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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-QSB

(Mark One)

|ý | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------
|  | For the quarterly period ended March 31, 2002                                    
|o | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT                  
|  | For the transition period  to                                                    

ANTEX BIOLOGICS INC.(Exact name of small business issuer as specified in its charter)

Delaware(State or other jurisdiction of
incorporation or organization)

52-1563899(IRS Employer Identification No.)


300 Professional Drive, Gaithersburg, MD 20879(Address of principal executive offices)

(301) 590-0129(Issuer's telephone number)

(Former
name, former address and former fiscal year, if changed since last report)

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

APPLICABLE ONLY TO CORPORATE USERS

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

12,304,856
shares of Antex Biologics Inc. Common Stock, $.01 par value, were outstanding as of April 26, 2002

Transitional
Small Business Disclosure Format (check one):

Yes o    No ý

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PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

Antex Biologics Inc.  (a development stage enterprise)        Condensed Consolidated Balance Sheets

|                                                                                                                                             |                                                                                                                   | March 31,
2002
(unaudited) |           | December 31,
2001 |          
|-------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | -------------------------- | --------- | ----------------- | ---------
|Assets                                                                                                                                       |                                                                                                                   |                            |           |                   |          
|Current assets:                                                                                                                              |                                                                                                                   |                            |           |                   |          
|                                                                                                                                             | Cash and cash equivalents                                                                                         |                            | $         | 5,539,514         |          
|                                                                                                                                             | Accounts and other receivables                                                                                    |                            |           | 75,960            |          
|                                                                                                                                             | Prepaid expenses                                                                                                  |                            |           | 144,887           |          
|                                                                                                                                             |                                                                                                                   |                            |           |                   |          
|Total current assets                                                                                                                         |                                                                                                                   |                            | 5,760,361 |                   |          
|Property and equipment, net                                                                                                                  |                                                                                                                   |                            | 677,176   |                   |          
|Restricted cash and other assets                                                                                                             |                                                                                                                   |                            | 173,891   |                   |          
|                                                                                                                                             |                                                                                                                   |                            |           |                   |          
|                                                                                                                                             |                                                                                                                   | Total assets               |           | $                 | 6,611,428
|                                                                                                                                             |                                                                                                                   |                            |           |                   |          
|Liabilities and Stockholders' Equity                                                                                                         |                                                                                                                   |                            |           |                   |          
|Current liabilities:                                                                                                                         |                                                                                                                   |                            |           |                   |          
|                                                                                                                                             | Accounts payable and accrued expenses                                                                             |                            | $         | 846,789           |          
|                                                                                                                                             | Deferred revenue                                                                                                  |                            |           | 779,584           |          
|                                                                                                                                             | Deferred gain on sale of equipment                                                                                |                            |           | 41,431            |          
|                                                                                                                                             |                                                                                                                   |                            |           |                   |          
|Total current liabilities                                                                                                                    |                                                                                                                   |                            | 1,667,804 |                   |          
|Accrued rent obligation and other liabilities                                                                                                |                                                                                                                   |                            | 151,559   |                   |          
|                                                                                                                                             |                                                                                                                   |                            |           |                   |          
|                                                                                                                                             |                                                                                                                   | Total liabilities          |           |                   | 1,819,363
|Commitments and contingencies                                                                                                                |                                                                                                                   |                            |           |                   |          
|Series B convertible preferred stock, $.01 par value, $1,000 liquidation value; 8,000 shares authorized; 3,000 shares issued and outstanding |                                                                                                                   |                            | 875,711   |                   |          
|Stockholders' equity:                                                                                                                        |                                                                                                                   |                            |           |                   |          
|                                                                                                                                             | Preferred stock, $.01 par value; 5,000,000 shares authorized; no shares issued and outstanding                    |                            |           |                  |          
|                                                                                                                                             | Common stock, $.01 par value; 95,000,000 shares authorized; 12,304,856 issued and outstanding; 12,234,680 in 2001 |                            |           | 123,048           |          
|                                                                                                                                             | Additional paid-in capital                                                                                        |                            |           | 37,310,608        |          
|                                                                                                                                             | Deficit accumulated during the development stage                                                                  |                            |           | (33,517,302       | )        
|                                                                                                                                             |                                                                                                                   |                            |           |                   |          
|                                                                                                                                             |                                                                                                                   | Total stockholders' equity |           |                   | 3,916,354
|                                                                                                                                             |                                                                                                                   |                            |           |                   |          
|                                                                                                                                             |                                                                                                                   | $                          | 6,611,428 |                   | $        
|                                                                                                                                             |                                                                                                                   |                            |           |                   |          

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

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Antex Biologics Inc.  (a development stage enterprise)        Condensed Consolidated Statements of Operations  (Unaudited)

|                                                                                                   |                             | Three Months
Ended March 31 |            |            |  
|-------------------------------------------------------------------------------------------------- | --------------------------- | --------------------------- | ---------- | ---------- | -
|
|
|Contract revenues                                                                                  |                             | $                           | 130,425    |            | $
|Research and development expenses                                                                  |                             |                             | 1,513,148  |            |  
|Selling, general and administrative expenses                                                       |                             |                             | 731,564    |            |  
|                                                                                                   |                             |                             |            |            |  
|Loss from operations                                                                               |                             |                             | (2,114,287 | )          |  
|Interest income                                                                                    |                             |                             | 30,320     |            |  
|Interest expense                                                                                   |                             |                             |           |            |  
|Other                                                                                              |                             |                             |           |            |  
|                                                                                                   |                             |                             |            |            |  
|Net loss                                                                                           |                             |                             | (2,083,967 | )          |  
|Dividend accretion attributable to beneficial conversion feature, and dividends on preferred stock |                             |                             | (288,532   | )          |  
|                                                                                                   |                             |                             |            |            |  
|Net loss applicable to common stockholders                                                         |                             | $                           | (2,372,499 | )          | $
|                                                                                                   |                             |                             |            |            |  
|Net loss per common share:                                                                         |                             |                             |            |            |  
|                                                                                                   | Basic and assuming dilution |                             | $          | (0.19      | )
|                                                                                                   |                             |                             |            |            |  
|Weighted average common shares outstanding:                                                        |                             |                             |            |            |  
|                                                                                                   | Basic and assuming dilution |                             |            | 12,293,160 |  
|                                                                                                   |                             |                             |            |            |  

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

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Antex Biologics Inc.  (a development stage enterprise)        Condensed Consolidated Statements of Cash Flows  (Unaudited)

|                                                                            |                                                                 | Three Months
Ended March 31                  |            |        |        
|--------------------------------------------------------------------------- | --------------------------------------------------------------- | -------------------------------------------- | ---------- | ------ | -------
|
|
|Operating activities                                                        |                                                                 |                                              |            |        |        
|Net loss                                                                    |                                                                 | $                                            | (2,083,967 | )      | $      
|Adjustments to reconcile net loss to net cash used in operating activities: |                                                                 |                                              |            |        |        
|                                                                            | Depreciation and amortization of property and equipment, net    |                                              |            | 61,995 |        
|                                                                            | Amortization of deferred credits                                |                                              |            |       |        
|                                                                            | Other expenses                                                  |                                              |            |       |        
|                                                                            | Write-down of construction in progress                          |                                              |            |       |        
|                                                                            | Stock-based compensation                                        |                                              |            | 31,445 |        
|                                                                            | Changes in operating assets and liabilities:                    |                                              |            |        |        
|                                                                            |                                                                 | Accounts and other receivables               |            |        | 511,424
|                                                                            |                                                                 | Prepaid expenses and other                   |            |        | (35,228
|                                                                            |                                                                 | Accounts payable, accrued expenses and other |            |        | 39,303 
|                                                                            |                                                                 | Deferred revenue                             |            |        | (59,983
|                                                                            |                                                                 | Due from affiliate                           |            |        |       
|                                                                            |                                                                 |                                              |            |        |        
|Net cash used in operating activities                                       |                                                                 |                                              | (1,535,011 | )      |        
|                                                                            |                                                                 |                                              |            |        |        
|Investing activities                                                        |                                                                 |                                              |            |        |        
|Purchase of property and equipment                                          |                                                                 |                                              | (44,829    | )      |        
|Increase in restricted cash                                                 |                                                                 |                                              |           |        |        
|                                                                            |                                                                 |                                              |            |        |        
|Net cash used in investing activities                                       |                                                                 |                                              | (44,829    | )      |        
|                                                                            |                                                                 |                                              |            |        |        
|Financing activities                                                        |                                                                 |                                              |            |        |        
|Net proceeds from sales of common stock, warrants and options               |                                                                 |                                              |           |        |        
|Net proceeds from exercise of common stock warrants and options             |                                                                 |                                              |           |        |        
|Proceeds from sale and leaseback agreement                                  |                                                                 |                                              |           |        |        
|Principal repayments on sale and leaseback agreement                        |                                                                 |                                              |           |        |        
|Proceeds from issuance of notes payable                                     |                                                                 |                                              |           |        |        
|Net proceeds from sale of preferred stock                                   |                                                                 |                                              |           |        |        
|Deferred financing costs                                                    |                                                                 |                                              |           |        |        
|                                                                            |                                                                 |                                              |            |        |        
|Net cash provided by (used in) financing activities                         |                                                                 |                                              |           |        |        
|                                                                            |                                                                 |                                              |            |        |        
|Net increase (decrease) in cash and cash equivalents                        |                                                                 |                                              | (1,579,840 | )      |        
|Cash and cash equivalents at beginning of period                            |                                                                 |                                              | 7,119,354  |        |        
|                                                                            |                                                                 |                                              |            |        |        
|Cash and cash equivalents at end of period                                  |                                                                 | $                                            | 5,539,514  |        | $      
|                                                                            |                                                                 |                                              |            |        |        
|Supplemental cash flows disclosures:                                        |                                                                 |                                              |            |        |        
|                                                                            | Cashless exercise of common stock options and warrants          |                                              | $          |       |        
|                                                                            | Notes payable and accrued interest converted to preferred stock |                                              | $          |       |        
|                                                                            | Conversion of convertible preferred stock into common stock     |                                              | $          |       |        
|                                                                            | Sale and leaseback of property and equipment                    |                                              | $          |       |        
|                                                                            | Capitalized equipment                                           |                                              | $          |       |        
|                                                                            | Interest paid                                                   |                                              | $          |       |        

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

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Antex Biologics Inc.  (a development stage enterprise)        Notes to Condensed Consolidated Financial Statements  March 31, 2002  (Unaudited)

1.    Business

Antex Biologics Inc. (the "Company") is a biopharmaceutical company committed to improving human health by developing new vaccines and antibiotics to
prevent and treat chronic bacterial infections and related diseases. With respect to its research and product development, the Company currently has strategic alliances with GlaxoSmithKline, Aventis
Pasteur and the U.S. Department of Defense. Since its inception, the Company's revenues have been generated solely from contracts in support of its research and development activities and, as of
March 31, 2002, the Company's products are not sufficiently developed to enable the Company to generate sales on an ongoing basis. As a result, the Company is considered to be in the
development stage.

The
Company has raised capital from investors and received financing from its strategic alliances to sustain its research and product development activities. However, based on the
operating cash requirements and capital expenditures expected for 2002 and 2003, the Company believes that it will require additional funding to continue its operations beyond 2002. Possible sources
of funds include additional or expanded strategic alliances, additional equity or debt public offerings and/or private placements, proceeds from the exercise of outstanding options and warrants, and
additional grants and contracts. While the Company previously has been successful in raising additional capital, there can be no assurance that it will be able to raise sufficient capital to continue
its operations beyond 2002. If the Company is unsuccessful in its efforts to obtain sufficient financing, the Company will be required to reduce or cease operations, or consider other strategic
alternatives.

2.    Preparation of Condensed Consolidated Financial Statements

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates. Certain reclassifications have been made to the 2001 financial statements to conform them to the 2002 presentation.

The
accompanying Condensed Consolidated Balance Sheet as of March 31, 2002, the Condensed Consolidated Statements of Operations for the three months ended March 31, 2002
and 2001 and for the period August 3, 1991 (inception) to March 31, 2002, and the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2002 and
2001 and for the period August 3, 1991 (inception) to March 31, 2002, are unaudited. In the opinion of management, the accompanying financial statements reflect all adjustments
(consisting of normal recurring adjustments) that are necessary for a fair presentation of the consolidated financial position of Antex Biologics Inc. and its subsidiary at March 31,
2002, and the consolidated results of their operations and their cash flows for the periods referred to above. The results of operations for the three months ended March 31, 2002 are not
necessarily indicative of the operating results anticipated for the fiscal year ending December 31, 2002. Additionally, certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to rules and regulations promulgated by the Securities and Exchange
Commission. These financial statements should be read in conjunction with the financial statements and notes thereto for the fiscal year ended December 31, 2001 included in the Company's Annual
Report on Form 10-KSB.

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3.    Capital Stock

In July 2001, the Company completed a private placement of securities (consisting of convertible preferred stock, stock purchase warrants and a preferred
stock purchase option) resulting in gross proceeds to the Company of $3,000,000. At March 31, 2002 the preferred stock is convertible into 1,500,000 shares of common stock at $2.00 per share,
and 1,175,000 shares of common stock were reserved for the potential exercise of the stock purchase warrants. The preferred stock purchase option expired in accordance with its terms in
April 2002.

In
March 2000, the Company completed a private placement of securities (consisting of common stock, preferred stock and stock purchase warrants) resulting in gross proceeds to the
Company of approximately $15,300,000. In April 2001, the preferred stock issued in the private placement was
converted in its entirety into 1,224,242 shares of common stock. At March 31, 2002, 3,816,512 shares of common stock were reserved for the potential exercise of the stock purchase warrants.

3.    Property and Equipment

The Company adopted the provisions of the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 144 "Accounting for the
Impairment or Disposal of Long-Lived Assets" in the first quarter of 2002. The adoption of this standard did not materially impact the Company's financial position or results of
operations.

The
Company's policy is to review its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be
recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of the impairment is measured
as the difference between the asset's estimated fair value and its book value. Given the inherent risks within the biotechnology and biopharmaceutical industries, it is possible that the Company's
current expectation that it will recover the carrying amount of its long-lived assets from future operations or alternative uses could change.

4.    Disaggregated Financial Information

The Company has two reportable operating segments based on product lines, vaccines (or biologics) and antibiotics (or pharmaceuticals). Corporate includes patent
costs, reimbursements of patent costs, general and administrative costs, and the acquisition of assets used to support administrative functions. The 2001 amounts included a transfer of completed
construction in process from Corporate to the Vaccines segment. The following tables summarize information regarding the two segments for the three months ended March 31, 2002 and 2001:

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|                                  |  | Three Months Ended March 31, 2002 |           
|--------------------------------- |  | --------------------------------- | ----------
|
|Contract revenues                 |  | $                                 | 59,983    
|Research and development expenses |  | $                                 | 1,087,210 
|Loss from operations              |  | $                                 | (1,027,227
|Fixed asset acquisitions          |  | $                                 | 16,146    

|                         |  | Three Months Ended March 31, 2001 |         
|------------------------ |  | --------------------------------- | --------
|
|Contract revenues        |  | $                                 | 17,000  
|Research and development |  |                                   |         
|expenses                 |  | $                                 | 866,855 
|Loss from operations     |  | $                                 | (849,855
|Fixed asset acquisitions |  | $                                 | 163,772 

5.    Earnings (Loss) Per Share

Earnings (loss) per common share is computed by dividing "net income (loss) applicable to common stockholders" by the weighted average number of common shares
outstanding during the period. Earnings (loss) per share assuming dilution is computed by dividing "net income (loss) applicable to common stockholders" by the weighted average number of common shares
and potentially dilutive shares outstanding during the period.

The
Company excluded the following potentially dilutive shares from its diluted earnings per share calculation because they are anti-dilutive:

|                                                |  | March 31,
2002 |  | March 31,
2001
|----------------------------------------------- |  | -------------- |  | --------------
|Common Stock Issuable Upon:                     |  |                |  |               
|Conversion of convertible preferred stock       |  | 1,500,000      |  | 1,224,242     
|Exercise of stock purchase warrants             |  | 4,941,512      |  | 3,816,512     
|Exercise of employee and director stock options |  | 2,862,834      |  | 1,834,299     

During
the first quarter of 2002, the 1992 Directors' Stock Option Plan was amended to extend its term for an additional five years.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

The Company is developing new vaccines and antibiotics to prevent and treat chronic bacterial infections and related diseases. The Company currently has two
products in human clinical trials, and plans to have four additional products in human clinical trials within the year. Since its inception, the Company's revenues have been generated solely from
contracts in support of its research and development activities and, as of March 31, 2002, the Company's products are not sufficiently developed to enable the Company to generate sales on an
ongoing basis. As a result, the Company is considered to be in the development stage.

Results of Operations

Contract revenues for the first quarter of 2002 consisted of $70,442 of reimbursable patent expenses pursuant to the Company's strategic alliance with
GlaxoSmithKline ("GSK") and $59,983 related to work performed under a research contract from the U.S. Department of Defense. Contract revenues for the first quarter of 2001 consisted of $30,865 of
reimbursable expenses and $17,000 from research contracts.

Research
and development expenses increased 32.1% to $1,513,148 for the first quarter of 2002 as compared to $1,145,518 for the comparable quarter in 2001. The increase in research and
development costs in 2002 was related primarily to ongoing human clinical trials for two vaccine products and the production of clinical material for the Company's lead antibiotic product. There were
no clinical trials in process during the first quarter of 2001.

General
and administrative expenses in the first quarter of 2002 increased 15.9% to $731,564 as compared to $630,994 for the 2001 quarter. Increased expenditures in 2002 relate in part
to an increase in administrative personnel and an increase in legal costs.

Liquidity and Capital Resources

As a development stage company, the Company's activities have been limited primarily to research and development involving its proprietary technologies, and
pre-clinical and clinical trials of its various vaccine and antibiotic products. The Company currently has two products in human clinical trials, and plans to have four additional products
in human clinical trials within the year. The Company has no material commitments for 2002 other than operating lease obligations of approximately $725,000, and does not expect significant revenues in
2002.

The
Company to date has raised sufficient equity capital from investors and other financing from its strategic alliances to sustain its research and product development activities.
However, based on the operating cash requirements and capital expenditures expected for 2002 and 2003, including the cost to continue and complete on-going and planned clinical trials, the Company
believes that it will require additional funding to continue its operations beyond 2002. Possible sources of funds include additional or expanded strategic alliances, additional equity or debt public
offerings and/or private placements, proceeds from the exercise of outstanding options and warrants, and additional grants and contracts. While the Company previously has been successful in raising
additional capital, there can be no assurance that it will be able to raise sufficient capital to continue its operations beyond 2002. If the Company is unsuccessful in its efforts to obtain
sufficient financing, the Company will be required to reduce or cease operations, or consider other strategic alternatives.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

This quarterly report on form 10-QSB contains forward-looking statements within the meaning of Section 21E of the Securities Exchange
Act of 1934, as amended. Any statements contained herein that

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relate to future events or results are forward-looking statements. Without limiting the foregoing, the words "may," "will," "should," "intends," "estimates," "predicts," "potential," "continue,"
"believe," "anticipates," "plans," "expects," the negative of these terms or other comparable terminology are intended to identify forward-looking statements. These statements are only predictions. A
number of factors could cause actual results to differ materially from those indicated by forward-looking statements. In evaluating forward-looking statements, you should consider: (i) the
Company's ability to fund its future operations; (ii) the Company's ability to successfully complete product research and development, including preclinical and clinical studies and
commercialization; (iii) the Company's ability to obtain required governmental approvals; (iv) the Company's ability to attract and/or maintain manufacturing, sales, distribution and
marketing partners; and (v) the Company's ability to develop and commercialize its products before its competitors. Further information concerning these and other risks and uncertainties is
contained from time to time in our filings with the Securities and Exchange Commission. Although the Company believes that the expectations reflected in forward-looking statements are reasonable, the
Company cannot guarantee future results, events or conditions, levels of activity, performance or achievements. Given these risks and uncertainties, investors should not place undue reliance on
forward-looking statements as a prediction of actual results. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a results of new information, future
events or otherwise.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 2. CHANGES IN SECURITIES

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

Exhibits

None.

Reports on Form 8-K

None.

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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.

|                     |  | ANTEX BIOLOGICS INC.
|-------------------- |  | --------------------
|Date: April 29, 2002 |  | By:                 

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