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

                                   FORM 10-QSB

(X)      Quarterly report under Section 13 of 15(d) of the Securities Exchange
         Act of 1934.

For the quarterly period ended MAY 31, 2001 or

( )      Transition report under Section 13 or 15(d) of the Securities Exchange
         Act of 1934 for the transition period from _________ to _________.

Commission file number         0-19866
                       ----------------------

                          PROTIDE PHARMACEUTICALS, INC.
                      (Exact name of small business issuer
                          as specified in its charter)

            MINNESOTA                                      36-3384240
--------------------------------------------         ----------------------
(State or other jurisdiction of                         (I.R.S. Employer
incorporation or organization)                       Identification Number)

1311 HELMO AVENUE, SAINT PAUL, MINNESOTA                  55128
--------------------------------------------         ---------------
(Address of principal executive offices)                (Zip Code)


Issuers telephone number, including area code: (651) 730-1500


Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Act of 1934 during the past 12 months (or
for such shorter periods that the issuer was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.

                               Yes __X__ No _____

State the number of shares outstanding of each the issuer's classes of common
equity, as of the latest practicable date.

THE NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE, OUTSTANDING ON
JULY 1, 2001 WAS 3,733,169.

Transitional small business format disclosure:

                               Yes _____ No __X__


                                        1
<PAGE>


                                Table of Contents

                          PROTIDE PHARMACEUTICALS, INC.

                              Report on Form 10-QSB
                            for fiscal quarter ended
                                  May 31, 2001


<TABLE>
<CAPTION>

PART I -- FINANCIAL INFORMATION                                                              Page
                                                                                             ----

<S>                         <C>                                                              <C>
            ITEM 1.         Financial Statements

                            Balance Sheet as of August 31, 2000
                                and May 31, 2001                                               3

                            Statement of Operations -- Three months ended
                                May 31, 2001 and 2000 and nine months ended
                                May 31, 2001 and 2000                                          5

                            Statement of Changes in Shareholders' Equity
                                for the year ended August 31, 2000 and the
                                nine months ended May 31, 2001                                 6

                            Statement of Cash Flows -- Nine months ended
                                May 31, 2001 and 2000                                          7

                            Notes to Financial Statements                                      8


            ITEM 2.         Management's Discussion and Analysis of Financial
                                Conditions and Results of Operations                           9


PART II -- OTHER INFORMATION                                                                      14

</TABLE>




                                        2

<PAGE>



                         PART I -- FINANCIAL INFORMATION


ITEM 1 -- FINANCIAL STATEMENTS


PROTIDE PHARMACEUTICALS, INC.
BALANCE SHEET

                                                      May 31,     August 31,
ASSETS                                                 2001         2000
                                                     ---------    ---------
                                                    (Unaudited)
CURRENT ASSETS
       Cash and cash equivalents                     $ 104,596    $  63,935
       Certificates of deposit                         315,000      560,867
       Trade receivables                                22,851       33,816
       Accrued interest receivable                       8,692       11,901
       Inventories                                      58,885       53,191
       Other Assets                                      4,119        8,093
                                                     ---------    ---------

                        Total current assets           514,143      731,803
                                                     ---------    ---------

EQUIPMENT AND LEASEHOLD IMPROVEMENTS
       Laboratory and production equipment             226,937      226,937
       Office furniture and equipment                   94,822       94,822
       Leasehold improvements                          138,426      138,426
                                                     ---------    ---------
                                                       460,185      460,185
       Less accumulated depreciation                  (376,347)    (354,522)
                                                     ---------    ---------

                                                        83,838      105,663
OTHER ASSETS
       Patents, net                                     49,219       51,852
                                                     ---------    ---------

                        TOTAL ASSETS                 $ 647,200    $ 889,318
                                                     =========    =========


See Notes to Financial Statements.






                                        3

<PAGE>



PROTIDE PHARMACEUTICALS, INC.
BALANCE SHEET


                                                      May 31,        August 31,
LIABILITIES AND SHAREHOLDERS' EQUITY                   2001            2000
                                                     -----------    -----------
                                                     (Unaudited)
CURRENT LIABILITIES
       Accounts payable                              $     7,856    $     7,277
       Accrued liabilities                                37,239         36,923

       Bank note payable - current                        72,661         73,926
                                                     -----------    -----------

                        Total current liabilities        117,756        118,126
                                                     -----------    -----------

SHAREHOLDERS' EQUITY
       Common stock                                       36,882         36,832
       Additional paid-in capital                      5,696,596      5,691,646
                                                     -----------    -----------
                                                       5,733,478      5,728,478
       Accumulated deficit                            (5,204,034)    (4,957,286)
                                                     -----------    -----------

                        Total shareholders' equity       529,444        771,192
                                                     -----------    -----------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY           $   647,200    $   889,318
                                                     ===========    ===========


See Notes to Financial Statements.





                                        4

<PAGE>



PROTIDE PHARMACEUTICALS, INC.
STATEMENT OF OPERATIONS
(Unaudited)


<TABLE>
<CAPTION>
                                                                  Three months ended            Nine months ended
                                                                        May 31,                       May 31,
                                                                   2001          2000            2001          2000
-----------------------------------------------------------------------------------------------------------------------
<S>                                                            <C>            <C>            <C>            <C>
REVENUES
  Net sales                                                    $    47,648    $    33,018    $   146,828    $   127,835
  Cost of products sold                                             18,896         19,793         59,291         57,674
-----------------------------------------------------------------------------------------------------------------------

GROSS MARGIN                                                        28,752         13,225         87,537         70,161

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

OPERATING EXPENSES
  Research and development                                          37,365         37,418        116,239        109,366
  Marketing and sales                                               32,811         23,965         82,006         71,231
  Administration                                                    51,396         44,384        171,945        163,214
-----------------------------------------------------------------------------------------------------------------------

  Total operating expenses                                         121,572        105,767        370,190        343,811

OPERATING LOSS                                                     (92,820)       (92,542)      (282,653)      (273,650)

OTHER INCOME (EXPENSE)
  Interest and investment income                                     4,271          7,467         18,449         16,641
  Other income                                                           0          6,400         20,538          6,752
  Interest expense                                                  (1,361)        (1,027)        (3,082)        (3,260)
-----------------------------------------------------------------------------------------------------------------------

  Total other income, net                                            2,910         12,840         35,905         20,133

NET LOSS                                                       ($   89,910)   ($   79,702)   ($  246,748)   ($  253,517)
=======================================================================================================================

BASIC AND DILUTED LOSS PER
COMMON SHARE                                                   ($     0.02)   ($     0.02)   ($     0.07)   ($     0.08)
-----------------------------------------------------------------------------------------------------------------------

WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING                                        3,733,169      3,535,126      3,710,825      3,132,997
=======================================================================================================================

</TABLE>




See Notes to Financial Statements.





                                        5

<PAGE>


PROTIDE PHARMACEUTICALS, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)

<TABLE>
<CAPTION>
                                           Common Stock         Additional
                                          --------------         Paid-in     Accumulated
                                      Shares        Amount       Capital        Deficit        Total
-------------------------------------------------------------------------------------------------------
<S>                                  <C>         <C>           <C>           <C>            <C>
BALANCE AT AUGUST 31, 1999           2,909,169   $    29,092   $ 5,312,486   ($4,649,940)   $   691,638

         Shares issued in
             private placement         774,000         7,740       379,160                      386,900


         Net loss for the year                                                  (307,346)      (307,346)
-------------------------------------------------------------------------------------------------------

BALANCE AT AUGUST 31, 2000           3,683,169   $    36,832   $ 5,691,646   ($4,957,286)   $   771,192

         Shares issued in
             private placement          50,000            50         4,950                        5,000


         Net loss for the period                                                (246,748)      (246,748)
-------------------------------------------------------------------------------------------------------

BALANCE AT MAY 31, 2001              3,733,169   $    36,882   $ 5,696,596   ($5,204,034)   $   529,444

</TABLE>


See Notes to Financial Statements.




                                        6

<PAGE>



PROTIDE PHARMACEUTICALS, INC.
STATEMENT OF CASH FLOWS
(Unaudited)

<TABLE>
<CAPTION>

                                                                                     Nine months ended
                                                                                           May 31
                                                                                      2001        2000
---------------------------------------------------------------------------------------------------------
<S>                                                                                <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
      Net loss for the period                                                      ($246,748)   ($253,517)
      Adjustments to reconcile net loss to
         net cash used in operating activities:
                  Depreciation and amortization                                       24,458       27,348
                  Changes in assets and liabilities:
                        (Increase) decrease in:
                              Accounts receivable                                     10,965        6,581
                              Accrued interest receivable                              3,209       (5,729)
                              Inventories                                             (5,694)       3,974
                              Other assets                                             3,974       (1,813)
                        Increase (decrease) in:
                              Accounts payable                                           579       (8,908)
                              Accrued liabilities                                        316        9,873
---------------------------------------------------------------------------------------------------------

                              Net cash used in operating activities                 (208,941)    (222,191)
---------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Maturity (Purchase) of bank certificates of deposit, net                       245,867     (180,042)
      Capital expenditures                                                                 0       (6,981)
---------------------------------------------------------------------------------------------------------

                              Net cash from (used in) investing activities           245,867     (187,023)
---------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING:
      Issuance of common stock                                                         5,000      386,900
      Principal payments on bank note payable                                         (1,265)      (1,363)
---------------------------------------------------------------------------------------------------------
                              Net cash from financing activities                       3,735      385,537
                              Net increase (decrease) in cash
                                and cash equivalents                                  40,661      (23,677)

CASH AND CASH EQUIVALENTS:
      Beginning of period                                                             63,935      150,824
---------------------------------------------------------------------------------------------------------

      End of period                                                                $ 104,596    $ 127,147
=========================================================================================================

</TABLE>


See Notes to Financial Statements.





                                        7

<PAGE>



PROTIDE PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS -- MAY 31, 2001


NOTE A - BASIS OF PRESENTATION

      The accompanying financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB and Item 310 of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting only of normal
recurring adjustments) considered necessary for a fair presentation have been
included.

      The organization and business of the Company, accounting policies followed
by the Company and other information are contained in the notes to the Company's
financial statements filed as part of the Company's August 31, 2000 Form 10-KSB.
This quarterly report should be read in connection with such annual report.

NOTE B - CASH AND CASH EQUIVALENTS

      For purposes of reporting the statements of cash flows, the Company
considers all highly liquid debt instruments purchased with a maturity of three
months or less to be cash equivalents.

NOTE C - SHORT-TERM INVESTMENTS

      As of May 31, 2001 the Company had investments of $315,000 in certificates
of deposit. Certificates of deposit are made only with the highest rated banks.
The Company also utilizes a money market fund, which is restricted by its
charter to Tier 1 instruments, for a portion of its investments. At times
throughout the year, the Company's cash, cash equivalents and certificates of
deposit in financial institutions may exceed FDIC insurance limits. The Company
has not experienced any losses in such accounts.

NOTE D - NOTES PAYABLE BANK

      During April, 1997 the Company borrowed $100,000 from a local bank with
the proceeds used for financing a portion of the tenant improvements in the
Company's new facility. In February, 2001 the loan was renegotiated with a
different bank. The new loan is secured by a certificate of deposit at this
bank. The interest rate for this loan, currently 5.5%, is tied to the
certificate of deposit rate.

NOTE E - LOSS PER COMMON SHARE

      Basic loss per share is computed based upon the weighted average number of
common shares outstanding during the period. Stock options for 292,000 shares
were not included in the computation of diluted loss per share as the results
were antidilutive.

NOTE F - RECLASSIFICATION

      Certain fiscal 2000 amounts have been reclassified to conform to the
fiscal 2001 classifications. These reclassifications had no effect on the net
loss or shareholders' equity as previously reported.






                                        8

<PAGE>



ITEM 2--MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS


INTRODUCTION

      a. BACKGROUND AND PRODUCTS

      In January, 2001 Celox Laboratories, Inc. and its wholly owned
subsidiary, Protide Pharmaceuticals, Inc., merged with the surviving corporation
named Protide Pharmaceuticals, Inc. A new ticker symbol, "PPMD", became
effective January 12, 2001.

      Protide Pharmaceuticals, Inc. ("Protide" or the "Company") is a
biotechnology company devoted to the discovery, development and
commercialization of technologies and processes in clinical cell therapy and
transfusion medicine, specifically in the areas of cancer, genetic disorders,
cell engineering and transplantation. The focus of Protide is in the area of
gene therapy, cell therapy and contract manufacturing for companies and
educational institutions that are working in these areas.

      The Company markets over 25 different products. The Company's proprietary
products consist of six different serum-free supplements: TCM(TM), TM-235(TM),
TCH(TM), Nephrigen(TM), HemaPro(TM) and VaxMax(TM)and two cell freezing
solutions, Cellvation(TM) and pZerve(TM). VaxMax(TM), introduced in September of
1993, was developed specifically for use in the production of veterinary
vaccines. Nephrigen(TM) was introduced in fiscal 1998 and is a serum-free growth
medium developed specifically for the culturing of Human Embryonic Kidney (293)
cells. As part of the Nephrigen(TM) system, the Company also introduced a
non-enzymatic dissociation solution that is used instead of an enzyme such as
trypsin. HemaPro(TM) was also introduced in fiscal 1998 and is a low protein,
serum-free medium for clonogenic assays or EX VIVO expansion of human progenitor
cells. The Company intends to obtain IN VITRO diagnostic status for HemaPro(TM).
pZerve(TM) was introduced in 1999 and is used primarily for cryopreserving human
cells. pZerve(TM) is used as a research product only, it is not for human use.
An additional proposed clinical product, ViaStem(TM), has completed preclinical
testing. This product was developed to improve the preservation of critical
cells (e.g., stem cells), which are required for bone marrow transplantation.

      During the first quarter of fiscal 2001 the Company introduced the new
product STEMSOL(TM). STEMSOL(TM) is a sterile filtered, USP Grade Dimethyl
Sulfoxide (DMSO) used in a cryopreservation solution for, among other things,
peripheral-blood stem cells and cord blood preservations.

      The Company has received a Drug Master File classification from the Food
and Drug Administration (FDA) for TCM(TM). This classification will expedite the
FDA approval process for customers who want to use the Company's TCM(TM) product
for manufacturing purposes.

      The Company also manufactures eleven basal media formulations, a series of
buffered saline solutions, other cell biology reagents, and a variety of custom
formulations.

      During the third quarter of fiscal 2000, the Company entered into an
agreement to manufacture specialized solutions for the processing of pancreatic
islet cells for transplants.




                                        9

<PAGE>


      b. VIASTEM(TM)

      In March 1995, the Company filed a patent application for ViaStem(TM) with
the U.S. Patent and Trademark Office. The Company received the U.S. Patent in
early December 1996. This patent provides protection of the Company's
ViaStem(TM) technology through March of 2015. A second U.S. Patent was received
in August, 1998. This second patent broadened the patented uses of ViaStem(TM)
in bone marrow transplantation and related therapies. The Company has also filed
the documents needed for an International Patent Application as required by the
Patent Cooperation Treaty. In October, 1998 the Company received notice from the
New Zealand and Australia Patent Office that a patent on ViaStem(TM) had been
granted by each of the respective countries. In May, 2000 the Company received
notice from the Russian Patent Office of the official issue date for the Russian
patent. In March, 2000 notice was received from the Patent Office in Canada that
a patent had been issued for ViaStem(TM). Initial reports from other countries
that have reviewed the International Patent Application have been positive. Due
to the unique nature of ViaStem(TM)and its applications, the Company pursued the
patent process for this product.

      On March 31, 2000, Protide Pharmaceuticals, Inc. entered into an agreement
with Fairview-University Medical Center (FUMC), Minneapolis, MN. FUMC will
provide collecting, processing and assaying of human peripheral blood stem cells
as part of Protide's clinical investigation of ViaStem(TM).

      During May, 2000 the Company submitted an application to the Food and Drug
Administration (FDA) to initiate human clinical trials for ViaStem(TM). This was
the first submission ever made by the Company to the FDA for testing in human
subjects. In August, 2000 the Company announced that it had received notice from
the FDA that the clinical trial on had been placed on clinical hold pending
further information. The Company is currently working with the University of
Minnesota and possibly other transplant centers to complete and expedite the
submission of the additional requested information to the FDA.


      c. DISTRIBUTION/MARKETING

      The Company continues to sell its products on a direct basis to customers
around the world. In addition the Company has formed the following distribution
avenues:

      The Company has a non-exclusive world-wide distribution agreement with ICN
Pharmaceuticals, Inc. (NYSE:ICN), Costa Mesa, CA. Under the agreement, ICN is
marketing Celox' TCM(TM), TCH(TM), TM-235(TM) serum replacement products as well
as Cellvation(TM). The Company has also entered into an agreement with ICN to
custom manufacture certain of the Company's basal media and balanced salt
solutions to ICN for worldwide distribution. ICN manufactures and markets a
broad range of prescription and over-the-counter pharmaceuticals, medical
diagnostic products and biotechnology research products in North and Latin
America, Eastern and Western Europe and the Pacific Rim countries.

      In 1997, the Company began providing its proprietary products to Sigma
Chemical Company (NASDAQ:SIAL), St. Louis, MO. under a private label
distribution agreement for worldwide distribution.

      In 1997, the Company entered into a non-exclusive distribution agreement
with TaKaRa Shuzo Co., Ltd., Biomedical Group, Kyoto, Japan. Under the
agreement, TaKaRa will initially market Protide's proprietary product
Cellvation(TM). TaKaRa's Biomedical Group leads the industry in several areas
owing to the international scope of its research operations which span from the
People's Republic of China to North America and Europe. TaKaRa will market
Cellvation(TM) in Japan, Taiwan, Korea and People's Republic of China.

      The Company also has distribution of its products in Japan through
Funakoshi Co., LTD, a well established Japanese distributor.




                                       10

<PAGE>



      In March, 2000, the Company entered into an agreement with SciQuest.com,
Inc. (NASDAQ:SQST) to sell its products online. This agreement was canceled in
the third quarter of fiscal 2001 after SciQuest.com made changes to the
agreement which were unfavorable to Protide.






RESULTS OF OPERATIONS

      During the quarter ended May 31, 2001, the Company had net sales of
$47,648 which was an increase of $14,630 or 44% from $33,018 reported in the
same quarter for the prior fiscal year. For the nine month period ended May 31,
2001 net sales totaled $146,828 resulting in an increase of $18,993 (15%) from
the $127,835 reported in the comparable period in the previous fiscal year. The
increase between years for both of the reporting periods results primarily from
the amount and timing of custom orders, orders resulting from new products as
well as orders received from distributors.

      The Company had a net loss of $89,910 for the quarter ended May 31, 2001
compared to a net loss of $79,702 for the same period in the previous fiscal
year. For the nine months ended May 31, 2001 the Company had a net loss of
$246,748 compared to a net loss of $253,517 for the comparable period in the
previous fiscal period. The increase in net loss for the three month reporting
period results from increased marketing and sales expenses as well as higher
administrative costs which are offset by higher net sales. The decrease between
years for the nine month reporting periods results primarily from the receipt of
a check in the amount of $20,539 from the KPMG Litigation Settlement Fund offset
by higher operating expenses during the nine month period in the current fiscal
year. The KPMG check was the result of a settlement with the Piper Jaffray
Institutional Government Fund's auditors, KPMG. The check was recognized as
other income in the first quarter of fiscal 2001. On a per share basis, the loss
for the quarter ended May 31, 2001 equaled 2 cents versus a 2 cent loss in the
comparable period in fiscal 2000. For the nine months ended May 31, 2001 the
Company had a 7 cent loss per share compared to a 8 cent loss for the comparable
period in the previous fiscal year.

      The cost of products sold was 40% of net sales for the three months ended
May 31, 2001, as compared to 60% of net sales for the three months ended May 31,
2000. The cost of products sold for the nine months ended May 31, 2001 was 40%
of net sales compared to 45% of net sales for the nine months ended May 31,
2000. The decrease between years for the three month reporting periods results
from higher sales levels which results in a lower percentage of fixed
manufacturing costs as well as increased sales of contract manufactured
products. The decrease for the current nine month period as compared to the
previous fiscal year results from increased sales as well as the mix of products
sold.

      An operating loss of $92,820 was incurred for the quarter ended May 31,
2001 compared to an operating loss of $92,542 for the same period in the
previous fiscal year. For the nine months ended May 31, 2001 an operating loss
of $282,653 was incurred compared to an operating loss of $273,650 for the nine
months ended May 31, 2000. The slight increase between years for the three month
reporting period resulted from increased marketing and sales expenses and
administrative expenses which were offset by increases sales. For the nine month
reporting period the increase resulted from increases in research and
development expenses, sales and marketing expenses and administrative expenses,
offset by increased sales.






                                       11

<PAGE>



      The Company received interest and investment income of $4,271 during the
quarter ended May 31, 2001 as compared to $7,467 in the prior fiscal year.
Interest and investment income was $18,449 for the nine month period ended May
31, 2001 versus $16,641 in the comparable period in fiscal 2000. Investment
income is derived primarily from the investment of the proceeds of the Company's
March 1992 initial public offering as well as from subsequent private
placements. The decrease in investment income in the current three month
reporting period as compared to the previous fiscal period is due to lower
effective interest rates on investments and reduced investment balances from
using cash in operations. The increase in investment income during the nine
month period as compared to the previous fiscal year results from investing the
proceeds of the private placements in bank certificates of deposit.

      Operating expenses increased $15,805 (15%) to $121,572 from $105,767 for
the quarter ended May 31, 2001 as compared to the prior fiscal year. Operating
expenses increased $9,003 (3%) to $282,653 from $273,650 for the nine months
ended May 31, 2001 compared to the nine month period in the previous fiscal
year. The increase for the three month reporting period results from increased
marketing and sales expenditures as well as increased administrative expenses as
compared to the prior fiscal year. For the nine month reporting period, all of
the operating expense categories increased as compared to the prior fiscal year.

      Research and development costs decreased by $53 to $37,365 from $37,418 in
the current quarter as compared to the previous fiscal year. Research and
development expenses increase by $6,873 (6%) to $116,239 from $109,366 in the
nine month reporting period as compared to the same period in the prior fiscal
year. The increase for the ninth month reporting period results from increased
salaries and wages and professional fees as compared to the prior year. The
Company expects the costs of research and development to fluctuate based on the
status of preclinical and clinical trials for ViaStem(TM).

      Marketing expenses increased by $8,846 (37%) to $32,811 from $23,965 for
the quarter ended May 31, 2001 as compared to the previous fiscal year. For the
nine months ended May 31, 2001 marketing and sales expenses increased by $10,775
(15%) to $82,006 from $71,231 in fiscal 2000. The increase for both three month
and the nine month reporting periods as compared to the previous fiscal year
results from brochures and other marketing materials developed in connection
with the introduction of STEMSOL(TM) as well as other costs associated with the
introduction of new products. The Company expects that marketing and sales
expenses will fluctuate based on introduction of new products, new studies, and
as new advertising materials are developed.

      Administrative expenses increased by $7,012 (16%) for the quarter ended
May 31, 2001 compared to the previous fiscal year to $51,396 from $44,384.
Administrative expenses increased by $8,731 (5%) for the nine months ended May
31, 2001 as compared to the comparable period in the previous fiscal year to
$171,945 from $163,214. The increase for the three month reporting period
results from increased health insurance premiums and legal fees incurred in
connection with yearly patent fees. For the nine month reporting period the
increase resulted from higher utility expenses as well as increased professional
fees incurred in connection with the Company's name change.




LIQUIDITY AND CAPITAL RESOURCES

      Capital resources on hand at May 31, 2001 include cash and short-term
investments of $419,596 and net working capital of $396,387 This represents a
decrease of $205,206 (33%) in cash and short-term investments and a decrease of
$217,290 (35%) in net working capital as compared to August 31, 2000.




                                       12

<PAGE>



      The Company is leasing approximately 9,500 square feet of office,
laboratory and warehouse space in St. Paul, MN under a seven year lease. The
Company moved into the new facility during March, 1997. As partial payment for
tenant improvements in the new facility, the Company borrowed $100,000 from a
local bank. In February, 2000 the loan was renegotiated with a different bank.
The new loan is secured by a certificate of deposit at this bank. The interest
rate for this loan, currently 5.5%, is tied to the certificate of deposit rate.
The loan is renewed annually for a one year term with the current maturity in
February, 2002. The balance of the tenant improvements over this amount was paid
with Company funds.

      During fiscal 1999 the Company raised $59,400 in additional capital by
selling 55,000 units at $1.00 per unit to five accredited investors through a
private placement. Each unit consisted of one share of common stock and a
warrant to purchase an additional two shares of common stock at an exercise
price of $0.04 per share. The units were sold at a premium to the share price on
the OTC Bulletin Board at the time of the placement.

      During the second quarter of fiscal 2000 the Company raised $175,150 in
additional capital by selling 145,000 units at $1.15 per unit to five investors
through a private placement. Each unit consisted of one share of common stock
and a warrant to purchase an additional two shares of common stock at an
exercise price of $0.10 per share.

      During the third quarter of fiscal 2000 additional funds in the amount of
$211,750 were raised by selling units at $1.15 per unit and common stock at
$1.40 per share to other investors in a private placement. The additional funds
raised will be primarily used for advancing ViaStem(TM) through the necessary
testing before FDA approval can be obtained.

      During the second quarter of fiscal 2001, an additional 50,000 shares were
issued as a result of a private placement participant exercising warrants

      The Company intends to pursue additional financing, subject to prevailing
market conditions. There is no guarantee however, that the Company will be able
to successfully raise an adequate amount of additional funds. In addition, there
can be no assurance that the Company will be able to obtain the necessary FDA
approvals for ViaStem(TM).

      The Company anticipates spending approximately $10,000 during fiscal 2001
on capital expenditures. Through May, 2001 the Company has made no capital
expenditures. The majority of the planned expenditures will be used to fund new
products, research and development and manufacturing growth. The Company
believes that its capital resources on hand at May 31, 2001 together with
revenues from product sales, will be sufficient to meet its cash requirements
for the fiscal year.




FORWARD LOOKING INFORMATION

      Information contained in this Form 10-QSB contains "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, which can be identified by the use of forward-looking terminology such
as "may", "will", "expect", "plan", "anticipate", "estimate" or "continue" or
the negative thereof or other variations thereon or comparable terminology.
There are certain important factors that could cause results to differ
materially from those anticipated by some of these forward-looking statements.
Investors are cautioned that all forward-looking statements involve risks and
uncertainty. The factors, among others, that could cause actual results to
differ materially include the Company's ability to obtain FDA approval for its
clinical products, the ability of the Company to raise additional capital and
the ability to execute its business plan.



                                       13

<PAGE>


                          PART II -- OTHER INFORMATION


ITEM 1. -- LEGAL PROCEEDINGS

      The Company is not presently involved in any material legal proceedings.

ITEM 2. -- CHANGES IN SECURITIES

      None

ITEM 3. -- DEFAULTS UPON SENIOR SECURITIES

      None

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

      None

ITEM 5. -- OTHER INFORMATION

      None

ITEM 6. -- (A) EXHIBITS

           None

           (B) REPORTS ON FORM 8-K

           None




                                   SIGNATURES

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


                                       PROTIDE PHARMACEUTICALS, INC.


Dated: July 12, 2001                   By: /S/ Milo R. Polovina
                                           -------------------------------------
                                           Milo R. Polovina, President & CEO
                                           (Principal Financial Officer)





                                       14