.

7. RELATED PARTY TRANSACTIONS

The Company had unsecured notes payable of $29,250 to a director and two former
directors at December 31, 2001 and 2000. The notes accrue interest at a rate of
five percent per annum and are payable on demand. Interest expense related to
these notes was $1,463 and $1,467 for the years ended December 31, 2001 and
2000, respectively.

During 2001 and 2000, two stockholders of the Company contributed services
without remuneration to the Company valued at $27,500 and $30,000, respectively,
which have been recorded as expense in the consolidated statements of
operations.

8. RECENT ACCOUNTING PRONOUNCEMENTS

In June 2001, the FASB issued Statement No. 141, "Business Combinations" (SFAS
No. 141) and No. 142, "Goodwill and Other Intangible Assets" (SFAS No. 142),
effective for fiscal years beginning after December 15, 2001. Under the new
rules, goodwill and other intangible assets deemed to have indefinite lives will
no longer be amortized but will be subject to annual impairment tests in
accordance with the Statements. Other intangible assets will continue to be
amortized over their useful lives. The Company will adopt these new accounting
standards beginning the first quarter of fiscal 2002. We are currently assessing
the impact of this statement on the Company, however, we do not anticipate this
statement to have a material impact on the consolidated financial position or
results of operations of the Company.

In August 2001, the FASB issued Statement 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets ("SFAS No. 144"). The Statement supercedes
Statement 121, "Accounting for the Impairment of Long-Lived

                                      F13

<PAGE>

Assets and for Long-Lived Assets to be Disposed of" and 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" for segments of a business to be disposed of. SFAS No.
144 retains the requirements of SFAS No. 121 relating to the recognition and
measurement of an impairment loss and resolves certain implementation issues
resulting from SFAS No. 121. This Statement is effective for fiscal years
beginning after December 15, 2001. We are currently assessing the impact of
this statement on the Company, however, we do not anticipate this statement to
have a material impact on the consolidated financial position or results of
operations of the Company.

9. BUSINESS SEGMENT AND OTHER INFORMATION

The Company operates in one business segment: the research and development of
improved tissue oxygenation.

Information regarding the Company's operations in different geographic areas is
set forth below.

<TABLE>
<CAPTION>
                                                                  Year ended December 31,
                                                    ------------------------------------------------
                                                        2001               2000             1999
                                                        ----               ----             ----
<S>                                                 <C>                <C>               <C>
Grant Revenues:
    United States                                   $         -        $         -       $         -
    France                                                    -                  -            14,963
                                                    -----------        -----------       -----------
                                                    $         -        $         -       $    14,963
                                                    ===========        ===========       ===========

Operating income/(loss):
    United States                                   $(1,132,517)       $  (206,101)      $  (946,223)
    France                                               (8,156)              (251)            2,871
                                                    -----------        -----------       -----------
                                                    $(1,140,673)       $  (206,352)      $  (943,352)
                                                    ===========        ===========       ===========

Identifiable assets:
    United States                                   $   200,261        $   186,988       $    41,115
    France                                                    -             14,043            19,557
                                                    -----------        -----------       -----------
                                                        200,261            201,031            60,672
Corporate assets                                        858,943             23,535            32,405
                                                    -----------        -----------       -----------
                                                    $ 1,059,204        $   224,566       $    93,077
                                                    ===========        ===========       ===========
</TABLE>

10. QUARTERLY FINANCIAL DATA (UNAUDITED)

The following tables set forth selected quarterly financial information of
HEMOXymed for the years ended December 31, 2001 and 2000. The operating results
are not necessarily indicative of results for any future period.

<TABLE>
<CAPTION>
Year 2001                                  Mar. 31           Jun. 30          Sep. 30           Dec. 31
---------                                  -------           -------          -------           -------
<S>                                      <C>               <C>              <C>               <C>
    Revenues                             $         -       $         -      $         -       $         -
    Net income (loss)                        (52,278)         (169,480)        (734,545)         (200,782)
    Net income (loss) per share          $     (0.00)      $     (0.01)     $     (0.04)      $     (0.01)

Year 2000                                  Mar. 31           Jun. 30          Sep. 30           Dec. 31
---------                                  -------           -------          -------           -------

    Revenues                             $         -       $         -      $         -       $         -
    Net income (loss)                        (18,765)          (48,456)         (49,350)          (82,071)
    Net income (loss) per share          $     (0.00)      $     (0.00)     $     (0.00)      $     (0.00)
</TABLE>

                                      F14