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                                                                   EXHIBIT 10.78


                                ESCROW AGREEMENT

         THIS ESCROW AGREEMENT (this "AGREEMENT") is made and entered into as of
July 18, 2003, by ADVANCED VIRAL RESEARCH CORP., a Delaware corporation (the
"COMPANY"); the Buyer(s) listed on Schedule I to the Securities Purchase
Agreement dated the date hereof, (the "INVESTOR(S)"), and BUTLER GONZALEZ, LLP,
as Escrow Agent hereunder (the "ESCROW AGENT").


                                   BACKGROUND

         WHEREAS, the Company and the Investor(s) have entered into a Securities
Purchase Agreement (the "SECURITIES PURCHASE AGREEMENT"), dated as of the date
hereof, pursuant to which the Company proposes to sell convertible debentures
(the "CONVERTIBLE DEBENTURES") which shall be convertible into the Company's
Common Stock, par value $0.00001 per share (the "COMMON STOCK"), at a price per
share equal to the Purchase Price, as that term is defined in the Securities
Purchase Agreement. The Securities Purchase Agreement provides that the
Investor(s) shall deposit the purchase amount in a segregated escrow account to
be held by Escrow Agent in order to effectuate a disbursement to the Company at
a closing to be held as set forth in the Securities Purchase Agreement (the
"CLOSING").

         WHEREAS, the Company intends to sell Convertible Securities (the
"OFFERING").

         WHEREAS, Escrow Agent has agreed to accept, hold, and disburse the
funds deposited with it in accordance with the terms of this Agreement.

         WHEREAS, in order to establish the escrow of funds and to effect the
provisions of the Securities Purchase Agreement, the parties hereto have entered
into this Agreement.

         NOW THEREFORE, in consideration of the foregoing, it is hereby agreed
as follows:

         1. DEFINITIONS. The following terms shall have the following meanings
when used herein:

                  a. "ESCROW FUNDS" shall mean the funds deposited with Escrow
Agent pursuant to this Agreement.

                  b. "JOINT WRITTEN DIRECTION" shall mean a written direction
executed by the Investor(s) and the Company directing Escrow Agent to disburse
all or a portion of the Escrow Funds or to take or refrain from taking any
action pursuant to this Agreement.

                  c. "ESCROW PERIOD" shall begin with the commencement of the
Offering and shall terminate upon the earlier to occur of the following dates:

                           (i) The date upon which Escrow Agent confirms that it
has received in the Escrow Account all of the proceeds of the sale of the
Convertible Debentures;

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                           (ii) The expiration of twenty (20) days from the date
of commencement of the Offering (unless extended by mutual written agreement
between the Company and the Investor(s) with a copy of such extension to Escrow
Agent); or

                           (iii) The date upon which a determination is made by
the Company and the Investor(s) to terminate the Offering prior to the sale of
all the Convertible Debentures.

         1. During the Escrow Period, the Company and the Investor(s) are aware
that they are not entitled to any funds received into escrow and no amounts
deposited in the Escrow Account shall become the property of the Company or the
Investor(s) or any other entity, or be subject to the debts of the Company or
the Investor(s) or any other entity.

         2. APPOINTMENT OF AND ACCEPTANCE BY ESCROW AGENT. The Investor(s) and
the Company hereby appoint Escrow Agent to serve as Escrow Agent hereunder.
Escrow Agent hereby accepts such appointment and, upon receipt by wire transfer
of the Escrow Funds in accordance with Section 3 below, agrees to hold, invest
and disburse the Escrow Funds in accordance with this Agreement.

         3. CREATION OF ESCROW FUNDS. On or prior to the date of the
commencement of the Offering, the Escrow Agent shall establish an escrow account
which escrow account shall be entitled as follows: Advanced Viral Research
Corp./Cornell Capital Partners, LP Escrow Account for the deposit of the Escrow
Funds. The Investor(s) will instruct subscribers to wire funds to the account of
the Escrow Agent as follows:

BANK:                                      Wachovia, N.A. of New Jersey

ROUTING #:                                 031201467

ACCOUNT #:                                 2020000659170

NAME ON ACCOUNT:                           Butler Gonzalez LLP as Escrow Agent

NAME ON SUB-ACCOUNT:                       Advanced Viral Research Corp./Cornell
                                           Capital Partners, LP Escrow account

REFERENCE SUB-ACCOUNT #:                   2229-03

         4. DEPOSITS INTO THE ESCROW ACCOUNT. The Investor(s) agrees that they
shall promptly deliver funds for the payment of the Convertible Debentures to
Escrow Agent for deposit in the Escrow Account.

         5. DISBURSEMENTS FROM THE ESCROW ACCOUNT.

                  a. The Escrow Agent will continue to hold such funds until
Cornell Capital Partners, LP on behalf of the Investor(s) and Company execute a
Joint Written Direction directing the Escrow Agent to disburse the Escrow Funds
pursuant to Joint Written Direction signed by the Company and the Investor(s).
In disbursing such funds, Escrow Agent is authorized to rely upon such Joint
Written Direction from the Company and the Investor(s) and may accept any

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signatory from the Company listed on the signature page to this Agreement and
any signature from the Investor(s) that the Escrow Agent already has on file.

                  b. In the event Escrow Agent does not receive the amount of
the Escrow Funds from the Investor(s), Escrow Agent shall notify the Company and
the Investor(s). Upon receipt of payment instructions from the Company, Escrow
Agent shall refund to each subscriber without interest the amount received from
each Investor(s), without deduction, penalty, or expense to the subscriber. The
purchase money returned to each subscriber shall be free and clear of any and
all claims of the Company, the Investor(s) or any of their creditors.

                  c. In the event Escrow Agent does receive the amount of the
Escrow Funds prior to expiration of the Escrow Period, in no event will the
Escrow Funds be released to the Company until such amount is received by Escrow
Agent in collected funds. For purposes of this Agreement, the term "collected
funds" shall mean all funds received by Escrow Agent which have cleared normal
banking channels and are in the form of cash.

         6. DEPOSIT INTO ESCROW. Escrow Agent is hereby authorized to deposit
each wire deposit in the Escrow Account.

         7. SUSPENSION OF PERFORMANCE: DISBURSEMENT INTO COURT. If at any time,
there shall exist any dispute between the Company and the Investor(s) with
respect to holding or disposition of any portion of the Escrow Funds or any
other obligations of Escrow Agent hereunder, or if at any time Escrow Agent is
unable to determine, to Escrow Agent's sole satisfaction, the proper disposition
of any portion of the Escrow Funds or Escrow Agent's proper actions with respect
to its obligations hereunder, or if the parties have not within thirty (30) days
of the furnishing by Escrow Agent of a notice of resignation pursuant to Section
9 hereof, appointed a successor Escrow Agent to act hereunder, then Escrow Agent
may, in its sole discretion, take either or both of the following actions:

                  a. suspend the performance of any of its obligations
(including without limitation any disbursement obligations) under this Escrow
Agreement until such dispute or uncertainty shall be resolved to the sole
satisfaction of Escrow Agent or until a successor Escrow Agent shall be
appointed (as the case may be); provided however, Escrow Agent shall continue to
invest the Escrow Funds in accordance with Section 8 hereof; and/or

                  b. petition (by means of an interpleader action or any other
appropriate method) any court of competent jurisdiction in any venue convenient
to Escrow Agent, for instructions with respect to such dispute or uncertainty,
and to the extent required by law, pay into such court, for holding and
disposition in accordance with the instructions of such court, all funds held by
it in the Escrow Funds, after deduction and payment to Escrow Agent of all fees
and expenses (including court costs and attorneys' fees) payable to, incurred
by, or expected to be incurred by Escrow Agent in connection with performance of
its duties and the exercise of its rights hereunder.

                  c. Escrow Agent shall have no liability to the Company, the
Investor(s), or any person with respect to any such suspension of performance or
disbursement into court, specifically including any liability or claimed
liability that may arise, or be alleged to have arisen, out of or as a result of

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any delay in the disbursement of funds held in the Escrow Funds or any delay in
with respect to any other action required or requested of Escrow Agent.

         8. INVESTMENT OF ESCROW FUNDS. Escrow Agent shall deposit the Escrow
Funds in a non-interest bearing money market account.

         9. RESIGNATION AND REMOVAL OF ESCROW AGENT. Escrow Agent may resign
from the performance of its duties hereunder at any time by giving thirty (30)
days' prior written notice to the parties or may be removed, with or without
cause, by the parties, acting jointly, by furnishing a Joint Written Direction
to Escrow Agent, at any time by the giving of ten (10) days' prior written
notice to Escrow Agent as provided herein below. Upon any such notice of
resignation or removal, the representatives of the Investor(s) and the Company
identified in Sections 13a.(iv) and 13b.(iv), below, jointly shall appoint a
successor Escrow Agent hereunder, which shall be a commercial bank, trust
company or other financial institution with a combined capital and surplus in
excess of $10,000,000.00. Upon the acceptance in writing of any appointment of
Escrow Agent hereunder by a successor Escrow Agent, such successor Escrow Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Escrow Agent, and the retiring Escrow
Agent shall be discharged from its duties and obligations under this Escrow
Agreement, but shall not be discharged from any liability for actions taken as
Escrow Agent hereunder prior to such succession. After any retiring Escrow
Agent's resignation or removal, the provisions of this Escrow Agreement shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Escrow Agent under this Escrow Agreement. The retiring Escrow Agent shall
transmit all records pertaining to the Escrow Funds and shall pay all funds held
by it in the Escrow Funds to the successor Escrow Agent, after making copies of
such records as the retiring Escrow Agent deems advisable and after deduction
and payment to the retiring Escrow Agent of all fees and expenses (including
court costs and attorneys' fees) payable to, incurred by, or expected to be
incurred by the retiring Escrow Agent in connection with the performance of its
duties and the exercise of its rights hereunder.

         10. LIABILITY OF ESCROW AGENT.

                  a. Escrow Agent shall have no liability or obligation with
respect to the Escrow Funds except for Escrow Agent's willful misconduct or
gross negligence. Escrow Agent's sole responsibility shall be for the
safekeeping, investment, and disbursement of the Escrow Funds in accordance with
the terms of this Agreement. Escrow Agent shall have no implied duties or
obligations and shall not be charged with knowledge or notice or any fact or
circumstance not specifically set forth herein. Escrow Agent may rely upon any
instrument, not only as to its due execution, validity and effectiveness, but
also as to the truth and accuracy of any information contained herein, which
Escrow Agent shall in good faith believe to be genuine, to have been signed or
presented by the person or parties purporting to sign the same and conform to
the provisions of this Agreement. In no event shall Escrow Agent be liable for
incidental, indirect, special, and consequential or punitive damages. Escrow
Agent shall not be obligated to take any legal action or commence any proceeding
in connection with the Escrow Funds, any account in which Escrow Funds are
deposited, this Agreement or the Purchase Agreement, or to appear in, prosecute
or defend any such legal action or proceeding. Escrow Agent may consult legal
counsel selected by it in any event of any dispute or question as to

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construction of any of the provisions hereof or of any other agreement or its
duties hereunder, or relating to any dispute involving any party hereto, and
shall incur no liability and shall be fully indemnified from any liability
whatsoever in acting in accordance with the opinion or instructions of such
counsel. The Company and the Investor(s) jointly and severally shall promptly
pay, upon demand, the reasonable fees and expenses of any such counsel.

                  b. Escrow Agent is hereby authorized, in its sole discretion,
to comply with orders issued or process entered by any court with respect to the
Escrow Funds, without determination by Escrow Agent of such court's jurisdiction
in the matter. If any portion of the Escrow Funds is at any time attached,
garnished or levied upon under any court order, or in case the payment,
assignment, transfer, conveyance or delivery of any such property shall be
stayed or enjoined by any court order, or in any case any order judgment or
decree shall be made or entered by any court affecting such property or any part
thereof, then and in any such event, Escrow Agent is authorized, in its sole
discretion, to rely upon and comply with any such order, writ judgment or decree
which it is advised by legal counsel selected by it, binding upon it, without
the need for appeal or other action; and if Escrow Agent complies with any such
order, writ, judgment or decree, it shall not be liable to any of the parties
hereto or to any other person or entity by reason of such compliance even though
such order, writ judgment or decree may be subsequently reversed, modified,
annulled, set aside or vacated.

         11. INDEMNIFICATION OF ESCROW AGENT. From and at all times after the
date of this Agreement, the parties jointly and severally, shall, to the fullest
extent permitted by law and to the extent provided herein, indemnify and hold
harmless Escrow Agent and each director, officer, employee, attorney, agent and
affiliate of Escrow Agent (collectively, the "INDEMNIFIED PARTIES") against any
and all actions, claims (whether or not valid), losses, damages, liabilities,
costs and expenses of any kind or nature whatsoever (including without
limitation reasonable attorney's fees, costs and expenses) incurred by or
asserted against any of the Indemnified Parties from and after the date hereof,
whether direct, indirect or consequential, as a result of or arising from or in
any way relating to any claim, demand, suit, action, or proceeding (including
any inquiry or investigation) by any person, including without limitation the
parties to this Agreement, whether threatened or initiated, asserting a claim
for any legal or equitable remedy against any person under any statute or
regulation, including, but not limited to, any federal or state securities laws,
or under any common law or equitable cause or otherwise, arising from or in
connection with the negotiation, preparation, execution, performance or failure
of performance of this Agreement or any transaction contemplated herein, whether
or not any such Indemnified Party is a party to any such action or proceeding,
suit or the target of any such inquiry or investigation; provided, however, that
no Indemnified Party shall have the right to be indemnified hereunder for
liability finally determined by a court of competent jurisdiction, subject to no
further appeal, to have resulted from the gross negligence or willful misconduct
of such Indemnified Party. If any such action or claim shall be brought or
asserted against any Indemnified Party, such Indemnified Party shall promptly
notify the Company and the Investor(s) hereunder in writing, and the Investor(s)
and the Company shall assume the defense thereof, including the employment of
counsel and the payment of all expenses. Such Indemnified Party shall, in its
sole discretion, have the right to employ separate counsel (who may be selected
by such Indemnified Party in its sole discretion) in any such action and to
participate and to participate in the defense thereof, and the fees and expenses
of such counsel shall be paid by such Indemnified Party, except that the
Investor(s) and/or the Company shall be

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required to pay such fees and expense if (a) the Investor(s) or the Company
agree to pay such fees and expenses, or (b) the Investor(s) and/or the Company
shall fail to assume the defense of such action or proceeding or shall fail, in
the sole discretion of such Indemnified Party, to employ counsel reasonably
satisfactory to the Indemnified Party in any such action or proceeding, (c) the
Investor(s) and the Company are the plaintiff in any such action or proceeding
or (d) the named or potential parties to any such action or proceeding
(including any potentially impleaded parties) include both the Indemnified
Party, the Company and/or the Investor(s) and the Indemnified Party shall have
been advised by counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the Company
or the Investor(s). The Investor(s) and the Company shall be jointly and
severally liable to pay fees and expenses of counsel pursuant to the preceding
sentence, except that any obligation to pay under clause (a) shall apply only to
the party so agreeing. All such fees and expenses payable by the Company and/or
the Investor(s) pursuant to the foregoing sentence shall be paid from time to
time as incurred, both in advance of and after the final disposition of such
action or claim. The obligations of the parties under this section shall survive
any termination of this Agreement, and resignation or removal of the Escrow
Agent shall be independent of any obligation of Escrow Agent.

         The parties agree that neither payment by the Company or the
Investor(s) of any claim by Escrow Agent for indemnification hereunder shall
impair, limit, modify, or affect, as between the Investor(s) and the Company,
the respective rights and obligations of Investor(s), on the one hand, and the
Company, on the other hand, under the Placement Agency Agreement.

         12. EXPENSES OF ESCROW AGENT. Except as set forth in Section 11 the
Company shall reimburse Escrow Agent for all of its reasonable out-of-pocket
expenses, including attorneys' fees, travel expenses, telephone and facsimile
transmission costs, postage (including express mail and overnight delivery
charges), copying charges and the like. All of the compensation and
reimbursement obligations set forth in this Section shall be payable by the
Company, upon demand by Escrow Agent. The obligations of the Company under this
Section shall survive any termination of this Agreement and the resignation or
removal of Escrow Agent.

         13. WARRANTIES.

                  a. The Investor(s) makes the following representations and
warranties to Escrow Agent:

                           (i) The Investor(s) has full power and authority to
execute and deliver this Agreement and to perform its obligations hereunder.

                           (ii) This Agreement has been duly approved by all
necessary corporate action of the Investor(s), including any necessary
shareholder approval, has been executed by duly authorized officers of the
Investor(s), enforceable in accordance with its terms.

                           (iii) The execution, delivery, and performance of the
Investor(s) of this Agreement will not violate, conflict with, or cause a
default under the certificate of incorporation or bylaws of the Investor(s), any
applicable law or regulation, any court order or administrative ruling or degree

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to which the Investor(s) is a party or any of its property is subject, or any
agreement, contract, indenture, or other binding arrangement.

                           (iv) Mark Angelo has been duly appointed to act as
the representative of the Investor(s) hereunder and has full power and authority
to execute, deliver, and perform this Escrow Agreement, to execute and deliver
any Joint Written Direction, to amend, modify, or waive any provision of this
Agreement, and to take any and all other actions as the Investor(s)'s
representative under this Agreement, all without further consent or direction
form, or notice to, the Investor(s) or any other party.

                           (v) No party other than the parties hereto and the
Investor(s)s have, or shall have, any lien, claim or security interest in the
Escrow Funds or any part thereof. No financing statement under the Uniform
Commercial Code is on file in any jurisdiction claiming a security interest in
or describing (whether specifically or generally) the Escrow Funds or any part
thereof.

                           (vi) All of the representations and warranties of the
Investor(s) contained herein are true and complete as of the date hereof and
will be true and complete at the time of any disbursement from the Escrow Funds.

                  b. The Company makes the following representations and
warranties to the Escrow Agent:

                           (i) The Company is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware
and has full power and authority to execute and deliver this Agreement and to
perform its obligations hereunder.

                           (ii) This Agreement has been duly approved by all
necessary corporate action of the Company, including any necessary shareholder
approval, has been executed by duly authorized officers of the Company,
enforceable in accordance with its terms.

                           (iii) The execution, delivery, and performance by the
Company of this Agreement is in accordance with the Securities Purchase
Agreement and will not violate, conflict with, or cause a default under the
certificate of incorporation or bylaws of the Company, any applicable law or
regulation, any court order or administrative ruling or decree to which the
Company is a party or any of its property is subject, or any agreement,
contract, indenture, or other binding arrangement, including without limitation
to the Securities Purchase Agreement, to which the Company is a party.

                           (iv) Alan Gallantar has been duly appointed to act as
the representative of the Company hereunder and has full power and authority to
execute, deliver, and perform this Agreement, to execute and deliver any Joint
Written Direction, to amend, modify or waive any provision of this Agreement and
to take all other actions as the Company's Representative under this Agreement,
all without further consent or direction from, or notice to, the Company or any
other party.

                           (v) No party other than the parties hereto and the
Investor(s)s have, or shall have, any lien, claim or security interest in the
Escrow Funds or any part thereof. No financing statement under the Uniform

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Commercial Code is on file in any jurisdiction claiming a security interest in
or describing (whether specifically or generally) the Escrow Funds or any part
thereof.

                           (vi) All of the representations and warranties of the
Company contained herein are true and complete as of the date hereof and will be
true and complete at the time of any disbursement from the Escrow Funds.

         14. CONSENT TO JURISDICTION AND VENUE. In the event that any party
hereto commences a lawsuit or other proceeding relating to or arising from this
Agreement, the parties hereto agree that the United States District Court for
the District of New Jersey shall have the sole and exclusive jurisdiction over
any such proceeding. If all such courts lack federal subject matter
jurisdiction, the parties agree that the Superior Court Division of New Jersey,
Chancery Division of Hudson County shall have sole and exclusive jurisdiction.
Any of these courts shall be proper venue for any such lawsuit or judicial
proceeding and the parties hereto waive any objection to such venue. The parties
hereto consent to and agree to submit to the jurisdiction of any of the courts
specified herein and agree to accept the service of process to vest personal
jurisdiction over them in any of these courts.

         15. NOTICE. All notices and other communications hereunder shall be in
writing and shall be deemed to have been validly served, given or delivered five
(5) days after deposit in the United States mails, by certified mail with return
receipt requested and postage prepaid, when delivered personally, one (1) day
delivered to any overnight courier, or when transmitted by facsimile
transmission and upon confirmation of receipt and addressed to the party to be
notified as follows:

If to Investor(s), to:                 Cornell Capital Partners, LP
                                       101 Hudson Street - Suite 3606
                                       Jersey City, NJ 07302
                                       Attention:   Mark Angelo
                                                    Portfolio Manager
                                       Telephone:   (201) 985-8300
                                       Facsimile:   (201) 985-8266

If to Escrow Agent, to:                Butler Gonzalez LLP
                                       1000 Stuyvesant Avenue
                                       Union, NJ 07083
                                       Attention:   David Gonzalez, Esq.
                                       Telephone:   (908) 810-8588
                                       Facsimile:   (908) 810-0973

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If to the Company, to:                 Advanced Viral Research Corp.
                                       200 Corporate Boulevard South
                                       Yonkers, NY 10701
                                       Attention:   Alan Gallantar
                                                    Chief Financial Officer
                                       Telephone:   (914) 376-7383
                                       Facsimile:   (914) 376-7638
With a copy to:
                                       Kirkpatrick & Lockhart LLP
                                       201 South Biscayne Boulevard - Suite 2000
                                       Miami, FL  33131-2399
                                       Attention:   Clayton E. Parker, Esq.
                                       Telephone:   (305) 539-3300
                                       Facsimile:   (305) 358-7095

Or to such other address as each party may designate for itself by like notice.

         16. AMENDMENTS OR WAIVER. This Agreement may be changed, waived,
discharged or terminated only by a writing signed by the parties hereto. No
delay or omission by any party in exercising any right with respect hereto shall
operate as waiver. A waiver on any one occasion shall not be construed as a bar
to, or waiver of, any right or remedy on any future occasion.

         17. SEVERABILITY. To the extent any provision of this Agreement is
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition, or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.

         18. GOVERNING LAW. This Agreement shall be construed and interpreted in
accordance with the internal laws of the State of Delaware without giving effect
to the conflict of laws principles thereof.

         19. ENTIRE AGREEMENT. This Agreement constitutes the entire Agreement
between the parties relating to the holding, investment, and disbursement of the
Escrow Funds and sets forth in their entirety the obligations and duties of the
Escrow Agent with respect to the Escrow Funds.

         20. BINDING EFFECT. All of the terms of this Agreement, as amended from
time to time, shall be binding upon, inure to the benefit of and be enforceable
by the respective heirs, successors and assigns of the Investor(s), the Company,
or the Escrow Agent.

         21. EXECUTION OF COUNTERPARTS. This Agreement and any Joint Written
Direction may be executed in counter parts, which when so executed shall
constitute one and same agreement or direction.

         22. TERMINATION. Upon the first to occur of the disbursement of all
amounts in the Escrow Funds pursuant to Joint Written Directions or the
disbursement of all amounts in the Escrow Funds into court pursuant to Section 7
hereof, this Agreement shall terminate and Escrow Agent shall have no further
obligation or liability whatsoever with respect to this Agreement or the Escrow
Funds.

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         IN WITNESS WHEREOF the parties have hereunto set their hands and seals
the day and year above set forth.

                                              ADVANCED VIRAL RESEARCH CORP.


                                              By:  /s/ SHALOM Z. HIRSCHMAN
                                                 -------------------------------
                                              Name: Shalom Z. Hirschman
                                              Title: Chief Executive Officer




                                              CORNELL CAPITAL PARTNERS, LP

                                              BY:    YORKVILLE ADVISORS, LLC
                                              ITS:   GENERAL PARTNER


                                              By:  /s/ MARK ANGELO
                                                 -------------------------------
                                              Name: Mark Angelo
                                              Title: Portfolio Manager




                                              BUTLER GONZALEZ LLP

                                              By:  /s/ DAVID GONZALEZ
                                                 -------------------------------
                                              Name: David Gonzalez, Esq.
                                              Title: Partner


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