<PAGE>

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

 ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

                        Commission file number 333-09349

                             AVAX TECHNOLOGIES, INC.
                 (Name of small business issuer in its charter)

               DELAWARE                                13-3575874
      (State or other jurisdiction          (I.R.S. Employer Identification No.)
   of incorporation or organization)

          4520 MAIN STREET
             SUITE 930
           KANSAS CITY, MO                               64111
(Address of principal executive offices)               (Zip Code)

                    Issuer's telephone number: (816) 960-1333

       Securities registered under Section 12(b) of the Exchange Act: None

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

                     COMMON STOCK, PAR VALUE $.004 PER SHARE
                                (Title of class)

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

Indicate by check mark if disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained herein and, to the best of the
registrant's knowledge, will not be contained in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or by any
amendment to this Form 10-KSB. / /

The issuer's revenues for the period ended December 31, 2000 were $112,459.

As of March 27, 2001, 19,210,843 shares of the registrant's common stock, par
value $.004 per share, were outstanding or are issuable upon conversion of the
outstanding shares of Series C Preferred Stock. The aggregate market value of
the voting and common equity held by non-affiliates (assuming 100% conversion of
the outstanding shares of preferred stock) computed by reference to the reported
closing price of the common stock on the Nasdaq Stock Market, on March 27, 2001,
was $16,779,908. Shares of common stock, beneficially owned by each executive
officer and director and each person who beneficially owns 10% or more of the
outstanding shares of common stock, have been excluded, in that such persons may
be deemed to be affiliates of the Company. This determination of affiliate
status is not necessarily conclusive.

Documents incorporated by reference: The information required by Part III of
Form 10-KSB is incorporated herein by reference to the registrant's definitive
Proxy Statement relating to its 2001 Annual Meeting of Stockholders, which will
be filed with the Commission within 120 days after the end of the registrant's
fiscal year.

Transitional Small Business Disclosure Format:  Yes / /    No /X/


<PAGE>



                             AVAX TECHNOLOGIES, INC.

                              INDEX TO FORM 10-KSB

<TABLE>
<CAPTION>

                                     PART I

<S>        <C>                                                                                                   <C>
Item 1.    Description of Business................................................................................1
Item 2.    Description of Property...............................................................................21
Item 3.    Legal Proceedings.....................................................................................21
Item 4.    Submission of Matters to a Vote of Security Holders...................................................21

                                     PART II

Item 5.    Market for Common Equity and Related Stockholder Matters..............................................22
Item 6.    Management's Discussion and Analysis of Financial Condition and Plan of Operation.....................23
Item 7.    Financial Statements..................................................................................25
Item 8.    Changes In and Disagreements with Accountants on Accounting and Financial Disclosure..................25

                                    PART III

Item 9.    Directors, Executive Officers, Promoters and Control Persons;
           Compliance with Section 16(a) of the Exchange Act.....................................................26
Item 10.   Executive Compensation................................................................................26
Item 11.   Security Ownership of Certain Beneficial Owners and Management........................................26
Item 12.   Certain Relationships and Related Transactions........................................................26
Item 13.   Exhibits and Reports on Form 8-K......................................................................26

Signatures.......................................................................................................27
</TABLE>


<PAGE>

           CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

         In this Report, AVAX Technologies, Inc. ("AVAX" or the "Company") makes
statements that plan for or anticipate the future. These forward-looking
statements include statements about the future of biotechnology products and the
biopharmaceutical industry, statements about AVAX's future business plans and
strategies, and other statements that are not historical in nature. These
forward-looking statements are based on the Company's current expectations. Many
of these statements are found in the "Description of Business" section beginning
on page 1.

         Forward-looking statements may be identified by words or phrases such
as "believe," "expect," "anticipate," "should," "planned," "may," "estimated"
and "potential." The Private Securities Litigation Reform Act of 1995 provides a
"safe harbor" for forward-looking statements. In order to comply with the terms
of the safe harbor, and because forward-looking statements involve future risks
and uncertainties, listed below are a variety of factors that could cause actual
results and experience to differ materially from the anticipated results or
other expectations expressed in the Company's forward-looking statements. These
factors might include:

         o    AVAX's history of operating losses, its increasing cash
              requirements, its need to raise more money during calendar year
              2002, and the uncertainty of the Company's future profitability.

         o    Uncertainty about whether the Company's AC Vaccine technology can
              be developed to produce safe, effective and commercially viable
              products, and if so, whether the Company's AC Vaccine products
              will be commercially accepted and profitable.

         o    Uncertainty about whether the Company's products will successfully
              complete the long, complex and expensive clinical trial and
              regulatory approval process for approval of new drugs in the U.S.,
              including the increased uncertainties created by the FDA hold on
              the M-Vax and O-Vax clinical trials recently disclosed.

         o    The expenses, delays, uncertainties and complications typically
              encountered by development stage biopharmaceutical businesses,
              many of which are beyond the Company's control.

         o    The Company's need to expand its manufacturing facilities or
              increase its dependence on third parties to manufacture and
              distribute its products.

         o    The Company's financial and development obligations and its
              responsibility to meet requisite research funding levels under its
              license and research agreements in order to protect AVAX's rights
              to its products and technologies.

         o    The Company's difficulty or inability to obtain or defend its
              patents, or operate without infringing upon the rights of others.

         o    The Company's difficulty or inability to compete with other
              companies, research institutes, hospitals and universities that
              are developing and producing products and technologies similar to
              its own.

         o    Each of the other  factors  discussed in this Report under
              Item 1 - "Description of Business - Risk Factors."


<PAGE>


                             AVAX TECHNOLOGIES, INC.

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

GENERAL

         AVAX is a development stage biotechnology company with international
operations, specializing in the development and commercialization of
individualized therapies and other novel products and technologies for the
treatment of cancer and other life-threatening diseases. The Company's lead
development program is a patented autologous cell technology (AC Vaccine) that
attempts to stimulate a patients own immune system to recognize, contain and
eliminate cancer cells. AVAX is based in Kansas City, Missouri, with operations
in Philadelphia, Pennsylvania, Rennselaer, New York, Paris and Lyon, France and
Melbourne, Australia.

         In 1995, AVAX identified research being conducted by Dr. David Berd, an
oncologist and professor at Thomas Jefferson University in Philadelphia, and
licensed the rights to Dr. Berd's research. Since then, the Company has licensed
other medical technologies (products and processes) developed elsewhere, just as
it did with Dr. Berd's research. In April 2000 the Company began leasing
research laboratory facilities in Rennselaer, New York and initiated its own
research to supplement that being done through research agreements with several
universities.

         In August 2000, the Company acquired Genopoietic S.A. and its corporate
affiliate ("Genopoietic"), based in Paris, France, which develops cell and
gene-based therapies in collaboration with Pierre et Marie Curie University
(UPMC) and Centre National de la Recherche Scientifique (CNRS). Through this
acquisition, AVAX is developing a gene therapy technology based on the thymidine
kinase (TK) gene to induce bone marrow and solid organ transplantation
tolerance, for the treatment of cancer and other indications; and autologous
chondrocytes for the repair of damaged cartilage.

         AVAX is a typical development stage biotech company in that it is not
currently generating any material revenue from its proposed products, and has
not yet made a profit.

         The Company is primarily focusing its efforts on the development of
immunotherapies for the treatment of cancer. Although, many different types of
drugs are used to treat a variety of cancers, no one drug has been found to be a
cure for the disease. Given the need for new effective treatments for cancer, a
drug that effectively treats cancer could have a large market potential.
Surgery, in many cases is the first treatment performed on cancer patients, and,
if a treatment following surgery were to prove broadly applicable and safe, its
market potential could be significant. In addition, such a treatment would
enable the health care system to realize significant overall cost savings due to
a reduction in the number of cases of recurrent disease requiring
hospitalization and ongoing clinical and home care.

         Historically, chemotherapies have been the only accepted post-surgical
treatment for cancer. Chemotherapy is the prevention or treatment of disease by
administering chemical agents. Alternatively, immunotherapy, which is a rapidly
expanding segment of cancer therapy research, is the treatment of disease or
infection by stimulating the body's immune system through a process of
immunization. When a person is immunized for a particular disease or infection,
that person is injected with portions of or all of the disease agent itself,
which stimulates the body's immune system to recognize and fight the foreign
agent. In this way, he or she builds up an immunity to the disease or infection.
Immunotherapies that are being developed to treat cancer are intended to act in
the same way.


                                       1
<PAGE>

         A cancer cell, in the most simple terms, is an abnormal cell that the
body itself produces. Cancer is characterized by the uncontrolled growth and
spread of these abnormal cells that escape from the control of the body's immune
system. Because your body itself produces these abnormal cells, your immune
system does not recognize the cancer cells as foreign, and therefore, scientists
believe, does not respond by attacking and destroying the abnormal cells. Cancer
cells that escape an immune system attack can then spread throughout the body by
a variety of means. Consequently, the cancer cells invade and destroy healthy
tissue, which can ultimately lead to a person's death if untreated.

         Cancers, composed of either solid tumors or blood-borne cancerous
cells, tend to spread over time to other tissues and organs in the body. Cancer
may be diagnosed at any stage of the disease, from very early (best prognosis)
to very late (worst prognosis). When cancer is detected early and has not yet
spread to other organs and tissues, surgical removal of the tumor is often
effective. While this treatment is effective in many types of cancers, in cases
in which removal of the tumor is incomplete or in which the cancer has spread,
the patient's prognosis is poor. Moreover, if the cancer is not discovered until
cancer cells from the primary tumor have already entered the blood or lymphatic
system and established new tumors at distant sites, the cells and the tumors
they form are difficult to treat with current technology. Chemotherapy and
radiation therapy have traditionally been the accepted methods of treatment in
these cases. Current chemotherapy and radiation therapy are, however, rather
crude treatments because they kill cells indiscriminately, destroying normal as
well as cancerous cells, which leads to toxic side effects and thereby limits
the usefulness of these therapies. Through its research agreements and in
conjunction with its wholly-owned subsidiary, Genopoietic, AVAX is developing a
range of treatments for cancer, particularly through the development of a novel
immunotherapy.

         The Company was incorporated in the State of New York on January 12,
1990, under the name Nehoc, Inc. On May 29, 1992, it changed its name to Appex
Technologies, Inc. On October 22, 1992, the Company merged into Walden
Laboratories, Inc. ("Walden"), a Delaware corporation, which was incorporated on
September 18, 1992. On December 27, 1995, Walden sold its former leading product
under development, an over-the-counter nutritional dietary, medicinal or
elixorative food supplement or drug and related patents and intellectual
property to a subsidiary of Interneuron Pharmaceuticals, Inc. The Company
changed its name from Walden Laboratories, Inc., to AVAX Technologies, Inc.,
effective March 26, 1996.

         AVAX's principal executive office is located at 4520 Main Street, Suite
930, Kansas City, Missouri 64111. The telephone number at that address is (816)
960-1333.

TECHNOLOGY AND PRODUCT CANDIDATES AND SERVICES

AC VACCINE TECHNOLOGY

         AVAX licensed from Thomas Jefferson University an issued U.S. patent
and certain U.S. and foreign patent applications covering a cancer vaccine
containing a cancer patient's own modified tumor cells and a method for making
and using this type of vaccine (the "TJU License"). The Company's autologous
cell vaccine ("AC Vaccine") is a vaccine made using a patient's own tumor cells,
that is designed to stimulate a patient's immune system to recognize, contain
and eliminate the cancer cells. The method for creating and using the AC Vaccine
(AC Vaccine technology) involves the removal of a patient's own tumor cells, and
then modifying the tumor cells by joining or combining them with a smaller
molecule called a hapten. Once the tumor cells have been modified (haptenized),
the hapten-modified cells are injected into the patient along with an adjuvant,
which is an agent that increases the immune response. This combination is
recognized as foreign by the body's immune system, which elicits an immune
response against the hapten-modified tumor cells. This approach is based on the
premise that if the patient has a strong immune response to the hapten-modified
tumor cells, this may be followed by the development of an immune response to
the unmodified tumor cells. In this way, the body's immune system would be
triggered to attack and eliminate what the body would now see as an intruder.


                                       2
<PAGE>

M-VAX

         The Company's leading AC Vaccine is M-Vax, which is designed as an
immunotherapy for the post-surgical treatment of stage 3 melanoma. Melanoma is a
highly malignant tumor that can spread so rapidly that it can be fatal within
months of diagnosis. The incidence of melanoma is increasing at a faster rate
than most other cancers in the U.S., Australia, northern Europe and Canada.
Although there are several causative factors, rising exposure by the general
population to UV radiation in sunlight appears to be the most significant factor
behind this increase. The National Cancer Institute estimates that the incidence
of melanoma is growing at a rate of approximately 4% annually.

         Melanoma patients may be categorized according to the following staging
system:

         o Stage 1--lesion less than 1.5mm thickness and no apparent spreading
         from primary cancer site (metastasis);

         o Stage 2--lesion greater than 1.5mm thickness and local spreading from
primary cancer site;

         o Stage 3--metastasis to regional draining lymph nodes and regional
spread from primary cancer site; and

         o Stage 4--distant metastasis.

         Historically, patients with stage 3 melanoma have been treated with a
year long regimen of alpha interferon post-surgically, which is a chemotherapy
and currently the only U.S. Food and Drug Administration ("FDA")-approved
post-surgical treatment for patients with stage 3 melanoma. In many cases
however, survival is restricted by the inability of surgery to guarantee removal
of all the tumor cells. It is highly possible for the post-surgery patient to
remain with undetected metastasis. Further, use of alpha interferon is
associated with many severe side effects, often leading to either reduction in
dosage or complete discontinuation before the full course of treatment is
completed. Due to limited efficacy and highly toxic side effects, chemotherapy
and radiation have not been widely used in the treatment of these patients.

         The Company believes that M-Vax is the first immunotherapy to suggest a
substantial increase in the survival rate for patients with stage 3 melanoma. In
earlier Phase 2 clinical trials, over 400 melanoma patients have been treated
post-surgically on an outpatient basis with M-Vax by TJU or the Company. M-Vax
was administered to patients with stage 3 melanoma, who had already had their
lymph nodes and lesions removed. In 62 patients with stage 3 melanoma in cases
in which there has been sufficient time for long-term follow-up, the five-year
survival rate was 55%. This compares with the historical post-surgical survival
rate of approximately 22%, and the published post-surgical survival rate for
treatment with high dose alpha interferon of approximately 32% in patients whom
the Company believes are comparable to those treated with M-Vax. In the over 400
patients treated by TJU or the Company in the Phase 2 clinical trials, the
Company believes that only relatively minor side effects, such as brief bouts of
mild nausea and soreness and swelling at the site of the injection, have been
observed to date.

         The FDA approved a Company-sponsored Investigational New Drug
Application ("IND") for M-Vax in 1998. The approval of the Company-sponsored IND
allowed the Company to proceed with a pivotal registration clinical trial which
is planned to involve at least 400 patients at 25 or more different investigator
locations around the country. The Company also will conduct a second
registration trial as required by the FDA. AVAX intends to use the results of
the two multi-center clinical trials, along with the results of the initial
clinical trials conducted at Thomas Jefferson University, as the basis for
filing an application for FDA approval to market M-Vax in the U.S.


                                       3
<PAGE>

         In November 1999, the Company presented nine-year follow-up data on
stage 3 melanoma patients from the Phase 2 studies of M-Vax. The data was
obtained from an ongoing study of a group of 71 patients with advanced skin
cancer who were cancer-free two years following treatment with M-Vax, and then
monitored for up to an additional 7.8 years. The median follow-up time as of
November, 1999 was 5.3 years. Dr. Berd began studies of M-Vax in 1989. At the
time M-Vax was administered, 39 of the 71 patients were deemed to have little
chance of long-term survival because their cancer had spread to more than one
lymph node. Of those 71 patients, 49 survived 5 years or more, of which 44 (or
approximately 89%) were still alive at November 1999. The other 22 patients had
been monitored for less than 5 years as of November 1999. On the basis of
Kaplan-Meier estimates, the projected overall 9-year survival rate for the
entire group is approximately 85%. No serious or long-term toxic effects of
M-Vax were observed in any of these patients.

O-VAX

         The Company is also currently treating post-surgical stage 3 and
advanced patients in Phase 1/2 clinical trials of O-Vax, which is designed as an
immunotherapy for the treatment of ovarian cancer. Ovarian cancer is the fifth
most common cancer among women and the leading cause of death from gynecological
malignancy in the U.S. It is estimated that 1 in 55 women will develop ovarian
cancer in her lifetime. Moreover, although up to 80% of women initially respond
to standard chemotherapy, the majority of these women will subsequently develop
recurrent disease. Currently, there are no therapies available for patients who
initially respond to chemotherapy, but are at high risk of having their cancer
return.

         The Phase 1/2 clinical trials for O-Vax are being conducted at Thomas
Jefferson University under the direction of Dr. Berd. These initial Phase 1/2
clinical trials showed a positive immune response to unmodified tumor cells in
the first eight of nine adjuvant patients treated, as measured by a delayed type
hypersensitivity test. A delayed type hypersensitivity test measures the
activity of T-lymphocytes, which are cells that are crucial in triggering the
body's immune system. Similar results have also been obtained in comparable
numbers of patients with advanced or stage 4 ovarian cancer. The Company
believes these results in both patient groups are promising, considering that,
unlike the patients treated with M-Vax, the patients administered with O-Vax
initially received chemotherapy.

         The Company used these initial results to support the submission of a
Company-sponsored IND for O-Vax, which the FDA approved in January 2000. The FDA
also authorized AVAX to begin Phase 2 clinical trials of O-Vax. The Company is
currently recruiting patients with stage 3 and stage 4 ovarian cancer for three
planned multi-center, national Phase 2 clinical trials of O-Vax and is
recruiting approximately 30 clinical sites for each protocol. These multi-center
Phase 2 trials will be in addition to the ongoing testing at Thomas Jefferson
University.

RECENT DEVELOPMENTS AFFECTING M-VAX AND O-VAX

         On March 23, 2001, the Company announced that it had received oral
communication from the FDA that clinical activities for both the Company's M-Vax
and O-Vax vaccines have been placed on clinical hold pending further review by
the agency. The Company provided additional information regarding the clinical
hold in its current report on Form 8-K filed on March 30, 2001.

OTHER AC VACCINE PRODUCT CANDIDATES

         The Company believes that the technology used to develop M-Vax and
O-Vax may have applications in the treatment of other cancers, including breast,
kidney, lung and colorectal cancers, as well as acute myelogenous leukemia. AVAX
presently does not intend to fund the pre-clinical or initial clinical
development of this technology for any of these indications, beyond its limited
current contractual obligations to TJU and the University of Illinois.


                                       4
<PAGE>

TK SUICIDE GENE TECHNOLOGY

         TK suicide gene therapy is a technology based on the thymidine kinase
(TK) gene developed to prevent graft-versus-host disease (GVHD) following
allogeneic (or foreign donor) bone marrow transplantation and to induce
transplantation tolerance after allogeneic organ transplantation.

         In December 2000, animal data from pre-clinical studies relating to the
Company's TK suicide gene program for GVHD were published in the peer-reviewed
journal, HUMAN GENE THERAPY. In the pre-clinical studies, mice were transplanted
with foreign bone marrow treated with TK gene therapy to prevent the grafted
bone marrow from immunologically attacking the host mouse. This reaction, called
graft-versus-host disease, often occurs after allogeneic bone marrow transplants
and limits the use of the procedure. The data from the study showed that
treatment with the Company's TK system resulted in control of GVHD and resulted
in enhanced survival of the animal. In addition, the study tested the ability of
the animal's immune system to respond to a viral infection and found that, even
though GVHD was controlled, the animal could still mount an immune response
against the virus. These findings suggest this approach may be effective in
human allogeneic bone marrow grafts in specifically suppressing GVHD without
altering other, beneficial immune function.

         In humans, allogeneic bone marrow transplants may be used in the
treatment of cancer but are limited by GVHD, which may be life threatening.
Allogeneic bone marrow transplantation remains the treatment of choice for many
hematological cancers. Under the current protocol, attempts to control GVHD with
medication require immunosuppression. Accordingly, grafted patients experience
severe immune deficiency for several months after transplantation and remain
susceptible to life threatening infections because the therapy they receive
suppresses the body's ability to fight infection, the graft-versus-infection
(GVI) effect.

         The Company's TK suicide gene program is similarly applicable to solid
organ transplantation. A major challenge with solid organ transplantation is the
rejection of the transplanted organ by the patient's immune system, because the
patient's immune system sees the transplanted organ as foreign. Overall survival
rates for transplanted organs are below 50% at 10 years. The goal of AVAX's TK
gene therapy technology is to prevent the immune system from recognizing the
transplanted organ as foreign and rejecting it, while at the same time not
interfering with other immune system functions. For this reason, one of the
major goals of transplantation immunology is to induce selective immune
tolerance, which would alleviate the need for immunosuppression and decrease
late allograft failure. The technique involves inducing immune tolerance to a
foreign organ using a suicide gene allowing selective elimination of dividing T
cells expressing HERPES SIMPLEX virus type 1 TK upon ganciclovir (GCV)
administration, thereby selectively killing T cells that may be attacking the
transplanted organ. The process involves: (1) extracting and purifying T cells
from the patient, (2) infecting the T cells with the viral preparation (HSV1),
(3) administering those infected T cells to the patient, and (4) administering
GCV to the patient in order to kill the now infected T cells. GCV upon
administration is not toxic. The chemical structure of GCV, however, is changed
as it is metabolized by the patient's body, and thereby transformed into a toxic
compound only in cells expressing HSV1-TK gene.

         AVAX has completed initial Phase 1 testing of its TK suicide gene
technology in 20 patients with glioblastoma, a malignant brain tumor, and 11
patient with late stage melanoma. Data indicate that there were no serious side
effects associated with the therapy. The Company intends to use the TK gene
technology as a platform not only for inducing transplantation tolerance, but
also for the treatment of cancer and other life threatening diseases. The
Company expects to initiate Phase 1/2 clinical studies in France and to file an
IND in France utilizing the technology in indications such as liver metastasis
and GVHD/leukemia by the third quarter of 2001.

         In February 2001, AVAX received a contract from the French army to
prepare a clinical trial of the Company's TK suicide gene program for the
prevention of GVHD following foreign bone marrow


                                       5
<PAGE>

transplantation for patients who have been exposed accidentally to acute
irradiation. The contract will allow the Company to apply its gene therapy
technology to a new indication in its GVHD program.

AUTOLOGOUS CHONDROCYTES

         Autologous chondrocytes are cultured, patient-specific cartilage cells
that are re-injected into a patient and help repair damaged joint cartilage. The
process involves taking grafts of the patient's cartilage and culturing the
cells to grow new cartilage for replacement in the patient. The technology
developed by AVAX consists of: (1) taking a small biopsy of healthy cartilage of
the patient under arthroscopy, (2) separating out the mature cartilage cells
(chondrocytes) and culturing those cells in the GMP central facility, (3)
sending back the cultured chondrocytes to the surgeon; and (4) re-implanting the
cells on the defective cartilage by a surgical procedure in order to repair the
injury. The Company is currently evaluating ways to begin commercializing
chondrocytes in select European countries by the end of 2001. AVAX is currently
working to prepare its Lyon, France manufacturing facility for GMP manufacture
of both chondrocytes and M-Vax.

NOVEL ANTI-ESTROGENS

         The Company also has licensed from The Texas A&M University System
("Texas A&M") an issued U.S. patent and certain U.S. and foreign patent
applications relating to a series of novel cancer fighting anti-estrogen
compounds that may be especially effective against hormone-dependent tumors (the
"Texas A&M License"). Anti-estrogens have been proven to be clinically-useful
anticancer therapies. U.S. patents for both the Texas A&M compounds and their
anticancer uses have been filed by Texas A&M, as well as a non-U.S. application
based on more recent work. The Company expects to pursue additional foreign
patent coverage based on the results of ongoing laboratory research. One of
these compounds has been selected for further development, and is in an early
stage of pre-clinical development for solid tumor indications. Under AVAX's
agreements with Texas A&M, the Company intends to continue to expend resources
on the research and development of these compounds. As the pre-clinical
development progresses, the Company may explore strategic opportunities to
license its rights to further develop these compounds to another company.

TOPOISOMERASE INHIBITORS

         In December 1996, AVAX licensed from Rutgers University and the
University of Medicine and Dentistry of New Jersey (collectively, "Rutgers"),
certain patent applications relating to a series of anticancer agents or
compounds (topoisomerase inhibitor compounds), that inhibit topoisomerase I and
topoisomerase II activities (the "Rutgers License"). Topoisomerases are key
enzymes needed for remolding DNA, a necessary function for cell division and
malignant tumor growth. These enzymes are over-produced in tumor cells.
Inhibitors of these enzymes have been proven to be clinically-useful anticancer
therapies.

         Both U.S. and non-U.S. patents for the Rutgers compounds and their
anticancer and anti-infective uses have been filed. The Company holds license to
a number of U.S. patents granting claims to novel compounds that inhibit
activity of topoisomerase I. Although these compounds are in an early stage of
pre-clinical development for solid tumor, antifungal and parasitic indications,
the Company has identified a number of promising compounds for further
development.

TUMOR CELL BANKING

         In October 2000, the Company announced that it had begun to provide the
commercial service of collecting and storing patients' own tumor cells for
potential therapeutic use. In March 2001, the Company determined not to continue
to promote actively tumor cell banking. The Company will


                                       6
<PAGE>

continue to collect and store tumor cells for melanoma and ovarian cancer
patients who seek that service from the Company.

         The tumor cell banking process begins with patients choosing to store
tumor cells at one of the Company's facilities after their tumors have been
surgically removed. Many patients who undergo surgery to treat their cancer and
discard their tumor may be missing out on potential therapeutic and diagnostic
options. Too often patients are unaware of alternatives until after their tumor
has been removed. Storing tumor cells in viable form at a single location may
allow patients, with physician guidance, to utilize their stored tumor cells for
treatments already on the market and to take advantage of ongoing or even future
clinical studies. Patients may also have the cells sent elsewhere to utilize the
services of companies that study tumor cells to help predict response to
chemotherapy.

         The cost of the service is approximately $1,000 per patient, which
includes storage for three years and all necessary handling procedures. This
cost will be waived if the patient enters an AVAX clinical trial.

LICENSE AND RESEARCH AGREEMENTS

THE TJU LICENSE AND RESEARCH AGREEMENT

         The TJU License is a royalty-bearing license for the rights to the AC
Vaccine technology, and provides for certain payments upon the occurrence of
certain milestones. As partial consideration, the Company paid $10,000 to TJU
for the TJU License. The Company also issued to each of TJU and Dr. Berd,
229,121 shares of its common stock, representing 7.5% (15% in the aggregate) of
the Company's total outstanding voting securities at that time.

         In addition to the milestone payments the Company has already made to
TJU, AVAX is obligated to make future payments to TJU as follows: $10,000 upon
the first filing of a marketing application with the FDA (or comparable filing
with a comparable international agency), and $25,000 upon receipt by AVAX of
approval from the FDA (or comparable international agency) to market products
relating to the AC Vaccine technology.

         In connection with the TJU License, the Company and TJU also entered
into a Clinical Study and Research Agreement (the "TJU Research Agreement").
Under the TJU License and the TJU Research Agreement, the Company has agreed to
provide TJU with minimum sponsored research funding relating to the development
of additional immunotherapies based on the AC Vaccine technology. The Company
expects to renew this agreement in 2001 through February 2002.

         The Company is presently obligated to spend a minimum of $500,000 per
year on the development of the AC Vaccine technology until commercialized in the
U.S. If AVAX files for FDA approval of a Company-sponsored marketing application
for the right to market an AC Vaccine product, the Company may elect to spend
less than $500,000 per year on the development of the AC Vaccine technology
during the period of time the marketing application is under review by the FDA.

         The Company is also obligated to pay royalties on its net sales revenue
and a percentage of all revenues received from sublicenses relating to the AC
Vaccine technology.


                                       7
<PAGE>

GENOPOIETIC RESEARCH FUNDING AGREEMENT

         In connection with the Company's acquisition of Genopoietic and its
corporate affiliates, AVAX entered into the Research Funding Agreement dated as
of August 24, 2000 with Genopoietic (the "Genopoietic Research Funding
Agreement") to provide funding to its wholly-owned subsidiary for direct costs
of basic scientific research in areas of mutual interest to the Company and
Genopoietic. Subject to the fulfillment of certain funding conditions, AVAX
agreed to provide up to an aggregate of $8,000,000 to Genopoietic for the period
ending July 31, 2005. At the Company's option, the funds will be provided as
additional contributions to the capital of Genopoietic, as payment of
indebtedness owed by Genopoietic to third parties or as a long-term loan to
Genopoietic.

THE TEXAS A&M LICENSE AND RESEARCH AGREEMENT

         Under the Texas A&M License, the Company is obligated to make milestone
payments to Texas A&M as follows: $24,000 upon the initiation of a specified
toxicity evaluation, $12,000 upon completion of a toxicity evaluation
demonstrating acceptable toxicity levels, $12,000 upon the submission of an IND
to the FDA or its equivalent in a major market country, $5,000 upon the
completion of the first Phase 1 clinical investigations and $15,000 upon the
FDA's granting of the first NDA. In addition, AVAX is required to achieve
certain milestones toward development of a licensed product within certain
specified time frames.

         In connection with the Texas A&M License, in May 1997, Texas A&M and
the Company entered into a three-year Sponsored Research Agreement (the "Texas
A&M Research Agreement"). Under the Texas A&M License and the Texas A&M Research
Agreement, the Company agreed to provide minimum yearly funding of $108,750 for
Texas A&M's research. Texas A&M waived any up front payment by the Company for
the Texas A&M License in recognition of the Company's three-year research
funding commitment. The Texas A&M Research Agreement was extended to January
2002.

         The Company is also obligated to pay royalties on any net sales revenue
derived from these compounds and a percentage of net sales revenues received
from sublicenses of the compounds.

THE RUTGERS LICENSE AND RESEARCH AGREEMENT

         AVAX paid $15,000 to Rutgers for the Rutgers License, and issued to
Rutgers warrants to purchase 125,000 shares of its common stock at a price of
$8.24 per share. The warrants are exercisable upon the achievement of certain
development-related milestones. The first 75,000 warrants will expire in 2006
and the final 50,000 warrants will expire in 2011. The warrants provide for
cashless exercise, piggyback registration rights and certain anti-dilution
rights. The Company has also agreed to pay an additional $15,000 license
maintenance fee each year, but only in years in which the Company's research
funding is less than $100,000.

         In addition to the milestone payments the Company has already made to
Rutgers, AVAX is obligated to make future payments to Rutgers as follows:
$25,000 on the earlier of October 31, 2001 or the date of initiation of Phase 2
trials in the U.S. or another major market country, $45,000 on the earlier of
October 31, 2005 or the date of first filing of a marketing application with the
FDA, or comparable international agency and $150,000 on the earlier of October
31, 2008 or the date of receipt by the Company of approval from the FDA or
comparable international agency to market products.

         In connection with the Rutgers License, in May 1997, Rutgers and the
Company entered into a three-year Sponsored Research Agreement (the "Rutgers
Research Agreement"). Under the Rutgers License and the Rutgers Research
Agreement, the Company initially agreed to provide minimum yearly funding of
approximately $130,000 for Rutgers' research, including certain overhead costs.
Upon its


                                       8
<PAGE>

expiration, the Rutgers Research Agreement was extended for another year, and
has been further extended through February 2003.

         The Company is presently obligated to spend an aggregate of not less
than $500,000 each year until the first year of commercial marketing of a
product derived from the Rutgers compounds, for the research and development,
regulatory approval, manufacture, and marketing and selling of a product derived
from the Rutgers compounds.

         AVAX is also required to pay royalties on the Company's worldwide net
sales revenue derived from the Rutgers compounds and a percentage of all
revenues received from sublicenses of products derived from the compounds.

RESEARCH AND DEVELOPMENT EXPENSE

         In 1999, the Company incurred research and development expense of
$5,175,695. In 2000, the Company incurred research and development expense, and
certain costs associated with the Company's manufacturing facility in Lyon,
France of $9,405,318. Research and development expense, including the costs
associated with the Company's manufacturing facility in Lyon, France incurred in
2000, for the period from inception through December 31, 2000, has been
$23,401,441.

MANUFACTURING AND MARKETING

AC VACCINES - GENERAL

         The AC Vaccine products being developed by AVAX are individualized
therapies which are manufactured by first receiving cells from a patient,
treating those cells and creating a liquid vaccine using the cells as a raw
material, then delivering the vaccine to the doctor's office for administration
to the patient. AVAX believes that the key to success in developing and
distributing individualized therapies relies upon a model employing central
processing, so that manufacturing cell based products can be a standardized
process that can benefit from economies of scale and efficient distribution. The
basic model for most of the Company's products under development is "cells
in-product out," where the final product looks like a traditional mass produced
drug to the end-user, but is individually made.

MANUFACTURING M-VAX AND O-VAX IN THE U.S.

         The Company's manufacturing facility in Pennsylvania serves as the
central U.S. manufacturing center for the production and distribution of
M-Vax and O-Vax for the Company's ongoing and planned clinical trials. The
Pennsylvania facility was built to comply with current Good Manufacturing
Practice standards, however, as part of any final regulatory approval of
M-Vax for commercialization, the manufacturing facility will have to be
licensed by the FDA. Although the Pennsylvania facility adequately supports
AVAX's ongoing multi-center clinical trials for both M-Vax and O-Vax, the
Company may have to expand its manufacturing capacity in the future if any of
its clinical programs are expanded substantially or if its products are
approved for commercialization in the U.S.

OTHER CELL AND GENE THERAPIES

         Pursuant to the Company's acquisition of Genopoietic, AVAX now leases a
GMP quality manufacturing facility in Lyon, France. The facility is currently
being used to produce the Company's TK suicide gene products and autologous
chondrocytes for the ongoing pre-clinical studies of those technologies and
other retroviral vectors and monoclonal antibodies as a contract manufacturer
for other companies and research institutions. From a production perspective,
the Company expects the Lyon facility also to be ready to produce M-Vax for the
European market by the middle of 2001.


                                       9
<PAGE>

MARKETING M-VAX IN AUSTRALIA

         On December 1, 1999, the Company entered into a definitive joint
venture agreement with Neptunus International Holdings Limited, a pharmaceutical
group in Australia which has been subsequently renamed Australian Vaccine
Technologies Ltd. ("AVT"), under the subsidiary name, AVAX Holdings Australia
Pty Limited ("AVAX Holdings"). Under the joint venture agreement, AVAX Holdings,
through its affiliated entities, holds the rights to manufacture and market
M-Vax in Australia, and has similar rights in New Zealand.

         In July 2000, AVAX began marketing M-Vax in Australia. AVAX is the
first company to commercialize a centrally produced cancer vaccine for melanoma,
custom-made from a patient's own tumor cells. The joint venture manufactures
M-Vax in Australia through a contract manufacturing agreement with
Bioenterprises Pty. Ltd.

         At December 31, 2000, AVAX Holdings held a 50% interest in the
Australian joint venture entities. In August 2000, AVT made a final $3 million
(AUD) payment in a series of investments totaling $10 million (AUD) for a 50%
interest in the joint venture entities, thereby reducing AVAX Holdings' interest
to 50%.

OTHER FOREIGN MARKETS FOR M-VAX

         The Company hopes to begin marketing M-Vax for commercial use in select
countries in Europe by the end of 2001. The commercialization of M-Vax in one or
more European countries will be subject only to meeting certain requirements
determined by each applicable regulatory agency. In order to expedite the
availability of M-Vax to melanoma patients in Europe, the Company is currently
exploring a number of strategic options to assist in realizing these
opportunities. AVAX also may pursue a similar regulatory approach for the
manufacturing and marketing of its products in certain other countries.

SOURCES AND AVAILABILITY OF RAW MATERIALS

         The Company does not expect to encounter significant difficulties in
obtaining raw materials for M-Vax, O-Vax or any other of its AC Vaccine
products, because they are primarily composed of a readily available chemical
reagent, DNP, and the patient's own tumor cells. In addition the vaccine is
administered with a chemical adjuvant, BCG, which assists in stimulating the
immune system. Should the supply of DNP or BCG significantly decrease, the
Company may encounter problems preparing M-Vax, O-Vax, or any other AC Vaccine
products.

         The Company currently utilizes bovine serum in the cell culturing
process for autologous chondrocytes. While bovine serum is readily available and
is approved for use in France, the Company cannot guarantee that the serum's use
will not be prohibited in the future. Should the use of bovine serum be
prohibited, the Company may encounter problems culturing autologous
chondrocytes.

COMPETITION

CANCER DRUGS - GENERAL

         The Company is aware of estimates that more than 300 companies are
reported to have more than 1,000 cancer drugs, including chemotherapies and
immunotherapies, under development worldwide, many of which are under
development in the U.S. A substantial number of these drugs are, or may be in
direct competition with M-Vax, O-Vax or any other of the Company's
immunotherapies or compounds.


                                       10
<PAGE>

         The Company's competitors include: (i) large established pharmaceutical
and biotechnology companies with commitments to oncology or antiviral research,
development and marketing, including, Schering Plough Corporation, Chiron
Corporation, Bristol-Myers Squibb and Johnson & Johnson; (ii) smaller
biotechnology companies with similar strategies, including IDEC Pharmaceuticals,
Inc. and Biomira Diagnostics; and (iii) many development stage companies
licensing or developing oncology therapeutics. In addition, many research
institutes, hospitals and universities are working to develop products and
processes in the same field of cancer that may in the future be in direct
competition with the Company's technologies.

OTHER COMPANIES DEVELOPING CANCER VACCINES

         A number of companies or research institutions are developing cancer
vaccines, including Ribi ImmunoChem Research, Inc./Corixa, Cancer Vax, and
Progenics, Inc., in melanoma; AltaRex, Genentech and Biomira, in ovarian cancer;
Intracel in colorectal cancer; and Antigenics in renal cell and other cancers.

         The principal competitive factors in the area of cancer immunotherapies
are (i) the efficacy of the product and (ii) the timing of the entry of the
product into the market. Initially, the Company faces competition from these
companies for the registration of new patients in existing and planned clinical
trials. There are a limited number of persons eligible for participation in any
particular clinical trial, and the Company and its research partners compete
directly with other pharmaceutical and biotechnology companies, research firms,
hospitals and universities for the inclusion of patients in its clinical trials.
Enrollment rates for clinical trials are a key determinant in the timelines for
bringing products to market.

         Although there is significant competition, to date, the Company
believes that none of the competing immunotherapies has demonstrated the
increase in survival suggested by the Company's technology in melanoma.
Moreover, AVAX believes that M-Vax is the world's first commercially available
cancer immunotherapy.

GENE THERAPIES

         The field of gene therapy drug development is new and rapidly evolving,
and it is expected to continue to undergo significant and rapid technological
change. The Company expects to experience intense competition both from other
companies in the gene therapy field and from companies that have other forms of
treatment for the diseases currently being targeted. The Company is aware of
several development-stage and established enterprises, including major
pharmaceutical and biotechnology firms, that are exploring gene-based drugs or
are actively engaged in gene delivery research and development. These include
companies making protein therapies for hemophilia, Gaucher's disease, and anemia
such as Amgen Inc., Aventis S.A., Bayer Corporation, Baxter Healthcare
Corporation, Genzyme Corporation, Johnson & Johnson and Wyeth-Ayerst
Laboratories. In addition, companies directly engaged in gene therapy product
development include: Cell Genesys, Inc., Chiron Corporation, Targeted Genetics
Corporation, Transkaryotic Therapies, Inc. and Urogen Corp. There are also
academic institutions, governmental agencies and other research organizations
that are conducting research in areas in which the Company is working.

AUTOLOGOUS CHONDROCYTES

         If the Company begins to commercialize chondrocytes in Europe in 2001,
it will compete directly with certain European universities and U.S. and
European companies that have developed similar products, including Codon,
Verigen, Isotis and Genzyme Biosurgery. Genzyme Biosurgery has been granted a
BLA for chondrocytes in the U.S. The Company's autologous chondrocytes product
also competes indirectly with alternative therapies for repairing damaged joint
cartilage, including medicinal type treatments that are administered by
injection and various surgical treatments.


                                       11
<PAGE>

GOVERNMENT REGULATION

         The research, pre-clinical development, clinical trials, product
manufacturing and marketing conducted by or on behalf of the Company is subject
to regulation by the FDA and similar health authorities in foreign countries.
The proposed products and technologies of the Company also may be subject to
certain other federal, state and local government regulations, including, the
Federal Food, Drug and Cosmetic Act, and their state, local and foreign
counterparts.

         Generally, the steps required before a pharmaceutical or therapeutic
biological agent may be marketed in the U.S. include: (i) pre-clinical
laboratory tests, pre-clinical studies in animals, toxicity studies and
formulation studies; (ii) the submission to the FDA of an IND for human clinical
testing, that must become effective before human clinical trials commence; (iii)
adequate and well-controlled human clinical trials to establish the safety and
efficacy of the drug; (iv) the submission of a marketing application to the FDA;
and (v) FDA approval of the marketing application prior to any commercial sale
or shipment of the drug.

         Pre-clinical studies include laboratory evaluation of the product,
mostly conducted under Good Laboratory Practice regulations, and animal studies
to assess the pharmacological activity and the potential safety and
effectiveness of the drug. The results of the pre-clinical studies are submitted
to the FDA in the IND. Unless the FDA objects to an IND, it becomes effective 30
days following submission and the clinical trial described in the IND may then
begin.

         Clinical trials begin when a drug is approved for testing on humans.
There are usually said to be three main phases of clinical trials that a drug
must go through in the U.S. before the drug is approved to be manufactured and
marketed to the public. These phases may involve testing of drugs in healthy
human volunteers (Phase 1) for assessment of safety, followed by tests of
effectiveness and safety in patients with illnesses the drug is designed to
treat (Phases 2 and 3). In most instances, Phase 3 studies are the final group
of studies that are conducted before a product can be approved by the FDA for
commercial use. In the case of life-threatening illness, the study process and
phases of clinical trials may be compressed and accelerated. In some cases,
Phase 2 trials are deemed sufficient for market approval by the FDA or foreign
regulatory authorities. Pivotal registration trials are large-scale Phase 2 or 3
trials, the data obtained from which are intended to be used to provide for the
registration of a drug or product for market use.

         Every clinical trial must be conducted under the review and oversight
of an institutional review board at each institution participating in the trial.
The institutional review board evaluates, among other things, ethical factors,
the safety of human subjects, and the possible liability of the institution.

         The results of the pre-clinical and clinical trials are submitted to
the FDA as part of an application to market the drug. The marketing application
also includes information pertaining to the chemistry, formulation and
manufacture of the drug and each component of the final product. The FDA review
of a marketing application takes from one to two years on average to complete,
though reviews of treatments for cancer and other life-threatening diseases may
be accelerated. The process may take substantially longer, however, if the FDA
has questions or concerns about a product. Following review, the FDA may
ultimately decide that an application does not satisfy regulatory and statutory
criteria for approval. In some cases, the FDA may approve a product but require
additional clinical tests following approval (i.e., Phase 4).

         In addition to obtaining FDA approval for each product, each domestic
drug manufacturing facility must be registered with, and approved by the FDA.
Domestic manufacturing facilities are subject to inspections by the FDA and must
comply with Good Manufacturing Practices. To supply products for use in the
U.S., foreign manufacturing facilities also must comply with Good Manufacturing
Practices,


                                       12
<PAGE>

and are subject to periodic inspection by the FDA or by comparable foreign
regulatory agencies under reciprocal agreements with the FDA.

         If marketing approval of any Company product is granted, the Company
must continue to comply with FDA requirements not only for manufacturing, but
also for labeling, advertising, record keeping, and reporting to the FDA of
adverse experiences and other information. In addition, the Company must comply
with federal and state health care antikickback laws and other health care fraud
and abuse laws that affect the marketing of pharmaceuticals. Failure to comply
with applicable laws and regulations could subject the Company to administrative
or judicial enforcement actions, including product seizures, injunctions, civil
penalties, criminal prosecution, refusals to approve new products or withdrawal
of existing approvals, as well as increased product liability exposure.

         For clinical investigation and marketing outside the U.S., the Company
also is subject to certain foreign regulatory requirements governing human
clinical trials and marketing approval for drugs. The requirements governing the
conduct of clinical trials, product licensing, pricing and reimbursement vary
widely for European countries both within and outside the European Union ("EU").
Normally, foreign marketing authorizations are applied for at a national level,
although within the EU certain registration procedures are available to
companies wishing to market their products in more than one EU member state. If
any applicable regulatory authority is satisfied that adequate evidence of
safety, quality and efficacy has been presented, a marketing authorization will
be granted. The system for obtaining marketing authorizations within the EU
registration system is a dual one in which certain products, such as
biotechnology and high technology products and those containing new active
substances, will have access to a central regulatory system that provides
registration throughout the entire EU. Other products will be registered by
national authorities in individual EU member states, operating on a principle of
mutual recognition.

EMPLOYEES

         As of December 31, 2000, the Company had a total of 54 full-time
employees, including 22 full-time employees at the Company's subsidiary in
France (17 of which work at the manufacturing facility in Lyon, France and
five of which perform research in Paris, France) and 5 full-time employees at
the joint venture operation in Australia. The Company's other consultants,
scientific advisors and directors devote only a portion of their time to the
business of the Company.

RISK FACTORS

         INVESTING IN THE COMPANY'S SECURITIES INVOLVES A HIGH DEGREE OF RISK.
BEFORE MAKING A DECISION ABOUT INVESTING IN THE COMPANY'S SECURITIES, ONE SHOULD
CAREFULLY CONSIDER THE RISK FACTORS LISTED BELOW, AS WELL AS THE REST OF THE
INFORMATION CONTAINED IN THIS ANNUAL REPORT ON FORM 10-KSB AND THE COMPANY'S
OTHER REPORTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.

AVAX WILL NEED TO RAISE MORE MONEY DURING CALENDAR YEAR 2002.

         AVAX will need to raise more money some time during calendar year 2002
to continue research and product development throughout 2002, and to pursue the
manufacture and marketing of any products that it may develop. AVAX completed a
$25.1 million private placement of common stock on March 10, 2000, which funds,
together with other cash resources of the Company, will be sufficient to fund
the Company's expected activities through the first half of 2002. Although AVAX
expects its current cash resources to be sufficient to fund its operations
through the first half of calendar year 2002, the period of operations that can
be funded by the current cash resources of the Company will be affected by
numerous factors, including the rate of cash expenditures on product development
programs. See "Management's Discussion and Analysis of Financial Condition and
Plan of Operations" in this report and any quarterly


                                       13
<PAGE>

reports on Form 10-QSB hereafter filed by the Company for a discussion of the
current cash resources of the Company.

         AVAX has no way of knowing if it will be able to complete any
additional financings in the future. Even if AVAX is able to obtain future
financings, the terms offered to the Company may significantly limit its
financial or operating flexibility, or may not be acceptable. If the Company
fails to raise sufficient funds when needed and on reasonable terms, AVAX may
have to slow down, modify or cease some or all of its product development
programs.

THE COMPANY'S AC VACCINE TECHNOLOGY MAY NOT PRODUCE SAFE, EFFECTIVE OR
COMMERCIALLY VIABLE PRODUCTS.

         The Company's AC Vaccine technology is a new approach to the treatment
of cancer. It is a patient specific immunotherapy that utilizes the patient's
own tumor cells to stimulate the patient's immune system to recognize, attack
and destroy cancer cells. This core technology applies to all types of cancer,
but treatment of each type of cancer may require slight modifications in the
selection and processing of a patient's cells for production of the appropriate
AC Vaccine. Several companies are developing immunotherapy products, but AVAX is
not aware of any immunotherapy products developed for the treatment of cancer
that have been approved by the FDA for commercial marketing. AVAX has submitted
a company-sponsored IND to the FDA, and begun clinical trials for M-Vax and
O-Vax. In addition, clinical trials for O-Vax are also being conducted under a
physician-sponsored IND. The Company is in various stages of research and
development for several other AC Vaccine products. AVAX cannot be certain that
any of its AC Vaccine products will be safe and effective for patients. If the
AC Vaccine technology fails to generate products that can be successfully
developed and commercialized, the Company's business and financial condition
will be materially and adversely affected.

EVEN IF THE AC VACCINE IS SAFE AND EFFECTIVE, COMMERCIAL ACCEPTANCE AND
PROFITABILITY IS NOT GUARANTEED.

         The Company believes that M-Vax is safe and effective, but that does
not guarantee commercial acceptance. Because the AC Vaccine technology is a new
approach to the treatment of cancer, it must be accepted by both patients and
physicians before it can be successfully commercialized. The Company is using
its experience in Australia and in its U.S. clinical trials to develop ways to
increase acceptance of the AC Vaccine technology among the leading oncologists
in a particular market. The marketplace of ideas, technologies and information
is crowded, and AVAX must develop the means to reach leading specialist
physicians in each market with the AC Vaccine story. Although the Company
believes it has bridged this gap with leading specialists in Australia (where
M-Vax is now commercially available), as discussed below, the availability of
governmental and insurance reimbursements of the costs of the vaccine is
critical to ultimate physician and patient acceptance of the AC Vaccine
technology.

THE U.S. CLINICAL TRIAL AND REGULATORY APPROVAL PROCESS FOR THE COMPANY'S
PRODUCTS WILL BE EXPENSIVE AND TIME CONSUMING, AND THE OUTCOME IS UNCERTAIN.

         Before obtaining regulatory approval for the commercial sale of the
Company's products in the U.S., the Company must demonstrate through clinical
trials that its products are safe and effective. AVAX will continue to incur
substantial expense for, and devote a significant amount of time to pre-clinical
testing and clinical trials of its products. The results from pre-clinical
testing and early clinical trials are not totally predictive of results that may
be obtained in later clinical trials. Data obtained from pre-clinical testing
and clinical trials are susceptible to varying interpretations, which may delay,
limit or prevent regulatory approval. In addition, regulatory delays or
rejections may be encountered as a result of many factors, including changes in
regulatory policy during the period of product development. The


                                       14
<PAGE>

Company's business and financial condition will be materially and adversely
affected by any delays in, or termination of, its clinical trials.

         On March 23, 2001, the Company announced that it had received oral
communication from the FDA that clinical activities for both the Company's M-Vax
and O-Vax vaccines have been placed on clinical hold pending further review by
the agency. The Company provided additional information regarding the clinical
hold in its current report on Form 8-K filed on March 30, 2001.

THE CLINICAL SUCCESS OF M-VAX, O-VAX AND THE COMPANY'S OTHER PRODUCTS IS
UNCERTAIN.

         Although to date the initial clinical trials for M-Vax have supported
its safety and effectiveness, the data that have been obtained are still
insufficient to support an application for regulatory approval in the U.S.
without further clinical trials. In 1999, AVAX began a pivotal registration
clinical trial for M-Vax that is planned to involve at least 400 patients at 25
or more different locations around the country. Although the Company has
recently begun a Phase 2 clinical trial of O-Vax and is currently conducting
Phase 1/2 clinical trials for O-Vax, to date it has only obtained delayed type
hypersensitivity data on O-Vax and preliminary clinical data in patients with
ovarian cancer. Moreover, the clinical trials for both M-Vax and O-Vax are being
conducted with patients who are in advanced stages of melanoma and ovarian
cancer. During the course of treatment, these patients can die or suffer adverse
medical effects for reasons that may not be related to M-Vax or O-Vax. In
addition, as M-Vax and O-Vax advance through the several stages of clinical
trials, it may be difficult if not impossible to continue to enroll the
requisite number of patients (several hundred patient volunteers for a typical
Phase 3 clinical trial) who meet the requirements of the study and who are
willing to participate. AVAX cannot make assurances that it will be able to
complete successfully the clinical trials or gain regulatory approval for M-Vax,
O-Vax or any of its other potential AC Vaccine products.

         Each of the Company's other products and technologies will have similar
uncertainties even if initial laboratory or clinical results are promising.

AVAX IS A DEVELOPMENT STAGE BIOPHARMACEUTICAL COMPANY, AND IT MAY NEVER DEVELOP
OR SUCCESSFULLY MARKET ANY PRODUCTS.

         Investors must evaluate AVAX in light of the expenses, delays,
uncertainties and complications typically encountered by development stage
biopharmaceutical businesses, many of which are beyond the Company's control.
These include unanticipated problems relating to product development, testing,
regulatory compliance, manufacturing, marketing and competition, and additional
costs and expenses that may exceed current estimates. The Company's products are
at various stages of research and development and may never be successfully
developed or marketed. AVAX cannot make assurances that its products, even if
successfully developed and approved, will generate sufficient or sustainable
revenues to enable it to be profitable.

AVAX MAY HAVE TO EXPAND ITS MANUFACTURING FACILITIES OR INCREASE ITS DEPENDENCE
ON THIRD PARTIES TO MANUFACTURE ITS PRODUCTS.

         The Company completed construction of a manufacturing facility in
Pennsylvania in 1999. As part of any final regulatory approval of M-Vax for
commercialization in the U.S., the Philadelphia manufacturing facility will have
to be licensed by the FDA, and there can be no assurance the FDA will license
this facility. Although the Pennsylvania facility adequately supports AVAX's
current ongoing clinical trials, the Company will probably have to expand its
manufacturing capabilities in the U.S. in the future if any of its clinical
programs are expanded substantially or if its products are approved for
commercialization in the U.S.


                                       15
<PAGE>

         AVAX also has a manufacturing facility in Lyon, France, which it
acquired as part of the Genopoietic acquisition. This facility is not presently
equipped to produce M-Vax or other AC Vaccines for sale in Europe. The Company
anticipates that it will upgrade this facility in 2001 in conjunction with the
planned commercialization of M-Vax in Europe.

         In 2000, the Company's Australian joint venture entered into a contract
manufacturing arrangement with a third party to manufacture M-Vax in Australia.
If sales of M-Vax increase in Australia in 2001, the capacity of this facility
will likely need to be expanded. The reliance on a third party to manufacture
M-Vax or any other product, in Australia or elsewhere, creates additional risks
for the Company, including its inability to guarantee that the third party will
be able to manufacture the Company's products in a timely fashion, or that the
Company's customized products will be available from contract manufacturers at
acceptable costs. The Company will need substantial additional moneys and
qualified personnel if it expands its manufacturing capabilities in Philadelphia
or Lyon in 2001, and may, directly or indirectly, be required to pay the costs
of expanding the third-party contractor facility in Australia. In addition, AVAX
must rely on third parties for production and supply of certain materials
necessary for its clinical trials and studies for its products.

THE COMPANY MAY HAVE TO DEPEND ON THIRD PARTIES TO MARKET AND DISTRIBUTE ANY OF
ITS PRODUCTS APPROVED FOR COMMERCIALIZATION.

         AVAX currently does not have the resources to market or distribute
directly M-Vax, O-Vax or any other products it may develop in the future.
Moreover, it may be particularly difficult and expensive to distribute the AC
vaccine products, because they are custom made for each individual patient. AVAX
will need additional financing to hire and train an internal sales force to
market and distribute its products. If AVAX is unable to obtain the requisite
funding, or if the Company determines that developing an internal sales force is
not cost effective, the Company may not be able to contract with third parties
for those services on acceptable terms. AVAX may have less control over
marketing and distribution activities performed by third parties than if it were
performing those functions with its own facilities and employees. This lack of
direct control could adversely affect the results of these activities. See "ITEM
1 DESCRIPTION OF BUSINESS - MARKETING M-VAX IN AUSTRALIA," AND "OTHER FOREIGN
MARKETS FOR M-VAX" for a discussion of the Company's agreement with a third
party for the manufacture and marketing of M-Vax in Australia, and the Company's
exploration of similar strategic partnerships for the manufacture and marketing
of M-Vax in The Netherlands, Germany and Japan.

AVAX COULD LOSE THE RIGHTS TO ITS PRODUCTS AND TECHNOLOGIES.

         AVAX is a party to several license and research agreements that place
substantial responsibility on its licensors for research and clinical
development of the Company's products and technologies. AVAX has financial,
development and other obligations under those agreements. The Company's primary
responsibility under its license and research agreements is to meet requisite
research funding levels. If the Company fails or is delayed in meeting its
obligations, AVAX could lose the rights to its products and technologies, or
lose the right to have others conduct the Company's research and development.

THE COMPANY MAY NOT BE ABLE TO OBTAIN OR DEFEND ITS PATENTS, OR OPERATE WITHOUT
INFRINGING UPON THE RIGHTS OF OTHERS.

         The Company, as well as its current and potential future licensors, may
be unable or have difficulty obtaining and defending its patents and maintaining
its trade secrets. If so, AVAX could be delayed or prevented from manufacturing,
using or selling its products. It is also possible that one of the Company's
products or technologies may infringe upon an existing U.S. or foreign patent of
a third party, or that other patents could issue in the future that could
interfere with the Company's ability to make or


                                       16
<PAGE>

sell its products. If AVAX is involved in a patent dispute it may have to pay
significant legal costs, license fees or damages, and may have to stop producing
and selling its products and technologies.

AVAX IS DEPENDENT ON ITS SMALL MANAGEMENT TEAM.

         AVAX is dependent upon its small management team to obtain funding for
the research and development of the Company's products, to decide which of the
Company's products to promote, to shepherd the products through the clinical
trial and regulatory approval process, and to stimulate business development and
seek out new products and technologies for development. The Company cannot
guarantee that AVAX will be able to retain its existing personnel or that it
will be able to attract, retain and motivate any additional qualified employees
required for the expansion of the Company's activities. The Company's failure to
do these things could disrupt or delay its development programs. The Company
also relies on the specialized scientific knowledge provided by outside
scientists, consultants and the Company's Scientific Advisory Board, but without
the benefit of the full-time attention of these individuals if they were
employees of the Company.

         In February 2001, the Chief Executive Officer of the Company resigned
as an employee and director of the Company. The Company is presently seeking a
new CEO. There is a disruption to the management of the Company as a result of
the resignation of the former CEO, which disruption is likely to continue until
a new CEO is hired. Additionally, any new CEO will require a certain amount of
time to become familiar with AVAX's products and technologies and to develop
independent opinions regarding the best strategic plans for the Company. There
can be no assurance that AVAX will be able to attract a new CEO with the desired
skills or that the search will not take a substantial period of time.

AVAX MAY NOT BE ABLE TO COMPETE WITH OTHER COMPANIES, RESEARCH INSTITUTES,
HOSPITALS OR UNIVERSITIES THAT ARE DEVELOPING AND PRODUCING CANCER TREATMENT
PRODUCTS AND TECHNOLOGIES.

         Many other companies, research institutes, hospitals and universities
are working to develop products and technologies in AVAX's specific field of
cancer research. Many of these entities have more experience than AVAX does in
developing and producing cancer treatment products. Most of these entities also
have much greater financial, technical, manufacturing, marketing, distribution
and other resources than AVAX possesses. AVAX believes that numerous
pharmaceutical companies are engaged in research and development efforts for
products that could directly compete with the Company's products under
development. In addition, some of AVAX's competitors have already begun testing
products and technologies similar to its own. These other entities may succeed
in developing products before AVAX or that are better than those that the
Company is developing. AVAX expects competition in its specific area of research
to intensify.

AVAX ALSO COMPETES WITH OTHER CLINICAL PROGRAMS AND OTHER TREATMENTS FOR
PATIENTS FOR ITS CLINICAL TRIALS.

         AVAX also competes with numerous clinical trials and other treatment
regimens for patients for the Company's clinical trials. Companies with clinical
trials, including AVAX, provide information and other incentives to oncologists
and other specialists as an inducement to put their patients in particular
clinical trials. The Company has experienced intense competition for patients
for its M-Vax pivotal registration clinical trial to date, and anticipates that
competition will continue.

         The Company spent substantially more money on its M-Vax clinical trials
in 2000 than it did in 1999, particularly in the last two quarters of 2000. It
is too early to determine whether those substantial expenditures in the second
half of 2000 (which rate of spending is continuing in 2001) will accelerate the
rate of enrollment in the M-Vax pivotal registration clinical trial.

MARKETING THE COMPANY'S PRODUCTS TO THE PUBLIC MAY EXPOSE AVAX TO PRODUCT
LIABILITY CLAIMS.


                                       17
<PAGE>

         Marketing the Company's products to the public may expose AVAX to
product liability claims. If a product liability dispute is decided against the
Company, AVAX might incur significant money damages that could exceed its
financial resources, including the limits of its product liability insurance.
Even if AVAX experiences no significant judgments or settlements against it, the
costs of defending product liability claims could have a major adverse effect on
the management's time and the Company's cash resources. AVAX's primary research
and license agreements require the Company to indemnify the universities, their
trustees, officers, employees and agents (including Dr. Berd) from certain
claims arising out of the clinical study and research programs carried out under
each of the license and research agreements. The Company will also likely be
required to indemnify any future licensors or persons with whom AVAX establishes
a marketing, manufacturing or other collaborative arrangement, against product
liability claims incurred as a result of the products it develops.

AVAX HAS A HISTORY OF OPERATING LOSSES AND THE COMPANY'S FUTURE PROFITABILITY IS
UNCERTAIN.

         AVAX has had substantial operating losses since its business first
began. AVAX lost approximately $16.3 million in calendar year 2000 (of which
approximately $10.4 million represented net cash used in operating activities),
and, as of December 31, 2000, the Company's accumulated deficit was
approximately $37.5 million. AVAX expects to incur significant operating losses
over the next several years as it continues its research and development
programs.

AVAX WILL FACE UNCERTAINTY OVER REIMBURSEMENT AND HEALTHCARE REFORM.

         In both the U.S. and other countries, sales of the Company's products
will depend in part upon the availability of reimbursement from third-party
payors, which include government health administration authorities, managed care
providers, and private health insurers. In Australia, the AVAX joint venture has
not obtained reimbursement approvals for M-Vax from the leading governmental
authority and private insurers. The absence of reimbursement for M-Vax in
Australia has, in management's opinion, directly affected the rate of
commercialization of M-Vax in Australia. The Company anticipates that all
documentation required for submissions for reimbursement for M-Vax in Australia
will be completed and submitted by the middle of 2001. After submission is
completed, however, it is expected that the evaluation period of the submission
may be lengthy and the results of the submission for reimbursement cannot be
guaranteed. AVAX will face similar reimbursement timelines and obstacles as it
attempts to commercialize M-Vax in European countries.

         In addition, third-party payors are increasingly challenging the price
and examining the cost effectiveness of medical products and services.
Significant uncertainty exists as to the reimbursement status of newly approved
health care products, and the Company's products may not be considered cost
effective by a particular governmental authority or insurer. Adequate
third-party reimbursement may not be available to enable AVAX to maintain price
levels sufficient to realize an appropriate return on its investment in the
research and development of its products.

         The U.S. and other countries continue to propose and pass legislation
designed to reduce the cost of healthcare. Accordingly, legislation and
regulations affecting the pricing of the Company's products may change before
the products are approved for marketing to the public. Adoption of new
legislation and regulations could further limit reimbursement for AVAX's
products. If third-party payors fail to provide adequate coverage and
reimbursement rates for the Company's products, the market acceptance of the
products may be adversely affected. In that case, AVAX's business and financial
condition will suffer.


                                       18
<PAGE>

AVAX EXPECTS THE PRICE OF ITS COMMON STOCK TO BE HIGHLY VOLATILE.

         The market price of the Company's common stock, like that of many other
development-stage pharmaceutical or biotechnology companies, has been highly
volatile. For the 12-month period ended December 31, 2000, the price of the
Company's common stock has ranged from $2.66 to $16.00. AVAX expects the price
of its common stock to remain volatile. In addition to general market
fluctuations, the following are examples of public disclosures by the Company or
others that could have a significant impact on the price of AVAX's common stock:

         o technological innovations or new products

         o results of pre-clinical or clinical testing of products

         o adverse reactions to products;

         o governmental  approvals,  delays  in  expected  governmental
           approvals or withdrawals of any prior governmental approvals;

         o receipt or denial of applications for reimbursement of the costs of
           M-Vax and other AC Vaccines in Australia or other countries in which
           those products have been commercialized or are near
           commercialization;

         o changes in U.S. or foreign regulatory policy during the period of
           product development;

         o developments in patent or other proprietary rights, including any
           third party challenges of the Company's intellectual property rights;

         o public or regulatory agency concerns regarding the safety or
           effectiveness of the Company's products;

THE TRADING VOLUME OF THE COMPANY'S COMMON STOCK IS RELATIVELY LOW AND A MORE
ACTIVE MARKET MAY NEVER DEVELOP.

         The Company's common stock is listed for quotation on the Nasdaq
National Market (effective October 9, 2000). The average daily trading volume in
the Company's common stock varies significantly, but is usually low. For the
12-month period ended December 31, 2000, the average daily trading volume in
AVAX's common stock was 159,860 shares and the average number of transactions
per day was 213. The average daily trading volume for the year is affected by
two days in which the common stock traded over 1,000,000 shares and one day when
the stock traded over 3,000,000 shares. On many days, the common stock trades
less than 50,000 shares. This low average volume and low average number of
transactions per day may affect the ability of the Company's stockholders to
sell their shares in the public market at prevailing prices. AVAX cannot
guarantee that there will be a more active trading market for its common stock
in the future. In addition, the Company cannot assure investors that it will be
able to continue to adhere to the strict listing criteria for the Nasdaq
National Market. On March 26, 2001, the Company's common stock traded below
$1.00 per share for the first time. A minimum share price of $1.00 is a
requirement for continued listing on the Nasdaq National Market and the Nasdaq
SmallCap Market. If the Company's common stock does not trade above $1.00 per
share on a consistent basis, it is possible that the Nasdaq may notify the
Company of its intent to delist the Company's common stock. If the common stock
were no longer listed on the Nasdaq National Market, the liquidity of the
Company's common stock could be materially impaired, not only in the number of
shares that could be bought and sold at a given price, but also through delays
in the timing of transactions and reduction in media coverage of the Company. If
the common stock were not listed on the Nasdaq SmallCap Market, the liquidity of
the Company's common stock could be further materially impaired,


                                       19
<PAGE>

not only in the number of shares that could be bought and sold at a given price,
but also through delays in the timing of transactions and reduction in media
coverage of the Company.

CERTAIN PROVISIONS OF AVAX'S CERTIFICATE OF INCORPORATION HAVE ANTITAKEOVER
EFFECTS.

         AVAX's Certificate of Incorporation, as amended, authorizes the Company
to issue up to 5,000,000 shares of "blank check" preferred stock, 2,080,000
shares of which remain undesignated. Unlike common stock, the designation, and
the rights and preferences of blank check preferred stock are not set out in a
company's Certificate of Incorporation. The specific designation, rights and
preferences of blank check preferred stock are determined by the Company's board
of directors at the time they decide to issue a series of preferred stock.
Accordingly, the Company's board of directors is empowered, without stockholder
approval, to issue a new series of preferred stock with dividend, liquidation,
conversion, voting or other rights that could have a negative effect on the
voting power or other rights of common stockholders. The Company's board of
directors could issue a new series of preferred stock as a means of
discouraging, delaying or preventing a change in control of the Company.

         The Company's board of directors used the blank check preferred stock
powers granted to it when AVAX issued its Series B preferred stock in May and
June 1996, and its Series C preferred stock in March 1999. The Series B
preferred stock was converted into common stock in 2000.

THE RIGHTS OF THE COMPANY'S PREFERRED STOCKHOLDERS ARE SUPERIOR TO THE RIGHTS OF
THE COMPANY'S COMMON STOCKHOLDERS.

         The holders of the Company's Series C preferred stock have certain
rights that are superior to the rights of holders of the Company's common stock,
including a liquidation preference over the common stock. In the case of (1) a
liquidation, (2) if AVAX ceases to exist by virtue of a merger in which AVAX is
not the surviving corporation, or (3) if one person or entity acquires more than
50% of the voting power of the Company, holders of the Company's Series C
preferred stock will receive $100 per share in cash or securities, before any
distributions are made to the holders of the Company's common stock.
Additionally, the holders of the Series C preferred stock are entitled to the
consideration per share of common stock that they would have received from the
transaction if they had converted all of their shares of Series C preferred
stock into common stock immediately before the transaction. These rights of the
Series C preferred stock holders could result in the holders of those shares
receiving substantially more of the consideration in a merger transaction than
they would otherwise have received if they had actually converted their shares
of Series C preferred stock into common stock before the merger transaction. The
holders of the Company's common stock would, accordingly, receive a lesser
amount in a merger transaction of that type than they would have received if
there were no outstanding shares of the Series C preferred stock.

CERTAIN SECTIONS OF DELAWARE'S GENERAL CORPORATION LAW, BY WHICH AVAX IS
GOVERNED, HAVE ANTITAKEOVER EFFECTS.

         The Company was organized under the laws of the State of Delaware, and
therefore is subject to the General Corporation Law of the State of Delaware.
Section 203 of that law, subject to certain exceptions, prohibits a Delaware
corporation like AVAX from engaging in any business combination with any
interested stockholder for a period of three years following the date that the
stockholder became an interested stockholder. In general, Section 203 defines an
interested stockholder as any entity or person beneficially owning 15% or more
of the outstanding voting stock of a corporation and any entity or person
affiliated with or controlling or controlled by that entity or person.
Accordingly, Section 203 could discourage third parties from making tender
offers for the Company's shares and, as a consequence, Section 203 could prevent
fluctuations in the market price of the Company's shares that could result from
actual or rumored takeover attempts. Section 203 could also be used by the
Company to attempt to prevent changes in AVAX's management.


                                       20
<PAGE>

AVAX HAS NEVER PAID A CASH DIVIDEND AND DOES NOT EXPECT TO PAY A CASH DIVIDEND
IN THE NEAR FUTURE.

         AVAX has never paid cash dividends on its capital stock and does not
anticipate paying any cash dividends for the foreseeable future.

ITEM 2.  DESCRIPTION OF PROPERTY

         The Company's executive offices are located at 4520 Main, Suite 930,
Kansas City, Missouri 64111. The Company currently leases approximately 7,700
square feet of office space for a monthly lease cost of approximately $13,200.

         In addition, the Company leases a facility at 2000 Hamilton Street,
Philadelphia, Pennsylvania 19103, for its clinical manufacturing facility. The
facility consists of approximately 11,900 square feet of which approximately
9,300 square feet are utilized for manufacturing development while the remaining
2,600 square feet are used for office space. The Company has options for
additional space. Currently, the monthly rental on the facility is approximately
$10,400.

         The Company also leases a facility at One University Place, Rennselaer,
New York 12144-3456. The facility consists of 1,325 square feet of laboratory
facilities located within the laboratory facility owned and operated by the
University of Albany Foundation. Currently the monthly rental for this facility
is approximately $1,700.

         In connection with the Company's acquisition of Genopoietic, AVAX now
leases a manufacturing facility in Lyon, France. The facility consists of
approximately 9,000 square feet of which approximately 7,000 square feet are
utilized for manufacturing development, including 3,000 square feet of clean
rooms, while the remaining 2,000 square feet are used for office space.
Currently, the monthly rental on the facility is approximately $11,500. The
lease is for a 9-year period and is extendable for another 9-year period. The
lease may be cancelled by the Company after three years.

         The Company also leases approximately 700 square feet of office space
in Paris, France, pursuant to a lease agreement entered into in 1995. The lease
is cancelable upon 90 days' written notice, and the monthly rent under the
agreement is approximately $1,200.

ITEM 3.  LEGAL PROCEEDINGS

         The Company's application for a federal trademark registration for the
marks AVAX, NVAX and MVAX has been opposed by a third party. The parties have
reached an agreement in principal and are finalizing their agreement. As a
result of the settlement agreement, which will globally resolve all of the
disputes between the Company and the third party, the third party opposition to
those applications will be withdrawn and the third party will not object to the
Company's use of the marks AVAX, NVAX and MVAX. Once the settlement is
finalized, registrations for those marks should issue from the United States
Patent & Trademark Office in due course.

         The Company is not aware of any other pending or threatened legal
actions.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters were submitted to a vote of security holders during the
quarter ended December 31, 2000.


                                       21
<PAGE>

                             AVAX TECHNOLOGIES, INC.

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         The common stock was publicly traded on the OTC Bulletin Board from
December 19, 1996, through July 9, 1997. The common stock was listed for
quotation on the Nasdaq SmallCap Market under the symbol "AVXT" from July 10,
1997 to October 8, 2000. Effective October 9, 2000, the Company's common stock
began trading on the Nasdaq National Market under the symbol "AVXT". The
following table sets forth, for the periods indicated, the high and low sales
price for the common stock, as reported by Nasdaq, for the quarters presented.
Certain of the prices set forth below may represent inter-dealer quotations,
without adjustment for markups, markdowns and commissions and may not reflect
actual transactions.
<TABLE>
<CAPTION>

                        ---------------------------------------------- -------------- -----------------
                                                                           HIGH             LOW
                        ---------------------------------------------- -------------- -----------------
<S>                                                                       <C>             <C>
                        Fiscal year ended December 31, 2000
                           First quarter                                    16            6 1/16
                           Second quarter                                 12 1/8           6 1/4
                           Third quarter                                  13 1/2           7 1/8
                           Fourth quarter                                  8 1/4           2 7/8


                        ---------------------------------------------- -------------- -----------------
                        Fiscal year ended December 31, 1999
                           First quarter                                   5 1/8            2 3/8
                           Second quarter                                    7             3 9/16
                           Third quarter                                   4 1/2          2 15/16
                           Fourth quarter                                  6 3/4          2 21/32
                        ---------------------------------------------- -------------- -----------------
</TABLE>


         The last reported sale price of the common stock on the Nasdaq National
Market on March 27, 2001 was $1.00 per share. At March 27, 2001, there were
16,541,621 shares of common stock outstanding, which were held by approximately
4,800 stockholders of record. The 86,750 shares of Series C preferred stock
outstanding at December 31, 2000, are convertible into 2,669,225 shares of
common stock excluding the effect of any fractional shares.

         The Company has not paid any cash dividends on its common stock since
its formation. The payment of dividends, if any, in the future, with respect to
the common stock, is within the discretion of the Board of Directors of the
Company and will depend on the Company's earnings, capital requirements,
financial condition and other relevant factors. The Board of Directors of the
Company does not presently intend to declare any dividends on the common stock
in the foreseeable future. The Company anticipates that all earnings and other
resources of the Company, if any, will be retained by the Company for investment
in its business.


                                       22
<PAGE>

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
         OPERATION

GENERAL

         Since its inception, the Company has concentrated its efforts and
resources on the development and commercialization of biotechnology and
pharmaceutical products and technologies. The Company has been unprofitable
since its founding and has incurred a cumulative net loss of approximately
$37,502,589 as of December 31, 2000. The Company expects to incur significant
operating losses over the next several years, primarily due to the
continuation of its research and development programs, including clinical
trials for M-Vax and O-Vax, pre-clinical studies for the Company's other
products and compounds, and for the research and development efforts
undertaken at the Company's subsidiary in France.

         The Company's ability to achieve profitability depends upon, among
other things, its ability to develop products, obtain regulatory approval for
its proposed products, and enter into agreements for product development,
manufacturing and commercialization. The Company's M-Vax and O-Vax products do
not currently generate revenue (other than limited M-Vax revenue through the
Australian joint venture), and there can be no assurance that the Company will
ever achieve significant revenues or profitable operations from the sale of
M-Vax, O-Vax, or any other products that it may develop.

PLAN OF OPERATION

         The Company is currently engaged in the development and
commercialization of biotechnology and pharmaceutical products and
technologies. In November 1995, the Company acquired the rights to the AC
Vaccine technology pursuant to the TJU License. The Company intends to
continue to be engaged primarily in the development and commercialization of
its AC Vaccine products, other Company products and compounds, and the
products and technologies acquired in the Genopoietic acquisition. The
Company anticipates that during the next 12 months it will continue
substantial research and development, including (i) pivotal registration
clinical trials for M-Vax, the Company's lead AC Vaccine technology for
metastatic melanoma, (ii) multi-center Phase 2 clinical trials for O-Vax, its
AC Vaccine for ovarian cancer, (iii) development of the Genopoietic products
and technologies, and (iv) development of certain other Company compounds and
products. The Company has undertaken in the last 90 days a review of all
products, compounds and initiatives (which review is ongoing) in an effort to
reassess the leading opportunities for the Company. The Company expects to
continue to focus its research and development resources primarily on the AC
Vaccine technology and the TK suicide gene therapy. See ITEM 1 "DESCRIPTION
OF BUSINESS - TECHNOLOGY AND PRODUCT CANDIDATES AND SERVICES," "LICENSE AND
RESEARCH AGREEMENTS" and "MANUFACTURING AND MARKETING."

         Although the Company completed a $25.1 million private placement of
common stock on March 10, 2000, there can be no assurance that the Company will
be able to obtain the additional financing necessary to continue to develop
current products and technologies or any future additional products or
technologies. In addition, there can be no assurance that changes in the
Company's research and development plans, or other changes which would or could
alter the Company's operating expenses, will not require the Company to
reallocate funds among its planned activities and curtail certain planned
expenditures. There can be no assurance as to the availability or the terms of
any required additional financing, when and if needed. In the event that the
Company fails to raise any funds it requires, it may be necessary for the
Company to curtail significantly its activities or cease operations.

         During the last 12 months, the Company's manufacturing, research and
development expenses increased from $5.2 million to $9.4 million, while selling,
general and administrative expenses increased from $3.4 million to $4.0 million.
The increases in research and development expenses relate primarily to an
increase in activity at the Company's manufacturing facility related to
processing tumors and


                                       23
<PAGE>

vaccines for the clinical trials, increased expenses associated with the M-Vax
pivotal registration trial, the initiation of Phase 2 trials for O-Vax,
increased spending related to the anti-estrogen and topoisomerase compounds in
pre-clinical development and approximately $700,000 in new spending at the
Company's French subsidiary acquired in August 2000. In 2000, the Company also
had increased costs related to patent, trademark and regulatory expenses in its
efforts to expand the use of the AC Vaccine technology in Europe and Australia.
In addition, the Company incurred a charge of $4.7 million related to acquired
in process research and development obtained in the acquisition of Genopoietic.
Selling, general and administrative expenses increased due to the establishment
of a marketing and business development function in the U.S. to oversee
commercialization and business development activities worldwide.

         The Company anticipates that, over the next 12 months, research and
development expenses, exclusive of the 2000 charge for acquired in process
research and development discussed above, will increase over 2000 expenses, due
in part to the funding obligations to support the early clinical development
programs in France. In addition the Company anticipates that selling, general
and administration expenses will increase due to the increased efforts to
support and penetrate the Australian and European markets for the AC Vaccine
technology.

LIQUIDITY AND CAPITAL RESOURCES

         The Company presently anticipates that its current resources should be
sufficient to fund operations through the first half of 2002 based upon the
Company's current operating plan. AVAX will need to raise more money during the
first half of 2002 to continue research and product development through the end
of 2002, and to pursue the manufacture and marketing of any products that it may
develop.

         Because the Company's working capital requirements will depend upon
numerous factors, including, without limitation, progress of the Company's
research and development programs, pre-clinical and clinical testing, timing and
cost of obtaining regulatory approvals, changes in levels of resources that the
Company devotes to the development of manufacturing and marketing capabilities,
competitive and technological advances, status of competitors, and the ability
of the Company to establish collaborative arrangements with other organizations,
there can be no assurance that the current cash resources of the Company will be
sufficient to fund its operations through the first half of 2002. Because the
Company has no committed external sources of capital, and expects no significant
product revenues for the foreseeable future, it will require additional
financing to fund future operations. There can be no assurance, however, that
the Company will be able to obtain the additional funds it will require on
acceptable terms, if at all. If adequate funds are not available the Company may
be required to delay, reduce the scope of, or eliminate, one or more of its
research or development programs; to obtain funds through arrangements with
collaborative partners or others that may require the Company to relinquish
rights to certain technologies, product candidates or products that the Company
would otherwise seek to develop or commercialize itself; or to license the
rights to such products on terms that are less favorable to the Company that
might otherwise be available.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

         None noted.


                                       24
<PAGE>


ITEM 7.  FINANCIAL STATEMENTS

         The Company's  consolidated  financial  statements appear following
Item 13 of this Report.  See Financial Statements.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         None.


                                       25
<PAGE>



                             AVAX TECHNOLOGIES, INC.

                                    PART III

ITEM 9.  DIRECTORS,  EXECUTIVE OFFICERS,  PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF  THE EXCHANGE ACT

         Incorporated by reference to the Company's Proxy Statement for its
Annual Meeting of Stockholders to be filed with the Securities and Exchange
Commission within 120 days after the close of the year ended December 31, 2000.

ITEM 10. EXECUTIVE COMPENSATION

         Incorporated by reference to the Company's Proxy Statement for its
Annual Meeting of Stockholders to be filed with the Securities and Exchange
Commission within 120 days after the close of the year ended December 31, 2000.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Incorporated by reference to the Company's Proxy Statement for its
Annual Meeting of Stockholders to be filed with the Securities and Exchange
Commission within 120 days after the close of the year ended December 31, 2000.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Incorporated by reference to the Company's Proxy Statement for its
Annual Meeting of Stockholders to be filed with the Securities and Exchange
Commission within 120 days after the close of the year ended December 31, 2000.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)      EXHIBITS

         Exhibits are listed on the Index to Exhibits at the end of this Report.

(b)      REPORTS ON FORM 8-K

         An amendment to the Current Report on Form 8-K originally filed with
the Securities and Exchange Commission on September 8, 2000, was filed with the
Securities and Exchange Commission on November 7, 2000 for the purpose of filing
the requisite exhibits and financial schedules pursuant to Item 7, in connection
with the Company's acquisition of GPH, S.A. and Genopoietic S.A.


                                       26
<PAGE>

                        CONSOLIDATED FINANCIAL STATEMENTS

                             AVAX TECHNOLOGIES, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                     YEARS ENDED DECEMBER 31, 2000 AND 1999
                      AND THE PERIOD FROM JANUARY 12, 1990
                      (INCORPORATION) TO DECEMBER 31, 2000
                       WITH REPORT OF INDEPENDENT AUDITORS
<PAGE>

                             AVAX Technologies, Inc.
                          (A DEVELOPMENT STAGE COMPANY)

                        Consolidated Financial Statements



Years Ended December 31, 2000 and 1999 and for the period From January 12, 1990
                      (Incorporation) to December 31, 2000




                                    CONTENTS

Report of Independent Auditors ........................................ F-1

Consolidated Financial Statements

Consolidated Balance Sheet as of December 31, 2000 .................... F-2
Consolidated Statements of Operations for the years ended
        December 31, 2000 and 1999 and for the period from
        January 12, 1990 (incorporation) to December 31, 2000 ......... F-3
Consolidated Statements of Equity (Deficit) for the years
        ended December 31, 2000 and 1999 and for the period
        from January 12, 1990 (incorporation) to
        December 31, 2000 ............................................. F-4
Consolidated Statements of Cash Flows for the years ended
        December 31, 2000 and 1999 and for the period from
        January 12, 1990 (incorporation) to December 31, 2000 ......... F-7
Notes to Consolidated Financial Statements ............................ F-9
<PAGE>

                         Report of Independent Auditors

The Board of Directors and Stockholders
AVAX Technologies, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheet of AVAX
Technologies, Inc. (a development stage company) and subsidiaries as of December
31, 2000, and the related consolidated statements of operations, stockholders'
equity (deficit) and cash flows for the years ended December 31, 2000 and 1999,
and for the period from January 12, 1990 (incorporation) to December 31, 2000.
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 AVAX Technologies,
Inc. and subsidiaries at December 31, 2000 and the consolidated results of their
operations and their cash flows for the years ended December 31, 2000 and 1999
and for the period from January 12, 1990 (incorporation) to December 31, 2000 in
conformity with accounting principles generally accepted in the United States.





                                                           /s/ Ernst & Young LLP


Kansas City, Missouri
February 23, 2001


                                      F-1
<PAGE>

                    AVAX Technologies, Inc. and Subsidiaries
                          (A DEVELOPMENT STAGE COMPANY)
                           Consolidated Balance Sheet

<TABLE>
<CAPTION>
                                                                                                        DECEMBER 31,
                                                                                                            2000
                                                                                                    ----------------------
<S>                                                                                                 <C>
ASSETS
Current assets:
   Cash and cash equivalents                                                                        $        3,694,424
   Marketable securities                                                                                    19,239,189
   Accounts receivable                                                                                         133,140
   Inventory                                                                                                    55,187
   Prepaid expenses and other current assets                                                                 1,019,400
                                                                                                    ----------------------
Total current assets                                                                                        24,141,340
Property, plant and equipment, at cost                                                                       3,133,204
   Less accumulated depreciation                                                                               704,397
                                                                                                    ----------------------
Net property, plant and equipment                                                                            2,428,807
Equity investment in joint venture                                                                              47,753
Acquired intellectual property and other intangibles                                                         4,081,726
                                                                                                    ----------------------
Total assets                                                                                        $       30,699,626
                                                                                                    ======================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable and accrued liabilities                                                         $        2,296,641
   Deferred revenue                                                                                             64,614
                                                                                                    ----------------------
Total current liabilities                                                                                    2,361,255
Long-term debt                                                                                                 247,752
Commitments and contingencies
Stockholders' equity:
   Preferred stock, $.01 par value:
     Authorized shares - 5,000,000, including Series B -
        300,000 shares and Series C - 120,000 shares
     Series B convertible preferred stock:
        Issued and outstanding shares - 0                                                                            -
     Series C convertible preferred stock:
       Issued and outstanding shares - 86,750
       (liquidation preference - $8,675,000)                                                                       867
   Common stock, $.004 par value:
     Authorized shares - 30,000,000
     Issued and outstanding shares - 16,541,621                                                                 66,167
   Additional paid-in capital                                                                               65,446,587
   Subscription receivable                                                                                        (422)
   Accumulated other comprehensive loss                                                                         80,009
   Deficit accumulated during the development stage                                                        (37,502,589)
                                                                                                    ----------------------
Total stockholders' equity                                                                                  28,090,619
                                                                                                    ----------------------
Total liabilities and stockholders' equity                                                          $       30,699,626
                                                                                                    ======================
</TABLE>




SEE ACCOMPANYING NOTES.


                                      F-2
<PAGE>

                    AVAX Technologies, Inc. and Subsidiaries
                          (A DEVELOPMENT STAGE COMPANY)

                      Consolidated Statements of Operations

<TABLE>
<CAPTION>
                                                                                                                  PERIOD FROM
                                                                                                                JANUARY 12, 1990
                                                                                                                (INCORPORATION)
                                                                                    YEAR ENDED                         TO
                                                                                   DECEMBER 31,                   DECEMBER 31,
                                                                             1999               2000                 2000
                                                                      -------------------------------------------------------------
<S>                                                                   <C>               <C>                 <C>

Revenue:
   Gain from sale of the Product                                      $              -  $             -     $       1,951,000
   Product and contract service revenue                                              -           112,459              112,459
                                                                      -------------------------------------------------------------
Total revenue                                                                        -           112,459            2,063,459

Costs and expenses:
   Manufacturing, research and development                                   5,175,695         9,405,318           23,401,441
   Acquired in process research and development                                      -         4,659,448            4,659,448
   Selling, general and administrative                                       3,376,278         4,000,730           15,999,013
                                                                      -------------------------------------------------------------
Total operating loss                                                        (8,551,973)      (17,953,037)         (41,996,443)

Other income (expense):
   Interest income                                                             661,951         1,538,695            4,834,327
   Interest expense                                                                  -                 -             (646,293)
   Minority interest in losses of consolidated
     subsidiaries                                                               22,459                 -               22,459
   Amortization of deferred gain on joint venture                                    -           902,900              902,900
   Equity in net loss of joint venture                                               -          (765,307)            (765,307)
   Other, net                                                                        -                 -              145,768
                                                                      -------------------------------------------------------------
Total other income, net                                                        684,410         1,676,288            4,493,854
                                                                      -------------------------------------------------------------
Net loss                                                                    (7,867,563)      (16,276,749)         (37,502,589)
Amount payable for liquidation preference                                            -                 -           (1,870,033)
                                                                      -------------------------------------------------------------
Net loss attributable to common stockholders                          $     (7,867,563)  $   (16,276,749)   $     (39,372,622)
                                                                      =============================================================

Net loss per common share - basic                                     $           (.74)  $         (1.06)
                                                                      =====================================
Weighted average number of common shares outstanding                        10,642,366        15,347,464
                                                                      =====================================
</TABLE>


SEE ACCOMPANYING NOTES.


                                      F-3
<PAGE>

                    AVAX Technologies, Inc. and Subsidiaries
                          (A DEVELOPMENT STAGE COMPANY)
            Consolidated Statements of Stockholders' Equity (Deficit)



<TABLE>
<CAPTION>
                                              SERIES A             SERIES B             SERIES C
                                             CONVERTIBLE          CONVERTIBLE          CONVERTIBLE
                                           PREFERRED STOCK      PREFERRED STOCK      PREFERRED STOCK       COMMON STOCK
                                        -------------------------------------------------------------------------------------
                                          SHARES     AMOUNT    SHARES     AMOUNT    SHARES     AMOUNT    SHARES     AMOUNT
                                        -------------------------------------------------------------------------------------

<S>                                     <C>        <C>         <C>      <C>       <C>        <C>        <C>         <C>
Issuance of common stock for
   services in January 1990                     -  $       -         -  $      -          -  $      -     582,500   $ 2,330
Net loss                                        -          -         -         -          -         -           -         -
                                        -------------------------------------------------------------------------------------
Balance at December 31, 1990                    -          -         -         -          -         -     582,500     2,330
   Issuance of common stock for
     services in August 1991                    -          -         -         -          -         -     230,000       920
   Net loss                                     -          -         -         -          -         -           -         -
                                        -------------------------------------------------------------------------------------
Balance at December 31, 1991                    -          -         -         -          -         -     812,500     3,250
   Conversion of note payable to
     related party to common stock
     in June 1992                               -          -         -         -          -         -      22,913        92
   Issuance of common stock for
     services in May and June 1992              -          -         -         -          -         -     264,185     1,056
   Issuance of Series A convertible
     preferred stock, net of
     issuance cost in June, July
     and September 1992                 1,287,500     12,875         -         -          -         -           -         -
   Net loss                                     -          -         -         -          -         -           -         -
                                        -------------------------------------------------------------------------------------
Balance at December 31, 1992            1,287,500     12,875         -         -          -         -   1,099,598     4,398
   Issuance of common stock for
     services in July and November              -          -         -         -          -         -       8,717        35
     1993
   Net loss                                     -          -         -         -          -         -           -         -
                                        -------------------------------------------------------------------------------------
Balance at December 31, 1993            1,287,500     12,875         -         -          -         -   1,108,315     4,433
   Issuance of common stock for
     services in July 1994                      -          -         -         -          -         -       3,750        15
   Net loss                                     -          -         -         -          -         -           -         -
                                        -------------------------------------------------------------------------------------
Balance at December 31, 1994            1,287,500     12,875         -         -          -         -   1,112,065     4,448
   Common stock returned and
     canceled in April and May 1995             -          -         -         -          -         -    (307,948)   (1,232)
   Shares issued in September and
     November 1995                              -          -         -         -          -         -   1,777,218     7,109
   Amount payable for liquidation
     preference                                 -          -         -         -          -         -           -         -
   Net income                                   -          -         -         -          -         -           -         -
                                        -------------------------------------------------------------------------------------
Balance at December 31, 1995            1,287,500     12,875         -         -          -         -   2,581,335    10,325



<CAPTION>
                                                                                                         DEFICIT
                                                                             UNREALIZED                ACCUMULATED     TOTAL
                                        ADDITIONAL                            LOSS ON        OTHER      DURING THE STOCKHOLDERS'
                                          PAID-IN   SUBSCRIPTION  DEFERRED   MARKETABLE  COMPREHENSIVE DEVELOPMENT    EQUITY
                                          CAPITAL    RECEIVABLE COMPENSATION SECURITIES     INCOME        STAGE      (DEFICIT)
                                       ------------------------------------------------------------------------------------------
<S>                                    <C>          <C>         <C>         <C>         <C>            <C>          <C>

Issuance of common stock for
   services in January 1990            $        920 $       -   $        -  $       -   $       -      $         -  $     3,250
Net loss                                          -         -            -          -           -             (889)        (889)
                                       ------------------------------------------------------------------------------------------
Balance at December 31, 1990                    920         -            -          -           -             (889)       2,361
   Issuance of common stock for
     services in August 1991                  5,830         -            -          -           -                -        6,750
   Net loss                                       -         -            -          -           -          (97,804)     (97,804)
                                       ------------------------------------------------------------------------------------------
Balance at December 31, 1991                  6,750         -            -          -           -          (98,693)     (88,693)
   Conversion of note payable to
     related party to common stock
     in June 1992                           160,465         -            -          -           -                -      160,557
   Issuance of common stock for
     services in May and June 1992            6,444         -            -          -           -                -        7,500
   Issuance of Series A convertible
     preferred stock, net of
     issuance cost in June, July
     and September 1992                   2,258,837         -            -          -           -                -    2,271,712
   Net loss                                       -         -            -          -           -         (607,683)    (607,683)
                                       ------------------------------------------------------------------------------------------
Balance at December 31, 1992              2,432,496         -            -          -           -         (706,376)   1,743,393
   Issuance of common stock for
     services in July and November
     1993                                    24,965         -            -          -           -                -       25,000
   Net loss                                       -         -            -          -           -       (1,610,154)  (1,610,154)
                                       ------------------------------------------------------------------------------------------
Balance at December 31, 1993              2,457,461         -            -          -           -       (2,316,530)     158,239
   Issuance of common stock for
     services in July 1994                    4,485         -            -          -           -                -        4,500
   Net loss                                       -         -            -          -           -         (781,221)    (781,221)
                                       ------------------------------------------------------------------------------------------
Balance at December 31, 1994              2,461,946         -            -          -           -       (3,097,751)    (618,482)
   Common stock returned and
     canceled in April and May 1995               -         -            -          -           -                -       (1,232)
   Shares issued in September and
     November 1995                                -    (7,109)           -          -           -                -            -
   Amount payable for liquidation
     preference                            (738,289)        -            -          -           -                -     (738,289)
   Net income                                     -         -            -          -           -        1,380,571    1,380,571
                                       ------------------------------------------------------------------------------------------
Balance at December 31, 1995              1,723,657    (7,109)           -          -           -       (1,717,180)      22,568
</TABLE>


                                      F-4
<PAGE>

                    AVAX Technologies, Inc. and Subsidiaries
                          (A DEVELOPMENT STAGE COMPANY)
      Consolidated Statements of Stockholders' Equity (Deficit) (continued)


<TABLE>
<CAPTION>
                                              SERIES A             SERIES B             SERIES C
                                             CONVERTIBLE          CONVERTIBLE          CONVERTIBLE
                                           PREFERRED STOCK      PREFERRED STOCK      PREFERRED STOCK       COMMON STOCK
                                        -------------------------------------------------------------------------------------
                                          SHARES     AMOUNT    SHARES     AMOUNT    SHARES     AMOUNT    SHARES     AMOUNT
                                        -------------------------------------------------------------------------------------
<S>                                     <C>          <C>       <C>      <C>          <C>     <C>       <C>         <C>
Balance at December 31, 1995            1,287,500    $12,875         -  $      -          -  $      -   2,581,335   $10,325
   Repurchase of common stock
     in March 1996                              -          -         -         -          -         -     (77,901)    ( 312)
   Payment of subscription
     receivable                                 -          -         -         -          -         -           -         -
   Conversion of Series A
     preferred stock in June 1996       (1,287,500)  (12,875)        -         -          -         -     321,875     1,288
   Issuance of common stock and
     Series B preferred stock in a
     private placement in May and
     June 1996                                  -          -   258,198     2,582          -         -     129,099       516
   Issuance of common stock
     and Series B preferred
     stock for services in
     June 1996                                  -          -     1,000        10          -         -         500         2
   Exercise of warrants in June and
     July 1996                                  -          -         -         -          -         -     156,250       626
   Amount payable for liquidation
     preference                                 -          -         -         -          -         -           -         -
   Compensation related to stock
     options granted in May and
     September 1996                             -          -         -         -          -         -           -         -
   Amortization of deferred
     compensation                               -          -         -         -          -         -           -         -
   Unrealized loss on marketable
     securities                                 -          -         -         -          -         -           -         -
   Net loss                                     -          -         -         -          -         -           -         -
                                        -------------------------------------------------------------------------------------
Balance at December  31, 1996                   -          -   259,198     2,592          -          -  3,111,158    12,445
   Payment of subscription
   receivable                                   -          -         -         -          -          -          -         -
   Write-off of subscription                    -          -         -         -          -          -          -         -
   receivable
   Exercise of warrants in
     April and June 1997                        -          -         -         -          -          -     49,770       199
   Conversion of preferred to                   -          -   (55,039)     (551)         -          -  1,421,403     5,685
   common stock
   Repurchase of fractional shares              -          -         -         -          -          -        (26)        -
   Realization of loss on marketable            -          -         -         -          -          -          -         -
     securities

   Amortization of deferred                     -          -         -         -          -          -          -         -
   compensation
   Net loss                                     -          -         -         -          -          -          -         -
                                        -------------------------------------------------------------------------------------
Balance at December  31, 1997                   -          -   204,159    $2,041          -          -  4,582,305    18,329
   Conversion of preferred to                   -          -   (91,470)     (914)         -          -  2,386,174     9,544
     common stock
   Payment of subscription                      -          -         -         -          -          -          -         -
     receivable
   Issue shares based upon reset                -          -         -         -          -          -  3,029,339    12,117
     provisions
   Issue compensatory shares to                 -          -         -         -          -          -      9,301        38
     officer
   Amortization of deferred                     -          -         -         -          -          -          -         -
     compensation
   Net loss                                     -          -         -         -          -          -          -         -
                                        -------------------------------------------------------------------------------------
Balance at December 31, 1998                    -           -  112,689     1,127          -          - 10,007,119    40,028
                                        -------------------------------------------------------------------------------------



<CAPTION>
                                                                                                        DEFICIT
                                                                             UNREALIZED                ACCUMULATED     TOTAL
                                        ADDITIONAL                            LOSS ON        OTHER      DURING THE STOCKHOLDERS'
                                          PAID-IN   SUBSCRIPTION  DEFERRED   MARKETABLE  COMPREHENSIVE DEVELOPMENT    EQUITY
                                          INCOME     RECEIVABLE COMPENSATION SECURITIES     INCOME        STAGE      (DEFICIT)
                                        -----------------------------------------------------------------------------------------
<S>                                     <C>           <C>       <C>         <C>         <C>            <C>         <C>
Balance at December 31, 1995            $ 1,723,657   $(7,109)  $        -  $       -   $       -      $(1,717,180)$    22,568
   Repurchase of common stock
     in March 1996                                -       312            -          -           -                -            -
   Payment of subscription
     receivable                                   -     2,771            -          -           -                -        2,771
   Conversion of Series A
     preferred stock in June 1996            11,587         -            -          -           -                -            -
   Issuance of common stock and
     Series B preferred stock in a
     private placement in May and
     June 1996                           22,217,397         -            -          -           -                -   22,220,495
   Issuance of common stock
     and Series B preferred
     stock for services in
     June 1996                               99,988         -            -          -           -                -      100,000
   Exercise of warrants in June and
     July 1996                                5,624         -            -          -           -                -        6,250
   Amount payable for liquidation
     preference                          (1,131,744)        -            -          -           -                -   (1,131,744)
   Compensation related to stock
     options granted in May and
     September 1996                       1,076,373         -   (1,076,373)         -           -                -            -
   Amortization of deferred
     compensation                                 -         -      112,949          -           -                -      112,949
   Unrealized loss on marketable
     securities                                   -         -            -     (2,037)          -                -       (2,037)
   Net loss                                       -         -            -          -           -       (1,536,842)  (1,536,842)
                                        -----------------------------------------------------------------------------------------
Balance at December  31, 1996            24,002,882    (4,026)    (963,424)    (2,037)          -       (3,254,022)  19,794,410
   Payment of subscription
     receivable                                   -     1,761            -          -           -                -        1,761
   Write-off of subscription
     receivable                              (1,833)    1,833            -          -           -                -            -
   Exercise of warrants in
     April and June 1997                       (199)        -            -          -           -                -            -
   Conversion of preferred to
     common stock                            (5,134)        -            -          -           -                -            -
   Repurchase of fractional shares              (76)        -            -          -           -                -          (76)
   Realization of loss on marketable
     securities                                   -         -            -      2,037           -                -        2,037
   Amortization of deferred
     compensation                                 -         -      269,100          -           -                -      269,100
   Net loss                                       -         -            -          -           -       (4,266,125)  (4,266,125)
                                        -----------------------------------------------------------------------------------------
Balance at December  31, 1997            23,995,640      (432)    (694,324)         -           -       (7,520,147)  15,801,107
   Conversion of preferred to
     common stock                            (8,630)        -            -          -           -                -            -
   Payment of subscription
     receivable                                   -        10            -          -           -                -           10
   Issue shares based upon reset
     provisions                             (12,117)        -            -          -           -                -
   Issue compensatory shares to
     officer                                 24,962         -            -          -           -                -       25,000
   Amortization of deferred
     compensation                                 -         -      269,100          -           -                -      269,100
   Net loss                                       -         -            -          -           -       (5,838,130)  (5,838,130)
                                        -----------------------------------------------------------------------------------------
Balance at December 31, 1998             23,999,855      (422)    (425,224)         -           -      (13,358,277)  10,257,087
                                        -----------------------------------------------------------------------------------------
</TABLE>


                                      F-5
<PAGE>

                    AVAX Technologies, Inc. and Subsidiaries
                          (A DEVELOPMENT STAGE COMPANY)
      Consolidated Statements of Stockholders' Equity (Deficit) (continued)

<TABLE>
<CAPTION>

                                              Series A             Series B             Series C
                                             Convertible          Convertible          Convertible
                                           Preferred Stock      Preferred Stock      Preferred Stock       Common Stock
                                        -------------------------------------------------------------------------------------
                                          Shares     Amount    Shares     Amount    Shares     Amount    Shares     Amount
                                        -------------------------------------------------------------------------------------
<S>                                     <C>        <C>         <C>        <C>       <C>      <C>       <C>          <C>
Balance at December  31, 1998                   -  $       -   112,689    $1,127          -  $       - 10,007,119   $40,028
   Conversion of preferred to
     common stock                               -          -   (38,805)     (388)         -          -  1,012,286     4,049
   Issue shares based upon reset
     provisions                                 -          -         -         -          -          -     20,885        84
   Issuance of Series C preferred
     stock in a private placement
     in March 1999                              -          -         -         -    101,300      1,013          -         -
   Exercise of Warrants pursuant to
     cashless exercise provisions               -          -         -         -          -          -     37,500       150
   Capital contributed through sale
     of 20% interest in
     consolidated subsidiaries to
     unrelated third party                      -          -         -         -          -          -          -         -
   Amortization of deferred
     compensation                               -          -         -         -          -          -          -         -
   Net loss                                     -          -         -         -          -          -          -         -
                                        -------------------------------------------------------------------------------------
Balance at December 31, 1999                    -          -    73,884       739    101,300      1,013 11,077,790    44,311
                                        -------------------------------------------------------------------------------------
   Conversion of preferred to
     common stock                               -          -   (73,884)     (739)   (14,550)      (146) 2,375,083     9,500
   Private placement of common
     stock, March 2000                          -          -         -         -          -          -  2,259,494     9,039
   Capital contribution by
     shareholder                                -          -         -         -          -          -          -         -
   Exercise of options and warrants             -          -         -         -          -          -     29,254       117
   Shares issued pursuant to
     acquisition of Subsidiary                  -          -         -         -          -          -    800,000     3,200
   Elimination of contributed
     capital related to joint
     venture no longer consolidated
     (See NOTE 4)                               -          -         -         -          -          -          -         -
   Amortization of deferred
     compensation                               -          -         -         -          -          -          -         -
   Foreign currency translation
     adjustment                                 -          -         -         -          -          -          -         -
   Net loss                                     -          -         -         -          -          -          -         -
                                        -------------------------------------------------------------------------------------
Balance at December 31, 2000                    -  $       -         -  $      -      86,750 $     867 16,541,621 $  66,167
                                        -------------------------------------------------------------------------------------



<CAPTION>
                                                                                                         Deficit
                                                                              Unrealized                Accumulated     Total
                                         Additional                            Loss on        Other      During the Stockholders'
                                           Paid-In   Subscription  Deferred   Marketable  Comprehensive Development    Equity
                                           Capital    Receivable Compensation Securities     Income        Stage      (Deficit)
                                        ------------------------------------------------------------------------------------------
<S>                                     <C>          <C>         <C>         <C>        <C>            <C>           <C>
Balance at December  31, 1998            $23,999,855 $    (422)  $ (425,224) $       -  $        -     $(13,358,277) $10,257,087
   Conversion of preferred to
     common stock                             (3,661)        -            -          -           -                -            -
   Issue shares based upon reset
     provisions                                  (84)        -            -          -           -                -            -
   Issuance of Series C preferred
     stock in a private placement
     in March 1999                         9,283,726         -            -          -           -                -    9,284,739
   Exercise of Warrants pursuant to
     cashless exercise provisions             27,000         -            -          -           -                -       27,150
   Capital contributed through sale
     of 20% interest in
     consolidated subsidiaries to
     unrelated third party                 2,099,200         -            -          -           -                -    2,099,200
   Amortization of deferred
     compensation                                  -         -      269,100          -           -                -      269,100
   Net loss                                        -         -            -          -           -       (7,867,563)  (7,867,563)
                                        ------------------------------------------------------------------------------------------
Balance at December 31, 1999            $ 35,406,036      (422)    (156,124)         -           -      (21,225,840)  14,069,713
                                        ------------------------------------------------------------------------------------------
   Conversion of preferred to
     common stock                             (8,615)        -            -          -           -                -            -
   Private placement of common
     stock, March 2000                    24,186,656         -            -          -           -                -   24,195,695
   Capital contribution by
     shareholder                              93,637                                                                      93,637

   Exercise of options and warrants          271,273         -            -          -           -                -      271,390
   Shares issued pursuant to
     acquisition of Subsidiary             7,596,800                                                                   7,600,000
   Elimination of contributed
     capital related to joint
     venture no longer consolidated
     (See NOTE 4)                         (2,099,200)        -            -          -           -                -   (2,099,200)
   Amortization of deferred
     compensation                                  -         -      156,124          -           -                -      156,124
   Foreign currency translation
     adjustment                                    -         -            -          -      80,009                -       80,009
   Net loss                                        -         -            -          -           -      (16,276,749) (16,276,749)
                                        ------------------------------------------------------------------------------------------
Balance at December 31, 2000            $  65,446,587$    (422)   $       -   $      -    $ 80,009     $(37,502,589 $ 28,090,619
                                        ------------------------------------------------------------------------------------------
</TABLE>




SEE ACCOMPANYING NOTES.


                                      F-6
<PAGE>

                    AVAX Technologies, Inc. and Subsidiaries
                          (A DEVELOPMENT STAGE COMPANY)

                      Consolidated Statements of Cash Flows


<TABLE>
<CAPTION>
                                                                                                            PERIOD FROM
                                                                                                         JANUARY 12, 1990
                                                                                                          (INCORPORATION)
                                                                           YEAR ENDED DECEMBER 31         TO DECEMBER 31,
                                                                           1999              2000              2000
                                                                     -------------------------------------------------------
<S>                                                                   <C>              <C>               <C>
OPERATING ACTIVITIES
Net loss                                                              $    (7,867,563) $   (16,276,749)  $    (37,502,589)
Adjustments to reconcile net loss to net cash used in operating
   activities:
     Depreciation and amortization                                            350,485          533,371          1,685,787
     Amortization of deferred gain on joint venture                                 -         (902,900)          (902,900)
     Equity in net loss of joint venture                                            -          765,307            765,307
     Minority interest in net loss of consolidated subsidiary                 (22,459)               -            (22,459)
     Acquired in-process research and development charge                            -        4,659,448          4,659,448
     Compensatory stock issue                                                       -                -             25,000
     Gain on sale of the Product                                                    -                -         (1,951,000)
     Gain on sale of intellectual property                                          -                -               (787)
     Accretion of interest on common stock receivable                               -                -           (449,000)
     Accretion of interest on amount payable to preferred
       stockholders and Former Officer                                              -                -            449,000
     Loss on sale or abandonment of furniture and equipment                         -                -             37,387
     Issuance of common stock or warrants for services                         27,150          249,139            423,289
     Changes in operating assets and liabilities:
       Accounts receivable                                                          -          (13,776)           (13,776)
       Inventory                                                                    -          (10,722)           (10,722)
       Prepaid expenses and other current assets                             (106,120)        (171,728)          (508,549)
       Accounts payable and accrued liabilities                              (485,383)         732,930          1,134,193
       Deferred revenue                                                                         64,614             64,614
       Amount payable to Former Officer                                             -                -             80,522
                                                                     -------------------------------------------------------
Net cash used in operating activities                                      (8,103,890)     (10,371,066)       (32,037,235)

INVESTING ACTIVITIES
Purchases of marketable securities                                        (87,395,943)    (162,639,464)      (348,212,614)
Proceeds from sale of marketable securities                                87,905,000      152,268,896        321,856,953
Proceeds from sale of short-term investments                                        -                -          7,116,472
Purchases of furniture and equipment                                       (1,232,787)        (243,495)        (2,768,107)
Proceeds from sale of furniture and equipment                                       -                -              4,600
Other                                                                               -                -             (1,358)
Acquisition of GPH, S.A. and Genopoietic, S.A.                                      -         (621,397)          (621,397)
                                                                     -------------------------------------------------------
Net cash used in investing activities                                        (723,730)     (11,235,460)       (22,625,451)
</TABLE>


                                      F-7
<PAGE>

                    AVAX Technologies, Inc. and Subsidiaries
                          (A DEVELOPMENT STAGE COMPANY)

                Consolidated Statements of Cash Flows (continued)

<TABLE>
<CAPTION>
                                                                                                        PERIOD FROM
                                                                                                          JANUARY
                                                                                                         12, 1990
                                                                                                     (INCORPORATION)
                                                                      YEAR ENDED DECEMBER 31         TO DECEMBER 31,
                                                                       1999             2000               2000
                                                                --------------------------------------------------------
<S>                                                             <C>               <C>              <C>
FINANCING ACTIVITIES
Proceeds from issuance of notes payable
   to related party                                             $              -  $              - $         957,557
Principal payments on notes payable to related party                           -            (5,000)         (802,000)
Proceeds from loans payable                                                    -                 -         1,389,000
Principal payments on loans payable                                            -                 -        (1,389,000)
Payments for fractional shares from reverse splits and
   preferred stock conversions                                                 -                 -               (76)
Financing costs incurred                                                       -                 -           (90,000)
Shareholder capital contribution                                               -            93,637            93,637
Payments received on subscription receivable                                   -                 -             4,542
Proceeds received from exercise of stock warrants                              -            22,251            28,501
Elimination of consolidated accounting treatment for joint
   venture                                                                     -        (2,511,701)       (2,511,701)
Capital contribution through sale of interest in consolidated
   subsidiary                                                          2,624,000                 -         2,624,000
Net proceeds received from issuance of preferred and
   common stock                                                        9,284,739        24,195,695        57,972,641
                                                                --------------------------------------------------------
Net cash provided by financing activities                             11,908,739        21,794,882        58,277,101
                                                                --------------------------------------------------------

Effect of exchange rate changes on cash                                        -            80,009            80,009
                                                                --------------------------------------------------------

Net increase in cash and cash equivalents                              3,081,119           268,365         3,694,424
Cash and cash equivalents at beginning
   of period                                                             344,940         3,426,059                 -
                                                                --------------------------------------------------------
Cash and cash equivalents at end of period                       $     3,426,059   $     3,694,424 $       3,694,424
                                                                ========================================================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid                                                   $              -  $              - $          197,072
                                                                ========================================================
</TABLE>


SEE ACCOMPANYING NOTES.


                                      F-8
<PAGE>

                    AVAX Technologies, Inc. and Sudsidiaries
                         (A DEVELOPMENT STAGE COMPANY)

                   Notes to Consolidated Financial Statements

                           December 31, 2000 and 1999

1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

AVAX Technologies, Inc. (the Company) is a development stage biopharmaceutical
company.

In November 1995, the Company sold its leading product under development, an
over-the-counter nutritional, dietary, medicinal and/or elixorative food
supplement or drug and all of the related patents and other intellectual
property (the Product) (see NOTE 2).

Also in November 1995, the Company entered into a license agreement with Thomas
Jefferson University (TJU) to develop, commercially manufacture and sell
products embodying immunotherapeutic vaccines for the treatment of malignant
melanoma and other cancers (the Invention) (see NOTE 3).

In December 1996, the Company entered into a license agreement with Rutgers
University (Rutgers) to develop, commercially manufacture and sell products
embodying a series of compounds for the treatment of cancer and infectious
diseases (the Compounds) (see NOTE 3).

In February 1997, the Company entered into a license agreement with Texas A&M to
develop, commercially manufacture and sell products embodying a series of
compounds for the treatment of cancer (the Texas A&M Compounds) (see NOTE 3).

In November 1999, the Company entered into a definitive joint venture agreement
with Australia Vaccine Technologies ("AVT") (formerly Neptunus International
Holdings Limited), a pharmaceutical group in Australia, under the subsidiary
name, AVAX Holdings Australia Pty Limited ("AVAX Holdings"). Under the joint
venture agreement, AVAX Holdings, through its affiliated entities, is
manufacturing and marketing M-Vax in Australia, and has similar rights in New
Zealand.

In August 2000, the Company completed its acquisition of GPH, S.A. ("Holdings")
and Genopoietic S.A. ("Genopoietic") each a French societe anonyme based in
Paris, France. Holdings and Genopoietic were organized in 1993 to develop gene
therapy applications and market gene therapy treatments for cancer. The Company
currently performs contract manufacturing and research activities at its
facilities located in Lyon, France and through its collaborations with the
Pierre and Marie Curie University and the University of Nantes.

The Company's business is subject to significant risks consistent with
biotechnology companies that are developing products for human therapeutic use.
These risks include, but are not limited to, uncertainties regarding research
and development, access to capital, obtaining and enforcing patents, receiving
regulatory approval, and competition with other biotechnology and pharmaceutical
companies. The Company plans to continue to finance its operations with a
combination of equity and debt financing and, in the longer term, revenues from
product sales, if any. However, there can be no assurance that it will
successfully develop any product or, if it does, that the product will generate
any or sufficient revenues.

PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts of
AVAX Technologies, Inc., and its subsidiaries. All significant intercompany
balances and transactions have been eliminated.


                                      F-9
<PAGE>

1.      DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

In 1999, AVAX Holdings was included in the consolidated financial statements of
the Company. Due to additional investment by AVT in AVAX Holdings in 2000,
whereby they acquired a 50% ownership interest, and their substantial and active
involvement in the operations of the joint venture late in 2000, the Company no
longer exercised control over AVAX Holdings. As such, AVAX Holdings' accounts
are not included in the consolidated financial statements of the Company for the
year ended December 31, 2000. The Company accounts for its share of AVAX
Holdings' net loss under the equity method. (See NOTE 4).

FOREIGN CURRENCY TRANSLATION

Holdings and Genopoietic use the French Franc as their functional currency. In
accordance with Statement of Financial Accounting Standards (SFAS) No. 52,
"Foreign Currency Translation", the financial statements of these entities have
been translated into United States dollars, the functional currency of the
Company and its other wholly-owned subsidiaries and the reporting currency
herein, for purposes of consolidation. In addition, there were no material
foreign currency transaction gains or losses in 2000 or 1999.

USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the period. Actual results could differ from those estimates.

REVENUE

The Company's revenues are related to the provision of contract and other
product services. Contract service revenue is recognized in installments based
upon the contractual agreement entered into with clients. Product revenues
represents fees received by the Company related to tumor cell banking.

CASH EQUIVALENTS

For purposes of reporting cash flows, the Company considers all highly liquid
financial instruments with a maturity of three months or less when purchased to
be cash equivalents. At December 31, 2000, all cash and cash equivalents were
held at one financial institution.

INVENTORIES

Inventories are stated at the lower of cost, determined using the first-in,
first-out method, or market. The Company's inventories include raw materials and
supplies.


                                      F-10
<PAGE>

1.      DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

DEPRECIATION

Depreciation is computed using the straight-line method over the estimated
useful lives of the furniture and equipment, which range from three to ten
years. Depreciation for the Company's manufacturing facility and related
equipment are computed using the straight-line method over estimated useful
lives of 5 to 10 years. Leasehold improvements related to the building are being
amortized using the straight-line method over the actual life of the lease.

ACQUIRED INTELLECTUAL PROPERTY AND OTHER INTANGIBLES

Intellectual property and other intangibles acquired in the acquisition of
Holdings and Genopoietic were recorded at fair value and are being amortized
using the straight-line method over the lives of the related assets. (See NOTE
5).

RESEARCH AND DEVELOPMENT COSTS

Research and development costs, including payments related to patents and
license agreements, are expensed when incurred.

DEFERRED COMPENSATION

Certain compensation costs deferred in prior years have been amortized over the
vesting period of such compensation and became fully amortized in 2000.

MARKETABLE SECURITIES

Management determines the appropriate classification of debt securities at the
time of purchase. Debt securities are classified as held-to-maturity when the
Company has the positive intent and ability to hold the securities to maturity.
Held-to-maturity securities are stated at amortized cost, adjusted for
amortization of premiums and accretion of discounts to maturity. Such
amortization and interest on securities classified as held-to-maturity are
included in interest income. The Company's debt securities held at December 31,
2000 all mature in 2001. The following is a summary of marketable securities:

<TABLE>
<CAPTION>
                                                                                       UNREALIZED            ESTIMATED
                        DESCRIPTION OF SECURITIES                     COST             GAIN/(LOSS)          FAIR VALUE
           -------------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>                <C>                   <C>

           DECEMBER 31, 1999
           Held-to-maturity debt securities:
              Commercial paper                                      $8,390,417         $        -            $8,390,417
              U.S. Treasury securities                                 478,204                  -               478,204
                                                              ----------------------------------------------------------------
                                                                    $8,868,621         $        -            $8,868,621
                                                              ================================================================
           DECEMBER 31, 2000
           Held-to-maturity debt securities:
              Commercial paper                                     $18,861,295         $        -           $18,861,295
              U.S. Treasury securities                                 377,894                  -               377,894
                                                              ----------------------------------------------------------------
                                                                   $19,239,189         $        -           $19,239,189
                                                              ================================================================
</TABLE>


                                      F-11
<PAGE>

1.      DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

STOCK-BASED COMPENSATION

In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation." SFAS No. 123 prescribes accounting and reporting standards for
all stock-based compensation plans, including employee stock options, restricted
stock, employee stock purchase plans and stock appreciation rights. SFAS No. 123
requires compensation expense to be recorded (i) using the new fair value method
or (ii) using existing accounting rules prescribed by Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees," (APB 25) and
related interpretations, with pro forma disclosure of what net income and
earnings per share would have been had the Company adopted the new fair value
method. The Company has elected to continue to account for its stock-based
compensation plans in accordance with the provisions of APB 25. See NOTE 6 for
the pro forma effects of applying SFAS No. 123.

EARNINGS PER SHARE

Net loss per share is based on net loss divided by the weighted average number
of shares of common stock outstanding during the respective periods. The
following table sets forth the computation of the Company's basic earnings per
share information. Diluted earnings per share information is not presented, as
the effects of stock options, warrants and other convertible securities would be
antidilutive for the periods presented.
<TABLE>
<CAPTION>
                                                                                                       DECEMBER 31,
                                                                                                 1999               2000
                                                                                          ---------------------------------------
<S>                                                                                       <C>                 <C>
Numerator (basic):
Loss available to common stockholders                                                     $      (7,867,563)  $    (16,276,749)
                                                                                          =======================================
Denominator (basic):
   Weighted average common shares outstanding                                                    10,642,366         15,347,464
                                                                                          =======================================

Net loss per share - basic                                                                $            (.74)  $          (1.06)
                                                                                          =======================================
</TABLE>

2.      SALE OF THE PRODUCT

In December 1995, the Company entered into an agreement to sell the Product for
$2.4 million in shares of common stock of Interneuron Pharmaceuticals, Inc.
(IPI), a public company, the parent of the purchaser of the Product (the Stock).
Certain common stockholders of the Company are also common stockholders of IPI.
Pursuant to the terms of the agreement, the purchase price, payable in two equal
installments in December 1996 and 1997, was fixed, and the number of shares of
the Stock would vary depending on the quoted market price of the Stock at such
time.

The first installment was paid on January 3, 1997 in the form of a distribution
of IPI stock directly by IPI to the Series A convertible preferred stockholders,
who were holders of record on the closing date of the agreement for sale, and
the Company's former President and Chief Executive Officer (the Former Officer).
The final installment was received on January 14, 1999.


                                      F-12
<PAGE>

2.      SALE OF THE PRODUCT (CONTINUED)

The sale of the Product was approved by the Company's common and Series A
preferred stockholders subject to the following conditions:

        o    At approximately the same time each installment was received by the
             Company, 95.85% of the Stock was to be distributed by the Company,
             or directly by IPI, to the Company's preferred stockholders of
             record (referred to herein as the holders of Series A preferred
             stock) at the time sale of the Product closed, on a pro rata basis,
             to reduce their liquidation preference, provided, however, that if
             at the time of each installment, any of the Company's indebtedness
             which had been outstanding at the time of the closing of the
             agreement to sell the Product (December 27, 1995) and was due and
             payable, the Company was to cause such indebtedness to be paid or
             provided for, whether by use of available cash, refinancing,
             redirecting a portion of the Stock to satisfy such indebtedness, or
             otherwise, as the Company would determine in its best interest.

        o    The remaining 4.15% of the Stock (or a cash payment equal to the
             value thereof) was to be distributed to the Former Officer in
             partial consideration for his resignation from the Company and the
             return to the Company of all common stock of the Company and
             cancellation of options to purchase 62,500 shares of common stock.

Other than for the Former Officer, none of the other common stockholders were
entitled to any of the Stock.

Because the Stock was receivable in two equal annual installments, the gain from
the sale of the Product, $1,951,000, was calculated by discounting the value of
the Stock receivable using a discount rate of 15%. In 1995, the Company also
recorded the difference between 95.85% of the discounted net present value of
the Stock to be received and the Company's indebtedness, $1,131,744 at December
31, 1995, as a payable to the preferred stockholders of $738,289 to reduce their
liquidation preference. The present value of the amount payable to the preferred
stockholders, including the accretion of interest thereon, was $2,156,106 at
December 31, 1996, since all of the Company's indebtedness outstanding as of the
date of the sale of the Product was satisfied through sources other than the
Stock to be received. This obligation was settled with the January 1999 receipt
of the final installment of IPI stock, as discussed above.

The discounted net present value of the Stock distributable to the Former
Officer as of the date of sale, amounting to $80,967, was allocated between
common stock ($445) and severance expense ($80,522) based on the fair value of
the Company's common stock ($.004 per share).

3.      LICENSE AND RESEARCH AGREEMENTS

In November 1995, the Company entered into an agreement with TJU for the
exclusive worldwide license to develop, manufacture and sell the Invention. In
consideration for the license agreement, the Company paid cash of $10,000 and
issued an aggregate of 458,243 shares of common stock to TJU and the scientific
founder (the Scientist).

Under the terms of the license agreement the Company is obligated to (i) pay
certain milestone payments as follows: $10,000 upon initiation of the first
clinical trial that is approved by the Food and Drug Administration (FDA) or
comparable international agency, $10,000 upon the first filing of a New Drug
Application (NDA) with the FDA or comparable international agency, and $25,000
upon receipt by the Company of approval from the FDA or comparable international
agency to market products, (ii) enter into a research agreement to fund a study
to be performed by TJU for the development of the technology related to the
Invention (the Study) at approximately $220,000 per annum for the first three
years, and (iii) following the third year, spend an aggregate of $500,000 per
year on the development of the Invention until


                                      F-13
<PAGE>

3.   LICENSE AND RESEARCH AGREEMENTS (CONTINUED)

commercialized in the United States. If following the third year, the Company
files for United States marketing approval through a Company sponsored NDA, the
Company may elect to spend less than $500,000 per year on the development of the
Invention during the period of time the NDA is under review by the FDA. During
2000, a payment of $25,000 was made to TJU pursuant to the license agreement. In
addition, the Company is obligated to pay royalties on its worldwide net revenue
derived from the Invention and a percentage of all revenues received from
sublicensees of the Invention.

The research agreement with TJU mentioned above will continue until completion
of the Study, although it is terminable, upon notice by either party to the
other, at any time. Expenses incurred related to research funding for TJU were
$231,904 and $279,690 for the years ended December 31, 2000 and 1999,
respectively. This level of funding satisfies the Company's obligation under the
agreement.

In December 1996, the Company entered into an agreement with Rutgers for the
exclusive worldwide license to develop, manufacture and sell products embodying
the Compounds. In consideration for the license agreement, the Company paid cash
of $15,000, has agreed to pay $15,000 in each subsequent year as a license
maintenance fee and has committed to the issuance of warrants to Rutgers to
purchase 125,000 shares of common stock at a price of $8.24 per share based on
the achievement of certain development milestones. The first 75,000 warrants
will expire in 2006, and the final 50,000 warrants will expire in 2011. These
warrants, once issued, shall provide for cashless exercise, piggyback
registration rights and certain antidilution rights. The Company has agreed to
fund research in the amount of one hundred thousand dollars ($100,000) per year
for three years. In addition, the Company is obligated to spend an aggregate of
$200,000 in the first year, $300,000 in the second year and $500,000 each year
thereafter until the first year of commercial marketing of a product derived
from the Compounds. The license maintenance fee shall not be payable in years
where research funding is equal to or greater than $100,000. Expenses incurred
related to research funding for Rutgers were $208,506 and $133,750 for the years
ended December 31, 2000 and 1999, respectively. This level of funding satisfies
the Company's obligation under the agreement. The research agreement has been
extended until February 2003.

Under the terms of the license agreement, the Company is obligated to pay
certain milestone payments as follows: $15,000 on the earlier of October 31,
2000 or the date of first filing of an Investigational New Drug (IND)
application with the FDA, or comparable international agency; $25,000 on the
earlier of October 31, 2001 or the date of initiation of Phase II trials in the
United States or another major market country; $45,000 on the earlier of October
31, 2005 or the date of first filing of an NDA application with the FDA, or
comparable international agency; and $150,000 on the earlier of October 31, 2008
or the date of receipt by the Company of approval from the FDA, or comparable
international agency, to market products. During 2000, the Company paid $15,000
pursuant to its obligations under this agreement.

In addition, the Company is obligated to pay royalties on its worldwide net
revenue derived from the Compounds and a percentage of all revenues received
from sublicensees of products derived from the Compounds. Such royalty payments
shall be no less than $100,000 in the first year of commercial marketing,
$200,000 in the second year, $250,000 in the third year, $300,000 in the fourth
year, and $350,000 in the fifth and all following years.


                                      F-14
<PAGE>

3.      LICENSE AND RESEARCH AGREEMENTS (CONTINUED)

In February 1997, the Company entered into an agreement with Texas A&M for the
exclusive worldwide license to develop, manufacture and sell products embodying
the Texas A&M Compounds. Under the terms of the license agreement, the Company
has agreed to fund research in the amount of approximately $108,000 per year for
the first three years. The Company is also obligated to pay certain milestone
payments as follows: $24,000 upon initiation of certain toxicity evaluations;
$12,000 upon completion of toxicity evaluations demonstrating certain acceptable
toxicity levels; $12,000 upon the submission of an IND to the FDA, or comparable
international agency; $5,000 upon completion of the first Phase I clinical
investigation; and $15,000 upon receipt by the Company of NDA approval from the
FDA to market products.

In addition, the Company is obligated to pay royalties on its worldwide net
revenue derived from the Compounds and a percentage of all revenues received
from sublicensees of products derived from the Compounds. Such royalty payments
shall be no less than $50,000 in the first year of commercial marketing,
$100,000 in the second year and $200,000 in the third year and all following
years. Expenses incurred related to research funding for Texas A&M was $27,150
and $108,750 for each of the years ended December 31, 2000 and 1999,
respectively. This level of funding satisfies the Company's obligation under the
agreement. The research agreement has been extended until January 2002.

4.      JOINT VENTURE AGREEMENT

In November 1999, the Company's subsidiary AVAX Australia Holdings, Pty. Limited
entered into a joint venture agreement with AVT related to commercialization and
sale of the AC Vaccine Technology in Australia and New Zealand. Pursuant to the
joint venture agreement, the Company created two operating companies, AVAX
Australia Pty Limited and AVAX Australia Manufacturing Pty Limited.

During 2000, AVT, through a subsidiary, contributed 6,000,000 Australian
Dollars, raising AVT's total ownership percentage in the joint venture to 50%.
Due to the ownership percentage now maintained by AVT and their substantial and
active involvement in the management and decision making processes of the joint
venture, the Company has determined that it no longer maintains a controlling
interest in the operations of the joint venture. Accordingly, the Company began
to account for its investment in the joint venture using the equity method of
accounting in late 2000.

At the time of the change from the consolidation method to the equity method,
there existed a difference between the Company's cost of its 50% investment in
the joint venture and the net book value of the underlying assets. This
difference, which amounted to approximately $2.7 million, resulted from the
Company's contribution of technology and related licensing rights, which had
little recorded value, and AVT's cash investments of 10 million Australian
Dollars. The resulting deferred gain is being amortized to income over three
years. The amortization of this deferred gain in 2000 amounts to approximately
$902,000 and is reported separately in the accompanying consolidated statement
of operations. The Company's investment in joint venture amounts to $47,753 at
December 31,2000.


                                      F-15
<PAGE>

5.      ACQUISITION OF G.P.H. AND GENOPOIETIC

On August 24, 2000, the Company completed its acquisition of GPH, S.A.
("Holdings") and Genopoietic S.A. ("Genopoietic"), each a French societe anonyme
based in Paris, France. In this transaction, 100% of the outstanding shares of
both Holdings, which is the majority shareholder of Genopoietic, and Genopoietic
have been contributed to the Company by the shareholders of those two entities
in exchange for an aggregate of 800,000 shares of the Company's common stock
valued at $7,600,000 as of the acquisition date and $5,000 in notes payable. Of
the 800,000 shares issued to Professors David R. Klatzmann and Jean-Loup
Salzmann, 659,756 shares and have been placed in escrow to secure their
indemnification obligations under the Contribution Agreement. In addition the
Company incurred $621,397 in acquisition costs, which were capitalized as part
of the purchase price and allocated to the net assets acquired.

Upon the closing of the transaction, the Company entered into the Rights
Agreements dated as of August 24, 2000 between the Company and the two primary
shareholders of Holdings, pursuant to which each individual has the right to
acquire up to an additional 1,100,000 shares of the Company's common stock, upon
the successful and timely achievement of development and commercialization
milestones by Genopoietic. These contingent shares have not been included as
part of the purchase price.

Simultaneously with the closing of the transaction the Company entered into a
Research Funding Agreement with Genopoietic whereby the Company has committed to
provide funding to Genopoietic over the next five years in the amount of
$8,000,000.

The acquisition of Holdings and Genopoietic was accounted for as a purchase. The
assets and liabilities of both companies have been recorded on the books of the
Company at their fair market values. The operating results of the acquired
business have been included in the consolidated statements of operations from
August 24, 2000, the effective date of the acquisition.

Aggregate consideration for the acquisition of $8,226,397 was allocated, based
on estimated fair values on the acquisition date, as follows:

<TABLE>
<CAPTION>
<S>                                                                                     <C>
                  Acquired in-process research and development                          $        4,421,286
                  Acquired intellectual property and other intangibles:
                     Acquired existing technology                                                3,115,354
                     Patents                                                                       904,712
                     Assembled workforce                                                           301,420
                  Assets acquired                                                                  895,423
                  Liabilities assumed                                                           (1,410,200)
                                                                                        -------------------
                  Total purchase price                                                  $        8,226,397
                                                                                        ==================
</TABLE>

The acquired existing technology and patents are being amortized over their
estimated useful lives of ten years and the intangible asset related to
assembled workforce is being amortized over its estimated useful life of four
years.

Acquired in-process research and development represents the present value of the
estimated after-tax cash flows expected to be generated by the purchased
technology, which, at the acquisition date, had not yet reached technological
feasibility. The cash flow projections for revenues were based on estimates of
growth rates and the aggregate size of the respective market for each product;
probability of technical success given the stage of development at the time of
acquisition; products sales cycles; and the estimated life of a product's
underlying technology. Estimated operating expenses and income taxes were
deducted from estimated revenue projections to arrive at estimated after-tax
cash flows. The rates utilized to discount projected cash flows were 25% to 55%
depending upon the relative risk of each technology and the technologies stage
of development. In process research and development acquired in this transaction
is reflected as an expense in the accompanying consolidated statements of
operations.


                                      F-16
<PAGE>

5.    ACQUISITION OF G.P.H. AND GENOPOIETIC (CONTINUED)

All estimates and projections were based upon assumptions the Company believed
to be reasonable at the time of acquisition, but which are inherently uncertain
and unpredictable. If these projects are not successfully developed, the
business, operating results and financial condition of the Company may be
adversely affected. As of the date of the acquisition, the Company concluded
that once completed, the technologies under development can only be economically
used for their specific and intended purposes and that such in-process
technology has no alternative future use after taking into consideration the
overall objectives of the project, progress toward the objectives and uniqueness
of developments to these objectives. If the projects fail, the economic
contribution expected to be made by the acquired in-process research and
development will not materialize.

The following table reflects unaudited consolidated pro forma results of
operations of the Company and Holdings on the assumption that the acquisition
had taken place at the beginning of each period presented. Such pro forma
amounts are not necessarily indicative of what the actual consolidated results
of operations might have been if the acquisition had been effective at the
beginning of the respective periods. The following pro forma information does
not include the one-time charges for purchased in-process research and
development relating to the acquisition of Holdings. Included are amortization
charges of acquired intangible assets which are amortized on a straight-line
basis over their expected useful lives period. Holdings' reporting currency is
the French Franc. Its results were translated using the average exchange rate
for each period.

<TABLE>
<CAPTION>
                                                                        -----------------------------------------------
                                                                                     YEAR ENDED DECEMBER 31,
                                                                        -----------------------------------------------
                                                                                1999                        2000
                                                                                ----                        ----
<S>                                                                         <C>                          <C>
           Revenue                                                          $    847,892                 $    711,117
           Net loss                                                           (8,123,175)                 (12,434,463)
           Basic and diluted net loss per share                                     (.71)                        (.78)
</TABLE>

6.   EQUITY TRANSACTIONS

COMMON AND PREFERRED STOCK

Common stock issued for services since 1990 has been recorded based on the value
of the services provided.

In April 1995, in accordance with the terms of his resignation and related
severance arrangements, the Former Officer returned 111,330 shares of common
stock and options to purchase 62,500 shares of common stock. The common stock
returned was valued at $.004 per share. The common stock and options returned
were canceled.

In May 1995, in accordance with the terms of a settlement agreement with a
former officer and director of the Company, the Company agreed to release and
relinquish any claim it may have on certain intellectual property, excluding the
Product, in exchange for 196,618 shares of the Company's common stock owned by
her and her family. The common stock was valued at $.004 per share and was
canceled.


                                      F-17
<PAGE>

6.   EQUITY TRANSACTIONS (CONTINUED)

On September 13, 1995, the Company issued 402,490 shares of common stock to
officers of the Company at $.004 per share.

On November 20, 1995, the Company issued an aggregate of 458,243 shares of
common stock to TJU and the Scientist (see NOTE 3). In addition, on November 20,
1995, the Company issued, in aggregate, an additional 916,485 shares to a
principal stockholder, a third party designated by the principal stockholder,
and an officer, at $.004 per share.

On March 24, 1996, the Company repurchased 77,901 shares of common stock
previously issued to an officer at $.004 per share. The repurchased shares were
canceled.

In May 1996, the Company's authorized capital was increased to 50,000,000 shares
of common stock, par value $.004, and 5,000,000 shares (of which 2,500,000
shares were designated as Series A preferred stock and 300,000 shares were
designated as Series B preferred stock) of preferred stock, par value $.01. In
June 1998, the Company's authorized common stock, par value $.004, was decreased
to 30,000,000 shares.

Pursuant to a private placement in May and June 1996, the Company issued 258,198
shares of Series B convertible preferred stock. The preferred stockholders also
received 129,099 shares of common stock. The total consideration was
$25,819,800. The per share price allocated to common stock and Series B
convertible preferred stock was $1 and $99, respectively. In connection with the
private placement, the Company paid $3,357,000 in commissions and nonaccountable
expenses to the Paramount Capital (Paramount), a related party, and issued 500
shares of common stock and 1,000 shares of Series B convertible preferred stock
as consideration for legal services valued at $100,000. In addition, the
placement agent received warrants to purchase 25,819.8 shares of Series B
convertible preferred stock at an exercise price of $110 per share. Such
warrants are exercisable until June 11, 2006, contain certain antidilution
provisions and may be exercised pursuant to a cashless exercise feature. Other
share issuance expenses amounted to $142,000. During 2000, 19,127 of these
warrants were exercised.

The Series B preferred stockholders are entitled to voting rights equivalent to
the number of common shares into which their preferred shares are convertible.
The Series B preferred stockholders are also entitled to receive, in preference
to the holders of common stock, an amount per preferred share of $135 plus any
declared but unpaid dividends.

Pursuant to the terms of the private placement, each share of Series B preferred
stock was convertible at any time, in whole or in part, at the discretion of the
holders, into common stock at $4 per share (the Initial Conversion Price), which
amounted to 6,479,950 shares at December 31, 1996. Twelve months after the final
closing date (the Reset Date), the Company could, at its option, cause
conversion of the preferred stock, in whole or in part, into common stock at the
Initial Conversion Price if the closing price of the common stock exceeded 150%
of the Initial Conversion Price for at least 20 trading days in any
30-consecutive-trading-day period.

At the second closing of the private placement on June 11, 1996, the 1,287,500
shares of Series A preferred stock were automatically converted to 321,875
shares of common stock. Notwithstanding such conversion, holders of the Series A
preferred stock have received pro rata 95.85% of shares of common stock of IPI
associated with the sale of the Product, as discussed in NOTE 2.


                                      F-18
<PAGE>

6.   EQUITY TRANSACTIONS (CONTINUED)

In September 1998, the Company issued 9,301 shares of common stock, which is
restricted from trading, to the Company's President. The stock issue was in
compensation for services rendered and accordingly an expense of $25,000 (the
fair market value at issue date) was recorded in general and administrative
expenses.

On March 1, 1999, the Company authorized and consummated an offering of Series C
Convertible Preferred Stock (the "Series C Offering") pursuant to which the
Company raised aggregate gross proceeds of approximately $10,130,000. In the
Series C Offering, the Company sold an aggregate of 101,300 shares of Series C
Preferred Stock combined with Class A Warrants to purchase an aggregate of
311,692 shares of Common Stock at an exercise price of $4.00 per share and Class
B Warrants to purchase an aggregate of 311,692 shares of Common Stock at an
exercise price of $4.50 per share. During the year 2,462 of these warrants were
exercised. The Series C Preferred Stock, the Class A Warrants and the Class B
Warrants were sold as a unit in the Series C Offering. The Class A Warrants and
Class B Warrants are exercisable until March 1, 2004.

The Series C preferred stockholders are entitled to voting rights equivalent to
the number of common shares into which their preferred shares are convertible.
The Series C preferred stockholders are also entitled to receive, in preference
to the holders of common stock, an amount per preferred share of $100 plus any
declared but unpaid dividends.

Pursuant to the terms of the private placement, each share of Series C preferred
stock was convertible at any time, in whole or in part, at the discretion of the
holders, into common stock at $3.25 per share.

In connection with the private placement, the Company paid $845,261 in finders
fees and non-accountable expenses. Of this amount $709,100 was paid to
Paramount, a related party, in the form of a finders fee. In addition, Paramount
was issued an option to acquire 187,015 shares of Common Stock at an exercise
price of $3.58, exercisable until March 1, 2004. Upon exercise of the option
granted to it in connection with the Series C Offering, Paramount would be
issued warrants to purchase 37,402 shares of Common Stock of which 18,701 will
be exercisable at $4.00 and the remaining 18,701 will be exercisable at $4.50,
all for an aggregate exercise price of $828,472. The warrants are exercisable
until March 1, 2004.

In September 1999, a vendor of the Company's exercised warrants pursuant to the
cashless exercise provision of the warrant. This resulted in the Company issuing
an additional 37,500 shares of Common Stock. Expense related to this transaction
of $27,150 was recorded during the year which represented the fair value of the
services on the date of issuance.

In March 2000, the Company completed a $25,137,000 private placement with
institutional investors. The Company sold an aggregate of 2,259,494 newly issued
shares of common stock, and issued warrants to purchase an additional 225,952
shares of common stock at an exercise price of $12.79 per share, for an
aggregate warrant exercise price of $2,890,817. The warrants are exercisable
until March 10, 2005.

In connection with services rendered in connection with the private placement,
the Company paid Gruntal & Co., L.L.C., who acted as the placement agent, a cash
fee of approximately $747,000 and issued warrants to purchase 83,927 shares of
common stock at an exercise price of $11.125. The warrants are exercisable until
March 10, 2005. In addition the Company issued to Sagres Group Ltd. warrants to
purchase 124,045 shares of common stock at an exercise price of $11.125 per
share as a finder's fee in connection with the private placement. The Warrants
are exercisable until March 10, 2005. Other share issuance expenses amounted to
approximately $54,000.


                                      F-19
<PAGE>

6.   EQUITY TRANSACTIONS (CONTINUED)

Pursuant to a prior agreement, Paramount was paid a fee due to the participation
in the private placement of certain investors previously introduced to the
Company by Paramount. As a result of this agreement, the Company paid Paramount
a cash fee of approximately $140,000 and issued to Paramount warrants to
purchase 10,787 shares of common stock of the Company at an exercise price of
$11.125 per share. The warrants are exercisable until March 10, 2005.

The 86,750 shares of Series C preferred stock, outstanding at December 31, 2000,
is convertible into 2,669,225 shares of common stock excluding the effect of any
fractional shares.

CONVERSION RESET

In accordance with the terms of the Series B placement, the Initial Conversion
Price was to be adjusted and reset effective as of the Reset Date if the average
closing bid price for the 30 consecutive trading days immediately preceding the
Reset Date (the 12-Month Trading Price) was less than 135% of the Initial
Conversion Price or $5.40. If such was the case, the Initial Conversion Price
would be reduced to be equal to the greater of the 12-Month Trading Price
divided by 1.35 or 50% of the Initial Conversion Price.

The Initial Conversion Price was adjusted effective June 11, 1997, because the
average closing bid price of the common stock for the 30 consecutive trading
days immediately preceding such date was less than $5.40. The average was, in
fact, $5.175 per share. Accordingly, the conversion price was adjusted to $3.83
per share, which corresponds to a new conversion rate of 26.0875 shares of
common stock per share of Series B preferred stock.

STAGGERED LOCK-UP

Pursuant to the terms of the Series B placement, 25% of each holder's shares of
common stock issuable upon conversion of the Series B preferred shares (the
Conversion Shares) were not subject to any restriction on resale (Lock-up). The
remaining 75% of each holder's Conversion Shares were subject to a staggered
Lock-up, whereby 25% of the Conversion Shares were released from the Lock-up
every three months after the final closing, through and including March 11,
1997.

In March 1997, the Company completed a revision to the staggered Lock-up and
Conversion Reset provision of the private placement. Shareholders owning
approximately 94% of the Series B preferred shares agreed to a modification of
the original subscription agreement, such that the staggered Lock-up would
expire beginning three months after both listing and effectiveness under the
Securities Act of 1933 of the Company's Registration Statement for its common
stock (Effectiveness). As so modified, upon listing and Effectiveness, which
occurred on July 10, 1997, 25% of the Conversion Shares were not subject to any
Lock-up provisions. The remaining 75% of the Conversion Shares were subject to a
staggered Lock-up, such that every three months after July 10, 1997, 25% of the
Conversion Shares were released from Lock-up until April 10, 1998 at which point
all Conversion Shares were no longer subject to any Lock-up.


                                      F-20
<PAGE>

6.   EQUITY TRANSACTIONS (CONTINUED)

In addition, for those shareholders who accepted the Lock-up modifications, the
Company agreed to provide additional reset protection, extending the Reset Date
to 12 months following the later of Effectiveness and listing, or July 10, 1999.
The terms of this modified reset were the same as the original reset provision,
except that the Company would not adjust the conversion price, but would issue
additional shares of common stock to effect the principles of the original reset
provision. The average closing bid price for the 30 consecutive trading days
preceding July 10, 1998 was $3.1544 and accordingly, the Company issued
3,029,339 shares of common stock to those holders of Series B Preferred Stock
who had agreed to the lockup and had not converted their Preferred Stock to
Common Stock.

CONVERSION OF SERIES B SHARES TO COMMON SHARES

Effective March 21, 2000 the Company elected to convert all of the then
outstanding shares of Series B convertible preferred stock into fully paid and
non-assessable shares of common stock. As of the conversion date the remaining
66,093 shares of outstanding Series B Convertible preferred stock were converted
into 1,724,152 shares of common stock.

STOCK OPTIONS - STOCK OPTION PLAN

In April 1992, the Board of Directors approved the 1992 Stock Option Plan (the
Plan), which, as amended, authorized up to 437,500 shares of common stock for
granting both incentive and nonqualified stock options to employees, directors,
consultants and members of the scientific advisory board of the Company. The
Plan was amended in June 1999, to increase the number of shares issuable to
1,500,000. The Plan was further amended in June 2000, to increase the number of
shares issuable to 2,500,000. The exercise price and vesting period of the
options are determined by the Board of Directors at the date of grant. Options
may be granted up to 10 years after the Plan's adoption date and generally
expire 10 years from the date of grant.

The following summarizes activity in the Plan:

<TABLE>
<CAPTION>
                                                              NUMBER OF OPTIONS
                                                              ------------------
<S>                                                           <C>
Balance at December 31, 1994                                          276,375
    Canceled                                                         (246,375)
                                                              ------------------
Balance at December 31, 1995, 1996 and 1997                            30,000
    Granted                                                           600,000
                                                              ------------------
Balance at December 31, 1998                                          630,000
    Granted                                                           955,397
    Expired                                                          (240,000)
                                                              ------------------
Balance at December 31, 1999                                        1,345,397
    Granted                                                           430,000
    Expired                                                           (13,430)
    Exercised                                                          (7,955)
                                                              ------------------
Balance at December 31, 2000                                        1,754,012
                                                              ==================
</TABLE>


                                      F-21
<PAGE>

6.   EQUITY TRANSACTIONS (CONTINUED)

DIRECTOR OPTION PLAN

In June 2000, the Company adopted the 2000 Director Stock Option plan and
authorized the plan to issue up to 480,000 shares of common stock as
compensation to the outside directors of the Company for services to be received
from the Directors. During 2000, each the Company's six outside director
received options to purchase 40,000 shares of common stock, which vest quarterly
at the rate 2,500 shares, with the first vesting period being January 1, 2000.

STOCK OPTIONS - OTHER

Certain officers and employees were also granted stock options in 1996, as
authorized by the Board of Directors, apart from the Plan. In May 1996, the
Company's President and Chief Executive Officer (the President) received options
to purchase 318,873 shares of common stock at $1.00 per share. Such options vest
at a rate of 1/16 per quarter over four years and are exercisable for a period
of seven years. Because the fair value of the Company's common stock at the date
of grant was determined to be $2 per share, the Company recorded $318,873 as
deferred compensation. Such deferred compensation has been amortized over four
years.

In September 1996, certain officers and an employee also received options to
purchase 252,500 shares of common stock at $1.00 per share. Such options vest at
a rate of 1/16 per quarter over four years and are exercisable for a period of
seven years. Because the fair value of the Company's common stock at the date of
grant was determined to be $4 per share, the Company recorded $757,500 as
deferred compensation. Such deferred compensation has been amortized over four
years. During 2000, 9,688 of these options were exercised.

In March 1997, one other employee of the Company received options to purchase
52,500 shares of common stock at $6.00 per share, the closing market price on
the date of grant. In July 1997, the Company withdrew such options and replaced
them with options to purchase 90,000 shares of common stock at an exercise price
of $4.50, the closing market price on the date of grant. The options vest as
follows: 5,000 shares vest on September 1, 1997, 30,000 shares vest at a rate of
1/6 every six months over a three-year period, thereafter, and the remaining
55,000 shares will vest upon the occurrence of certain milestone events relating
to the Company's manufacturing program. Such options are exercisable for a
period of seven years.

In July 1997, the President, certain officers and an employee also received
options to purchase 280,000 shares of common stock at $4.50 per share. The
President's options, which represent 150,000 of these options, vest at a rate of
1/12 per quarter over a three-year period. The remaining options vest at a rate
of 1/16 per quarter over four years and all are exercisable for a period of
seven years.

In July 1997, options were issued to a scientific consultant to purchase 30,000
shares of common stock at $4.50 per share. Such options vest at a rate of 1/3
per year over three years and are exercisable for a period of seven years.

In September 1997, four directors of the Company each received a grant of 40,000
options to purchase common stock at $4.50 per share. Such options vest at a rate
of 1/16 per quarter over four years, commencing on December 1, 1997, and are
exercisable for a period of seven years.


                                      F-22
<PAGE>

6.   EQUITY TRANSACTIONS (CONTINUED)

In December 1997, four directors of the Company each received a grant of 5,161
options to purchase common stock at $3.88 per share. Such options vest at a rate
of 1/4 per quarter over one year, commencing on March 1, 1999, and are
exercisable for a period of seven years.

In March 1998, in consideration for consulting services, the Company issued
options to purchase 50,000 shares of common stock to a consultant of the
Company, exercisable for seven years at an exercise price of $4.00 per share.
Such options vest at a rate of 1/12 per month.

In December 1998, four directors each received grants to purchase 8,101 shares
of common stock each at $2.47 per share. In March 2000, one director received a
grant to purchase 4,938 shares of common stock at $3.38 per share. In August
2000, two directors each received grants to purchase 2,222 shares of common
stock each at $3.00 per share. All options vested as of December 31, 2000 based
upon the issuance date, and are exercisable for a period of seven years.

In December 1998, the Company issued options to purchase 21,000 shares of common
stock to a consultant of the Company, exercisable for seven years at an exercise
price of $2.25 per share. Such options vest in equal increments annually over
three years.

In November 1999, two directors each received grants to purchase 10,000 shares
of common stock each at $2.94 per share. Such options vest in equal increments
annually over one year, and are exercisable for a period of seven years.

WARRANTS

In May 1993, the Company issued warrants to purchase 7,750 shares of the
Company's common stock at a price of $11.00 per share. These warrants expired in
May of 1999 unexercised.

In January and February of 1996, the Company issued warrants to purchase 97,500
shares of the Company's common stock at a price of $.04 per share, of which
66,250 warrants were exercised in 1996. The remaining warrants are exercisable
at any time and expire in 2007.

In October 1996, the Company issued warrants to purchase 50,000 shares of common
stock at $6 per share, 25,000 of which were subsequently canceled in April of
1997 (see NOTE 8). These warrants are exercisable and expire in 2001.

In December 1996, the Company committed to the future issuance of warrants to
purchase 125,000 shares of the Company's common stock at a price of $8.24 per
share (see NOTE 3).

In February 1997, the Company issued warrants to three outside consultants to
purchase a total of 25,500 shares of common stock at $6.00 per share. These
warrants vested immediately upon issuance and expire in 2004.

In April 1997, the Company issued warrants to purchase 50,000 shares of common
stock at $8.00 per share (see NOTE 8). Such warrants expire in July 2002.


                                      F-23
<PAGE>

6.   EQUITY TRANSACTIONS (CONTINUED)

In July 1997, warrants were issued to a consultant to purchase 45,000 shares of
common stock at $4.50 per share. Such warrants were to vest upon the occurrence
of certain milestones and were exercisable for a period of five years. In
December 1997, these warrants were canceled and new warrants to purchase 115,000
shares of common stock at $3.50 per share were issued to the consultant. Such
warrants vest upon the occurrence of certain milestones and are exercisable for
a period of five years. During 2000, 64,346 of these warrants became exercisable
and the remaining 50,654 expired.

In December 1997, warrants were issued to a consultant to purchase 200,000
shares of common stock at $3.75 per share. Such warrants vest upon the
achievement of certain performance-based milestones and are exercisable for a
period of five years. During 2000, these warrants expired.

In May 1998, warrants were issued to a financial consultant to purchase 80,000
shares of common stock at $4.03 per share. The agreement was terminated during
the year resulting in only 40,000 shares vesting as of December 31, 1998. During
2000, 6,000 shares were exercised. These warrants expire in May 2003.

In October 1998, warrants were issued to a financial consultant to purchase
75,000 shares of common stock at $1.625 per share. These options became fully
vested in 1999 and the consultant exercised the option, utilizing the cashless
exercise provisions of the warrant, resulting in the issuance of 37,500 shares
of common stock.

In December 1999, warrants were issued to a financial consultant to purchase
150,000 shares of common stock at $5.09 per share. Such options vest over a
three-month period and expire in December 2004.

Authorized but unissued shares of common stock were reserved for issuance at
December 31, 2000 as follows:


<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                                     2000
                                                             ---------------------
<S>                                                          <C>
Series C convertible preferred stock                                2,669,225
Stock option plan                                                   2,500,000
2000 Directors option plan                                            480,000
Non Plan options                                                    1,275,115
Warrants to purchase common stock                                     505,096
Warrants to purchase Series B convertible
   preferred stock                                                    654,437
Warrants to purchase Series C convertible
  preferred stock                                                     845,339
Warrants to purchase Common Stock pursuant to
  2000 fund raising                                                   444,710
Contingent shares issuable in conjunctions with the
  Genopoietic acquisition                                           2,200,000
                                                             ---------------------
                                                                   11,573,922
                                                             =====================
</TABLE>


                                      F-24
<PAGE>

6.       EQUITY TRANSACTIONS (CONTINUED)

SFAS NO. 123 DISCLOSURES

Pro forma information regarding net loss and net loss per share is required by
SFAS No. 123 and has been determined as if the Company had accounted for its
applicable stock options and warrants under the fair value method of the
statement.

The fair value for these options and warrants was estimated at the date of grant
using a Black-Scholes option pricing model with the following weighted-average
assumptions for 2000, including a risk free interest rate of 6.0%, a volatility
factor of the expected market price of the Company's common stock of .719 and a
weighted-average remaining contractual life of the option or warrant of 48
months.

This model was developed for use in estimating the fair value of traded options
that have no vesting restrictions and are fully transferable. In addition,
option valuation models require the input of highly subjective assumptions,
including the expected stock price volatility. Because the Company's stock
options and warrants have characteristics significantly different from those of
traded options and because changes in the subjective input assumptions can
materially affect the fair value estimate, in management's opinion, the existing
models do not necessarily provide a reliable single measure of the fair value of
its employee stock options or warrants.

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the option or warrant vesting period. The effects
of applying SFAS No. 123 for pro forma disclosures are not likely to be
representative of the effects on reported net income or losses for future years.
The Company's pro forma information follows:

<TABLE>
<CAPTION>
                                                         1999               2000
                                                 ----------------------------------------
<S>                                                   <C>                 <C>

Pro forma net loss attributable to common
   stockholders                                       $(10,535,114)       $(21,099,568)
                                                      =============  ====================

Pro forma net loss per share                                 $(.99)             $(1.37)
                                                      =============  ====================
</TABLE>


A summary of applicable stock option and warrant activity and related
information for the years ended December 31, 1999 and 2000 is as follows:

<TABLE>
<CAPTION>
                                                                    1999                               2000
                                                     ------------------------------------  ------------------------------------
                                                                       WEIGHTED-AVERAGE                        WEIGHTED-AVERAGE
                                                        OPTIONS AND         EXERCISE          OPTIONS AND          EXERCISE
                                                          WARRANTS            PRICE              WARRANTS           PRICE
                                                     ------------------------------------ -------------------------------------
<S>                                                        <C>                <C>               <C>                 <C>
       Outstanding at beginning of year                    3,213,330          $3.27             4,913,314           $3.58
       Granted                                             2,014,984           3.73             1,114,710            8.12
       Exercised                                              75,000           1.63                45,231            4.00
       Forfeited                                             240,000           1.81               264,084            3.68
                                                     -------------------                  -------------------
       Outstanding at end of year                          4,913,314           3.58             5,718,709            4.
                                                     ===================                  ===================
       Exercisable at end of year                          3,106,972          $3.71             4,208,427           $4.61
                                                     ===================                  ===================
</TABLE>


                                      F-25
<PAGE>

6.      EQUITY TRANSACTIONS (CONTINUED)

The weighted-average fair value of options and warrants granted during 2000 and
1999 was $8.12 and $2.42, respectively. Exercise prices for options and warrants
outstanding range from $.04 to $12.79. The option contracts expire at various
times through October of 2011.

7.      INCOME TAXES

At December 31, 2000, the Company has net operating loss carryforwards of
approximately $36,408,000 for federal income tax purposes that expire in varying
amounts between 2005 and 2015, if not utilized.

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets and liabilities for federal income tax
purposes are as follows:

<TABLE>
<CAPTION>
                                                                                       DECEMBER 31,
                                                                                           2000
                                                                                  -----------------------
<S>                                                                                        <C>
Deferred tax assets:
   Net operating losses                                                                    $13,981,000
   Deferred compensation                                                                       413,000
   Other                                                                                         1,000
                                                                                  -----------------------
Total deferred tax assets                                                                   14,395,000
Deferred tax liabilities:
   Depreciation expense                                                                        (20,000)
                                                                                  -----------------------
                                                                                            14,375,000
Valuation allowance                                                                        (14,375,000)
                                                                                  -----------------------
Net deferred tax assets                                                                    $         -
                                                                                  =======================
</TABLE>

The valuation allowance at December 31, 1999 was $8,167,000.

Under Section 382 of the Tax Reform Act of 1986, the Company's net operating
loss carryforward could be subject to an annual limitation if it should be
determined that a change in ownership of more than 50% of the value of the
Company's stock occurred over a three-year period.


                                      F-26
<PAGE>

7.      INCOME TAXES (CONTINUED)

The following summary reconciles the federal statutory rate with the actual
income tax provision (benefit):

<TABLE>
<CAPTION>
                                                                               DECEMBER 31,
                                                                         1999               2000
                                                                  ---------------------------------------
<S>                                                                <C>                    <C>

Income taxes (benefit) at
   statutory rate                                                  $    (2,675,000)       $(5,534,000)
State income taxes, net of
   federal benefit                                                        (363,000)          (716,000)
Change in the valuation
   allowance                                                             3,048,000          6,208,000
Other                                                                      (10,000)            42,000
                                                                  ---------------------------------------
Provision for income
   taxes (benefit)                                                 $             -        $         -
                                                                  =======================================
</TABLE>

8.      COMMITMENTS

LEASES

In May of 1999, the Company entered into a five-year lease agreement for its
current office space that amended the Company's previous lease agreement. The
Company provided the landlord with an irrevocable letter of credit in the amount
of $7,595 as security related to the lease. Monthly lease payments escalate each
year of the lease beginning at approximately $13,170 per month and increasing to
$14,450 per month throughout the lease.

In December 1997, the Company entered into a 10-year lease agreement for
manufacturing facility space that commenced in February 1998 and contains an
option to terminate after five years. The termination option requires a lump sum
payment at the termination of the lease of $236,057. The monthly rental is
approximately $10,400. The first month's rent was payable upon signing of the
lease along with a security deposit equivalent to two months rental. This lease
is secured by a one-year irrevocable standby letter of credit whereby the lessor
is the named beneficiary. This $379,530 letter of credit automatically renews
each December and will be reduced by the amortized reduction of the landlord
investment each year.

In July 2000, the Company entered into a 9-year lease agreement for
manufacturing and research space in Lyon, France. The lease is cancelable by the
Company after three years. The monthly rental is approximately $11,500, $80,000
French Francs. The Company also leases office space located in Paris, France
pursuant to a lease agreement entered into in 1995. At the present time the
lease is cancelable upon ninety days written notice. Monthly rent under the
agreement is approximately $1,200 per month.

Rent expense under these agreements was approximately $327,000 and $252,000 for
the years ended December 31, 2000 and 1999, respectively.


                                      F-27
<PAGE>

8.      COMMITMENTS (CONTINUED)

Future minimum lease payments under the noncancellable operating leases,
assuming the termination payment is made in 2002 on the manufacturing facility
lease, consisted of the following at December 31, 2000:

<TABLE>
<CAPTION>
    YEAR ENDING
    DECEMBER 31,
---------------------
<S>                                 <C>
        2001                         $469,331
        2002                         $690,258
        2003                         $259,921
        2004                          $60,631
</TABLE>

CONSULTING AGREEMENTS

Effective in June 1996, the Company entered into consulting agreements with the
Scientist that runs through May 2002. Annual consulting fees payable pursuant to
the agreement with the Scientist are $48,000.

In April, May and July 1997, the Company entered into agreements with four
members of the Scientific Advisory Board. These agreements are for initial terms
of two years and require compensation of $2,000 per person per meeting of the
Scientific Advisory Board. In July 1997, the Company entered into a consulting
agreement with a member of its Scientific Advisory Board. The agreement calls
for annual compensation of $20,000 plus options to acquire 30,000 shares of
common stock at $4.50 per share (see NOTE 6). In December 1998, the Company
entered into a three year consulting agreement with a second member of its
Scientific Advisory Board for additional consulting services. The agreement
calls for annual compensation of $20,000 plus options to acquire 21,000 shares
of common stock at $2.25 per share (see NOTE 6). The options vest annually in
arrears.

In August 1998, the Company entered into a consulting agreement with a contract
research organization to assist the Company in performance of its clinical
trials. The agreement had an expected term of in excess of seven years and
requires fixed payments of $120,000 per quarter over the first two years. This
agreement was cancelled in September 2000.

In September 1998, the Company entered into an agreement with a financial
advisor, pursuant to which the advisor would, at the Company's request, perform
certain financial advisory services for the Company. The agreement had an
initial term of one year. In connection with this agreement, the advisor was
granted warrants to purchase 75,000 shares of common stock at $1.625 per share.
This agreement was terminated during 1999 resulting in the Company accruing
$50,000 as of December 31, 1999.

In November 1999, the Company extended a Technical Testing Agreement with a
Consultant. The agreement, which is for a period of two years, calls for annual
payments of $110,000 annually in advance.

In January 2000, the Company entered into an Agreement for Services with a
contract research organization to assist the Company in the performance of its
clinical trials. The agreements is to extend over the life of the clinical
trials which has an expected term of in excess of seven years. Payments will be
made upon the achievement of various milestones in the study. Total expected
payments under all agreements if approximately $11,138,000. During 2000,
expenses incurred related to this agreement were $1,500,950.


                                      F-28
<PAGE>

9.      LONG TERM DEBT

The Company's French subsidiary receives financial support from a French
governmental agency (Anvar). The grants which are subject to conditions
specifying that non-compliance with such conditions could result in the
forfeiture of all or a portion of the future amounts to be received, as well as
the repayment of all or a portion of amounts received to date, are accounted for
as long term debt. If certain products are commercialized, the December 31, 2000
balance of $247,752 (1,800,000 French Francs) is repayable based on an annual
royalty equal to 47% of the revenue related to the project. As such, the total
amount of grant proceeds received is recorded as a liability in the accompanying
consolidated balance sheet. In case of failure or partial success, as defined in
the agreement, $55,056 (400,000 French Francs) is payable on or before December
21, 2001.

10.     PROPERTY, PLANT AND EQUIPMENT

The Company completed construction of its GMP (Good Manufacturing Practices)
compliant clinical manufacturing facility during 2000. Costs incurred related to
the planning and construction of the facility have been capitalized and are
included in property, plant and equipment.

The following shows the composition of the assets included in property, plant
and equipment at December 31, 2000:

<TABLE>
<CAPTION>
                                                                   Accumulated
                                               Cost                Depreciation                Net
                                     ----------------------- ----------------------- -----------------------
<S>                                  <C>                        <C>                   <C>

Office furniture and
   equipment                         $         288,802          $      124,226        $        164,577
Manufacturing facility and
   related equipment                         2,844,402                 580,171               2,264,231
                                     ----------------------- ----------------------- -----------------------
Total                                $       3,133,204          $      704,397        $      2,428,807
                                     ======================= ======================= =======================
</TABLE>

Depreciation expense was $377,247 and $81,385 for the years ended December 31,
2000 and 1999, respectively.

11.     EMPLOYEE BENEFIT PLAN

During 1996, the Company established a 401(k) plan for all employees over the
age of 21. Employee contributions are subject to normal 401(k) plan limitations.
The Company made a $10,188 contribution in 1999 and a $25,039 contribution in
2000.


                                       F-29
<PAGE>


                                   SIGNATURES

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

                                  AVAX TECHNOLOGIES, INC.

Date:  April 2, 2001              By:      /s/ David L. Tousley
                                           --------------------------------

                                           David L. Tousley
                                           Chief Operating  Officer and Chief
                                           Financial  Officer (Principal
                                           Executive and Financial Officer)

         In accordance with the Exchange Act, this Report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>

                   SIGNATURE                                         NAME & TITLE                                DATE
                   ---------                                         ------------                                ----

<S>                                             <C>                                                         <C>
     /s/ Richard P. Rainey                      Richard P. Rainey                                           April 2, 2001
     ---------------------                      Vice President - Finance and Administration (Principal
                                                Accounting Officer)

     /s/ Edson D. De Castro                     Edson D. de Castro                                          April 2, 2001
     ----------------------                     Director

     /s/ John K. A. Prendergast, Ph.D.          John K. A. Prendergast, Ph.D.                               April 2, 2001
     ---------------------------------          Director

     /s/ Carl Spana, Ph.D.                      Carl Spana, Ph.D.                                           April 2, 2001
     ---------------------                      Director

     /s/ James Currie                           James Currie                                                April 2, 2001
     ----------------                           Director

     /s/ Andrew W. Dahl, Sc.D.                  Andrew W. Dahl, Sc.D.                                       April 2, 2001
     -------------------------                  Director

     /s/ Jean-Loup Salzmann, M.D., Ph.D.        Jean-Loup Salzmann, M.D., Ph.D.                             April 2, 2001
     -----------------------------------        Director
</TABLE>


                                     27


<PAGE>

                                  EXHIBIT INDEX

    EXHIBIT NO.                    DESCRIPTION
    -----------                    -----------

     3.1    Certificate of Incorporation, as amended (excluding the Certificates
            of Designations for the Series B and Series C Convertible Preferred
            Stock).(1)

     3.2    By-Laws.(2)

     4.1    Reference is made to Exhibits 3.1 and 3.2.

     4.2    Specimen of Common Stock certificate.(2)

     4.7    Investors' Rights Agreement Dated November 20, 1995, by and between
            the Company and certain investors.(2)

     4.8    Form of Placement Warrant Relating to Offering of Series B Placement
            Warrants.(3)

     4.9    Certificate of Designations of Series C Convertible Preferred
            Stock.(4)

     4.10   Series C Convertible Preferred Stock Warrant Purchase Agreement.(4)

     4.11   Form of Class A and Class B Common Stock Purchase Warrant issued in
            connection with the Series C Convertible Preferred Stock.(4)

     10.1   Clinical Study and Research Agreement dated November 20, 1995, by
            and between the Company and Thomas Jefferson University.(5)

     10.2   License Agreement dated November 20, 1995, by and between the
            Company and Thomas Jefferson University.(5)


     10.3   Extension to the Clinical Study and Research Agreement dated
            November 20, 1995, by and between the Company and Thomas Jefferson
            University.(4)

     10.4   Consulting Agreement dated May 9, 1996, between the Company and Dr.
            David Berd.(2)

     10.5   Letter of Employment dated September 13, 1996, between the Company
            and David L. Tousley.(6)

     10.6   Letter of Employment dated September 13, 1996, between the Company
            and Ernest W. Yankee, Ph.D.(6)

     10.7   License Agreement dated December 10, 1996, by and between the
            Company and Rutgers, The State University of New Jersey and the
            University of Medicine and Dentistry.(5)

     10.8   License Agreement dated February 17, 1997, by and between the
            Company and The Texas A&M University System.(5)

     10.9   Sponsored Research Agreement dated May 2, 1997, by and between the
            Company and Rutgers, The State University of New Jersey and the
            University of Medicine and Dentistry.(7)

     10.10  Sponsored Research Agreement Dated May 12, 1997, by and between the
            Company and The Texas A&M University System.(7)

     10.11  Lease Agreement dated December 1, 1997 for Kansas City Facility, as
            amended.(8)

     10.12  Lease Agreement dated December 1, 1997 for Philadelphia Facility.(8)

     10.13  The Company's Amended and Restated 1992 Stock Option Plan.(9)


                                       i
<PAGE>

     10.14  Employment Agreement dated October 15, 1999, between the Company and
            Dr. Jeffrey M. Jonas.(1)

     10.15  Stockholders Agreement dated November 25, 1999, among AVAX Australia
            Holdings Pty Limited, Eastpac Inc., Jetona Pty Ltd and Neptunus
            International Holdings Limited.(10)

     10.16  Securities Purchase Agreement dated March 7, 2000.(11)

     10.17  Stock Contribution Agreement dated as of July 17, 2000, among the
            Company, Professor David R. Klatzmann, Professor Jean-Loup Salzmann,
            GPH, S.A. and Genopoietic, S.A.(12)

     10.18  [Tax] Agreement dated as of August 24, 2000, among the Company, GPH,
            S.A., Genopoietic S.A., Professor David R. Klatzmann and Professor
            Jean-Loup Salzmann.(12)

     10.19  Research Funding Agreement dated as of August 24, 2000, between the
            Company and Genopoietic, S.A.(12)

     10.20  Rights Agreement dated as of August 24, 2000, between the Company
            and Professor David R. Klatzmann (an identical agreement was entered
            into between the Company and Professor Jean-Loup Salzmann).(12)

     10.21  Severance Agreement dated February 25, 2001, between the Company and
            Dr. Jeffrey M. Jonas.(13)

     10.22  2000 Directors' Stock Option Plan.*

     11.1   Statement Concerning Computation of Per Share Earnings.*

     21.1   Subsidiaries of the Company.*

     23.1   Consent of Ernst & Young LLP, Independent Auditors.*

---------------
*    Filed herewith.
(1)  Incorporated by reference and previously filed as an exhibit to the annual
     report on Form 10-KSB for the year ended December 31, 1999, filed with the
     Securities and Exchange Commission on February 17, 2000.
(2)  Incorporated by reference and previously filed as an exhibit to the
     registration statement on Form S-3 filed with the Securities and Exchange
     Commission (File No. 333-09349) on August 1, 1996.
(3)  Incorporated by reference and previously filed as an exhibit to Post
     Effective Amendment No. 6 to the registration statement on Form S-3 filed
     with the Securities and Exchange Commission on August 17, 1998.
(4)  Incorporated by reference and previously filed as an exhibit to the Annual
     Report on Form 10-KSB for the year ended December 31, 1998, filed with the
     Securities and Exchange Commission on March 31, 1999.
(5)  Incorporated by reference and previously filed as an exhibit to Amendment
     No. 9 to the registration statement on Form S-3 filed with the Securities
     and Exchange Commission on July 3, 1997.
(6)  Incorporated by reference and previously filed as an exhibit to Amendment
     No. 6 to the registration statement on Form SB-2 filed with the Securities
     and Exchange Commission on May 7, 1997.
(7)  Incorporated by reference and previously filed as an exhibit to Post
     Effective Amendment No. 1 to the registration statement on Form S-3 filed
     with the Securities and Exchange Commission on August 14, 1997.
(8)  Incorporated by reference and previously filed as an exhibit to Post
     Effective Amendment No. 3 to the registration statement on Form S-3 filed
     with the Securities and Exchange Commission on March 16, 1998.
(9)  Incorporated by reference and previously filed as an exhibit to the
     Quarterly Report on Form 10-QSB for the quarter ended June 30, 1998, filed
     with the Securities and Exchange Commission on August 14, 1998.
(10  Incorporated by reference and previously filed as an exhibit to the Current
     Report on Form 8-K, filed with the Securities and Exchange Commission on
     December 16, 1999.
(11) Incorporated by reference and previously filed as an exhibit to the current
     report on Form 8-K, filed with the Securities and Exchange Commission on
     March 23, 2000.
(12) Incorporated by reference and previously filed as an exhibit to the current
     report on Form 8-K, filed with the Securities and Exchange Commission on
     September 8, 2000, as amended by the amendment on Form 8-K/A filed with the
     Securities and Exchange Commission on November 7, 2000.
(13) Incorporated by reference and previously filed as an exhibit to the current
     report on Form 8-K, filed with the Securities and Exchange Commission on
     March 2, 2001.


                                       ii