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

_________________

# FORM 10-QSB

|x |  | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ---------------------------------------------------------------------------------

For the quarterly period ended March 31, 2005

|o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ----------------------------------------------------------------------------------------

For the transition period from _____________ to ___________
Commission file number      0-29222

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

|Delaware                                                       |  | 13-3575874                           | 
|-------------------------------------------------------------- |  | ------------------------------------ | 
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.) | 
|2000 Hamilton Street                                           | 
|Suite 204                                                      | 
|Philadelphia, Pennsylvania                                     |  | 19130                                | 
|(Address of principal executive offices)                       |  | (Zip Code)                           | 

Issuers telephone number, including area code:   (215) 241-9760

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

State the number of shares outstanding of each of the issuers classes
of common equity, as of the latest practicable date: 62,545,773 as of May 27, 2005.

Transitional Small Business Disclosure Format:oYesxNo

Page 1

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# AVAX TECHNOLOGIES, INC.

# Table of Contents

|                               |  | Page                                                                                                                    
|------------------------------ |  | ------------------------------------------------------------------------------------------------------------------------
|                               |  |                                                                                                                         
|PART I  FINANCIAL INFORMATION
|                              
|Item 1.                        |  | Financial Statements                                                                                                    
|                               |  | Consolidated BALANCE SHEETS  As of December 31, 2004     and March 31, 2005 (Unaudited)                                
|                               |  | Consolidated STATEMENTS OF OPERATIONS AND COMPREHENSIVE     LOSS (Unaudited)  For the Three Months Ended March 31, 2005
|                               |  | and 2004 and for the Period from January 12, 1990     (Incorporation) through March 31, 2005                            
|                               |  | Consolidated STATEMENTS OF CASH FLOWS (Unaudited)                                                                      
|                               |  | For the Three Months Ended March 31, 2005 and 2004 and                                                                  
|                               |  | for the Period from January 12, 1990 (Incorporation)     through March 31, 2005                                         
|                               |  | Notes to Consolidated Financial Statements                                                                              
|                              
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Plan of Operations                                      
|                              
|Item 3.                        |  | Controls and Procedures                                                                                                 
|                              
|PART II  OTHER INFORMATION   
|                              
|Item 6.                        |  | Exhibits and Reports on Form 8-K                                                                                        
|                              
|Signatures                     |  |                                                                                                                         

Page 2

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# PART I  FINANCIAL INFORMATION

# Item 1.   Financial Statements.

AVAX Technologies, Inc. and Subsidiaries
(a development stage company)
Consolidated Balance Sheets

|                                                                                   |  | December 31,
2004 |   | March 31,
2005 |  
|---------------------------------------------------------------------------------- |  | ----------------- | - | -------------- | -
|(Unaudited)                                                                       
|Assets                                                                             |  |                   |   |                |  
|Current assets:                                                                    |  |                  
|Cash and cash equivalents                                                          |  |                   | $ | 1,560,761      |  
|Accounts receivable                                                                |  |                   |   | 73,080         |  
|Inventory                                                                          |  |                   |   | 13,561         |  
|VAT receivable                                                                     |  |                   |   | 185,828        |  
|Prepaid expenses and other current assets                                          |  |                   |   | 204,238        |  
|                                                                                   |  |                   |   |               
|Total current assets                                                               |  |                   |   | 2,037,468      |  
|Property and equipment, at cost                                                    |  |                   |   | 3,674,935      |  
|Less accumulated depreciation                                                      |  |                   |   | 2,498,864      |  
|                                                                                   |  |                   |   |               
|Net property and equipment                                                         |  |                   |   | 1,176,071      |  
|Research and development tax credit receivable                                     |  |                   |   | 240,016        |  
|Goodwill                                                                           |  |                   |   | 188,387        |  
|                                                                                   |  |                   |   |               
|Total assets                                                                       |  |                   | $ | 3,641,942      |  
|                                                                                   |  |                   |   |               
|                                                                                  
|Liabilities and stockholders equity                                               |  |                  
|Current liabilities:                                                               |  |                  
|Accounts payable and accrued expenses                                              |  |                   | $ | 1,827,408      |  
|Subscription payable                                                               |  |                   |   |               |  
|Deferred revenue                                                                   |  |                   |   | 224,540        |  
|Loans payable - ANVAR grant payable                                                |  |                   |   | 374,402        |  
|                                                                                   |  |                   |   |               
|Total current liabilities                                                          |  |                   |   | 2,426,350      |  
|Stockholders equity:                                                              |  |                  
|Preferred stock, $.01 par value:                                                   |  |                  
|Authorized shares - 5,000,000, including Series B - 300,000 shares and Series C    |  |                  
|- 120,000 shares                                                                   |  |                  
|Series B convertible preferred stock:                                              |  |                  
|Issued and outstanding shares - 0                                                  |  |                  
|Series C convertible preferred stock:                                              |  |                  
|Issued and outstanding shares - 36,750 (liquidation preference - $3,675,000)       |  |                   |   | 367            |  
|Common stock, $.004 par value:                                                     |  |                  
|Authorized shares - 150,000,000 at December 31, 2004 and March 31, 2005            |  |                  
|Issued and outstanding shares - 36,071,568 at December 31, 2004 and March 31, 2005 |  |                   |   | 144,286        |  
|Additional paid-in capital                                                         |  |                   |   | 69,426,457     |  
|Subscription receivable                                                            |  |                   |   | (422           | )
|Accumulated other comprehensive income                                             |  |                   |   | 426,818        |  
|Deficit accumulated during the development stage                                   |  |                   |   | (68,781,914    | )
|                                                                                   |  |                   |   |               
|Total stockholders equity                                                         |  |                   |   | 1,215,592      |  
|                                                                                   |  |                   |   |               
|Total liabilities and stockholders equity                                         |  |                   | $ | 3,641,942      |  
|                                                                                   |  |                   |   |               

See accompanying notes.

Page 3

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AVAX Technologies, Inc. and Subsidiaries
(a development stage company)
Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)

|                                                                   |  |  |   |            |   | Period from
January 12, 1990(Incorporation)Through
|------------------------------------------------------------------ |  |  | - | ---------- | - | --------------------------------------------------
|
|
|
|Revenue:                                                           |  |  |   |            |   |                                                   
|Gain from sale of the Product                                      |  |  | $ |           |   | $                                                 
|Product and contract service revenue                               |  |  |   | 347,703    |   |                                                   
|                                                                   |  |  |   |            |   |                                                   
|Total revenue                                                      |  |  |   | 347,703    |   |                                                   
|                                                                  
|Costs and expenses:                                                |  | 
|Research and development                                           |  |  |   | 842,593    |   |                                                   
|Acquired in process research and development                       |  |  |   |           |   |                                                   
|Write down of acquired intellectual property and other intangibles |  |  |   |           |   |                                                   
|Amortization of acquired intangibles                               |  |  |   |           |   |                                                   
|Selling, general and administrative                                |  |  |   | 502,042    |   |                                                   
|                                                                   |  |  |   |            |   |                                                   
|Total operating loss                                               |  |  |   | (996,932   | ) |                                                   
|Other income (expense):                                            |  | 
|Interest income                                                    |  |  |   | 1,324      |   |                                                   
|Interest expense                                                   |  |  |   | (85,992    | ) |                                                   
|Other, net                                                         |  |  |   |           |   |                                                   
|                                                                   |  |  |   |            |   |                                                   
|Total other income (expense)                                       |  |  |   | (84,668    | ) |                                                   
|                                                                   |  |  |   |            |   |                                                   
|Loss from continuing operations                                    |  |  |   | (1,081,600 | ) |                                                   
|Loss from discontinued operations                                  |  |  |   |           |   |                                                   
|                                                                   |  |  |   |            |   |                                                   
|Net loss                                                           |  |  |   | (1,081,600 | ) |                                                   
|Amount payable for liquidation preference                          |  |  |   |           |   |                                                   
|                                                                   |  |  |   |            |   |                                                   
|                                                                  
|Net loss attributable to common stockholders                       |  |  | $ | (1,081,600 | ) | $                                                 
|                                                                   |  |  |   |            |   |                                                   
|                                                                  
|Loss per common share - basic and diluted                          |  |  | $ | (0.06      | ) | $                                                 
|                                                                   |  |  |   |            |   |                                                   
|                                                                  
|Weighted average number of common shares outstanding               |  |  |   | 18,249,271 |   |                                                   
|                                                                   |  |  |   |            |   |                                                   
|                                                                  
|Net loss                                                           |  |  | $ | (1,081,600 | ) | $                                                 
|Foreign currency translation gain (loss)                           |  |  |   | (7,014     | ) |                                                   
|                                                                   |  |  |   |            |   |                                                   
|Net comprehensive loss                                             |  |  | $ | (1,088,614 | ) | $                                                 
|                                                                   |  |  |   |            |   |                                                   

See accompanying notes.

Page 4

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AVAX Technologies, Inc. and Subsidiaries
(a development stage company)
Consolidated Statements of Cash Flows
(Unaudited)

|                                                         |  |  |   |            |   | Period from
January 12, 1990(Incorporation)
|-------------------------------------------------------- |  |  | - | ---------- | - | -------------------------------------------
|
|
|
|Operating activities                                     |  |  |   |            |   |                                            
|Net loss                                                 |  |  | $ | (1,081,600 | ) | $                                          
|Adjustments to reconcile net loss to net cash used in    |  | 
|operating activities:                                    |  | 
|Depreciation and amortization                            |  |  |   | 101,942    |   |                                            
|Amortization of discount on convertible notes payable    |  |  |   | 74,280     |   |                                            
|Amortization of deferred gain on joint venture           |  |  |   |           |   |                                            
|Equity in net loss of joint venture                      |  |  |   |           |   |                                            
|Extraordinary gain related to negative goodwill on       |  | 
|consolidated subsidiary                                  |  |  |   |           |   |                                            
|Cumulative effect of change in accounting                |  |  |   |           |   |                                            
|Compensatory stock issue                                 |  |  |   |           |   |                                            
|Minority interest in net loss of consolidated subsidiary |  |  |   |           |   |                                            
|Acquired in-process research and development charge      |  |  |   |           |   |                                            
|Write down of acquired intellectual property and         |  | 
|other intangibles                                        |  |  |   |           |   |                                            
|Gain from sale of the Product                            |  |  |   |           |   |                                            
|Gain on sale of intellectual property                    |  |  |   |           |   |                                            
|Accretion of interest on common stock receivable         |  |  |   |           |   |                                            
|Accretion of interest on amount payable to               |  | 
|preferred stockholders and former officer                |  |  |   |           |   |                                            
|Loss (gain) on sale or abandonment of furniture and      |  | 
|equipment                                                |  |  |   |           |   |                                            
|Issuance of common stock or warrants for services        |  |  |   |           |   |                                            
|Changes in operating assets and liabilities:             |  | 
|Accounts receivable                                      |  |  |   | (7,193     | ) |                                            
|Inventory                                                |  |  |   | 38,165     |   |                                            
|Prepaid expenses and other current assets                |  |  |   | (3,644     | ) |                                            
|Accounts payable and accrued liabilities                 |  |  |   | 291,876    |   |                                            
|Deferred revenue                                         |  |  |   | 182,622    |   |                                            
|Research and development tax credit receivable           |  |  |   | 944        |   |                                            
|Amount payable to former officer                         |  |  |   |           |   |                                            
|                                                         |  |  |   |            |   |                                            
|Net cash used in operating activities                    |  |  |   | (402,608   | ) |                                            
|                                                        
|Investing activities                                     |  | 
|Purchase of marketable securities and short-term         |  | 
|investments                                              |  |  |   | (525,268   | ) |                                            
|Proceeds from sale of marketable securities              |  |  |   | 525,588    |   |                                            
|Proceeds from sale of short-term investments             |  |  |   |           |   |                                            
|Purchases of furniture and equipment                     |  |  |   | (103,664   | ) |                                            
|Proceeds from sale of furniture and equipment            |  |  |   |           |   |                                            
|Organization costs incurred                              |  |  |   |           |   |                                            
|Cash acquired in acquisition of control of joint venture |  |  |   |           |   |                                            
|                                                         |  |  |   |            |   |                                            
|Net cash used in investing activities                    |  |  |   | (103,344   | ) |                                            

See accompanying notes.

Page 5

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AVAX Technologies, Inc. and Subsidiaries
(a development stage company)
Consolidated Statements of Cash Flows (continued)
(Unaudited)

|                                                         |  |  |   |           |   | Period from
January 12, 1990(Incorporation)
|-------------------------------------------------------- |  |  | - | --------- | - | -------------------------------------------
|
|
|
|Financing activities                                     |  |  |   |           |   |                                            
|Proceeds from issuance of notes payable to related party |  |  | $ |          |   | $                                          
|Principal payments on notes payable to related party     |  |  |   |          |   |                                            
|Proceeds from loans payable and the related issuance of  |  | 
|warrants                                                 |  |  |   |          |   |                                            
|Principal payments on loans payable                      |  |  |   |          |   |                                            
|Payments for fractional shares from reverse splits and   |  | 
|preferred stock conversions                              |  |  |   |          |   |                                            
|Financing costs incurred                                 |  |  |   |          |   |                                            
|Payments received on subscription receivable             |  |  |   |          |   |                                            
|Payments received on subscription payable                |  |  |   |          |   |                                            
|Shareholder capital contribution                         |  |  |   |          |   |                                            
|Proceeds received from exercise of stock warrants        |  |  |   | 48,391    |   |                                            
|Elimination of the consolidated accounting treatment     |  | 
|for joint venture                                        |  |  |   |          |   |                                            
|Capital contribution through sale of interest in         |  | 
|consolidated subsidiaries                                |  |  |   |          |   |                                            
|Net proceeds received from issuance of preferred and     |  | 
|common stock                                             |  |  |   |          |   |                                            
|                                                         |  |  |   |           |   |                                            
|Net cash provided by financing activities                |  |  |   | 48,391    |   |                                            
|                                                        
|Effect of exchange rate changes on cash                  |  |  |   | (9,525    | ) |                                            
|                                                         |  |  |   |           |   |                                            
|                                                        
|Net increase (decrease) in cash and cash equivalents     |  |  |   | (467,086  | ) |                                            
|Cash and cash equivalents at beginning of period         |  |  |   | 1,125,960 |   |                                            
|                                                         |  |  |   |           |   |                                            
|Cash and cash equivalents at end of period               |  |  | $ | 658,874   |   | $                                          
|                                                         |  |  |   |           |   |                                            
|                                                        
|Supplemental disclosure of cash flow information         |  | 
|Interest paid                                            |  |  | $ |          |   | $                                          
|                                                         |  |  |   |           |   |                                            
|Non-cash activity:                                       |  |  | $ |          |   | $                                          
|Conversion of accounts payable into notes payable        |  |  | $ |          |   | $                                          
|                                                         |  |  |   |           |   |                                            
|Common stock warrants issued in conjunction with         |  |  |   |           |  
|convertible notes payable                                |  |  | $ |          |   | $                                          
|                                                         |  |  |   |           |   |                                            
|Conversion of bridge loans into common stock             |  |  | $ |          |   | $                                          
|                                                         |  |  |   |           |   |                                            
|Payment of interest on bridge loans with common stock    |  |  | $ |          |   | $                                          
|                                                         |  |  |   |           |   |                                            

See accompanying notes.

Page 6

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AVAX Technologies, Inc. and Subsidiaries
(a development stage company)
Notes to Consolidated Financial Statements (Unaudited)
For the Three Months ended March 31, 2005 and 2004

# 1.   Organization and Summary of Significant Accounting Policies

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

In November 1995, the Company sold its leading product under development, an
over-the-counter nutritional food supplement and all of the related patents and other intellectual property (the Product).

Also in November 1995, the Company entered into a license agreement with
Thomas Jefferson University (TJU) to develop, commercially manufacture and sell products embodying immunotherapeutic vaccines for
the treatment of malignant melanoma and other cancers (the Invention) (see Note 5).

In February 1997, the Company entered into a license agreement with Texas
A&M to develop, commercially manufacture and sell products embodying a series of compounds for the treatment of cancer (the
Texas A&M Compounds) (see Note 5).

In November 1999, the Company entered into a definitive joint venture
agreement with Australia Vaccine Technologies (AVT) (formerly Neptunus International Holdings Limited), a
pharmaceutical group in Australia, under the subsidiary name, AVAX Holdings Australia Pty Limited (AVAX Holdings).
Under the joint venture agreement, AVAX Holdings, through its affiliated entities AVAX Australia Pty Limited and AVAX Australia
Manufacturing Pty Limited (the Joint Venture Companies), was organized for the purpose of manufacturing and marketing
M-Vax, an immunotherapy for the post-surgical treatment of Stage 3 and 4 melanoma, in Australia and New Zealand. In January 2002,
the Joint Venture Companies repurchased 90% of AVTs interest in the two joint venture companies resulting in AVAX owning a
95% interest in the net equity of both joint venture companies. The Company was seeking but was unable to obtain a timely
governmental reimbursement for the costs of treatment with the AC Vaccine in Australia, and decided to discontinue operations in
Australia in order to focus the cash resources of the Company on its U.S. and European operations. In September 2002, the Company
announced that it would be discontinuing its operations in Australia and in December 2002 the Company completed the liquidation of
its Australian subsidiary.

In August 2000, the Company completed its acquisition of GPH, S.A.
(Holdings) and Genopoietic S.A. (Genopoietic) each a French societe anonyme based in Paris, France.
Holdings and Genopoietic were organized in 1993 to develop gene therapy applications and market gene therapy treatments for
cancer. The Company has designated the Lyon, France operations facility as its primary source facility for the production of
vaccines to be used in clinical trials. In addition, the Company currently performs contract manufacturing and research activities
at its facilities located in Lyon, France.

# Basis of Presentation

The financial information as of March 31, 2005 and for the three-month
periods ended March 31, 2005 and 2004 contained herein is unaudited. The Company believes this information has been prepared in
accordance with accounting principles generally accepted in the United States for interim financial information and Article 10 of
Regulation S-X. The Company also believes this information includes all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the financial position, results of operations and cash flows for the periods then ended.
The results of operations for the three-month period ended March 31, 2005 are not necessarily indicative of the results of
operations that may be expected for the entire year.

The accompanying financial statements and the related notes should be read in
conjunction with the Companys audited financial statements for the year ended December 31, 2004 included in the
Companys annual report on Form 10-KSB.

Page 7

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AVAX Technologies, Inc. and Subsidiaries
(a development stage company)

The Companys business is subject to significant risks consistent with
biotechnology companies that are developing novel products for human therapeutic use. These risks include uncertainties regarding
research and development, access to capital, obtaining and enforcing patents, receiving regulatory approval, and competing with
other biotechnology and pharmaceutical companies. The Company plans to continue to finance its operations with a combination of
equity and debt financing and, in the longer term, revenues from product sales, if any. However, there can be no assurance that it
will successfully develop any product or, if it does, that the product will generate any or sufficient revenues.

# Reclassifications

Certain prior year and cumulative expenses for legal costs for patents have
been reclassified from research and development expenses to general and administrative expenses, to conform to current year
presentation.

# Principles of Consolidation

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

In 1999, the Joint Venture Companies were included in the consolidated
financial statements of the Company. Due to additional investment by AVT in the Joint Venture Companies in 2000, whereby AVT
acquired a 50% ownership interest, and AVTs substantial and active involvement in the operations of the Joint Venture
Companies late in 2000, the Company no longer exercised control over the Joint Venture Companies. During January 2002, the Joint
Venture Companies repurchased 90% of AVTs interest in each company in exchange for cash consideration of approximately
$1,860,000 AUD (approximately $970,000 US). This resulted in AVAX Holdings owning a 95% interest in the Joint Venture Companies as
of the date of the transaction, giving AVAX Holdings control of the companies and requiring the results of AVAX Holdings and its
majority owned subsidiaries be consolidated into the Companys consolidated results.

# Revenue

The Companys revenues are related to the provision of contract services
and the sale of its product, the AC Vaccine Technology for the treatment of melanoma. Contract service revenue is recognized in
installments based upon the contractual agreement entered into with clients (see Note 3). Product revenues represent fees received
or payable to the Company related to the manufacture and sale of the vaccine. Product revenue is recognized when the vaccine is
received by the hospital administering the vaccine. Royalties related to product sales are recorded 60 days after the product is
received for administration to the patient in accordance with the product distribution agreement.

# Conversion of Warrants

In the first quarter of 2004, holders of warrants to purchase 338,400 shares
of common stock, which were issued in connection with the December 2003 bridge financing, elected to exercise those warrants. Upon
exercise of the warrants, the Company issued 338,400 shares of its common stock in exchange for cash in the amount of $48,391.

# 2.   Joint Venture Agreement

In November 1999, the Companys subsidiary AVAX Australia Holdings, Pty
Limited entered into a joint venture agreement with AVT related to commercialization and sale of the AC Vaccine Technology in
Australia and New Zealand. Pursuant to the joint venture agreement, the Company created two operating companies, AVAX Australia
Pty Limited and AVAX Australia Manufacturing Pty Limited, and AVT contributed $4 million Australian Dollars giving them a 20%
equity interest in the joint venture.

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

Page 8

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AVAX Technologies, Inc. and Subsidiaries
(a development stage company)

At the time of the change from the consolidation method to the equity method,
there existed a difference between the Companys cost of its 50% investment in the joint venture and the net book value of
the underlying assets. This difference, which amounted to approximately $2.7 million, resulted from the Companys
contribution of technology and related licensing rights, which had little recorded value, and AVTs cash investments of $10
million Australian Dollars. The resulting deferred gain was being amortized to income over three years.

During January 2002, Joint Venture Companies repurchased 90% of AVTs
outstanding shares for cash consideration of approximately $1.8 million Australia Dollars. After closing the transaction AVAX
Holdings owned a 95% equity interest in the Joint Venture Companies.

AVAX accounted for its investment in the Australian Joint Venture Companies
using the equity method up through the date of the repurchase of AVT shares. At the date of that transaction, the Company had
recorded on its books an investment in joint venture (net of unamortized deferred gain) of approximately $12,282. As a result of
the transaction, AVAXs 95% equity in the Joint Venture Companies had a book value of approximately $1,101,400. Of this
difference, $902,900, which represented the deferred gain as of December 31, 2001, was recognized as a cumulative effect of change
in accounting in the three months ended June 30, 2002. The remaining difference of $186,295 was recognized as an extraordinary
gain related to negative goodwill in the consolidated subsidiary. As discussed further below, these amounts are both included in
the loss from discontinued operations in the 2002 consolidated statement of operations.

In September 2002 the Company made the decision to discontinue the operations
of the Joint Venture Companies. With the adoption of Statement of Financial Accounting Standards (SFAS) No. 144, the Australian
operations are required to be accounted for and presented in the accompanying financial statements as a discontinued operation.

The Company liquidated, through sale, all of the long-lived assets of the
joint venture companies prior to December 31, 2002. Proceeds received on the sale of the assets of the Company at the time were
$40,919 while the cost basis of the assets was $247,210, resulting in a net loss on the disposition of the assets of $206,291,
which is included in the loss from discontinued operations.

On December 13, 2002 a liquidator was appointed to oversee the dissolution of
the joint venture companies. The combined assets of the joint venture companies included in the September 30, 2004 consolidated
balance sheet consists of cash of $53,649 and recorded liabilities of $88,341. Other long-term liabilities related to leasehold
obligations were not recorded as obligations as they will not be required to be met pursuant to the liquidation proceedings.

# 3.   Contractual Joint Manufacturing Alliance

In February 2004 the Company entered into a manufacturing alliance with
OPISODIA, SAS, a French pharmaceutical company (OPI). The agreement requires annual funding from OPI of approximately $1,500,000
(US) for each of 2004 and 2005, and places the existing OPI facilities and personnel under the direction of Genopoeitics
management. The funding from OPI covered a majority of the manufacturing costs of the combined French facilities in 2004 and is
expected to cover a majority of the manufacturing costs in 2005. Pursuant to the contract the total manufacturing expenses
incurred are allocated to OPI based upon a pre-determined allocation of the total number of personnel available to work on the OPI
contract. Proceeds received from OPI as a result of the alliance for the three months ended March 31, 2005 were $330,203.
Expenses were $333,354 allocated and were recorded as revenue to the extent the proceeds received were equal to the amount of
expenses allocable to OPI. Amounts received in excess of expenses allocated to the OPI contract for the period ended
March 31, 2005 were $60,897 and were recorded in deferred revenue in the accompanying consolidated balance sheet. The
allocation of the expenses is based upon the allocation of the number of employees of the alliance available to work on the
manufacture of OPIs products. The expenses allocated to the OPI contract do not represent additional costs incurred in
performing work under the OPI contract but instead represent the expenses that are allocated to the contract pursuant to the
negotiated contractual terms. This expense allocation does not represent costs incurred by the Company in performing the contract.

Page 9

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AVAX Technologies, Inc. and Subsidiaries
(a development stage company)

# 4.   Stock Based Compensation

SFAS No. 123, Accounting for Stock-Based Compensation, prescribes
accounting and reporting standards for all stock-based compensation plans, including employee stock options, restricted stock,
employee stock purchase plans and stock appreciation rights. SFAS No. 123 requires compensation expense to be recorded
(i) using the new fair value method or (ii) using existing accounting rules prescribed by Accounting Principles Board Opinion
No. 25, Accounting for Stock Issued to Employees, (APB 25) and related interpretations, with pro forma disclosure of
what net income and earnings per share would have been had the Company adopted the new fair value method. SFAS No. 148
Accounting for Stock Based Compensation  Transaction and Disclosures further established accounting and
disclosure requirements using a fair value based method of accounting for stock based employee compensation plans. The Company has
elected to continue to account for its stock-based compensation plans in accordance with the provisions of APB 25 using the
intrinsic value method.

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

|                                                          |  | Three Months Ended March 31,
|--------------------------------------------------------- |  | ----------------------------
|
|Net loss as reported                                      |  |                             
|Stock based compensation expense as reported              |  |                             
|Stock based compensation expenses under fair value method |  |                             
|                                                          |  |                             
|Pro forma net loss attributable to common stockholders    |  |                             
|                                                          |  |                             
|Pro forma net loss per share - basic and diluted          |  |                             
|                                                          |  |                             

# 5.   License and Research Agreements

The Thomas Jefferson University (TJU) License and Research
Agreement

The Company entered into license and research agreements with TJU for the AC
Vaccine technology in November 1995. The TJU License is a perpetual royalty-bearing license for the rights to the AC Vaccine
technology, and provides for certain payments upon the occurrence of certain milestones. As partial consideration, we paid $10,000
to TJU for the TJU License, $10,000 upon initiation of the first clinical trial, and $25,000 upon our receipt of approval from the
FDA (or comparable international agency) to market products relating to the AC Vaccine technology (which payment was triggered by
the Companys receipt of that regulatory approval in Australia). The Company also issued to each of TJU and Dr. Berd, 229,121
shares of common stock, representing 7.5% (15% in the aggregate) of the total outstanding voting securities at that time.

In addition to the milestone payments the Company already made to TJU, the
Company is obligated to pay TJU $10,000 upon the first filing of a marketing application with the FDA (or comparable filing with a
comparable international agency). The BLA filing in France for the marketing of the AC Vaccine for melanoma in France triggered
the Companys obligation to make this next milestone payment to TJU, which the Company anticipates paying in the second
quarter of 2005.

In connection with the TJU License, the Company also entered into a Clinical
Study and Research Agreement with TJU (the TJU Research Agreement). Under the TJU License and the TJU Research Agreement, the
Company agreed to provide TJU with minimum sponsored research funding relating to the development of additional immunotherapies
based on the AC Vaccine technology. The Company renewed this agreement for a three-year period through November 2004. The research
conducted by Dr. Berd and TJU under the TJU Research Agreement has pertained to applications of the AC Vaccine technology beyond
the core vaccine products being developed.

The Company is presently obligated under the TJU License to spend a minimum
of $500,000 per year on the development of the AC Vaccine technology until commercialized in the United States. This spending
includes funding provided pursuant to the TJU Research Agreement, the internal expenditures and the external expenditures incurred
by the Company. If the Company files for FDA approval of a Company-sponsored marketing application for the right to market an AC
Vaccine product, the Company may elect to spend less than $500,000 per year on the development of the AC Vaccine technology during
the period of time the marketing application is under review by the FDA.

Page 10

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AVAX Technologies, Inc. and Subsidiaries
(a development stage company)

In 2004, the Company reached an agreement with TJU to terminate the TJU
Research Agreement and all of the Companys obligations thereunder in exchange for a final payment to TJU of $300,000,
$150,000 of which was paid in July 2004, and the balance of which was paid in April 2005 in satisfaction of all the Companys
outstanding liabilities to TJU under the TJU Research Agreement. The Company does not believe that the termination of this
agreement will have any meaningful effect upon the Company or the Companys ability to continue the AC Vaccine development
efforts.

The Company is also obligated to pay royalties on net sales revenue and a
percentage of all revenues received from sublicenses relating to the AC Vaccine technology. The Company bears the expense of
maintaining and defending the patents that are subject to the TJU License Agreement.

The Texas A&M License and Research Agreement

The Company entered into license and research agreements with Texas A&M
University for a series of novel cancer-fighting anti-estrogen compounds in February 1997. Under the Texas A&M License, the
Company is obligated to make milestone payments to Texas A&M as follows: $24,000 upon the initiation of a specified toxicity
evaluation, $12,000 upon completion of a toxicity evaluation demonstrating acceptable toxicity levels, $12,000 upon the submission
of an IND to the FDA or its equivalent in a major market country, $5,000 upon the completion of the first Phase I clinical
investigations and $15,000 upon the FDAs granting of the first NDA. In addition, the Company is required to achieve certain
milestones toward development of a licensed product within certain specified time frames.

In connection with the Texas A&M License, in May 1997, the Company
entered into a three-year Sponsored Research Agreement with Texas A&M (the Texas A&M Research Agreement). Under the Texas
A&M License and the Texas A&M Research Agreement, the Company agreed to provide minimum yearly funding of $108,750 for
Texas A&Ms research. Texas A&M waived any up front payment by us for the Texas A&M License in recognition of our
three-year research funding commitment. Currently there is no research agreement in place with the University. The Company is
evaluating potential studies with the principal investigator at Texas A&M and may decide to enter into a further research
alliance.

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

The Company bears the expense of maintaining and defending the patents that
are subject to the Texas A&M License.

# 6.   Subsequent Events

On April 5, 2005, the Company closed a private placement of 25,343,430 shares
of common stock at a purchase price of $0.34 per share with 12 accredited or institutional investors. The Company received gross
proceeds of approximately $8,616,000, and incurred offering-related expenses of $579,374 payable to advisors related to the
fundraising. In connection with the private placement, the Company also issued to the investors warrants to purchase 3,801,515
shares of common stock at a warrant exercise price of $0.41 per share, and warrants to purchase 3,801,515 shares of common stock
at a warrant exercise price of $0.48 per share. All warrants issued in this private placement expire on April 5, 2010. At March
31, 2005, the Company had received $1,684,007 in payments on subscriptions for this offering, which subscriptions had not been
accepted by the Company as of that date. The Companys obligation to refund that amount as of March 31, 2005, had the
subscriptions not been accepted by the Company, is reflected on the consolidated balance sheet as a current liability at March 31,
2005.

Page 11

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# Item 2.   Managements Discussion and Analysis or Plan of Operation.

# CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

In this report, in other filings with the SEC and in press releases and other
public communications throughout the year, the Company makes, or will make statements that plan for or anticipate the future.
These forward-looking statements include statements about the future of biotechnology products and the biopharmaceutical industry,
statements about AVAXs future business plans and strategies, and other statements that are not historical in nature. These
forward-looking statements are based on the Companys current expectations.

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

| |  |  | AVAXs history of operating losses, its continuing cash
requirements, its need to raise additional capital by the end of 2005 or early in 2006, and the uncertainty of the Companys
prospects of reaching a meaningful level of revenues.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | The business uncertainties arising from the Companys
decision to conduct all AC Vaccine manufacturing activities at its Lyon, France facility and the logistical issues and risks
relating to shipping biologics from the U.S. and other countries to France and the vaccine from France to patients in the U.S. and
other countries.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Uncertainty about whether the Companys products will
successfully complete the long, complex and expensive clinical trial and regulatory approval process for approval of new drugs in
the U.S. and certain European countries.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Uncertainty about whether the Companys AC Vaccine technology
can be developed to produce safe and effective products, and if so, whether the Companys AC Vaccine products will be
commercially accepted and profitable.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | The Companys difficulty or inability to compete with other
clinical trials and treatment regimens for patients and clinical sites for the Companys planned clinical trials.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

| |  |  | Each of the other factors discussed in the Companys Annual
Report on Form 10-KSB for the year ended December 31, 2004, under Item 1  Description of
Business  Risk Factors.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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# PLAN OF OPERATION

# General

Since our inception, we have concentrated our efforts and resources on the
development and commercialization of biotechnology and pharmaceutical products and technologies. We have been unprofitable since
our founding and have incurred a cumulative net loss of $69,300,592 as of March 31, 2005. We incurred net losses of $518,678
and $1,081,600 for the three months ended March 31, 2005 and 2004, respectively. We expect to continue to incur operating
losses, primarily due to the expenses associated with our product development efforts in Europe, the cost of maintaining our
manufacturing facilities in Europe and the United States, activities related to planned reestablishment of our clinical trials for
M-Vax and possible studies in non-small cell lung cancer (NSCLC), and pre-clinical studies.

Our ability to survive as an operating company depends upon, among other
things, our ability to raise additional capital to allow us to develop products, obtain regulatory approval for our proposed
products, and enter into agreements for product development, manufacturing and commercialization. Our M-Vax product does not
currently generate any material revenue, and we may never achieve significant revenues or profitable operations from the sale of
M-Vax or any other products that we may develop.

The major challenge for us and others in the biopharmaceutical industry are
the significant costs, time delays and uncertainties related to efforts to obtain regulatory approval to market drug products in
the U.S. and foreign countries. We have encountered a number of these challenges in our efforts to develop the AC Vaccine into
marketable products including the following:

| |  |  |  | the
FDA clinical hold of our AC Vaccine clinical trials in 2001 and the resultant substantial
expenses and delays in resolving the FDA concerns and refiling new INDs for a revised AC
Vaccine;
| |  | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | manufacturing
challenges relating to the production of a vaccine from the patients own cancer
cells, such as the sterility issues we previously experienced at our Philadelphia
facility;
| |  | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | our failure to develop a market for the AC Vaccine in Australia
notwithstanding substantial expenditures of time and money to do so;
| |  | - |  | ------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | our inability to agree with the FDA on an acceptable potency assay
(which is a biological measure of the drugs active ingredients) of our product prior to administration of the vaccine which
will be required for later stage clinical trials and commercial approval of the vaccine;
| |  | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | our inability to generate any meaningful revenues from any other
products or services while we work to develop our lead products and technologies; and
| |  | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | the cutbacks in our development plans and programs due to the
limited cash resources in recent years, which is not likely to change unless we are able to raise substantial additional capital.
| |  | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Notwithstanding these setbacks, we believe that the potential efficacy and
viability of the AC Vaccine technology is still substantial and is, in many respects, of greater probability today than it was
three years ago. We base this optimism in our lead products on the following:

| |  |  |  | As a result of the FDA clinical hold, we concluded that (1) it
would no longer be feasible to continue the clinical development of the original AC Vaccine using the established manufacturing
format (referred to as the fresh vaccine product format), and (2) a revised product format needed to be established,
tested and reviewed by the FDA. Through these research and development activities we re-engineered the manufacturing steps for the
production and distribution of the AC Vaccine, referred to as the frozen vaccine technology, which we believe has
substantial advantages over the former fresh product.
| |  | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | After years of frustration and lack of acceptance of the AC
Vaccine technology among the oncology community in Australia, which resulted in us abandoning our efforts in Australia, we are
experiencing meaningful new acceptance of the AC Vaccine technology in Europe, particularly in Spain and Belgium, among key
members of the oncology community.
| |  | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | In France, AFSSAPS has published regulations specific to the
regulation of cell and gene therapies (which includes the AC Vaccine technology). Based upon prior clinical results achieved with
the fresh vaccine, these regulations create a potential new regulatory path for the approval of M-Vax in France.
| |  | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our continued belief in the AC Vaccine technology is, however, tempered by
our continuing need to raise sufficient capital to implement an aggressive product development effort. As a result, for the past
two years, our primary focus has been on reducing costs, raising additional capital, taking the least expensive steps possible to
maintain positive momentum in product development, and clinical advancement of the technology. The infusion of additional capital
would not assure success in developing a marketable product in Europe or in the U.S., but it would allow us to accelerate the plan
of operation described below. Our continuing most significant challenge is the limited capital resources of the Company.

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# Research and Development Expenses

Our research and development activities focus primarily on clinical
development and trials of our AC Vaccine technology for the treatment of melanoma, ovarian cancer, lung cancer and other cancers.
Our clinical development program includes the development of techniques, procedures and tests that need to be developed as part of
the manufacturing of our biological product so that the product can be evaluated and potentially approved by regulatory
authorities. We are also developing an anti-estrogen compound for the treatment of cancer, but we do not consider this to be a
major program.

Our research and development expenses consist primarily of costs associated
with the clinical trials of our product candidates, compensation and other expenses for research personnel, payments to
collaborators under contract research agreements, costs for our consultants and compensation, materials, maintenance and supplies
for the operation and maintenance of our biological clean room facilities which are necessary for the production of materials to
be used in clinical trials. All of these costs qualify as research and development expenses in accordance with the guidance
included in Statement of Financial Accounting Standards No. 2 Accounting for Research and Development Costs.

Manufacturing costs included in this category relate to the costs of
developing, supporting and maintaining facilities and personnel that produce clinical samples in compliance with current Good
Manufacturing Practices (cGMP). Our facilities and the personnel maintained for manufacturing are currently at what we feel are
the minimum required for compliance with cGMP. Based upon the current capacity of our facilities, our personnel and our current
and future planned clinical trials, we have excess capacity for the production and testing of biological products. We use this
excess capacity to generate cash in the form of contract manufacturing alliances. Because the incremental costs incurred to
provide these services are not material or quantifiable, they are not presented separately.

Contract manufacturing encompasses services we provide to other
bio-technology or pharmaceutical companies that are pursuing the clinical development of biological products. The engagements
generally consist of two components. The first component is process validation in which the contracting company provides
information on its product and the processes and techniques used to produce the product. Procedures are developed, documented and
cataloged for the cGMP production of the product using known and acceptable techniques, tests and materials. Small scale lots are
produced, techniques validated and feasibility of the production processes and tests validated. The end product of the first phase
of an engagement is a pilot batch of product and the necessary production formulation and techniques to be used to file an IND
with regulatory authorities for human clinical trials. The second phase of an engagement consists of the production of batches of
product to be used in human clinical trials. The typical engagement results in production of small batches of product to be used
in early stage (Phase 1 and 2) clinical trials.

We have incurred essentially no incremental additional expenses to perform
contract services for OPI. To maintain our existing clean room facility in Lyon, France requires a minimum level of personnel to
perform regulatory quality control and quality assurance functions. The personnel we utilize at our Lyon facility is the minimum
compliment that we believe is required to maintain the cGMP status of that facility. With this current established infrastructure,
we have had and continue to have excess capacity for the production of biological products. We are using this excess capacity to
provide the contract services to OPI, at essentially no additional expense to us.

The costs incurred to provide these services to OPI have not been broken out
from our research and development expenses as they have not been material to date. If contract manufacturing costs in future
periods are material, they will be broken out from research and development expenses and classified as costs of goods sold.

Research and development costs incurred through March 31, 2005, were
$40,654,945. Research and development costs were $782,393 and $842,593, for the three months ended March 31, 2005 and 2004,
respectively. The majority of these costs relate to clinical research and development of our AC Vaccine technology. Our management
estimates that greater than 90% of the periodic and cumulative research and development expenses incurred relate to our one major
program, the AC Vaccine. At this time, due to the risks inherent in the clinical trial process, risks associated with the product
and product characterization and risks associated with regulatory review and approval of clinical product candidates, we are
unable to estimate with any certainty the costs we will incur in the continued development of our product candidates for
commercialization.

# Plan of Operation

Background.   In November 1995, we acquired the rights
to the AC Vaccine technology pursuant to the TJU License. Assuming we can obtain the necessary funding, we intend to continue to
be engaged in the development and commercialization of our AC Vaccine products and our other products and compounds.

Page 14

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We experienced events during 2001 that significantly affected our operations.
In March and April 2001, we received first oral notification and then written confirmation from the FDA that clinical activities
for both our M-Vax and O-Vax autologous cancer vaccines were placed on clinical hold pending further review by the agency. The
written notification from the FDA confirming the clinical hold identified the specific issues that the FDA would like addressed,
which primarily dealt with the sterility of autologous tumors received by us at the Philadelphia facility and the assurance that
vaccines being provided to patients would meet FDA sterility guidelines.

In conjunction with the clinical hold, the FDA conducted an inspection of our
manufacturing facility in Philadelphia, which inspection was completed in May 2001. As a result of that facility inspection, we
received a Form 483, which is a finding of manufacturing facility deficiencies, to which we initially responded at the end of
June 2001. The issues raised in the Form 483 were essentially consistent with those in the clinical hold letter, with no new
significant areas of concern identified.

In developing our response to the FDA clinical hold letters and the Form 483,
we identified and began to implement a number of product development initiatives related to the AC Vaccine technology. As a
result, we determined certain product improvements to the vaccine could be instituted that would address certain concerns of the
FDA and make the vaccine more viable from a regulatory and commercial perspective. Throughout the remainder of 2001 and into 2002,
we continued to evaluate (1) the prospect of freezing the haptenized cells for distribution to the end user, (2) steps
that could be taken to help ensure that final released vaccines prepared by us are sterile and (3) tests to determine the
minimal number of cells necessary for the vaccine to be effective. Based upon the results of these efforts, we re-engineered the
manufacturing steps to create and release the vaccine technology to take advantage of these potential product improvements.

Based upon the changes to the product, the FDA recommended that we consider
preparing and filing new INDs for the frozen vaccine. At the recommendation of the FDA, we decided to place our original INDs for
M-Vax and O-Vax on inactive status, given the FDAs view that the revisions to the manufacturing process, necessary to
address the Agencys concerns, would result in a new product from a regulatory perspective and given the Agencys
recommendation that we file new INDs for indications utilizing the new product. Based upon the continuing interactions with the
FDA in 2002, we determined to file new INDs for the revised product format for the AC Vaccine for melanoma and ovarian cancer. Our
Philadelphia facility was validated and cleared to begin processing clinical samples for administration to patients in clinical
trials. Due to a lack of funding, however, we decided not to initiate the clinical trials and instituted further cost minimization
steps that resulted in additional management changes at the end of 2002.

Also during 2002, based upon a negative reaction by authorities in Australia
to an application for product reimbursement for M-Vax, we determined that we would be unable to support further the operation in
Australia and a decision was made to discontinue and liquidate the Australian joint venture companies. We had not received formal
rejection of our reimbursement application, but a panel of oncologists selected by the regulatory authority in Australia had
recommended against governmental reimbursement for M-Vax in Australia. Subsequent to our liquidation of the Australian entity, we
received formal notification of our rejection of reimbursement by the appropriate authorities. Our experience in Australia
demonstrated the importance of obtaining support for the technology among the leading oncologists within a particular country or
community, which we were never able to achieve in Australia during this period. The results of the Australian operation, which was
consolidated in our results beginning in the first quarter of 2002, are treated as a discontinued operation and its results are
separated from our results from continuing operations.

In November 2003, we completed a bridge financing of $950,000 (before
expenses of approximately $26,250), which provided funding for U.S. operations (and certain of our European costs) for the balance
of 2003 and the first half of 2004. Seven individual and institutional investors participated in the financing. On May 21, 2004,
we closed a private placement of our common stock for gross proceeds of $3.05 million. In conjunction with the closing of the
private placement, the $950,000 principal amount of the bridge notes and accrued interest in the amount of $23,275 were converted
into approximately 7,487,000 shares of common stock in accordance with the terms of the bridge notes.

Recent Development  Capital Infusion.   On April
5, 2005, we closed a private placement of 25,343,430 shares of common stock at a purchase price of $0.34 per share with 12
accredited or institutional investors. We received gross proceeds of approximately $8,616,000, and incurred offering-related
expenses of approximately $580,000. In connection with the private placement, we also issued to the investors warrants to purchase 3,801,515
shares of common stock at a warrant exercise price of $0.41 per share, and warrants to purchase 3,801,515 shares of common stock
at a warrant exercise price of $0.48 per share. All warrants issued in this private placement expire on April 5, 2010. We intend
to use the proceeds of this private offering for general working capital purposes, including funding our current plan of operation
discussed below.

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Current Plan of Operation.   The following is a summary
of our plan of operation based on our current cash resources and assuming no material capital infusion in the next 12 months.

We have, throughout 2003 and 2004, laid the foundation for a significantly
more aggressive development plan that we have not been able to pursue during the past three years. The steps that were taken in
2003 and 2004 to implement this plan include:

| |  |  | Continuing development work on the AC Vaccine, particularly in
France.
| | - |  | ----------------------------------------------------------------------

| |  |  | Pre-Biological License Application (BLA) filing meetings and
follow-up contacts with representatives of AFSSAPS (the French counterpart of the FDA) regarding our filing of a BLA in France for
the AC Vaccine.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Two IND filings in France relating to the AC Vaccine for
indications other than melanoma.
| | - |  | -----------------------------------------------------------------------------------------

| |  |  | Alliance with OPI to place management of their French facility
under Genopoietic management control and to obtain funding of the combined facility manufacturing operations from OPI.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Established and maintained at our Lyon, France facility the
designation Establissment Pharmaceutique under applicable French regulations.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Commenced treatment of melanoma patients in Europe on a
compassionate use basis with our AC Vaccine.
| | - |  | ----------------------------------------------------------------------------------------------------

| |  |  | Hired Dr. David Berd as our full-time Medical Director to oversee
directly the development of the AC Vaccine technology for us.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------

With this foundation and the net proceeds from our April 2005 private
placement of common stock and warrants, we are pursuing the following plan of operation:

| |  |  | Recommence our clinical trial in the U.S. for the treatment of
melanoma with the AC Vaccine, using DTH as the endpoint. We have received all FDA approvals to recommence this clinical trial, and
we anticipate treating patients starting in the second quarter of 2005.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Commence a Phase I-II clinical trial in non-small cell lung cancer
in collaboration with the University of Pennsylvania Cancer Center. We anticipate submitting an IND application to the FDA for
treatment of NSCLC with the AC Vaccine by the end of June 2005.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Pursue our BLA filing with AFSSAPS for the approval of commercial
sale of the AC Vaccine for treatment of melanoma in France. We anticipate that this will be an ongoing process in 2005.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Continuing to offer M-Vax on a compassionate use basis in Spain
and Belgium, and to seek approval of compassionate use in other European countries to broaden the acceptance of the therapy within
the European oncology community.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Approach the FDA with clinical data generated from our clinical
trials in the U.S., and with the BLA French submission information, to determine the expected clinical programs that will need to
be completed to be in a position to submit clinical data for approval of the vaccine in the United States.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Begin planning and implementation of later stage pivotal
registration trials in the United States for the appropriate indications.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------

We continually evaluate our plan of operations discussed above to determine
the manner in which we can most effectively utilize our limited cash resources. The timing of completion of any aspect of our plan
of operations is highly dependant upon the availability of cash to implement that aspect of the plan and other factors beyond our
control. We believe we have the current cash resources to pursue this plan of operation through the end of 2005 and into the first
quarter of 2006. The full implementation of this plan of operation beyond that time is dependent upon us obtaining additional
funding before the end of 2005 or early in 2006. We believe we have the facilities, the facility managers and technical staff, the
scientific staff and consultants in place to implement this plan.

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We are currently engaged in contract manufacturing and the development and
commercialization of biotechnology and pharmaceutical products and technologies. These activities take advantage of the facilities
and personnel that we are required to maintain to ensure that we process our products in accordance with cGMP requirements. With
out current compassionate use and clinical activities planned, we anticipate that this excess capacity will exist at our Lyon,
France facility into the near and long term. In 2002, we entered into a contract manufacturing engagement at our Lyon, France
facility, which was completed in November 2003. In February 2004 we entered into a manufacturing alliance with OPI that is
providing approximately $1,500,000 (US) funding per year from OPI for our combined facilities for 2004 and 2005, which combined
facilities are under the management of Genopoietic, our French subsidiary. OPI is not presently current in its payment obligations to us under this manufacturing alliance. As of
the end of May 2005, we and OPI orally agreed to terminate the current arrangement. We will continue to consider providing contract manufacturing for OPI on future terms in accordance with our plan of
operation. Although the OPI contract was critical to our ongoing operations in 2004, with the recent capital infusion, this
contract is no longer critical to our ongoing operations in France.

We will continue to pursue additional contract manufacturing agreements in
the U.S. and France, which would provide us with additional revenue to fund our operations and the costs of the facilities. We
believe that we have developed significant expertise in producing certain biological products for clinical and development
purposes, and that this expertise can be marketed by us to other companies and research institutions engaged in clinical trials
and product development programs. In addition, we have invested significant amounts to establish and maintain current Good
Manufacturing Practices (cGMP) at our manufacturing facilities in Philadelphia, Pennsylvania and Lyon, France. We believe that
services provided by these facilities may be valuable to other companies that wish to avoid the significant cash outlays
associated with buying or building their own cGMP facilities. Although we are not currently conducting any clinical or
pre-clinical development programs at our Philadelphia facility, we would consider re-activating that facility if a sufficiently
significant opportunity presented itself.

# Results of Operations

Three Months Ended March 31, 2005, Compared to Three Months Ended
March 31, 2004.

Revenues recognized in the first three months of 2005 were $726,742, compared
with revenues of $347,703 for the same period in 2004. Revenues in the same period in the prior year consisted of revenue earned
under the OPI contract, which was established in February 2004. Current period revenue includes a full three months under the OPI
contract plus additional revenue associated with two new contract manufacturing feasibility studies, which were completed during
the period. In addition, current period revenues included revenue earned from the sale of the AC Vaccine in Spain and
Belgium on a compassionate use basis.

For the first three months of 2005, the Companys research and
development expenses decreased to $782,393 from $842,593 for the same three months in 2004.Expenses for the periods are
broken out by region as follows:

|              |  | Three Months EndedMarch 31,
|------------- |  | ---------------------------
|
|
|United States |  |                            
|France        |  |                            
|              |  |                            
|              |  |                            
|              |  |                            

The increase in spending in France relates to activities conducted in
preparation for the melanoma and non-small cell lung clinical trials in the United States as well as ongoing development
initiatives related to the two planned clinical trials in France for peritoneal and hepatic cancers. Additional development
activities in France include developing additional tests and assays for potential new cancer targets. The decline in expenses
in the U.S. is associated with the prior years first quarter, including research fees payable to TJU that did not recur,
decreases in depreciation expense and general cost decreases due to cost savings initiatives initiated in prior years.

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For the first quarter of 2005, the Companys selling, general and
administrative expenses decreased to $467,457 from $502,042 for the same three months in 2004. Expenses for the periods are broken
out by region as follows:

|              |  | Three Months EndedMarch 31,
|------------- |  | ---------------------------
|
|
|United States |  |                            
|France        |  |                            
|              |  |                            
|              |  |                            
|              |  |                            

In France, administrative expenses increased as expected with the addition of
support costs related to the filing of the BLA with AFSSAPS and the additional activities associated with managing the logistics
of planned clinical studies in the United States and France. The decline in costs in the United States is due to the closing of
the office in Overland Park, Kansas in November 2004 and the elimination of additional costs associated with lease expenses and
staff.

Interest expenses recorded in 2004 was $85,992 compared to no interest
expense in the same quarter of 2005. Prior year interest was associated with the Bridge financing completed in November 2004 that
were converted, both principal and interest, to common stock in May of 2004. No new notes were issued or outstanding in 2005.

The Company anticipates that over the next 12 months research and development
expenses will increase as compared with 2004 due to planned increases in the development activities related to the AC Vaccine.

# Liquidity and Capital Resources

We presently anticipate that our current resources, including the net
proceeds of the private placement closed in April 2005, should be sufficient to fund operations through the end of 2005 and into
the first part of 2006, depending upon how aggressively we implement development plans discussed above. That current
operating plan includes anticipated expenses relating to (1) recommencing clinical trials for M-Vax in the U.S., (2) costs
associated with the BLA submission in France in March 2005, (3) a planned clinical trial for non-small cell lung cancer, which is
expected to commence in 2005, (4) continuing maintenance costs associated with our Philadelphia facility for future
utilization in production or contract manufacturing, and (5) continuing costs associated with maintaining a cGMP-compliant
facility in Lyon, France. We will need to raise additional money or to initiate additional contract manufacturing
relationships on terms favorable to us by the end of 2005 or early in 2006 to continue our operations through 2006. If we are unable to raise additional money, secure additional contract manufacturing relationships or enter into strategic alliances, we
will have to curtail our development initiatives.

If our current and planned clinical trials for the AC Vaccine
in the United States or France do not demonstrate continuing progress toward taking one or more products to market, the ability to
raise additional capital to fund our product development efforts would likely be seriously impaired. The ability of
a biotechnology company, such as AVAX, to raise additional capital in the marketplace to fund its continuing development
operations is conditioned upon the company continuing to move its development products toward ultimate regulatory approval and
commercialization. If in the future we are not able to demonstrate adequate progress in the development of one or more
products, we will not be able to raise the capital needed to continue our then-current business operations and business
activities, and we would not likely have sufficient liquidity or cash resources to continue operating.

Because working capital requirements depend upon numerous factors, including
progress of research and development programs, pre-clinical and clinical testing, timing and cost of obtaining regulatory
approvals, changes in levels of resources devoted to the development of manufacturing and marketing capabilities, competitive and
technological advances, status of competitors, and the ability to establish collaborative arrangements with other organizations,
there can be no assurance that current cash resources will be sufficient to fund our operations beyond the first
quarter of 2006. Because we do not have committed external sources of capital, and expect no significant product
revenues for the foreseeable future, we will require additional financing to fund future operations or will need to enter
into contract manufacturing relationships on favorable terms. There can be no assurance, however, that we will be able to
obtain the additional funds or attract contract manufacturing relationships that we will require on acceptable terms, if
at all. If additional funds are not raised in early 2006, we will likely cease operations in 2006.

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# Item 3.   Controls and Procedures.

An evaluation was carried out by the Companys chief executive and
financial officer of the effectiveness of the design and operations of the Companys disclosure controls and procedures (as
defined in Exchange Act Rule 13a-15(e). Based upon that evaluation as of the end of the period covered by this report, the chief
executive and financial officer concluded that the Companys disclosure controls and procedures are effective in timely
alerting him to material information relating to the Company (including its consolidated subsidiaries) required to be included in
the Companys periodic filings with the SEC. There have been no changes in the Companys internal controls over
financial reporting during the quarter ended March 31, 2005, that have materially affected, or are reasonably likely to
materially affect, the Companys internal controls over financial reporting.

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# PART II  OTHER INFORMATION

# Item 6.   Exhibits and Reports on Form 8-K.

|31.1 |  | Certifications of Principal Executive Officer of the Company under
Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------

|31.2 |  | Certifications of Principal Financial Officer of the Company under
Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------

|32.1 |  | Certifications of Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. Section 1350.
|---- |  | ---------------------------------------------------------------------------------------------------------

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Signatures

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

|                      |                            |                         |  |                         | 
|--------------------- | -------------------------- | ----------------------- |  | ----------------------- | 
|                      |                            | AVAX Technologies, Inc.
|Date:   June 15, 2005 |                            | By:                     |  | /s/   Richard P. Rainey | 
|                      |                           
|                      | Richard P. RaineyPresident |                        

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