<PAGE>

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

                                  Form 10-KSB

                                   (Mark One)
     X   Annual report under Section 13 or 15(d) of the Securities Exchange
    ---  Act of 1934. For the fiscal year ended June 30, 2002.

                                       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: 0-18299

                               BIOENVISION, INC.
                               -----------------
                 (Name of Small Business Issuer in Its Charter)

                 Delaware                                   13-4025857
     -------------------------------                   -------------------
     (State or Other Jurisdiction of                      (IRS Employer
      Incorporation or Organization)                   Identification No.)

                509 Madison Avenue
                    Suite 404
                New York, New York                           10022
     ----------------------------------------              ----------
     (Address of Principal Executive Offices)              (Zip Code)

       Registrant's telephone number, including area code: (212) 750-6700

Securities Registered Pursuant to Section 12(b) of the Act: None

Securities Registered Pursuant to Section 12(g) of the Act:

                              Title of Each Class:
                              -------------------
                         Common Stock, $0.001 par value

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

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

The issuer's revenues for its most recent fiscal year were $802,965.

The aggregate market value of the voting stock held by non-affiliates computed
by reference to the last price at which the stock was sold, as of September 17,
2002, was $4,900,149. The number of shares of common stock outstanding as of
September 17, 2002 was 16,887,786.


<PAGE>

                                     PART I

         The information set forth in this Report on Form 10-KSB including,
without limitation, that contained in Item 6, Management's Discussion and
Analysis and Plan of Operation, contains "forward looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Actual results may
differ materially from those projected in the forward-looking statements as a
result of certain risks and uncertainties set forth in this report. Although
management believes that the assumptions made and expectations reflected in the
forward-looking statements are reasonable, there is no assurance that the
underlying assumptions will, in fact, prove to be correct or that actual future
results will not be different from the expectations expressed in this report.

Item 1.  Description of Business.

         Bioenvision is an emerging biopharmaceutical company. Our primary
business focus is the acquisition, development and distribution of drugs to
treat cancer. We have a broad range of products and technologies under
development, but our two lead drugs are Clofarabine and Modrenal(R).

         We believe that our two lead products have the following competitive
advantages over existing products at market:

<TABLE>
<S>                                                        <C>
Modrenal(R)(selective steroid receptor modulation           Clofarabine (purine nucleoside technology product)
technology product)
                                                            o    Broader cellular activity than most currently
o    Novel mode of action on estrogen receptor                   available nucleoside analogs, based on
                                                                 pre-clinical and clinical trials to date
o    Increases estrogen binding to ER(beta)
                                                            o    Greater range of clinical activity than other
o    46% response rate in international clinical                 nucleoside analogs
     trials of almost 800 patients with advanced
     breast cancer                                          o    Good oral bio-availability

o    Second line therapy for hormone-sensitive              o    Pre-clinical activity against some solid
     breast cancer                                               tumours

o    Possible combination therapy with Tamoxifen            o    Complete response in chronic and acute
                                                                 leukemia, based on clinical trials to date
o    Possible role in prostate and ovarian cancer

o    Favorable pricing compared to competitors
</TABLE>

Anti-Cancer Product Portfolio
-----------------------------

Our anti-cancer product portfolio is as follows:

<TABLE>
<CAPTION>
Product/Condition                   Pre-clinical       Phase I        Phase II         Phase III       At Market
------------------------------------------------------------------------------------------------------------------
<S>                                <C>                <C>            <C>              <C>             <C>
Modrenal(R)/Breast Cancer                                                                              At
------------------------------------------------------------------------------------------------------------------
Abetafen/Prostate Cancer                                              Phase II
------------------------------------------------------------------------------------------------------------------
Modrenal(R)/Analog                  Pre-clinical
------------------------------------------------------------------------------------------------------------------
Clofarabine/Leukemia                                                  Phase II
------------------------------------------------------------------------------------------------------------------
Clofarabine/Lymphoma                                                  Phase II
------------------------------------------------------------------------------------------------------------------
Clofarabine/Solid Tumors                               Phase I
------------------------------------------------------------------------------------------------------------------
Gene Albumin                                           Phase I
------------------------------------------------------------------------------------------------------------------
TPO Gene                                               Phase I
------------------------------------------------------------------------------------------------------------------
Gossypol/Prostate Cancer                               Phase I
------------------------------------------------------------------------------------------------------------------
Gossypol/Bladder Cancer                                Phase I
------------------------------------------------------------------------------------------------------------------
Summary                                   1               5               3                0               1
==================================================================================================================
</TABLE>


                                       1
<PAGE>

Non-Cancer Product Portfolio
----------------------------

Our non-cancer product portfolio is as follows:

<TABLE>
<CAPTION>
Product/Condition                   Pre-clinical       Phase I        Phase II         Phase III       At Market
------------------------------------------------------------------------------------------------------------------
<S>                                <C>                <C>            <C>              <C>             <C>
Oligon(R)IV catheters (ST)                                                                             At Market
------------------------------------------------------------------------------------------------------------------
Methylene Blue                                                                                         At Market
------------------------------------------------------------------------------------------------------------------
Veteryl(R)/Cushing's Disease                                                                           At Market
------------------------------------------------------------------------------------------------------------------
Modrefen /Alzheimer's Disease       Pre-clinical
------------------------------------------------------------------------------------------------------------------
Clofarabine/ Transplantation        Pre-clinical
------------------------------------------------------------------------------------------------------------------
Gene Therapy Vaccine/Various            R&D
------------------------------------------------------------------------------------------------------------------
Summary                                  2                 0              0                0               3
==================================================================================================================
</TABLE>

Animal Health Product Portfolio
-------------------------------

Our animal health product portfolio is as follows:

<TABLE>
<CAPTION>
Product/Condition                   Pre-clinical       Phase I        Phase II         Phase III       At Market
------------------------------------------------------------------------------------------------------------------
<S>                                <C>                <C>            <C>              <C>             <C>
Modrestane(R)/ Cushing's Disease                                                                       At Market
------------------------------------------------------------------------------------------------------------------
Modrestane(R)/Alopecia X                                              Phase II
------------------------------------------------------------------------------------------------------------------
Clofarabine/Cancer                  Pre-Clinical
------------------------------------------------------------------------------------------------------------------
Cytostatic Agents /Cancer           Pre-clinical
------------------------------------------------------------------------------------------------------------------
Summary                                  2                 0              1                0               1
==================================================================================================================
</TABLE>

         The animal healthcare market is a multi-billion dollar market (as
demonstrated by publicly reported sales of large pharmaceutical companies) and
we intend to exploit the value of our products in the veterinary field. This
business segment is not a part of our core business and will be managed
separately from our core human pharmaceuticals business.

Products and Technologies

         The following is a description of our current portfolio of platform
technologies.

    Purine Nucleoside Technology

         We have a license from Southern Research Institute, Birmingham,
Alabama, to develop and market purine nucleoside analogs which, based on
third-party studies conducted to date, may be effective in the treatment of
leukemia and lymphoma. The lead compound of these purine-based nucleosides is
known as Clofarabine. To facilitate its development, we entered into a
co-development agreement with Ilex Oncology, Inc. ("Ilex") in March 2001.
Clofarabine has successfully completed Phase I/II clinical trials at M.D.
Anderson Cancer Center, Houston, Texas. Three Phase II clinical trials have
begun at MD Anderson and will be extended to other leading centers in the United
States and Europe. In addition, a clinical trial exemption certificate has been
granted for Clofarabine in the United Kingdom and approval for a Phase I/II
trial of Clofarabine in lymphoma has been obtained in Switzerland. In January
2002, the European orphan drug application for use of Clofarabine to treat acute
leukemia in adults was approved. The drug also has been granted orphan drug
status in the United States. The combination of the Phase II trials in acute
leukemia at M.D. Anderson Cancer Center and other leading cancer centers in the
U.S. and Europe and the encouraging results from the Phase I and early Phase II
studies lead us to be enthusiastic for the prospects of Clofarabine reaching the
market, possibly as soon as the fourth quarter of calendar year 2003 or the
first quarter of calendar year 2004.


                                       2
<PAGE>

         Under the terms of the agreement with Southern Research Institute, we
were granted the exclusive worldwide license, excluding Japan and Southeast
Asia, to make, use and sell products derived from the technology for a term
expiring on the date of expiration of the last patent covered by the license
(subject to earlier termination under certain circumstances), and to utilize
technical information related to the technology to obtain patent and other
proprietary rights to products developed by us and by Southern Research
Institute from the technology. We plan to develop Clofarabine initially for the
treatment of leukemia and lymphoma and to study its potential role in treatment
of solid tumors.

         Pre-clinical testing of Clofarabine demonstrated that the drug has
anti-tumor activity against a range of human and animal cancers, including
hematological malignancies and several solid tumors. In addition, Clofarabine
has been shown to have good oral bioavailability, and it is our intention to
develop an oral preparation of the drug for clinical testing. Preliminary
results from ongoing clinical studies indicate that Clofarabine may be an
effective treatment for relapsed acute leukemias in adult and pediatric
patients, as well as acute leukemias in adult and pediatric patients that have
become resistant, or refractory, to prior treatments. According to researchers
at M.D. Anderson Cancer Center, interim Phase II study results showed that 45%
of adults with acute myelogenous leukemia (AML) achieved a complete remission
(CR) rate, and acute lymphocytic leukemia (ALL) patients achieved a 20% CR rate
when treated with Clofarabine as a single agent. Data from a separate Phase I
dose-escalation study demonstrated a 25% CR rate, and an overall response rate
of 40%, in children with acute leukemias who were refractory to previous
therapy. Trials in pediatric acute leukemias are currently ongoing in the U.S.
and are planned to commence in Europe later this calendar year. Complete
remission, in this context, means complete clearance of all leukemic cells from
the blood and normalization of the blood count, sustained for a period of more
than four weeks. In this context, a response, or partial response, has largely
the same meaning, except that the bone marrow may still contain more than five
percent but less than 25% blast cells (leukemic cells).

         Clofarabine appears to attack cancer cells in at least four ways:

         (1)      damaging DNA in cancer cells;

         (2)      preventing DNA repair by damaged cancer cells;

         (3)      damaging the cancer cell's important control structures--the
                  mitochondria; and

         (4)      initiating the process of programmed cell death (apoptosis) in
                  cancer cells.

         Clofarabine combines many of the favorable properties of the two most
commonly used nucleoside analog drugs, fludarabine(R) and cladribine(R), but has
several-fold greater potency, when compared to fludarabine(R), at damaging the
DNA of leukemia cells. Clofarabine appears to achieve this greater potency by a
process of breaking DNA chains and inhibiting an important enzyme,
ribonucleotide reductase. Clofarabine distinguishes itself from other drugs by
its broader activity; in particular, the manner in which it damages the cells
mitochondria and initiates the process of programmed cell death (apoptosis).
(See Blood 2000; volume 96, page 3537).

         Because Clofarabine is a potent inhibitor of DNA repair, we, along with
our co-development partners in North America, ILEX, plan to explore the
potential use of Clofarabine in combination with DNA damaging agents. This
strategy has already been validated through the combination of fludarabine(R)
with cyclophosphamide in the treatment of chronic lymphocytic leukemia (CLL).

         Purine Nucleoside--Solid Tumor. In pre-clinical tests, Clofarabine has
shown anti-tumor activity against several human cancers, including cancers of
the colon, kidney and prostate, as well as its action against leukemic cells.
This activity against solid tumors distinguishes Clofarabine from other drugs in
its class which have shown relatively little activity against solid tumors. We
intend to develop Clofarabine as a potential drug for the treatment of certain
solid tumors, such as colon and prostate cancer. The development strategy for
Clofarabine as a solid tumor agent will run in conjunction with the program for
hematological cancers, but is expected to take longer to complete clinical
trials and will require a different marketing approach.

         Cancer of the colon is one of the most common cancers in the Western
world with approximately 200,000 new cases in the United States each year.
Surgery is the most successful treatment for the primary tumor. Once the cancer
has spread the results of chemotherapy are disappointing and long-term survival
figures have changed very little in the past 50 years. There is a great need for
an effective chemotherapeutic agent to treat this disease, and a huge market
potential exists for any drug that can induce tumor regression in patients with
metastatic colon cancer. Prostate cancer affects 181,000 new patients in the
United States each year. Initial treatment is directed at hormonal control of
the disease, but in the event control is not achieved, chemotherapy usually is
required. We intend to develop Clofarabine, or a derivative of Clofarabine, as a
potential drug for the treatment of advanced colon and prostate cancer.


                                       3
<PAGE>

    Selective Steroid Receptor Modulation Technology

         We have commercial rights to a selective steroid receptor modulation
technology, the lead compound of which is currently approved by regulatory
authorities in the United Kingdom for the treatment of advanced breast cancer in
post-menopausal women, and by regulatory authorities in Germany, for the
treatment of certain adrenal disorders, such as Cushing's Disease. The product
had also received marketing approval for the treatment of Cushing's disease in
certain other European countries and the United States. The lead product,
trilostane, is currently approved for marketing under the names Modrenal(R) and
Modrastane(R).

         Breast cancer is, in general, a hormone-dependent disease, with
estrogen being the principal hormone driving cell growth. Consequently, a major
part of modern treatment is directed at blocking the action of estrogen, either
at the site of production in the body or at the cell's estrogen receptor. The
most widely used drug in this area, Tamoxifen(R), has been very successful in
improving response rates and survival in women with breast cancer. Until
recently, it was believed that estrogen acted via a single receptor on the
cancer cell. However, it is now known that more than one estrogen receptor
exists. Recent scientific data from Professor Gavin Vinson's laboratory at Queen
Mary & Westfield College, London, England (part of the University of London)
have shown that trilostane has a unique and previously unrecognized mode of
action. The drug inhibits estrogen binding to the classical estrogen receptor
(ER(alpha)) in an indirect (allosteric) fashion and also modulates estrogen
binding to the newly-described second receptor, ER(beta). This makes trilostane
the first drug in a new class of agents that specifically modulate ligand
binding to ER(beta). This novel action may explain the high clinical response
rates seen when the drug was given to breast cancer patients with Tamoxifen(R)
resistance. Furthermore, trilostane's action is different from that of other
known "hormonal agents" although its actions may be complementary to those of
other drugs. Extensive clinical trials with the drug have shown that it is
effective in a significant proportion of breast cancer patients, particularly
those with hormone-sensitive tumors. Trilostane has no aromatase inhibitor
activity, which distinguishes it from some of the competitor hormonal products
currently marketed for the treatment of breast cancer. We believe that the new
data presents the drug with considerable market potential, although there can be
no assurance that the medical profession or the FDA will accept this new data or
that the drug will be successful in the marketplace.

         Trilostane has been extensively studied in controlled trials in the
United States, Europe and Australia, and almost 800 patients with breast cancer
have been treated with trilostane. Its anti-tumor activity has been well
documented and the drug has been shown to produce tumor response rates of up to
55% in women with hormone-sensitive breast cancer. In a sub-set analysis of the
clinical trial data, patients with hormone-sensitive breast cancer who had
responded to one or more hormonal therapies were given trilostane upon relapse
of the cancer. The response rate was above 40% in this group of patients. This
compares to a response rate of about 30-35% with currently marketed aromatase
inhibitors and approximately 25% with herceptin given as second line therapy.
Most of the patients in the sub-set had received Tamoxifen(R) as first-line
therapy. Thus, trilostane given as follow-on, or salvage, therapy has a response
rate in excess of those reported for the drugs currently in use for second-line
treatment in this disease. Furthermore, trilostane has an acceptable side-effect
profile. On the basis of these data, trilostane was granted a product license in
the United Kingdom for the treatment of post-menopausal breast cancer.

         We hold an exclusive license, until the expiration of existing and new
patents related to trilostane, to market trilostane in major international
territories, and an agreement with a United Kingdom company to co-develop
trilostane for other therapeutic indications. Trilostane is currently
manufactured by third-party contractors in accordance with good manufacturing
practices. We have no plans to establish our own manufacturing facility for
trilostane, but will continue to use third-party contractors.


                                       4
<PAGE>

         We plan to launch Modrenal(R) by late calendar 2002 in the United
Kingdom for use in the treatment of post-menopausal breast cancer. We also
intend to seek regulatory approval for Modrenal(R) in the United States as
salvage therapy for hormone-sensitive breast cancers. This would target patients
that have hormone-sensitive cancers and have become refractory to prior hormone
treatments, such as Tamoxifen(R) or aromatase inhibitors. We believe that the
potential market for Modrenal(R), based upon the sales of currently available
drugs for hormonal therapy for breast cancers, is in excess of $1.8 billion of
sales per annum worldwide. The results of extensive clinical trails to date with
Modrenal(R) show that it is at least as effective in second line or third line
treatment of advanced breast cancer as the currently available hormonal
treatments, such as the selective estrogen receptor modulators, or SERMs, and
aromatase inhibitors, and more effective than these agents in certain specific
patient types, such as those who have become Tamoxifen(R)-refractory.
Furthermore, our management currently intends to price Modrenal(R) in such a
manner as to make treatment with Modrenal(R) compare very favorably, on a price
basis, with the cost of treatment with the existing drugs used for second line
or third line therapy. We believe that this pricing strategy should result in
cost benefits for physicians, patients and health-care systems.

         Anti-Estrogen Prostate. We have received Institutional Review Board
approval from the Massachusetts General Hospital for a Phase II study of
trilostane for the treatment of androgen independent prostate cancer. The study
will be conducted by The Dana Faber Cancer Institute.

         The human prostate gland is under the control of several hormones,
including androgens and estrogen. Receptors for estrogen have been identified in
the prostate gland, and the newly discovered "second receptor," ER(beta), has
been isolated from the human prostate gland. ER(beta) is also highly expressed
in uterine and ovarian tissue. Prostate cancer, in most cases, is initially
hormone-dependent and treatment of the disease is usually directed toward
blocking the action of the relevant hormones. Unfortunately, it is a common
occurrence for the cancer cells to become resistant to the standard hormonal
agents. We believe that this is probably due to the inability of currently
available treatments to block all the receptors on the prostate cancer cells.
The ability of trilostane to control prostate cell growth by altering hormone
binding on important receptors could expand the treatment options for patients
with prostate cancer.

         Since adrenal disorders are relatively uncommon in humans, our strategy
is not to aggressively market trilostane for these indications, but, rather, to
focus our marketing efforts on trilostane for the treatment of breast and
prostate cancer, which have considerably greater market potential. We intend to
file for applicable regulatory approval of trilostane for treatment of breast
cancer in the United States within months after discussing the appropriate
course of regulatory consideration with applicable regulators. We will, however,
pursue opportunities for adrenal disorder products on a smaller scale,
principally in the veterinary market, which we believe will generate modest
revenues over the near term. Marketing approval for trilostane's use in the
veterinary market has been granted in the United Kingdom and the drug is being
distributed by a third party. Under the terms of a co-development agreement, we
were granted the exclusive worldwide license, excluding Japan and South Africa,
to make, use and sell products derived from this technology for a term expiring
on the date of expiration of the last patent covered by the license, subject to
earlier termination under certain circumstances, in exchange for, among other
things, certain royalty payments based on gross sales of products derived from
the technology.

         We also plan to devote our research efforts to discover new
applications for trilostane and related products. The latest work has allowed
new patents to be filed which, if granted, will extend broadly the commercial
potential for trilostane and related products. In addition, a new analog of
trilostane, which shows increased activity compared with trilostane, is being
developed and is the subject of new patent filings.

     OLIGON(R) Technology

         With the acquisition of Pathagon in February 2002, we acquired patents,
technology and technology patents relating to OLIGON(R) anti-infective
technology, and have licensed rights from Oklahoma Medical Research Foundation
to the use of thiazine dyes, including methylene blue, for other anti-infective
uses.

         The OLIGON(R) technology is based on the antimicrobial properties of
silver ions. The broad spectrum activity of silver ions against bacteria,
including antibiotic-resistant strains, has been known for decades. OLIGON(R)
materials have application in a wide range of devices and products, including
vascular access devices, urology catheters, pulmonary artery catheters and
thoracic devices, renal dialysis catheters, orthopedic devices and several other
medical and consumer product applications. One application of the OLIGON(R)
technology has been licensed to a third party, which is currently marketing the
technology in its line of short-term vascular access catheters.

         Six U.S. patents for the OLIGON(R) technology have been granted and
additional patents have been filed. In addition, patents have been filed in
Europe, Canada and Japan.


                                       5
<PAGE>

         The OLIGON(R) technology specifically targets hospital-acquired
infections, the rate of which tripled between 1980 and 1990 and which accounts
for approximately $11 billion of extra expense to the U.S. healthcare system
each year. According to the U.S. Centers for Disease Control, $6.5 billion of
this expense is related to infections associated with medical devices, including
vascular access and urology catheters, and is unreimbursable to hospitals.
OLIGON(R) devices will be marketed as next generation products into large
existing markets. Manufacturers of existing products are aware of the
seriousness of device related infections, but none has been able to develop
technology that imparts antimicrobial efficacy to surfaces of implanted devices
over long periods of time. OLIGON(R) effectively addresses these requirements.

         Edwards Lifesciences has released OLIGON(R) catheters on a limited
basis to Centers of Excellence in select European countries with very positive
results. In addition, since there are no changes required in user procedures the
anti-infective devices have been well accepted by the medical community.

     Methylene Blue Technology

         We have licensed from Oklahoma Medical Research Foundation the rights
to use a range of thiazine dyes, the most well known of which is methylene blue,
for the in vitro and in vivo inactivation of pathogens in biological fluids.
Methylene blue, especially when irradiated by light, acts by preventing
replication of nucleic acid (DNA and RNA) in pathogens. Methylene blue is
currently used commercially in Europe to inactivate pathogens found in blood
transfusion products, with excellent safety and effectiveness.

         Blood transfusions are required to treat a variety of medical
conditions and, to meet that need, over 90 million blood donations occur each
year. Of these, approximately 39 million donations occur in North America,
Western Europe and Japan. Methylene blue is currently used in several European
countries to inactivate pathogens in fresh frozen plasma (FFP). We intend to
work closely with international blood collection agencies to maximize the value
of our intellectual property position.

     Gene Therapy Technology

         Our product portfolio also includes a variety of gene therapy products
which, we believe, may offer advancements in the field of cancer treatment and
may have additional applications in certain non-cancer diseases such as
diabetes, cystic fibrosis and other auto-immune disorders. Pursuant to a
co-development agreement with the Royal Free and University College Medical
School and a Canadian biotechnology company, we are developing DNA vector
technologies which, based on pre-clinical research and early Phase I clinical
trials, we believe are capable of elevating albumin levels in cancer and
cirrhosis patients with hypo-albuminemia, a serious physiological disorder. We
believe this has considerable market potential since low albumin levels are
considered to be very dangerous consequences of many diseases, including
cirrhosis and liver cancer.

     Cytostatic Technology

         We have acquired a license to develop a distinct group of compounds
that we believe could play an important role in controlling the rate of growth
of cancer cells. In some cancers, such as cancer of the bladder and skin, drugs
that stop cell growth (cytostatics) can be as effective as drugs that kill the
cell by direct toxicity (cytotoxics). The cytostatic drugs we are developing are
believed to work by blocking cell division and reversing the malignant process
in the cancer cell. The first compound is a synthetic analog of a drug derived
from a naturally grown plant, which has been widely tested for a variety of
clinical indications. The results of this testing have been published in the
medical literature. In particular, the drug has shown efficacy against certain
cancers by, it is believed, preventing cell division and promoting cell
differentiation.

         We plan to develop more potent analogs and to study their role in the
process of cell differentiation and the prevention of the spread of cancer
cells. The first compound derived from this technology is currently approved for
a Phase I clinical trial at a leading United Kingdom cancer center.


                                       6
<PAGE>

     Animal Health Products

         We also have one animal health product, Veteryl(R), at market in the
United Kingdom for the treatment of Cushing's disease in dogs. In November 2001,
we granted to Arnolds Ltd., a major distributor of animal products in the United
Kingdom, the right to market the drug for a six-month trial period, after which
time, if the results were satisfactory to Arnolds, we would enter into a
licensing arrangement whereby Arnolds would pay royalties to us on sales from
April 2002 onward. During the trial period, Arnolds posted more than $400,000 of
sales of the drug. Arnolds has licensed the drug from us for sale in the United
Kingdom market in consideration of a payment of a 5% royalty on sales. We have
established a separate division to market this product. The animal healthcare
market is a multi-billion dollar market (as demonstrated by sales of large
pharmaceutical companies) and we intend to exploit the value of our products in
the veterinary field. This business segment is not a part of our core business
and will be managed separately from our core human pharmaceuticals business.

Patents and Proprietary Rights

         Our success will depend, in part, upon our ability to obtain and
enforce protection for our products under United States and foreign patent laws
and other intellectual property laws, preserve the confidentiality of our trade
secrets and operate without infringing the proprietary rights of third parties.
Our policy is to file patent applications in the United States and/or foreign
jurisdictions to protect technology, inventions and improvements to our
inventions that are considered important to the development of our business.
Also, we will rely upon trade secrets, know-how, continuing technological
innovations and licensing opportunities to develop a competitive position.

         Through our current license agreements, we have acquired the right to
utilize the technology covered by five issued patents and six patent
applications, as well as additional intellectual property and know-how that
could be the subject of further patent applications in the future. We evaluate
the desirability of seeking patent or other forms of protection for our products
in foreign markets based on the expected costs and relative benefits of
attaining this protection. There can be no assurance that any patents will be
issued from any applications or that any issued patents will afford adequate
protection to us. Further, there can be no assurance that any issued patents
will not be challenged, invalidated, infringed or circumvented or that any
rights granted thereunder will provide competitive advantages to us. Parties not
affiliated with us have obtained or may obtain United States or foreign patents
or possess or may possess proprietary rights relating to our products. There can
be no assurance that patents now in existence or hereafter issued to others will
not adversely affect the development or commercialization of our products or
that our planned activities will not infringe patents owned by others.

         We could incur substantial costs in defending ourselves in infringement
suits brought against us or any of our licensors or in asserting any
infringement claims that we may have against others. We could also incur
substantial costs in connection with any suits relating to matters for which we
have agreed to indemnify our licensors or distributors. An adverse outcome in
any litigation could have a material adverse effect on our business and
prospects. In addition, we could be required to obtain licenses under patents or
other proprietary rights of third parties. No assurance can be given that any of
these licenses would be made available on terms acceptable to us, or at all. If
we are required to, and do not obtain any required licenses, we could be
prevented from, or encounter delays in, developing, manufacturing or marketing
one or more of our products.

         We also rely upon trade secret protection for our confidential and
proprietary information. There can be no assurance that others will not
independently develop substantially equivalent proprietary information and
techniques or otherwise gain access to our trade secrets or disclose this
technology or that we can meaningfully protect our trade secrets.

         It is our policy to require our employees, consultants, members of the
Scientific Advisory Board and parties to collaborative agreements to execute
confidentiality agreements upon the commencement of employment or consulting
relationships or a collaboration with us. These agreements provide that all
confidential information developed or made known during the course of the
relationship with us is to be kept confidential and not disclosed to third
parties except in specific circumstances. In the case of employees, the
agreements provide that all inventions resulting from work performed for us,
utilizing our property or relating to our business and conceived or completed by
the individual during employment shall be our exclusive property to the extent
permitted by applicable law.

Sales and Marketing

         We intend to establish strategic partnerships for the marketing, sales
and distribution of our products in North America and certain countries in
Europe.. As of the date of this prospectus, we have one such arrangement in
place with Ilex for the co-development and marketing of one of our initial lead
products, clofarabine, and another arrangement with Edwards Lifesciences for the
marketing of short-term vascular access catheters using the OLIGON(R)
technology. We may also seek to engage in our own direct marketing and sales.
However, in order to market any of our products directly, we would need to
establish a marketing and sales team with technical expertise and distribution
capability or contract with other pharmaceutical and/or health care companies
with distribution systems and direct sales teams. We have not yet established a
marketing and sales team and we currently intend primarily to rely on our
co-development partners for sales and marketing initiatives.


                                       7
<PAGE>

         Our marketing policy will be to generate awareness of our products and
target the two key audiences for our products - doctors and patients. Medical
education will be a priority, with the use of peer-opinion leaders, clinical
trials at major centers, satellite symposia and conferences, product advertising
in specific scientific journals and trained sales personnel. Patient education
is carefully controlled and is important to our marketing approach. Patient
education is particularly important because Modrenal(R), our first product for
which we have obtained regulatory approval (in the United Kingdom) for marketing
for use in a type of cancer treatment, is effective for patients with
post-menopausal breast cancer, one of the most common cancers in women. In
particular, the drug is approved as follow-on treatment for patients who have
previously responded to hormonal therapy. This is a large market and, based on
the current world sales of the major hormonal treatments - SERM's and aromatase
inhibitors - we expect trilostane is targeted at a market which currently
experiences sales in excess of $1.8 billion annually worldwide.

         If the trials of trilostane in prostate cancer prove successful, we
will have a drug for treating a cancer found in approximately 180,000 men each
year in the United States. We will work with patient help organizations, inform
the lay public through consumer journals and television.

Manufacturing

         We do not have and do not intend to establish any internal product
testing, manufacturing or distribution capabilities. Our strategy is to enter
into collaborative arrangements with other companies for the clinical testing,
manufacture and distribution of its products. These collaborators are generally
expected to be responsible for funding or reimbursing all or a portion of the
development costs, including the costs of clinical testing necessary to obtain
regulatory clearances and for commercial-scale manufacturing, in exchange for
exclusive or semi-exclusive rights to market specific products in particular
geographic territories. Manufacturers of our products will be subject to Good
Manufacturing Practices prescribed by the FDA or other rules and regulations
prescribed by foreign regulatory authorities.

Raw Materials

         Our raw materials (such as laboratory chemicals) and other supply items
to be used in our research and development processes are available from many
different suppliers and are generally available in sufficient quantities in
timely fashion. We do not anticipate any significant problems in the
availability of, or significant price increases for, required raw materials or
other production items in the foreseeable future.

Research and Development

         In developing new products, we consider a variety of factors including:
(i) existing or potential marketing opportunities for these products; (ii) our
capability to arrange for these products to be manufactured on a commercial
scale; (iii) whether or not these products complement our existing products;
(iv) the opportunities to leverage these products with the development of
additional products; and (v) the ability to develop co-marketing relationships
with pharmaceutical and/or other companies with respect to the products. We
intend to fund future research and development activities at a number of medical
and scientific centers in Europe and the United States. Costs related to these
activities are expected to include: clinical trial expenses; drug production
costs; salaries and benefits of scientific, clinical and other personnel; patent
protection costs; analytical and other testing costs; professional fees; and
insurance and other administrative expenses. We currently have three scientists
currently working on a full-time basis who are involved in research and
development activities. We estimate that that we have spent $1,565,908 and
$1,900,000 on research and development activities in 2001 and 2002,
respectively.


                                       8
<PAGE>

Industry Overview

         The biopharmaceutical industry has evolved significantly since its
commercial inception in the 1970s and is currently approaching a period of
sustained growth. We believe that this industry growth, together with the
maturing state of the existing biotechnology sector, will strengthen the large
pharmaceutical companies and result in the emergence of a new generation of
biopharmaceutical companies. To be successful, this new breed of
biopharmaceutical company must have the ability to harness rapidly advancing
technology, provide solutions for previously unmet therapeutic needs, ensure
faster development of new drugs and allow flexibility to exploit changing market
conditions. We seek to be at the forefront of this new generation of
biopharmaceutical companies, linking the technological skills of doctors and
scientists in Europe and North America with the U.S. and European capital
markets.

         The World Health Organization estimated in 2000 that globally, there
were 3.5 million deaths and 5.3 million new cases of cancer annually. As would
be expected, the prevalent US cancer population at 3.2 million dwarfs those of
other major markets. In addition, cancer causes a major drain on health-care
resources. The Imperial Cancer Research Fund estimates that one out of every
three people worldwide will contract some form of cancer at some point in their
life. The World Health Organization estimates that globally over seven million
people will lose their lives to cancer this year alone.

         The National Cancer Institute estimated in 2000 the overall costs for
cancer to be $107 billion in the United States; $37 billion for direct costs,
$11 billion for morbidity costs and $59 billion for mortality costs. Treatment
of breast, lung and prostate cancer account for over half the direct medical
costs.

         The table below shows the forecast global cancer treatment market for
the period 2001-2007. The overall market is forecast to grow from $29.4 billion
in 2001 to $42.8bn in 2007, representing an average annual growth rate of 6.5%.

Forecast Global Cancer Treatment Market 2001 - 2007 (amounts in $ billions)
---------------------------------------------------------------------------

<TABLE>
<CAPTION>
Drug Class            2001      2002      2003      2004      2005      2006      2007
-----------------   -------   -------   -------   -------   -------   -------   -------
<S>                <C>       <C>       <C>       <C>       <C>       <C>       <C>
Adjunct therapies   $11,321   $11,834   $12,347   $12,860   $13,373   $13,752   $14,132
Cytotoxics            8,651     9,136     9,501     9,881    10,277    10,585    10,902
Hormonals             5,720     5,841     5,950     5,952     5,856     5,688     5,464
Innovative agents     3,679     4,665     5,650     7,126     8,602    10,432    12,261
                    -------   -------   -------   -------   -------   -------   -------
        TOTALS      $29,372   $31,476   $33,448   $35,820   $38,108   $40,457   $42,760
                    =======   =======   =======   =======   =======   =======   =======
</TABLE>

Source:  Reuters, 2002

         We believe that new cancer therapies increasingly will be required to
be more cost-effective and allow for alternate site or in-home treatment and to
improve patient quality of life during treatment.

Government Regulation

         The FDA and comparable regulatory agencies in state and local
jurisdictions and in foreign countries impose substantial requirements upon the
clinical development, manufacture and marketing of pharmaceutical products.
These agencies and other federal, state and local entities regulate research and
development activities and the testing, manufacture, quality control, safety,
effectiveness, labeling, storage, record keeping, approval, advertising and
promotion of our drug delivery products.

         The process required by the FDA under the new drug provisions of the
Federal Food, Drug and Cosmetics Act before our products may be marketed in the
United States generally involves the following:

         o        pre-clinical laboratory and animal tests;

         o        submission to the FDA of an investigational new drug
                  application, or IND, which must become effective before
                  clinical trials may begin;

         o        adequate and well-controlled human clinical trials to
                  establish the safety and efficacy of the proposed
                  pharmaceutical in our intended use;


                                       9
<PAGE>

         o        submission to the FDA of a new drug application; and

         o        FDA review and approval of the new drug application.

The testing and approval process requires substantial time, effort, and
financial resources and we cannot be certain that any approval will be granted
on a timely basis, if at all.

         Pre-clinical tests include laboratory evaluation of the product, its
chemistry, formulation and stability, as well as animal studies to assess the
potential safety and efficacy of the product. The results of the pre-clinical
tests, together with manufacturing information and analytical data, are
submitted to the FDA as part of an IND, which must become effective before we
may begin human clinical trials. The IND automatically becomes effective 30 days
after receipt by the FDA, unless the FDA, within the 30-day time period, raises
concerns or questions about the conduct of the trials as outlined in the IND and
imposes a clinical hold. In such a case, the IND sponsor and the FDA must
resolve any outstanding concerns before clinical trials can begin. There is no
certainty that pre-clinical trials will result in the submission of an IND or
that submission of an IND will result in FDA authorization to commence clinical
trials.

         Clinical trials involve the administration of the investigational
product to human subjects under the supervision of a qualified principal
investigator. Clinical trials are conducted in accordance with protocols that
detail the objectives of the study, the parameters to be used to monitor safety
and the efficacy criteria to be evaluated. Each protocol must be submitted to
the FDA as part of the IND. Further, each clinical study must be conducted under
the auspices of an independent institutional review board at the institution
where the study will be conducted. The institutional review board will consider,
among other things, ethical factors, the safety of human subjects and the
possible liability of the institution.

         Human clinical trials are typically conducted in three sequential
phases which may overlap:

         o        PHASE I: The drug is initially introduced into healthy human
                  subjects or patients and tested for safety, dosage tolerance,
                  absorption, metabolism, distribution and excretion;

         o        PHASE II: Studies are conducted in a limited patient
                  population to identify possible short term adverse effects and
                  safety risks, to determine the efficacy of the product for
                  specific targeted diseases and to determine dosage tolerance
                  and optimal dosage;

         o        PHASE III: Phase III trials are undertaken to further evaluate
                  clinical efficacy and to further test for safety in an
                  expanded patient population, often at geographically dispersed
                  clinical study sites. Phase III or IIb/III trials are often
                  referred to as pivotal trials, as they are used for the final
                  approval of a product.

         In the case of products for life-threatening diseases such as cancer,
the initial human testing is often conducted in patients with disease rather
than in healthy volunteers. Since these patients already have the targeted
disease or condition, these studies may provide initial evidence of efficacy
traditionally obtained in Phase II trials and so these trials are frequently
referred to as Phase I/II trials. We cannot be certain that we will successfully
complete Phase I, Phase II or Phase III testing of our product candidates within
any specific time period, if at all. Furthermore, we, the FDA, the institutional
review board or the sponsor may suspend clinical trials at any time on various
grounds, including a finding that the subjects or patients are being exposed to
an unacceptable health risk.

         The results of product development, pre-clinical studies and clinical
studies are submitted to the FDA as part of a new drug application for approval
of the marketing and commercial shipment of the product. The FDA may deny a new
drug application if the applicable regulatory criteria are not satisfied or may
require additional clinical data. Even if the additional data is submitted, the
FDA may ultimately decide that the new drug application does not satisfy the
criteria for approval. Once issued, the FDA may withdraw product approval if
compliance with regulatory standards for production and distribution is not
maintained or if safety problems occur after the product reaches the market. In
addition, the FDA requires surveillance programs to monitor approved products
which have been commercialized, and the agency has the power to require changes
in labeling or to prevent further marketing of a product based on the results of
these post-marketing programs.


                                       10
<PAGE>

         The FDA has a Fast Track program intended to facilitate the development
and expedite the review of drugs that demonstrate the potential to address unmet
medical needs for treatment of serious or life-threatening conditions. Under
this program, if the FDA determines from a preliminary evaluation of clinical
data that a fast track product may be effective, the FDA can review portions of
a new drug application for a Fast Track product before the entire application is
complete, and undertakes to complete its review process within six months of the
filing of the new drug application. The FDA approval of a Fast Track product can
include restrictions on the product's use or distribution such as permitting use
only for specified medical procedures or limiting distribution to physicians or
facilities with special training or expertise. The FDA may grant conditional
approval of a product with Fast Track status and require additional clinical
studies following approval.

         Satisfaction of FDA requirements or similar requirements of state,
local and foreign regulatory agencies typically takes several years and the
actual time required may vary substantially, based upon the type, complexity and
novelty of the pharmaceutical product. Government regulation may delay or
prevent marketing of potential products for a considerable period of time and
impose costly procedures upon our activities. Success in pre-clinical or early
stage clinical trials does not assure success in later stage clinical trials.
Data from pre-clinical and clinical activities is not always conclusive and may
be susceptible to varying interpretations which could delay, limit or prevent
regulatory approval. Even if a product receives regulatory approval, the
approval may be significantly limited to specific indications. Further, even
after the FDA approves a product, later discovery of previously unknown problems
with a product may result in restrictions on the product or even complete
withdrawal of the product from the market.

         Any products manufactured or distribute under FDA clearances or
approvals are subject to pervasive and continuing regulation by the FDA,
including record-keeping requirements and reporting of adverse experiences with
the products. Drug manufacturers and their subcontractors are required to
register with the FDA and state agencies, and are subject to periodic
unannounced inspections by the FDA and state agencies for compliance with good
manufacturing practices, which impose procedural and documentation requirements
upon manufacturers and their third party manufacturers.

         We are subject to numerous other federal, state and local laws relating
to such matters as safe working conditions, manufacturing practices,
environmental protection, fire hazard control, and disposal of hazardous or
potentially hazardous substances. We may incur significant costs to comply with
such laws and regulations now or in the future. In addition, we cannot predict
what adverse governmental regulations may arise from future United States or
foreign governmental action.

         We also are subject to foreign regulatory requirements governing human
clinical trials and marketing approval for pharmaceutical products which we sell
outside the United States. The requirements governing the conduct of clinical
trials, product licensing, pricing and reimbursement vary widely from country to
country. Whether or not we obtain FDA approval, we must obtain approval of a
product by the comparable regulatory authorities of foreign countries before
manufacturing or marketing the product in those countries. The approval process
varies from country to country and the time required for these approvals may
differ substantially from that required for FDA approval. We cannot assure you
that clinical trials conducted in one country will be accepted by other
countries or that approval in one country will result in approval in any other
country. For clinical trials conducted outside the United States, the clinical
stages generally are comparable to the phases of clinical development
established by the FDA.

Competition

         Competition in the pharmaceutical industry is intense. Potential
competitors in the United States and Europe are numerous and include
pharmaceutical, chemical and biotechnology companies, most of which have
substantially greater capital resources, marketing experience, research and
development staffs and facilities than us. Although we seek to limit potential
sources of competition by developing products that are eligible for orphan drug
designation or other forms of protection, there can be no assurance that our
competitors will not succeed in developing similar technologies and products
more rapidly than are being or will be developed by us.


                                       11
<PAGE>

         One of Bioenvision's lead drugs, Clofarabine, has been granted Orphan
Drug Status in the U.S. and Europe, and is currently undergoing multi-center
Phase II trials. Listed below are other Cytotoxic Agents currently at market.

<TABLE>
<CAPTION>
                                                                                                                      Growth
                                                                                            1999     2000     2001   2000-01
Company         Brand                    Generic                  Class                     ($m)     ($m)     ($m)     (%)
-------------   ----------------------   ----------------------   ---------------------   -------  -------  -------  -------
<S>            <C>                      <C>                      <C>                      <C>      <C>      <C>      <C>
BMS             Taxol                    Paclitaxel               Other Cytotoxics         1,481    1,592    1,197    -24.8
Aventis         Taxotere                 Docctaxel                Other Cytotoxics           461      686      925     34.8
Lilly           Gemzar                   Gemcitabine              Antimetabolite             453      559      723     29.3
BMS             Paraplatin               Carboplatin              Other Cytotoxics           600      690      702      1.7
Pharmacia       Camptosar                irinorccan               Other Cytotoxics           293      441      613     39.0
Taiho           UFT                      tegafur uracil           Antimetabolite             460      440      420e    -4.5
Pharmacia       Pharmorubicin/Ellence    cpirubein                Cytotoxic Antibiotics      206      199      261     31.2
Ivax            Paxene                   paclitaxel               Other Cytotoxics           n/a       35      215    514.3
Roche           Furtulon                 doxifluridine            Antimetabolite             166      201      201      0.0
Aventis         Campro                   irinotecan               Other Cytotoxics            83      139      186     33.8
Sanofi          Eloxatine                oxilaplatin              Other Cytotoxics            72      130      181     39.2
SP              Temodar                  temozolomide             Alkylating agents           36      121      180     48.8
Roche           Xeloda                   capecitabine             Antimetabolite              53       89      155     74.0
GSK             Hycarntin                topotecan                Other Cytotoxics           141      144      131     -9.0
Schering AG     Fludara                  fludarabine              Antimetabolite              79      102      120     17.6
BMS             Ifex                     ifosfamide               Alkylating agents           88      108      120e    11.1
Alza US         Doxil/Caelyx             liposomal/ doxorubicin   Cytotoxic Antibiotics       66       82      100     22.0
Pierre Fabre    Navelbine                vinorelbine              Vae                         76       82       90e     9.8
Wyeth           Novantrone               mitoxantrone             Cytotoxic Antibiotics       45       60       71     18.7
BMS             VcPesid                  ctoposide                Vae                         77       70       65e    -7.1
GSK             Navelbine                vinorelbine              Vae                         67       65       63e    -3.1
Pharmacia       Adriamycin               doxorubicin              Cytotoxic Antibiotics       65       62       55e   -11.3
BMS             Hydrea                   hydroxyurea              Alkylating agents           56       52       48e    -7.7

Others                                                                                     1,824    1,776    1,829      3.0
                                                                                           -----    -----    -----    -----
         TOTAL                                                                             6,948    7,925    8,651      9.2
                                                                                           =====    =====    =====    =====
</TABLE>

Source:  Reuters, 2002

         Another of Bioenvision's lead drugs, Modrenal(R) is approved in the UK
for the treatment of post-menopausal patients with advanced breast cancer. In
particular, the drug is approved as follow-on treatment for patients who
previously have responded to hormonal therapy.

         Listed below are other hormonal therapies currently at market.

<TABLE>
<CAPTION>
                                                                                                                      Growth
                                                                                            1999     2000     2001   2000-01
Company         Brand                    Generic                  Class                     ($m)     ($m)     ($m)     (%)
-------------   ----------------------   ----------------------   ---------------------   -------  -------  -------  -------
<S>            <C>                      <C>                      <C>                      <C>      <C>      <C>      <C>
TAP             Lupron                   Leuprorelin              LHRH agonsists             775      798      833      4.4
AstraZeneca     Zoladex                  Goserelin                LHRH agonsists             686      734      728     -0.8
AstraZeneca     Nolvadex                 Tamoxifen                Anti-estrogens             573      576      630      9.4
AstraZeneca     Casodex                  Bicalulamide             Anti-estrogens             340      433      569     31.4
Takeda          Leuplin                  leuprorelin              LHRH agonsists             485      515      530e     2.9
Barr            Tamoxifen                Tamoxifen                Anti-estrogens             297      322      501     55.6
Pharmacia       Depo-Provera             Medroxy                  Progestagens               252      272      283      4.0
AstraZeneca     Arimidex                 Anastrozole              Aromatase Inhibitors       140      156      191     22.4
Abbott          Lupron                   leuprorelin              LHRH agonsists             140      153      163      6.5
BMS             Megace                   megestrol                Progestagens               114      180      150e   -16.7
Novartis        Femara                   letrozole                Aromatase Inhibitors        57       74      125     68.9
Ipsen           Deccapepryl              triptorelin              LHRH agonsists             100      105      110e     4.8
Aventis         Nilandron                nilutamide               Anti-androgens              72       87       93e     6.9
Schering AG     Androcur                 cyproterone              Anti-androgens              91       95       92     -3.0
Aventis         Suprecur/                buserelin                LHRH agonsists              83       84       85e     1.7
                Suprefact
SP              Eulexin                  flutamide                Anti-androgens             155      128       83    -35.2
Pharmacia       Aromasin                 exemestane               Aromatase Inhibitors       n/a       36       65e    80.6
Nihun Kayaku    Odyne                    flutamide                Anti-androgens              71       65       62e    -4.5
Teikoku         Prostal                  chlormadinone            Progestagens                63       63       62e    -1.6
Hormone
Novartis        Lentaron                 formestane               Aromatase Inhibitors        47       45       43e    -4.4
Nihun Kayaku    Fareston                 toremifene               Anti-estrogens              44       43       40e    -6.1
Novartis        Afema                    tadrozole                Aromatase Inhibitors        22       25       23e    -8.0
Mitsui          Tasuomin                 Tamoxifen                Anti-estrogens              10        9        9e    -3.2

Others                                                                                       237      240      250      4.3
                                                                                           -----    -----    -----    -----
         TOTAL                                                                             4,855    5,237    5,720      9.2
                                                                                           =====    =====    =====    =====
</TABLE>

Source:  Reuters, 2002


                                       12
<PAGE>

         The generic drug industry is intensely competitive and includes large
brand name and multi-source pharmaceutical companies. Because generic drugs do
not have patent protection or any other market exclusivity, our competitors may
introduce competing generic products, which may be sold at lower prices or with
more aggressive marketing. Conversely, as we introduce branded drugs into our
product portfolio, we will face competition from manufacturers of generic drugs
which may claim to offer equivalent therapeutic benefits at a lower price.

         We expect that our proposed products will compete on the basis of,
among other things, safety, efficacy, reliability, price, quality of life
factors (including the frequency and method of drug administration), marketing,
distribution, reimbursement and effectiveness of intellectual property rights.
We believe that our competitive success will be based partly on our ability to
attract and retain scientific personnel, establish specialized research and
development capabilities, gain access to manufacturing, marketing and
distribution resources, secure licenses to external technologies and products,
and obtain sufficient development capital. We intend to obtain many of these
capabilities from pharmaceutical or biotechnology companies through
collaborative or license arrangements. However, there is intense competition
among early stage biotechnology firms to establish these arrangements. Our
development products may not be of suitable potential market size or provide a
compelling return on investment to attract other firms to commit resources to a
collaboration. Even if collaborations can be established, there can be no
assurance that we will secure financial terms that meet our commercial
objectives.

Employees

         As of June 30, 2002, we had 8 full-time and 2 part-time employees. Of
these, 5 are in management, 1 is in sales/marketing, 1 is in administration and
3 are in research and development. We believe our relationships with our
employees are satisfactory.

Corporate History

         We were incorporated as Express Finance, Inc. under the laws of the
State of Delaware on August 16, 1996, and changed our name to Ascott Group, Inc.
in August 1998 and further to Bioenvision, Inc. in December 1998, at which time
the Company merged with Bioenvision, Inc, (`Old Bioenvision') a development
stage Company primarily engaged in the research and development of products and
technologies for the treatment of cancer.

         On February 1, 2002, we completed the acquisition of Pathagon Inc., a
non-public company focused on the development of novel anti-infective products
and technologies. Pathagon's principal products, OLIGON(R) and methylene blue,
are ready for market. Affiliates of SCO Capital Partners LLC, our financial
advisor and consultant, owned 82% of Pathagon prior to the acquisition. We
acquired 100% of the outstanding shares of Pathagon in exchange for 7,000,000
shares of our common stock. The acquisition has been accounted for as a purchase
business combination in accordance with SFAS 141. With the acquisition, we added
rights to OLIGON(R) and methylene blue to our product portfolio.


                                       13
<PAGE>

Factors that May Affect Our Business

         There are a number of important factors that could cause our actual
results to differ materially from those that are indicated by forward-looking
statements. Those factors include, without limitation, those listed below and
elsewhere herein.

We have a limited operating history, which makes it difficult to evaluate our
business and to predict our future operating results.

         Since our inception, we have been primarily engaged in organizational
activities, including developing a strategic operating plan, entering into
various collaborative agreements for the development of products and
technologies, hiring personnel and developing and testing our products. We have
not generated any material revenues to date. Accordingly, we have no relevant
operating history upon which an evaluation of our performance and prospects can
be made.

We have incurred net losses since commencing business and expect future losses.

         To date, we have incurred significant net losses, including net losses
of $5,735,981 for the year ended June 30, 2002. At June 30, 2002, we had a
deficit accumulated of $21,027,299. We anticipate that we may continue to incur
significant operating losses for the foreseeable future. We may never generate
material revenues or achieve profitability and, if we do achieve profitability,
we may not be able to maintain profitability.

Clinical trials for our products will be expensive and may be time consuming,
and their outcome is uncertain, but we must incur substantial expenses that may
not result in any viable products.

         Before obtaining regulatory approval for the commercial sale of a
product, we must demonstrate through pre-clinical testing and clinical trials
that a product candidate is safe and effective for use in humans. Conducting
clinical trials is a lengthy, time-consuming and expensive process. We will
incur substantial expense for, and devote a significant amount of time to
pre-clinical testing and clinical trials.

         Historically, the results from pre-clinical testing and early clinical
trials have often not been predictive of results obtained in later clinical
trials. A number of new drugs have shown promising results in clinical trials,
but subsequently failed to establish sufficient safety and efficacy data to
obtain necessary regulatory approvals. Data obtained from pre-clinical and
clinical activities are susceptible to varying interpretations, which may delay,
limit or prevent regulatory approval. Regulatory delays or rejections may be
encountered as a result of many factors, including changes in regulatory policy
during the period of product development. Regulatory authorities may require
additional clinical trials, which could result in increased costs and
significant development delays.

         Completion of clinical trials for any product may take several years or
more. The length of time generally varies substantially according to the type,
complexity, novelty and intended use of the product candidate. Our commencement
and rate of completion of clinical trials may be delayed by many factors,
including:

         o        inability to manufacture sufficient quantities of materials
                  for use in clinical trials;

         o        slower than expected rate of patient recruitment or
                  variability in the number and types of patients in a study;

         o        inability to adequately follow patients after treatment;

         o        unforeseen safety issues or side effects;

         o        lack of efficacy during the clinical trials; or

         o        government or regulatory delays.


                                       14
<PAGE>

If our development agreement with ILEX does not proceed as planned we may incur
delay in the commercialization of Clofarabine, which would delay our ability to
generate sales and cash flow from the sale of Clofarabine.

         ILEX has primary responsibility for clinical and regulatory work in the
United States and Canada under our co-development agreement with ILEX. While
there are target dates for completion, that agreement allows ILEX time to
continue working beyond those dates under certain circumstances. If ILEX does
not complete clinical trials and regulatory work expeditiously, or if it fails
to do so at all or otherwise fails to meet its obligations under the
co-development agreement, we could lose valuable time in developing Clofarabine
for commercialization. Furthermore, we intend to make use of clinical data from
trials ILEX is conducting to prepare and support our regulatory applications in
Europe and elsewhere. If ILEX fails to meet its obligations under the
co-development agreement, it could have a material adverse effect on our ability
to develop Clofarabine, obtain necessary regulatory approvals, and generate
sales and cash flow from the sale of Clofarabine. If delays in completion
constitute a breach by ILEX or there are certain other breaches of the
co-development agreement by ILEX, then, at our discretion, the primary
responsibility for completion would revert to us, but there is no assurance that
we would have the financial, managerial or technical resources to complete such
tasks in timely fashion or at all.

We may fail to address risks we face as a developing business which could
adversely affect the implementation of our business plan.

         We are prone to all of the risks inherent to the establishment of any
new business venture. You should consider the likelihood of our future success
to be highly speculative in light of our limited operating history, as well as
the limited resources, problems, expenses, risks and complications frequently
encountered by similarly situated companies. To address these risks, we must,
among other things,

         o        maintain and increase our product portfolio;

         o        implement and successfully execute our business and marketing
                  strategy;

         o        continue to develop new products and upgrade our existing
                  products;

         o        respond to industry and competitive developments; and

         o        attract, retain, and motivate qualified personnel.


We may not be successful in addressing these risks. If we are unable to do so,
our business prospects, financial condition and results of operations would be
materially adversely affected.

We have limited experience in developing products and may be unsuccessful in our
efforts to develop products.

         To achieve profitable operations, we, alone or with others, must
successfully develop, clinically test, market and sell our products. The
development of new pharmaceutical products is highly uncertain and subject to a
number of significant risks. Most products resulting from our or our
collaborative partners' product development efforts are not expected to be
available for sale for at least several years, if at all. Potential products
that appear to be promising at early stages of development may not reach the
market for a number of reasons, including:

         o        discovery during pre-clinical testing or clinical trials that
                  the products are ineffective or cause harmful side effects;

         o        failure to receive necessary regulatory approvals;

         o        inability to manufacture on a large or economically feasible
                  scale;


                                       15
<PAGE>

         o        failure to achieve market acceptance; or

         o        preclusion from commercialization by proprietary rights of
                  third parties.

         To date, our resources have been substantially dedicated to the
acquisition, research and development of products and technologies. Most of the
existing and future products and technologies developed by us will require
extensive additional development, including pre-clinical testing and clinical
trials, as well as regulatory approvals, prior to commercialization. Our product
development efforts may not be successful. We may fail to receive required
regulatory approvals from U.S. or foreign authorities for any indication may not
be obtained. Any products, if introduced, may not be capable of being produced
in commercial quantities at reasonable costs or being successfully marketed. The
failure of our research and development activities to result in any commercially
viable products or technologies would materially adversely affect our future
prospects.

Our industry is subject to extensive government regulation and our products
require other regulatory approvals which makes it more expensive to operate our
business.

         Regulation in General. Virtually all aspects of our business are
regulated by federal and state statutes and governmental agencies in the United
States and other countries. Failure to comply with applicable statutes and
government regulations could have a material adverse effect on our ability to
develop and sell products which would have a negative impact on our cash flow.
The development, testing, manufacturing, processing, quality, safety, efficacy,
packaging, labeling, record-keeping, distribution, storage and advertising of
pharmaceutical products, and disposal of waste products arising from these
activities, are subject to regulation by one or more federal agencies. These
activities are also regulated by similar state and local agencies and equivalent
foreign authorities.

         FDA Regulation. All pharmaceutical manufacturers in the United States
are subject to regulation by the FDA under the authority of the Federal Food,
Drug, and Cosmetic Act. Under the Act, the federal government has extensive
administrative and judicial enforcement powers over the activities of
pharmaceutical manufacturers to ensure compliance with FDA regulations. Those
powers include, but are not limited to the authority to:

         o        initiate court action to seize unapproved or non-complying
                  products;

         o        enjoin non-complying activities;

         o        halt manufacturing operations that are not in compliance with
                  current good manufacturing practices prescribed by the FDA;

         o        recall products which present a health risk; and

         o        seek civil monetary and criminal penalties.

         Other enforcement activities include refusal to approve product
applications or the withdrawal of previously approved applications. Any
enforcement activities, including the restriction or prohibition on sales of
products marketed by us or the halting of manufacturing operations of us or our
collaborators, would have a material adverse effect on our ability to develop
and sell products which would have a negative impact on our cash flow. In
addition, product recalls may be issued at our discretion or by the FDA or other
domestic and foreign government agencies having regulatory authority for
pharmaceutical product sales. Recalls may occur due to disputed labeling claims,
manufacturing issues, quality defects or other reasons. Recalls of
pharmaceutical products marketed by us may occur in the future. Any product
recall could have a material adverse effect on our revenue and cash flow.

         FDA Approval Process. We have a variety of products under development,
including line extensions of existing products, reformulations of existing
products and new products. All "new drugs" must be the subject of an
FDA-approved new drug application before they may be marketed in the United
States. All generic equivalents to previously approved drugs or new dosage forms
of existing drugs must be the subject of an FDA-approved abbreviated new drug
application before they may by marketed in the United States. In both cases, the
FDA has the authority to determine what testing procedures are appropriate for a
particular product and, in some instances, has not published or otherwise
identified guidelines as to the appropriate procedures. The FDA has the
authority to withdraw existing new drug application and abbreviated application
approvals and to review the regulatory status of products marketed under the
enforcement policy. The FDA may require an approved new drug application or
abbreviated application for any drug product marketed under the enforcement
policy if new information reveals questions about the drug's safety or
effectiveness. All drugs must be manufactured in conformity with current good
manufacturing practices and drugs subject to an approved new drug application or
abbreviated application must be manufactured, processed, packaged, held and
labeled in accordance with information contained in the new drug application or
abbreviated application.


                                       16
<PAGE>

         The required product testing and approval process can take a number of
years and require the expenditure of substantial resources. Testing of any
product under development may not result in a commercially-viable product.
Further, we may decide to modify a product in testing, which could materially
extend the test period and increase the development costs of the product in
question. Even after time and expenses, regulatory approval by the FDA may not
be obtained for any products we develop. In addition, delays or rejections may
be encountered based upon changes in FDA policy during the period of product
development and FDA review. Any regulatory approval may impose limitations in
the indicated use for the product. Even if regulatory approval is obtained, a
marketed product, its manufacturer and its manufacturing facilities are subject
to continual review and periodic inspections. Subsequent discovery of previously
unknown problems with a product, manufacturer or facility may result in
restrictions on the product or manufacturer, including withdrawal of the product
from the market.

         Foreign Regulatory Approval. Even if required FDA approval has been
obtained with respect to a product, foreign regulatory approval of a product
must also be obtained prior to marketing the product internationally. Foreign
approval procedures vary from country to country and the time required for
approval may delay or prevent marketing. In certain instances, we or our
collaborative partners may seek approval to market and sell some of our products
outside of the United States before submitting an application for approval to
the FDA. The clinical testing requirements and the time required to obtain
foreign regulatory approvals may differ from that required for FDA approval.
Although there is now a centralized European Union approval mechanism for new
pharmaceutical products in place, each European Union country may nonetheless
impose its own procedures and requirements, many of which are time consuming and
expensive, and some European Union countries require price approval as part of
the regulatory process. Thus, there can be substantial delays in obtaining
required approval from both the FDA and foreign regulatory authorities after the
relevant applications are filed.

         Changes in Requirements. The regulatory requirements applicable to any
product may be modified in the future. We cannot determine what effect changes
in regulations or statutes or legal interpretations may have on our business in
the future. Changes could require changes to manufacturing methods, expanded or
different labeling, the recall, replacement or discontinuation of certain
products, additional record keeping and expanded documentation of the properties
of certain products and scientific substantiation. Any changes or new
legislation could have a material adverse effect on our ability to develop and
sell products and, therefore, generate revenue and cash flow.

         The products under development by us may not meet all of the applicable
regulatory requirements needed to receive regulatory marketing approval. Even
after we expend substantial resources on research, clinical development and the
preparation and processing of regulatory applications, we may not be able to
obtain regulatory approval for any of our products. Moreover, regulatory
approval for marketing a proposed pharmaceutical product in any jurisdiction may
not result in similar approval in other jurisdictions. Our failure to obtain and
maintain regulatory approvals for products under development would have a
material adverse effect on our ability to develop and sell products and,
therefore, generate revenue and cash flow.

We may not be successful in receiving orphan drug status for our products or, if
that status is obtained, fully enjoying the benefits of orphan drug status.

         Under the Orphan Drug Act, the FDA may grant orphan drug designation to
drugs intended to treat a rare disease or condition. A disease or condition that
affects populations of fewer than 200,000 people in the United States generally
constitutes a rare disease or condition. We may not be successful in receiving
orphan drug status for certain of our products. Orphan drug designation must be
requested before submitting a new drug application. After the FDA grants orphan
drug designation, the generic identity of the therapeutic agent and its
potential orphan use are publicized by the FDA. Under current law, orphan drug
status is conferred upon the first company to receive FDA approval to market the
designated drug for the designated indication. Orphan drug status also grants
marketing exclusivity in the United States for a period of seven years following
approval of the new drug application, subject to limitations. Orphan drug
designation does not provide any advantage in, or shorten the duration of, the
FDA regulatory approval process. Although obtaining FDA approval to market a
product with orphan drug status can be advantageous, the scope of protection or
the level of marketing exclusivity that is currently afforded by orphan drug
status and marketing approval may not remain in effect in the future.


                                       17
<PAGE>

         Our business strategy involves obtaining orphan drug designation for
certain of the oncology products we have under development. We do not know
whether any of these products will receive an orphan drug designation. Orphan
drug designation does not prevent other manufacturers from attempting to develop
the same drug for the designated indication or from obtaining the approval of a
new drug application for their drug prior to the approval of our new drug
application. If another sponsor's new drug application for the same drug and the
same indication is approved first, that sponsor is entitled to exclusive
marketing rights if that sponsor has received orphan drug designation for its
drug. In that case, the FDA would refrain from approving an application by us to
market our competing product for seven years, subject to limitations. Competing
products may not receive orphan drug designations and FDA marketing approval
before the products under development by us.

         New drug application approval of a drug with an orphan drug designation
does not prevent the FDA from approving the same drug for a different
indication, or a molecular variation of the same drug for the same indication.
Because doctors are not restricted by the FDA from prescribing an approved drug
for uses not approved by the FDA, it is also possible that another company's
drug could be prescribed for indications for which products developed by us have
received orphan drug designation and new drug application approval. Prescribing
of approved drugs for unapproved uses, commonly referred to as "off label" use,
could adversely affect the marketing potential of products that have received an
orphan drug designation and new drug application approval. In addition, new drug
application approval of a drug with an orphan drug designation does not provide
any marketing exclusivity in foreign markets.

         The possible amendment of the Orphan Drug Act by the United States
Congress has been the subject of frequent discussion. Although no significant
changes to the Orphan Drug Act have been made for a number of years, members of
Congress have from time to time proposed legislation that would limit the
application of the Orphan Drug Act. The precise scope of protection that may be
afforded by orphan drug designation and marketing approval may be subject to
change in the future.

The use of our products may be limited or eliminated by professional guidelines
which would decrease our sales of these products and, therefore, our revenue and
cash flows.

         In addition to government agencies, private health/science foundations
and organizations involved in various diseases may also publish guidelines or
recommendations to the healthcare and patient communities. These private
organizations may make recommendations that affect the usage of therapies, drugs
or procedures, including products developed by us. These recommendations may
relate to matters such as usage, dosage, route of administration and use of
concomitant therapies. Recommendations or guidelines that are followed by
patients and healthcare providers and that result in, among other things,
decreased use or elimination of products developed by us could have a material
adverse effect on our revenue and cash flows.

We rely on licensing or purchasing products and technologies to grow our product
portfolio, and may not be effective in licensing or acquiring new products which
would adversely affect our ability to grow our business and become profitable.

         We have adopted a license and acquisition strategy to build our product
portfolio. Unless and until we develop and introduce a sufficient number of our
own products, we must rely upon the availability for licensing or purchasing of
products or technologies of other pharmaceutical or biotechnology companies. Our
success in executing this strategy depends on our continued ability to identify
and acquire new pharmaceutical products targeted at niche markets within
selected strategic therapeutic market segments. Other companies, including those
with substantially greater financial, marketing and other resources than us,
compete with us for the right to license or acquire these products. We may not
be successful in identifying potential product licensing or acquisition
opportunities. If any of these opportunities are identified, we may not be able
to obtain these licenses or complete these acquisitions on acceptable terms. We
may not be able to successfully integrate any licensed or acquired products or
technologies into our product portfolio. Our failure to obtain licenses for, or
complete acquisitions of, products or technologies within a selected strategic
therapeutic market segment or to promote and market commercially successful
products or technologies within an existing strategic therapeutic market segment
could have a material adverse effect on our ability to grow our business and
become profitable. Once we have obtained rights to a product or technology and
committed to payment terms, we may not be able to generate sales sufficient to
create a profit or otherwise avoid a loss. Any inability to generate sufficient
sales or any subsequent reduction of sales could have a material adverse effect
on our revenue and cash flows.


                                       18
<PAGE>

Generic products which third parties may develop may render our products
noncompetitive or obsolete.

         An increase in competition from generic pharmaceutical products could
have a material adverse effect on our ability to generate revenue and cash flow.

Because many of our competitors have substantially greater capabilities and
resources, they may be able to develop products before us or develop more
effective products or market them more effectively which would limit our ability
to generate revenue and cash flow.

         Competition in our industry is intense. Potential competitors in the
United States and Europe are numerous and include pharmaceutical, chemical and
biotechnology companies, most of which have substantially greater capital
resources, marketing experience, research and development staffs and facilities
than us. Although we seek to limit potential sources of competition by
developing products that are eligible for orphan drug designation and new drug
application approval or other forms of protection, our competitors may develop
similar technologies and products more rapidly than us or market them more
effectively. Competing technologies and products may be more effective than any
of those that are being or will be developed by us. The generic drug industry is
intensely competitive and includes large brand name and multi-source
pharmaceutical companies. Because generic drugs do not have patent protection or
any other market exclusivity, our competitors may introduce competing generic
products, which may be sold at lower prices or with more aggressive marketing.
Conversely, as we introduce branded drugs into our product portfolio, we will
face competition from manufacturers of generic drugs which may claim to offer
equivalent therapeutic benefits at a lower price. The aggressive pricing
activities of our generic competitors could have a material adverse effect on
our revenue and cash flow.

If we fail to keep up with rapid technological change and evolving therapies,
our technologies and products could become less competitive or obsolete.

         The pharmaceutical industry is characterized by rapid and significant
technological change. We expect that pharmaceutical technology will continue to
develop rapidly, and our future success will depend on our ability to develop
and maintain a competitive position. Technological development by others may
result in products developed by us, branded or generic, becoming obsolete before
they are marketed or before we recover a significant portion of the development
and commercialization expenses incurred with respect to these products.
Alternative therapies or new medical treatments could alter existing treatment
regimes, and thereby reduce the need for one or more of the products developed
by us, which would adversely affect our revenue and cash flow.

We depend on others for clinical testing of our products which could delay our
ability to develop products.

         We do not currently have any internal product testing capabilities. Our
inability to retain third parties for the clinical testing of products on
acceptable terms would adversely affect our ability to develop products. Any
failures by third parties to adequately perform their responsibilities may delay
the submission of products for regulatory approval, impair our ability to
deliver products on a timely basis or otherwise impair our competitive position.
Our dependence on third parties for the development of products may adversely
affect our potential profit margins and our ability to develop and deliver
products on a timely basis.

We depend on others to manufacture our products and have not manufactured them
in significant quantities.

         We have never manufactured any products in commercial quantities, and
the products being developed by us may not be suitable for commercial
manufacturing in a cost-effective manner. Manufacturers of products developed by
us will be subject to current good manufacturing practices prescribed by the FDA
or other rules and regulations prescribed by foreign regulatory authorities. We
may not be able to enter into or maintain relationships either domestically or
abroad with manufacturers whose facilities and procedures comply or will
continue to comply with current good manufacturing practices or applicable
foreign requirements. Failure by a manufacturer of our products to comply with
current good manufacturing practices or applicable foreign requirements could
result in significant time delays or our inability to commercialize or continue
to market a product and could have a material adverse effect on our sales of
products and, therefore, our cash flow. In the United States, failure to comply
with current good manufacturing practices or other applicable legal requirements
can lead to federal seizure of violative products, injunctive actions brought by
the federal government, and potential criminal and civil liability on the part
of a company and our officers and employees.


                                       19
<PAGE>

We have limited sales and marketing capability, and may not be successful in
selling or marketing our products.

         The creation of infrastructure to commercialize oncology products is a
difficult, expensive and time-consuming process. We may not be able to establish
direct or indirect sales and distribution capabilities or be successful in
gaining market acceptance for proprietary products or for other products. We
currently have very limited sales and marketing capabilities. To market any
products directly, we will need to develop a marketing and sales force with
technical expertise and distribution capability or contract with other
pharmaceutical and/or health care companies with distribution systems and direct
sales forces. To the extent that we enter into co-promotion or other licensing
arrangements, any revenues to be received by us will be dependent on the efforts
of third parties. The efforts of third parties may not be successful. Our
failure to establish marketing and distribution capabilities or to enter into
marketing and distribution arrangements with third parties could have a material
adverse effect on our revenue and cash flows.

We depend on patent and proprietary rights to develop and protect our
technologies and products, which rights may not offer us sufficient protection.

         The pharmaceutical industry places considerable importance on obtaining
patent and trade secret protection for new technologies, products and processes.
Our success will depend on our ability to obtain and enforce protection for
products that we develop under United States and foreign patent laws and other
intellectual property laws, preserve the confidentiality of our trade secrets
and operate without infringing the proprietary rights of third parties. Through
our current license agreements, we have acquired the right to utilize the
technology covered by issued patents and patent applications, as well as
additional intellectual property and know-how that could be the subject of
further patent applications in the future. Patents may not be issued from these
applications and issued patents may not give us adequate protection. Issued
patents may be challenged, invalidated, infringed or circumvented, and any
rights granted thereunder may not provide us with competitive advantages.
Parties not affiliated with us have obtained or may obtain United States or
foreign patents or possess or may possess proprietary rights relating to
products being developed or to be developed by us. Patents now in existence or
hereafter issued to others may adversely affect the development or
commercialization of products developed or to be developed by us. Our planned
activities may infringe patents owned by others.

         We could incur substantial costs in defending infringement suits
brought against us or any of our licensors or in asserting any infringement
claims that we may have against others. We could also incur substantial costs in
connection with any suits relating to matters for which we have agreed to
indemnify our licensors or distributors. An adverse outcome in any litigation
could have a material adverse effect on our ability to sell products or use
patents in the future. In addition, we could be required to obtain licenses
under patents or other proprietary rights of third parties. These licenses may
not be made available on terms acceptable to us, or at all. If we are required
to, and do not obtain any required licenses, we could be prevented from, or
encounter delays in, developing, manufacturing or marketing one or more
products.

         We also rely upon trade secret protection for our confidential and
proprietary information. Others may independently develop substantially
equivalent proprietary information and techniques or gain access to our trade
secrets or disclose our technology. We may not be able to meaningfully protect
our trade secrets which could limit our ability to exclusively produce products.

         We require our employees, consultants, members of the scientific
advisory board and parties to collaborative agreements to execute
confidentiality agreements upon the commencement of employment or consulting
relationships or a collaboration with us. These agreements may not provide
meaningful protection of our trade secrets or adequate remedies in the event of
unauthorized use or disclosure of confidential and proprietary information.


                                       20
<PAGE>

If we lose key management or other personnel our business will suffer.

         We are highly dependent on the principal members of our scientific and
management staff. We also rely on consultants and advisors, including our
scientific advisors, to assist us in formulating our research and development
strategy. Our success also depends upon retaining key management and technical
personnel, as well as our ability to continue to attract and retain additional
highly-qualified personnel. We face intense competition for personnel from other
companies, government entities and other organizations. We may not be successful
in retaining our current personnel. We may not be successful in hiring or
retaining qualified personnel in the future. If we lose the services of any of
our scientific and management staff or key technical personnel, or if we fail to
continue to attract qualified personnel, our ability to acquire, develop or sell
products would be adversely affected.

Our management and internal systems might be inadequate to handle our potential
growth.

         Our success will depend in significant part on the expansion of our
operations and the effective management of growth. This growth will place a
significant strain on our management and information systems and resources and
operational and financial systems and resources. To manage future growth, our
management must continue to improve our operational and financial systems and
expand, train, retain and manage our employee base. Our management may not be
able to manage our growth effectively. If our systems, procedures, controls, and
resources are inadequate to support our operations, our expansion would be
halted and we could lose our opportunity to gain significant market share. Any
inability to manage growth effectively may harm our ability to institute our
business plan.

Because we intend to have international operations, we will be subject to risks
of conducting business in foreign countries.

         If, as we anticipate, international operations will constitute a part
of our business, we will be subject to the risks of conducting business in
foreign countries, including:

         o        difficulty in establishing or managing distribution
                  relationships;

         o        different standards for the development, use, packaging and
                  marketing of our products and technologies;

         o        our inability to locate qualified local employees, partners,
                  distributors and suppliers;

         o        the potential burden of complying with a variety of foreign
                  laws, trade standards and regulatory requirements, including
                  the regulation of pharmaceutical products and treatment; and

         o        general geopolitical risks, such as political and economic
                  instability, changes in diplomatic and trade relations, and
                  foreign currency risks.

We cannot predict our future capital needs and we may not be able to secure
additional financing which could affect our ability to operate as a going
concern.

         We have recently completed a $17,750,000 offering through the sale of
shares of Series A preferred stock and common stock purchase warrants. The
common stock purchase warrants are exercisable within five years of the issuance
date. However, we may need additional financing to continue to fund the research
and development of our products and to generally expand and grow our business.
To the extent that we will be required to fund operating losses, our financial
position would deteriorate. There can be no assurance that we will be able to
find significant additional financing at all or on terms favorable to us. If
equity securities are issued in connection with a financing, dilution to our
stockholders may result, and if additional funds are raised through the
incurrence of debt, we may be subject to restrictions on our operations and
finances. Furthermore, if we do incur additional debt, we may be limiting our
ability to repurchase capital stock, engage in mergers, consolidations,
acquisitions and asset sales, or alter our lines of business or accounting
methods, even though these actions would otherwise benefit our business. As of
June 30, 2002, we had stockholders' equity of approximately $24,771,000 and net
working capital of approximately $10,669,000.

         If adequate financing is not available, we may be required to delay,
scale back or eliminate some of our research and development programs, to
relinquish rights to certain technologies or products, or to license third
parties to commercialize technologies or products that we would otherwise seek
to develop. Any inability to obtain additional financing, if required, would
have a material adverse effect on our ability to continue our operations and
implement our business plan.


                                       21
<PAGE>

The prices we charge for our products and the level of third-party reimbursement
may decrease and our revenues could decrease.

         Our ability to commercialize products successfully depends in part on
the price we may be able to charge for our products and on the extent to which
reimbursement for the cost of our products and related treatment will be
available from government health administration authorities, private health
insurers and other third-party payors. Government officials and private health
insurers are increasingly challenging the price of medical products and
services. Significant uncertainty exists as to the pricing flexibility
distributors will have with respect to, and the reimbursement status of, newly
approved health care products.

         In the United States, for instance, we expect that there will continue
to be a number of federal and state proposals to implement government control of
pricing and profitability of prescription pharmaceuticals. Government imposed
controls could decrease the price we receive for products by preventing the
recovery of development costs and an appropriate profit margin. Any of these
cost controls could have a material adverse effect on our ability to make a
profit. Furthermore, federal and state regulations govern or influence the
reimbursement to health care providers in connection with medical treatment of
certain patients. If any actions are taken by federal and/or state governments,
they could adversely affect the prospects for sales of our products. Actions
taken by federal and/or state governments with regard to health care reform
could have a material adverse effect on our business and our prospects.

         Third-party payors may attempt to control costs further by selecting
exclusive providers of their pharmaceutical products. If third-party payors were
to make this type of arrangement with one or more of our competitors, they would
not reimburse patients for purchasing our competing products. This could cause
the acceptance and/or use of our products to decline. This lack of reimbursement
would diminish the market for products developed by us and could have a material
adverse effect on us.

Our products may be subject to recall.

         Product recalls may be issued at our discretion or by the FDA, the FTC
or other government agencies having regulatory authority for product sales.
Product recalls, if any in the future, may harm our reputation and cause us to
lose development opportunities, or customers or pay refunds. Products may need
to be recalled due to disputed labeling claims, manufacturing issues, quality
defects, or other reasons. We do not carry any insurance to cover the risk of
potential product recall. Any product recall could have a material adverse
effect on us, our prospects, our financial condition and results of operations.

We may face exposure from product liability claims and product liability
insurance may not be available to cover the costs of our liability claims
related to technologies or products.

         We face exposure to product liability claims if the use of our
technologies or products or those we license from third parties is alleged to
have resulted in adverse effects to users thereof. Regulatory approval for
commercial sale of our products does not mitigate product liability risks. Any
precautions we take may not be sufficient to avoid significant product liability
exposure. We may not be able to obtain an appropriate level of liability
insurance coverage for our development and marketing activities. Existing
coverage may not be adequate as we further develop our products. In the future,
adequate insurance coverage or indemnification by collaborative partners may not
be available in sufficient amounts, or at acceptable costs, if at all. To the
extent that product liability insurance, if available, does not cover potential
claims, we will be required to self-insure the risks associated with those
claims. The successful assertion of any uninsured product liability or other
claim against us could limit our ability to sell our products or could cause
monetary damages. In addition, future product labeling may include disclosure of
additional adverse effects, precautions and contraindications, which may
adversely impact product sales. The pharmaceutical industry has experienced
increasing difficulty in maintaining product liability insurance coverage at
reasonable levels, and substantial increases in insurance premium costs in many
cases have rendered coverage economically impractical.

We may be liable for the use of hazardous materials.

         Our research and development activities may involve the use of
hazardous materials, chemicals and/or various radioactive compounds by our
collaborative partners. The risk of accidental contamination or injury from
these materials cannot be completely eliminated. In the event of an accident, we
could be held liable for any damages that result and any liability could exceed
our resources. Our future collaborative partners may incur substantial costs to
comply with environmental regulations, which costs may be passed on to us.


                                       22
<PAGE>

We may encounter significant financial and operating risks if we grow our
business through acquisitions.

         As part of our growth strategy, we may seek to acquire or invest in
complementary or competitive businesses, products or technologies. The process
of integrating acquired assets into our operations may result in unforeseen
operating difficulties and expenditures and may absorb significant management
attention that would otherwise be available for the ongoing development of our
business. We may allocate a significant portion of our available working capital
to finance all or a portion of the purchase price relating to possible
acquisitions although we have no immediate plans to do so. Any future
acquisition or investment opportunity may require us to obtain additional
financing to complete the transaction. The anticipated benefits of any
acquisitions may not be realized. In addition, future acquisitions by us could
result in potentially dilutive issuances of equity securities, the incurrence of
debt and contingent liabilities and amortization expenses related to goodwill
and other intangible assets, any of which could materially adversely affect our
operating results and financial position. Acquisitions also involve other risks,
including entering markets in which we have no or limited prior experience.

The price of our common stock is likely to be volatile and subject to wide
fluctuations.

         The market price of the securities of biotechnology companies has been
especially volatile. Thus, the market price of our common stock is likely to be
subject to wide fluctuations. If our revenues do not grow or grow more slowly
than we anticipate, or, if operating or capital expenditures exceed our
expectations and cannot be adjusted accordingly, or if some other event
adversely affects us, the market price of our common stock could decline. In
addition, if the market for pharmaceutical and biotechnology stocks or the stock
market in general experiences a loss in investor confidence or otherwise fails,
the market price of our common stock could fall for reasons unrelated to our
business, results of operations and financial condition. The market price of our
stock also might decline in reaction to events that affect other companies in
our industry even if these events do not directly affect us. In the past,
companies that have experienced volatility in the market price of their stock
have been the subject of securities class action litigation. If we were to
become the subject of securities class action litigation, it could result in
substantial costs and a diversion of management's attention and resources.

The public trading market for our common stock is limited and may not be
developed or sustained which could limit the liquidity of an investment in our
common stock.

         There is a limited trading market for the common stock. Since January
1999, the common stock has been traded sporadically under the symbol "BIOV" on
the OTC bulletin board, an inter-dealer automated quotation system for equity
securities. There can be no assurance that an active and liquid trading market
will develop or, if developed, that it will be sustained which could limit your
ability to sell our common stock at a desired price.

Certain events could result in a dilution of your ownership of our common stock.

         As of June 30, 2002, we had 16,887,786 shares of common stock
outstanding, 5,916,666 shares of Series A preferred stock outstanding which are
currently convertible into 11,833,332 shares of common stock and 13,604,543
common stock equivalents including warrants and stock options, other than the
options granted under the co-development agreement with ILEX. The exercise and
conversion prices of the common stock equivalents range from $1.25 to $2.33 per
share. We have also reserved for issuance an aggregate of 7,473,082 shares of
common stock for a stock option plan for our employees. These securities also
provide for antidilution protection upon the occurrence of sales of our common
stock below certain prices, stock splits, redemptions, mergers and other similar
transactions. If one or more of these events occurs the number of shares of our
common stock that may be acquired upon conversion or exercise would increase. If
converted or exercised, these securities will result in a dilution to your
percentage ownership of our common stock.


                                       23
<PAGE>

The provisions of Delaware law may inhibit potential acquisition bids that
stockholders may believe are desirable, and the market price of our common stock
may be lower as a result.

         We are subject to the anti-takeover provisions of Section 203 of the
Delaware corporate statute, which regulates corporate acquisitions. These
provisions could discourage potential acquisition proposals and could delay or
prevent a change in control transaction. They could also have the effect of
discouraging others from making tender offers for our common stock. As a result,
these provisions may prevent our stock price from increasing substantially in
response to actual or rumored takeover attempts. These provisions may also
prevent changes in our management.

Where You Can Find More Information

         We file annual, quarterly and special reports, proxy statements and
other information with the SEC. This information is available at the SEC's
Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may
obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports,
proxy and information statements, and other information about Bioenvision, Inc.
and other issuers that file electronically with the SEC at http://wwww.sec.gov.

Item 2.  Description of Property.

Facilities

         As of June 30, 2002, we did not own any interest in real property. We
currently lease 3,229 square feet of office space at our principal executive
offices at 509 Madison Avenue, Suite 404, New York, New York 10022 for
approximately $13,000 per month. These facilities are the center for all of our
administrative and marketing functions in the United States. We also rent 250
square feet of office space at 32 Haymarket, London SW1Y 4TP for approximately
$2,000 per month. This office space is used by management and administration. To
date, most of our drug development programs have been conducted at scientific
institutions around the world. It is our policy to continue development at
leading scientific institutions in the United States and Europe. We do not plan
to conduct laboratory research in any of our facilities in the near future,
rather, we will conduct research through collaborative arrangements with
Strategic Research Institute, M.D. Anderson and others.

Investment Policies

         We do not currently have any investments in real estate or interests in
real estate; investments or interests in real estate mortgages or in the
securities of or interests in persons primarily engaged in real estate. We
generally acquire our assets for the purpose of ultimately producing sales
revenues from the exploitation of such assets in the development of our
biopharmaceutical business. We currently invest our surplus cash in
interest-bearing deposit accounts, short-term certificates of deposit and
governmental debt instruments.

Item 3.  Legal Proceedings.

         We are not a party to any material legal proceedings.

Item 4.  Submission of Matters to a Vote of Security Holders.

         None.


                                       24
<PAGE>

                                    PART II


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

         The following represents the range of reported high and low bid
quotations for our common stock on a quarterly basis since July 1, 1999 as
reported on the OTC Bulletin Board. Our trading symbol is "BIOV" The quotations
also reflect inter-dealer prices, without retail mark-up, mark-down or
commission, and may not represent actual transactions.

                                             High                   Low
                                             ----                   ---
Fiscal Year Ended June 30, 2000
First Quarter*                               $8.25                  $4.00
Second Quarter*                              $8.00                  $6.00
Third Quarter                                $9.00                  $6.25
Fourth Quarter                               $8.00                  $5.00

Fiscal Year Ended June 30, 2001
First Quarter                                $4.25                  $2.50
Second Quarter                               $4.00                  $1.50
Third Quarter                                $2.625                 $0.875
Fourth Quarter                               $2.45                  $0.82

Fiscal Year Ended June 30, 2002
First Quarter                                $2.50                  $1.60
Second Quarter                               $2.50                  $1.15
Third Quarter                                $3.00                  $2.25
Fourth Quarter                               $3.60                  $1.75

         *In accordance with the terms of the Acquisition Agreement between Old
Bioenvision and Bioenvision dated December 21, 1998, Bioenvision effected a
1-for-15 reverse stock split, reducing its issued and outstanding shares of
common stock from 3,450,000 to 230,000, immediately prior to issuing 7,013,897
shares of post 1-for-15 reverse stock split common stock at the closing of the
acquisition on January 5, 1999.

         On September 17, 2002, we had 292 stockholders of record.

         We have never declared or paid cash dividends on our capital stock, and
our board of directors does not intend to declare or pay any dividends on the
common stock in the foreseeable future. However, the Company is required to
accrue for and pay a dividend of 5%, subject to certain adjustments, on its
cumulative Series A Convertible Participating Preferred Stock. Our earnings, if
any, are expected to be retained for use in expanding our business. The
declaration and payment in the future of any cash or stock dividends on the
common stock will be at the discretion of the board of directors and will depend
upon a variety of factors, including our ability to service our outstanding
indebtedness and to pay our dividend obligations on securities ranking senior to
the common stock, our future earnings, if any, capital requirements, financial
condition and such other factors as our board of directors may consider to be
relevant from time to time.

Recent Sales of Unregistered Securities

         In May 2002, Bioenvision issued an aggregate of 5,916,666 shares of
Series A convertible participating preferred stock for $3.00 per share and
warrants to purchase an aggregate of 5,916,666 shares of common stock. The
issuance of these shares and warrants was exempt from registration under
Regulation D under the Securities Act or Section 4(2) of the Securities Act.

         On February 1, 2002, Bioenvision issued 7,000,000 shares of common
stock to the former stockholders of Pathagon in connection with the consummation
of the Pathagon transaction. The issuance of these shares was exempt from
registration under Regulation D under the Securities Act or Section 4(2) of the
Securities Act.


                                       25
<PAGE>

         On November 16, 2001, we entered into an engagement letter with SCO
Capital, pursuant to which SCO Capital would act as our financial advisor. In
connection with the engagement letter, we issued a warrant to purchase 100,000
shares of common stock at an exercise price of $1.25 per share, subject to
certain anti-dilution adjustments. In connection with securing the credit
facility with SCO Capital, we issued warrants to purchase 1,500,000 shares of
our common stock at a strike price of $1.25 per share, subject to certain
anti-dilution adjustments. The warrants expire five years from the date of
issuance. The issuance of these shares and warrants were exempt from
registration under Regulation D under the Securities Act or Section 4(2) of the
Securities Act.

         In October 2001, we issued 134,035 shares of common stock to officers
as payment for salaries accrued to September 30, 2001. The issuance of these
shares was exempt from registration under Regulation D under the Securities Act
or Section 4(2) of the Securities Act.

         In August 2001, in connection with outstanding deferred salaries, we
issued 208,333 shares of common stock at the rate of $1.25 per share as follows:
Christopher Wood 98,684 shares; Thomas Nelson, 27,412 shares; and Stuart Smith,
82,237 shares. The issuance of these shares was exempt from registration under
Regulation D under the Securities Act or Section 4(2) of the Securities Act.

         In addition, in August 2001 we granted 150,000 options to purchase
shares of our common stock at an exercise price of $1.25 per share. The options
were issued to two consultants in exchange for certain services rendered. The
options expire in August 2004 and are immediately vested. Those issuances of
options were exempt from registration under Regulation S under the Securities
Act or Section 4(2) of the Securities Act. In August 2001, we cancelled these
options and replaced them with 150,000 shares.

         In May 2001, certain officers agreed to convert $910,681 in outstanding
deferred salaries into 705,954 shares of our common stock. The issuance of these
shares was exempt from registration under Regulation D under the Securities Act
or Section 4(2) of the Securities Act.

         In April 2001, Bioenvision issued 5,104,544 options at an exercise
price of $1.25 per share. The initial term of the options are that each option
can be exercised after April 30, 2001 for a period of three years until April
30, 2004, but were extended to five years.

         Of these options, management was issued the following options:

         Christopher B. Wood          1,500,000 options
         Stuart Smith                 500,000 options
         Thomas Scott Nelson          200,000 options

The issuance of these options was exempt from registration under Regulation D
under the Securities Act or Section 4(2) of the Securities Act.

         In April 2001, we issued 500,000 options to Phoenix Ventures to
purchase shares of our common stock at an exercise price of $1.25 per share. The
options were issued in connection with a credit facility made available to us by
Glen Investments Limited, a Jersey (Channel Islands) corporation wholly-owned by
Kevin R. Leech, a U.K. citizen and one of our stockholders, which facility was
terminated in August 2001. The options expire in April 2004 and are immediately
vested. Those issuances of options were exempt from registration under
Regulation S under the Securities Act or Section 4(2) of the Securities Act.

         In March 2001, we entered into the Co-Development Agreement with ILEX,
pursuant to which ILEX has a 30-day option to purchase $1 million of our common
stock upon completion by ILEX of the pivotal Phase II clinical trial of
Clofarabine, and an additional 30-day option to purchase $2 million of our
common stock after the filing by ILEX of a new-drug application in the United
States for the use of Clofarabine in the treatment of lymphocytic leukemia. The
exercise price per share for each option is based upon the average market price
of our common stock at the time of exercise.

         In December 2000, the Company issued 272,500 shares of common stock to
outside consultants. Consultant's expense of $272,500 based on the fair value of
the Company's stock trading at $1.00 at the time the shares were issued has been
recognized in the Company's financial statements.

         In November 2000, Bioenvision issued 272,500 shares of common stock at
approximately $1.00 per share to various consultants for work performed for and
our behalf. The shares were issued to Andrew Turner (112,500), David Chester
(112,500), and Shane Sutton (47,500). The issuance of these shares was exempt
from registration under Regulation S under the Securities Act or Section 4(2) of
the Securities Act.


                                       26
<PAGE>

         As of June 30, 2000, our financial advisors held 342,468 shares of our
common stock, which were issued in exchange for financial planning services
rendered. These services are reflected in the statement of operations as
administrative expenses. These shares are valued at $0.13 to $0.67 per share,
which reflected the most recent transaction for shares. The issuance of these
shares was exempt from registration under Regulation D under the Securities Act
or Section 4(2) of the Securities Act.

         In April 2000, we received a $2 million equity investment from
Bioaccelerate in exchange for the issuance of 727,272 shares of our common stock
at a price of $2.75 per share. The investment agreement, dated March 21, 2000,
granted to Bioaccelerate the option to purchase two further trances of 727,272
shares of common stock at an exercise price of $2.75 per share, upon the
achievement of certain specified milestones. We entered into the superceding
arrangement with Bioaccelerate on April 30, 2001, to replace the outstanding
option and eliminate the additional options in exchange for the new three-year
option to purchase 1,454,544 shares at $1.25 per share and amending certain
other provisions of the investment agreement. These shares were exempt from
registration under Regulation S under the Securities Act or Section 4(2) of the
Securities Act.

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

         The following discussion and analysis provides information which
management believes is relevant to an assessment and understanding of our
results of operations and financial condition. The discussion should be read
together with our audited consolidated financial statements and notes included
under Item 7 in this annual report on Form 10-KSB, which consolidated financial
statements are presented beginning at page F-1, for further details.

         Summary of Significant Accounting Policies

         Financial Reporting Release No. 60, which was recently released by the
SEC, requires all companies to include a discussion of critical accounting
policies or methods used in the preparation of the consolidated financial
statements. In addition, Financial Reporting Release No. 61 was recently
released by the SEC, which requires all companies to include a discussion to
address, among other things, liquidity, off-balance sheet arrangements,
contractual obligations and commercial commitments. The following discussion is
intended to supplement the summary of significant accounting policies as
described in Note 1 of the Notes To Consolidated Financial Statements for the
year ended June 30, 2002 included under Item 7 in this annual report on Form
10-KSB, which are presented beginning at page F-1.

         These policies were selected because they represent the more
significant accounting policies and methods that are broadly applied in the
preparation of the consolidated financial statements.

         Revenue Recognition - Non-refundable up-front payments received in
connection with research and development collaboration agreements are deferred
and recognized on a straight-line basis over the relevant periods in the
agreement, generally the research or development period. Milestone and royalty
payments, if any, are recognized pursuant to collaborative agreements upon the
achievement of the specified milestones or sales transaction.

         Stock Based Compensation - In accordance with the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 123, Accounting for
Stock-Based Compensation, we apply Accounting Principles Board Opinion 25 and
related interpretations in accounting for our stock option plan and,
accordingly, we do not recognize compensation expense for employee stock options
granted with exercise prices equal to or greater than fair market value.
Non-employee stock-based compensation arrangements are accounted for in
accordance with the provisions of SFAS No. 123 and Emerging Issues Task Force
No. 96-18, Accounting for Equity Instruments That Are Issued to Other Than
Employees for Acquiring, or in Conjunction with Selling, Goods or Services as
amended by EITF 00-27. Under EITF No. 96-18, as amended, where the fair value of
the equity instrument is more reliably measurable than the fair value of
services received, such services will be valued based on the fair value of the
equity instrument.

         Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles of the United States
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements as well as the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates, and such differences may be material to the
financial statements.


                                       27
<PAGE>

Overview

         We are an emerging biopharmaceutical company. Our primary business
focus is the acquisition, development and distribution of drugs to treat cancer.
We have a broad range of products and technologies under development, but our
two lead drugs are Clofarabine and Modrenal(R).

         Clofarabine
         -----------

         Based on third party studies conducted to date, we believe that
Clofarabine may be effective in the treatment of leukemia and lymphoma. To
expedite the commercialization Clofarabine, we have entered into a
co-development agreement with ILEX Oncology, Inc. ("ILEX") under which Phase II
clinical trials of Clofarabine are currently being conducted. In January 2002,
the European orphan drug application for use of Clofarabine to treat acute
leukemia in adults was approved. The drug has also been granted orphan drug
status in the United States.

         Extensive preclinical and mechanistic studies have provided much of the
rationale for the rapidly advancing Clofarabine clinical development program.
Published data and information presented at recent scientific meetings suggest
that Clofarabine has broader anti-cancer activity, and may be more potent than
other currently marketed purine analogues such as Fludara(R) (fludarabine) and
Leustatin(R) (cladribine).

         Preliminary results from ongoing clinical studies indicate that
Clofarabine may be an effective treatment for acute leukemias in adult and
pediatric patients that have become resistant, or refractory, to prior
treatment. According to researchers at the MD Anderson Cancer Center, interim
Phase II study results showed that 45% of adults with acute myelogenous leukemia
(AML) achieved a complete remission (CR) rate, and acute lymphocytic leukemia
(ALL) patients achieved a 20% CR rate when treated with Clofarabine as a single
agent. Data from a separate Phase I dose-escalation study demonstrated a 25% CR
rate, and an overall response rate of 40%, in children with acute leukemias who
were refractory to previous therapy. Trials in adult and pediatric acute
leukemias are currently ongoing in the U.S. and are planned to commence in
Europe later this year. Complete remission, in this context, means complete
clearance of all leukemic cells from the blood and normalization of the blood
count, sustained for a period of more than 4 weeks. In this context, a response,
or partial response, has largely the same meaning, except that the bone marrow
may still contain more than 5% but less than 25% blast cells (leukemic cells).

         Modrenal(R)
         -----------

         We plan to launch Modrenal(R), by late 2002 in the United Kingdom,
where we have obtained regulatory approval for its use in the treatment of
post-menopausal breast cancer. Our management believes that Modrenal(R) works by
a unique action as compared with other commercially available drugs to treat
post-menopausal breast cancer. We believe that Modrenal(R) alters the way in
which the female hormone, estrogen, binds to the hormone receptor on the cell in
a previously unrecognized fashion. In particular, it changes the manner in which
the hormone acts on a newly identified second estrogen receptor, ER beta
(ER(beta)). Modrenal(R) is the first drug to be commercially available in a new
class of agents that specifically target ER(beta). We intend to seek regulatory
approval for Modrenal(R) in the United States as salvage therapy for
hormone-sensitive breast cancer. This would target patients that have
hormone-sensitive cancers and have become resistant, or refractory, to prior
hormone treatments, such as Tamoxifen(R) or aromatase inhibitors. We believe
that the potential market for Modrenal(R), based upon the sales of currently
available drugs for hormonal therapy for breast cancers, is in excess of $1.8
billion of sales per annum worldwide. The results of extensive clinical trails
to date with Modrenal(R) illustrate that it is at least as effective in second
line or third line treatment of advanced breast cancer as the currently
available hormonal treatments, such as the SERM's and aromatase inhibitors, and
more effective than these agents in certain specific patient types, such as
those who have become Tamoxifen(R) refractory. Furthermore, our management
currently intends to price Modrenal(R) in such a manner as to make treatment
with Modrenal(R) compare very favorably, on a price basis, with the cost of
treatment with the existing drugs used for second line or third line therapy. We
believe that this should result in cost benefits for physicians, patients and
health-care systems.


                                       28
<PAGE>

         Company Status
         --------------

         We have made significant progress in developing our product portfolio
over the past twelve months, and have multiple products in clinical trials. We
have incurred losses during this development stage. Our management believes that
we have the opportunity to become a leading oncology-focused pharmaceutical
company in the next five years if we successfully bring our two lead drugs to
market. We anticipate that revenues derived from the two lead drugs will permit
us to further develop the twelve other products and potential products currently
in our development portfolio. We currently plan to have as many as twelve
products at market by the end of 2006. We intend to commence marketing on of our
lead products, Modrenal(R), and to continue developing our existing platform
technologies with a primary business focus on drugs to treat cancer, and
commercializing products derived from such technologies. A key element of our
business strategy is to continue to acquire, obtain licenses for, and develop
new technologies and products that we believe offer unique market opportunities
and/or complement our existing product lines. As a result of the acquisition of
Pathagon Inc. in February 2002, we have several anti-infective technologies.
These include the OLIGON(R) technology, an advanced biomaterial that has been
approved for certain indications by the FDA in the U.S., and is being sold by a
product co-development partner, and the use of thiazine dyes, such as methylene
blue, which are used for in vitro and in vivos inactivation of pathogens
(viruses, bacteria and fungus) in biological fluids. It is not the Company's
strategy to sell devices or to expand into the anit-infective market per se, but
the technology obtained in the Pathagon acquisition has specific application for
support of the cancer patient and oncology treatment. We have had discussions
with potential product co-development partners from time to time, and plan to
continue to explore the possibilities for co-development and sub-licensing in
order to implement our development plans. In addition, we believe that some of
our products may have applications in treating non-cancer conditions in humans
and in animals. Those conditions are outside our core business focus and we do
not presently intend to devote a substantial portion of our resources to
addressing those conditions. However, we have established an animal healthcare
division to exploit some of those opportunities.

         You should consider the likelihood of our future success to be highly
speculative in light of our limited operating history, as well as the limited
resources, problems, expenses, risks and complications frequently encountered by
similarly situated companies. To address these risks, we must, among other
things:

         o        satisfy our future capital requirements for the implementation
                  of our business plan;

         o        commercialize our existing products;

         o        complete development of products presently in our pipeline and
                  obtain necessary regulatory approvals for use;

         o        implement and successfully execute our business and marketing
                  strategy to commercialize products;

         o        establish and maintain our client base;

         o        continue to develop new products and upgrade our existing
                  products;

         o        respond to industry and competitive developments; and

         o        attract, retain, and motivate qualified personnel.

         We may not be successful in addressing these risks. If we were unable
to do so, our business prospects, financial condition and results of operations
would be materially adversely affected. The likelihood of our success must be
considered in light of the development cycles of new pharmaceutical products and
technologies and the competitive and regulatory environment in which we operate.


                                       29
<PAGE>

Results of Operations

Year Ended June 30, 2002 Compared to Year Ended June 30, 2001

         We reported revenues of $803,000 and $245,000 for the years ended June
30, 2002 and 2001, respectively. Revenues reflect our agreements with our
co-development partners and/or licensees in connection with our platform of
drugs and technologies. Research and development costs for the years ended June
30, 2002 and 2001 were $1,912,000 and $1,566,000, respectively. Administrative
expenses for the year ended June 30, 2002 were $2,128,000, representing an
increase of $1,578,000 from the year ended June 30, 2001. The increase primarily
reflects administrative and development expenses associated with current year
amortization of certain capitalized expenses associated with the consummation of
the Company's private placement financing which occurred in May 2002, the
acquisition of Pathagon, Inc. in February 2002 and the Company's bridge
financing which was consummated in November 2001. Administrative expenses are
comprised primarily of investment banking, legal, accounting and other
professional fees and expenses. We reported interest and finance charges of
$2,173,000 for the year ended June 30, 2002, representing an increase of
$1,944,000 from the year ended June 30, 2001. This increase reflects charges
related to the issuance of warrants in connection with the Company's various
financings. Depreciation and amortization expense totaled $579,000 for the year
ended June 30, 2002, representing an increase of $556,000 from the year ended
June 30, 2001. The increase is primarily due to the amortization of certain
intangible assets we acquired in the Pathagon transaction which we consummated
in February 2002.

Year Ended June 30, 2001 Compared to Year Ended June 30, 2000

         Research and development costs increased to $1,566,000 in the fiscal
year ended June 30, 2001, from $984,000 in the year ended June 30, 2000. The
increase in research and development costs is a result of increasing our
research activities during the fiscal year ended June 30, 2001 as we increased
the pace of development of our products portfolio. General and administrative
expenses totaled $550,000 in the year ended June 30, 2001, as compared with
$487,000 in the year ended June 30, 2000. General and administrative expenses
were comprised primarily of charges related to legal fees, accounting fees,
investor relations and rent. Depreciation and amortization expense totaled
$23,000 in the fiscal year ended June 30, 2001, as compared with $12,000 in the
fiscal year ended June 30, 2000. Interest and finance charges totaled $229,000
in the fiscal year ended June 30, 2001, as compared with $13,000 in the fiscal
year ended June 30, 2000. The majority of interest and finance charges relates
to costs associated with the issuance of stock options related to our credit
facility with Glen Investments Limited, a Jersey (Channel Islands) corporation
wholly owned by Kevin R. Leech, a United Kingdom citizen and one of our
shareholders, which facility was terminated in August 2001. Reference is made to
footnote 8 to our consolidated financial statements in Item 7 hereto, which
consolidated financial statements are presented beginning at page F-1, for
further details.

Liquidity and Capital Resources

         We are actively seeking strategic alliances in order to develop and
market our range of products. In August 2001, we obtained a $1 million unsecured
line of credit facility from Jano Holdings Limited, bearing interest at 8% per
annum. In November 2001, we entered into a senior, Secured Credit Facility with
SCO Capital Partners LLC. The credit facility was established for up to
$1,000,000 in short term financing, in four tranches of $250,000, subject to
satisfaction of certain conditions, secured by the pledge of certain of our
assets, and was established to bear interest on drawings at a rate of 6% per
annum. In addition, our officers agreed to defer salaries, and our former
outside counsel agreed to defer certain fees, until we obtained sufficient
long-term funding. Deferred salaries and fees amounted to approximately $52,000
through June 30, 2002. In May 2001, our officers agreed to accept 705,954 shares
of our common stock in settlement of $910,681 of the outstanding accrued
salaries through June 30, 2001. The shares were issued during the quarter ended
March 31, 2002. On October 17, 2001, our officers agreed to accept 134,035
shares in settlement of $154,140 of additional outstanding accrued salaries to
September 30, 2001. On October 17, 2001, the board of directors approved a plan
to repay certain trade debt with shares of our common stock, and a total of
146,499 shares of common stock were issued for the repayment of $168,473.

         We received an initial payment from ILEX of $1,350,000 which became
non-refundable in March 2001 upon execution of the agreement with ILEX to
co-develop Clofarabine. That sum will be recognized as income for accounting
purposes on a straight line basis over the period from March 2001, when the
payment was received, through December 31, 2002, at which time ILEX is scheduled
to complete Phase II trials of Clofarabine and make another payment to us. A
total of $802,000 of that payment was recognized as contract revenue for the
year ended June 30, 2002.


                                       30
<PAGE>

         On May 7, 2002 we authorized the issuance and sale of up to 5,920,000
shares of Series A Preferred Stock. The Series A preferred stock may be
converted into shares of common stock at an initial conversion price of $1.50
per share of common stock, subject to adjustment for stock splits, stock
dividends, mergers, issuances of cheap stock and other similar transactions.
Holders of Series A preferred stock also received, in respect of each share of
Series A preferred stock purchased in a private placement which took place in
May 2002, one warrant to purchase one share of our common stock at an initial
exercise price of $2.00 subject to adjustment.

         Through May 16, 2002 we have sold an aggregate of 5,916,666 shares of
Series A convertible participating preferred stock in the May 2002 private
placement for $3.00 per share and warrants to purchase an aggregate of 5,916,666
shares of common stock, resulting in aggregate gross proceeds of approximately
$17,750,000. A portion of the proceeds were used to repay in full the Jano
Holdings and SCO Capital obligations upon which such facilities were terminated,
as well as to pay fees amounting to $1,610,000 related to the transaction.

         Our management believes that our net proceeds from the May 2002 private
placement will be sufficient to continue currently planned operations over the
next 12 months, and we will not intend to raise any additional funds during that
period in order to fund operations. However, a key element of our business
strategy is to continue to acquire, obtain licenses for, and develop new
technologies and products that we believe offer unique market opportunities
and/or complement our existing product lines. We are not presently considering
any such transactions, and we do not presently expect to acquire or sell any
significant assets over the coming 12 month period, but if any such opportunity
presents itself and we deem it to be in our interests to pursue such an
opportunity, it is possible that additional financing would be required for such
a purpose. We plan to utilize a portion of the proceeds of the May 2002 private
placement to conduct clinical trials of our receptor modulation drug,
trilostane, in the treatment of breast and prostate cancer. Further laboratory
studies will be conducted to examine the effect of the drug on the hormone
receptor.

         We anticipate that we may continue to incur significant operating
losses for the foreseeable future. There can be no assurance as to whether or
when we will generate material revenues or achieve profitable operations.

Plan of Operation

         We are an emerging biopharmaceutical company with a primary business
focus on the acquisition, development and distribution of drugs to treat cancer.
We have acquired development and marketing rights to a portfolio of six platform
technologies developed over the past 15 years, from which a range of products
have been derived and additional products may be developed in the future.
Although we intend to commence marketing one of our lead products, Modrenal(R),
and to continue developing Clofarabine, and our existing platform technologies
and commercializing products derived from such technologies, a key element of
our business strategy is to continue to acquire, obtain licenses for, and
develop new technologies and products that we believe offer unique market
opportunities and/or complement our existing product lines. Once a product or
technology has been launched into the market for a particular disease
indication, we plan to work with numerous collaborators, both pharmaceutical and
clinical, in the oncology community to extend the permitted uses of the product
to other indications. In order to market our products effectively, we intend to
develop marketing alliances with strategic partners and may co-promote and/or
co-market in certain territories.

         In addition, a provisional product license has been granted in the
United Kingdom for the use of trilostane for the treatment of Cushing's disease
in dogs. In November 2001, we granted to Arnolds Ltd., a major distributor of
animal products in the United Kingdom, the right to market the drug for a six
month trial period, after which time, if the results were satisfactory to
Arnolds, we would enter into a licensing arrangement whereby Arnolds would pay
royalties to us on sales from April 2002 onward. During the trial period,
Arnolds has posted more than $400,000 of sales of the drug, which is marketed in
the United Kingdom as Veteryl(R).

         We also plan to utilize a major portion of the proceeds of the May 2002
private placement to initiate clinical trials of Clofarabine in Europe. The
emphasis will be on the use of Clofarabine in the treatment of refractory acute
leukemia in children and adults. The drug has received orphan drug designation
in Europe.


                                       31
<PAGE>

         We plan to identify licensing partners for OLIGON(R) and to continue
developing new aspects of the technology. We also plan to continue development
of methlylene blue and other products in our pipeline.

         With respect to our gene therapy technology, we have completed
laboratory research which confirms proof of principal of our gene therapy
technology and has added to the pre-clinical data which will be important for
any subsequent regulatory submission. This laboratory research was required to
allow the Company and the research departments of the relevant universities
assisting with this technology to file patents for which the Company has
licensing rights. We now plan to perform additional clinical trials with the two
lead products related to this technology.

Recent Accounting Pronouncements

         In June 2001, the FASB issued Statement No. 142, Goodwill and Other
Intangible Assets, effective for fiscal years beginning after December 15, 2001.
Under the new rules, goodwill and intangible assets with indefinite lives will
no longer be amortized, but will be subject to annual impairment tests in
accordance with Statement 142. Other intangible assets will continue to be
amortized over their useful lives. The Company recorded goodwill as a result of
the Pathagon acquisition, but has not recorded any amortization in accordance
with SFAS No. 142. The Company is still in the process of evaluating the impact
of adopting this pronouncement on its consolidated financial statements,
however, it does not believe that the adoption of this pronouncement will have a
material impact on the consolidated financial statements.

         In August 2001, the FASB issued SFAS 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets". This statement is effective for
fiscal years beginning after December 31, 2001. This supercedes SFAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of", while retaining many of the requirements of such statement. The
Company does not believe that this statement will have a material effect on the
Company's financial statements.

         In April 2002, the FASB, issued SFAS No. 145, Recission of FASB
Statements No. 4, 44, 64, Amendment of FASB Statement No. 13, and Technical
Corrections. In addition to amending and rescinding other existing authoritative
pronouncements to make various technical corrections, clarify meanings, or
describe their applicability under changed conditions, SFAS No. 145 precludes
companies from recording gains and losses from the exetinguishment of debt as an
extraordinary item. SFAS No. 145 is effective for our first quarter in the
fiscal year ending June 30, 2003. The Company does not expect the adoption of
this pronouncement to have a material impact on our consolidated results of
operations or financial position.

         In June 2002, the FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities. The standard requires companies to
recognize costs associated with exit or disposal activities when they are
incurred rather than at the date of a commitment to an exit or disposal
activity. SFAS No. 146 is to be applied prospectively to exit or disposal
activities initiated after December 31, 2002. The Company does not expect the
adoption of this pronouncement to have a material effect on the consolidated
results of operations or financial position.

Subsequent Events

         David P. Luci commenced employment with the Company on July 22, 2002 as
Director of Finance, General Counsel and Corporate Secretary of the Company.

         On September 3, 2002, the Company and ILEX agreed that effective
immediately the management team for the development of Clofarabine in the U.S.,
Canada and Europe (the "Management Team") would consist of Dr. Wood and Mr. Luci
from the Company and Mr. Ze'ev Shaked and Dr. Adam Craig from ILEX.

         On September 17, 2002, the Company announced that the new location of
its principal executive offices is 509 Madison Avenue, Suite 404, New York, New
York 10022.


                                       32
<PAGE>

         The Company and Mr. Thomas Scott Nelson have agreed in principal on an
arrangement pursuant to which Mr. Nelson will resign from his position as Chief
Financial Officer of the Company effective September 30, 2002. Mr. Luci has
taken responsibility as the Company's principal accounting officer. Mr. Nelson
will continue his role as director of the Company and a member of the Audit
Committee.

         The Company and Mr. Stuart Smith have agreed in principal on an
arrangement pursuant to which Mr. Smith will resign from his position as Senior
Vice President of the Company effective September 30, 2002.

Item 7.  Financial Statements.

         The consolidated financial statements of Bioenvision, Inc. and its
subsidiaries including the notes thereto and the report thereon, are presented
beginning at page F-1.

Item 8.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure.

         On June 15, 2001, the Company received a letter from Ernst & Young LLP
("Ernst & Young") expressing its desire to resign as independent auditors of the
Company. On June 16, 2001 and again on June 19, 2001, the Company's management
had discussions with Ernst & Young LLP asking them to reconsider their
resignation. On June 20, 2001, the Company received a letter from Ernst & Young
LLP stating that it did not wish to reconsider its resignation.

         The reports of Ernst & Young on the Company's financial statements for
the two fiscal years ended June 30, 2000 did not contain an adverse opinion or
disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principles except that the report for the years ended
June 30, 1999 and 2000 included a paragraph expressing substantial doubt as to
the Company's ability to continue as a going concern.

         In connection with the audits of the Company's financial statements for
each of the two fiscal years ended June 30, 2000 and in the subsequent interim
period, there were no disagreements with Ernst & Young on any matters of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedures which, if not resolved to the satisfaction of Ernst & Young,
would have caused Ernst & Young to make reference to the matter in their report.

         On July 23, 2001, the Company, pursuant to authorization of its Board
of Directors, engaged Grant Thornton LLP as its independent certified public
accountants to audit the Company's financial statements for the year ended June
30, 2001. During the Company's two most recent fiscal years and any subsequent
interim period prior to engaging the new accountants, the Company did not
consult with the newly engaged accountants regarding any of the matters
described in Regulation S-B Item 304(a)(2)(i) or (ii).


                                    PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act.

         Our executive officers, directors and other significant employees and
their ages and positions are as follows:

                                       33
<PAGE>

<TABLE>
<CAPTION>
Name of Individual                 Age      Position with Bioenvision and Subsidiaries
------------------                 ---      ------------------------------------------
<S>                               <C>      <C>
Christopher B. Wood, M.D.          56       Chairman of the Board and Chief Executive Officer
David P. Luci, C.P.A., J.D.        35       Director of Finance, General Counsel and Corporate Secretary (1)
Thomas Scott Nelson, C.A.          63       Director (3)
Jeffrey B. Davis                   39       Director (2)
Steven A. Elms                     38       Director (3)
Andrew Schiff, M.D.                36       Director (2)(3)
</TABLE>

-----------------------------
(1)      Mr. Luci has been employed with the Company since July 22, 2002.
(2)      Member of the Compensation Committee since September 5, 2002.
(3)      Member of the Audit Committee since September 5, 2002.

         Christopher B. Wood, M.D. has served as our Chairman of the Board and
Chief Executive Officer since January 1999. From January 1997 to December 1998,
Dr. Wood was Chairman of Eurobiotech, Inc. From March 1994 to January 1997, Dr.
Wood was a specialist surgeon in the National Health Service, United Kingdom.
From April 1979 to March 1991, Dr. Wood was a specialist surgeon at The Royal
Postgraduate Medical School, London, England. He has more than 15 years
experience in the European biotechnology sector. He has taken two biotechnology
companies from start-up through commercialization, one of which, Medeva Plc.,
traded on the London Stock Exchange and the New York Stock Exchange, and is now
wholly owned by Celltech Group PLC. Dr. Wood holds an M.D. from the University
of Wales School of Medicine and the Fellowship of the Royal College of Surgeons
of Edinburgh.

         David P. Luci, C.P.A., Esq. has served as Director of Finance, General
Counsel and Corporate Secretary since July 2002. From September 1994 to July
2002, Mr. Luci served as a corporate associate at Paul, Hastings, Janofsky &
Walker LLP. Prior to that, Mr. Luci served as a senior auditor at Ernst & Young
LLP (New York office). Mr. Luci is a certified public accountant. He holds a
Bachelor of Science in Business Administration with a concentration in
accounting from Bucknell University and a J.D. from Albany Law School of Union
University.

         Thomas Scott Nelson was named a director in May 1998. Mr. Nelson served
as our Chief Financial Officer from May 1998 to September 2002. From 1996 to
1999, Mr. Nelson served as the Director of Finance of the Management Board of
the Royal & Sun Alliance Insurance Group. From 1991 to 1996, Mr. Nelson served
as Group Finance Director of the Main Board of Sun Alliance Insurance Group. He
has served as Chairman of the United Kingdom insurance industry committee on
European regulatory, fiscal and accounting issues. He has also worked with
Deloitte in Paris and as a consultant with PA Consultants Management. Mr. Nelson
is a Member of Institute of Chartered Accountants of Scotland and a Fellow of
the Institute of Cost and Management Accountants. Mr. Nelson holds a B.A. degree
from Cambridge University.

         Jeffrey B. Davis was named a director in February 2002. Mr. Davis has
extensive experience in investment banking, and corporate development and
financing for development stage companies. Mr. Davis serves as President of SCO
Financial Group LLC and SCO Securities LLC. He served as Senior Vice President
and Chief Financial Officer of a publicly traded development stage healthcare
technology company from November 1995 to April 1997. Prior to that, from June
1990 to November 1995, Mr. Davis was Vice President, Corporate Finance, at
Deutsche Morgan Grenfell, both in the U.S. and Europe. Mr. Davis also served in
senior marketing and product management positions at AT&T Bell Laboratories and
Philips Medical Systems North America, where he was also a member of the
technical staff.

         Steven A. Elms was named a director in May 2002. Mr. Elms serves as a
Managing Director of the Perseus-Soros BioPharmaceutical Fund. For five years
prior to joining Perseus-Soros, Mr. Elms was a Principal in the Life Science
Investment Banking group of Hambrecht & Quist (now J.P. Morgan H&Q). During his
five years at H&Q, Mr. Elms was involved in over 60 financing and M&A
transactions, helping clients raise in excess of $3.3 billion of capital. Mr.
Elms' primary areas of focus were the genomics and drug discovery technology
sectors.

         Andrew Schiff, M.D. was named a director in May 2002. Dr. Schiff
currently serves as a Managing Director of Perseus-Soros Biopharmaceutical Fund.
Over the last 10 years, Schiff has practiced internal medicine at The New York
Presbyterian Hospital where he maintains his position as a Clinical Assistant
Professor of Medicine. In addition, he has also been a partner of a small family
run investment fund, Kuhn, Loeb & Co.


                                       34
<PAGE>

         Under the terms of its investment agreement, as amended in April 2001,
Bioaccelerate Ltd. has the right to nominate one member to our board of
directors. Bioaccelerate Ltd. has not made any such nomination at this time.

         Under the terms of the merger agreement with certain former directors
of Pathagon, such former directors have the right to nominate another individual
to our board of directors. These former directors of Pathagon have not made any
such nomination at this time.

         The directors serve until the next annual meeting of stockholders and
until their respective successors are elected and qualified. Officers serve at
the discretion of the board of directors.

Committees of the Board of Directors

         The Board of Directors currently has two committees; the Audit
Committee and the Compensation Committee. The Board of Directors recently
re-constituted membership of the Audit Committee and Compensation Committee to
include non-management directors on such committees.

         The Audit Committee is comprised of Messrs. Elms, Schiff and Nelson;
with Mr. Elms serving as Chairman of the Audit Committee. The Audit Committee
recommends the independent accountants appointed by the Board of Directors to
audit our the financial statements, which includes an inspection of our books
and accounts, and reviews with such accountants the scope of their audit and
their report thereon, including any questions and recommendations that may arise
relating to such audit and report or our internal accounting and auditing system
procedures. The Audit Committee reports to the Board of Directors.

         The Compensation Committee is comprised of Messrs. Davis and Schiff;
with Mr. Davis serving as Chairman of the Compensation Committee. The function
of the Compensation Committee is to review and approve the compensation of
executive officers and establish targets and incentive awards under our
incentive compensation plans. The Compensation Committee reports to the Board of
Directors.

Scientific Advisory Committee

         In addition to the foregoing committees of the board of directors, the
Company has a Scientific Advisory Committee. The Scientific Advisory Committee
is comprised of Professor Emillio Montserrat, Nagy Habib, M.D., Ph.D., Michael
Keating, M.D., Professor Cecilia Saccone, B.Sr., Professor Wafik El-Deiry, M.D.,
Ph.D., Professor Anthony Davies, Ph.D., D.Sr. and Professor Daniel Jaeck, M.D.
The members of the Scientific Advisory Committee are each leaders in various
disciplines relating to our scientific interests. These individuals were
appointed by and report to the Board of Directors and provide critical review
and advice pertaining to our product research and development, and business
development activities and strategies at the request of management or the Board
of Directors. Members of the Scientific Advisory Committee are compensated on a
case-by-case basis based on their commitment of time and other factors and are
reimbursed for out-of-pocket expenses incurred in serving on the Scientific
Advisory Committee. Compensation through stock options or stock purchases may be
provided. To our knowledge, none of our Scientific Advisory Committee members
have any conflict of interest between his or her obligations to us and his or
her obligations to others.

Chief Medical Consultant

         George Margetts, M.D. has served as our Chief Medical Consultant since
December 1998. Since 1990, he has been Managing Director of Stegram
Pharmaceutical Ltd. From 1984 to 1990, Dr. Margetts served as Executive Vice
President Research/Managing Director of Sterling Winthrop Group and as its
Medical Director between 1971 and 1989. Dr. Margetts holds B. Pharm. and M.Sc.
degrees from the University of London and M.R.C.S., L.R.C.P., M.D. and B.S.
degrees from University College Hospital Medical School, London.


                                       35
<PAGE>

Compliance with Section 16(a) of the Exchange Act

         Section 16(a) of the Exchange Act requires Bioenvision's directors and
executive officers, and persons who own more than 10% of the outstanding equity
securities of Bioenvision, to file initial reports of beneficial ownership and
reports of changes in beneficial ownership of equity securities with the SEC and
any national securities exchange on which equity securities are listed. These
persons are required by SEC regulations to furnish Bioenvision with copies of
all Section 16(a) forms they file.

         Based upon filings made with the SEC and Bioenvision's records,
Bioenvision believes that certain of its directors, executive officers or
holders of more than 10% of the outstanding shares of common stock have not
filed on a timely basis the reports required by Section 16(a) of the Exchange
Act during, or with respect to, the year ended June 30, 2002.

Item 10.  Executive Compensation.

         The following table sets forth information for each of the fiscal years
ended June 30, 2002, 2001 and 2000 concerning the compensation paid and awarded
to all individuals serving as (a) our chief executive officer, (b) each of our
four other most highly compensated executive officers (other than our chief
executive officer) at the end of our fiscal year ended June 30, 2002 whose total
annual salary and bonus exceeded $100,000 for these periods, and (c) up to two
additional individuals, if any, for whom disclosure would have been provided
pursuant to (b) except that the individual(s) were not serving as our executive
officers at the end of our fiscal year ended June 30, 2002:

                           Summary Compensation Table

<TABLE>
<CAPTION>
                                                 Annual compensation                          Long term compensation
                                          ---------------------------------    ----------------------------------------------------
                                                                                        Awards                      Payouts
                                                                               -------------------------     ----------------------
                                                                  Other        Restricted    Securities
                                                                  Annual          Stock      underlying       LTIP      All other
Name & Principal Position         Year     Salary     Bonus    Compensation      Awards     options/SARs     payouts   compensation
-------------------------         ----    -------     -----    ------------    ----------   ------------     -------   ------------
                                             $          $            $             $                            $            $
<S>                              <C>     <C>         <C>      <C>             <C>          <C>              <C>       <C>
Christopher B. Wood (1)           2002    225,000
                                  2001    180,000
                                  2000    180,000

Stuart Smith (2)                  2002    150,000
                                  2001    150,000
                                  2000    150,000
</TABLE>

----------
(1)      On April 30, 2001, Dr. Wood was granted options for 1,500,000 shares of
         our common stock. The options are immediately exercisable and
         originally expired on April 30, 2004 but have been extended to April
         30, 2006.
(2)      On April 30, 2001, Mr. Smith was granted options for 500,000 shares of
         our common stock. The options are immediately exercisable and
         originally expired on April 30, 2004 but have been extended to April
         30, 2006.

Stock Options

         Our board of directors adopted our 2001 Stock Option Plan effective on
April 30, 2001. The purpose of the option plan is to increase the employees',
advisors', consultants' and non-employee directors' proprietary interest in us
and to align more closely their interests with the interests of our
stockholders. The purpose of the option plan is also to enable us to attract and
retain the services of experienced and highly qualified employees and
non-employee directors.

         We reserved an aggregate of 5,104,544 shares of common stock for
issuance pursuant to options granted under the 2001 Stock Option Plan. As of
September 28, 2002 options to purchase an aggregate of 5,104,544 shares of our
common stock have been issued under the 2001 Stock Option Plan. The board of
directors or a committee of the board of directors (the Compensation Committee)
will administer the Plan including, without limitation, the selection of the
persons who will be granted options under the Plan, the type of options to be
granted, the number of shares subject to each option and the option price.


                                       36
<PAGE>

         Options granted under the option plan may either be options qualifying
as incentive stock options under Section 422 of the Internal Revenue Code of
1986, as amended, or options that do not so qualify (or are not intended to so
qualify). Officers, directors and key employees of and consultants to us and our
subsidiaries will be eligible to receive non-qualified options under the plan.
Only our officers, directors and employees who are employed by us or by our
subsidiaries as "common law employees" are eligible to receive incentive
options. In addition, the option plan also allows for the inclusion of a "reload
option" provision, which permits an eligible person to pay the exercise price of
the option, and any withholding taxes that may be due on the exercise, with
shares of common stock owned by the eligible person and to receive a new option
to purchase shares of common stock equal in number to the tendered shares. Any
incentive option granted under the option plan must provide for an exercise
price of not less than 100% of the fair market value of the underlying shares on
the date of such grant, but the exercise price of any incentive option granted
to an eligible employee owning more than 10% of the total combined voting power
of all classes of our common stock or the common stock of any of our subsidiary
companies must be at least 110% of such fair market value as determined on the
date of the grant.

         The term of each option and the manner in which it may be exercised is
determined by the board of directors or a committee, provided that no incentive
stock option may be exercisable more than three years after the date of its
grant. The exercise price of non-qualified options shall be determined by the
board of directors or a committee.

         The per share purchase price of shares subject to options granted under
the option plan may be adjusted in the event of certain changes in our
capitalization, but any such adjustment shall not change the total purchase
price payable upon the exercise in full of options granted under the option
plan.

         Incentive stock options are non-assignable and non-transferable, except
by will or by the laws of descent and distribution and, during the lifetime of
the optionee, may be exercised only by such optionee. Non-qualified options may
be assignable to the optionee's spouse or children. If an optionee's employment
is terminated for cause or without the approval of a committee of the board of
directors (other than due to his death or disability), or if an optionee is not
our employee but is a member of our board of directors and his service as a
director is terminated for cause, the option granted will be immediately
forfeited. If the optionee's employment is terminated for any other reason,
option(s) granted to him may be exercised to the extent provided in the
agreement pursuant to which the option(s) were granted; provided, however, that
incentive stock options must be exercised no later than three months after the
optionee's termination of employment (other than due to death) and, if the
optionee is permanently and totally disabled within the meaning of Section
22(c)(3) of the Code, the incentive stock options granted to him lapse to the
extent unexercised on the earlier of the expiration date of the option or one
year following the date of the disability.

         The board of directors or a committee may amend, suspend or terminate
the option plan at any time, except that no amendment will be made which:

         o        increases the total number of shares subject to the plan or
                  changes the minimum purchase price therefor (except in either
                  case in the event of adjustments due to changes in our
                  capitalization);

         o        without the consent of the optionee, affects outstanding
                  options or any exercise right thereunder;

         o        extends the term of any option beyond ten years; or

         o        extends the termination date of the option plan.

         Unless the option plan is earlier suspended or terminated by the board
of directors, the option plan will terminate on the third anniversary of the
option plan's adoption by the board of directors. This termination of the option
plan will not affect the validity of any options previously granted under the
option plan.


                                       37
<PAGE>

         The following table sets forth information concerning option/SAR grants
in our fiscal year ended June 30, 2002 to all individuals serving as (a) our
chief executive officer, (b) each of our four other most highly compensated
executive officers (other than our chief executive officer) at the end of our
fiscal year ended June 30, 2002 whose total annual salary and bonus exceeded
$100,000 for these periods, and (c) up to two additional individuals, if any,
for whom disclosure would have been provided pursuant to (b) except that the
individual(s) were not serving as our executive officers at the end of our
fiscal year ended June 30, 2002:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
                                           Option/SAR Grants in Last Fiscal Year
                                                   [Individual Grants]
----------------------------------------------------------------------------------------------------------------------------
                                                            Percent of total
                              Number of securities       options/SARs granted
                            underlying options/SARs         to employees in         Exercise or base
Name                              granted (#)                in fiscal year         price ($/Share)      Expiration Date
----------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>                          <C>                    <C>                   <C>
All Executive Officers                0                            n/a                    n/a                   n/a
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

         There were no options/SARs exercised in our fiscal year ended June 30,
2002 by the named executive officers.

Employment Agreements

         We have has entered into employment agreements with each of our
principal executive officers. Pursuant to these agreements, our executive
officers agree to devote all or a substantial portion of their business and
professional time efforts to our business as executive officers. The employment
agreements provide for certain compensation packages, which include bonuses and
other incentive compensation. The agreements also contain covenants restricting
the employees from competing with us and our business and prohibiting them from
disclosing confidential information about us and our business.

         On September 1, 1999, we entered into an employment agreement with
Christopher B. Wood, M.D. under which he serves as our Chairman and Chief
Executive Officer. The initial term of Dr. Wood's employment agreement is two
years with automatic one-year extensions thereafter unless either party gives
written notice to the contrary. Dr. Wood's agreement provides for an initial
base salary of $180,000, a bonus as determined by the Board of Directors, life
insurance benefits equal to his annual salary, health insurance and other
benefits currently or in the future provided to key employees of the Company. If
Dr. Wood's employment is terminated for cause or if he terminates his employment
for good reason, he will receive a lump sum payment in an amount equal to his
then current annual base salary plus his average annual bonus for the preceding
two years.

         On January 1, 2000, we entered into an employment agreement with Stuart
Smith under which he serves as our Senior Vice President. The initial term of
Mr. Smith's employment agreement is two years, with automatic one-year
extensions thereafter unless either party gives written notice to the contrary.
Mr. Smith's agreement provides for an initial base salary of $150,000, a bonus
as determined by the board of directors, life insurance benefits equal to his
annual salary, health insurance and other benefits currently or in the future
provided to our key employees. The Company and Mr. Smith have an agreement in
principal pursuant to which Mr. Smith will resign from his position as Senior
Vice President effective September 30, 2002.

Director Compensation

         Our policy is that non-management directors are entitled to receive a
director's fee of $1,000 per meeting for attendance at meetings of the board of
directors, and are reimbursed for actual expenses incurred in respect of such
attendance. We do not separately compensate employees for serving as directors.
We do not provide additional compensation for committee participation or special
assignments of the board of directors.


                                       38
<PAGE>

Item 11. Security Ownership of Certain Beneficial Owners and Management and
         Related Stockholder Matters.

         The following table sets forth certain information regarding the
beneficial ownership of common stock, as of September 17, 2002, by (i) each
person whom we know to beneficially own 5% or more of the common stock, (ii)
each of our directors, (iii) each person listed on the Summary Compensation
Table set forth under "Executive Compensation" and (iv) all of our directors and
executive officers. The number of shares of common stock beneficially owned by
each stockholder is determined in accordance with the rules of the Commission
and does not necessarily indicate beneficial ownership for any other purpose.
Under these rules, beneficial ownership includes those shares of common stock
over which the stockholder exercises sole or shared voting or investment power.
The percentage ownership of the common stock, however, is based on the
assumption, expressly required by the rules of the Commission, that only the
person or entity whose ownership is being reported has converted or exercised
common stock equivalents into shares of common stock; that is, shares underlying
common stock equivalents are not included in calculations in the table below for
any other purpose, including for the purpose of calculating the number of shares
outstanding generally. The table below does not reflect the right of ILEX to
purchase from us $1.0 million of our common stock at the then applicable market
price within 30 days of the completion of the Phase II trial for Clofarabine,
and an additional $2.0 million of our common stock at the then applicable market
price within 30 days of submittal to the FDA of the NDA for Clofarabine.

<TABLE>
<CAPTION>
                                                                                   BENEFICIAL                         CURRENT
                                                                                  OWNERSHIP OF                     PERCENTAGE OF
NAME                                                                                 STOCK                           CLASS (1)
<S>                                                                                <C>                               <C>
Perseus-Soros Biopharmaceutical
Fund, LP (2)
888 Seventh Avenue, 29th Floor
New York, New York 10106....................................................        9,000,000                         34.77%

OrbiMed Advisors Inc. (3)
767 Third Avenue, 30th Floor
New York, New York 10017....................................................        3,000,000                         15.08%

Merlin Biomed Private Equity Fund LP (4)
230 Park Avenue, Suite 928
New York, New York 10169....................................................        1,000,002                          5.59%

DWS Investment GmbH (5)
Gruneburgweg M3-M5
60323 Frankfurt
Germany.....................................................................        1,299,999                          7.15%

SCO Capital Partners LLC (6)
1285 Avenue of the Americas, 35th Floor
New York, New York 10019....................................................        7,479,946                         38.86%

Kevin Leech (7)
The Old Chapel
Sacre Couer
Rouge Boullion
St Helier
Jersey, Channel Islands.....................................................        1,900,000                         10.92%

Lifescience Ventures Limited (8)
Suite F8
International Commercial Centre
Gibraltar...................................................................          887,500                          5.26%

Estate of David Chester (9).................................................          887,500                          5.26%

Bioaccelerate, Inc. (10)
PO Box 3175
Road Town
Tortolla
British Virgin Islands......................................................        2,181,816                         11.89%
</TABLE>


                                       39
<PAGE>

<TABLE>
<CAPTION>
                                                                                   BENEFICIAL                         CURRENT
                                                                                  OWNERSHIP OF                     PERCENTAGE OF
NAME                                                                                 STOCK                           CLASS (1)
<S>                                                                                <C>                               <C>
Christopher B. Wood, M.D. (11)
c/o Bioenvision, Inc.
509 Madison Avenue, Suite 404
New York, New York 10022....................................................        3,957,342                         21.52%

Stuart Smith (12)
c/o Bioenvision, Inc.
509 Madison Avenue, Suite 404
New York, New York 10022....................................................          840,895                          4.84%

David P. Luci (13)
c/o Bioenvision, Inc.
509 Madison Avenue, Suite 404
New York, New York 10022....................................................           50,000                            *

Thomas Scott Nelson (14)
c/o Bioenvision, Inc.
509 Madison Avenue, Suite 404
New York, New York 10022....................................................          287,523                          1.68%

Jeffrey B. Davis (15)
1285 Avenue of the Americas, 35th Floor
New York, New York  10019...................................................          749,243                          4.37%

Steven A. Elms (16)
888 Seventh Avenue, 29th Floor
New York, New York 10106....................................................                0                               *

Andrew N. Schiff, M.D. (16)
888 Seventh Avenue, 29th Floor
New York, New York 10106....................................................                0                               *

All Executive Officers and Directors as a group (six persons) (17)..........        5,885,003                         30.35%
</TABLE>

----------
*        Represents holdings of less than one percent (1%).

(1)      Based on a total of 16,887,786 shares of common stock outstanding as of
         September 17, 2002.

(2)      Includes 3,000,000 shares of Series A Preferred Stock currently
         convertible into 6,000,000 shares of common stock at a conversion price
         of $1.50 and a warrant to purchase 3,000,000 shares of common stock
         exercisable at $2.00 per share for five years from May 8, 2002. Based
         upon information contained in its report on Schedule 13D filed with the
         Commission on May 20, 2002, Perseus-Soros BioPharmaceutical Fund, L.P.
         reported that Perseus-Soros BioPharmaceutical Fund, L.P. and
         Perseus-Soros Partners may be deemed to have sole power to direct the
         voting and disposition of the 9,000,000 shares of common stock. By
         virtue of the relationships between and among Perseus-Soros
         BioPharmaceutical Fund, L.P., Perseus-Soros Partners, LLC, Perseus
         BioTech Fund Partners, LLC, SFM Participation, L.P., SFM AH, Inc.,
         Frank H. Pearl, George Soros, Soros Fund Management LLC, Perseus EC,
         LLC, Perseuspur, LLC, each of such Perseus entities, other than
         Perseus-Soros BioPharmaceutical Fund, L.P. and Perseus-Soros Partners,
         may be deemed to share the power to direct the voting and disposition
         of the 9,000,000 shares of common stock.

(3)      Includes 669,964 shares of Series A Preferred Stock currently
         convertible into 1,339,928 shares of common stock at a conversion price
         of $1.50 and a warrant to purchase 669,964 shares of common stock
         exercisable at $2.00 per share for five years from May 16, 2002, both
         of which are held by Caduceus Private Investments, LP; 13,945 shares of
         Series A Preferred Stock currently convertible into 27,980 shares of
         common stock at a conversion price of $1.50 and a warrant to purchase
         13,945 shares of common stock exercisable at $2.00 per share for five
         years from May 16, 2002, both of which are held by OrbiMed Associates
         LLC; and 316,091 shares of Series A Preferred Stock currently
         convertible into 632,182 shares of common stock at a conversion price
         of $1.50 and a warrant to purchase 316,091 shares of common stock
         exercisable at $2.00 per share for five years from May 16, 2002, both
         of which are held by PW Juniper Crossover Fund, L.L.C. Based upon
         information contained in its report on Schedule 13G filed with the
         Commission on June 21, 2002, OrbiMed Advisors Inc., OrbiMed Advisors
         LLC, OrbiMed Capital LLC and Samuel D. Isaly reported that they share
         the power to direct the voting and disposition of the 3,000,000 shares
         of common stock.


                                       40
<PAGE>

(4)      Includes 333,334 shares of Series A Preferred Stock currently
         convertible into 666,668 shares of common stock at a conversion price
         of $1.50 and a warrant to purchase 333,334 shares of common stock
         exercisable at $2.00 per share for five years from May 8, 2002. Based
         upon information contained in its report on Schedule 13G filed with the
         Commission on June 28, 2002, Merlin BioMed Private Equity Fund, L.P.
         reported that it shares the power to direct the voting and disposition
         of the 1,000,002 shares of common stock with Merlin BioMed Private
         Equity, LLC, its general partner and Dominique Semon, who is the sole
         managing member of the general partner.

(5)      Includes 433,333 shares of Series A Preferred Stock currently
         convertible into 866,666 shares of common stock at a conversion price
         of $1.50 and a warrant to purchase 433,333 shares of common stock
         exercisable at $2.00 per share for five years from May 14, 2002.

(6)      Includes a warrant to purchase 1,200,000 shares of common stock
         exercisable at $1.25 per share for five years from November 16, 2001; a
         warrant to purchase 688,333 shares of common stock exercisable at $1.50
         per share for five years from May 8, 2002; a warrant to purchase
         100,000 shares of common stock exercisable at $1.25 per share Financial
         Group LLC for five years from November 16, 2001 held by SCO; a warrant
         to purchase 70,000 shares of common stock exercisable at $1.50 per
         share for five years from May 8, 2002 held by SCO Financial Group LLC;
         a warrant to purchase 150,000 shares of common stock exercisable at
         $1.25 per share for five years from November 16, 2001 held by the
         Sophie C. Rouhandeh Trust; and a warrant to purchase 150,000 shares of
         common stock exercisable at $1.25 per share for five years from
         November 16, 2001 held by the Chloe H. Rouhandeh Trust. Steven H.
         Rouhandeh, in his capacity as President of SCO Capital Partners LLC,
         has investment power and voting power with respect to these shares, but
         disclaims any beneficial ownership thereof.

(7)      These shares are owned of record by Phoenix Ventures Limited, a Channel
         Islands (Jersey) corporation, which, to our knowledge, is wholly-owned
         by Kevin Leech. These shares include 500,000 options which are
         exercisable at $1.25 per share for the benefit of Phoenix.

(8)      Lifescience Ventures is a Gibraltar limited company owned of record by
         a Gibraltar trust. Lee J. Cole, in his capacity as the trustee of the
         trust, has investment power and voting power with respect to these
         shares, but disclaims any beneficial ownership thereof.

(9)      These shares are owned of record by General Capital Limited, a Bermuda
         corporation which, to our knowledge, is wholly-owned by the Estate of
         David Chester, a private investor.

(10)     Bioaccelerate, Inc. is a BVI corporation, owned of record by several
         private investors and includes options to acquire 1,454,544 shares of
         the common stock which are exercisable at $1.25 per share for five
         years from April 30, 2001. Barbara Platts, in her capacity as Managing
         Director of Bioaccelerate, Inc., has investment power and voting power
         with respect to these shares, but disclaims any beneficial ownership
         thereof.

(11)     Includes 318,750 shares of common stock owned by Julie Wood, Dr. Wood's
         spouse, as to which Dr. Wood disclaims any beneficial interest, and
         1,500,000 options which are exercisable at $1.25 for five years from
         April 30, 2001.

(12)     Includes options to acquire 500,000 shares of the common stock which
         are exercisable at $1.25 per share for five years from April 30, 2001.

(13)     Includes options to acquire 50,000 shares of common stock which are
         exercisable at $1.95 per share for five years from June 28, 2002.


                                       41
<PAGE>

(14)     Includes options to acquire 200,000 shares of the common stock which
         are exercisable at $1.25 per share for five years from April 30, 2001.

(15)     Includes a warrant to purchase 250,000 shares of common stock
         exercisable at $1.50 per share for five years from May 8, 2002. Mr.
         Davis is the President of SCO Financial Group LLC, an affiliate of SCO
         Capital Partners LLC. Mr. Davis disclaims beneficial ownership of all
         shares of common stock deemed beneficially owned by SCO Capital
         Partners LLC.

(16)     Messrs. Elms and Schiff disclaim beneficial ownership of all shares of
         common stock deemed beneficially owned by Perseus-Soros
         Biopharmaceutical Fund, L.P.

(17)     Includes shares of common stock owned by Christopher B. Wood, Stuart
         Smith, Thomas Nelson, Jeffrey Davis, Steven A. Elms and Andrew Schiff,
         M.D. Also includes (a) 318,750 shares of common stock owned by Julie
         Wood, Dr. Wood's spouse, as to which Dr. Wood disclaims any beneficial
         interest, (b) Christopher Wood's options to acquire 1,500,000 shares of
         common stock, (c) Stuart Smith's options to acquire 500,000 shares of
         common stock, (d) David Luci's options to acquire 50,000 shares of
         common stock, (e) Thomas Nelson's options to acquire 200,000 shares of
         common stock and (e) Jeffrey B. Davis' warrant to purchase 250,000
         shares of common stock.

Item 12. Certain Relationships and Related Transactions.

         As of June 30, 2000, our financial advisors held 342,468 shares of our
common stock, which were issued in exchange for financial planning services
rendered. These services are reflected in the statement of operations as
administrative expenses. They are valued at $0.13 to $0.67 per share, which
reflected the most recent transaction for shares.

         In November 2000 Bioenvision issued 272,500 shares of common stock
valued at approximately at $1.00 per share to various consultants for work
performed for and on our behalf. The shares were issued to Andrew Turner
(112,500), David Chester (112,500), and Shane Sutton (47,500).

         In April 2001, Bioenvision issued 5,104,544 options at an exercise
price of $1.25. The initial terms of the options are that each option can be
exercised after 30th April 2001 for a period of three years, whereby the options
will no longer be able to be exercised after April 30, 2004, but were extended
to five years.

         Of these options, management was issued the following options:

         Christopher Wood             1,500,000 options
         Stuart Smith                 500,000 options
         Thomas Nelson                200,000 options

         In April 2001, we granted to Phoenix Ventures 500,000 options to
purchase shares of our common stock at an exercise price of $1.25 per share. The
options were issued in connection with a credit facility made available to us by
Glen Investments Limited, a Jersey (Channel Islands) corporation wholly owned by
Kevin R. Leech, a U.K. citizen and one of our stockholders, which facility was
terminated in August 2001.

         In May 2001, certain officers agreed to convert $910,681 of the
outstanding deferred salaries into 705,954 shares of common stock.

         In August 2001 Bioenvision issued 208,333 shares at the rate of $1.25
per share as follows: Christopher B. Wood, 98,684 shares; Thomas Nelson, 27,412
shares; and Stuart Smith, 82,237 shares, in each case, in exchange for accrued
officers' salaries of $154,214.

         In August 2001, we obtained a $1 million line of credit facility, which
expires in September 2002, from Jano Holdings Limited, one of our shareholders.
This credit facility was terminated in May 2002, at which time the Company
received a payoff letter evidencing such termination.

         In October 2001, we issued 134,035 shares of common stock to officers
as payment for salaries accrued to September 30, 2001.


                                       42
<PAGE>

         On November 16, 2001, we entered into an engagement letter with SCO
Capital, pursuant to which SCO would act as our financial advisor. In connection
with the engagement letter, we issued a warrant to purchase 100,000 shares of
common stock at an exercise price of $1.25 per share, subject to certain
anti-dilution adjustments. The warrants expire five years from the date of
issuance.

         In connection with securing a credit facility with SCO Capital, we
issued warrants to purchase 1,500,000 shares of our common stock at a strike
price of $1.25 per share, subject to certain anti-dilution adjustments. The
warrants expire five years from the date of issuance. The credit facility with
SCO Capital was terminated in May 2002 at which time the Company received a
payoff letter evidencing such termination.

         On February 5, 2002, we completed the acquisition of Pathagon Inc. In
connection therewith, on February 1, 2002 we issued 7,000,000 shares of common
stock to the former stockholders of Pathagon Inc. Affiliates of SCO Capital
owned 82% of Pathagon prior to the acquisition.

         In May 2002, we entered into a private placement pursuant to which we
issued an aggregate of 5,916,666 shares of Series A convertible participating
preferred stock for $3.00 per share and warrants to purchase an aggregate of
5,916,666 shares of common stock. An affiliate of SCO Capital Partners LLC, one
of our stockholders, served as financial advisor to the Company in connection
with this financing and earned a placement fee of approximately $1,200,000 in
connection therewith.

Item 13. Exhibits, List and Reports on Form 8-K.

Exhibit
Number                                   Description
-------                                  -----------
2.1           Acquisition Agreement between Registrant and Bioenvision, Inc.
              dated December 21, 1998 for the acquisition of 7,013,897 shares of
              Registrant's Common Stock by the stockholders of Bioenvision, Inc.
              (1)

2.2           Amended and Restated Agreement and Plan of Merger, dated as of
              February 1, 2002, by and among Bioenvision, Inc., Bioenvision
              Acquisition Corp. and Pathagon, Inc. (5)

3.1           Certificate of Incorporation of Registrant. (2)

3.1(a)        Amendment to Certificate of Incorporation filed January 29, 1999.
              (3)

3.1(b)        Certificate of Correction to the Certificate of Incorporation,
              filed March 15, 2002 (6)

3.1(c)        Certificate of Amendment to the Certificate of Incorporation,
              filed April 30, 2002 (6)

3.2           By-Laws of the Registrant. (2)

3.2(a)        Amendment to Bylaws, effective April 30, 2002 (6)

4.1           Certificate of Designation (6)

4.2           Form of Warrant (6)

10.1          Sponsored Research Agreement between Eurobiotech Corporation, Ltd.
              and University of Texas, MD Anderson Cancer Center dated February
              26, 1998. (3)

10.2          Co-Development Agreement between Bioheal, Ltd. and Christopher
              Wood dated May 19, 1998. (3)

10.3          Co-Development Agreement between Biomed (UK) Ltd. and
              EuroLifesciences, Ltd. dated May 20, 1998. (3)

10.4          Co-Development Agreement between Stegram Pharmaceuticals, Ltd. and
              Bioenvision, Inc. dated July 15, 1998. (3)

10.5          Co-Development Agreement between Southern Research Institute and
              Eurobiotech Group, Inc. dated August 31, 1998. (3)

10.5(a)       Agreement to Grant License from Southern Research Institute to
              Eurobiotech Group, Inc. dated September 1, 1998. (3)

10.6          Loan Agreement between Glen Investments Ltd. and Bioenvision, Inc.
              dated September 8, 1998 and affirmed July 15, 1999. (3)

10.7          Co-Development and Licensing Agreement between Orion
              Pharmaceuticals Canada and Bioenvision, Inc. dated November 1998.
              (3)

10.8          License Agreement between Bioenvision, Inc. and Royal Free and
              University College Medical School, London dated March 11, 1999.
              (3)

10.9          License Agreement between Bioenvision, Inc. and University College
              Cardiff Consultants Limited dated June 21, 1999. (3)

10.10         Research Agreement between Bioenvision, Inc. and Cardiff
              University dated July 8, 1999.(3)

10.11         Employment agreement between Bioenvision, Inc. and Stuart Smith
              dated January 1, 2000. (4)


                                       43
<PAGE>

Exhibit
Number                                   Description
-------                                  -----------
10.12         Employment Agreement between Bioenvision, Inc. and Christopher B.
              Wood, M.D. dated September 1, 1999. (4)

10.13         Securities Purchase Agreement with Bioaccelerate Inc dated March
              24, 2000. (4)

10.14         Engagement Letter Agreement, dated as of November 16, 2001, by and
              between Bioenvision, Inc. and SCO Securities LLC. (7)

10.15         Security Agreement, dated as of November 16, 2001, by Bioenvision,
              Inc. in favor of SCO Capital Partners LLC. (7)

10.16         Commitment Letter, dated November 16, 2001, by and between SCO
              Capital Partners LLC and Bioenvision, Inc. (7)

10.17         Senior Secured Grid Note, dated November 16, 2001, by Bioenvision,
              Inc. in favor of SCO Capital Partners LLC. (7)

10.18         Registration Rights Agreement, dated as of February 1, 2002, by
              and among Bioenvision, Inc., the former shareholders of Pathagon,
              Inc. party thereto, Christopher Wood, Bioaccelerate Limited, Jano
              Holdings Limited and Lifescience Ventures Limited. (8)

10.19         Stockholders Lock-Up Agreement, dated as of February 1, 2002, by
              and among Bioenvision, Inc., the former shareholders of Pathagon,
              Inc. party thereto, Chirstopher Wood, Bioaccelerate Limited, Jano
              Holdings Limited and Lifescience Ventures Limited. (8)

10.20         Form of Securities Purchase Agreement by and among Bioenvision,
              Inc. and certain purchasers, dated as of May 7, 2002. (6)

10.21         Form of Registration Rights Agreement by and among Bioenvision,
              Inc. and certain purchasers, dated as of May 7, 2002. (6)

10.22         Exclusive License Agreement by and between Baxter Healthcare
              Corporation, acting through its Edwards Critical-Care division,
              and Implemed, dated as of May 6, 1997. (12)

10.23         License Agreement by and between Oklahoma Medical Research
              Foundation and bridge Therapeutic Products, Inc., dated as of
              January 1, 1998. (12)

10.23(a)      Amendment No. 1 to License Agreement by and among Oklahoma Medical
              Research Foundation, Bioenvision, Inc. and Pathagon, Inc., dated
              May 7, 2002. (12)

10.24         Inter-Institutional Agreement between Sloan-Kettering Institute
              for Cancer Research and Southern Research Institute, dated as of
              August 31, 1998. (12)

10.25         License Agreement between University College London and
              Bioenvision, Inc., dated March 1, 1999. (12)

10.26         Research Agreement, between Stegram Pharmaceuticals Ltd., Queen
              Mary and Westfield College and Bioenvision, Inc., dated June 8,
              1999. (12)

10.27         Research and License Agreement between Bioenvision, Inc., Velindre
              NHS Trust and University College Cardiff Consultants, dated as of
              January 9, 2001. (12)

10.28         Co-Development Agreement, between Bioenvision, Inc. and ILEX
              Oncology, Inc., dated March 9, 2001. (12)

10.29         Amended and Restated Agreement and Plan of Merger, dated as of
              February 1, 2002, among Bioenvision, Inc., Bioenvision Acquisition
              Corp. and Pathagon Inc. (5)

16.1          Letter from Graf Repetti & Co., LLP to the Securities and Exchange
              Commission, dated September 30, 1999. (9)

16.2          Letter from Ernst & Young LLP to the Securities and Exchange
              Commission, dated July 6, 2001. (10)

16.3          Letter from Ernst & Young LLP to the Securities and Exchange
              Commission, dated August 16, 2001. (11)

21.1          Subsidiaries of the registrant (4)

24.1          Power of Attorney (appears on signature page)

99.1          Certificate of Chief Executive Officer

99.2          Certificate of Director of Finance

-----------------------
(1)      Incorporated by reference and filed as an Exhibit to Registrant's
         Current Report on Form 8-K filed with the SEC on January 12, 1999.

(2)      Incorporated by reference and filed as an Exhibit to Registrant's
         Registration Statement on Form 10-12g filed with the SEC on September
         3, 1998.

(3)      Incorporated by reference and filed as an Exhibit to Registrant's Form
         10-KSB/A filed with the SEC on October 18, 1999.

(4)      Incorporated by reference and filed as an Exhibit to Registrant's Form
         10-KSB filed with the SEC on November 13, 2000.


                                       44
<PAGE>

(5)      Incorporated by reference and filed as an Exhibit to Registrant's
         Current Report on Form 8-K filed with the SEC on April 16, 2002.

(6)      Incorporated by reference and filed as an Exhibit to Registrant's
         Current Report on Form 8-K, filed with the SEC on May 28, 2002.

(7)      Incorporated by reference and filed as an Exhibit to Registrant's
         Current Report on Form 8-K, filed with the SEC on January 8, 2002.

(8)      Incorporated by reference and filed as an Exhibit to Registrant's
         Current Report on Form 8-K, filed with the SEC on February 21, 2002.

(9)      Incorporated by reference and filed as an Exhibit to Registrant's
         Current Report on Form 8-K, filed with the SEC on October 1, 1999.

(10)     Incorporated by reference and filed as an Exhibit to Registrant's
         Current Report on Form 8-K/A, filed with the SEC on July 26, 2001.

(11)     Incorporated by reference and filed as an Exhibit to Registrant's
         Current Report on Form 8-K, filed with the SEC on December 6, 2001.

(12)     Incorporated by reference and filed as an Exhibit to Registrant's
         Current Report on Form 8-K, filed with the SEC on June 24, 2002.


(b)      Reports on Form 8-K.

         (i)      The Company filed a Current Report on Form 8-K with the SEC on
                  June 26, 2001.

         (ii)     The Company filed a Current Report on Form 8-K/A with the SEC
                  on July 26, 2001.

         (iii)    The Company filed a Current Report on Form 8-K with the SEC on
                  December 6, 2001.

         (iv)     The Company filed a Current Report on Form 8-K with the SEC on
                  January 8, 2002.

         (v)      The Company filed a Current Report on Form 8-K with the SEC on
                  February 21, 2002.

         (vi)     The Company filed a Current Report on Form 8-K filed with the
                  SEC on April 16, 2002.

         (vii)    The Company filed a Current Report on Form 8-K with the SEC on
                  May 28, 2002.

         (viii)   The Company filed a Current Report on Form 8-K with the SEC on
                  June 24, 2002.


                                       45
<PAGE>

INDEX TO FINANCIAL STATEMENTS


<TABLE>
<S>                                                                                                  <C>
Report of Independent Certified Public Accountants                                                    F-2
Consolidated Balance Sheets as of June 30, 2002 and 2001                                              F-3
Consolidated Statements of Operations for years ended June 30, 2002 and 2001                          F-4
Consolidated Statements of Stockholders' Equity (Deficit) for years ended June 30, 2002 and 2001      F-5
Consolidated Statements of Cash Flows for years ended June 30, 2002 and 2001                          F-6
Notes to Consolidated Financial Statements                                                            F-7
</TABLE>


                                      F-1
<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


Board of Directors and Stockholders of
     Bioenvision, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of Bioenvision,
Inc. and Subsidiaries as of June 30, 2002 and 2001, and the related consolidated
statements of operations, stockholders' equity (deficit), and cash flows for
each of the two years in the period ended June 30, 2002. These consolidated
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 of America. 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
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinions.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Bioenvision, Inc.
and Subsidiaries as of June 30, 2002 and 2001, and the consolidated results of
their operations and cash flows for each of the two years in the period ended
June 30, 2002 in accordance with accounting principles generally accepted in the
United States of America.


/s/ Grant Thornton LLP
-----------------------------
GRANT THORNTON LLP

New York, New York
September 23, 2002


                                      F-2
<PAGE>

Bioenvision, Inc. and Subsidiaries
--------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                         Years ended June 30,
                                                                                      --------------------------
                                                                                          2002           2001
                                                                                      ------------   -----------
<S>                                                                                  <C>            <C>
ASSETS
Current Assets
    Cash and cash equivalents                                                         $ 12,882,521   $       --
    Deferred costs - current                                                               184,091       337,500
    Accounts receivable                                                                     50,000           --
                                                                                      ------------   -----------
       Total current assets                                                             13,116,612       337,500
    Property and equipment, net                                                                587        18,097
    Intangible assets, net                                                              16,921,792        15,696
    Goodwill                                                                             4,704,100           --
    Deferred costs - long term                                                                 --        184,091
    Deferred financing costs                                                                   --        207,500
                                                                                      ------------   -----------
       Total Assets                                                                   $ 34,743,091   $   762,884
                                                                                      ============   ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
    Accounts payable                                                                  $    434,316   $   785,134
    Accrued expenses                                                                     1,560,836       317,799
    Directors loans payable                                                                 32,261           --
    Bank overdraft                                                                             --        127,241
    Officers salaries                                                                       52,090       910,681
    Deferred revenue - current                                                             368,182       736,363
                                                                                      ------------   -----------
       Total current liabilities                                                         2,447,686     2,877,218
                                                                                      ------------   -----------
Long-term debt
    Deferred revenue                                                                           --        368,182
    Deferred tax liability                                                               7,656,000           --
                                                                                      ------------   -----------
       Total liabilities                                                                10,103,686     3,245,400
                                                                                      ------------   -----------
Stockholders' equity (deficit)
    Preferred stock - $0.001 par value; 5,920,000 authorized and 5,916,966                   5,917           --
       shares issued and outstanding
    Common stock - par value $0.01; authorized 50,000,000 and 25,000,000
       shares issued and outstanding 16,887,786 and 8,248,919 shares                        16,887         8,249
       in 2002 and 2001, respectively
    Additional paid-in-capital                                                          45,491,554     3,165,540
    Accumulated deficit                                                                (21,027,299)   (5,808,651)
    Accumulated other comprehensive Income                                                 152,346       152,346
                                                                                      ------------   -----------
       Stockholders' equity (deficit)                                                   24,629,405    (2,482,516)
                                                                                      ------------   -----------
       Total Liabilities and Stockholders' Equity                                     $ 34,743,091   $   762,884
                                                                                      ============   ===========
</TABLE>

The accompanying footnotes are an integral part of these financial statements.


                                      F-3
<PAGE>

Bioenvision, Inc. & Subsidiaries
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                Years ended June 30,
                                                                             --------------------------
                                                                                 2002           2001
                                                                             ------------   -----------
<S>                                                                         <C>            <C>
Contract revenue                                                             $    802,965   $   245,455
                                                                             ------------   -----------
Costs and expenses:
    Research and development                                                    1,912,258     1,565,908
    General and administrative                                                  2,127,664       550,215
    Interest and finance charges                                                2,172,682       228,787
    Depreciation and amortization                                                 579,342        22,809
                                                                             ------------   -----------
Total costs and expenses                                                        6,791,946     2,367,719
                                                                             ------------   -----------
Net loss before income tax benefit                                             (5,988,981)   (2,122,264)
Income tax benefit                                                                253,000
                                                                             ------------   -----------
Net Loss                                                                       (5,735,981)   (2,122,264)
Cumulative preferred stock dividend                                              (131,328)          --
Beneficial conversion preferred stock dividend                                 (9,351,339)
                                                                             ------------   -----------
Net loss available to common shareholders                                     (15,218,648)   (2,122,264)
                                                                             ============   ===========
Basic and diluted net loss per share                                                (1.25)        (0.26)
                                                                             ============   ===========
Weighted average shares used in computing
basic and diluted net loss per share                                           12,184,152     8,121,255
                                                                             ------------   -----------
</TABLE>

The accompanying footnotes are an integral part of these financial statements.


                                      F-4
<PAGE>

Bioenvision, Inc. & Subsidiaries
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
                                                                         Preferred Stock            Common Stock
                                                                 ---------------------------------------------------------
                                                                        Shares         $        Shares           $
                                                                        ------         -        ------           -
<S>                                                                    <C>             <C>      <C>              <C>
      Balance at June 30, 2000                                                           --      7,976,419        7,976
                                                                 ---------------------------------------------------------
Shares issued in December private placement                                                        272,500          273
Net Loss for the year
Options issued for consulting services
Options issued financing arrangement - Phoenix Ventures
Comprehensive loss for the year                                                                                     --
                                                                 ---------------------------------------------------------
      Balance at June 30, 2001                                                           --      8,248,919        8,249
                                                                 ---------------------------------------------------------
Net Loss for the year
Shares issued to employees for accrued salaries                                                  1,048,352        1,048
Shares issued to consultants for services                                                          390,515          390
Shares issued in connection with acquisition of Pathagon                                         7,000,000        7,000
Shares issued in connection with licensing agreement -
OMRF                                                                                               200,000          200
Warrants issued in connection with licensing agreement -
OMRF
Gross proceeds from issuance of preferred stock                        5,916,966       5,917
Direct costs incurred to issue preferred stock                                           --
Cumulative preferred stock dividend
Beneficial conversion preferred stock dividend                                           --
Warrants issued in connection with credit facility
Warrants issued for services rendered

                                                                 ---------------------------------------------------------
      Balance at June 30, 2002                                         5,916,966       5,917    16,887,786       16,887
                                                                 ---------------------------------------------------------

<CAPTION>

                                                                                                         Accumulated
                                                                  Additional                               Other       Stockholders
                                                                   Paid In         Acccumulated         Comprehensive     Equity
                                                                    Capital           Deficit           Income (Loss)   (Deficit)
                                                                 -------------------------------------------------------------------
<S>                                                                <C>               <C>                    <C>         <C>
      Balance at June 30, 2000                                      2,353,812         (3,686,387)           121,007     (1,203,590)
                                                                 -------------------------------------------------------------------
Shares issued in December private placement                           272,228                --                 --         272,500
Net Loss for the year                                                                 (2,122,264)                       (2,122,264)
Options issued for consulting services                                124,500                                              124,500
Options issued financing arrangement - Phoenix Ventures               415,000                                              415,000
Comprehensive loss for the year                                           --                 --              31,339         31,339
                                                                 -------------------------------------------------------------------
      Balance at June 30, 2001                                      3,165,540         (5,808,651)           152,346     (2,482,516)
                                                                 -------------------------------------------------------------------
Net Loss for the year                                                                 (5,735,981)                       (5,735,981)
Shares issued to employees for accrued salaries                     1,269,864                                            1,270,912
Shares issued to consultants for services                             168,083                                              168,473
Shares issued in connection with acquisition of Pathagon           12,484,926                                           12,491,926
Shares issued in connection with licensing agreements -
OMRF                                                                  619,800                                              620,000
Warrants issued in connection with licensing agreement -
OMRF                                                                  425,600                                              425,600
Gross proceeds from issuance of preferred stock                    17,744,081                                           17,749,998
Direct costs incurred to issue preferred stock                     (3,911,906)                                          (3,911,906)
Cumulative preferred stock dividend                                       --            (131,328)                         (131,328)
Beneficial conversion preferred stock dividend                      9,351,339         (9,351,339)                              --
Warrants issued in connection with credit facility                  1,872,000                                            1,872,000
Warrants issued for services rendered                               2,302,228                                            2,302,228
                                                                          --                                                   --
                                                                 -------------------------------------------------------------------
      Balance at June 30, 2002                                     45,491,554        (21,027,299)           152,346     24,639,405
                                                                 -------------------------------------------------------------------
</TABLE>

The accompanying footnotes are an integral part of these financial statements.


                                      F-5
<PAGE>

Bioenvision, Inc. & Subsidiaries
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASHFLOWS

<TABLE>
<CAPTION>
                                                                                               Years ended June 30,
                                                                                            --------------------------
                                                                                                2002           2001
                                                                                            ------------   -----------
<S>                                                                                         <C>            <C>
Cashflow from operating activities:
Net loss                                                                                     $(5,735,981)  $(2,122,264)
                                                                                             -----------   -----------
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization                                                                    579,342        22,809
Financing charges non-cash                                                                     2,129,482           --
Shares issued for legal settlements                                                                  --            --
Compensation costs - options issued to non employees                                                 --        124,500
Compensation costs - shares issued to employees                                                      --        272,500
Changes in assets and liabilities:
Accounts receivable                                                                              (50,000)       75,695
Deferred financing fees                                                                              --        207,500
Deferred costs                                                                                   337,500      (521,589)
Deferred revenue                                                                                (736,364)    1,104,545
Accounts payable                                                                                (350,817)     (268,405)
Officers salary for equity conversion                                                             52,090       910,681
Other accrued expenses and liabilities                                                         1,099,636        37,193
                                                                                             -----------   -----------
           Net cash (used in) operating activities                                            (2,675,113)     (156,835)
                                                                                             -----------   -----------
Cashflow from investing activities:
Capital expenditures, net                                                                            --         (1,760)
Purchase of intangible assets                                                                   (455,500)          --
                                                                                             -----------   -----------
    Net cash (used in) investing activities                                                     (455,500)       (1,760)
                                                                                             -----------   -----------
Cashflow from Financing Activities:
Bank overdraft                                                                                  (127,241)      127,241
Proceeds from loan financing                                                                     982,943
Repayment of loan financing                                                                     (982,943)
Proceeds from issuance of preferred stock                                                     17,749,998           --
Costs incurred in connection with offering                                                    (1,609,623)
                                                                                             -----------   -----------
       Net cash provided by financing activities                                              16,013,134       127,241
                                                                                             -----------   -----------
Effect of exchange rate on cash                                                                      --         31,339
                                                                                             -----------   -----------
Net increase in cash and equivalents                                                          12,882,521           (15)
Cash and equivalents, beginning of year                                                              --             15
                                                                                             -----------   -----------
Cash and equivalents, end of year                                                             12,882,521           --
                                                                                             ===========   ===========
Supplemental disclosure of cash flow information
Interest paid                                                                                $    43,200   $    21,287
Supplemental disclosure of non cash investing and financing activities
Non cash issuance of warrants related to Jano financing agreement                            $       --    $   415,000
Non cash conversion of officers salary into common stock                                       1,270,912
Non cash conversion of trade payables into common stock                                          168,473
Non cash issuance of warrants related to SCO financing agreement                               1,872,000
Non cash issuance of warrants in connection with preferred stock                               2,302,283
Non cash issuance of stock related to Pathagon acquisition                                    12,491,926
Non cash issuance of warrants and shares related to OMRFA                                      1,145,600
</TABLE>

The accompanying footnotes are an integral part of these financial statements.


                                      F-6
<PAGE>

                       BIOENVISION, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2002 AND 2001


Note 1  - Organization and significant accounting policies

Description of business

         Bioenvision, Inc. ("Bioenvision" or the "Company") is an emerging
biopharmaceutical company whose primary business focus is the acquisition,
development and distribution of drugs to treat cancer. The Company has a broad
range of products and technologies under development, but its two lead drugs are
Clofarabine and Modrenal(R). Modrenal(R)is approved for marketing in the U.K.
for advanced breast cancer. The Company's plan is to bring Modrenal(R)into the
U.S. to perform further clinical trials and to access the U.S. market. Most of
the Company's other drugs are now in clinical trials in various stages of
development.

         The Company was incorporated as Express Finance, Inc. under the laws of
the State of Delaware on August 16,1996, and changed its name to Ascot Group,
Inc. in August 1998 and further to Bioenvision, Inc. in December 1998.

         On February 1, 2002, the Company completed the acquisition of Pathagon
Inc. ("Pathagon"), a privately held company focused on the development of novel
anti-infective products and technologies. Pathagon's principal products are
OLIGON(R) and methylene blue. Affiliates of SCO Capital Partners LLC, the
Company's financial advisor and consultant, owned 82% of Pathagon prior to the
acquisition. The Company acquired 100% of the outstanding shares of Pathagon in
exchange for 7,000,000 shares of the Company's common stock. The acquisition has
been accounted for as a purchase business combination in accordance with SFAS
141.

Basis of presentation

         On May 7, 2002 the Company authorized the issuance and sale of up to
5,920,000 shares of Series A Convertible Participating Preferred Stock, par
value $0.001 per share ("Series A Preferred Stock"). Series A Preferred Stock
may be converted into two shares of common stock at an initial conversion price
of $1.50 per share of common stock, subject to adjustment for stock splits,
stock dividends, mergers, issuances of cheap stock and other similar
transactions. Holders of Series A Preferred Stock also received, in respect of
each share of Series A Preferred Stock purchased in the May 2002 Private
Placement by the Company, one warrant to purchase one share of the Company's
common stock at an initial exercise price of $2.00, subject to adjustment.

         Prior to the acquisition of Pathagon and the May 2002 private placement
in which the Company raised gross proceeds of $17.7 million (see note 8), the
Company devoted most of its efforts to establishing a new business (raising
capital, research and development, etc.) and had been a development stage
enterprise. Management believes they now have the financial resources to market
some of the Company's late-stage products which can lead to significant revenues
from royalty payments and drug sales. Accordingly, the financial statements no
longer reflect the required disclosure for a Development Stage Enterprise.

Principles of consolidation

         The accompanying consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries. Inter-company accounts and
transactions have been eliminated.

Use of estimates

         The preparation of financial statements in conformity with generally
accepted accounting principles of the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities
at the date of the financial statements as well as the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates, and such differences may be material to the financial
statements.


                                      F-7
<PAGE>

                       BIOENVISION, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2002 AND 2001


Note 1  - Organization and significant accounting policies - continued

Revenue Recognition

         Non-refundable up-front payments received in connection with research
and development collaboration agreements are deferred and recognized on a
straight-line basis over the relevant periods in the agreement, generally the
research or development period. Milestone and royalty payments, if any, are
recognized pursuant to collaborative agreements upon the achievement of the
specified milestones or sales transaction.

Research and development

         Research and development costs are charged to expense as incurred.

Stock based compensation

         In accordance with the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 123, Accounting for Stock-Based Compensation, the Company
applies Accounting Principles Board Opinion 25 and related interpretations in
accounting for its stock option plan and, accordingly, does not recognize
compensation expense for employee stock options granted with exercise prices
equal to or greater than fair market value. Note 10 to the financial statements
contains a summary of the pro-forma effects to reported net loss and loss per
share for 2001 as if the Company had elected to recognize compensation expense
based on the fair value of the options granted at grant date as described by
SFAS No.123. Non-employee stock-based compensation arrangements are accounted
for in accordance with the provisions of SFAS No. 123 and Emerging Issues Task
Force No. 96-18, Accounting for Equity Instruments That Are Issued to Other Than
Employees for Acquiring, or in Conjunction with Selling, Goods or Services as
amended by EITF 00-27. Under EITF No. 96-18 where the fair value of the equity
instrument is more reliably measurable than the fair value of services received,
such services will be valued based on the fair value of the equity instrument.

Income taxes

         The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (FAS 109). Under FAS
109, deferred tax assets and liabilities are determined based on the differences
between the financial reporting and tax bases of assets and liabilities and are
measured using the enacted tax rates that will be in effect when the differences
are expected to reverse.

Net loss per share

         Basic net loss per share is computed using the weighted average number
of common shares outstanding during the periods. Diluted net loss per share is
computed using the weighted average number of common shares and potentially
dilutive common shares outstanding during the periods. Options and warrants to
purchase 13,604,543 and 4,854,444 shares of common stock have not been included
in the calculation of net loss per share for the years ended June 30, 2002 and
2001, respectively, as their effect would have been anti-dilutive.

Foreign currency translation

         Through June 30, 2001, the functional currency of the Company was the
Pound Sterling and its reporting currency was the United States dollar.
Translation adjustments arising from differences in exchange rates from these
transactions were reported as accumulated other comprehensive income in
stockholders' equity (deficit). Effective July 1, 2001, the functional and
reporting currency is the United States dollar


                                      F-8
<PAGE>

                       BIOENVISION, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2002 AND 2001


Note 1  - Organization and significant accounting policies - continued

Advertising costs

         Costs related to advertising and other promotional expenditures are
expensed as incurred. Advertising costs totaled $4,850 and $0, respectively, for
the years ended June 30, 2002 and 2001, respectively.

Deferred costs

         Payments for certain royalties incurred pursuant to collaborative
agreement are recognized as deferred charges and amortized to research and
development costs, ratably on a straight-line basis over the applicable
development periods.

Property and equipment

         Property and equipment are stated at cost, net of accumulated
depreciation and amortization. Property and equipment are depreciated on a
straight-line basis over an estimated three-year useful life.

Intangible assets

         Intangible assets primarily consist of patents and licenses acquired as
a result of the acquisition of Pathagon. Acquired intangibles are stated at
their cost less accumulated amortization. Amortization is provided on a
straight-line basis over 13 years.

Cash and cash equivalents

         The Company considers all highly liquid financial instruments with a
maturity of three months or less when purchased to be cash equivalents. The
Company invests all its funds with a single financial institution which provides
for FDIC insurance of $100,000.

Impact of recently issued accounting pronouncements

         In June 2001, the FASB issued Statement No. 142, Goodwill and Other
Intangible Assets, effective for fiscal years beginning after December 15, 2001.
Under the new rules, goodwill and intangible assets with indefinite lives will
no longer be amortized, but will be subject to annual impairment tests in
accordance with Statement 142. Other intangible assets will continue to be
amortized over their useful lives. The Company recorded goodwill as a result of
the Pathagon acquisition, but has not recorded any amortization in accordance
with SFAS No. 142. The Company is still in the process of evaluating the impact
of adopting this pronouncement on its consolidated financial statements,
however, it does not believe that the adoption of this pronouncement will have a
material impact on the consolidated financial statements.

         In August 2001, the FASB issued SFAS 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets". This statement is effective for
fiscal years beginning after December 31, 2001. This supercedes SFAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of", while retaining many of the requirements of such statement. The
Company does not believe that this statement will have a material effect on the
Company's financial statements.

         In April 2002, the FASB, issued SFAS No. 145, Recission of FASB
Statements No. 4, 44, 64, Amendment of FASB Statement No. 13, and Technical
Corrections. In addition to amending and rescinding other existing authoritative
pronouncements to make various technical corrections, clarify meanings, or
describe their applicability under changed conditions, SFAS No. 145 precludes
companies from recording gains and losses from the extinguishment of debt as an
extraordinary item. SFAS No. 145 is effective for our first quarter in the
fiscal year ending June 30, 2003. The Company does not expect the adoption of
this pronouncement to have a material impact on our consolidated results of
operations or financial position.


                                      F-9
<PAGE>

                       BIOENVISION, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2002 AND 2001


Impact of recently issued accounting pronouncements - continued

         In June 2002, the FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities. The standard requires companies to
recognize costs associated with exit or disposal activities when they are
incurred rather than at the date of a commitment to an exit or disposal
activity. SFAS No. 146 is to be applied prospectively to exit or disposal
activities initiated after December 31, 2002. The Company does not expect the
adoption of this pronouncement to have a material effect on the consolidated
results of operations or financial position.

NOTE 2  - Acquisition of Pathagon

         On February 1, 2002, the Company completed the acquisition of Pathagon.
The acquisition was accounted for as a purchase business combination in
accordance with SFAS 141. The Company issued 7,000,000 shares of common stock to
complete the acquisition, which was valued at $12,600,000 based on the 5-day
average trading price of the stock ($1.80) surrounding November 22, 2001, the
day of the Company's announcement of the agreed upon acquisition. The acquired
patents and licensing rights of OLIGON(R) and methylene blue (collectively
referred to as "Purchased Technologies"), were recorded at their fair market
value as determined by an outside consultant and was approximately $17,576,000.
The patent and licensing rights acquired are being amortized over 13 years,
which is the estimated remaining contractual life of these assets. Since the
estimated fair value of the Purchased Technologies was at least equal to the
amount paid, the purchase price, net of assumed liabilities, was allocated to
Purchased Technologies. The transaction qualified as a tax-free merger which
resulted in a difference between the tax basis value of the assets acquired and
the fair market value of the patents and licensing rights. As a result, a
deferred tax liability was recorded for approximately $7,909,000. The purchase
price exceeded the fair market value of the net assets acquired resulting in the
recording of Goodwill of $4,704,100. Pathagon had no operations other than
holding the patents and licenses acquired. As Pathagon had no operations, its
pro-forma financials would not be meaningful and thus are not presented.

         The Company now has the worldwide rights to the use of thiazine dyes,
including methylene blue, for in vitro and in vivos inactivation of pathogens in
biological fluids. Methylene blue is one of only two compounds used commercially
to inactivate pathogens in blood products, and is currently used in many
European countries to inactivate pathogens in fresh frozen plasma. The Company
believes that, as a result of the mechanism of action of its proprietary
technology, its systems also have the potential to inactivate many new pathogens
before they are identified and before tests have been developed to detect their
presence in the blood supply. Because the Company's systems are being designed
to inactivate rather than merely test for pathogens, the Company's systems also
have the potential to reduce the risk of transmission of pathogens that would
remain undetected by testing.

         The OLIGON(R) technology is a patented anti-microbial technology that
can be incorporated into the manufacturing process of many implantable devices.
The patented process, involving two dissimilar metals (silver and platinum)
creates an electrochemical reaction that releases silver ions that destroy
bacteria, fungi and other pathogens. The Company intends to commercialize the
technology in partnership with leading medical devices manufacturers.

         On May 6, 1997, Baxter Healthcare Corporation acting through its
Edwards Clinical-Care Division ("Edwards") entered into an Exclusive License
Agreement with Implemed, Inc. ("Implemed"), a predecessor in interest to the
Company. Pursuant to the terms of the License Agreement, among other things,
Edwards licensed certain intellectual property technology relating to the
manufacture of anti-microbial polymers from Implemed.

         On May 7, 2002, the Company executed an amendment to the original
license agreement between Oklahoma Medical Research Foundation ("OMRF") and
Bridge Therapeutic Products, Inc. ("BTP"), a predecessor of Pathagon, relating
to the licensing of methylene blue. Under the terms of the amendment, OMRF
agreed to the assignment of the original license agreement by BTP to Pathagon.
Pursuant to the amendment, the Company paid OMRF $100,000 and issued 200,000
shares of the Company's common stock and a five-year warrant to purchase an
additional 200,000 shares of common stock. The exercise price of the warrant is
$2.33 per share, subject to adjustment. The Company capitalized the costs of
approximately $1,145,600 related to this amendment as an intangible asset and
will amortize this asset over the remaining life of the methylene blue license
agreement.


                                      F-10
<PAGE>

                       BIOENVISION, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2002 AND 2001


NOTE 3  - Intangible Assets

Intangible assets consist of the following:

                                                             June 30, 2002

Patents and licensing rights                                   $17,487,548
Less:  accumulated amortization                                    565,756
                                                               -----------

                                                               $16,921,792
                                                               ===========

Amortization of patents and licensing rights amounted to $561,832 for the year
ended June 30, 2002. Amortization for each of the next five fiscal years will
amount to approximately $1,346,000 annually.

NOTE 4  - License and Co-Development Agreements

         Clofarabine

         We have a license from Southern Research Institute, Birmingham,
Alabama, to develop and market purine nucleoside analogs which, based on
third-party studies conducted to date, may be effective in the treatment of
leukemia and lymphoma. The lead compound of these purine-based nucleosides is
known as Clofarabine. Under the terms of the agreement with Southern Research
Institute, we were granted the exclusive worldwide license, excluding Japan and
Southeast Asia, to make, use and sell products derived from the technology for a
term expiring on the date of expiration of the last patent covered by the
license (subject to earlier termination under certain circumstances), and to
utilize technical information related to the technology to obtain patent and
other proprietary rights to products developed by us and by Southern Research
Institute from the technology. We plan to develop Clofarabine initially for the
treatment of leukemia and lymphoma and to study its potential role in treatment
of solid tumors.

         To facilitate the development of Clofarabine, we entered into a
co-development agreement with ILEX Oncology, Inc. ("ILEX") in March 2001. Under
the terms of the co-development agreement, ILEX is required to pay all
development costs in the United States and Canada, and 50% of approved
development costs worldwide outside the U.S. and Canada (excluding Japan and
Southeast Asia). ILEX is responsible for conducting all clinical trials and the
filing and prosecution of applications with applicable regulatory authorities in
the United States and Canada. The Company retains the right to handle those
matters in all territories outside the United States and Canada (excluding Japan
and Southeast Asia). The Company retained the exclusive manufacturing and
distribution rights in Europe and elsewhere worldwide, except for the United
States, Canada, Japan and Southeast Asia. Under the co-development agreement,
ILEX will have certain rights if it performs its development obligations in
accordance with that agreement. The Company would be required to pay ILEX a
royalty on sales outside the U.S., Canada, Japan and Southeast Asia. In turn,
ILEX, which would have U.S. and Canadian distribution rights, would pay the
Company a royalty on sales in the U.S. and Canada. In addition, the Company is
entitled to certain milestone payments. The Company also granted Ilex an option
to purchase $1 million of Common Stock after completion of the pivotal Phase II
clinical trial, and ILEX has an additional option to purchase $2 million of
Common Stock after the filing of a new drug application in the United States for
the use of Clofarabine in the treatment of lymphocytic leukemia. The exercise
price per share for each option is determined by a formula based around the date
of exercise. Under the co-development agreement, ILEX also pays royalties to
Southern Research Institute based on certain milestones. The Company continues
to pay royalties to Southern Research Institute in respect to Clofarabine.

         Modrenal(R)

         We hold an exclusive license, until the expiration of existing and new
patents related to trilostane, to market trilostane in major international
territories, and an agreement with a United Kingdom company to co-develop
trilostane for other therapeutic indications. Trilostane currently is
manufactured by third-party contractors in accordance with good manufacturing
practices. We have no plans to establish our own manufacturing facility for
trilostane, but will continue to use third-party contractors.


                                      F-11
<PAGE>

                       BIOENVISION, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2002 AND 2001


NOTE 4  - License and Co-Development Agreements - continued

         Deferred revenue

         As of June 30, 2002, the Company reported deferred revenue of $368,182
related to the contract with ILEX. The Company is amortizing the deferred
revenue, and recognizing revenues ratably, on a straight-line basis concurrent
with certain development activities described in the contract, through December
2002.

         Deferred costs

         Deferred costs represent costs that are associated with the negotiation
and execution of the co-development agreement with ILEX. Since the revenue
related to the co-development agreement will be realized over the life of the
agreement, the Company has deferred the costs related to the ILEX agreement. The
Company will amortize such costs ratably, on a straight-line basis concurrent
with development activities through December 2002. As of June 30, 2002, the
Company has deferred costs of $184,091.

Note 5  - Rent expense

         During the year ended June 30, 2002 used office space provided by its
financial advisors for its executive offices at a cost of $4,000 per month in
the United States and at a cost of 3,000 pounds per month in the United Kingdom
on a month-to-month agreement.

         Rent expense for the fiscal year ended June 30, 2002 totaled
approximately $138,000.

Note 6  - Income taxes

The components of the income tax benefit are as follows:

                                                             June 30,
                                                    ---------------------------
                                                        2002            2001
                                                    -----------     -----------
Current:
   Federal                                          $       --      $       --
                                                    -----------     -----------
   State                                                    --              --
                                                    -----------     -----------

Deferred:
   Federal                                             (160,000)            --
   State                                                (93,000)            --
                                                    -----------     -----------
                                                       (253,000)            --
                                                    -----------     -----------
Total benefit                                       $  (253,000)    $       --
                                                    ===========     ===========

Significant components of the company's deferred tax assets and liability at
June 30 are as follows:

                                                             June 30,
                                                    ---------------------------
                                                        2002            2001
                                                    -----------     -----------
Deferred tax liability
    Acquired intangibles                            $(7,656,000)    $      --
                                                    -----------     -----------


Deferred tax assets
   Federal net operating loss                         2,048,000         589,000
   State net operating loss                           1,208,000         347,000
   Depreciation                                          13,000           9,000
   Other                                                  1,000           1,000
                                                    -----------     -----------
Total deferred tax assets                             3,270,000         945,000
Valuation allowance for deferred tax assets          (3,270,000)       (945,000)
                                                    -----------     -----------
Net deferred tax asset                                     --              --
                                                    -----------     -----------

Net deferred tax liability                          $(7,656,000)    $      --
                                                    ===========     ===========


                                      F-12
<PAGE>

                       BIOENVISION, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2002 AND 2001


At June 30, 2002, the Company had approximately $7,226,000 of net operating loss
carryforwards for U.S. Federal and state income tax purposes that expire through
2021, with a tax value of $3,256,000. A full valuation allowance has been
established for the deferred tax assets due to the uncertainty of the
utilization of such deferred tax asset.

The Tax Reform Act of 1986 enacted a complex set of rules (Internal Revenue Code
Section 382) limiting the utilization of NOLs to offset future taxable income
following a corporate "ownership change." Generally, this occurs when there is a
greater than 50 percentage point change in ownership. Accordingly, such change
could limit the amount of NOLs available in a given year.

The income tax benefit as recognized differs from the benefit that would be
recognized at the Federal statutory rate on the pre-dividend net loss primarily
due to the valuation allowance established against the net operating loss
deferred tax assets.

NOTE 7  - Credit Facilities

         In August 2001, the Company obtained an unsecured financing facility
with Jano Holdings for $1,000,000, bearing interest at a rate of 8% per annum.

         In November 2001, the Company announced the appointment of SCO
Financial Group LLC as its financial advisor, and that SCO Capital Partners LLC
("SCO Capital") extended a $1,000,000 secured credit line (the "Facility") to
the Company.

         In May 2002, the Company repaid the amounts outstanding under the Jano
and SCO credit facilities, of approximately $326,000 and $657,000, respectively.

NOTE 8  - Stockholders' transactions

         Common Stock and Securities Convertible into Common Stock

         Under an agreement between the Company and Bioaccelerate Inc, a BVI
company ("Bioaccelerate"), of Switzerland, dated 21 March 2000, Bioaccelerate
purchased 727,273 common shares of the Company at $2.75 per share. The agreement
also provided Bioaccelerate options to purchase two further tranches of 727,272
common shares each at $2.75 per share upon certain specified milestones being
achieved. The specified milestones have not yet been achieved. In April 2001,
Bioaccelerate amended certain provisions of its investment agreement with the
Company, including eliminating the outstanding option and the right to purchase
additional options upon achievement of milestones and, in consideration,
received 1,454,444 options to purchase shares of the Company's common stock at
an exercise price of $1.25 per share.

         In December 2000, the Company issued 272,500 shares of common stock to
outside consultants. Consultant's expense of $272,500 based on the fair value of
the Company's stock trading at $1.00 at the time the shares were issued has been
recognized in the Company's financial statements.

         In April 2001, we granted to Phoenix Ventures 500,000 options to
purchase shares of our common stock at an exercise price of $1.25 per share. The
options were issued in connection with a credit facility made available to us by
Glen Investments Limited, a Jersey (Channel Islands) corporation wholly-owned by
Kevin R. Leech, a U.K. citizen and one of our stockholders, which facility was
terminated in August 2001. The options immediately vested and expire in April
2004. These options resulted in a finance charge of $415,000 being recorded and
amortized over the remaining life of the loan facility that expired August 2001.

         In April 2001, the Company granted 150,000 options to two consultants
in exchange for certain services received to purchase shares of the Company's
common stock at any exercise price of $1.25 per share. The options expire in
April 2004 and are immediately vested. The issuance of these options resulted in
a charge to consulting expenses of $124,500 in the Company's financial
statements. In August 2001, the Company cancelled these options and replaced
them with 150,000 shares.


                                      F-13
<PAGE>

                       BIOENVISION, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2002 AND 2001


NOTE 8  - Stockholders' transactions - continued

         In August 2001, the Company issued 208,333 shares to officers of the
Company, in exchange for accrued officers' salaries of $154,214.

         In October 2001, the Company issued 134,035 shares to officers as
payment for accrued salaries of $206,017 to September 30, 2001. In October 2001,
the Company issued 146,499 shares as payment for trade payables of $168,473 to
certain creditors.

         In connection with securing the Facility with SCO Capital in November
2001, the Company issued warrants to purchase 1,500,000 shares of the Company's
common stock at a strike price of $1.25 per share, subject to certain
anti-dilution adjustments. The warrants expire five years from the date of
issuance. The Company measured the fair market value of the warrants and
recorded financing costs of $1,872,000, which were amortized over the term of
the Facility. The warrants expire five years from the date of issuance. The
credit facility with SCO Capital was terminated in May 2002 at which time the
Company received a payoff letter evidencing such termination.

         On February 1, 2002, in connection with the Company's acquisition of
Pathagon, the Company issued 7,000,000 shares of its common stock. In connection
with the closing of the acquisition of Pathagon, the Company also entered into
Registration Rights Agreements, with the persons or entities who were
shareholders of Pathagon, pursuant to which the Company is required to register
the offer and resale of the shares of common stock issued in the acquisition.
Affiliates of SCO Capital owned 82% of Pathagon prior to the acquisition.

         On March 12, 2002, a majority of the Company's shareholders delivered a
written consent to authorize amendment of the Company's certificate of
incorporation, approved by the Company's Board of Directors, to increase the
number of authorized shares of common stock from 25,000,000 to 50,000,000 and to
authorize the issuance of 10,000,000 shares of the Company's Series A
Convertible Preferred Stock. The shareholder action became effective, and the
amendment was filed and became effective, on April 30, 2002.

         In March 2002, the Company issued 705,984 shares of common stock to its
officers and directors as payment for salaries accrued through June 30, 2001 of
$910,000

         Preferred Stock

         On May 7, 2002 the Company authorized the issuance and sale of up to
5,920,000 shares of Series A Convertible Participating Preferred Stock, par
value $0.001 per share ("Series A Preferred Stock"). Series A Preferred Stock
may be converted into two shares of common stock at an initial conversion price
of $1.50 per share of common stock, subject to adjustment for stock splits,
stock dividends, mergers, issuances of cheap stock and other similar
transactions. Holders of Series A Preferred Stock also received, in respect of
each share of Series A Preferred Stock purchased in the May 2002 Private
Placement by the Company, one warrant to purchase one share of the Company's
common stock at an initial exercise price of $2.00, subject to adjustment. The
purchasers of Series A Preferred Stock also received certain registration
rights.

         In May 2002, Bioenvision issued an aggregate of 5,916,666 shares of
Series A convertible participating preferred stock for $3.00 per share and
warrants to purchase an aggregate of 5,916,666 shares of common stock in a
private placement financing. The preferred stock has a par value of $.001 per
share and generally carries rights to vote with the holders of common stock as
one class on a two-for-one basis. The preferred stock is convertible into the
Company's common stock on a two-for-one basis subject to certain adjustments at
the earlier to occur of (i) at the election of each holder from and after the
issuance date, or (ii) the date at any time after the one year anniversary of
the issuance date upon which both (x) the average of the market price for a
share of common stock for thirty consecutive trading days exceeds $10.00 per
share, subject to certain adjustments, and (y) the average of the trading volume
for the Company's common stock during such period exceeds 150,000, subject to
certain adjustments.

         Upon conversion, the holder of the preferred stock will be required to
pay to the Company, in cash, a conversion price equal to $1.50 per share of
common stock into which the shares of preferred stock are convertible.


                                      F-14
<PAGE>

                       BIOENVISION, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2002 AND 2001


NOTE 8  - Stockholders' transactions - continued

The Company is required to accrue for and pay a dividend of 5%, subject to
certain adjustments, on its cumulative Series A Convertible Participating
Preferred Stock. In the event of a voluntary or involuntary liquidation or
dissolution of the Company, before any distribution of assets shall be made to
the holders of the Company's securities which are junior to the preferred stock
(such as the common stock), holders of the preferred stock shall be paid out of
the assets of the Company legally available for distribution to the Company's
stockholders an amount per share equal to the initial original issue price
($3.00) subject to certain adjustments plus all accrued but unpaid dividends on
such preferred stock.

NOTE 9  - Related party transactions

         In November 2000 Bioenvision issued 272,500 shares of common stock
valued at approximately at $1.00 per share to various consultants for work
performed for and on our behalf. The shares were issued to Andrew Turner
(112,500), David Chester (112,500), and Shane Sutton (47,500). The Company
recorded each of these consulting expenses as a non-cash charge to its income
statement for the year ended June 30, 2001.

         In April 2001, in accordance with the terms of the Company's stock
option plan, the Company issued the following options at an exercise price of
$1.25 per option share and which immediately vested. Originally, the terms of
the options were that each option can be exercised after April 30, 2001 for a
period of three years, whereby the options will no longer be able to be
exercised after April 30, 2004 unless otherwise agreed with the Company. In July
2002, the Company changed the three-year term to a five-year term:

         o        a total of 2,200,000 options to employees (Christopher Wood -
                  1,500,000 options; Stuart Smith - 500,000 options; and Thomas
                  Scott Nelson - 200,000 options);

         o        a total of 2,904,544 options to certain consultants to the
                  Company.

         o        a total of 500,000 options to Phoenix Ventures which were
                  issued in connection with a credit facility made available to
                  us by Glen Investments Limited, a Jersey (Channel Islands)
                  corporation wholly owned by Kevin R. Leech, a U.K. citizen and
                  one of our stockholders, which facility was terminated in
                  August 2001.

         The extension of the foregoing options to a five year term will require
the Company to record additional compensation and consulting fees and expenses
in the first quarter of the fiscal year ended June 30, 2003.

         In May 2001, certain officers agreed to convert $910,681 of the
outstanding deferred salaries into 705,954 shares of common stock. The deferred
salaries were converted to additional paid in capital during the quarter ended
June 30, 2001.

         In August 2001 in connection with outstanding deferred salaries,
Bioenvision issued 208,333 shares at the rate of $1.25 per share as follows:
Christopher B. Wood, 98,684 shares; Thomas Nelson, 27,412 shares; and Stuart
Smith, 82,237 shares. The deferred salaries were converted to additional paid in
capital during the quarter ended September 30, 2001.

         In August 2001, we obtained a $1 million line of credit facility, which
expires in September 2002, from Jano Holdings Limited, one of our shareholders.
This credit facility was terminated in May 2002 at which time the Company
received a payoff letter evidencing such termination.

         In October 2001, we issued 134,035 shares of common stock to officers
as payment for salaries accrued to September 30, 2001. The deferred salaries
were converted to additional paid in capital during the quarter ended December
31, 2001.

         On November 16, 2001, we entered into an engagement letter with SCO
Capital, pursuant to which SCO would act as our financial advisor. In connection
with the engagement letter, we issued a warrant to purchase 100,000 shares of
common stock at an exercise price of $1.25 per share, subject to certain
anti-dilution adjustments. The warrants expire five years from the date of
issuance. The issuance of these shares has been capitalized as deferred
financing costs which are being amortized over a twelve-month period.


                                      F-15
<PAGE>

                       BIOENVISION, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2002 AND 2001


NOTE 9  - Related party transactions - continued

         In connection with securing a credit facility with SCO Capital, we
issued warrants to purchase 1,500,000 shares of our common stock at a strike
price of $1.25 per share, subject to certain anti-dilution adjustments. The
warrants expire five years from the date of issuance. The credit facility with
SCO Capital was terminated in May 2002 at which time the Company received a
payoff letter evidencing such termination.

         On February 5, 2002, we completed the acquisition of Pathagon Inc.
Affiliates of SCO Capital owned 82% of Pathagon prior to the acquisition. In
connection therewith, on February 1, 2002 we issued 7,000,000 shares of common
stock to the former stockholders of Pathagon Inc.

         In May 2002, we completed a private placement pursuant to which we
issued an aggregate of 5,916,666 shares of Series A Preferred Stock for $3.00
per share and warrants to purchase an aggregate of 5,916,666 shares of common
stock. Perseus-Soros Biopharmaceutical Fund, LP received 3,000,000 shares of
Series A Preferred Stock and warrants to purchase an aggregate of 3,000,000
shares of common stock.

NOTE 10 - Stock options

         The Company adopted its 2001 Stock Option Plan (the "Plan") on April
30, 2001. The purchase price of stock options under the Plan is determined by
the Compensation Committee of the Board of Directors of the Company (the
"Committee"). The term is fixed by the Committee, but no incentive stock option
is exercisable after 5 years from the date of grant.

         In April 2001, in accordance with the terms of the Company's stock
option plan, the Company issued the following options at an exercise price of
$1.25 per option share and which immediately vested. Originally, the terms of
the options were that each option can be exercised after April 30, 2001 for a
period of three years, whereby the options will no longer be able to be
exercised after April 30, 2004 unless otherwise agreed with the Company. In July
2002, the Company changed the three-year term to a five-year term:

         o        a total of 2,200,000 options to employees (Christopher Wood -
                  1,500,000 options; Stuart Smith - 500,000 options; and Thomas
                  Scott Nelson - 200,000 options);

         o        a total of 2,904,544 options to certain consultants to the
                  Company.


         A summary of the Company's stock option activity for options issued to
employees and related information follows:

<TABLE>
<CAPTION>
                                                                            Year Ended
                                                                             June 20,
                                                         ------------------------------------------------
                                                                 2002                        2001
                                                         --------------------        --------------------
                                                          Common      Option          Common      Option
                                                           Stock     Exercise          Stock     Exercise
                                                          Options      Price          Options      Price
                                                         ---------   --------        ---------   --------
<S>                                                     <C>           <C>           <C>           <C>
         Outstanding at beginning of year.............   2,200,000     $1.25                 0       n/a
         Granted......................................           0                   2,200,000     $1.25
         Exercised....................................           0                           0
         Canceled.....................................           0                                     0
         Outstanding at end of year...................   2,200,000                   2,200,000     $1.25
         Exercisable at end of year...................   2,200,000                   2,200,000     $1.25
         Weighted average fair value of options
         granted during the year......................                 $1.25                       $0.83
</TABLE>


                                      F-16
<PAGE>

                       BIOENVISION, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2002 AND 2001


NOTE 10 - Stock options -continued


         The Company accounts for stock-based compensation in accordance with
the provisions of APB No. 25. Had compensation expense been determined based on
the fair value of the options at the grant dates, as prescribed in SFAS No. 123,
the Company's results would have been as follows:

                                      Year Ended June 30,
                                  ---------------------------
                                      2002           2001
                                  ------------   ------------
         Net loss as reported     $(5,735s981)   $(2,122,264)
         Pro forma net loss       $(5,735,981)   $(3,948,264)


                                      F-17
<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.


                                        BIOENVISION, INC.


                                        By  /s/ Christopher B. Wood, M.D.
                                           -------------------------------------
                                           Christopher B. Wood, M.D.
                                           Chairman and Chief Executive Officer


                                        By  /s/ David P. Luci
                                           -------------------------------------
                                           David P. Luci
                                           Director of Finance, General Counsel
                                           and Corporate Secretary
                                           (Principal Accounting Officer)

         Each person whose signature appears below hereby constitutes and
appoints either Christopher B. Wood, M.D. or David P. Luci his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments to this report, and to file the same, with exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying all that said attorney-in-fact and agent or his
substitute or substitutes, or any of them, may lawfully do or cause to be done
by virtue hereof. In accordance with the requirements of the Exchange Act, this
report has been signed by the following persons in the capacities and on the
dates indicated.

<TABLE>
<CAPTION>
         Signature                                      Title                                      Date
         ---------                                      -----                                      ----
<S>                                <C>                                                    <C>
/s/ Christopher B. Wood, M.D.       Chairman and Chief Executive Officer and Director      September 30, 2002
-----------------------------
Christopher B. Wood, M.D.

/s/ Thomas S. Nelson, C.A.          Director                                               September 30, 2002
--------------------------
Thomas S. Nelson, C.A.

/s/ Jeffrey B. Davis                Director                                               September 30, 2002
--------------------
Jeffrey B. Davis

/s/ Andrew N. Schiff                Director                                               September 30, 2002
--------------------
Andrew N. Schiff

/s/ Steven A. Elms                  Director                                               September 30, 2002
------------------
Steven A. Elms
</TABLE>


<PAGE>

Item 14. Controls and Procedures.

(a)      Certificate of Chief Executive Officer.

I, Christopher B. Wood, certify that:

         1.       I have reviewed this annual report on Form 10-KSB of
                  Bioenvision, Inc.;

         2.       Based on my knowledge, this annual report does not contain any
                  untrue statement of a material fact or omit to state a
                  material fact necessary to make the statements made, in light
                  of the circumstances under which such statements were made,
                  not misleading with respect to the period covered by this
                  annual report;

         3.       Based on my knowledge, the financial statements, and other
                  financial information included in this annual report, fairly
                  present in all material respects the financial condition,
                  results of operations and cash flows of the registrant as of,
                  and for, the periods presented in this annual report;

         4.       The registrant's other certifying officers and I are
                  responsible for establishing and maintaining disclosure
                  controls and procedures (as defined in Exchange Act Rules
                  13a-14 and 15d-14 for the registrant and have:

                  a.       designed such disclosure controls and procedures to
                           ensure that material information relating to the
                           registrant, including its consolidated subsidiaries,
                           is made known to us by others within those entities,
                           particularly during the period in which this annual
                           report is being prepared;

                  b.       evaluated the effectiveness of the registrant's
                           disclosure controls and procedures as of a date
                           within 90 days prior to the filing date of this
                           annual report (the "Evaluation Date"); and

                  c.       presented in this annual report our conclusions about
                           the effectiveness of the disclosure controls and
                           procedures based on our evaluation as of the
                           Evaluation Date;

         5.       The registrant's other certifying officers and I have
                  disclosed, based on our most recent evaluation, to the
                  registrant's auditors and the audit committee of registrant's
                  board of directors (or persons performing the equivalent
                  functions):

                  a.       all significant deficiencies in the design or
                           operation of internal controls which could adversely
                           affect the registrant's ability to record, process,
                           summarize and report financial data and have
                           identified for the registrant's auditors any material
                           weaknesses in internal controls; and

                  b.       any fraud, whether or not material, that involves
                           management or other employees who have a significant
                           role in the registrant's internal controls; and

         6.       The registrant's other certifying officers and I have
                  indicated in this annual report whether there were significant
                  changes in internal controls or in other factors that could
                  significantly affect internal controls subsequent to the date
                  of our most recent evaluation, including any corrective
                  actions with regard to significant deficiencies and material
                  weaknesses.


         Date:  September 30, 2002
                                        /s/ Christopher B. Wood
                                        ----------------------------------------
                                        Christopher B. Wood
                                        Chairman and Chief Executive Officer
                                        (Principal Executive Officer)
<PAGE>

(b)      Certificate of Director of Finance.


I, David P. Luci, certify that:

         7.       I have reviewed this annual report on Form 10-KSB of
                  Bioenvision, Inc.;

         8.       Based on my knowledge, this annual report does not contain any
                  untrue statement of a material fact or omit to state a
                  material fact necessary to make the statements made, in light
                  of the circumstances under which such statements were made,
                  not misleading with respect to the period covered by this
                  annual report;

         9.       Based on my knowledge, the financial statements, and other
                  financial information included in this annual report, fairly
                  present in all material respects the financial condition,
                  results of operations and cash flows of the registrant as of,
                  and for, the periods presented in this annual report;

         10.      The registrant's other certifying officers and I are
                  responsible for establishing and maintaining disclosure
                  controls and procedures (as defined in Exchange Act Rules
                  13a-14 and 15d-14 for the registrant and have:

                  a.       designed such disclosure controls and procedures to
                           ensure that material information relating to the
                           registrant, including its consolidated subsidiaries,
                           is made known to us by others within those entities,
                           particularly during the period in which this annual
                           report is being prepared;

                  b.       evaluated the effectiveness of the registrant's
                           disclosure controls and procedures as of a date
                           within 90 days prior to the filing date of this
                           annual report (the "Evaluation Date"); and

                  c.       presented in this annual report our conclusions about
                           the effectiveness of the disclosure controls and
                           procedures based on our evaluation as of the
                           Evaluation Date;

         11.      The registrant's other certifying officers and I have
                  disclosed, based on our most recent evaluation, to the
                  registrant's auditors and the audit committee of registrant's
                  board of directors (or persons performing the equivalent
                  functions):

                  a.       all significant deficiencies in the design or
                           operation of internal controls which could adversely
                           affect the registrant's ability to record, process,
                           summarize and report financial data and have
                           identified for the registrant's auditors any material
                           weaknesses in internal controls; and

                  b.       any fraud, whether or not material, that involves
                           management or other employees who have a significant
                           role in the registrant's internal controls; and

         12.      The registrant's other certifying officers and I have
                  indicated in this annual report whether there were significant
                  changes in internal controls or in other factors that could
                  significantly affect internal controls subsequent to the date
                  of our most recent evaluation, including any corrective
                  actions with regard to significant deficiencies and material
                  weaknesses.


         Date:  September 30, 2002

                                        /s/ David P. Luci
                                        ----------------------------------------
                                        David P. Luci
                                        Director of Finance, General Counsel and
                                        Corporate Secretary
                                        (Principal Accounting Officer)
<PAGE>

                                 EXHIBIT INDEX
                                 -------------

Exhibit
Number                                   Description
-------                                  -----------
2.1           Acquisition Agreement between Registrant and Bioenvision, Inc.
              dated December 21, 1998 for the acquisition of 7,013,897 shares of
              Registrant's Common Stock by the stockholders of Bioenvision, Inc.
              (1)

2.2           Amended and Restated Agreement and Plan of Merger, dated as of
              February 1, 2002, by and among Bioenvision, Inc., Bioenvision
              Acquisition Corp. and Pathagon, Inc. (5)

3.1           Certificate of Incorporation of Registrant. (2)

3.1(a)        Amendment to Certificate of Incorporation filed January 29, 1999.
              (3)

3.1(b)        Certificate of Correction to the Certificate of Incorporation,
              filed March 15, 2002 (6)

3.1(c)        Certificate of Amendment to the Certificate of Incorporation,
              filed April 30, 2002 (6)

3.2           By-Laws of the Registrant. (2)

3.2(a)        Amendment to Bylaws, effective April 30, 2002 (6)

4.1           Certificate of Designation (6)

4.2           Form of Warrant (6)

10.1          Sponsored Research Agreement between Eurobiotech Corporation, Ltd.
              and University of Texas, MD Anderson Cancer Center dated February
              26, 1998. (3)

10.2          Co-Development Agreement between Bioheal, Ltd. and Christopher
              Wood dated May 19, 1998. (3)

10.3          Co-Development Agreement between Biomed (UK) Ltd. and
              EuroLifesciences, Ltd. dated May 20, 1998. (3)

10.4          Co-Development Agreement between Stegram Pharmaceuticals, Ltd. and
              Bioenvision, Inc. dated July 15, 1998. (3)

10.5          Co-Development Agreement between Southern Research Institute and
              Eurobiotech Group, Inc. dated August 31, 1998. (3)

10.5(a)       Agreement to Grant License from Southern Research Institute to
              Eurobiotech Group, Inc. dated September 1, 1998. (3)

10.6          Loan Agreement between Glen Investments Ltd. and Bioenvision, Inc.
              dated September 8, 1998 and affirmed July 15, 1999. (3)

10.7          Co-Development and Licensing Agreement between Orion
              Pharmaceuticals Canada and Bioenvision, Inc. dated November 1998.
              (3)

10.8          License Agreement between Bioenvision, Inc. and Royal Free and
              University College Medical School, London dated March 11, 1999.
              (3)

10.9          License Agreement between Bioenvision, Inc. and University College
              Cardiff Consultants Limited dated June 21, 1999. (3)

10.10         Research Agreement between Bioenvision, Inc. and Cardiff
              University dated July 8, 1999.(3)

10.11         Employment agreement between Bioenvision, Inc. and Stuart Smith
              dated January 1, 2000. (4)

10.12         Employment Agreement between Bioenvision, Inc. and Christopher B.
              Wood, M.D. dated September 1, 1999. (4)

10.13         Securities Purchase Agreement with Bioaccelerate Inc dated March
              24, 2000. (4)

<PAGE>

Exhibit
Number                                   Description
-------                                  -----------
10.14         Engagement Letter Agreement, dated as of November 16, 2001, by and
              between Bioenvision, Inc. and SCO Securities LLC. (7)

10.15         Security Agreement, dated as of November 16, 2001, by Bioenvision,
              Inc. in favor of SCO Capital Partners LLC. (7)

10.16         Commitment Letter, dated November 16, 2001, by and between SCO
              Capital Partners LLC and Bioenvision, Inc. (7)

10.17         Senior Secured Grid Note, dated November 16, 2001, by Bioenvision,
              Inc. in favor of SCO Capital Partners LLC. (7)

10.18         Registration Rights Agreement, dated as of February 1, 2002, by
              and among Bioenvision, Inc., the former shareholders of Pathagon,
              Inc. party thereto, Christopher Wood, Bioaccelerate Limited, Jano
              Holdings Limited and Lifescience Ventures Limited. (8)

10.19         Stockholders Lock-Up Agreement, dated as of February 1, 2002, by
              and among Bioenvision, Inc., the former shareholders of Pathagon,
              Inc. party thereto, Chirstopher Wood, Bioaccelerate Limited, Jano
              Holdings Limited and Lifescience Ventures Limited. (8)

10.20         Form of Securities Purchase Agreement by and among Bioenvision,
              Inc. and certain purchasers, dated as of May 7, 2002. (6)

10.21         Form of Registration Rights Agreement by and among Bioenvision,
              Inc. and certain purchasers, dated as of May 7, 2002. (6)

10.22         Exclusive License Agreement by and between Baxter Healthcare
              Corporation, acting through its Edwards Critical-Care division,
              and Implemed, dated as of May 6, 1997. (12)

10.23         License Agreement by and between Oklahoma Medical Research
              Foundation and bridge Therapeutic Products, Inc., dated as of
              January 1, 1998. (12)

10.23(a)      Amendment No. 1 to License Agreement by and among Oklahoma Medical
              Research Foundation, Bioenvision, Inc. and Pathagon, Inc., dated
              May 7, 2002. (12)

10.24         Inter-Institutional Agreement between Sloan-Kettering Institute
              for Cancer Research and Southern Research Institute, dated as of
              August 31, 1998. (12)

10.25         License Agreement between University College London and
              Bioenvision, Inc., dated March 1, 1999. (12)

10.26         Research Agreement, between Stegram Pharmaceuticals Ltd., Queen
              Mary and Westfield College and Bioenvision, Inc., dated June 8,
              1999. (12)

10.27         Research and License Agreement between Bioenvision, Inc., Velindre
              NHS Trust and University College Cardiff Consultants, dated as of
              January 9, 2001. (12)

10.28         Co-Development Agreement, between Bioenvision, Inc. and ILEX
              Oncology, Inc., dated March 9, 2001. (12)

10.29         Amended and Restated Agreement and Plan of Merger, dated as of
              February 1, 2002, among Bioenvision, Inc., Bioenvision Acquisition
              Corp. and Pathagon Inc. (5)

16.1          Letter from Graf Repetti & Co., LLP to the Securities and Exchange
              Commission, dated September 30, 1999. (9)

16.2          Letter from Ernst & Young LLP to the Securities and Exchange
              Commission, dated July 6, 2001. (10)

16.3          Letter from Ernst & Young LLP to the Securities and Exchange
              Commission, dated August 16, 2001. (11)

21.1          Subsidiaries of the registrant (4)

24.1          Power of Attorney (appears on signature page)

99.1          Certificate of Chief Executive Officer

99.2          Certificate of Director of Finance

----------
(1)      Incorporated by reference and filed as an Exhibit to Registrant's
         Current Report on Form 8-K filed with the SEC on January 12, 1999.

(2)      Incorporated by reference and filed as an Exhibit to Registrant's
         Registration Statement on Form 10-12g filed with the SEC on September
         3, 1998.
<PAGE>

(3)      Incorporated by reference and filed as an Exhibit to Registrant's Form
         10-KSB/A filed with the SEC on October 18, 1999.

(4)      Incorporated by reference and filed as an Exhibit to Registrant's Form
         10-KSB filed with the SEC on November 13, 2000.

(5)      Incorporated by reference and filed as an Exhibit to Registrant's
         Current Report on Form 8-K filed with the SEC on April 16, 2002.

(6)      Incorporated by reference and filed as an Exhibit to Registrant's
         Current Report on Form 8-K, filed with the SEC on May 28, 2002.

(7)      Incorporated by reference and filed as an Exhibit to Registrant's
         Current Report on Form 8-K, filed with the SEC on January 8, 2002.

(8)      Incorporated by reference and filed as an Exhibit to Registrant's
         Current Report on Form 8-K, filed with the SEC on February 21, 2002.

(9)      Incorporated by reference and filed as an Exhibit to Registrant's
         Current Report on Form 8-K, filed with the SEC on October 1, 1999.

(10)     Incorporated by reference and filed as an Exhibit to Registrant's
         Current Report on Form 8-K/A, filed with the SEC on July 26, 2001.

(11)     Incorporated by reference and filed as an Exhibit to Registrant's
         Current Report on Form 8-K, filed with the SEC on December 6, 2001.

(12)     Incorporated by reference and filed as an Exhibit to Registrant's
         Current Report on Form 8-K, filed with the SEC on June 24, 2002.