<PAGE>
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-QSB

                                   (Mark One)
     [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
                For the quarterly period ended September 30, 2001
                                       OR
              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                               OF THE EXCHANGE ACT
                For the transition period from ______ to _______

                         Commission file number 0-23145

                                  ZYMETX, INC.
             (Exact name of registrant as specified in its charter)

               Delaware                                73-1444040
     (State or other jurisdiction           (I.R.S. Employer Identification No.)
    of incorporation or organization)

     800 Research Parkway, Suite 100                     73104
        Oklahoma City, Oklahoma                        (Zip Code)
(Address of principal executive offices)

                                  405-271-1314
                           (Issuer's telephone number)

         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
         preceding 12 months (or for such shorter period that the registrant was
         required to file such reports), and (2) has been subject to such filing
         requirements for the past 90 days.

                                    Yes X   No

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

  8,225,321 shares of common stock, $.001 par value, issued and outstanding at
                                November 1, 2001

Transitional Small Business Disclosure Format (check one): Yes   No X



<PAGE>

                                  ZYMETX, INC.
                                   FORM 10-QSB
                                      INDEX

<Table>
<Caption>
                                                                                                                PAGE
<S>          <C>                                                                                                <C>
  PART I  -  FINANCIAL INFORMATION

  Item 1.    Financial Statements (Unaudited)

             Condensed Balance Sheets - June 30, 2001 and September 30, 2001......................                2

             Condensed Statements of Operations - Three Months Ended September 30,
             2000 and 2001........................................................................                3

             Condensed Statements of Cash Flows - Three Months Ended September 30,
             2000 and 2001........................................................................                4

             Notes to Condensed Financial Statements..............................................                5

  Item 2.    Management's Discussion and Analysis or Plan of Operations ..........................                9


  PART II  - OTHER INFORMATION

  Item 1.    Legal Proceedings....................................................................               19

  Item 2.    Changes in Securities and Use of Proceeds............................................               19

  Item 3.    Defaults Upon Senior Securities......................................................               20

  Item 4.    Submission of Matters to a Vote of Security Holders..................................               20

  Item 5.    Other Information....................................................................               20

  Item 6.    Exhibits and Reports on Form 8-K.....................................................               20

  SIGNATURES......................................................................................               21
</Table>



                                       1
<PAGE>

                                  ZymeTx, Inc.
                            Condensed Balance Sheets
                (Information at September 30, 2001 is unaudited)

<Table>
<Caption>
                                                                   JUNE 30,       SEPTEMBER 30,
                                                                     2001              2001
                                                                --------------    --------------
<S>                                                             <C>               <C>
ASSETS
Current assets:
   Cash and cash equivalents                                    $      237,673    $       15,154
   Accounts receivable                                                 113,897           188,401
   Inventory                                                         1,941,161         1,658,750
   Prepaid insurance and other                                          80,303            94,501
                                                                --------------    --------------
Total current assets                                                 2,373,034         1,956,806

Inventory not expected to be realized within one year                  492,226           464,107
Property, equipment and leasehold improvements, net                    437,756           393,396
Proprietary technology and other intangibles, net                       37,616            35,735
                                                                --------------    --------------
Total assets                                                    $    3,340,632    $    2,850,044
                                                                ==============    ==============

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
   Accounts payable                                             $      739,961    $      984,189
   Accrued salaries, wages and benefits                                112,282           128,701
   Other accrued liabilities                                           301,196           252,384
   Senior secured convertible debentures, in default (Note 5)        2,831,800         2,886,800
   Notes payable to stockholders in default (Note 6)                   126,394           128,748
                                                                --------------    --------------
Total current liabilities                                            4,111,633         4,380,822

Senior secured convertible debentures, in default (Note 5)                  --           698,000

Other long term obligations                                             39,009            11,742

Stockholders' deficit:
Preferred stock $.001 par value; 12,000,000 shares authorized               --                --
Common stock $.001 par value; 30,000,000 shares authorized
   (6,886,882 shares and 6,896,895 issued and outstanding at
   June 30, 2001 and September 30, 2001, respectively)                   6,887             6,897
Additional paid-in capital                                          34,890,066        34,993,886
Accumulated deficit                                                (35,706,963)      (37,241,303)
                                                                --------------    --------------
Total stockholders' deficit                                           (810,010)       (2,240,520)
                                                                --------------    --------------
Total liabilities and stockholders' deficit                     $    3,340,632    $    2,850,044
                                                                ==============    ==============
</Table>

See accompanying notes.



                                       2
<PAGE>

                                  ZymeTx, Inc.
                       Condensed Statements of Operations
                                   (Unaudited)

<Table>
<Caption>
                                                                     THREE MONTHS ENDED
                                                                        SEPTEMBER 30,
                                                                    2000            2001
                                                                ------------    ------------
<S>                                                             <C>             <C>
Revenues                                                        $     64,780    $    598,395
Cost of goods sold                                                    33,384         453,108
                                                                ------------    ------------
Gross profit                                                          31,396         145,287

Operating expenses:
   Research and development                                          209,103         195,348
   Product development                                               199,302         132,707
   Sales and marketing                                               529,011         241,233
   General and administrative                                        556,244         234,534
                                                                ------------    ------------
Total operating expenses                                           1,493,660         803,822
                                                                ------------    ------------
Loss from operations                                              (1,462,264)       (658,535)

Other income (expense):
   Interest, dividend and other income                                49,417          10,807
   Interest expense                                                   (9,241)        (33,612)
   Provision for premium on redemption of debentures (Note 5)             --        (853,000)
                                                                ------------    ------------
Total other income (expense)                                          40,176        (875,805)
                                                                ------------    ------------
Net loss                                                        $ (1,422,088)     (1,534,340)
                                                                ============    ============

Basic and diluted net loss per common share                     $       (.21)   $       (.22)
                                                                ============    ============

Weighted average common shares outstanding                         6,840,125       6,895,303
                                                                ============    ============
</Table>

See accompanying notes to financial statements.



                                       3
<PAGE>

                                  ZymeTx, Inc.
                       Condensed Statements of Cash Flows
                                   (Unaudited)

<Table>
<Caption>
                                                                                   THREE MONTHS ENDED
                                                                                     SEPTEMBER 30,
OPERATING ACTIVITIES                                                              2000            2001
                                                                              ------------    ------------
<S>                                                                           <C>             <C>
Net loss                                                                      $ (1,422,088)   $ (1,534,340)
Adjustments to reconcile net loss to net cash used by operating activities:
     Depreciation and amortization                                                  51,556          49,431
     Provision for premium on redemption of debentures                                  --         853,000
     Accretion of interest                                                           4,333           2,288
     Compensation expense related to common stock warrants
       outstanding                                                                 218,266              --
     Deferred lease rentals                                                        (32,911)        (26,554)
     Changes in operating assets and liabilities:
       Accounts receivable                                                         (52,740)        (74,504)
       Interest receivable on marketable securities                                 (8,617)             --
       Prepaid insurance and other                                                 (51,956)        (14,198)
       Inventory                                                                  (118,581)        310,530
       Accounts payable                                                             23,056         244,228
       Accrued salaries, benefits and other                                        (91,194)         16,419
       Other liabilities                                                          (148,524)        (48,812)
                                                                              ------------    ------------
Total adjustments                                                                 (207,312)      1,311,828
                                                                              ------------    ------------
Net cash used by operating activities                                           (1,629,400)       (222,512)

INVESTING ACTIVITIES
Purchase of marketable securities available for sale                              (483,975)             --
Proceeds from sale of marketable securities available for sale                   1,472,737              --
Purchase of property, equipment and leasehold improvements                         (32,026)         (3,190)
                                                                              ------------    ------------
Net cash provided by investing activities                                          956,736          (3,190)

FINANCING ACTIVITIES
Payments on notes payable and other                                                (13,797)           (647)
Proceeds from exercise of employee stock options                                    25,000              --
Proceeds from sale of common stock purchased through employee
    stock purchase plan                                                              6,572           3,830
                                                                              ------------    ------------
Net cash provided by financing activities                                           17,775           3,183
                                                                              ------------    ------------
Net increase (decrease) in cash                                                   (654,889)       (222,519)

Cash and cash equivalents at beginning of period                                 1,357,509         237,673
                                                                              ------------    ------------
Cash and cash equivalents at end of period                                    $    720,620    $     15,154
                                                                              ============    ============
</Table>

See accompanying notes to financial statements.



                                       4
<PAGE>

                                  ZYMETX, INC.
               NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
                               SEPTEMBER 30, 2001

NOTE 1 - THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES

ZymeTx, Inc. (the "Company" or "ZymeTx"), a Delaware corporation, is a
biotechnology company engaged in the discovery, development and
commercialization of unique products used to diagnose and treat viruses. The
scientific foundation for our business is based upon the role of enzymes in the
process of viral infection. Our strategy is to:

         o        develop products that may be used to diagnose and treat a
                  range of viral diseases;

         o        earn revenues from marketing ZstatFlu, our first diagnostic
                  product;

         o        continue our diagnostic research and development program into
                  other platform technologies; and

         o        sustain an anti-viral therapeutic research and development
                  program.

The accompanying unaudited financial statements have been prepared in accordance
with the instructions to Form 10-QSB as prescribed by the Securities and
Exchange Commission ("SEC"). Such financial statements, in the opinion of
management, include all adjustments (consisting only of normal, recurring items,
other than the 2001 provision for premium on redemption of Debentures in the
amount of $853,000, more fully described in Note 5) necessary for their fair
presentation in conformity with accounting principles generally accepted in the
United States. These financial statements should be read in conjunction with the
financial statements and notes included in the Company's Annual Report on Form
10-KSB for the year ended June 30, 2001, for an expanded discussion of the
Company's financial disclosures and accounting policies. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States
have been condensed or omitted pursuant to the SEC rules and regulations.
Interim results are not necessarily indicative of results for the full year.
Revenues increased during the first quarter of fiscal 2002 due to sales to the
Company's Japanese distributor. Formerly, the U.S. influenza market was the
principal market for the Company's products, and the Company's revenues were
concentrated in the second and third quarters of each fiscal year.

NOTE 2 - NET LOSS PER SHARE

For the three month periods ended September 30, 2001 and 2000 all unexercised
stock options and warrants granted were antidilutive for purposes of calculating
diluted net loss per share. At September 30, 2001, there were warrants
outstanding for the purchase of an aggregate of 2,915,687 shares of the
Company's common stock exercisable at prices ranging from $.38 to 4.00 (an
average of $1.48 per share) (Note 3). The Company has allocated 1,250,000 shares
of common stock for issuance under the Employees' and Directors' stock option
plans, 782,269 of which remain unexercised at September 30, 2001 (exercise
prices ranging from $1.00 - $4.94 per share). In addition, the Company has
reserved 100,000 shares of common stock for issuance under the Consultants stock
option plan, 55,000 of which were granted (weighted average exercise price of
$2.35 per share), and are unexercised at September 30, 2001. The Company also
has issued Debentures that are, as of September 30, 2001, convertible into
5,877,356 shares



                                       5
<PAGE>

of the Company's common stock (7,003,155 shares of the Company's common stock as
of October 13, 2001).

NOTE 3 - STOCK OPTIONS AND WARRANTS

During the three month period ended September 30, 2001, the Company did not
issue any additional stock options. During the quarter, the number of warrants
outstanding and shares of the Company's common stock reserved for purchase
increased by 789,315 shares, from 2,126,372 shares at June 30, 2001 to 2,915,687
shares at September 30, 2001. On October 13, 2001, after the debenture
conversion price reset described in Note 5, the number of warrants outstanding
increased to 3,333,467. The additional warrants resulted from the issue of
500,000 five-year warrants to the debenture holders at an exercise price of
$.45, and adjustments for anti-dilution provisions of various outstanding
warrants.

NOTE 4 - COMPREHENSIVE INCOME (LOSS)

The Company presents comprehensive income in accordance with Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS 130"). The
provisions of SFAS 130 require the Company to classify items of other
comprehensive income in the financial statements and display the accumulated
balance of other comprehensive income separately from retained earnings and
additional paid-in capital in the equity section of the balance sheet. Other
comprehensive loss for the three-month period ended September 30, 2000 and 2001,
are detailed below.

<Table>
<Caption>
                            THREE MONTHS ENDED
                               SEPTEMBER 30,
                           2000            2001
                       ------------    ------------
<S>                    <C>             <C>
Net loss               $ (1,422,088)   $ (1,534,340)
Unrealized gains
  (losses) on
  investments
  available for sale          2,042              --
                       ------------    ------------
Comprehensive loss     $ (1,417,742)   $ (1,534,340)
                       ============    ============
</Table>

NOTE 5 - SENIOR SECURED CONVERTIBLE DEBENTURES IN DEFAULT

On October 13, 2000, the Company sold $2.0 million of senior secured convertible
Debentures to two private investors, resulting in net proceeds of approximately
$1.9 million. The Debentures have a stated rate of interest of 5%, which is
payable May 1 and November 1 of each year, in cash or common stock or by adding
the interest to the outstanding principal due under the Debenture at the
Company's option.

The Debentures are convertible to common stock at the option of the investor
based on a conversion price based on the weighted average price of our common
stock for ten days prior to periodic anniversaries of the issuance of the
Debentures. The Debentures are secured by a first priority interest in
substantially all of the Company's assets. The Debentures prohibit the Company
from declaring and paying dividends on common stock so long as these Debentures



                                       6
<PAGE>

remain outstanding and limit the Company's ability to incur new indebtedness
senior to the Debentures.

The Debentures include certain anti-dilution and put features. The features
provide for keep-whole provisions in the event that the Company sells equity at
less than market prices and put options at the discretion of the investors,
which allow the Investors to demand repayment of the Debentures at a premium
redemption price generally equivalent to the greater of 120% of face value or
Conversion Value, as defined. These put options become available to the
investors upon the occurrence of certain events, including any events of
default, if the investors do not have the ability to "freely trade" the
underlying common stock, or if a change of control occurs.

As a result of the Company's delisting from the NASDAQ National Market System
and the other events described below, the Company is in default under the
Debentures. Since the Debenture holders had not waived these defaults and had
the right to declare the Debentures immediately due and payable, the Company at
June 30, 2001 accreted the discount and premium on redemption then due, fully
amortized the deferred offering costs, and classified the Debentures as due
within one year in the accompanying June 30, 2001 balance sheet. As of June 30,
2001, the Company also recognized the premium on redemption of $617,800
associated with the put option triggered by the default of the provisions of the
agreement in the caption Senior Secured Convertible Debentures in Default, in
the accompanying balance sheet.

In November 2001, the Debenture holders agreed to not enforce their rights (i)
to demand payment of the Debentures prior to March 1, 2002 and (ii) to receive
the Conversion Value (essentially the highest price from the date of the default
times the shares of the Company's common stock eligible to be received upon
conversion of the Debentures) resulting from the presently existing defaults.
However, the Debenture holders did retain their right to receive the Conversion
Value associated with any future events of default, as defined in the Debenture
Agreement, as amended. Should there be any future events of default under the
Debenture Agreement, as of November 16, 2001, the Conversion Value provision of
the Debenture Agreement, giving effect to the latest common stock conversion
price that occurred on October 13, 2001 and the highest price of the Company's
common stock from the earliest date of an event of default, would allow the
holders of the Debentures to make demand on the Company for approximately $7.6
million. The Company is not presently aware of any other events of default not
covered by the above described forbearance agreement; however, there are no
assurances that there will not be additional events of default or other matters
in the near-term that would cause the Company to recognize the Conversion Value
in the future results of operations and financial position of the Company. In
connection with this forbearance agreement, the Company agreed to a new event of
default which requires the Company on or after November 30, 2001, to maintain at
least $250,000 of cash, cash equivalents and accounts receivable.  The
conditional deferral is also contingent upon the Company receiving into escrow
an aggregate of $704,750 of financing.

As a result of the Debenture conversion reset, discussed below, in October 2001
and the rise in the trading price of the Company's common stock in late October
2001, both of which occurred prior to the execution of the forbearance agreement
with the Debenture holders discussed above, in the second quarter of fiscal
2002, the Company will recognize an additional charge to operations related to
the premium redemption provisions of the Debentures and related agreements of
approximately $4.7 million.  This amount will also be reflected in the Company's
balance sheet as debentures in default, bringing such liability due within one
year to an aggregate of $7.6 million.  This amount may be reduced in future
periods to the extent the Debentures are exchanged for shares of the Company's
common stock or ultimately redeemed, thus settling the amount of the liability
associated with the Debentures.  There are no assurances that the Company will
be successful in ultimately settling the liability associated with the
Debentures for an amount less than the amount described above or that there will
not be future events of default resulting in the expiration of the limitation on
the rights of the Debenture investors to make demand on the Company for the
conversion value of the Debentures. As of March 1, 2002, assuming there are no
additional events of default, the Debenture holders can exercise their put
options requiring the Company to redeem the then outstanding Debentures. As of
September 30, 2001 the amount the Debenture holders could demand on March 1,
2002 would approximate $2.7 million.


The initial conversion price of the Debentures of $3.12 was reset to $0.70 per
share on April 13, 2001, to $0.38 per share on July 13, 2001 and to $.29 per
share on October 13, 2001. On May 1, 2001, the Company elected to add interest
payable on the Debentures in the amount of $54,000 to outstanding principal
bringing the total outstanding face amount of the Debentures as of May 1, 2001,
to $2,214,000. The effect of the changes in the conversion price and the
addition of



                                       7
<PAGE>

interest to principal resulted in an increase in the potential number of shares
of common stock from exercise of both the Debentures and associated warrants
from 929,764 at inception to 3,395,558 on April 13, 2001, to 6,115,920 on July
13, 2001 and to 7,241,719 on October 13, 2001. The Company increased the shares
reserved for future issuance to provide for the increases, but the Company did
not file a registration statement covering the increased number of shares
required by the debentures. This was also an event of default.

Between October 9, 2001 and October 30, 2001, the debenture holders converted
$431,000 principal amount and accrued interest into 1,321,783 shares of common
stock at an average conversion price of $0.33. Accordingly, the portion of the
Debentures related to these shares of $698,000 has been classified as noncurrent
in the accompanying September 2001 condensed balance sheet and will be
reclassified to common stock and paid-in-capital in the second quarter of fiscal
2002.

NOTE 6 - NOTE PAYABLE TO STOCKHOLDER IN DEFAULT

The Company has a promissory note outstanding relating to a license of
intellectual property from OMRF which had an outstanding balance at September
30, 2001, of $125,998. The terms of the note, as amended, require quarterly
principal and interest payments of $16,753 and continuing thereafter until the
note is repaid in full. The Company failed to make quarterly payments due on May
15, 2001, August 15, 2001, and November 15, 2001 and intends to resume quarterly
payments retroactively after completing its new financing arrangements. The
Company has been in communication with OMRF about its financial situation.

NOTE 7 - INVENTORY

The components of inventory consist of the following:

<Table>
<Caption>
                                         June 30, 2001        September 30, 2001
                                         -------------        ------------------
<S>                                      <C>                  <C>
Raw Materials                            $     537,434        $          559,458
Work in Process                                139,230                   122,369
Finished Goods                               1,756,723                 1,441,030
                                         -------------        ------------------
                                             2,433,387                 2,122,857
Less amounts not expected to be
  realized this year                           492,226                   464,107
                                         -------------        ------------------
                                         $   1,941,161        $        1,658,750
                                         =============        ==================
</Table>

The inventory in the accompanying balance sheets consist of costs related to
ZstatFlu. The market for influenza diagnostics grew during fiscal years 2000 and
2001, largely due to the introduction of influenza therapeutics produced by
other companies during the year. However, there are no assurances that this
market will continue to develop and accordingly, there are no assurances that
the Company's investment in its ZstatFlu inventory will be recoverable. In
addition, improvements in the delivery of the Company's diagnostic as a result
of its research and development program or new products from competitors may
render a portion of the inventory on hand obsolete in the near term.

NOTE 8 - LIQUIDITY AND MANAGEMENT'S PLANS

As of September 30, 2001, the Company has negative working capital of $2.4
million, including $3.0 million of debt in default. For the years ended June 30,
2000 and 2001, the Company incurred operating losses of $6.8 million and $7.0
million, respectively and during the first quarter of fiscal 2002 the Company
incurred an additional operating loss of $1.5 million. As a result of the
Company's delisting from the NASDAQ National Market System and other events, the
Company is in default under the Debentures. The Debenture holders have not
waived these defaults but have agreed to forebear demand for repayment until at
least March 1, 2002, conditioned upon any further events of default as discussed
in Note 5. If the holders make demand on the Company at that time, the Company
would likely be unable to pay the Debentures, and the holders would have the
right to foreclose on all of the Company's assets. The Company cannot predict
what actions the Debenture holders may take; however, the Company is
communicating with the Debenture holders and others in an effort to secure their
cooperation with the attempts to obtain long-term financing or adopt alternative
measures.

Beginning in the fourth quarter of fiscal 2001, the Company has taken a number
of actions to conserve and generate cash needed to remain in business. Operating
overheads have been reduced, research and development has been put on hold, and
payments to vendors and suppliers have been delayed. In the first quarter of
fiscal 2002, in an effort to provide cash, the Company reached agreement with
its Japanese distributor of ZstatFlu to sell 100,000 units of product, 40,000 of
which were on an accelerated basis. The accelerated sales necessitated shipment
of finished goods rather than component parts resulting in reduced profit
margins to the Company but provided cash needed to remain in business.

In October 2001, the Company revised its operating plan for fiscal 2002. The new
plan requires $700,000 of temporary financing in November 2001 in the form of
12% notes payable (due in May 2002) to a group of approximately 15 investors who
will receive warrants to purchase 700,000 shares of common stock at an exercise
price of $.30 for a period of 5 years. There are no assurances that the Company
will be successful in closing this temporary financing.  If the Company does not
close on this financing, the Company may, in the near term, be in violation of
the event of default under the Debentures requiring the Company to maintain
cash, cash equivalents and accounts receivable of $250,000 which would result in
the expiration of the Debenture holders agreement not to enforce their rights to
demand payment of the Debentures prior to February 28, 2002 at the premium
redemption price of 120% of face value or to the conversion value provision of
the premium redemption allowing them to make demand on the Company for
approximately $7.6 million.

The revised plan calls for the sale of 350,000 units of ZstatFlu during the
second and third quarters of fiscal 2002 at an average unit sales price of
$12.00. The plan reduces its monthly requirement of cash for operating expenses
to approximately $260,000 per month.



                                       8
<PAGE>

The $700,000 of temporary financing allows the Company to meet its expenses and
begin paying down its past due payables until December when cash receipts from
new sales are anticipated to begin. It will be necessary for the Company to
obtain additional financing during the third quarter of fiscal 2002 in order to
assure the payment of all of its liabilities and to remain in business beyond
March 2002.

The Company expects to receive the $700,000 of temporary financing by November
27, 2001, but cannot be assured that the additional financing required to
continue operations beyond March 2002 will be available or that such financing
will be available at all. The Company continues to explore alternatives in the
event financing is unavailable, including the sale or dissolution of the Company
or the sale of the Company's significant assets.

The accompanying financial statements do not include any adjustments to reflect
the possible future effects on the recoverability and classification of assets
or the amounts and classification of liabilities that may result from the
outcome of these matters.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

From time to time, we may publish forward-looking statements relating to certain
matters, including anticipated financial performance, business prospects, and
the progress and goals for our research and development program, marketing
strategies and other similar matters. The Private Securities Litigation Reform
Act of 1995 provides a safe harbor for forward-looking statements. To comply
with the terms of that safe harbor, a variety of factors could cause our actual
results and experience to differ materially from the anticipated results or
other expectations expressed in our forward-looking statements. In addition, we
disclaim any intent or obligation to update those forward-looking statements.

When used in this discussion, the words "believes," "anticipated" and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to certain risks and uncertainties that could cause actual results
to differ materially from those projected. Readers are cautioned not to place
undue reliance on these forward-looking statements that speak only as of the
date hereof. We undertake no obligation to publicly release the result of any
revisions to these forward-looking statements that may be made to reflect events
or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.

OVERVIEW

ZymeTx, Inc. is engaged in the discovery, development and commercialization of
unique products used to diagnose and treat viruses. The scientific foundation
for our business is based upon the role of enzymes in the process of viral
infection. Our strategy is to:

         o        develop products that may be used to diagnose and treat a
                  range of viral diseases;

         o        earn revenues from marketing ZstatFlu, our first diagnostic
                  product;



                                       9
<PAGE>

         o        continue our diagnostic research and development program into
                  other platform technologies; and

         o        sustain an anti-viral therapeutic research and development
                  program.

ViraZyme(R), our core technology, exploits the subtle structural differences and
characteristics of enzymes to create products to diagnose and treat viruses. Our
diagnostic technology is a platform for proprietary two-part compounds that will
split when the compound contacts a specific enzyme which is the viral target
site. As a result of this split, one part of the compound reveals itself in
formats easily detected by the naked eye, permitting the user to determine
whether the virus is present. For therapeutic products, the technology platform
uses modified versions of the diagnostic compounds that bind to specific viral
enzymes to interrupt the replication cycle, and a proprietary Inverted Drug
Screening System (IDS).

The initial viral targets of our diagnostic products are respiratory infections
including influenza A and influenza B, respiratory syncytial virus,
parainfluenza and adenovirus. There are three genera of influenza virus, A, B,
and C; A and B are most common to humans, while C rarely causes significant
infection. Respiratory syncital virus infects humans, usually children, which is
an important cause of acute respiratory disease. Adenovirus can cause
respiratory disease, keratoconjunctivitis, diarrhea, cystitis and other
diseases.

For fiscal 2000 and fiscal 2001, we incurred net losses of $6.8 million and $7.0
million respectively. For the three months ended September 30, 2001, we
recognized a net loss of $1.5 million. As of September 30, 2001, our working
capital was a deficit of $2.4 million, including $3.0 million of debt in
default. In October 2001, we revised our operating plan for fiscal 2002. The new
plan requires $700,000 of temporary financing in November 2001 in the form of
12% notes payable (due in May 2002) to a group of approximately 15 investors who
will receive warrants to purchase 700,000 shares of common stock at an exercise
price of $.30 for a period of 5 years. There are no assurances that we will be
successful in closing this temporary financing. If we do not close on this
financing, we may, in the near term, be in violation of the event of default
under the Debentures requiring us to maintain cash, cash equivalents and
accounts receivable of $250,000 which would result in the expiration of the
Debenture holders agreement not to enforce their rights to demand payment of the
Debentures prior to February 28, 2002 at the premium redemption price of 120% of
face value or to the conversion value provision of the premium redemption
allowing them to make demand on us for approximately $7.6 million.

The $700,000 of temporary financing will allow us to meet our expenses and begin
paying down our past due payables until December when cash receipts from new
sales are anticipated to begin. It will be necessary for us to obtain additional
financing during the third quarter of fiscal 2002 in order to assure the payment
of all of our liabilities and to remain in business beyond March 2002.

We cannot assure that financing will be available on terms satisfactory to us,
or that such financing will be available at all. Additionally, our ability to
conduct research and development in the future will be dependent on our ability
to generate cash flow from operations adequate to finance these activities. The
lack of adequate capital resources to conduct research and development could
limit our ability to introduce new products or make improvements in our existing
product line.

As an alternative to financing, we are considering all other options, including
the sale of the company, the sale of significant assets of the company or
dissolution of the company. See Liquidity and Capital Resources.

ZymeTx was incorporated under the laws of the State of Delaware in 1994.
ViraZyme(R), ViraSTAT(R) and ZstatFlu(TM) are trademarks owned or licensed by
ZymeTx.



                                       10
<PAGE>

PLAN OF OPERATIONS

Our plan of operations for fiscal 2002, assuming we are successful in raising
capital as discussed herein, is to market ZstatFlu to the point of care, acute
care and hospital markets. The continued anthrax situation in the United States
is propelling interest in our ZstatFlu test. As a result of the threat of
bioterrorism, the Company has promoted the test to independent
primary-care-physicians, clinics, emergency rooms, occupational health, nursing
homes and government.

Beginning in the fourth quarter of fiscal 2001, we have taken a number of
actions to conserve and generate cash needed to remain in business. Operating
overheads have been reduced, research and development has been put on hold, and
payments to vendors and suppliers have been delayed. In the first quarter of
fiscal 2002, in an effort to provide cash, we reached agreement with our
Japanese distributor of ZstatFlu to sell 100,000 units of product, 40,000 of
which were on an accelerated basis. The accelerated sales necessitated shipment
of finished goods rather than component parts resulting in reduced profit
margins but provided cash needed to remain in business.

In October 2001, we revised our operating plan for fiscal 2002. The new plan
requires $700,000 of temporary financing in November 2001 in the form of 12%
notes payable (due in May 2002) to a group of approximately 15 investors who
will receive warrants to purchase 700,000 shares of common stock at an exercise
price of $.30 for a period of 5 years. There are no assurances that we will be
successful in closing this temporary financing. If we do not close on this
financing, we may, in the near term, be in violation of the event of default
under the Debentures requiring us to maintain cash, cash equivalents and
accounts receivable of $250,000 which would result in the expiration of the
Debenture holders agreement not to enforce their rights to demand payment of the
Debentures prior to February 28, 2002 at the premium redemption price of 120% of
face value or to the conversion value provision of the premium redemption
allowing them to make demand on us for approximately $7.6 million.

The revised plan calls for the sale of 350,000 units of ZstatFlu during the
second and third quarters of fiscal 2002 at an average unit sales price of
$12.00. The plan reduces our monthly requirement of cash for operating expenses
to approximately $260,000 per month.

The $700,000 of temporary financing will allow us to meet our expenses and begin
paying down our past due payables until December when cash receipts from new
sales are anticipated to begin. It will be necessary for us to obtain additional
financing during the third quarter of fiscal 2002 in order to assure the payment
of all of our liabilities and to remain in business beyond March 2002.

We expect to receive the $700,000 of temporary financing by November 27, 2001,
but cannot be assured that the additional financing required to continue
operations beyond March 2002 will be available or that such financing will be
available at all. We continue to explore alternatives in the event financing is
unavailable, including the sale or dissolution of the Company or the sale of its
significant assets.

As a result of the Debenture conversion reset in October 2001 and the rise in
the trading price of our common stock in late October 2001, both of which
occurred prior to the execution of the forbearance agreement with the Debenture
holders discussed above, in the second quarter of fiscal 2002, we will recognize
an additional charge to operations related to the premium redemption provisions
of the Debentures and related agreements of approximately $4.7 million. This
amount will also be reflected in our balance sheet as debentures in default,
bringing such liability due within one year to an aggregate of $7.6 million.
This amount may be reduced in future periods to the extent the Debentures are
exchanged for shares of our common stock or ultimately redeemed, thus settling
the amount of the liability associated with the Debentures. There are no
assurances that we will be successful in ultimately settling the liability
associated with the Debentures for an amount less than the amount described
above or that there will not be future events of default resulting in the
expiration of the limitation on the rights of the Debenture investors to make
demand on us for the conversion value of the Debentures.

RESULTS OF OPERATIONS

NET LOSS

For the three months ended September 30, 2001, we recognized a net loss of $1.5
million. Net loss applicable to common stock for the three months ended
September 30, 2001, was $.22 per basic and diluted share, compared to a net loss
of $.21 per basic and diluted share for the first



                                       11
<PAGE>

quarter of fiscal 2000. The increase in net loss is due to an additional $.9
million of provision on redemption of the Debentures due to the decrease in the
conversion price in the first quarter of fiscal 2002, partially offset by an
increase in sales and a reduction in expenses as discussed below. (See Note 5 of
Notes to Condensed Financial Statements.)

PRODUCT SALES

For the three months ended September 30, 2001, we recognized increased revenues
from sales of our primary diagnostic product as compared to the comparable three
months ended September 30, 2000. This increase is attributed to the sale of
ZstatFlu to our Japanese distributor this year while last year's sales were
limited to the U.S. market, in which sales are concentrated in the second and
third quarters.

About half of our sales to our Japanese supplier were on an accelerated basis in
order to generate cash to fund outstanding payables and make payroll. The
accelerated sales necessitated shipment of finished goods rather than component
parts, resulting in reduced profit margins.

RESEARCH AND DEVELOPMENT

Research and development spending for the three months ended September 30, 2001,
totaled $.2 million, which was comparable to the amount spent during the three
months ended September 30, 2000.

PRODUCT DEVELOPMENT

Product development costs expended in the manufacturing and production of our
diagnostic product totaled $.1 million for the three months ended September 30,
2001. This represents a 33% decrease from the comparable three months ended
September 30, 2000. The decrease is due primarily to a decrease in contract
labor expense.

SALES AND MARKETING

Sales and marketing expenses totaled $.2 million for the three months ended
September 30, 2001. This represents a 54% decrease from the comparable three
months ended September 30, 2000. This decrease is primarily due to decreased use
of outside consultants and very limited promotional sales programs in fiscal
2002.

GENERAL AND ADMINISTRATIVE

General and administrative costs totaled $.2 million for the three months ended
September 30, 2001. This represents a 58% decrease from the comparable three
months ended September 30, 2000. The decrease was principally due to decreased
use of outside consultants and fewer full-time personnel.



                                       12
<PAGE>

INTEREST, DIVIDEND AND OTHER INCOME

Interest, dividend and other income totaled $10,807 for the three months ended
September 30, 2001. This represents a 78% decrease compared to the three months
ended September 30, 2000. The decrease resulted because we no longer have cash
to invest in marketable securities, offset by $10,000 of other income in fiscal
2002.

INTEREST EXPENSE

Interest expense totaled $34,000 for the three months ended September 30, 2001.
This represents a 364% increase compared to the three months ended September 30,
2000. This increase is due to the Debenture issuance in October 2000.

PROVISION FOR PREMIUM ON REDEMPTION OF DEBENTURES

The provision for premium on redemption of Debentures for the three months ended
September 20, 2001 amount to $.9 million, $.8 million of which resulted from
reduction in the Debenture conversion rate from $.70 per share in the fourth
quarter of 2001 to $.38 per share in the first quarter of 2002. Due to the
existing and ongoing defaults under the Debentures, the Company is subject to
the premium redemption provisions of the Debentures and related agreements that
provide the holders the right to put the Debentures to the Company at specified
premiums. See Note 5 of Notes to Condensed Financial Statements for further
discussion of the current terms and conditions of the Debentures.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2001, we had negative working capital of $2.4 million,
including $3.0 million of debt in default. For the years ended June 30, 2000 and
2001, we incurred operating losses of $6.8 million and $7.0 million,
respectively and during the first quarter of fiscal 2002 we incurred an
additional operating loss of $1.5 million. As a result of our delisting from the
NASDAQ National Market System and other events, we are in default under the
Debentures. The Debenture holders have not waived these defaults but have agreed
to forebear demand for repayment until at least March 1, 2002, conditioned upon
any further events of default. If the holders make demand on us at that time, we
would likely be unable to pay the Debentures, and the holders would have the
right to foreclose on all of our assets. We cannot predict what actions the
Debenture holders may take; however, we are communicating with the Debenture
holders and others in an effort to secure their cooperation with the attempts to
obtain long-term financing or adopt alternative measures.

Beginning in the fourth quarter of fiscal 2001, we have taken a number of
actions to conserve and generate cash needed to remain in business. Operating
overheads have been reduced, research and development has been put on hold, and
payments to vendors and suppliers have been delayed. In the first quarter of
fiscal 2002, in an effort to provide cash, we reached agreement with our
Japanese distributor of ZstatFlu to sell 100,000 units of product, 40,000 of
which were on an accelerated basis. The accelerated sales necessitated shipment
of finished goods rather than component parts resulting in reduced profit
margins but provided cash needed to remain in business.



                                       13
<PAGE>
 In October 2001, we revised our operating plan for fiscal 2002. The new plan
requires $700,000 of temporary financing in November 2001 in the form of 12%
notes payable (due in May 2002) to a group of approximately 15 investors who
will receive warrants to purchase 700,000 shares of common stock at an exercise
price of $.30 for a period of 5 years. There are no assurances that we will be
successful in closing this temporary financing. If we do not close on this
financing, we may, in the near term, be in violation of the event of
default under the Debentures requiring us to maintain cash, cash equivalents and
accounts receivable of $250,000 which would result in the expiration of the
Debenture holders agreement not to enforce their rights to demand payment of the
Debentures prior to February 28, 2002 at the premium redemption price of 120% of
face value or to the conversion value provision of the premium redemption
allowing them to make demand on us for approximately $7.6 million.

The $700,000 of temporary financing allows us to meet our expenses and begin
paying down our past due payables until December when cash receipts from new
sales are anticipated to begin. It will be necessary for us to obtain additional
financing during the third quarter of fiscal 2002 in order to assure the payment
of all of our liabilities and to remain in business beyond March 2002.

We expect to receive the $700,000 of temporary financing by November 27, 2001,
but cannot be assured that the additional financing required to continue
operations beyond March 2002 will be available or that such financing will be
available at all. We continue to explore alternatives in the event financing is
unavailable, including the sale or dissolution of the Company or the sale of its
significant assets.

As a result of the Debenture conversion reset in October 2001 and the rise in
the trading price of our common stock in late October 2001, both of which
occurred prior to the execution of the forbearance agreement with the Debenture
holders discussed above, in the second quarter of fiscal 2002, we will recognize
an additional charge to operations related to the premium redemption provisions
of the Debentures and related agreements of approximately $4.7 million. This
amount will also be reflected in our balance sheet as debentures in default,
bringing such liability due within one year to an aggregate of $7.6 million.
This amount may be reduced in future periods to the extent the Debentures are
exchanged for shares of our common stock or ultimately redeemed, thus settling
the amount of the liability associated with the Debentures. There are no
assurances that we will be successful in ultimately settling the liability
associated with the Debentures for an amount less than the amount described
above or that there will not be future events of default resulting in the
expiration of the limitation on the rights of the Debenture investors to make
demand on us for the conversion value of the Debentures.

OMRF PROMISSORY NOTE

We have a promissory note outstanding relating to a license of intellectual
property from OMRF which had an outstanding balance at September 30, 2001, of
$125,998. The terms of the note, as amended, require quarterly principal and
interest payments of $16,753 and continuing thereafter until the note is repaid
in full. We failed to make quarterly payments due on May 15, 2001, and August
15, 2001, and intend to resume quarterly payments retroactively after we have
arranged the financing necessary to continue operations.

FACTORS AFFECTING OPERATIONS

The following is a discussion of factors that we believe could have an impact on
future operations and financial performance:

WE HAVE INCURRED LOSSES SINCE INCEPTION AND ANTICIPATE THAT WE WILL INCUR
CONTINUED LOSSES FOR THE FORESEEABLE FUTURE. WITHOUT ADDITIONAL FUNDING, WE WILL
NOT BE ABLE TO SUSTAIN OPERATIONS BEYOND NOVEMBER 30, 2001.

ZstatFlu is our only current source of product revenue. We have incurred losses
in each year since our inception in 1994. For fiscal 2000 and fiscal 2001, we
incurred net losses of $6.8 million and $7.0 million respectively. For the three
months ended September 30, 2001, we incurred a net loss of $1.5 million. As of
September 30, 2001, we had a negative working capital of $2.4 million.
Consequently, we must obtain funding to sustain operations beyond November 30,
2001. We expect to receive $700,000 of temporary financing by November 27, 2001.

We will require additional financing to sustain operations beyond March 2002. We
cannot assure that financing will be available on terms satisfactory to us, or
that such financing will be available at all. Additionally, our ability to
conduct research and development in the future will



                                       14
<PAGE>

depend on our ability to generate cash flow from operations adequate to finance
these activities. The lack of adequate capital resources to conduct research and
development could limit our ability to introduce new products or make
improvements in our existing product line.

If we are unsuccessful in securing financing to provide us with operating
capital, then we will be required to consider other options, including selling
the company or its significant assets or dissolving the company.

WE NEED SUBSTANTIAL ADDITIONAL FUNDING AND MAY NOT HAVE ACCESS TO CAPITAL. IF WE
ARE UNABLE TO RAISE CAPITAL WHEN NEEDED, WE MAY NEED TO DELAY OR ELIMINATE
RESEARCH AND DEVELOPMENT PROGRAMS OR OUR COMMERCIALIZATION EFFORTS, WHICH WOULD
HARM OUR BUSINESS.

We will need to raise substantial additional funds to continue our business
activities. We have incurred losses from operations since inception and may
continue to incur additional operating losses, resulting from:

         o        further research and development activities;

         o        further clinical trials;

         o        further development of marketing and sales capabilities; and

         o        payments to our licensor related to ZstatFlu and our other
                  product candidates.

We will require additional capital for fiscal 2002. However, our actual capital
requirements will depend upon numerous factors, including:

         o        the cash flows provided from the sale of ZstatFlu;

         o        possible demand by debenture holders;

         o        future occurrences of events of default under debentures;

         o        the development of further commercialization activities;

         o        the progress of our research and development programs;

         o        the progress of preclinical and clinical testing;

         o        the time and cost involved in obtaining regulatory approvals;

         o        the cost of filing, prosecuting, defending and enforcing any
                  patent claims and other intellectual property rights;

         o        the effect of competing technological and market developments;

         o        the effect of changes and developments in our existing
                  licensing and other relationships; and

         o        the terms of any new collaborative, licensing and other
                  arrangements that we may establish.

We may be unable to raise sufficient funds to continue operations beyond
November 30, 2001 or to complete our development, marketing and sales activities
for ZstatFlu or any of our other product candidates. Potential funding sources
include:

         o        public and private securities offerings;

         o        debt financing, such as bank loans; and



                                       15
<PAGE>

         o        collaborative, licensing and other arrangements with third
                  parties.

We may not be able to obtain sufficient debt or equity funding on acceptable
terms. In such case, we may have to cease operations or delay or eliminate
research and development programs. Our sale of additional equity securities or
the expectation that we will sell additional equity securities may have an
adverse effect on the price of our common stock. In addition, collaborative
arrangements may require us to grant product development programs or licenses to
third parties for products that we might otherwise seek to develop or
commercialize ourselves.

WE HAVE SIGNIFICANT INDEBTEDNESS AND WE MAY NOT BE ABLE TO MEET OUR OBLIGATIONS.

We are not currently generating sufficient cash flow from operations to pay the
principal amount of the senior secured convertible debentures in default which
although due in March 2002 may be immediately due and payable upon any future
event of default. To avoid a foreclosure, we may have to sell the company's
assets to repay our indebtedness and preserve as much value as possible for our
stockholders. We believe a potential buyer would require us to assign to it the
OMRF license, and that OMRF would agree to such an assignment. We cannot,
however, be sure that OMRF would agree to any such transfer or that a willing
buyer would be found.

Our ability to meet our debt service obligations and to reduce our indebtedness
depends on our future operating performance and on economic, financial,
competitive, regulatory and other factors affecting our operations. Many of
these factors are beyond our control and some or all of these factors could
adversely affect our future operating performance. We historically have been
unable to generate sufficient cash flow from operations to meet our operating
needs and have relied on equity and debt financings to fund our operations.

BECAUSE OF RAPID TECHNOLOGICAL DEVELOPMENT AND INTENSE COMPETITION, OUR PRODUCTS
MAY BE OBSOLETE BEFORE WE RECOUP COMMERCIALIZATION EXPENSES.

The viral diagnostic and therapeutic field is rapidly evolving, and the pace of
technological advancement is expected to continue. Rapid technological
development may result in our products becoming obsolete before we recoup a
significant portion of related research, development and commercialization
expenses. Quidel and Biostar each introduced influenza diagnostic products
during 1999 that compete directly with ZstatFlu. Becton-Dickinson introduced an
influenza A and B diagnostic in late 2000.

WE DEPEND ON THE SUCCESS OF ZSTATFLU.

During the 1998-1999 influenza season we had limited success in realizing sales
of ZstatFlu, due principally to the lack of therapeutic products to treat
influenza. With the introduction of therapeutics during the 1999-2000 influenza
season we saw significantly increased sales of ZstatFlu. Sales of ZstatFlu
decreased during the unusually mild 2000-2001 influenza season. The degree of
market acceptance of ZstatFlu will depend upon a number of factors, including
the availability of third-party reimbursement on an economically advantageous
basis to care providers, the establishment of cost-effectiveness of ZstatFlu and
its advantages over existing technologies and products.



                                       16
<PAGE>

WE MAY NOT BE ABLE TO SUCCESSFULLY DEVELOP A THERAPEUTIC OR OTHER DIAGNOSTIC
PRODUCTS.

Our business strategy involves the discovery and development of products in
addition to our currently FDA cleared diagnostic products, particularly
therapeutic products. These products are in early stages of research and
development and further research, development and extensive testing will be
required to determine their technical feasibility and commercial viability.
Until the development process for these products is complete, we cannot assure
that such products will perform in the manner we anticipate, be commercially
viable or even if commercially viable, that such products will receive FDA
clearance.

We may experience delays in the commercial introduction of these products, and
such delays could be significant. The proposed development schedules for our
other diagnostic and therapeutic products may be affected by a variety of
factors, many of which will not be within our control, including technological
difficulties, proprietary technology of others, possible changes in government
regulation and the availability of funding sources. Any delay in the
development, introduction and marketing of our products could result either in
such products being marketed at a time when their cost and performance
characteristics would not be competitive in the marketplace or in the shortening
of their commercial lives.

For fiscal 2002, we will concentrate our efforts on completing improvements to
ZstatFlu. We plan to devote greater efforts to the development of our
therapeutic and other diagnostic products in fiscal 2003 and beyond if capital
resources are available to justify expenditures for those products. Due to our
present working capital constraints, we plan to reduce research and development
expenditures during fiscal 2002 which may further delay or eliminate the
development and acceptance of our therapeutic or other diagnostic products.

WE CURRENTLY DEPEND ON THIRD PARTIES TO MANUFACTURE ZSTATFLU.

We have limited experience in product manufacturing and currently have no
facility capable of manufacturing products on the scale necessary for adequate
market penetration. Because we do not currently have a large scale manufacturing
facility, we have engaged third-party manufacturers to produce finished units of
ZstatFlu. Delays by third-party manufacturers in delivering finished products in
time could have a material adverse effect on us.

WE DEPEND ON PATENTS AND PROPRIETARY RIGHTS, WHICH MAY OFFER ONLY LIMITED
PROTECTION AGAINST POTENTIAL INFRINGEMENT. IF WE ARE UNABLE TO PROTECT OUR
PATENTS AND PROPRIETARY RIGHTS, OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF
OPERATIONS WILL BE HARMED.

Our success will depend, in part, on our ability to:

         o        obtain patents and license patent rights,

         o        to maintain trade secret protection, and

         o        to operate without infringing on the rights of other patent
                  holders.

The patent position of biotechnology firms for such types of patents generally
is highly uncertain and involves complex legal and factual issues. Our
competitors may have filed applications for



                                       17
<PAGE>

or have been issued patents and may obtain additional patents and other
proprietary rights relating to virus substrates, chromogens, inhibitors or
processes competitive with our patents. The ultimate scope and validity of such
patents are presently unknown. If the courts uphold existing or future patents
obtained by competitors as valid, we may be required to obtain licenses from
such competitors. The extent to which these licenses will be available to us and
their cost cannot currently be determined.

THE FDA AND OTHER GOVERNMENTAL AUTHORITIES STRICTLY REGULATE OUR PRODUCTS. IF
REGULATION DELAYS THE SALE OF OUR PRODUCTS, OUR BUSINESS WOULD BE HARMED.

Regulation by Federal, state, local and foreign governmental authorities of our
research and development activities, as well as the use and sale of our products
when they are commercially viable, is currently, and is expected to remain,
significant. The introduction of our products is governed by strict FDA rules
and regulations. Our diagnostic products are governed by FDA 510(k) application
requiring a clinical trial that compares our products to a standard or to a
prior cleared methodology. The testing, manufacturing, labeling, distribution,
marketing and advertising of therapeutic products are subject to extensive
regulation by governmental regulatory authorities in the United States and other
countries. The FDA and comparable agencies in foreign countries impose
substantial requirements on the introduction of new pharmaceutical products
through lengthy and detailed clinical testing procedures and other costly and
time-consuming compliance procedures.

Our therapeutic compounds will require substantial clinical trials and FDA
review as new drugs and such products are in the discovery stage of development,
requiring significant further research, development, clinical testing and
regulatory clearances. Due to the extended testing and regulatory review process
required for therapeutic products before marketing clearance can be obtained, we
do not expect to be able to commercialize any therapeutic drug for at least
several years, either directly or through any potential corporate partners or
licensees. A delay in obtaining or failure to obtain such approvals could have a
material adverse effect on our business and results of operations. We and our
third-party manufacturers are subject to quality regulations promulgated by the
FDA. The FDA will also inspect our manufacturing facilities and the facilities
of our third-party manufacturers on a routine basis for regulatory compliance
with quality regulations. Although our employees have experience with quality
protocols, there can be no assurance that we or our third-party manufacturers
can satisfy these requirements. We would not be allowed to manufacture our
approved or cleared products in the event such quality protocols could not be
met.

IF WE ARE NOT ABLE TO MANAGE THE GROWTH OF THE COMPANY WE MAY NEVER ACHIEVE
PROFITABILITY.

Our success will depend on our ability to expand and manage our operations and
facilities. There can be no assurance that we will be able to manage our growth,
meet the staffing requirements of manufacturing scale-up or for current or
additional collaborative relationships or successfully assimilate and train our
new employees. In addition, to manage our growth effectively, we will be
required to expand our management base and enhance our operating and financial
systems. If we continue to grow, there can be no assurance that the management
skills and systems currently



                                       18
<PAGE>

in place will be adequate or that we will be able to manage any additional
growth effectively. Failure to achieve any of these goals could have a material
adverse effect on our business, financial condition or results of operations.

WE MAY BE SUBJECT TO PRODUCT LIABILITY CLAIMS, WHICH MAY HARM OUR BUSINESS,
FINANCIAL CONDITION AND RESULTS OF OPERATIONS REGARDLESS OF THE OUTCOME.

The testing, marketing and sale of therapeutic products and, to a lesser degree,
diagnostic products, entail an inherent risk of adverse effects and/or medical
complications to patients and, as a result, product liability claims may be
asserted against us. A product liability claim or product recall could have a
material adverse effect on our financial condition. We have product liability
insurance in the aggregate amount of $11.0 million for products that we market.
There can be no assurance that liability will not exceed the insured amount. In
the event of a successful suit against us, insufficient insurance or lack of
insurance would have a material adverse effect on us.

OUR INABILITY TO FUND OR COMPLETE PRECLINICAL STUDIES AND CLINICAL TRIALS COULD
RESULT IN DELAYS AND INCREASED COSTS WHICH COULD ADVERSELY AFFECT OUR BUSINESS.

We must demonstrate through preclinical studies and clinical trials that our
proposed therapeutic products are safe and effective for use in each target
indication before we can obtain regulatory approvals for the commercial sale of
those products. These studies and trials may be very costly and time-consuming.
The rate of completion of clinical trials for either diagnostic or therapeutic
products is dependent upon, among other factors, the rate of enrollment of
patients. Failure to enroll an adequate number of clinical patients during the
appropriate season could cause significant delays and increased costs. The cost
to conduct human clinical trials for any potential product can vary dramatically
based on a number of factors, including whether the product is a diagnostic or a
therapeutic product, the order and timing of clinical indications pursued and
the extent of development and financial support, if any, from corporate
partners.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS:  NONE

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS:  NONE



                                       19
<PAGE>
ITEM 3. DEFAULTS UPON SENIOR SECURITIES: None, other than default under
debentures as described herein.

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

There were no matters submitted to a vote of stockholders during our first
quarter of fiscal 2002.

ITEM 5. OTHER INFORMATION: NONE

ITEM 6. EXHIBITS AND REPORTS ON FORMS 8-K:

a.       Exhibits:

         4.1      Agreement dated November 19, 2001 by and between ZymeTx, Inc.
                  and investors identified therein (filed electronically
                  herewith)

b.       Reports on Form 8-K: None.



                                       20
<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of the Exchange Act the registrant caused
         this report to be signed on its behalf by the undersigned thereunto
         duly authorized.

                                       ZYMETX, INC., a Delaware Corporation
                                       -----------------------------------------
                                       (Registrant)

                                       /s/ Fred E. Hiller
                                       -----------------------------------------
                                       Fred E. Hiller Principal Financial and
                                       Accounting Officer

Date: November 20, 2001



                                       21
<PAGE>

                                INDEX TO EXHIBITS

<Table>
<Caption>
       EXHIBIT
       NUMBER                      DESCRIPTION
       -------                     -----------
<S>               <C>
         4.1      Agreement dated as of November 19, 2001 by and between ZymeTx,
                  Inc. and investors identified therein (filed electronically
                  herewith)
</Table>