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

FORM 10-QSB

(Mark One)

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

For the quarterly period ended March 31, 2001

[ ]    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                                                       |  | 52-1563899                       
|                                                               |  |                                  
|(State or other jurisdiction of incorporation
or organization) |  | (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 [x] No [ ]

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.

12,234,680 shares of Antex Biologics Inc. Common Stock, $.01 par value, were
outstanding as of April 23, 2001

Transitional Small Business Disclosure Format (check one):

Yes     NoX





---



ANTEX BIOLOGICS INC.

FORM 10-QSB

QUARTER ENDED MARCH 31, 2001

INDEX

|                                        |                                                                                                                                                                                                     |                                                                                       |       | 
|--------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------- | ----- | 
|Part I.           Financial Information | Page No                                                                                                                                                                                             |                                                                                      
|                                       
|                                       
|                                       
|                                       
|                                        | Item 1.                                                                                                                                                                                             | Financial Statements                                                                 
|                                       
|                                       
|                                       
|                                       
|                                        | Consolidated Balance Sheets at December 31, 2000 and
March 31, 2001 (Unaudited)                                                                                                                     | 3                                                                                     |       | 
|                                       
|                                       
|                                       
|                                       
|                                        | Consolidated Statements of Operations (Unaudited) for the
three months ended March 31, 2000 and 2001 and the period
August 3, 1991 (inception) to March 31, 2001                                    | 4                                                                                     |       | 
|                                       
|                                       
|                                       
|                                       
|                                        | Consolidated Statements of Stockholders Equity (Deficit)
for each of the years in the period August 3, 1991 (inception)
to December 31, 2000 and the three months ended
March 31, 2001 (Unaudited) | 5-7                                                                                   |       | 
|                                       
|                                       
|                                       
|                                       
|                                        | Consolidated Statements of Cash Flows (Unaudited) for the
three months ended March 31, 2000 and 2001 and the period
August 3, 1991 (inception) to March 31, 2001                                    | 8-9                                                                                   |       | 
|                                       
|                                       
|                                       
|                                       
|                                        | Notes to Consolidated Financial Statements                                                                                                                                                          | 10-12                                                                                 |       | 
|                                       
|                                       
|                                       
|                                       
|                                        | Item 2.                                                                                                                                                                                             | Managements Discussion and Analysis of Financial Condition
And Results of Operations | 13-15 | 
|                                       
|                                       
|                                       
|                                       
|Part II.           Other Information   
|                                       
|                                       
|                                       
|                                       
|                                        | Item 2.                                                                                                                                                                                             | Changes in Securities and Use of Proceeds                                             | 15    | 
|                                       
|                                       
|                                       
|                                       
|                                        | Item 6.                                                                                                                                                                                             | Exhibits and Reports on Form 8-K                                                      | 15    | 
|                                       
|                                       
|                                       
|                                       
|Signatures                              | 16                                                                                                                                                                                                  |                                                                                       |      

2



---



Antex Biologics Inc.
(a development stage enterprise)

Consolidated Balance Sheets

|                                     |                                                                                                                                           |   |            |              |   |           |            |             |   | 
|------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------- | - | ---------- | ------------ | - | --------- | ---------- | ----------- | - | 
|                                     |                                                                                                                                           |   |            | December 31, |   | March 31,
|                                     |                                                                                                                                           |   |            | 2000         |   | 2001     
|                                     |                                                                                                                                           |   |            |              |   |          
|                                     |                                                                                                                                           |   |            |              |   |           |            | (Unaudited)
|Assets                              
|                                    
|                                    
|                                    
|                                    
|Current assets:                     
|                                    
|                                    
|                                    
|                                    
|                                     | Cash and cash equivalents                                                                                                                 |   | $          | 10,876,186   |   |           | $          | 9,077,378   |  
|                                    
|                                    
|                                    
|                                    
|                                     | Accounts and other receivables                                                                                                            |   |            | 53,332       |   |           |            | 97,215      |  
|                                    
|                                    
|                                    
|                                    
|                                     | Prepaid expenses                                                                                                                          |   |            | 96,015       |   |           |            | 201,443     |  
|                                     |                                                                                                                                           |   |            |              |   |           |            |            
|Total current assets                 |                                                                                                                                           |   | 11,025,533 |              |   |           | 9,376,036  |            
|                                    
|                                    
|                                    
|                                    
|Property and equipment, net          |                                                                                                                                           |   | 790,973    |              |   |           | 841,392    |            
|                                    
|                                    
|                                    
|                                    
|Restricted cash                      |                                                                                                                                           |   | 146,600    |              |   |           | 146,600    |            
|                                    
|                                    
|                                    
|                                    
|Deferred financing costs             |                                                                                                                                           |   |           |              |   |           | 100,000    |            
|                                    
|                                    
|                                    
|                                    
|Other                                |                                                                                                                                           |   | 27,291     |              |   |           | 27,291     |            
|                                     |                                                                                                                                           |   |            |              |   |           |            |            
|                                     |                                                                                                                                           | $ | 11,990,397 |              |   | $         | 10,491,319 |            
|                                     |                                                                                                                                           |   |            |              |   |           |            |            
|Liabilities and stockholders equity
|                                    
|                                    
|                                    
|                                    
|Current liabilities:                
|                                    
|                                    
|                                    
|                                    
|                                     | Accounts payable and accrued expenses                                                                                                     |   | $          | 453,324      |   |           | $          | 463,874     |  
|                                    
|                                    
|                                    
|                                    
|                                     | Deferred research and development revenue                                                                                                 |   |            | 604,756      |   |           |            | 675,708     |  
|                                    
|                                    
|                                    
|                                    
|                                     | Deferred gain on equipment                                                                                                                |   |            | 49,590       |   |           |            | 49,590      |  
|                                     |                                                                                                                                           |   |            |              |   |           |            |            
|Total current liabilities            |                                                                                                                                           |   | 1,107,670  |              |   |           | 1,189,172  |            
|                                    
|                                    
|                                    
|                                    
|Deferred gain on equipment           |                                                                                                                                           |   | 53,829     |              |   |           | 41,432     |            
|                                    
|                                    
|                                    
|                                    
|Other                                |                                                                                                                                           |   | 16,465     |              |   |           | 9,406      |            
|                                     |                                                                                                                                           |   |            |              |   |           |            |            
|Total liabilities                    |                                                                                                                                           |   | 1,177,964  |              |   |           | 1,240,010  |            
|                                     |                                                                                                                                           |   |            |              |   |           |            |            
|Commitments and contingencies       
|                                    
|                                    
|                                    
|                                    
|Stockholders equity:               
|                                    
|                                    
|                                    
|                                    
|                                     | Preferred stock, $.01 par value; 5,000,000 shares
authorized; Series A convertible preferred stock - 61,212 shares issued and outstanding |   |            | 612          |   |           |            | 612         |   | 
|                                    
|                                    
|                                    
|                                    
|                                     | Common stock, $.01 par value; 95,000,000 shares
authorized; 10,992,493 and 11,010,438 shares
issued and outstanding                       |   |            | 109,925      |   |           |            | 110,104     |  
|                                    
|                                    
|                                    
|                                    
|                                     | Additional paid-in capital                                                                                                                |   |            | 35,476,166   |   |           |            | 35,497,827  |  
|                                    
|                                    
|                                    
|                                    
|                                     | Deficit accumulated during the development stage                                                                                          |   |            | (24,774,270  | ) |           |            | (26,357,234 | )
|                                     |                                                                                                                                           |   |            |              |   |           |            |            
|Total stockholders equity           |                                                                                                                                           |   | 10,812,433 |              |   |           | 9,251,309  |            
|                                     |                                                                                                                                           |   |            |              |   |           |            |            
|                                     |                                                                                                                                           | $ | 11,990,397 |              |   | $         | 10,491,319 |            
|                                     |                                                                                                                                           |   |            |              |   |           |            |            

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

3



---



Antex Biologics Inc.
(a development stage enterprise)

Consolidated Statements of Operations
(Unaudited)

|                                                                          |                                                    |   |                |           |                |   |                |            |   |   |             |            |  
|------------------------------------------------------------------------- | -------------------------------------------------- | - | -------------- | --------- | -------------- | - | -------------- | ---------- | - | - | ----------- | ---------- | -
|                                                                          |                                                    |   | Three Months   |           | August 3, 1991
|                                                                          |                                                    |   | Ended March 31 |           | (inception)   
|                                                                          |                                                    |   |                |           | to            
|                                                                          |                                                    |   | 2000           |           | 2001           |   | March 31, 2001
|                                                                          |                                                    |   |                |           |                |   |               
|Revenues                                                                  |                                                    | $ | 129,763        |           |                | $ | 47,865         |            |   | $ | 16,979,741  |           
|                                                                          |                                                    |   |                |           |                |   |                |            |   |   |             |           
|Expenses:                                                                
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Research and development                           |   |                | 1,006,958 |                |   |                | 1,145,518  |   |   |             | 28,514,329 |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | General and administrative                         |   |                | 433,198   |                |   |                | 630,994    |   |   |             | 14,641,313 |  
|                                                                          |                                                    |   |                |           |                |   |                |            |   |   |             |           
|Total expenses                                                            |                                                    |   | 1,440,156      |           |                |   | 1,776,512      |            |   |   | 43,155,642  |           
|                                                                          |                                                    |   |                |           |                |   |                |            |   |   |             |           
|Loss from operations                                                      |                                                    |   | (1,310,393     | )         |                |   | (1,728,647     | )          |   |   | (26,175,901 | )         
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Other income (expense):                                                  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Interest income                                    |   |                | 112,567   |                |   |                | 145,683    |   |   |             | 2,238,838  |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Cost of treasury shares in
excess of fair    value |   |                |          |                |   |                |           |   |   |             | (1,711,814 | )
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Interest expense                                   |   |                |          |                |   |                |           |   |   |             | (708,357   | )
|                                                                          |                                                    |   |                |           |                |   |                |            |   |   |             |           
|Net loss                                                                  |                                                    |   | (1,197,826     | )         |                |   | (1,582,964     | )          |   |   | (26,357,234 | )         
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Non-cash dividend accretion
attributable to beneficial
conversion feature |                                                    |   | (122,500       | )         |                |   | (612,500       | )          |   |   | (2,940,000  | )         
|                                                                          |                                                    |   |                |           |                |   |                |            |   |   |             |           
|Net loss applicable to common
stockholders                                |                                                    | $ | (1,320,326     | )         |                | $ | (2,195,464     | )          |   | $ | (29,297,234 | )         
|                                                                          |                                                    |   |                |           |                |   |                |            |   |   |             |           
|Loss per common share:                                                   
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Basic and diluted                                  |   | $              | (0.20     | )              |   | $              | (0.20      | )
|                                                                          |                                                    |   |                |           |                |   |                |           
|Weighted average common shares
   outstanding:                           
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Basic and diluted                                  |   |                | 6,552,580 |                |   |                | 11,007,248 |  
|                                                                          |                                                    |   |                |           |                |   |                |           

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

4



---



Antex Biologics Inc.
(a development stage enterprise)

Consolidated Statements of Stockholders
Equity (Deficit)

For Each of the Years in the Period August 3, 1991 (Inception) to December 31, 2000
and the Three Months Ended March 31, 2001 (Unaudited)

|                                                                                                                                           |  |                 |         |              |  |        |      |           |  |  |           |   |  |   |        |  
|------------------------------------------------------------------------------------------------------------------------------------------ |  | --------------- | ------- | ------------ |  | ------ | ---- | --------- |  |  | --------- | - |  | - | ------ | -
|                                                                                                                                           |  | Preferred Stock |         | Common Stock
|                                                                                                                                           |  |                 |         |             
|                                                                                                                                           |  | Shares          |         | Par Value    |  | Shares |      | Par Value
|                                                                                                                                           |  |                 |         |              |  |        |      |          
|Initial capitalization ($.20 per share), as
previously reported                                                                            |  |                 |        |              |  | $      |     |           |  |  | 390,830   |   |  | $ | 3,908  |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Adjustment to reflect one-for-five reverse
split of common shares                                                                          |  |                 |        |              |  |        |     |           |  |  | (312,664  | ) |  |   | (3,126 | )
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Net loss                                                                                                                                   |  |                 |        |              |  |        |     |           |  |  |          |   |  |   |       |  
|                                                                                                                                           |  |                 |         |              |  |        |      |           |  |  |           |   |  |   |        |  
|Balance at December 31, 1991                                                                                                               |  |                 |        |              |  |        |     |           |  |  | 78,166    |   |  |   | 782    |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Sale of common stock for cash, January 1992 ($23.05 per share)                                                                             |  |                 |        |              |  |        |     |           |  |  | 8,686     |   |  |   | 87     |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Sale of common stock for cash, February 1992 ($34.50 per share)                                                                            |  |                 |        |              |  |        |     |           |  |  | 23,160    |   |  |   | 231    |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Issuance of common stock for services, March 1992 to July 1992 ($10.00 per share)                                                          |  |                 |        |              |  |        |     |           |  |  |          |   |  |   |       |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Conversion of notes payable into preferred stock, September 1992 ($22.40 per share)                                                        |  |                 | 22,740  |              |  |        | 227  |           |  |  |          |   |  |   |       |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Sale of preferred stock for cash, September 1992 ($22.40 per share)                                                                        |  |                 | 17,866  |              |  |        | 179  |           |  |  |          |   |  |   |       |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Issuance of preferred stock upon exercise of warrants, September
1992 ($9.60 per share)                                                    |  |                 | 9,380   |              |  |        | 94   |           |  |  |          |   |  |   |       |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Issuance of common stock for cash ($5.00 per
share) and services ($5.00 per share),
October 1992                                           |  |                 |        |              |  |        |     |           |  |  | 15,000    |   |  |   | 150    |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Conversion of preferred stock into common stock, December 1992                                                                             |  |                 | (49,986 | )            |  |        | (500 | )         |  |  | 49,986    |   |  |   | 500    |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Sale of common stock and warrants for cash,
December 1992 ($24.18 per unit, net of
offering costs of $1,396,893 or $5.82
per unit)         |  |                 |        |              |  |        |     |           |  |  | 240,000   |   |  |   | 2,400  |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Net loss                                                                                                                                   |  |                 |        |              |  |        |     |           |  |  |          |   |  |   |       |  
|                                                                                                                                           |  |                 |         |              |  |        |      |           |  |  |           |   |  |   |        |  
|Balance at December 31, 1992                                                                                                               |  |                 |        |              |  |        |     |           |  |  | 414,998   |   |  |   | 4,150  |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Sale of common stock and warrants for cash,
January 1993 ($26.34 per unit, net of
offering costs of $131,723 or $3.66
per unit)            |  |                 |        |              |  |        |     |           |  |  | 36,000    |   |  |   | 360    |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Compensation and consulting expense in
connection with options granted                                                                     |  |                 |        |              |  |        |     |           |  |  |          |   |  |   |       |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Net loss                                                                                                                                   |  |                 |        |              |  |        |     |           |  |  |          |   |  |   |       |  
|                                                                                                                                           |  |                 |         |              |  |        |      |           |  |  |           |   |  |   |        |  
|Balance at December 31, 1993                                                                                                               |  |                 |        |              |  |        |     |           |  |  | 450,998   |   |  |   | 4,510  |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Net loss                                                                                                                                   |  |                 |        |              |  |        |     |           |  |  |          |   |  |   |       |  
|                                                                                                                                           |  |                 |         |              |  |        |      |           |  |  |           |   |  |   |        |  
|Balance at December 31, 1994                                                                                                               |  |                 |        |              |  |        |     |           |  |  | 450,998   |   |  |   | 4,510  |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Sale of common stock and warrants for cash,
March and April 1995 ($39,972 per unit,
net of offering costs of $706,971 or
$10,028 per unit) |  |                 |        |              |  |        |     |           |  |  | 2,014,326 |   |  |   | 20,143 |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Registration of common stock and warrants,
October 1995 ($1,525 per unit)                                                                  |  |                 |        |              |  |        |     |           |  |  |          |   |  |   |       |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Net loss                                                                                                                                   |  |                 |        |              |  |        |     |           |  |  |          |   |  |   |       |  
|                                                                                                                                           |  |                 |         |              |  |        |      |           |  |  |           |   |  |   |        |  
|Balance at December 31, 1995                                                                                                               |  |                 |        |              |  |        |     |           |  |  | 2,465,324 |   |  |   | 24,653 |  

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                                                                                                           |  |                 |            |             |  |             |             |                |  |       |   |  |  |   |   |  |  |   |            |  
|------------------------------------------------------------------------------------------------------------------------------------------ |  | --------------- | ---------- | ----------- |  | ----------- | ----------- | -------------- |  | ----- | - |  |  | - | - |  |  | - | ---------- | -
|                                                                                                                                           |  |                 |            |             |  | Deficit    
|                                                                                                                                           |  |                 |            |             |  | Accumulated
|                                                                                                                                           |  |                 |            |             |  | During the  |             | Treasury Stock
|                                                                                                                                           |  | Additional      |            | Development |  |            
|                                                                                                                                           |  | Paid-In Capital |            | Stage       |  | Shares      |             | Cost           |  | Total
|                                                                                                                                           |  |                 |            |             |  |             |             |                |  |      
|Initial capitalization ($.20 per share), as
previously reported                                                                            |  | $               | 74,093     |             |  | $           |            |                |  |       |  |  |  | $ |  |  |  | $ | 78,001     |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Adjustment to reflect one-for-five reverse
split of common shares                                                                          |  |                 | 3,126      |             |  |             |            |                |  |       |  |  |  |   |  |  |  |   |           |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Net loss                                                                                                                                   |  |                 |           |             |  |             | (941,145    | )              |  |       |  |  |  |   |  |  |  |   | (941,145   | )
|                                                                                                                                           |  |                 |            |             |  |             |             |                |  |       |   |  |  |   |   |  |  |   |            |  
|Balance at December 31, 1991                                                                                                               |  |                 | 77,219     |             |  |             | (941,145    | )              |  |       |  |  |  |   |  |  |  |   | (863,144   | )
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Sale of common stock for cash, January 1992 ($23.05 per share)                                                                             |  |                 | 199,913    |             |  |             |            |                |  |       |  |  |  |   |  |  |  |   | 200,000    |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Sale of common stock for cash, February 1992 ($34.50 per share)                                                                            |  |                 | 799,769    |             |  |             |            |                |  |       |  |  |  |   |  |  |  |   | 800,000    |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Issuance of common stock for services, March 1992 to July 1992 ($10.00 per share)                                                          |  |                 | 383,014    |             |  |             |            |                |  |       |  |  |  |   |  |  |  |   | 383,014    |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Conversion of notes payable into preferred stock, September 1992 ($22.40 per share)                                                        |  |                 | 508,882    |             |  |             |            |                |  |       |  |  |  |   |  |  |  |   | 509,109    |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Sale of preferred stock for cash, September 1992 ($22.40 per share)                                                                        |  |                 | 400,010    |             |  |             |            |                |  |       |  |  |  |   |  |  |  |   | 400,189    |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Issuance of preferred stock upon exercise of warrants, September
1992 ($9.60 per share)                                                    |  |                 | 89,906     |             |  |             |            |                |  |       |  |  |  |   |  |  |  |   | 90,000     |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Issuance of common stock for cash ($5.00 per
share) and services ($5.00 per share),
October 1992                                           |  |                 | 149,850    |             |  |             |            |                |  |       |  |  |  |   |  |  |  |   | 150,000    |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Conversion of preferred stock into common stock, December 1992                                                                             |  |                 |           |             |  |             |            |                |  |       |  |  |  |   |  |  |  |   |           |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Sale of common stock and warrants for cash,
December 1992 ($24.18 per unit, net of
offering costs of $1,396,893 or $5.82
per unit)         |  |                 | 5,800,827  |             |  |             |            |                |  |       |  |  |  |   |  |  |  |   | 5,803,227  |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Net loss                                                                                                                                   |  |                 |           |             |  |             | (2,415,723  | )              |  |       |  |  |  |   |  |  |  |   | (2,415,723 | )
|                                                                                                                                           |  |                 |            |             |  |             |             |                |  |       |   |  |  |   |   |  |  |   |            |  
|Balance at December 31, 1992                                                                                                               |  |                 | 8,409,390  |             |  |             | (3,356,868  | )              |  |       |  |  |  |   |  |  |  |   | 5,056,672  |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Sale of common stock and warrants for cash,
January 1993 ($26.34 per unit, net of
offering costs of $131,723 or $3.66
per unit)            |  |                 | 947,917    |             |  |             |            |                |  |       |  |  |  |   |  |  |  |   | 948,277    |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Compensation and consulting expense in
connection with options granted                                                                     |  |                 | 64,011     |             |  |             |            |                |  |       |  |  |  |   |  |  |  |   | 64,011     |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Net loss                                                                                                                                   |  |                 |           |             |  |             | (2,725,902  | )              |  |       |  |  |  |   |  |  |  |   | (2,725,902 | )
|                                                                                                                                           |  |                 |            |             |  |             |             |                |  |       |   |  |  |   |   |  |  |   |            |  
|Balance at December 31, 1993                                                                                                               |  |                 | 9,421,318  |             |  |             | (6,082,770  | )              |  |       |  |  |  |   |  |  |  |   | 3,343,058  |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Net loss                                                                                                                                   |  |                 |           |             |  |             | (3,040,032  | )              |  |       |  |  |  |   |  |  |  |   | (3,040,032 | )
|                                                                                                                                           |  |                 |            |             |  |             |             |                |  |       |   |  |  |   |   |  |  |   |            |  
|Balance at December 31, 1994                                                                                                               |  |                 | 9,421,318  |             |  |             | (9,122,802  | )              |  |       |  |  |  |   |  |  |  |   | 303,026    |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Sale of common stock and warrants for cash,
March and April 1995 ($39,972 per unit,
net of offering costs of $706,971 or
$10,028 per unit) |  |                 | 2,797,887  |             |  |             |            |                |  |       |  |  |  |   |  |  |  |   | 2,818,030  |  
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Registration of common stock and warrants,
October 1995 ($1,525 per unit)                                                                  |  |                 | (107,530   | )           |  |             |            |                |  |       |  |  |  |   |  |  |  |   | (107,530   | )
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|                                                                                                                                          
|Net loss                                                                                                                                   |  |                 |           |             |  |             | (3,131,059  | )              |  |       |  |  |  |   |  |  |  |   | (3,131,059 | )
|                                                                                                                                           |  |                 |            |             |  |             |             |                |  |       |   |  |  |   |   |  |  |   |            |  
|Balance at December 31, 1995                                                                                                               |  |                 | 12,111,675 |             |  |             | (12,253,861 | )              |  |       |  |  |  |   |  |  |  |   | (117,533   | )

5



---



Antex Biologics Inc.
(a development stage enterprise)

Consolidated Statements of Stockholders
Equity (Deficit)

For Each of the Years in the Period August 3, 1991 (Inception) to December 31, 2000
and the Three Months Ended March 31, 2001 (Unaudited)

|                                                                                                                                                     |  |                 |        |              |  |        |     |           |  |  |            |   |  |   |         |  
|---------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------- | ------ | ------------ |  | ------ | --- | --------- |  |  | ---------- | - |  | - | ------- | -
|                                                                                                                                                     |  | Preferred Stock |        | Common Stock
|                                                                                                                                                     |  |                 |        |             
|                                                                                                                                                     |  | Shares          |        | Par Value    |  | Shares |     | Par Value
|                                                                                                                                                     |  |                 |        |              |  |        |     |          
|Issuance of exchange option, May 1996 ($1.85
per share, net of costs of $351,082)                                                                    |  |                 |       |              |  | $      |    |           |  |  |           |   |  | $ |        |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Issuance of common stock upon exercise of
Class B Warrants and stock options,
May to August 1996 ($2.50 per share,
net of related costs of $214,811) |  |                 |       |              |  |        |    |           |  |  | 2,030,612  |   |  |   | 20,306  |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Net income                                                                                                                                           |  |                 |       |              |  |        |    |           |  |  |           |   |  |   |        |  
|                                                                                                                                                     |  |                 |        |              |  |        |     |           |  |  |            |   |  |   |         |  
|Balance at December 31, 1996                                                                                                                         |  |                 |       |              |  |        |    |           |  |  | 4,495,936  |   |  |   | 44,959  |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Issuance of common stock upon exercise of stock
options, October 1997                                                                                |  |                 |       |              |  |        |    |           |  |  | 125        |   |  |   | 1       |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Net loss                                                                                                                                             |  |                 |       |              |  |        |    |           |  |  |           |   |  |   |        |  
|                                                                                                                                                     |  |                 |        |              |  |        |     |           |  |  |            |   |  |   |         |  
|Balance at December 31, 1997                                                                                                                         |  |                 |       |              |  |        |    |           |  |  | 4,496,061  |   |  |   | 44,960  |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Forfeiture of escrowed shares, May 1998                                                                                                              |  |                 |       |              |  |        |    |           |  |  | (58,332    | ) |  |   | (583    | )
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Cashless exercise of Placement Agents unit
purchase option, September 1998 ($121,430
per unit)                                                      |  |                 |       |              |  |        |    |           |  |  | 1,409,742  |   |  |   | 14,097  |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Issuance of common stock for services, October
1998 ($1.45 per share)                                                                                |  |                 |       |              |  |        |    |           |  |  | 10,000     |   |  |   | 100     |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Net loss                                                                                                                                             |  |                 |       |              |  |        |    |           |  |  |           |   |  |   |        |  
|                                                                                                                                                     |  |                 |        |              |  |        |     |           |  |  |            |   |  |   |         |  
|Balance at December 31, 1998                                                                                                                         |  |                 |       |              |  |        |    |           |  |  | 5,857,471  |   |  |   | 58,574  |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Exercise of exchange option, September 1999                                                                                                          |  |                 |       |              |  |        |    |           |  |  | 719,053    |   |  |   | 7,191   |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Issuance of amended and restated warrant,
September 1999                                                                                             |  |                 |       |              |  |        |    |           |  |  |           |   |  |   |        |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Cancellation of treasury stock, September 1999                                                                                                       |  |                 |       |              |  |        |    |           |  |  | (684,726   | ) |  |   | (6,847  | )
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Net loss                                                                                                                                             |  |                 |       |              |  |        |    |           |  |  |           |   |  |   |        |  
|                                                                                                                                                     |  |                 |        |              |  |        |     |           |  |  |            |   |  |   |         |  
|Balance at December 31, 1999                                                                                                                         |  |                 |       |              |  |        |    |           |  |  | 5,891,798  |   |  |   | 58,918  |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Issuance of common stock upon exercise of
stock options                                                                                              |  |                 |       |              |  |        |    |           |  |  | 38,081     |   |  |   | 380     |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Sale of preferred stock, common stock, and
warrants for cash, March 2000 ($3.30
per unit, net of related costs of
$312,453)                          |  |                 | 44,545 |              |  |        | 445 |           |  |  | 3,743,573  |   |  |   | 37,436  |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Consulting expense in connection with
warrants issued (April and August 2000)                                                                        |  |                 |       |              |  |        |    |           |  |  |           |   |  |   |        |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Cashless exercise of SmithKlines warrant,
May 2000 ($1.85 per warrant)                                                                              |  |                 |       |              |  |        |    |           |  |  | 773,154    |   |  |   | 7,732   |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Cancellation of treasury stock, July 2000                                                                                                            |  |                 |       |              |  |        |    |           |  |  | (74,113    | ) |  |   | (741    | )
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Issuance of common stock for warrants, August
2000                                                                                                   |  |                 |       |              |  |        |    |           |  |  | 620,000    |   |  |   | 6,200   |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Issuance of preferred stock as compensation
in private placement, August 2000                                                                        |  |                 | 16,667 |              |  |        | 167 |           |  |  |           |   |  |   |        |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Compensation expense in connection with
options granted                                                                                              |  |                 |       |              |  |        |    |           |  |  |           |   |  |   |        |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Net loss                                                                                                                                             |  |                 |       |              |  |        |    |           |  |  |           |   |  |   |        |  
|                                                                                                                                                     |  |                 |        |              |  |        |     |           |  |  |            |   |  |   |         |  
|Balance at December 31, 2000                                                                                                                         |  |                 | 61,212 |              |  |        | 612 |           |  |  | 10,992,493 |   |  |   | 109,925 |  

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                                                                                                                     |  |                 |            |             |  |             |             |                |  |       |          |   |  |   |            |   |  |   |            |  
|---------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------- | ---------- | ----------- |  | ----------- | ----------- | -------------- |  | ----- | -------- | - |  | - | ---------- | - |  | - | ---------- | -
|                                                                                                                                                     |  |                 |            |             |  | Deficit    
|                                                                                                                                                     |  |                 |            |             |  | Accumulated
|                                                                                                                                                     |  |                 |            |             |  | During the  |             | Treasury Stock
|                                                                                                                                                     |  | Additional      |            | Development |  |            
|                                                                                                                                                     |  | Paid-In Capital |            | Stage       |  | Shares      |             | Cost           |  | Total
|                                                                                                                                                     |  |                 |            |             |  |             |             |                |  |      
|Issuance of exchange option, May 1996 ($1.85
per share, net of costs of $351,082)                                                                    |  | $               | 979,166    |             |  | $           |            |                |  |       |         |   |  | $ |           |   |  | $ | 979,166    |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Issuance of common stock upon exercise of
Class B Warrants and stock options,
May to August 1996 ($2.50 per share,
net of related costs of $214,811) |  |                 | 4,841,413  |             |  |             |            |                |  |       |         |   |  |   |           |   |  |   | 4,861,719  |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Net income                                                                                                                                           |  |                 |           |             |  |             | 535,435     |                |  |       |         |   |  |   |           |   |  |   | 535,435    |  
|                                                                                                                                                     |  |                 |            |             |  |             |             |                |  |       |          |   |  |   |            |   |  |   |            |  
|Balance at December 31, 1996                                                                                                                         |  |                 | 17,932,254 |             |  |             | (11,718,426 | )              |  |       |         |   |  |   |           |   |  |   | 6,258,787  |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Issuance of common stock upon exercise of stock
options, October 1997                                                                                |  |                 | 428        |             |  |             |            |                |  |       |         |   |  |   |           |   |  |   | 429        |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Net loss                                                                                                                                             |  |                 |           |             |  |             | (442,676    | )              |  |       |         |   |  |   |           |   |  |   | (442,676   | )
|                                                                                                                                                     |  |                 |            |             |  |             |             |                |  |       |          |   |  |   |            |   |  |   |            |  
|Balance at December 31, 1997                                                                                                                         |  |                 | 17,932,682 |             |  |             | (12,161,102 | )              |  |       |         |   |  |   |           |   |  |   | 5,816,540  |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Forfeiture of escrowed shares, May 1998                                                                                                              |  |                 | 583        |             |  |             |            |                |  |       |         |   |  |   |           |   |  |   |           |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Cashless exercise of Placement Agents unit
purchase option, September 1998 ($121,430
per unit)                                                      |  |                 | 2,981,577  |             |  |             |            |                |  |       | 684,726  |   |  |   | (1,283,860 | ) |  |   | 1,711,814  |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Issuance of common stock for services, October
1998 ($1.45 per share)                                                                                |  |                 | 14,400     |             |  |             |            |                |  |       |         |   |  |   |           |   |  |   | 14,500     |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Net loss                                                                                                                                             |  |                 |           |             |  |             | (2,833,687  | )              |  |       |         |   |  |   |           |   |  |   | (2,833,687 | )
|                                                                                                                                                     |  |                 |            |             |  |             |             |                |  |       |          |   |  |   |            |   |  |   |            |  
|Balance at December 31, 1998                                                                                                                         |  |                 | 20,929,242 |             |  |             | (14,994,789 | )              |  |       | 684,726  |   |  |   | (1,283,860 | ) |  |   | 4,709,167  |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Exercise of exchange option, September 1999                                                                                                          |  |                 | (7,191     | )           |  |             |            |                |  |       |         |   |  |   |           |   |  |   |           |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Issuance of amended and restated warrant,
September 1999                                                                                             |  |                 | 502,540    |             |  |             |            |                |  |       |         |   |  |   |           |   |  |   | 502,540    |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Cancellation of treasury stock, September 1999                                                                                                       |  |                 | (1,277,013 | )           |  |             |            |                |  |       | (684,726 | ) |  |   | 1,283,860  |   |  |   |           |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Net loss                                                                                                                                             |  |                 |           |             |  |             | (3,483,674  | )              |  |       |         |   |  |   |           |   |  |   | (3,483,674 | )
|                                                                                                                                                     |  |                 |            |             |  |             |             |                |  |       |          |   |  |   |            |   |  |   |            |  
|Balance at December 31, 1999                                                                                                                         |  |                 | 20,147,578 |             |  |             | (18,478,463 | )              |  |       |         |   |  |   |           |   |  |   | 1,728,033  |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Issuance of common stock upon exercise of
stock options                                                                                              |  |                 | 70,513     |             |  |             |            |                |  |       |         |   |  |   |           |   |  |   | 70,893     |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Sale of preferred stock, common stock, and
warrants for cash, March 2000 ($3.30
per unit, net of related costs of
$312,453)                          |  |                 | 14,943,457 |             |  |             |            |                |  |       |         |   |  |   |           |   |  |   | 14,981,338 |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Consulting expense in connection with
warrants issued (April and August 2000)                                                                        |  |                 | 234,760    |             |  |             |            |                |  |       |         |   |  |   |           |   |  |   | 234,760    |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Cashless exercise of SmithKlines warrant,
May 2000 ($1.85 per warrant)                                                                              |  |                 | 1,422,603  |             |  |             |            |                |  |       | 74,113   |   |  |   | (1,430,335 | ) |  |   |           |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Cancellation of treasury stock, July 2000                                                                                                            |  |                 | (1,429,594 | )           |  |             |            |                |  |       | (74,113  | ) |  |   | 1,430,335  |   |  |   |           |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Issuance of common stock for warrants, August
2000                                                                                                   |  |                 | (6,200     | )           |  |             |            |                |  |       |         |   |  |   |           |   |  |   |           |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Issuance of preferred stock as compensation
in private placement, August 2000                                                                        |  |                 | (167       | )           |  |             |            |                |  |       |         |   |  |   |           |   |  |   |           |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Compensation expense in connection with
options granted                                                                                              |  |                 | 93,216     |             |  |             |            |                |  |       |         |   |  |   |           |   |  |   | 93,216     |  
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|                                                                                                                                                    
|Net loss                                                                                                                                             |  |                 |           |             |  |             | (6,295,807  | )              |  |       |         |   |  |   |           |   |  |   | (6,295,807 | )
|                                                                                                                                                     |  |                 |            |             |  |             |             |                |  |       |          |   |  |   |            |   |  |   |            |  
|Balance at December 31, 2000                                                                                                                         |  |                 | 35,476,166 |             |  |             | (24,774,270 | )              |  |       |         |   |  |   |           |   |  |   | 10,812,433 |  

6



---



Antex Biologics Inc.
(a development stage enterprise)

Consolidated Statements of Stockholders
Equity (Deficit)

For Each of the Years in the Period August 3, 1991 (Inception) to December 31, 2000
and the Three Months Ended March 31, 2001 (Unaudited)

|                                                        |  |                 |        |              |  |        |     |           |  |  |            |  |  |   |         | 
|------------------------------------------------------- |  | --------------- | ------ | ------------ |  | ------ | --- | --------- |  |  | ---------- |  |  | - | ------- | 
|                                                        |  | Preferred Stock |        | Common Stock
|                                                        |  |                 |        |             
|                                                        |  | Shares          |        | Par Value    |  | Shares |     | Par Value
|                                                        |  |                 |        |              |  |        |     |          
|Issuance of common stock upon exercise of stock options |  |                 |       |              |  | $      |    |           |  |  | 17,945     |  |  | $ | 179     | 
|                                                       
|                                                       
|                                                       
|                                                       
|Required registration of stock and warrants, March 2001 |  |                 |       |              |  |        |    |           |  |  |           |  |  |   |        | 
|                                                       
|                                                       
|                                                       
|                                                       
|Compenstion expense in connection with options granted  |  |                 |       |              |  |        |    |           |  |  |           |  |  |   |        | 
|                                                       
|                                                       
|                                                       
|                                                       
|Net loss for the period                                 |  |                 |       |              |  |        |    |           |  |  |           |  |  |   |        | 
|                                                        |  |                 |        |              |  |        |     |           |  |  |            |  |  |   |         | 
|Balance at March 31, 2001                               |  |                 | 61,212 |              |  | $      | 612 |           |  |  | 11,010,438 |  |  | $ | 110,104 | 
|                                                        |  |                 |        |              |  |        |     |           |  |  |            |  |  |   |         | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                        |  |                 |            |             |  |             |             |                |  |       |   |  |  |   |   |  |  |   |            |  
|------------------------------------------------------- |  | --------------- | ---------- | ----------- |  | ----------- | ----------- | -------------- |  | ----- | - |  |  | - | - |  |  | - | ---------- | -
|                                                        |  |                 |            |             |  | Deficit    
|                                                        |  |                 |            |             |  | Accumulated
|                                                        |  |                 |            |             |  | During the  |             | Treasury Stock
|                                                        |  | Additional      |            | Development |  |            
|                                                        |  | Paid-In Capital |            | Stage       |  | Shares      |             | Cost           |  | Total
|                                                        |  |                 |            |             |  |             |             |                |  |      
|Issuance of common stock upon exercise of stock options |  | $               | 39,123     |             |  | $           |            |                |  |       |  |  |  | $ |  |  |  | $ | 39,302     |  
|                                                       
|                                                       
|                                                       
|                                                       
|Required registration of stock and warrants, March 2001 |  |                 | (48,907    | )           |  |             |            |                |  |       |  |  |  |   |  |  |  |   | (48,907    | )
|                                                       
|                                                       
|                                                       
|                                                       
|Compenstion expense in connection with options granted  |  |                 | 31,445     |             |  |             |            |                |  |       |  |  |  |   |  |  |  |   | 31,445     |  
|                                                       
|                                                       
|                                                       
|                                                       
|Net loss for the period                                 |  |                 |           |             |  |             | (1,582,964  | )              |  |       |  |  |  |   |  |  |  |   | (1,582,964 | )
|                                                        |  |                 |            |             |  |             |             |                |  |       |   |  |  |   |   |  |  |   |            |  
|Balance at March 31, 2001                               |  | $               | 35,497,827 |             |  | $           | (26,357,234 | )              |  |       |  |  |  | $ |  |  |  | $ | 9,251,309  |  
|                                                        |  |                 |            |             |  |             |             |                |  |       |   |  |  |   |   |  |  |   |            |  

7



---



Antex Biologics Inc.
(a development stage enterprise)

Consolidated Statements of Cash Flows
(Unaudited)

|                                                                                    |                                                                                                                               |   |                |         |                |   |                |          |   |   |             |           |  
|----------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------- | - | -------------- | ------- | -------------- | - | -------------- | -------- | - | - | ----------- | --------- | -
|                                                                                    |                                                                                                                               |   | Three Months   |         | August 3, 1991
|                                                                                    |                                                                                                                               |   | Ended March 31 |         | (inception)   
|                                                                                    |                                                                                                                               |   |                |         | to            
|                                                                                    |                                                                                                                               |   | 2000           |         | 2001           |   | March 31, 2001
|                                                                                    |                                                                                                                               |   |                |         |                |   |               
|Operating activities                                                               
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Net loss                                                                            |                                                                                                                               | $ | (1,197,826     | )       |                | $ | (1,582,964     | )        |   | $ | (26,357,234 | )        
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Adjustments to reconcile net loss to net
cash used in development stage activities:
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Depreciation and amortization of
property and equipment, net of
amortization of deferred gain on
sale/leaseback and equipment |   |                | 43,198  |                |   |                | 55,343   |   |   |             | 676,713   |  
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Amortization of deferred credits                                                                                              |   |                | (7,059  | )              |   |                | (7,059   | ) |   |             | (478,946  | )
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Expense recorded on cashless exercise
of common stock options and warrants                                                    |   |                |        |                |   |                |         |   |   |             | 1,711,814 |  
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Writedown of construction in progress                                                                                         |   |                |        |                |   |                |         |   |   |             | 174,400   |  
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Expense recorded on issuance of
common stock and warrant
and vesting of options                                               |   |                |        |                |   |                | 31,445   |   |   |             | 1,407,595 |  
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Changes in operating assets and liabilities:                                       
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Accounts and other receivables                                                                                                |   |                | (293    | )              |   |                | (43,883  | ) |   |             | (97,215   | )
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Prepaid expenses                                                                                                              |   |                | (58,160 | )              |   |                | (105,428 | ) |   |             | (85,201   | )
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Other assets                                                                                                                  |   |                |        |                |   |                |         |   |   |             | (27,291   | )
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Accounts payable and accrued expenses                                                                                         |   |                | 71,724  |                |   |                | 10,550   |   |   |             | 56,866    |  
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Deferred research and development                                                                                             |   |                |        |                |   |                | 70,952   |   |   |             | 675,708   |  
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Due from affiliate                                                                                                            |   |                |        |                |   |                |         |   |   |             | 420,448   |  
|                                                                                    |                                                                                                                               |   |                |         |                |   |                |          |   |   |             |          
|Net cash used in development stage activities                                       |                                                                                                                               |   | (1,148,416     | )       |                |   | (1,571,044     | )        |   |   | (21,922,343 | )        
|                                                                                    |                                                                                                                               |   |                |         |                |   |                |          |   |   |             |          
|Investing activities                                                               
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Purchase of property and equipment                                                  |                                                                                                                               |   | (62,251        | )       |                |   | (118,159       | )        |   |   | (1,601,484  | )        
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Increase in restricted cash                                                         |                                                                                                                               |   |               |         |                |   |               |          |   |   | (146,600    | )        
|                                                                                    |                                                                                                                               |   |                |         |                |   |                |          |   |   |             |          
|Net cash used in investing activities                                               |                                                                                                                               |   | (62,251        | )       |                |   | (118,159       | )        |   |   | (1,748,084  | )        
|                                                                                    |                                                                                                                               |   |                |         |                |   |                |          |   |   |             |          

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

8



---



Antex Biologics Inc.(a development stage enterprise)

Consolidated Statements of Cash Flows (Continued)
(Unaudited)

|                                                                             |  |                                                                 |            |                |   |                |            |                |   |   |            |   |           | 
|---------------------------------------------------------------------------- |  | --------------------------------------------------------------- | ---------- | -------------- | - | -------------- | ---------- | -------------- | - | - | ---------- | - | --------- | 
|                                                                             |  |                                                                 |            | Three Months   |   | August 3, 1991
|                                                                             |  |                                                                 |            | Ended March 31 |   | (inception)   
|                                                                             |  |                                                                 |            |                |   | to            
|                                                                             |  |                                                                 |            | 2000           |   | 2001           |            | March 31, 2001
|                                                                             |  |                                                                 |            |                |   |                |            |               
|Financing activities                                                        
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Net proceeds from sales of common stock
and warrants and the exchange option |  | $                                                               | 15,087,188 |                |   | $              | (48,907    | )              |   | $ | 26,538,601 |  
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Net proceeds from exercise of warrants
and stock options                     |  |                                                                 | 6,786      |                |   |                | 39,302     |                |   |   | 4,972,343  |  
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Proceeds from sale and leaseback agreement                                   |  |                                                                 |           |                |   |                |           |                |   |   | 2,164,792  |  
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Principal repayments on sale and leaseback
agreement                         |  |                                                                 |           |                |   |                |           |                |   |   | (2,164,792 | )
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Proceeds from issuance of notes payable                                      |  |                                                                 |           |                |   |                |           |                |   |   | 500,000    |  
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Proceeds from sale of preferred stock                                        |  |                                                                 |           |                |   |                |           |                |   |   | 400,189    |  
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Deferred financing costs                                                     |  |                                                                 |           |                |   |                | (100,000   | )              |   |   | (100,000   | )
|                                                                             |  |                                                                 |            |                |   |                |            |                |   |   |            |  
|Net cash provided (used) by
financing activities                             |  |                                                                 | 15,093,974 |                |   |                | (109,605   | )              |   |   | 32,311,133 |  
|                                                                             |  |                                                                 |            |                |   |                |            |                |   |   |            |  
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Net increase (decrease) in cash and cash
equivalents                         |  |                                                                 | 13,883,307 |                |   |                | (1,798,808 | )              |   |   | 8,640,706  |  
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Cash and cash equivalents at beginning
of period                             |  |                                                                 | 1,706,275  |                |   |                | 10,876,186 |                |   |   | 436,672    |  
|                                                                             |  |                                                                 |            |                |   |                |            |                |   |   |            |  
|Cash and cash equivalents at end of period                                   |  | $                                                               | 15,589,582 |                |   | $              | 9,077,378  |                |   | $ | 9,077,378  |  
|                                                                             |  |                                                                 |            |                |   |                |            |                |   |   |            |  
|Supplemental cash flows disclosures:                                        
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|                                                                             |  | Cashless exercise of common stock
options and warrants          |            | $              |  |                |            | $              |  |   |            | $ | 4,426,000 | 
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|                                                                             |  | Notes payable and accrued interest
converted to preferred stock |            | $              |  |                |            | $              |  |   |            | $ | 509,109   | 
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|                                                                             |  | Sale and leaseback of property and
equipment                    |            | $              |  |                |            | $              |  |   |            | $ | 2,099,175 | 
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|                                                                             |  | Capitalized equipment                                           |            | $              |  |                |            | $              |  |   |            | $ | 247,957   | 
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|                                                                             |  | Interest paid                                                   |            | $              |  |                |            | $              |  |   |            | $ | 699,248   | 

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

9



---



Antex Biologics Inc.
(a development stage enterprise)

Notes to Consolidated Financial Statements
For the Three-Month Periods Ended March 31, 2000 and 2001
(Unaudited)



|1. |  | Business
|-- |  | --------

Antex Biologics Inc. (the Company) is a biopharmaceutical company
committed to developing and marketing new products to prevent and treat
infections and related diseases. With respect to its human bacterial vaccine
research and development, the Company currently has strategic alliances with
GlaxoSmithKline, Aventis Pasteur and the United States Navy.

The Consolidated Balance Sheet as of March 31, 2001, the Consolidated
Statements of Operations for the three-month periods ended March 31, 2000 and
2001 and for the period August 3, 1991 (inception) to March 31, 2001, the
Consolidated Statement of Stockholders Equity (Deficit) for the period January
1, 2001 to March 31, 2001, and the Consolidated Statements of Cash Flows for
the three-month periods ended March 31, 2000 and 2001 and for the period August
3, 1991 (inception) to March 31, 2001 have been prepared without audit.
However, such financial statements reflect all adjustments (consisting solely
of normal recurring adjustments) that are, in the opinion of management,
necessary for a fair presentation of the consolidated financial position of
Antex Biologics Inc. and its subsidiary at March 31, 2001, and the consolidated
results of their operations and their consolidated cash flows for the periods
referred to above.

Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These financial statements should
be read in conjunction with the financial statements and notes thereto for the
fiscal year ended December 31, 2000 included in the Companys Annual Report on
Form 10-KSB.

The results of operations for the period ended March 31, 2001 are not
necessarily indicative of the operating results anticipated for the fiscal year
ending December 31, 2001.

Since inception, the Companys revenues have been generated solely in
support of its research and development activities and as of March 31, 2001,
the Companys research and products are not sufficiently developed to enable
the Company to generate sufficient revenues on an ongoing basis. As a result,
the Company is considered to be in the development stage.



|2. |  | Financing
|-- |  | ---------

On March 15, 2000, the Company completed a private placement resulting in
gross proceeds to the Company of approximately $15,300,000. The Companys
registration statement filed with the Securities and Exchange Commission
registration, for resale the shares of common

10



---



stock issued in the private placement and shares of common stock issuable upon
the exercise of warrants issued in the private placement was declared effective
as of March 30, 2001.

At March 31, 2001, common stock reserved for future issuance included the
following related to the private placement:

|                                      |  |  |           | 
|------------------------------------- |  |  | --------- | 
|Series A Convertible Preferred Stock  |  |  | 1,224,242 | 
|                                     
|                                     
|                                     
|                                     
|Class A, Class C and Class D Warrants |  |  | 3,816,512 | 
|                                      |  |  |           | 
|Total                                 |  |  | 5,040,754 | 
|                                      |  |  |           | 

In April 2001, the preferred stock was converted in its entirety to
1,224,242 shares of common stock.



|3. |  | Reverse Stock Split
|-- |  | -------------------

On July 7, 2000, the Board of Directors approved resolutions to implement
a one-for-five reverse stock split (the Reverse Stock Split). The Reverse
Stock Split became effective at the end of the day on July 19, 2000.

Under the terms of the Reverse Stock Split, each five shares of the
Companys common stock held at the close of business on July 19, 2000 was
combined into one fully paid and nonassessable share of common stock. The
number of shares of preferred stock (5,000,000) and the number of shares of
common stock (95,000,000) that the Company is authorized to issue under its
Certificate of Incorporation were not changed as a result of the Reverse Stock
Split.

The accompanying financial statements have been retroactively restated to
reflect the Reverse Stock Split.



|4. |  | Operating Segments
|-- |  | ------------------

During 2000 and 2001, the Company had two reportable segments, bacterial
vaccines and therapeutics. The therapeutics segment focuses on research and
development of drugs for infections and related diseases. For 2000 and 2001,
only direct costs and fixed asset acquisitions were attributed to the
therapeutics segment.

The following tables present information regarding the two segments for
the three-month periods ended March 31, 2000 and 2001:

|                                  |  |                                   |          |              |  |       |          |             |  |   |          |   |  |   |            |  
|--------------------------------- |  | --------------------------------- | -------- | ------------ |  | ----- | -------- | ----------- |  | - | -------- | - |  | - | ---------- | -
|                                  |  | Three Months Ended March 31, 2000
|                                  |  |                                  
|                                  |  | Bacterial                         |          |              |  |       |          | Reconciling
|Category                          |  | Vaccines                          |          | Therapeutics |  | Items |          | Total      
|                                  |  |                                   |          |              |  |       |          |            
|Revenues                          |  | $                                 | 49,998   |              |  | $     |         |             |  | $ | 79,765   |   |  | $ | 129,763    |  
|                                 
|                                 
|                                 
|                                 
|Research and development
expenses |  | $                                 | 790,355  |              |  | $     | 216,603  |             |  | $ |         |   |  | $ | 1,006,958  |  
|                                 
|                                 
|                                 
|                                 
|Loss from operations              |  | $                                 | (740,357 | )            |  | $     | (216,603 | )           |  | $ | (353,433 | ) |  | $ | (1,310,393 | )
|                                 
|                                 
|                                 
|                                 
|Fixed asset acquisitions          |  | $                                 | 103,608  |              |  | $     |         |             |  | $ | (41,357  | ) |  | $ | 62,251     |  

11



---



Reconciling items include reimbursable patent costs of $79,765; general and
administrative expenses, net of reimbursable patent costs, of $353,433; and
corporate fixed asset acquisitions and construction in progress transfers of
$41,357.

|                                  |  |                                   |          |              |  |       |          |             |  |   |          |   |  |   |            |  
|--------------------------------- |  | --------------------------------- | -------- | ------------ |  | ----- | -------- | ----------- |  | - | -------- | - |  | - | ---------- | -
|                                  |  | Three Months Ended March 31, 2001
|                                  |  |                                  
|                                  |  | Bacterial                         |          |              |  |       |          | Reconciling
|Category                          |  | Vaccines                          |          | Therapeutics |  | Items |          | Total      
|                                  |  |                                   |          |              |  |       |          |            
|Revenues                          |  | $                                 | 17,000   |              |  | $     |         |             |  | $ | 30,865   |   |  | $ | 47,865     |  
|                                 
|                                 
|                                 
|                                 
|Research and development
expenses |  | $                                 | 866,855  |              |  | $     | 278,663  |             |  | $ |         |   |  | $ | 1,145,518  |  
|                                 
|                                 
|                                 
|                                 
|Loss from operations              |  | $                                 | (849,855 | )            |  | $     | (278,663 | )           |  | $ | (600,129 | ) |  | $ | (1,728,647 | )
|                                 
|                                 
|                                 
|                                 
|Fixed asset acquisitions          |  | $                                 | 163,772  |              |  | $     |         |             |  | $ | (45,613  | ) |  | $ | 118,159    |  

Reconciling items include reimbursable patent costs of $30,865; general and
administrative expenses, net of reimbursable patent costs, of $600,129; and net
corporate fixed asset acquisitions and construction in progress transfers of
$45,613.



|5. |  | Earnings Per Share
|-- |  | ------------------

Basic earnings per share is computed by dividing net income (loss)
available to common shareholders by the weighted average number of common
shares outstanding during the period. Diluted earnings per share is computed
by dividing net income (loss) available to common shareholders by the weighted
average number of common shares outstanding after giving effect to all dilutive
potential common shares that were outstanding during the period. The Company
did not have any dilutive potential common shares during the three-month
periods ended March 31, 2000 and 2001; and excluded 5,826,185 and 5,600,811
shares, respectively, represented by stock options, an exchange option and
warrants from the earnings per share calculation as they are anti-dilutive.
Net loss as reported was adjusted for a non-cash dividend accretion to
determine the net loss applicable to common shareholders for the computation of
basic or diluted earnings per share.

12



---



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

The Company commenced operations in August 1991.

The Companys strategic alliances with GlaxoSmithKline and Aventis Pasteur
are consistent with one aspect of the Companys overall strategy which, since
its inception, has been to establish strategic partnerships and to focus on
researching technologies with the goal of developing and marketing new products
to prevent and treat infections and related diseases. The Company is operating
as a development stage enterprise.

Results of Operations

Revenues for the first quarter of 2001 consisted of $30,865 of
reimbursable patent expenses pursuant to the strategic alliance with SmithKline
Beecham and $17,000 from a Small Business Technology Transfer contract.
Revenues for the comparable period in 2000 consisted of reimbursable patent
expenses incurred of $79,765 pursuant to the SmithKline Beecham alliance, and
$49,998 from a Small Business Technology Transfer contract.

The decreases in human bacterial vaccine research and development support
and reimbursable expenses were due to a reduction in reimbursable patent
expenses and services provided under the Small Business Technology Transfer
contract..

Research and development expenses in the first quarter of 2001 increased
$138,560 to $1,145,518. Increases occurred in research material costs,
personnel expenditures and clinical trial costs.

General and administrative expenses in the first quarter of 2001 increased
$197,796 to $630,994. Increases occurred in patent and general legal fees,
increased facility costs and increases in investor and public relations
programs.

The increase in interest income in the first quarter of 2001 reflects the
increase in cash available for investing resulting from the equity financing
completed in March 2000.

The non-cash dividend
accretion of $612,500 was attributable to the beneficial
conversion feature of the Series A Convertible Preferred Stock issued
in March 2000.

Liquidity and Capital Resources

As a development stage company, the Companys operating activities have
been limited primarily to research and development involving its proprietary
technologies, and accordingly, have generated limited revenues.

For 2001, the Company will rely primarily upon the net proceeds of the
private placement completed in March 2000 to fund its operations (see Note 3 to
the financial statements). During 2001, the Company will continue to assess to
which human bacterial vaccine projects and antibacterials projects resources
will be allocated. The Company anticipates that its research and development
expenses related to these projects will be substantial for the foreseeable
future. The Company intends to pursue additional strategic

13



---



alliances, technology licenses, and grants and contracts to help fund its
research and development expenses.

The Company currently anticipates that it will increase its total
employees and contract personnel from its 2000 year-end total of 28 to
approximately 38 in 2001. The annual rent and pro-rata share of building
operating expenses and administrative charges for the Companys facility are
estimated at approximately $882,000 for 2001.

In order to sustain its research and development programs beyond the first
quarter 2002, as well as to fund its future operations, the Company will
continue to seek additional financing. The Company has no lines of credit. In
seeking additional funding, the Company continues to examine a range of
possible transactions, including: additional strategic alliances; additional
equity or debt public offerings and private placements; the exercise of
currently outstanding warrants; additional grants and contracts; the sale and
leaseback of existing assets; and research and development funding from third
parties. However, there is no assurance that additional funds will be
available from these or any other sources or, if available, that, the terms on
which such funds can be obtained will be acceptable to the Company.

If the Company is unsuccessful in its efforts to obtain sufficient
financing to continue to fund its current operations, the Company will be
required to reduce its level of operations. The Company may seek to enter into
a business combination transaction that would involve the merger or sale of the
Company in order to preserve shareholder value.

New Accounting Standards

The Financial Accounting Standards Board has issued a new standard.
Statement of Financial Accounting Standards No. 133 (SFAS 133), Accounting
for Derivative Instruments and Hedging Activities, which becomes effective for
years beginning after June 15, 2000, requires that every derivative instrument
be recorded in the balance sheet as either an asset or liability measured at
its fair value. The statement requires that changes in the derivatives fair
value be recognized in earnings unless specific hedge accounting criteria are
met. The effect of adoption of SFAS 133 will not be material to the Companys
financial statements.

In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 (SAB No. 101), Revenue Recognition in Financial
Statements, which summarizes certain of the staffs views on revenue
recognition. The Companys revenue recognition policies have been and continue
to be in accordance with SAB No. 101.

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

Statements contained herein that are not historical facts may be
forward-looking statements that are subject to a variety of risks and
uncertainties. There are a number of important factors that could cause actual
results to differ materially from those expressed in any forward-looking
statements made by the Company. These factors include, but are not limited to:
(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

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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.

PART II OTHER INFORMATION

ITEM 2.         CHANGES IN SECURITIES AND USE OF PROCEEDS



| |     
| | ----
| | None

ITEM 6.         EXHIBITS AND REPORTS ON FORM 8-K

Exhibits



| |     
| | ----
| | None

Reports on Form 8-K



| |     
| | ----
| | None

15



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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: May 15, 2001 | By: | /s/V. M. Esposito                                                  
|                   |     |                                                                    
|                   |     | V. M. Esposito, Chief Executive Officer and Chief Financial Officer

16