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SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-QSB

(Mark One)

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

For the quarterly period ended March 31, 2001
or

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

For the transition period from  to

Commission file number 333-09349

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

Delaware(State or other jurisdiction of
incorporation or organization)

13-3575874(I.R.S Employer Identification No.)4520 Main Street, Suite 930
Kansas City, Missouri(Address of principal executive offices)

64111(Zip Code)


Registrant's
telephone number, including area code:(816) 960-1333

Securities registered under Section 12(b) of the Exchange Act:None

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, par value $.004 per share

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Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. /x/ Yes / / No

As
of May 4, 2001, 16,541,621 shares of the Registrant's common stock, par value $.004 per share, were outstanding.

Documents
incorporated by reference: None.

Transitional
Small Business Disclosure Format: / / Yes /x/ No

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AVAX TECHNOLOGIES, INC.

Table of Contents

|                             |         |                                                                                                                                                                                                 |                                                                                       | Page  
|---------------------------- | ------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------- | ------
|PART IFINANCIAL INFORMATION |         |                                                                                                                                                                                                
|                             | Item 1. |                                                                                                                                                                                                 | Consolidated Financial Statements                                                     |       
|                             |         | Consolidated BALANCE SHEETSAs of December 31, 2000 and March 31, 2001 (Unaudited)                                                                                                              |                                                                                       | Page 3
|                             |         | Consolidated STATEMENTS OF OPERATIONS (Unaudited)For the Three Months Ended March 31, 2000 and March 31, 2001; and for the Period from January 12, 1990 (Incorporation) through March 31, 2001 |                                                                                       | Page 4
|                             |         | Consolidated STATEMENTS OF CASH FLOWS (Unaudited)For the Three Months Ended March 31, 2000 and March 31, 2001 and for the Period from January 12, 1990 (Incorporation) through March 31, 2001  |                                                                                       | Page 5
|                             |         | Notes to Consolidated Financial Statements                                                                                                                                                      |                                                                                       | Page 7
|                             | Item 2. |                                                                                                                                                                                                 | Management's Discussion and Analysis of Financial Condition and Results of Operations |       
|PART IIOTHER INFORMATION    |         |                                                                                                                                                                                                
|                             | Item 1. |                                                                                                                                                                                                 | Legal Proceedings                                                                     |       
|                             | Item 6. |                                                                                                                                                                                                 | Exhibits and Reports on Form 8-K                                                      |       
|Signatures                   |         | Page 12                                                                                                                                                                                        

Page 2

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PART IFINANCIAL INFORMATION

Item 1. Financial Statements

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

|                                                     |                                                  | December 31,
2000                                                                          |                                                                          | March 31,
2001 |       
|---------------------------------------------------- | ------------------------------------------------ | ------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------ | -------------- | ------
|
|Assets                                               |                                                  |                                                                                            |                                                                          |                |       
|Current assets:                                      |                                                  |                                                                                            |                                                                          |                |       
|                                                     | Cash and cash equivalents                        |                                                                                            | $                                                                        | 3,694,424      |       
|                                                     | Marketable securities                            |                                                                                            |                                                                          | 19,239,189     |       
|                                                     | Accounts receivable                              |                                                                                            |                                                                          | 133,140        |       
|                                                     | Inventory                                        |                                                                                            |                                                                          | 55,187         |       
|                                                     | Prepaid expenses and other current assets        |                                                                                            |                                                                          | 1,019,400      |       
|                                                     |                                                  |                                                                                            |                                                                          |                |       
|Total current assets                                 |                                                  |                                                                                            | 24,141,340                                                               |                |       
|Property, plant and equipment at cost                |                                                  |                                                                                            | 3,133,204                                                                |                |       
|                                                     | Less accumulated depreciation                    |                                                                                            |                                                                          | 704,397        |       
|                                                     |                                                  |                                                                                            |                                                                          |                |       
|Net furniture and equipment                          |                                                  |                                                                                            | 2,428,807                                                                |                |       
|Equity investment in joint venture                   |                                                  |                                                                                            | 47,753                                                                   |                |       
|Acquired intellectual property and other intangibles |                                                  |                                                                                            | 4,081,726                                                                |                |       
|                                                     |                                                  |                                                                                            |                                                                          |                |       
|Total assets                                         |                                                  | $                                                                                          | 30,699,626                                                               |                | $     
|                                                     |                                                  |                                                                                            |                                                                          |                |       
|Liabilities and stockholders' equity                 |                                                  |                                                                                            |                                                                          |                |       
|Current liabilities:                                 |                                                  |                                                                                            |                                                                          |                |       
|                                                     | Accounts payable and accrued liabilities         |                                                                                            | $                                                                        | 2,296,641      |       
|                                                     | Deferred revenue                                 |                                                                                            |                                                                          | 64,614         |       
|                                                     |                                                  |                                                                                            |                                                                          |                |       
|Total current liabilities                            |                                                  |                                                                                            | 2,361,255                                                                |                |       
|Long-term debt                                       |                                                  |                                                                                            | 247,752                                                                  |                |       
|Commitments and contingencies                        |                                                  |                                                                                            |                                                                          |                |       
|Stockholders' equity:                                |                                                  |                                                                                            |                                                                          |                |       
|                                                     | Preferred stock, $.01 par value:                 |                                                                                            |                                                                          |                |       
|                                                     |                                                  | Authorized shares5,000,000, including Series B300,000 shares and Series C120,000 shares |                                                                          |                |       
|                                                     |                                                  | Series B convertible preferred stock:                                                      |                                                                          |                |       
|                                                     |                                                  |                                                                                            | Issued and outstanding shares0                                          |                |       
|                                                     |                                                  | Series C convertible preferred stock:                                                      |                                                                          |                |       
|                                                     |                                                  |                                                                                            | Issued and outstanding shares86,750 (liquidation preference$8,675,000) |                |       
|                                                     | Common stock, $.004 par value:                   |                                                                                            |                                                                          |                |       
|                                                     |                                                  | Authorized shares30,000,000                                                               |                                                                          |                |       
|                                                     |                                                  | Issued and outstanding shares16,541,621                                                   |                                                                          |                | 66,167
|                                                     | Additional paid-in capital                       |                                                                                            |                                                                          | 65,446,587     |       
|                                                     | Subscription receivable                          |                                                                                            |                                                                          | (422           | )     
|                                                     | Accumulated other comprehensive income           |                                                                                            |                                                                          | 80,009         |       
|                                                     | Deficit accumulated during the development stage |                                                                                            |                                                                          | (37,502,589    | )     
|                                                     |                                                  |                                                                                            |                                                                          |                |       
|Total stockholders' equity                           |                                                  |                                                                                            | 28,090,619                                                               |                |       
|                                                     |                                                  |                                                                                            |                                                                          |                |       
|Total liabilities and stockholders' equity           |                                                  | $                                                                                          | 30,699,626                                                               |                | $     
|                                                     |                                                  |                                                                                            |                                                                          |                |       

See accompanying notes.

Page 3

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

|                                                     |                                                      |   |            |           |   | Period from
January 12, 1990
(Incorporation)
Through
March 31, 2001 |          
|---------------------------------------------------- | ---------------------------------------------------- | - | ---------- | --------- | - | ------------------------------------------------------------------- | ---------
|
|
|Revenue:                                             |                                                      |   |            |           |   |                                                                     |          
|                                                     | Gain from sale of the Product                        |   | $          |          |   | $                                                                   |         
|                                                     | Revenue                                              |   |            |          |   |                                                                     | 259,681  
|                                                     |                                                      |   |            |           |   |                                                                     |          
|Total revenue                                        |                                                      |   |           |           |   | 259,681                                                             |          
|Costs and expenses:                                  |                                                      |   |            |           |   |                                                                     |          
|                                                     | Manufacturing, research and development              |   |            | 1,500,495 |   |                                                                     | 2,254,370
|                                                     | Amortization of acquired intangibles                 |   |            |          |   |                                                                     | 119,312  
|                                                     | Selling, general and administrative                  |   |            | 1,047,884 |   |                                                                     | 1,495,572
|                                                     |                                                      |   |            |           |   |                                                                     |          
|Total operating loss                                 |                                                      |   | (2,548,379 | )         |   | (3,609,573                                                          | )        
|Other income (expense):                              |                                                      |   |            |           |   |                                                                     |          
|                                                     | Interest income                                      |   |            | 232,491   |   |                                                                     | 282,054  
|                                                     | Interest expense                                     |   |            |          |   |                                                                     |         
|                                                     | Minority interest in loss of consolidated subsidiary |   |            | 49,037    |   |                                                                     |         
|                                                     | Amortization of deferred gain on joint venture       |   |            |          |   |                                                                     | 225,725  
|                                                     | Equity in net loss of joint venture                  |   |            |          |   |                                                                     | (146,159 
|                                                     | Other, net                                           |   |            |          |   |                                                                     |         
|                                                     |                                                      |   |            |           |   |                                                                     |          
|Total other income (expense)                         |                                                      |   | 281,528    |           |   | 361,620                                                             |          
|                                                     |                                                      |   |            |           |   |                                                                     |          
|Net loss                                             |                                                      |   | (2,266,851 | )         |   | (3,247,953                                                          | )        
|Amount payable for liquidation preference            |                                                      |   |           |           |   |                                                                    |          
|                                                     |                                                      |   |            |           |   |                                                                     |          
|Net loss attributable to common stockholders         |                                                      | $ | (2,266,851 | )         | $ | (3,247,953                                                          | )        
|                                                     |                                                      |   |            |           |   |                                                                     |          
|Net loss per common share                            |                                                      | $ | (.17       | )         | $ | (.20                                                                | )        
|                                                     |                                                      |   |            |           |   |                                                                     |          
|Weighted average number of common shares outstanding |                                                      |   | 13,297,010 |           |   | 16,541,621                                                          |          
|                                                     |                                                      |   |            |           |   |                                                                     |          

See accompanying notes.

Page 4

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

|                                                                            |                                                                                      |                                           |             |         |         | Period from
January 12, 1990
(Incorporation)
To March 31,
2001 |         
|--------------------------------------------------------------------------- | ------------------------------------------------------------------------------------ | ----------------------------------------- | ----------- | ------- | ------- | -------------------------------------------------------------- | --------
|
|
|Operating activities                                                        |                                                                                      |                                           |             |         |         |                                                                |         
|Net loss                                                                    |                                                                                      | $                                         | (2,266,851  | )       | $       | (3,247,953                                                     | )       
|Adjustments to reconcile net loss to net cash used in operating activities: |                                                                                      |                                           |             |         |         |                                                                |         
|                                                                            | Depreciation and amortization                                                        |                                           |             | 150,262 |         |                                                                | 235,605 
|                                                                            | Amortization of deferred gain on joint venture                                       |                                           |             |        |         |                                                                | (225,725
|                                                                            | Equity in net loss of joint venture                                                  |                                           |             |        |         |                                                                | 146,159 
|                                                                            | Compensatory stock issue                                                             |                                           |             |        |         |                                                                |        
|                                                                            | Minority interest in net loss                                                        |                                           |             | (49,037 | )       |                                                                |        
|                                                                            | Acquired in-process research and development charges                                 |                                           |             |        |         |                                                                |        
|                                                                            | Gain from sale of the Product                                                        |                                           |             |        |         |                                                                |        
|                                                                            | Gain on sale of intellectual property                                                |                                           |             |        |         |                                                                |        
|                                                                            | Accretion of interest on common stock receivable                                     |                                           |             |        |         |                                                                |        
|                                                                            | Accretion of interest on amount payable to preferred stockholders and Former Officer |                                           |             |        |         |                                                                |        
|                                                                            | Loss on sale or abandonment of furniture and equipment                               |                                           |             |        |         |                                                                |        
|                                                                            | Issuance of common stock or warrants for services                                    |                                           |             |        |         |                                                                |        
|                                                                            | Changes in operating assets and liabilities:                                         |                                           |             |         |         |                                                                |         
|                                                                            |                                                                                      | Accounts receivable                       |             |         |        |                                                                |         
|                                                                            |                                                                                      | Inventory                                 |             |         |        |                                                                |         
|                                                                            |                                                                                      | Prepaid expenses and other current assets |             |         | 114,626 |                                                                |         
|                                                                            |                                                                                      | Accounts payable and accrued liabilities  |             |         | 339,336 |                                                                |         
|                                                                            |                                                                                      | Deferred revenue                          |             |         |        |                                                                |         
|                                                                            |                                                                                      | Amount payable to Former Officer          |             |         |        |                                                                |         
|                                                                            |                                                                                      |                                           |             |         |         |                                                                |         
|Net cash used in operating activities                                       |                                                                                      |                                           | (1,711,664  | )       |         | (3,846,621                                                     | )       
|Investing activities                                                        |                                                                                      |                                           |             |         |         |                                                                |         
|Purchase of marketable securities and short-term investments                |                                                                                      |                                           | (24,083,984 | )       |         | (371,423                                                       | )       
|Proceeds from sale of marketable securities                                 |                                                                                      |                                           | 15,833,652  |         |         | 19,239,189                                                     |         
|Proceeds from sale of short-term investments                                |                                                                                      |                                           |            |         |         |                                                               |         
|Purchases of furniture and equipment                                        |                                                                                      |                                           | (103,501    | )       |         | (13,670                                                        | )       
|Proceeds from sale of furniture and equipment                               |                                                                                      |                                           |            |         |         |                                                               |         
|Organization costs incurred                                                 |                                                                                      |                                           |            |         |         |                                                               |         
|Other                                                                       |                                                                                      |                                           | (118,384    | )       |         |                                                               |         
|                                                                            |                                                                                      |                                           |             |         |         |                                                                |         
|Net cash used in investing activities                                       |                                                                                      |                                           | (8,472,217  | )       |         | 18,854,096                                                     |         

Page 5

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

|                                                                                   |  |   |            |   |   | Period from
January 12, 1990
(Incorporation)
to March 31,
2001 |  
|---------------------------------------------------------------------------------- |  | - | ---------- | - | - | -------------------------------------------------------------- | -
|
|
|Financing activities                                                               |  |   |            |   |   |                                                                |  
|Proceeds from issuance of notes payable to related party                           |  | $ |           |   | $ |                                                               |  
|Principal payments on notes payable to related party                               |  |   |           |   |   |                                                               |  
|Proceeds from loans payable                                                        |  |   |           |   |   |                                                               |  
|Principal payments on loans payable                                                |  |   |           |   |   |                                                               |  
|Payments for fractional shares from reverse splits and preferred stock conversions |  |   |           |   |   |                                                               |  
|Financing costs incurred                                                           |  |   |           |   |   |                                                               |  
|Payments received on subscription receivable                                       |  |   |           |   |   |                                                               |  
|Shareholder capital contribution                                                   |  |   | 93,637     |   |   |                                                               |  
|Proceeds received from exercise of stock warrants                                  |  |   |           |   |   |                                                               |  
|Elimination of consolidated accounting treatment for joint venture                 |  |   |           |   |   |                                                               |  
|Capital contribution through sale of interest in consolidated subsidiaries         |  |   | 1,821,300  |   |   |                                                               |  
|Net proceeds received from issuance of preferred and common stock                  |  |   | 24,195,695 |   |   |                                                               |  
|                                                                                   |  |   |            |   |   |                                                                |  
|Net cash provided by financing activities                                          |  |   | 26,110,632 |   |   |                                                               |  
|                                                                                   |  |   |            |   |   |                                                                |  
|Effect of exchange rate changes on cash                                            |  |   | (187,228   | ) |   | (34,278                                                        | )
|                                                                                   |  |   |            |   |   |                                                                |  
|Net increase in cash and cash equivalents                                          |  |   | 15,739,523 |   |   | 14,973,197                                                     |  
|Cash and cash equivalents at beginning of period                                   |  |   | 3,426,059  |   |   | 3,694,424                                                      |  
|                                                                                   |  |   |            |   |   |                                                                |  
|Cash and cash equivalents at end of period                                         |  | $ | 19,165,582 |   | $ | 18,667,621                                                     |  
|                                                                                   |  |   |            |   |   |                                                                |  
|Supplemental disclosure of cash flow information                                   |  |   |            |   |   |                                                                |  
|Interest paid                                                                      |  | $ |           |   | $ |                                                               |  
|                                                                                   |  |   |            |   |   |                                                                |  

See accompanying notes.

Page 6

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AVAX Technologies, Inc.  (a development stage company)  Notes to Financial Statements (Unaudited)  For the Three Months ended March 31, 2000 and 2001

1. Organization and Summary of Significant Accounting Policies

AVAX Technologies, Inc. (the Company) is a development stage biopharmaceutical company.

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

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

In
December 1996, the Company entered into a license agreement with Rutgers University (Rutgers) to develop, commercially manufacture and sell products embodying a series of
compounds for the treatment of cancer and infectious diseases (the Compounds).

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

In
November 1999, the Company entered into a definitive joint venture agreement with Australia Vaccine Technologies ("AVT") (formerly Neptunus International Holdings Limited),
a pharmaceutical group in Australia, under the subsidiary name, AVAX Holdings Australia Pty Limited ("AVAX Holdings"). Under the
joint venture agreement, AVAX Holdings, through its affiliated entities, is manufacturing and marketing M-Vax in Australia, and has similar rights in New Zealand.

In
August 2000, the Company completed its acquisition of GPH, S.A. ("Holdings") and Genopoietic S.A. ("Genopoietic") each a French societe anonyme based in Paris, France.
Holdings and Genopoietic were organized in 1993 to develop gene therapy applications and market gene therapy treatments for cancer. The Company currently performs contract manufacturing and research
activities at its facilities located in Lyon, France and through its collaborations with the Pierre and Marie Curie University and the University of Nantes.

The
Company's business is subject to significant risks consistent with biotechnology companies that are developing products for human therapeutic use. These risks include, but are not
limited to, uncertainties regarding research and development, access to capital, obtaining and enforcing patents, receiving regulatory approval, and competition with other biotechnology and
pharmaceutical companies. The Company plans to continue to finance its operations with a combination of equity and debt financing and, in the longer term, revenues from product sales, if any. However,
there can be no assurance that it will successfully develop any product or, if it does, that the product will generate any or sufficient revenues.

Basis of Presentation

The accompanying financial statements have been prepared by the Company without audit, in accordance with generally accepted accounting principles in the
United States for interim financial information and with the rules and regulations of the Securities and Exchange Commission (the "Commission"). Certain information and footnote disclosure normally
included in the Company's audited annual financial statements has been condensed or omitted in the Company's interim financial statements. In the opinion of the Company, these financial statements
contain all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation. The results of operations for the three month periods ended March 31, 2001 and 2000 may
not necessarily be indicative of the results of operations expected for the full year, except that the Company expects to incur a significant loss for the year ending December 31, 2001.

Page 7

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Principles of Consolidation

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

Revenue

Revenue consists of three components. Grant revenue represents funds received pursuant to research performed related to certain of the Company's research
projects. Grant revenue is recognized as earned
when the research is completed and the funds are received. Contract service revenue is recognized in installments based upon the contractual agreement entered into with clients. Product revenue
represents fees received by the Company related to tumor cell banking. Costs related to contract service revenue and product sales are accrued and matched against revenue in the periods incurred.

The
accompanying financial statements and the related notes should be read in conjunction with the Company's audited financial statements for the years ended December 31, 2000
and 1999 included in the Company's annual report on Form 10-KSB.

2.  Joint Venture Agreement

In November 1999, the Company's subsidiary AVAX Australia Holdings, Pty. Limited entered into a joint venture agreement with AVT related to
commercialization and sale of the AC Vaccine Technology in Australia and New Zealand. Pursuant to the joint venture agreement, the Company created two operating companies, AVAX Australia Pty Limited
and AVAX Australia Manufacturing Pty Limited.

During
2000, AVT, through a subsidiary, contributed 6,000,000 Australian Dollars, raising AVT's total ownership percentage in the joint venture to 50%. Due to the ownership percentage
now maintained by AVT and their substantial and active involvement in the management and decision making processes of the joint venture, the Company has determined that it no longer maintains a
controlling interest in the operations of the joint venture. Accordingly, the Company began to account for its investment in the joint venture using the equity method of accounting in late 2000.

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

Page 8

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Statements in this Form 10-QSB that are not descriptions of historical facts are forward-looking statements. Forward-looking statements are
made pursuant to the safe harbor provisions of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements involve significant risks and uncertainties, and in light of the significant uncertainties
inherent in such statements, the inclusion of such information should not be regarded as a representation by the Company that the objectives and plans of the Company will be achieved. In fact, actual
results could differ materially from those contemplated by such forward-looking statements. Many important factors affect the Company's prospects, including, the results of the current FDA clinical
hold for the M-Vax and O-Vax clinical trials and other FDA questions regarding those products, the results of the FDA's ongoing inspection of the Company's manufacturing
facility, the Company's ability to obtain substantial additional funds, to integrate the Genopoietic product candidates and technologies into the Company's business, to obtain and maintain all
necessary patents or licenses, to demonstrate the safety and efficacy of product candidates at each stage of development, to meet applicable regulatory standards and receive required regulatory
approvals, to meet obligations and required milestones under its license agreements, to be capable of producing drug candidates in commercial quantities at reasonable costs, to compete successfully
against other products, and to market products in a profitable manner, as well as other risks detailed from time to time in AVAX's public disclosure filings with the Securities and Exchange
Commission, including, without limitation, the risk factors set forth in the Company's annual report on Form 10-KSB for the year ended December 31, 2000. The Company does not
undertake any obligation to publicly release any revisions to these forward-looking statements or to reflect the occurrence of unanticipated events.

PLAN OF OPERATION

Since its inception, the Company has concentrated its efforts and resources on the development and commercialization of biotechnology and pharmaceutical
products and technologies. The Company has been unprofitable since its founding and has incurred a cumulative net loss of approximately $40,750,542 as of March 31, 2001. The Company expects to
incur significant operating losses over the next several years, primarily due to the continuation of its research and development programs, including clinical trials for M-Vax and
O-Vax, pre-clinical studies for the Company's other products and compounds, and for the research and development efforts undertaken at the Company's subsidiary in France.

The
Company is currently engaged in the development and commercialization of biotechnology and pharmaceutical products and technologies. In November 1995, the Company acquired
the rights to the AC Vaccine technology pursuant to the TJU License. As previously announced, the Company's clinical trials for M-Vax and O-Vax have been placed on clinical
hold by the U.S. Food and Drug Administration (FDA). In addition, FDA has begun an inspection of the Company's manufacturing facility located in Philadelphia. The Company estimates that it will take
until at least the end of July 2001 to prepare a comprehensive response to the clinical hold inquiries received from the FDA. The Company is undertaking a review of all products, compounds and
initiatives in an effort to reassess the leading opportunities for the Company. The Company's plan of operations relating to the AC Vaccine technologies is subject to review and revision as
information is received relating to the FDA clinical hold for M-Vax and O-Vax and any relating to the FDA's review of the Company's manufacturing facility.

In
August 2000, the Company completed its acquisition of GPH, S.A. ("Holdings") and Genopoietic S.A. ("Genopoietic"), each a French societe anonyme based in Paris, France. In
connection with the Genopoietic acquisitions, the Company is required to fund research and development activities of Genopoetic's primary products that include therapies for joint repair, bone marrow
transplantation, autoimmune diseases and organ transplantation. In addition, the Company acquired Genopoietic's existing manufacturing facility in Lyon, France.

Although
the Company completed a $25.1 million private placement of common stock on March 10, 2000, there can be no assurance that the Company will be able to obtain the
additional financing necessary to
continue to develop current products and technologies or any future additional products or technologies. In addition, there can be no assurance that changes in the Company's research and development
plans, or other changes which would or could alter the Company's operating expenses, will not require the Company to reallocate funds among its planned activities and curtail certain planned
expenditures. There can be no

Page 9

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assurance as to the availability or the terms of any required additional financing, when and if needed. If the Company fails to raise any funds it requires, it may be necessary for the Company to
curtail significantly its activities or cease operations.

During
the three months ended March 31, 2001 the Company realized contract and product revenue of $136,653 and grant revenue of $119,808 versus no revenue recognized in the
prior year. The revenue and grant income relate primarily to manufacturing and research activities occurring at Genopoietic. The Company's ability to achieve profitability depends upon, among other
things, its ability to develop products, obtain regulatory approval for its proposed products, and enter into agreements for product development, manufacturing and commercialization.

The
Company's manufacturing, research and development expenses have increased 50.2% from $1,500,495 in the three months ended March 31, 2000 to $2,254,370 in the three months
ended March 31, 2001. The increased expenses relate to manufacturing and research activities occurring at Genopoietic (acquired in August of 2000), increased salary costs due primarily to the
addition of new regulatory and clinical personnel in the second half of the prior year, and increased costs associated with patent counsel activities.The Company's general and administrative expenses have increased 42.7% from $1,047,884 in the three months ended March 31, 2000 to $1,495,572 in the three months ended March 31, 2001.
The increase relates primarily to severance costs paid to the former CEO of the Company, who resigned in February 2001, and administrative costs incurred at Genopoietic. The Company anticipates
that it will continue to realize losses in the future.

LIQUIDITY AND CAPITAL RESOURCES

The Company currently anticipates that its current resources should be sufficient to fund operations for approximately the next
20-28 months, including the minimum funding required to be provided to Genopoietic. The Company does not currently expect to be required to raise additional capital in the next
12 months, although from time to time, the Company may avail itself of opportunities in the capital markets to raise additional capital if acceptable terms can be obtained. The Company's
working capital requirements will depend upon numerous factors, including the progress of the Company's research and development programs, pre-clinical and clinical testing, timing and
cost of obtaining regulatory approvals, changes in levels of resources that the Company devotes to the development of manufacturing and marketing capabilities, competitive and technological advances,
and the ability of the Company to establish collaborative arrangements with other organizations. There can be no assurance that the Company's current cash resources will be sufficient to fund its
operations for the next 20-28 months, as changes in any of the factors described in the preceding sentence (or other unforeseen changes in the Company's business) could directly
affect the rate at which the cash resources of the Company are used by the Company. Because the Company has no committed external sources of capital, and expects no significant product revenues for
the foreseeable future, it will likely require additional financing to fund future operations. There can be no assurance, however, that the Company will be able to obtain additional funds on
acceptable terms, if at all. If adequate funds are not available the Company may be required to delay, reduce the scope of or eliminate one or more of its research or development programs; to obtain
funds through arrangements with collaborative
partners or others that may require the Company to relinquish rights to certain technologies, product candidates or products that the Company would otherwise seek to develop or commercialize itself;
or to license the rights to such products on terms that are less favorable to the Company than might otherwise be available.

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PART IIOTHER INFORMATION

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

(a) Exhibits:

|Exhibit No. |  | Description                                                                              
|----------- |  | -----------------------------------------------------------------------------------------
|10.1        |  | Severance Agreement dated April 10, 2001, between the Company and Ernest W. Yankee, Ph.D.
|11.1        |  | Statement Concerning Computation of Per Share Earnings                                   

(b) Reports
on Form 8-K:

The
Company filed two reports on Form 8-K during the three months ended March 31, 2001:



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Signatures

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

|                   |  |  |  | AVAX TECHNOLOGIES, INC.(Registrant)                                                                                                
|------------------ |  |  |  | -----------------------------------------------------------------------------------------------------------------------------------
|Date: May 14, 2001 |  |  |  |                                                                                                                                    
|                   |  |  |  | /s/DAVID L. TOUSLEYDavid L. Tousley
Chief Operating Officer and Chief Financial Officer (Principal Executive and Financial Officer)
|Date: May 14, 2001 |  |  |  |                                                                                                                                    
|                   |  |  |  | /s/RICHARD P. RAINEYRichard P. Rainey
Vice President Finance & Administration
(Principal Accounting Officer)                       

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