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SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-QSB

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

For the Quarterly Period Ended September 30, 1997

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                        

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 November 5, 2001, 16,541,621 shares of the Registrant's common stock par value $.004 per share, were outstanding.

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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, 2000 and September 30, 2001 (Unaudited)                                                                                                                                     |  | Page 3 
|                             |            |  | CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)For the Three Months and Nine Months Ended September 30, 2000 and September 30, 2001 and for the Period from January 12, 1990 (Incorporation) through
September 30, 2001 |  | Page 4 
|                             |            |  | CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)For the Nine Months Ended September 30, 2000 and September 30, 2001 and for the Period from January 12, 1990 (Incorporation) through September 30,
2001                  |  | Page 5 
|                             |            |  | Notes to Consolidated Financial Statements                                                                                                                                                                                 |  | Page 7 
|                             | Item 2.    |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                                                                                                                                      |  | Page 9 
|PART IIOTHER INFORMATION    |            | 
|                             | Item 1.    |  | Legal Proceedings                                                                                                                                                                                                          |  | Page 11
|                             | Item 6.    |  | Exhibits and Reports on Form 8-K                                                                                                                                                                                           |  | Page 11
|                             | Signatures |  | Page 12                                                                                                                                                                                                                   

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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                                                                          |                                                                          | September 30, 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.

 3 

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

|                                                     |                                                      | Three Months Ended September 30, |            | Nine Months Ended September 30, |   | Period From
January 12, 1990
(Incorporation)
Through September 30,
2001 |          
|---------------------------------------------------- | ---------------------------------------------------- | -------------------------------- | ---------- | ------------------------------- | - | ----------------------------------------------------------------------- | ---------
|
|Revenue:                                             |                                                      |                                  |            |                                 |   |                                                                         |          
|                                                     | Gain from sale of the Product                        |                                  | $          |                                |   | $                                                                       |         
|                                                     | Grant revenue                                        |                                  |            |                                |   |                                                                         | 9,617    
|                                                     | Product and contract service revenue                 |                                  |            | 248,003                         |   |                                                                         | 62,336   
|                                                     |                                                      |                                  |            |                                 |   |                                                                         |          
|Total revenue                                        |                                                      |                                  | 248,003    |                                 |   | 71,953                                                                  |          
|Costs and expenses:                                  |                                                      |                                  |            |                                 |   |                                                                         |          
|                                                     | Manufacturing, research and development              |                                  |            | 2,806,473                       |   |                                                                         | 2,252,344
|                                                     | Amortization of acquired intangibles                 |                                  |            | 2,271,743                       |   |                                                                         | 119,312  
|                                                     | Selling, general and administrative                  |                                  |            | 1,260,086                       |   |                                                                         | 859,131  
|                                                     |                                                      |                                  |            |                                 |   |                                                                         |          
|Total operating loss                                 |                                                      |                                  | (6,090,299 | )                               |   | (3,158,834                                                              | )        
|Other income (expense):                              |                                                      |                                  |            |                                 |   |                                                                         |          
|                                                     | Interest income                                      |                                  |            | 497,209                         |   |                                                                         | 132,822  
|                                                     | Interest expense                                     |                                  |            |                                |   |                                                                         |         
|                                                     | Minority interest in loss of consolidated subsidiary |                                  |            | 135,722                         |   |                                                                         |         
|                                                     | Amortization of deferred gain on joint venture       |                                  |            |                                |   |                                                                         | 225,725  
|                                                     | Equity in net loss of joint venture                  |                                  |            |                                |   |                                                                         | (260,711 
|                                                     | Other, net                                           |                                  |            |                                |   |                                                                         |         
|                                                     |                                                      |                                  |            |                                 |   |                                                                         |          
|Total other income                                   |                                                      |                                  | 632,931    |                                 |   | 97,836                                                                  |          
|                                                     |                                                      |                                  |            |                                 |   |                                                                         |          
|Net loss                                             |                                                      |                                  | (5,457,368 | )                               |   | (3,060,998                                                              | )        
|Amount payable for liquidation preference            |                                                      |                                  |           |                                 |   |                                                                        |          
|                                                     |                                                      |                                  |            |                                 |   |                                                                         |          
|Net loss attributable to common stockholders         |                                                      | $                                | (5,457,368 | )                               | $ | (3,060,998                                                              | )        
|                                                     |                                                      |                                  |            |                                 |   |                                                                         |          
|Net loss per common share                            |                                                      | $                                | (.34       | )                               | $ | (.19                                                                    | )        
|                                                     |                                                      |                                  |            |                                 |   |                                                                         |          
|Weighted average number of common shares outstanding |                                                      |                                  | 16,031,959 |                                 |   | 16,541,621                                                              |          

See accompanying notes.

 4 

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

|                                                                            |                                                                                      | Nine Months Ended September 30,           |              | Period From
January 12, 1990
(Incorporation)
To September 30,
2001 |        
|--------------------------------------------------------------------------- | ------------------------------------------------------------------------------------ | ----------------------------------------- | ------------ | ------------------------------------------------------------------ | -------
|
|Operating activities                                                        |                                                                                      |                                           |              |                                                                    |        
|Net loss                                                                    |                                                                                      | $                                         | (10,111,187  | )                                                                  | $      
|Adjustments to reconcile net loss to net cash used in operating activities: |                                                                                      |                                           |              |                                                                    |        
|                                                                            | Depreciation and amortization                                                        |                                           |              | 443,821                                                            |        
|                                                                            | Amortization of deferred gain on joint venture                                       |                                           |              |                                                                   |        
|                                                                            | Equity in net loss of joint venture                                                  |                                           |              |                                                                   |        
|                                                                            | Acquired in process research and development charges                                 |                                           |              | 2,271,743                                                          |        
|                                                                            | Compensatory stock issue                                                             |                                           |              |                                                                   |        
|                                                                            | Minority interest in net loss                                                        |                                           |              | (294,705                                                           | )      
|                                                                            | 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 for services                                                |                                           |              |                                                                   |        
|                                                                            | Changes in operating assets and liabilities:                                         |                                           |              |                                                                    |        
|                                                                            |                                                                                      | Accounts receivable                       |              |                                                                    | 80,956 
|                                                                            |                                                                                      | Inventory                                 |              |                                                                    | 917    
|                                                                            |                                                                                      | Prepaid expenses and other current assets |              |                                                                    | 114,657
|                                                                            |                                                                                      | Accounts payable and accrued liabilities  |              |                                                                    | 469,820
|                                                                            |                                                                                      | Deferred revenue                          |              |                                                                    |       
|                                                                            |                                                                                      | Amount payable to Former Officer          |              |                                                                    |       
|                                                                            |                                                                                      |                                           |              |                                                                    |        
|Net cash used in operating activities                                       |                                                                                      |                                           | (7,023,978   | )                                                                  |        
|Investing activities:                                                       |                                                                                      |                                           |              |                                                                    |        
|Purchase of marketable securities and short-term investments                |                                                                                      |                                           | (121,894,220 | )                                                                  |        
|Proceeds from sale of marketable securities                                 |                                                                                      |                                           | 106,519,693  |                                                                    |        
|Proceeds from sale of short-term investments                                |                                                                                      |                                           |             |                                                                    |        
|Purchases of furniture and equipment                                        |                                                                                      |                                           | (351,638     | )                                                                  |        
|Proceeds from sale of furniture and equipment                               |                                                                                      |                                           |             |                                                                    |        
|Organization costs incurred                                                 |                                                                                      |                                           | (621,397     | )                                                                  |        
|                                                                            |                                                                                      |                                           |              |                                                                    |        
|Net cash provided by (used in) investing activities                         |                                                                                      |                                           | (16,347,562  | )                                                                  |        

 5 

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

|                                                                                   |  | Nine Months Ended September 30, |            | Period From
January 12, 1990
(Incorporation)
To September 30,
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                                  |  |                                 | 22,251     |                                                                    |  
|Elimination of consolidated accounting treatment for joint venture                 |  |                                 |           |                                                                    |  
|Capital contribution through sale of interest in consolidated subsidiaries         |  |                                 | 3,430,980  |                                                                    |  
|Net proceeds received from issuance of preferred and common stock                  |  |                                 | 24,195,695 |                                                                    |  
|                                                                                   |  |                                 |            |                                                                    |  
|Net cash provided by financing activities                                          |  |                                 | 27,742,563 |                                                                    |  
|Effect of exchange rate changes on cash                                            |  |                                 | (593,686   | )                                                                  |  
|                                                                                   |  |                                 |            |                                                                    |  
|Net increase in cash and cash equivalents                                          |  |                                 | 3,777,337  |                                                                    |  
|Cash and cash equivalents at beginning of period                                   |  |                                 | 3,426,059  |                                                                    |  
|                                                                                   |  |                                 |            |                                                                    |  
|Cash and cash equivalents at end of period                                         |  | $                               | 7,203,396  |                                                                    | $
|                                                                                   |  |                                 |            |                                                                    |  
|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 Nine Months ended September 30, 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 principles generally accepted 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 nine-month period ending September 30, 2001 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.

Principles of Consolidation

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

 7 

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Revenue

Grant revenue represents funds received pursuant to research performed related to certain of the Company's research awards. 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.  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 will require 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 will
also require 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.

We
are required to adopt the provisions of Statement 142 effective January 1, 2002. Goodwill and intangible assets acquired in business combinations completed before
July 1, 2001 will continue to be amortized prior to the adoption of Statement 142.

Statement 141
will require, upon adoption of Statement 142, that we evaluate our 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. Upon adoption of Statement 142,
we will be required to reassess the useful lives and residual values of all intangible assets acquired in purchase business combinations, and make any necessary amortization period adjustments by the
end of the first interim period after adoption. In addition, to the extent an intangible asset is identified as having an indefinite useful life, we will be required to test the intangible asset for
impairment in accordance with the provisions of Statement 142 within the first interim period. Any impairment loss will be measured as of the date of adoption and recognized as the cumulative
effect of a change in accounting principle in the first interim period.

In
connection with the transitional goodwill impairment evaluation, Statement 142 will require us to perform an assessment of whether there is an indication that goodwill is
impaired as of the date of adoption. Any transitional impairment loss will be recognized as the cumulative effect of a change in accounting principle in our consolidated statement of operations. As of
the date of adoption, we expect to have unamortized goodwill in the amount of approximately $2,725,000 and unamortized other intangible assets in the amount of approximately $998,000, before the
accounting for the acquisition of Genopoeitic all of which will be subject to the transition provisions of Statements 141 and 142. Amortization expense related to goodwill and other intangible
assets was approximately $239,000 and $358,000 for the year ended December 31, 2000 and the nine months ended September 30, 2001, respectively. Because of the extensive effort needed to
comply with adopting Statements 141 and 142, it is not practical at the date of this report to reasonably estimate the impact of adopting these Statements on our consolidated financial
statements, including whether any transitional impairment losses will be required to be recognized as the cumulative effect of a change in accounting principle.

 8 

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PART IFINANCIAL INFORMATION

Item 2.  Managements 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 resolution of the issues related to the FDA's issuance of a Warning Letter as a result of their review 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 it's founding and has incurred a cumulative net loss of approximately $46,349,554 as of September 30, 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 in the U.S. and 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. In March 2001, the Company's clinical trials for M-Vax and O-Vax were placed on clinical hold by the
U.S. Food and Drug Administration (FDA). In conjunction with the clinical hold, FDA conducted an inspection of the Company's manufacturing facility located in Philadelphia. The facility inspection was
completed by the FDA on May 25, 2001, and the Company received a Form 483 to which it responded on June 29, 2001. On October 30, 2001, in response to the Company's letter,
the FDA issued a warning letter to the Company.

The
Company has responded twice to FDA letters regarding the clinical hold and recently held a conference call with the FDA to discuss specific issues related to the hold, the vaccine
technology and proposed product changes to the vaccine technology.

In
developing its responses to the FDA clinical hold letters, the Company has identified and begun to implement a number of product development initiatives related to its AC Vaccine
Technology. As a result, the Company has determined certain product improvements to the vaccine may be instituted that the Company anticipates will make the vaccine more viable from a regulatory and
commercial perspective. The Company is evaluating (1) the prospect of freezing the haptenized cells for distribution to the end user, (2) steps that can be taken to help ensure that
tumors received by the Company are sterile and (3) tests to determine the minimal number of cells necessary for the vaccine to be effective. Based upon the results of these tests the Company
anticipates that it will re-design the current clinical programs to take advantage of these potential product improvements at the time the Company seeks to re-initiate its
M-Vax and O-Vax clinical trials.

 9 

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Based upon the changes to the product, the FDA has recommended that the Company consider preparing and filing a new IND for the frozen vaccine. Prior to filing a new IND, the FDA has
indicated that certain work related to the characterization of the product will need to be completed. As part of the Company's ongoing product development efforts the Company had already begun work on
the characterization of the frozen vaccine product. At the recommendation of the FDA, the Company has decided to place its existing INDs for M-Vax and O-Vax on inactive status,
given the FDA's view that the revisions to the manufacturing process, necessary to address the Agency's concerns, result in a new product from a regulatory perspective and given the Agency's
recommendation that the Company file new INDs for indications utilizing the new product. Based upon the continuing interactions with the FDA, the Company is determining the best strategy within which
to recommence its clinical programs.

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, graft versus
host disease (GVHD) and cancer. In addition, the Company acquired Genopoietic's existing manufacturing facility in Lyon, France.

The
Company's gene therapy portfolio, acquired in the Genopoietic transactions, has two components. The first consists of a TK gene technology, which has potential application in the
transplantation setting to prevent Graft Versus Host Disease, or GVHD. This technology has shown promise in animal studies. The Company's clinical evaluation in Leukemia patients undergoing bone
marrow transplantation is expected to commence with a small phase I trial in France targeted for the fourth quarter of 2001, which trial is expected to be funded in large part by European grants.

The
Company is also finalizing its ownership of the rights to what is essentially the first gene therapy cure, namely for Severe Combined Immuno-Deficiency, or SCID. This is also
referred to as "the bubble baby disease" and the condition represents a small market of about 50-75 cases per year worldwide. However, the science has cured 4 of the 5 patients
treated in what previously was an incurable fatal condition. The Company's Genopoietic subsidiary has manufactured the vector for all of these treatments.

For
the nine and three months ended September 30, 2001 the Company realized product and contract revenue of $225,246 and $62,336, respectively, as compared with product and
contract service revenue of $248,003 for the three and nine month periods in 2000. For the nine and three months ended September 30, 2001 the Company realized grant revenues of $140,083 and
$9,617, respectively, versus no revenue recognized in the same periods of the prior year. The revenue and grant income relate to the 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 4.38% from $6,047,311 in the nine months ended September 30, 2000 to $6,312,324 in the nine months
ended September 30, 2001. The increased expenses relate to manufacturing and research activities occurring at Genopoietic (acquired in August of 2000). Amortization of acquired intangibles has
decreased 84.24% from $2,271,743 to $357,936 as a result of the current years balance only including amortization of capitalized intangibles while the prior years expenses included an estimate of the
write-off for acquired intangibles. The Company's selling, general and administrative expenses have decreased 12.34% from $3,582,166 in the nine months ended September 30, 2000 to
$3,140,011 in the nine months ended September 30, 2001. Decreases in expenditures related to cost minimization initiatives were partially offset in the nine months of 2001 by administrative
activities at Genopoietic.

Liquidity and Capital Resources

The Company currently anticipates that its current cash resources should be sufficient to fund operations for approximately the next
14-21 months (from September 30, 2001), including the minimum funding to be provided to Genopoietic. Based upon the current operating plan, the Company expects a cash burn
for the 12 months ending September 30, 2002, of approximately $8-10 million. This estimate of cash needs of the Company assumes that the Company will be successful
with each of the development initiatives outlined in its July 17, 2001 investor conference call and the related Form 8-K filed on July 17, 2001 referred to in
 6 below.
The success of each initiative requires more cash (which is included in the estimated cash needs of the Company), while the abandonment of an initiative will reduce the short-term cash
needs of the

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Company. Accordingly, the greater the success of the Company in executing its current business plan with respect to each of its product initiatives, the greater the cash needs of the Company will be.

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 14-21 months (from
September 30, 2001), 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
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.

PART IIOTHER INFORMATION

Item 1.  Legal Proceedings:

None

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

The
Company filed one report on Form 8-K during the three months ended September 30, 2001:

A
Form 8-K was filed on July 17, 2001, discussing an investor conference call held on July 17, 2001 which dealt with the current status of the
Company's clinical programs and the Company's plans for moving forward in the development of its clinical programs.

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

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