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 June 30, 2001                                     
|     
|      |  |                                                                                  
|     
|[   ] |  | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT                  
|     
|      |  |                                                                                  
|     
|     
|     
|     
|     
|     
|     
|     
|      |  | For the transition period _________ to _________                                 



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|                                              |  |                                  
|--------------------------------------------- |  | ---------------------------------
|Delaware                                      |  | 52-1563899                       
|                                              |  |                                  
|(State or other jurisdiction of incorporation |  | (IRS Employer Identification No.)
|                                             
|                                             
|                                             
|                                             
|or organization)                             

300 Professional Drive, Gaithersburg, MD 20879

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(301) 590-0129

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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 July 23, 2001
| |  |  | ------------------------------------------------------------------------------------------------------------

Transitional Small Business Disclosure Format (check one):

Yes               No   X





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Condensed Consolidated Balance Sheets
(unaudited)

|                                             |                                                   |                                                    |                                                     |                                |         |              |            |             |         |           |           | 
|-------------------------------------------- | ------------------------------------------------- | -------------------------------------------------- | --------------------------------------------------- | ------------------------------ | ------- | ------------ | ---------- | ----------- | ------- | --------- | --------- | 
|                                             |                                                   |                                                    |                                                     |                                |         | December 31, |            | June 30,   
|                                             |                                                   |                                                    |                                                     |                                |         | 2000         |            | 2001       
|Assets                                      
|                                            
|                                            
|                                            
|                                            
|Current assets:                             
|                                            
|                                            
|                                            
|                                            
|                                             |                                                   |                                                    |                                                     | Cash and cash equivalents      |         | $            | 10,876,186 |             |         | $         | 7,448,602 | 
|                                            
|                                            
|                                            
|                                            
|                                             |                                                   |                                                    |                                                     | Accounts and other receivables |         |              | 53,332     |             |         |           | 131,995   | 
|                                            
|                                            
|                                            
|                                            
|                                             |                                                   |                                                    |                                                     | Prepaid expenses               |         |              | 96,015     |             |         |           | 176,579   | 
|                                             |                                                   |                                                    |                                                     |                                |         |              |            |            
|Total current assets                         |                                                   |                                                    | 11,025,533                                          |                                |         |              | 7,757,176  |            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|Property and equipment, net                  |                                                   |                                                    | 790,973                                             |                                |         |              | 809,335    |            
|                                            
|                                            
|                                            
|                                            
|Restricted cash                              |                                                   |                                                    | 146,600                                             |                                |         |              | 146,600    |            
|                                            
|                                            
|                                            
|                                            
|Deferred financing cost and other            |                                                   |                                                    | 27,291                                              |                                |         |              | 142,291    |            
|                                             |                                                   |                                                    |                                                     |                                |         |              |            |            
|                                             |                                                   |                                                    |                                                     | Total assets                   |         | $            | 11,990,397 |             |         | $         | 8,855,402 | 
|                                             |                                                   |                                                    |                                                     |                                |         |              |            |            
|Liabilities and Stockholders Equity        
|                                            
|                                            
|                                            
|                                            
|Current liabilities:                        
|                                            
|                                            
|                                            
|                                            
|                                             |                                                   |                                                    | Accounts payable and accrued expenses               |                                | $       | 453,324      |            |             | $       | 531,011   |          
|                                            
|                                            
|                                            
|                                            
|                                             |                                                   |                                                    | Deferred research and development revenue           |                                |         | 604,756      |            |             |         | 698,412   |          
|                                            
|                                            
|                                            
|                                            
|                                             |                                                   |                                                    | Deferred gain on sale of equipment, current portion |                                |         | 49,590       |            |             |         | 49,590    |          
|                                             |                                                   |                                                    |                                                     |                                |         |              |            |            
|Total current liabilities                    |                                                   |                                                    | 1,107,670                                           |                                |         |              | 1,279,013  |            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|Deferred gain on sale of equipment and other |                                                   |                                                    | 70,294                                              |                                |         |              | 29,029     |            
|                                             |                                                   |                                                    |                                                     |                                |         |              |            |            
|                                             |                                                   |                                                    | Total liabilities                                   |                                |         | 1,177,964    |            |             |         | 1,308,042 |          
|                                             |                                                   |                                                    |                                                     |                                |         |              |            |            
|Commitments and contingencies               
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|Stockholders equity:                       
|                                            
|                                            
|                                            
|                                            
|                                             | Preferred stock, $.01 par value; 5,000,000 shares
|                                            
|                                            
|                                            
|                                            
|                                             |                                                   | authorized; Series A convertible preferred stock -
|                                            
|                                            
|                                            
|                                            
|                                             |                                                   | none and 61,212 shares issued and outstanding      |                                                     |                                | 612     |              |            |             |        |          
|                                            
|                                            
|                                            
|                                            
|                                             | Common stock, $.01 par value; 95,000,000 shares  
|                                            
|                                            
|                                            
|                                            
|                                             |                                                   | authorized; 10,992,493 and 12,234,680 shares      
|                                            
|                                            
|                                            
|                                            
|                                             |                                                   | issued and outstanding                             |                                                     |                                | 109,925 |              |            |             | 122,346 |          
|                                            
|                                            
|                                            
|                                            
|                                             | Additional paid-in capital                        |                                                    |                                                     | 35,476,166                     |         |              |            | 35,504,125  |        
|                                            
|                                            
|                                            
|                                            
|                                             | Deficit accumulated during the development stage  |                                                    |                                                     | (24,774,270                    | )       |              |            | (28,079,111 | )      
|                                             |                                                   |                                                    |                                                     |                                |         |              |            |            
|                                             |                                                   |                                                    |                                                     | Total stockholders equity     |         |              | 10,812,433 |             |         |           | 7,547,360 | 
|                                             |                                                   |                                                    |                                                     |                                |         |              |            |            
|                                             |                                                   | $                                                  | 11,990,397                                          |                                |         | $            | 8,855,402  |            
|                                             |                                                   |                                                    |                                                     |                                |         |              |            |            

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

2



---





Condensed Consolidated Statements of Operations
(Unaudited)

|                                            |                               |   |               |            |      |   |            |            |  
|------------------------------------------- | ----------------------------- | - | ------------- | ---------- | ---- | - | ---------- | ---------- | -
|                                            |                               |   | Three Months 
|                                            |                               |   | Ended June 30
|                                            |                               |   |              
|                                            |                               |   | 2000          |            | 2001
|                                            |                               |   |               |            |     
|                                           
|Revenues                                    |                               | $ | 27,108        |            |      | $ | 72,094     |           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|Research and development expenses           |                               |   | 1,301,191     |            |      |   | 1,112,541  |           
|                                           
|                                           
|                                           
|                                           
|General and administrative expenses         |                               |   | 571,506       |            |      |   | 779,814    |           
|                                            |                               |   |               |            |      |   |            |           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                            | Loss from operations          |   |               | (1,845,589 | )    |   |            | (1,820,261 | )
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|Interest income                             |                               |   | 235,438       |            |      |   | 98,384     |           
|                                            |                               |   |               |            |      |   |            |           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|Net loss                                    |                               |   | (1,610,151    | )          |      |   | (1,721,877 | )         
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|Non-cash dividend accretion attributable to
|                                           
|                                           
|                                           
|                                           
|                                            | beneficial conversion feature |   |               | (735,000   | )    |   |            |           |  
|                                            |                               |   |               |            |      |   |            |           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|Net loss applicable to common stockholders  |                               | $ | (2,345,151    | )          |      | $ | (1,721,877 | )         
|                                            |                               |   |               |            |      |   |            |           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|Loss per basic and diluted common share     |                               | $ | (0.23         | )          |      | $ | (0.14      | )         
|                                            |                               |   |               |            |      |   |            |           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|Weighted average common shares outstanding  |                               |   | 9,993,741     |            |      |   | 12,207,774 |           
|                                            |                               |   |               |            |      |   |            |           

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

3



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Condensed Consolidated Statements of Operations
(Unaudited)

|                                            |                                   |               |            |               |   |                |            |               |   |   |             |            |            |  
|------------------------------------------- | --------------------------------- | ------------- | ---------- | ------------- | - | -------------- | ---------- | ------------- | - | - | ----------- | ---------- | ---------- | -
|                                            |                                   |               |            | Six Months    |   | August 3, 1991
|                                            |                                   |               |            | Ended June 30 |   | (inception)   
|                                            |                                   |               |            |               |   | to            
|                                            |                                   |               |            | 2000          |   | 2001           |            | June 30, 2001
|                                           
|Revenues                                    |                                   | $             | 156,871    |               |   | $              | 119,959    |               |   | $ | 17,051,835  |           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|Research and development expenses           |                                   |               | 2,308,149  |               |   |                | 2,258,059  |               |   |   | 29,626,870  |           
|                                           
|                                           
|                                           
|                                           
|General and administrative expenses         |                                   |               | 1,004,704  |               |   |                | 1,410,808  |               |   |   | 15,421,127  |           
|                                            |                                   |               |            |               |   |                |            |               |   |   |             |           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|Loss from operations                        |                                   |               | (3,155,982 | )             |   |                | (3,548,908 | )             |   |   | (27,996,162 | )         
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|Other income (expense):                    
|                                           
|                                           
|                                           
|                                           
|                                            | Interest income                   |               |            | 348,005       |   |                |            | 244,067       |   |   |             | 2,337,222  |           
|                                           
|                                           
|                                           
|                                           
|                                            | Interest expense                  |               |            |              |   |                |            |              |   |   |             | (708,357   | )         
|                                           
|                                           
|                                           
|                                           
|                                            | Cost of treasury shares in excess
|                                           
|                                           
|                                           
|                                           
|                                            |                                   | of fair value |            |               |  |                |            |               |  |   |             |            | (1,711,814 | )
|                                            |                                   |               |            |               |   |                |            |               |   |   |             |           
|Net loss                                    |                                   |               | (2,807,977 | )             |   |                | (3,304,841 | )             |   |   | (28,079,111 | )         
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|Non-cash dividend accretion attributable to
|                                           
|                                           
|                                           
|                                           
|                                            | beneficial conversion feature     |               |            | (857,500      | ) |                |            | (612,500      | ) |   |             | (2,940,000 | )         
|                                            |                                   |               |            |               |   |                |            |               |   |   |             |           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|Net loss applicable to common stockholders  |                                   | $             | (3,665,477 | )             |   | $              | (3,917,341 | )             |   | $ | (31,019,111 | )         
|                                            |                                   |               |            |               |   |                |            |               |   |   |             |           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|Loss per basic and diluted common share     |                                   | $             | (0.44      | )             |   | $              | (0.34      | )            
|                                            |                                   |               |            |               |   |                |            |              
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|                                           
|Weighted average common shares outstanding  |                                   |               | 8,273,161  |               |   |                | 11,610,827 |              
|                                            |                                   |               |            |               |   |                |            |              

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

4



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Condensed Consolidated Statements of Cash Flows
(Unaudited)



|                                              |                                            |                                           |            |               |         |                |            |               |         |   |             |          |           |  
|--------------------------------------------- | ------------------------------------------ | ----------------------------------------- | ---------- | ------------- | ------- | -------------- | ---------- | ------------- | ------- | - | ----------- | -------- | --------- | -
|                                              |                                            |                                           |            | Six Months    |         | August 3, 1991
|                                              |                                            |                                           |            | Ended June 30 |         | (inception)   
|                                              |                                            |                                           |            |               |         | to            
|                                              |                                            |                                           |            | 2000          |         | 2001           |            | June 30, 2001
|                                              |                                            |                                           |            |               |         |                |            |              
|Operating activities                         
|                                             
|                                             
|                                             
|                                             
|Net loss                                      |                                            | $                                         | (2,807,977 | )             |         | $              | (3,304,841 | )             |         | $ | (28,079,111 | )       
|                                             
|                                             
|                                             
|                                             
|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             |            |               | 99,654  |                |            |               | 111,769 |   |             |          | 733,139   |  
|                                             
|                                             
|                                             
|                                             
|                                              | Amortization of deferred credits           |                                           |            | (14,118       | )       |                |            | (16,465       | )       |   |             | (488,352 | )        
|                                             
|                                             
|                                             
|                                             
|                                              | Expense on cashless exercise of           
|                                             
|                                             
|                                             
|                                             
|                                              |                                            | common stock options and warrants         |            |               |        |                |            |               |        |   |             |          | 1,711,814 |  
|                                             
|                                             
|                                             
|                                             
|                                              | Writedown of construction in progress      |                                           |            |              |         |                |            |              |         |   |             | 174,400  |          
|                                             
|                                             
|                                             
|                                             
|                                              | Expense on issuance and/or vesting of     
|                                             
|                                             
|                                             
|                                             
|                                              |                                            | common stock, warrants and options        |            |               | 71,060  |                |            |               | 62,890  |   |             |          | 1,439,040 |  
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                              | Changes in assets and liabilities:        
|                                             
|                                             
|                                             
|                                             
|                                              |                                            | Accounts and other receivables            |            |               | 47,962  |                |            |               | (78,663 | ) |             |          | (131,995  | )
|                                             
|                                             
|                                             
|                                             
|                                              |                                            | Prepaid expenses and other                |            |               | (57,218 | )              |            |               | (80,564 | ) |             |          | (90,628   | )
|                                             
|                                             
|                                             
|                                             
|                                              |                                            | Accounts payable and accrued expenses     |            |               | 124,350 |                |            |               | 77,687  |   |             |          | 124,003   |  
|                                             
|                                             
|                                             
|                                             
|                                              |                                            | Deferred research and development revenue |            |               |        |                |            |               | 93,656  |   |             |          | 698,412   |  
|                                             
|                                             
|                                             
|                                             
|                                              |                                            | Due from affiliate                        |            |               |        |                |            |               |        |   |             |          | 420,448   |  
|                                              |                                            |                                           |            |               |         |                |            |               |         |   |             |         
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|Net cash used in development stage activities |                                            |                                           | (2,536,287 | )             |         |                | (3,134,531 | )             |         |   | (23,485,830 | )       
|                                              |                                            |                                           |            |               |         |                |            |               |         |   |             |         
|Investing activities                         
|                                             
|                                             
|                                             
|                                             
|Purchase of property and equipment            |                                            |                                           | (239,208   | )             |         |                | (154,931   | )             |         |   | (1,638,256  | )       
|                                             
|                                             
|                                             
|                                             
|Increase in restricted cash                   |                                            |                                           |           |               |         |                |           |               |         |   | (146,600    | )       
|                                              |                                            |                                           |            |               |         |                |            |               |         |   |             |         
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|                                             
|Net cash used in investing activities         |                                            |                                           | (239,208   | )             |         |                | (154,931   | )             |         |   | (1,784,856  | )       
|                                              |                                            |                                           |            |               |         |                |            |               |         |   |             |         

|                                                                          |  |            
|------------------------------------------------------------------------- |  | -----------
|The accompanying notes are an integral part of these financial statements |  | (Continued)

5



---





Condensed Consolidated Statements of Cash Flows (continued)
(Unaudited)

|                                           |                                    |                              |            |               |           |                |           |               |   |   |            |            |           | 
|------------------------------------------ | ---------------------------------- | ---------------------------- | ---------- | ------------- | --------- | -------------- | --------- | ------------- | - | - | ---------- | ---------- | --------- | 
|                                           |                                    |                              |            | Six Months    |           | August 3, 1991
|                                           |                                    |                              |            | Ended June 30 |           | (inception)   
|                                           |                                    |                              |            |               |           | to            
|                                           |                                    |                              |            | 2000          |           | 2001           |           | June 30, 2001
|                                           |                                    |                              |            |               |           |                |           |              
|Financing activities                      
|                                          
|                                          
|                                          
|                                          
|Net proceeds from sales of common stock,  
|                                          
|                                          
|                                          
|                                          
|                                           | warrants and options               |                              | $          | 15,081,929    |           |                | $         | (62,424       | ) |   | $          | 26,525,084 |          
|                                          
|                                          
|                                          
|                                          
|Net proceeds from exercise of common stock
|                                          
|                                          
|                                          
|                                          
|                                           | warrants and options               |                              |            | 7,860         |           |                |           | 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                   |                                    |                              |           |               |           |                | (115,000  | )             |   |   | (115,000   | )         
|                                           |                                    |                              |            |               |           |                |           |               |   |   |            |           
|Net cash provided by financing activities  |                                    |                              | 15,089,789 |               |           |                | (138,122  | )             |   |   | 32,282,616 |           
|                                           |                                    |                              |            |               |           |                |           |               |   |   |            |           
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|Net increase (decrease) in cash and cash  
|                                          
|                                          
|                                          
|                                          
|                                           | equivalents                        |                              |            | 12,314,294    |           |                |           | (3,427,584    | ) |   |            | 7,011,930  |          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|Cash and cash equivalents at beginning    
|                                          
|                                          
|                                          
|                                          
|                                           | of period                          |                              |            | 1,706,275     |           |                |           | 10,876,186    |   |   |            | 436,672    |          
|                                           |                                    |                              |            |               |           |                |           |               |   |   |            |           
|Cash and cash equivalents at end of period |                                    | $                            | 14,020,569 |               |           | $              | 7,448,602 |               |   | $ | 7,448,602  |           
|                                           |                                    |                              |            |               |           |                |           |               |   |   |            |           
|Supplemental cash flows disclosures:      
|                                          
|                                          
|                                          
|                                          
|                                           | Cashless exercise of common stock 
|                                          
|                                          
|                                          
|                                          
|                                           |                                    | options and warrants         |            | $             | 1,430,335 |                |           | $             |  |   |            | $          | 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.

6



---



Antex Biologics Inc.
(a development stage enterprise)

Notes to Condensed Consolidated Financial Statements
June 30, 2000 and 2001
(Unaudited)

1. Business

Antex Biologics Inc. (the Company) is a biopharmaceutical company
committed to improving human health by developing 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.

Since inception, the Companys revenues have been generated solely in
support of its research and development activities and, as of June 30, 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.

The accompanying unaudited Condensed Consolidated Balance Sheet as of June
30, 2001, the Condensed Consolidated Statements of Operations for the
three-month and six-month periods ended June 30, 2000 and 2001 and for the
period August 3, 1991 (inception) to June 30, 2001 and the Condensed
Consolidated Statements of Cash Flows for the six-month periods ended June 30,
2000 and 2001 and for the period August 3, 1991 (inception) to June 30, 2001
reflect all adjustments (consisting 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
June 30, 2001, and the consolidated results of their operations and their 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.

2. Preparation of Condensed Consolidated Financial Statements

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

7



---



The results of operations for the period ended June 30, 2001 are not
necessarily indicative of the operating results anticipated for the fiscal year
ending December 31, 2001.

The accompanying financial statements have been retroactively restated to
reflect July 9, 2000 one-for-five reverse stock split. Additionally, certain
reclassifications have been made to the 2000 financial statements to conform
them to the 2001 presentation.

3. 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 for
resale of the shares of common stock issued in the private placement and shares
of common stock issuable upon the exercise of warrants issued in the private
placement became effective as of March 30, 2001. On April 12, 2001, the
preferred stock was converted in its entirety into 1,224,242 shares of common
stock.

At June 30, 2001, 3,816,512 shares of common stock were reserved for
future issuance for the Class A, Class C and Class D Warrants related to the
private placement.

In July 2001, the Company raised approximately $3.0 million (the Initial
Investment) in a private placement of 3,000 shares of its Series B Convertible
Preferred Stock (the Series B Preferred Stock) to private investors (the
Purchasers). The Series B Preferred Stock is convertible into the Companys
Common Stock at $2.00 per share, subject to adjustment under certain
circumstances, and is redeemable under certain circumstances. The Company also
issued to the Purchasers (i) Class E Warrants for the purchase of up to an
aggregate of 750,000 shares of the Companys Common Stock at an exercise price
of $2.50 per share and (ii) Class F Warrants for the purchase of up to an
aggregate of 375,000 shares of the Companys Common Stock at an exercise price
of $3.00 per share, each subject to adjustments under certain circumstances.
The Class E and Class F Warrants expire on July 3, 2006. The Company and the
Purchasers also entered into an agreement to register the shares of the
Companys Common Stock issuable upon conversion of the Series B preferred Stock
and exercise of the Class E Warrants and Class F Warrants. The Company also
granted the Purchasers the option at any time prior to April 2, 2002 to invest
an equal amount on substantially the same terms and conditions as the Initial
Investment. The Company may cancel the option if at any time the average
closing bid price of the Companys Common Stock over a consecutive ten (10) day
period equals or exceeds $3.00 per share.

4. Operating Segments

During 2000 and 2001, the Company had two reportable segments, bacterial
vaccines and therapeutics. The following tables present information regarding
the two segments for the three-month and six-month periods ended June 30, 2000
and 2001:

8



---



|                                  |  |           |            |              |  |                                  |          |             |  |   |          |   |  |   |            |  
|--------------------------------- |  | --------- | ---------- | ------------ |  | -------------------------------- | -------- | ----------- |  | - | -------- | - |  | - | ---------- | -
|                                  |  |           |            |              |  | Three Months Ended June 30, 2000
|                                  |  |           |            |              |  |                                 
|                                 
|                                  |  | Bacterial |            |              |  |                                  |          | Reconciling
|Category                          |  | Vaccines  |            | Therapeutics |  | Items                            |          | Total      
|                                  |  |           |            |              |  |                                  |          |            
|Revenues                          |  | $         |           |              |  | $                                |         |             |  | $ | 27,108   |   |  | $ | 27,108     |  
|                                 
|                                 
|                                 
|                                 
|Research and development
expenses |  | $         | 1,089,631  |              |  | $                                | 211,560  |             |  | $ |         |   |  | $ | 1,301,191  |  
|                                 
|                                 
|                                 
|                                 
|Loss from operations              |  | $         | (1,089,631 | )            |  | $                                | (211,560 | )           |  | $ | (544,398 | ) |  | $ | (1,845,589 | )
|                                 
|                                 
|                                 
|                                 
|Fixed asset acquisitions          |  | $         | 26,097     |              |  | $                                | 37,456   |             |  | $ | 113,404  |   |  | $ | 176,957    |  

Reconciling items include general and administrative expenses of $544,398 (net
of reimbursable patent costs of $27,108) and corporate fixed asset acquisitions
and construction in progress expenditures of $113,404.

|                                  |  |           |          |              |  |                                  |          |             |  |   |          |   |  |   |            |  
|--------------------------------- |  | --------- | -------- | ------------ |  | -------------------------------- | -------- | ----------- |  | - | -------- | - |  | - | ---------- | -
|                                  |  |           |          |              |  | Three Months Ended June 30, 2001
|                                  |  |           |          |              |  |                                 
|                                 
|                                  |  | Bacterial |          |              |  |                                  |          | Reconciling
|Category                          |  | Vaccines  |          | Therapeutics |  | Items                            |          | Total      
|                                  |  |           |          |              |  |                                  |          |            
|Revenues                          |  | $         |         |              |  | $                                |         |             |  | $ | 72,094   |   |  | $ | 72,094     |  
|                                 
|                                 
|                                 
|                                 
|Research and development
expenses |  | $         | 714,061  |              |  | $                                | 398,480  |             |  | $ |         |   |  | $ | 1,112,541  |  
|                                 
|                                 
|                                 
|                                 
|Loss from operations              |  | $         | (714,061 | )            |  | $                                | (398,480 | )           |  | $ | (707,720 | ) |  | $ | (1,820,261 | )
|                                 
|                                 
|                                 
|                                 
|Fixed asset acquisitions          |  | $         |         |              |  | $                                |         |             |  | $ | 36,772   |   |  | $ | 36,772     |  

Reconciling items include general and administrative expenses of $707,720 (net
of reimbursable patent costs of $72,094) and net corporate fixed asset
acquisitions of $36,772.

|                                  |  |           |            |              |  |                                |          |             |  |   |          |   |  |   |            |  
|--------------------------------- |  | --------- | ---------- | ------------ |  | ------------------------------ | -------- | ----------- |  | - | -------- | - |  | - | ---------- | -
|                                  |  |           |            |              |  | Six Months Ended June 30, 2000
|                                  |  |           |            |              |  |                               
|                                 
|                                  |  | Bacterial |            |              |  |                                |          | Reconciling
|Category                          |  | Vaccines  |            | Therapeutics |  | Items                          |          | Total      
|                                  |  |           |            |              |  |                                |          |            
|Revenues                          |  | $         | 49,998     |              |  | $                              |         |             |  | $ | 106,873  |   |  | $ | 156,871    |  
|                                 
|                                 
|                                 
|                                 
|Research and development
expenses |  | $         | 1,879,986  |              |  | $                              | 428,163  |             |  | $ |         |   |  | $ | 2,308,149  |  
|                                 
|                                 
|                                 
|                                 
|Loss from operations              |  | $         | (1,829,988 | )            |  | $                              | (428,163 | )           |  | $ | (897,831 | ) |  | $ | (3,155,982 | )
|                                 
|                                 
|                                 
|                                 
|Fixed asset acquisitions          |  | $         | 129,705    |              |  | $                              | 37,456   |             |  | $ | 72,047   |   |  | $ | 239,208    |  

9



---



Reconciling items include general and administrative expenses of $897,831 (net
of reimbursable patent costs of $106,873) and corporate fixed asset
acquisitions and construction in progress expenditures of $72,047.

|                                  |  |           |            |              |  |                                |          |             |  |   |            |   |  |   |            |  
|--------------------------------- |  | --------- | ---------- | ------------ |  | ------------------------------ | -------- | ----------- |  | - | ---------- | - |  | - | ---------- | -
|                                  |  |           |            |              |  | Six Months Ended June 30, 2001
|                                  |  |           |            |              |  |                               
|                                 
|                                  |  | Bacterial |            |              |  |                                |          | Reconciling
|Category                          |  | Vaccines  |            | Therapeutics |  | Items                          |          | Total      
|                                  |  |           |            |              |  |                                |          |            
|Revenues                          |  | $         | 17,000     |              |  | $                              |         |             |  | $ | 102,959    |   |  | $ | 119,959    |  
|                                 
|                                 
|                                 
|                                 
|Research and development
expenses |  | $         | 1,580,916  |              |  | $                              | 677,143  |             |  | $ |           |   |  | $ | 2,258,059  |  
|                                 
|                                 
|                                 
|                                 
|Loss from operations              |  | $         | (1,563,916 | )            |  | $                              | (677,143 | )           |  | $ | (1,307,849 | ) |  | $ | (3,548,908 | )
|                                 
|                                 
|                                 
|                                 
|Fixed asset acquisitions          |  | $         |           |              |  | $                              |         |             |  | $ | 154,931    |   |  | $ | 154,931    |  

Reconciling items include general and administrative expenses of $1,307,849
(net of reimbursable patent costs of $102,959) and net corporate fixed asset
acquisitions and construction in progress transfers of $154,931.

5. Earnings Per Share

Basic earnings per share is computed by dividing net 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 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 excluded 9,008,002 and
3,816,512 shares for 2000 and 2001, respectively, represented by warrants,
stock options and/or convertible preferred stock 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.

10



---



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

Results of Operations

The Company is operating as a development stage enterprise.

Revenues for the second quarter of 2001 consisted of $72,094 of
reimbursable patent expenses pursuant to the Companys strategic alliance with
GlaxoSmithKline (GSK). Revenues for the six months ended June 30, 2001
totaled $119,959 and consisted of $102,959 of reimbursable patent expenses from
GSK and $17,000 from a Small Business Technology Transfer contract.

Revenues for the second quarter of 2000 consisted of $27,108 of
reimbursable expenses. Revenues for the six months ended June 30, 2000 totaled
$156,871 and consisted of $106,873 of reimbursable patent expenses from GSK
and $49,998 from a Small Business Technology Transfer contract.

Research and development expenses decreased 14.5% to $1,112,541 for the
second quarter of 2001 as compared to $1,301,191 for the comparable period in
2000, and decreased 2.2% to $2,258,059 for the six months ended June 30, 2001
as compared to $2,308,149 for 2000. Decreases in personnel expenditures and
patent expenses account for substantially all the decrease.

General and administrative expenses in the second quarter of 2001
increased 36.4% to $779,814 as compared to $571,506 for the comparable period
in 2000, and increased 40.4% to $1,410,808 for six months ended June 30, 2001
as compared to $1,004,704 for the comparable period in 2000. Increased
expenditures in the second quarter of 2001 related to personnel, legal and
insurance expenses. On May 1, 2001, the employment of the Vice President,
Chief Financial Officer was terminated per the terms of his employment
agreement, which resulted in a one-time severance payment of $176,005.

Liquidity and Capital Resources

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

Through early 2002, the Company will rely primarily upon the net proceeds
of the private placements completed in March 2000 and July 2001 to fund its
operations (see Note 3 to the financial statements). The Company anticipates
that its research and development expenses will be substantial for the
foreseeable future. The Company intends to pursue additional strategic
alliances, technology licenses, and grants and contracts to help fund its
research and development expenses.

11



---



To sustain its research and development programs beyond that time, as well
as to fund its future operations, the Company will continue to seek additional
capital. In seeking additional capital, 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.

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

This quarterly report on form 10-QSB contains forward-looking statements
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended. Any statements contained herein that relate to future events or
results are forward-looking statements. Without limiting the foregoing, the
words may, will, should, intends, estimates, predicts,
potential, continue, believe, anticipates, plans, expects, the
negative of these terms or other comparable terminology are intended to
identify forward-looking statements. These statements are only predictions. A
number of factors could cause actual results to differ materially from those
indicated by forward-looking statements. In evaluating forward-looking
statements, you should consider: (i) the Companys ability to fund its future
operations; (ii) the Companys ability to successfully complete product
research and development, including preclinical and clinical studies and
commercialization; (iii) the Companys ability to obtain required governmental
approvals; (iv) the Companys ability to attract and/or maintain manufacturing,
sales, distribution and marketing partners; and (v) the Companys ability to
develop and commercialize its products before its competitors. Further
information concerning these and other risks and uncertainties is contained
from time to time in our filings with the Securities and Exchange Commission.
Although the Company believes that the expectations reflected in
forward-looking statements are reasonable, the Company cannot guarantee future
results, events or conditions, levels of activity, performance or achievements.
Given these risks and uncertainties, investors should not place undue reliance
on forward-looking statements as a prediction of actual results. We undertake
no obligation to update or revise publicly any forward-looking statements,
whether as a results of new information, future events or otherwise.

PART II OTHER INFORMATION

ITEM 2.         CHANGE SECURITIES AND USE OF PROCEEDS

On July 3, 2001, the Company raised approximately $3.0 million in a
private placement of 3,000 shares of its Series B Convertible Preferred Stock
to certain qualified institutional buyers. The Company also issued to these
buyers (i) Class E Warrants for the purchase of up to an aggregate of 750,000
shares of the Companys Common Stock and (ii) Class F Warrants for the purchase
of up to an aggregate of 375,000 shares of the Companys Common Stock. The
Company expects to use these net proceeds to fund working capital needs. The
terms of this

12



---



private placement are more fully described in the Companys Form 8-K filed with
the Securities and Exchange Commission on August 1, 2002 and incorporated by
reference into this Form 10-QSB.

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

On June 20, 2001, the Company held its Annual Meeting of Stockholders.
The following proposals were adopted by the votes specified below.



| |  |  | Election to the Board of Directors of the Companys nominees  Charles
J. Coulter and V. M. Esposito:
| |  |  | -----------------------------------------------------------------------------------------------------

|        |  |  |           | 
|------- |  |  | --------- | 
|For     |  |  | 6,343,803 | 
|       
|       
|       
|       
|Against |  |  | 43,930    | 



| |  |  | The directors not elected at the Annual Meeting whose tenure continued
after the Annual Meeting are:                                                                            
| |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Robert L. Curry and Donald Stark                                                                                                                                                
|
| |  |  | Ratification of the appointment of Richard A. Eisner & Company, LLP as
the independent accountants to audit the Companys accounts for the
fiscal year ending December 31, 2001:

|          |  |  |           | 
|--------- |  |  | --------- | 
|For       |  |  | 6,367,783 | 
|         
|         
|         
|         
|Against   |  |  | 15,388    | 
|         
|         
|         
|         
|Abstained |  |  | 4,562     | 

ITEM 6.         EXHIBITS AND REPORTS ON FORM 8-K

Exhibits

None

Reports on Form 8-K

None

13



---



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: | August 14, 2000 |  |  |  |  |  | By: |  |  | /s/Jeffrey V. Pirone                                                      
|      |                 |  |  |  |  |  |     |  |  | Jeffrey V. Pirone
Executive Vice President and
    Chief Financial Officer

14