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SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-QSB

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

For the quarterly period ended March 31, 2002

or

|o | 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 0-29222

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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(IRS Employer Identification No.)9200 Indian Creek Parkway, Suite 200
Overland Park, KS(Address of principal executive offices)

66210(Zip Code)


Registrant's telephone number, including area code:(913) 693-8491

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

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.  Yes    No o

As
of May 9, 2002, 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: o Yes    No ý

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AVAX TECHNOLOGIES, INC.

Table of Contents

|                             |  |            |  |                                                                                                                                                                                       |  | Page   
|---------------------------- |  | ---------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------
|PART IFINANCIAL INFORMATION |  |           
|                             |  | Item 1.    |  | Financial Statements                                                                                                                                                                  |  |        
|                             |  |            |  | Consolidated BALANCE SHEETSAs of December 31, 2001 and March 31, 2002 (Unaudited)                                                                                                    |  | Page 3 
|                             |  |            |  | Consolidated STATEMENTS OF OPERATIONS (Unaudited)For the Three Months Ended March 31, 2001 and 2002; and for the Period from January 12, 1990 (Incorporation) through March 31, 2002 |  | Page 4 
|                             |  |            |  | Consolidated STATEMENTS OF CASH FLOWS (Unaudited)For the Three Months Ended March 31, 2001 and 2002 and for the Period from January 12, 1990 (Incorporation) through March 31, 2002  |  | Page 5 
|                             |  |            |  | Notes to Consolidated Financial Statements                                                                                                                                            |  | Page 7 
|                             |  | Item 2.    |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                                                                                                 |  | Page 10
|PART IIOTHER INFORMATION    |  |           
|                             |  | Item 1.    |  | Legal Proceedings                                                                                                                                                                     |  | Page 14
|                             |  | Item 6.    |  | Exhibits and Reports on Form 8-K                                                                                                                                                      |  | Page 15
|                             |  | Signatures |  | Page 16                                                                                                                                                                              

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,
2001                                                                          |                                                                          | March 31,
2002 |       
|---------------------------------------------------- | ------------------------------------------------ | ------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------ | -------------- | ------
|
|Assets                                               |                                                  |                                                                                            |                                                                          |                |       
|Current assets:                                      |                                                  |                                                                                            |                                                                          |                |       
|                                                     | Cash and cash equivalents                        |                                                                                            | $                                                                        | 11,649,447     |       
|                                                     | Marketable securities                            |                                                                                            |                                                                          | 344,470        |       
|                                                     | Accounts receivable                              |                                                                                            |                                                                          | 292,070        |       
|                                                     | Inventory                                        |                                                                                            |                                                                          | 53,939         |       
|                                                     | Prepaid expenses and other current assets        |                                                                                            |                                                                          | 833,990        |       
|                                                     |                                                  |                                                                                            |                                                                          |                |       
|Total current assets                                 |                                                  |                                                                                            | 13,173,916                                                               |                |       
|Property, plant and equipment at cost                |                                                  |                                                                                            | 3,189,033                                                                |                |       
|                                                     | Less accumulated depreciation                    |                                                                                            |                                                                          | 1,125,337      |       
|                                                     |                                                  |                                                                                            |                                                                          |                |       
|Net furniture and equipment                          |                                                  |                                                                                            | 2,063,696                                                                |                |       
|Equity investment in joint venture                   |                                                  |                                                                                            | 26,975                                                                   |                |       
|Acquired intellectual property and other intangibles |                                                  |                                                                                            | 188,387                                                                  |                |       
|                                                     |                                                  |                                                                                            |                                                                          |                |       
|Total assets                                         |                                                  | $                                                                                          | 15,452,974                                                               |                | $     
|                                                     |                                                  |                                                                                            |                                                                          |                |       
|Liabilities and stockholders' equity                 |                                                  |                                                                                            |                                                                          |                |       
|Current liabilities:                                 |                                                  |                                                                                            |                                                                          |                |       
|                                                     | Accounts payable and accrued liabilities         |                                                                                            | $                                                                        | 2,206,507      |       
|                                                     | Deferred revenue                                 |                                                                                            |                                                                          | 56,743         |       
|                                                     |                                                  |                                                                                            |                                                                          |                |       
|Total current liabilities                            |                                                  |                                                                                            | 2,263,250                                                                |                |       
|Long-term debt                                       |                                                  |                                                                                            | 247,752                                                                  |                |       
|Minority interest in consolidated subsidiaries       |                                                  |                                                                                            |                                                                         |                |       
|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50,000,000                                                               |                                                                          |                |       
|                                                     |                                                  | Issued and outstanding shares16,541,621                                                   |                                                                          |                | 66,167
|                                                     | Additional paid-in capital                       |                                                                                            |                                                                          | 65,446,587     |       
|                                                     | Subscription receivable                          |                                                                                            |                                                                          | (422           | )     
|                                                     | Accumulated other comprehensive income           |                                                                                            |                                                                          | 41,115         |       
|                                                     | Deficit accumulated during the development stage |                                                                                            |                                                                          | (52,612,342    | )     
|                                                     |                                                  |                                                                                            |                                                                          |                |       
|Total stockholders' equity                           |                                                  |                                                                                            | 12,941,972                                                               |                |       
|                                                     |                                                  |                                                                                            |                                                                          |                |       
|Total liabilities and stockholders' equity           |                                                  | $                                                                                          | 15,452,974                                                               |                | $     
|                                                     |                                                  |                                                                                            |                                                                          |                |       

See accompanying notes.

3

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

|                                                                                                                   |                                                                    | Three months ended
March 31, |            | Period from
January 12, 1990
(Incorporation)
Through
March 31, |  
|------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------ | ---------------------------- | ---------- | -------------------------------------------------------------- | -
|
|Revenue:                                                                                                           |                                                                    |                              |            |                                                                |  
|                                                                                                                   | Gain from sale of the Product                                      |                              | $          |                                                               |  
|                                                                                                                   | Product and contract service revenue                               |                              |            | 259,681                                                        |  
|                                                                                                                   |                                                                    |                              |            |                                                                |  
|Total revenue                                                                                                      |                                                                    |                              | 259,681    |                                                                |  
|Costs and expenses:                                                                                                |                                                                    |                              |            |                                                                |  
|                                                                                                                   | Manufacturing, research and development                            |                              |            | 2,254,370                                                      |  
|                                                                                                                   | Acquired in process research and development                       |                              |            |                                                               |  
|                                                                                                                   | Write down of acquired intellectual property and other intangibles |                              |            |                                                               |  
|                                                                                                                   | Amortization of acquired intangibles                               |                              |            | 119,312                                                        |  
|                                                                                                                   | Selling, general and administrative                                |                              |            | 1,495,572                                                      |  
|                                                                                                                   |                                                                    |                              |            |                                                                |  
|Total operating loss                                                                                               |                                                                    |                              | (3,609,573 | )                                                              |  
|Other income (expense):                                                                                            |                                                                    |                              |            |                                                                |  
|                                                                                                                   | Interest income                                                    |                              |            | 282,054                                                        |  
|                                                                                                                   | Interest expense                                                   |                              |            |                                                               |  
|                                                                                                                   | Minority interest in losses of consolidated subsidiary             |                              |            |                                                               |  
|                                                                                                                   | Amortization of deferred gain on joint venture                     |                              |            | 225,725                                                        |  
|                                                                                                                   | Equity in net loss of joint venture                                |                              |            | (146,159                                                       | )
|                                                                                                                   | Other, net                                                         |                              |            |                                                               |  
|                                                                                                                   |                                                                    |                              |            |                                                                |  
|Total other income (expense)                                                                                       |                                                                    |                              | 361,620    |                                                                |  
|                                                                                                                   |                                                                    |                              |            |                                                                |  
|Loss before cumulative effect of change in accounting principle and extraordinary item                             |                                                                    |                              | (3,247,953 | )                                                              |  
|Cumulative effect of change in accounting for deferred credit related to equity method investment in joint venture |                                                                    |                              |           |                                                                |  
|                                                                                                                   |                                                                    |                              |            |                                                                |  
|Loss before extraordinary item                                                                                     |                                                                    |                              |           |                                                                |  
|Extraordinary gain related to negative goodwill on consolidated subsidiary                                         |                                                                    |                              |           |                                                                |  
|                                                                                                                   |                                                                    |                              |            |                                                                |  
|Net loss                                                                                                           |                                                                    |                              | (3,247,953 | )                                                              |  
|Amount payable for liquidation preference                                                                          |                                                                    |                              |           |                                                                |  
|                                                                                                                   |                                                                    |                              |            |                                                                |  
|Net loss attributable to common stockholders                                                                       |                                                                    | $                            | (3,247,953 | )                                                              | $
|                                                                                                                   |                                                                    |                              |            |                                                                |  
|Net loss per common share                                                                                          |                                                                    | $                            | (.20       | )                                                              | $
|                                                                                                                   |                                                                    |                              |            |                                                                |  
|Weighted average number of common shares outstanding                                                               |                                                                    |                              | 16,541,621 |                                                                |  
|                                                                                                                   |                                                                    |                              |            |                                                                |  

See accompanying notes.

4

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

|                                                                            |                                                                                      | Three months ended March 31,              |            | Period from
January 12, 1990
(Incorporation)
To March 31, |         
|--------------------------------------------------------------------------- | ------------------------------------------------------------------------------------ | ----------------------------------------- | ---------- | --------------------------------------------------------- | --------
|
|Operating activities                                                        |                                                                                      |                                           |            |                                                           |         
|Net loss                                                                    |                                                                                      | $                                         | (3,247,953 | )                                                         | $       
|Adjustments to reconcile net loss to net cash used in operating activities: |                                                                                      |                                           |            |                                                           |         
|                                                                            | Depreciation and amortization                                                        |                                           |            | 235,605                                                   |         
|                                                                            | Amortization of deferred gain on joint venture                                       |                                           |            | (225,725                                                  | )       
|                                                                            | Equity in net loss of joint venture                                                  |                                           |            | 146,159                                                   |         
|                                                                            | Extraordinary gain related to negative goodwill on consolidated subsidiary           |                                           |            |                                                          |         
|                                                                            | Cumulative effect of change in accounting                                            |                                           |            |                                                          |         
|                                                                            | Compensatory stock issue                                                             |                                           |            |                                                          |         
|                                                                            | Minority interest in net loss of consolidated subsidiary                             |                                           |            |                                                          |         
|                                                                            | Acquired in-process research and development charge                                  |                                           |            |                                                          |         
|                                                                            | Write down of acquired intellectual property and other intangibles                   |                                           |            |                                                          |         
|                                                                            | 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                       |            |                                                           | (9,238  
|                                                                            |                                                                                      | Inventory                                 |            |                                                           | 3,539   
|                                                                            |                                                                                      | Prepaid expenses and other current assets |            |                                                           | 148,965 
|                                                                            |                                                                                      | Accounts payable and accrued liabilities  |            |                                                           | (906,164
|                                                                            |                                                                                      | Deferred revenue                          |            |                                                           | 8,191   
|                                                                            |                                                                                      | Amount payable to Former Officer          |            |                                                           |        
|                                                                            |                                                                                      |                                           |            |                                                           |         
|Net cash used in operating activities                                       |                                                                                      |                                           | (3,846,621 | )                                                         |         
|Investing activities                                                        |                                                                                      |                                           |            |                                                           |         
|Purchase of marketable securities and short-term investments                |                                                                                      |                                           | (371,423   | )                                                         |         
|Proceeds from sale of marketable securities                                 |                                                                                      |                                           | 19,239,189 |                                                           |         
|Proceeds from sale of short-term investments                                |                                                                                      |                                           |           |                                                           |         
|Purchases of furniture and equipment                                        |                                                                                      |                                           | (13,670    | )                                                         |         
|Proceeds from sale of furniture and equipment                               |                                                                                      |                                           |           |                                                           |         
|Organization costs incurred                                                 |                                                                                      |                                           |           |                                                           |         
|Cash acquired in acquisition of control of joint venture                    |                                                                                      |                                           |           |                                                           |         
|Other                                                                       |                                                                                      |                                           |           |                                                           |         
|                                                                            |                                                                                      |                                           |            |                                                           |         
|Net cash provided by (used in) investing activities                         |                                                                                      |                                           | 18,854,096 |                                                           |         

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

|                                                                                   |  | Three months ended March 31, |            | Period from
January 12, 1990
(Incorporation)
to March 31, |  
|---------------------------------------------------------------------------------- |  | ---------------------------- | ---------- | --------------------------------------------------------- | -
|
|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                                                   |  |                              |           |                                                           |  
|Proceeds received from exercise of stock warrants                                  |  |                              |           |                                                           |  
|Changes to the consolidated accounting treatment for joint venture                 |  |                              |           |                                                           |  
|Capital contribution through sale of interest in consolidated subsidiaries         |  |                              |           |                                                           |  
|Net proceeds received from issuance of preferred and common stock                  |  |                              |           |                                                           |  
|                                                                                   |  |                              |            |                                                           |  
|Net cash provided by financing activities                                          |  |                              |           |                                                           |  
|                                                                                   |  |                              |            |                                                           |  
|Effect of exchange rate changes on cash                                            |  |                              | (34,278    | )                                                         |  
|                                                                                   |  |                              |            |                                                           |  
|Net increase (decrease) in cash and cash equivalents                               |  |                              | 14,973,197 |                                                           |  
|Cash and cash equivalents at beginning of period                                   |  |                              | 3,694,424  |                                                           |  
|                                                                                   |  |                              |            |                                                           |  
|Cash and cash equivalents at end of period                                         |  | $                            | 18,667,621 |                                                           | $
|                                                                                   |  |                              |            |                                                           |  
|Supplemental disclosure of cash flow information                                   |  |                              |            |                                                           |  
|Interest paid                                                                      |  | $                            |           |                                                           | $
|                                                                                   |  |                              |            |                                                           |  

See accompanying notes.

6

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AVAX Technologies, Inc.(a development stage company)Notes to Financial Statements(Unaudited)For the Three Months ended March 31, 2001 and 2002

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
AVAX Australia Pty Limited and AVAX Australia Manufacturing Pty Limited ("the Joint Venture Companies"), is manufacturing and marketing M-Vax, an immunotherapy for the
post-surgical treatment of Stage 3 and 4 melanoma, in Australia, and has similar rights in New Zealand. In January 2002, the Joint Venture Companies repurchased 90% of AVT's
interest in the two joint venture companies resulting in AVAX owning a 95% interest in the net equity of both joint venture companies.

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.

The
Company expects that it will need to raise capital within the next 12 months to fund planned operations and product development. However, there can be no assurance that the
Company will be able to raise sufficient capital to fund these activities. The inability to secure such funding could have a material adverse effect on the Company, including the possibility that the
Company could have to curtail its operations significantly.

The
Company's business is subject to significant risks consistent with biotechnology companies that are developing novel products for human therapeutic use. These risks include, but are
not limited to, uncertainties associated with research and development of novel drug and biotechnology products, ensuring access to capital, obtaining and enforcing patents, receiving regulatory
approval from competent governmental authorities in the markets of interest (currently the Company's lead product candidate, the AC Vaccine technology, has been placed on clinical hold by the Food and
Drug Administration), and competing with other biotechnology and pharmaceutical companies. The Company

7

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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 financial information as of March 31, 2002 and for the three-month period ended March 31, 2001 and 2002 contained herein is unaudited. The
Company believes this information has been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and Article 10 of
Regulation S-X. The Company also believes this information includes all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial
position, results of operations and cash flows for the periods then ended. The results of operations for
the three-month periods ended March 2001 and 2002 are not necessarily indicative of the results of operations that may be expected for the entire year.

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.

In
1999, the Joint Venture Companies were included in the consolidated financial statements of the Company. Due to additional investment by AVT in the Joint Venture Companies in 2000,
whereby AVT acquired a 50% ownership interest, and AVT's substantial and active involvement in the operations of the Joint Venture Companies late in 2000, the Company no longer exercised control over
the Joint Venture Companies. As such, the Joint Venture Companies accounts are not included in the consolidated financial statements of the Company for the years ended December 31, 2001 and
2000. During January 2002, the Joint Venture Companies repurchased 90% of AVT's interest in each company in exchange for cash consideration of approximately $1,860,000 AUD (approximately
$970,000 US). This resulted in AVAX Holdings owning a 95% interest in the Joint Venture Companies as of the date of the transaction, giving AVAX Holdings control of the companies and requires that the
results of AVAX Holdings and its majority owned subsidiaries be consolidated into AVAX's consolidated results.

Revenue

The Company's revenues are related to the provision of contract and other product services. Contract service revenue is recognized in installments based upon the
contractual agreement entered into with clients. Product revenues represents fees received by the Company related to tumor cell banking.

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, 2001 and
2000 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 million Australian Dollars, Joint Venture Agreement raising AVT's total ownership percentage in the joint venture to 50%.
Due to the

8

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ownership percentage maintained by AVT and their substantial and active involvement in the management and decision making processes of the joint venture, the Company determined that it no longer
maintained 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 was being amortized to income over three years.

During
January 2002, Joint Venture Companies repurchased 90% of AVT's outstanding shares for cash consideration of approximately $1.6 million Australia Dollars. After
closing the transaction AVAX Holdings owns a 95% equity interest in the Joint Venture Companies.

AVAX
accounted for its investment in the Australian Joint Venture Companies using the equity method up through the date of the repurchase of AVT shares. At that date of the transaction,
the Company had recorded on its books Equity investment in joint venture of approximately $12,282. As a result of the transaction AVAX's 95% equity in the Joint Venture Companies had a book value of
approximately $1,101,400. $902,900, which represented the deferred gain as of December 31, 2001, was recognized as a cumulative effect of change in accounting. The remaining difference of
$186,295 was recognized as an extraordinary gain related to negative goodwill in the consolidated subsidiary.

3.    Recently Issued Accounting Pronouncements

In July 2001, the FASB issued Statement No. 141, Business Combinations, and Statement No. 142, Goodwill and Other Intangible Assets.
Statement 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001 as well as all purchase method business combinations completed
after June 30, 2001. Statement 141 also specifies the criteria intangible assets acquired in a purchase method business combination must meet to be recognized and reported apart from goodwill,
noting that any purchase price allocable to an assembled workforce may not be accounted for separately. Statement 142 requires that goodwill and intangible assets with indefinite useful lives no
longer be amortized, but instead that they be tested for impairment at least annually in accordance with the provisions of Statement 142. Statement 142 also requires that intangible assets with
definite useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with SFAS No. 121, Accounting for
the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. The Company has adopted the provisions of Statement 142 effective January 1, 2002.

Statement
141 requires that the Company evaluate its existing intangible assets and goodwill that were acquired in a prior purchase business combination, and to make any necessary
reclassifications in order to conform with the new criteria in Statement 141 for recognition apart from goodwill. Statement 141 also requires the Company to reassess the useful lives and residual
values of all intangible assets acquired in purchase business combinations, and make any necessary amortization period adjustments in the quarter ended March 31, 2002. In addition, to the
extent an intangible asset is identified as having an indefinite useful life, the Company is required to test the intangible asset for impairment in accordance with the provisions of Statement 142
within this quarter. There has been no impairment identified in the intangible assets remaining at January 1, 2002.

In
connection with the transitional goodwill impairment evaluation, Statement 142 requires the Company to perform an assessment of whether there is an indication that goodwill is
impaired as of

9

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the date of adoption. Any transitional impairment loss will be recognized as the cumulative effect of a change in accounting principle in the Company's consolidated statement of operations.

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, these factors might include:



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 $54,111,197 as of March 31, 2002. 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 initiation of new clinical trials for M-Vax
and O-Vax, clinical development and regulatory

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submissions related to licensure of the SCID-Xl technology, pre-clinical studies and potential IND filings for certain of the Company's other products and compounds.

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 M-Vax and O-Vax products do not currently generate revenue (other than limited
M-Vax revenue through the Australian joint venture), and there can be no assurance that the Company will ever achieve significant revenues or profitable operations from the sale of
M-Vax, O-Vax, or any other products that it may develop.

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. The Company intends to continue to be engaged primarily in the development and commercialization of its AC Vaccine products and certain
of the other Company products and compounds. The Company anticipates that during the next 12 months it will continue substantial research, development, clinical and regulatory activities,
including (i) initiating clinical trials for M-Vax, the Company's lead AC Vaccine technology for metastatic melanoma, (ii) initiating clinical trials for O-Vax,
its AC Vaccine for ovarian cancer, (iii) advancing the pre-clinical development of the two small molecule compounds (the topoisomerase and anti-estrogen compounds) in
anticipation of IND filings, (iv) preparing a regulatory dossier for the submission to the European Medical Evaluation Agency (EMEA) for the licensure and commercialization of the
SCID-Xl technology in Europe, and (v) pursuing reimbursement for the vaccine technology in Australia to augment and support further commercial sales of the vaccine in the region.

The
Company is aggressively pursuing partnering opportunities for all of its technologies. There can be no assurance that the Company will be able to obtain the additional financing or
consummate a partnering transaction on commercially reasonable terms necessary to continue to develop current products and 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 assurance as to the availability or the terms of any required additional financing, when and if needed. In the event that the Company fails to
raise any funds it requires, it may be necessary for the Company to curtail significantly its activities or cease operations.

AVAX
experienced events during 2001 that significantly impacted its operations during the year. Early in 2001 the Company announced changes to its management team. In addition, in March
of 2001 the Company announced that its clinical programs related to the AC Vaccine technology had been placed on clinical hold. Based upon discussions with the FDA it was later determined that these
programs should be inactivated and new clinical programs should be initiated for the frozen vaccine product. As a result of these events, AVAX engaged in a detailed review of its technology portfolio,
existing asset bases and available resources. This review resulted in a reprioritization and refocusing of the Company's technology portfolio, patent positions and resource requirements. From this
effort, a cost
minimization strategy was developed and implemented to preserve the Company's cash resources, while focusing on those few development programs with the highest potential return on investment.

During
the three months ended March 31, 2002, the Company realized contract and product revenue of $65,333 versus $259,681 in the prior year. The contract and product revenue
relate primarily to manufacturing and research activities occurring at Genopoietic. During 2002, the Company did not initiate any new contract manufacturing relationships and so its revenue producing
activities related to only one ongoing contract.

The
Company's manufacturing, research and development expenses in the United States and France decreased 25% from $2,254,370 in the three months ended March 31, 2001 to $1,700,076
in the

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three months ended March 31, 2002. This decrease is partially offset by the Australia costs that are now being consolidated in 2002. Expenses for the periods are broken out by region as
follows:

Three Months Ended March 31,2002

2001United States

$
1,341,700

$
1,831,066France


358,376


423,304Costs before Australia consolidation


1,700,076


2,254,370Australia


43,788


1,743,864


2,254,370


In
the United States expenses in the 2001 period included costs associated with the ongoing clinical trials that did not recur in 2002. Additional cost savings were also generated in the
current year related to salaries and patent costs. These cost decreases were partially offset by increased costs associated with product development activities, regulatory costs and manufacturing
process validation costs. In France, the decrease in costs relates primarily to headcount, materials and supply cost reductions resulting from
the scale-back in activities at the Lyon facility. Australia costs relate to fixed costs associated with headcount and facilities being maintained to manufacture the vaccine in the region.

The
Company's selling, general and administrative expenses in the United States and France decreased 45% from $1,495,572 in the three months ended March 31, 2001 to $816,912 in
the three months ended March 31, 2002. This decrease is partially offset by the Australia costs that are now being consolidated in 2002. Expenses for the periods are broken out by region as
follows:

Three Months Ended March 31,2002

2001United States

$
628,478

$
1,343,892France


188,434


151,680Costs before Australia consolidation


816,912


1,495,572Australia


125,497


942,409


1,495,572


In
the United States, the first quarter of 2001 included a severance payment to the former CEO of the Company. In the current year, the Company has decreased administrative salaries and
decreased outside professional fees associated with marketing, business development and legal activities. In France, selling, general and administrative expenses increased as a result of severance
payments to marketing personnel based upon the elimination of certain activities in the region. In Australia, selling, general and administrative costs relate to the management and marketing
infrastructure to support the Company's activities in the regions.

Liquidity and Capital Resources

The Company presently anticipates that its current resources should be sufficient to fund operations into the first quarter of 2003 based upon the Company's
current operating plan. That current operating
plan includes anticipated expenses relating to (1) filing IND's for M-Vax and O-Vax in 2002 and related costs for recommencing clinical trials for those products,
(2) continuing development of the topoisomerase compound and anti-estrogen technology, (3) preparing a regulatory dossier associated with the SCID-Xl technology
for submission to EMEA, and (4) pursuing

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reimbursement of the Vaccine in Australia. To the extent the Company does not achieve one or more of its operating plan objectives in 2002, the anticipated cash needs of the Company are expected to
decline. AVAX will need to raise more money during 2002 or in the first quarter of 2003 to continue research and product development through the end of 2003 and into 2004.

Because
the Company's working capital requirements depend upon numerous factors, including, without limitation, 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, status of competitors, and the ability of the Company to establish collaborative arrangements with other organizations, there can be no
assurance that the current cash resources of the Company will be sufficient to fund its operations through the first quarter of 2003. Because the Company has no committed external sources of capital,
and expects no significant product revenues for the foreseeable future, it will require additional financing to fund future operations. There can be no assurance, however, that the Company will be
able to obtain the additional funds it will require 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 that
might otherwise be available.

Trading in the Company's Common Stock

Currently the Company's common stock is listed and traded on the Nasdaq National Market. As a requirement for continued listing on Nasdaq National Market the
Company is required to maintain certain continuing listing criteria, which include a requirement that the minimum bid price for the Company's common stock not fall below $1.00 for 30 consecutive
trading days. The Company has been notified by Nasdaq that it has failed to meet this requirement. As a result, and in accordance with Nasdaq rules, the Company common stock may be
de-listed from trading on the exchange.

Nasdaq
now allows companies that meet the listing requirements of the Nasdaq SmallCap Market (other than the minimum bid price) an initial grace period of 180 days to regain
compliance with the minimum bid price of $1.00. On May 3, 2002 the Company submitted a listing application to allow the Company to transfer its common stock listing to the Nasdaq SmallCap. With
the acceptance of the Company's application to switch to the NASDAQ SmallCap Market, the Company's 90-day grace period to achieve the minimum bid requirements, which commenced
February 14, 2002, would be extended to 180 days or through August 13, 2002.

Additionally,
if the Company demonstrates at the end of the grace period that it is in compliance with the Nasdaq SmallCap Market core listing standards (that is, either $750,000 net
income, stockholders' equity of $5 million or market capitalization of $50 million) then the Company may be allowed an additional 180-day grace period to meet the $1.00
minimum bid price requirement, or until February 9, 2003.

If
a company that has transitioned to the Nasdaq SmallCap Market so desires, it can generally transition back to the Nasdaq National Market by meeting the $1.00 minimum bid price
requirement for 30 consecutive trading days during the grace periods and complying with the other applicable National Market criteria

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PART IIOTHER INFORMATION

Item 1. Legal Proceedings:

(a)  As
previously updated, Kamy Behzadhi, a former officer of the Company, has brought suit against the Company in Jackson County, Missouri Circuit Court regarding the
circumstances surrounding his resignation from the Company. Dr. Behzadhi has recently petitioned to amended his complaint to add an executive officer of the Company as a
co-defendant. The Company is vigorously defending itself and its executive officer in this matter and believes that the claims against both defendants are without merit.

(b)  On
May 2, 2002, the Company filed suit in the United States District Court for the Western District of Missouri against Professors Jean-Loup Salzmann
and David Klatzmann seeking a declaratory judgment and damages in connection with certain contractual arrangements between the Company and Professors Salzmann and Klatzmann. Professors Salzmann and
Klatzmann were the principal owners of GPH, S.A. ("Holdings") and Genopoietic S.A. ("Genopoietic"), which were acquired by the Company on August 24, 2000, under a Stock Contribution Agreement
dated as of July 17, 2000, as subsequently amended (the "Stock Contribution Agreement"). Since that time, Professors Salzmann and Klatzmann have served as consultants to the Company, and
Professor Salzmann served as a director of the Company from February 25, 2001 until April 7, 2002.

The
Company acquired Holdings and Genopoietic in exchange for an aggregate of 800,000 shares of the Company's Common Stock. Of the 800,000 shares, 333,422 shares were issued to Professor
Salzmann and 326,334 shares were issued to Professor Klatzmann. The shares issued to Professors Salzmann and Klatzmann were placed in escrow to secure their indemnification obligations to the Company
under the Stock Contribution Agreement. Pursuant to the terms of that Agreement, Professor Salzmann was elected to the Board of Directors of the Company.

In
addition, both Professors Salzmann and Klatzmann signed consulting agreements with AVAX International Services, Inc, a subsidiary of the Company, to advance the interests of both the
Company and Genopoietic. Pursuant to a Rights Agreements dated as of August 24, 2000, between the Company and Professors Salzmann and Klatzmann, each of Professors Salzmann and Klatzmann has
the right to acquire up to an additional 1,100,000 shares of the Company's Common Stock upon the successful and timely achievement of certain development and commercialization milestones by
Genopoietic. The Company also entered into a Research Funding Agreement with Genopoietic to provide funding to Genopoietic for direct costs of basic scientific research in areas of mutual interest to
the Company and Genopoietic.

As
reported in the Company's Annual Report on Form 10-KSB, filed with the SEC on April 1, 2002, the Company has had various disagreements with Professors
Salzmann and Klatzmann and had reached a non-binding agreement in principle regarding those disputes, which contemplated (1) the cancellation of all agreements relating to the
Genopoietic acquisition, including the consulting agreements with Professors Salzmann and Klatzmann and the Research Funding Agreement, (2) the transfer of all Company Common Stock and rights
and options to acquire Company Common Stock by Professors Salzmann and Klatzmann back to the Company (other than approximately 60,000 shares presently held by them), and (3) the transfer by the
Company back to Professors Salzmann and Klatzmann of certain technologies that the Company is not presently pursuing, including the TK suicide gene technology. In conjunction with the execution of the
agreement in principle, Professor Salzmann resigned from the Company's Board of Directors.

When
the efforts to finalize the terms of the agreement in principle stalled, the Company filed the lawsuit referenced above. The suits seeks (1) a declaratory judgment that the
Company is not in breach of its various agreements with Professors Salzmann and Klatzmann, (2) monetary damages for breaches of the Stock Contribution Agreement by Professors Salzmann and
Klatzmann, and (3) monetary

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damages for breaches of the consulting agreements by Professors Salzmann and Klatzmann. Additionally, Professors Salzmann and Klatzmann have threatened litigation against the Company in the course of
their negotiations with the Company, which has included a threatened claim for rescission of the August 2000 Genopoietic transaction.

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

None

None

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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, 2002 |  | By:                                
|Date: May 14, 2002 |  | By:                                

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