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[GRAPHIC OMITTED]ADVANCED BIOTHERAPY, INC.
                                       Administration
                                       --------------
                                       6355 Topanga Canyon Boulevard, Suite 510
                                       Woodland Hills, California  91367

                                       Laboratories
                                       ------------
                                       9110 Red Branch Rd.
                                       Columbia, MD   21045

                                       Telephone 818-883-6716
                                       Fax            818-883-3353
                                       www.advancedbiotherapy.com
October 27, 2003

Stockholders
Advanced Biotherapy, Inc.

Dear Stockholders:

This has been a positive and productive year for the Company.  The following are
a few highlights:

Investigational Human Clinical Studies
--------------------------------------

         1.  We  continued  to  establish  proof-of-concept  in  investigational
clinical  trials  regarding the use of antibodies to  interferon-gamma  in other
autoimmune  diseases.  Most recently we reported  that Type 1 diabetic  children
were treated at the Research Institute of Pediatric  Hematology of Russia with a
short course of our  investigational  antibodies to  interferon  gamma with each
patient  observed and  evaluated for a follow-up  period of 10-12  months.  Mean
C-peptide  (an indicator of insulin  production)  rose,  the  C-peptide/glycemia
ratio increased,  and each patient's  normally required insulin dose was dropped
significantly,  all indicators of positive clinical and laboratory effects.  One
child was also  afflicted  with the  autoimmune  condition  psoriasis  vulgaris.
Significant  improvement  was also  observed in that  condition,  and  remission
continued through the follow-up period. This study supports our view that use of
anti-interferon-gamma  therapy,  protected under our intellectual  property, can
promote  remission  of  Type  1  diabetes.   Type  1  diabetes  is  a  condition
characterized  by high blood  glucose  levels  caused by a lack of insulin  that
occurs when the body's immune system attacks and destroys the  insulin-producing
beta cells in the pancreas.  The pancreas  then  produces  little or no insulin.
Type 1 diabetes develops most often in young people but can appear in adults. In
the U.S. alone, there are approximately 1.7 million people suffering from Type 1
diabetes, a number which is growing.

         2. While the  Company  intended  to  commence  FDA  clinical  trials in
corneal   transplant   rejection   early  this  year,   other  matters  took  on
significantly  more importance,  specifically,  our focus on the development and

Page 1

<PAGE>

use of a monoclonal antibody we intend to use for this and other clinical trials
in the US. We still  intend to conduct  clinical  trials in  corneal  transplant
rejection in the foreseeable future.

         3. At the earliest  possible date, we intend to conduct clinical trials
in patients undergoing solid organ and beta islet cell transplantation.

Intellectual Property
---------------------

         1. We secured U.S.  patent No.  6,534,059 to treat  corneal  transplant
rejection  which  provides  legal  protection  through  2021.  2.  Other  patent
applications  have  been  filed  that  we are not at  liberty  to  disclose  for
competitive reasons.

Business Development
--------------------

         We are in preliminary  discussions with several biotechnology companies
for purposes of establishing collaborative  relationships.  The purposes of such
discussions are to co-develop, co-commercialize and license humanized antibodies
to interferon-gamma to be used under the umbrella of our "dominant" intellectual
property.  It is  intended  that  such  humanized  antibodies  will be used  for
treatment of certain autoimmune diseases. While we can provide no assurance that
such  discussions  will lead to agreements,  it is our intent to enter into such
relationships.

Financing
---------

         As of September 30, 2003 the Company had approximately  $1.8 million in
cash. We expect that such funding is adequate to provide for  operations  during
the next 18  months.  During  the past  week,  we also  received  an  additional
$800,000 in cash through the placement of convertible  pay-in-kind  notes due in
2007.

Common Stock
------------

         The  52-week  reported  range for the  closing  price of the  Company's
Common Stock was $0.19--$0.64. The closing per share price of the Company common
stock  since  September  30,  2003,  has ranged from a low of $0.38 per share on
October 8, 2003 to a high of $0.64 per share on October 20, 2003.

Website
-------

         We have also inaugurated our new website at www.advancedbiotherapy.com.

We are  confident  in our  future  prospects  and thank  you for your  continued
support.

Warmest regards,

Page 2

<PAGE>

ADVANCED BIOTHERAPY, INC.


Edmond Buccellato
CEO and Chairman of the Board of Directors

Statements made in this letter,  other than  statements of historical  fact, are
forward-looking  statements  and are subject to a number of  uncertainties  that
could cause actual results to differ materially from the anticipated  results or
other expectations  expressed in our forward-looking  statements.  The risks and
uncertainties  which may affect the  development,  operations and results of our
business  include,  but are not limited to the following:  risks associated with
clinical trials, the uncertainties of research and product development programs,
the uncertainties of the regulatory  approval process,  the risks of competitive
products,  the risks of our current capital  resources,  the uncertainties as to
the availability of future capital and our future capital requirements,  and the
risks associated with the extent and breadth of the Company's patent  portfolio.
The foregoing  discussion of the pending clinical  investigations and the effect
of the patents issued and pending  involves risks and  uncertainties,  including
but not limited to the risks that third parties may be successful in challenging
such  patents;  or that  granted  claims  may be  held  invalid  or  interpreted
differently by a court of law; or that new  technologies  will be developed that
are  superior in treating  the diseases  targeted by Advanced  Biotherapy,  Inc.
Readers are cautioned not to place reliance on these forward-looking statements,
which  speak only as of the date the  statements  were made.  See the  Company's
public  filings  with  the  Securities  and  Exchange   Commission  for  further
information  about risks and  uncertainties  that may affect the Company and the
results or expectations expressed in our forward-looking statements.


Page 3



<PAGE>






                            ADVANCED BIOTHERAPY, INC.
                    6355 TOPANGA CANYON BOULEVARD, SUITE 510
                        WOODLAND HILLS, CALIFORNIA 91367

                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
                         TO BE HELD ON DECEMBER 11, 2003

TO THE STOCKHOLDERS OF ADVANCED BIOTHERAPY, INC.:

         The Annual  Meeting of  Stockholders  of Advanced  Biotherapy,  Inc., a
Delaware  corporation  (the "Company"),  will be held on Thursday,  December 11,
2003,  at 2:00 p.m.  local time at the  Woodland  Hills  Marriott,  21850 Oxnard
Street, Woodland Hills, California 91367, for the following purposes:

1. To elect nine (9)  directors to hold office until the next Annual  Meeting of
Stockholders and until their respective successors are elected and qualified, or
until death, resignation or removal.

2. To transact  such other  business as may properly  come before the meeting or
any adjournment thereof.

         The foregoing  items of business are more fully  described in the Proxy
Statement accompanying this Notice.

         The Board of  Directors  has fixed the close of business on October 17,
2003,  as the record  date for the  determination  of  Stockholders  entitled to
notice  of and to  vote  at  the  Annual  Meeting  and  at  any  adjournment  or
postponement thereof. Only Stockholders of record as of the close of business on
such  date are  entitled  to  notice of and to vote in person or by proxy at the
Annual Meeting.

                                         Sincerely,

                                         Edmond Buccellato
                                         President and Chief Executive Officer
October 27, 2003


<PAGE>




All Stockholders are invited to attend the Annual Meeting in person, but even if
you  expect to be  present  at the  Annual  Meeting,  sign,  date and return the
enclosed  proxy  card as  promptly  as  possible  in the  postage-paid  envelope
provided.  Returning  a signed  proxy will not prevent  you from  attending  the
Meeting and voting in person if you so desire.



<PAGE>






                            ADVANCED BIOTHERAPY, INC.

                                 PROXY STATEMENT

                                OCTOBER 27, 2003

GENERAL

         The  enclosed  proxy is solicited by the Board of Directors of Advanced
Biotherapy,  Inc., a Delaware corporation (the "Company"), for use at the Annual
Meeting of Stockholders to be held on Thursday,  December 11, 2003, at 2:00 p.m.
local  time (the  "Annual  Meeting"),  and at any  adjournment  or  postponement
thereof,  for the purposes set forth  herein and in the  accompanying  Notice of
Annual Meeting.  The Annual Meeting will be held at the Woodland Hills Marriott,
21850 Oxnard Street,  Woodland Hills, California 91367. This proxy statement and
accompanying proxy card are being mailed to the Stockholders of the Company,  on
or about October 27, 2003.

                    OUTSTANDING SECURITIES AND VOTING RIGHTS

         The only class of voting securities of the Company is its Common Stock,
par value $.001 per share (the  "Common  Stock").  Only holders of record of the
Company's Common Stock at the close of business on October 17, 2003 (the "Record
Date"), will be entitled to notice of, and to vote at, the Annual Meeting. As of
September  30,  2003,  the  Company  had  42,304,447   shares  of  Common  Stock
outstanding.  Each share of Common  Stock  outstanding  as of the Record Date is
entitled to one vote at the Annual Meeting.

         As of the  Record  Date,  there  were  approximately  3,700  beneficial
owners,  according to  information  provided by American  Stock Transfer & Trust
Co., the stock transfer agent of the Company.

         The nominees  for  election to the Board of  Directors  who receive the
greatest  number of votes  cast for the  election  of  directors  by the  shares
present,  in person or by proxy, shall be elected  directors.  Holders of Common
Stock are not allowed to cumulate their votes in the election of Directors, and,
therefore, the holders of more than 50% of the shares of Common Stock, could, if
they chose to do so, elect all of the directors of the Company.

         A majority of the outstanding shares of Common Stock present, in person
or by proxy,  constitutes a quorum for the transaction of business at the Annual
Meeting.  Abstentions and broker nonvotes are counted as present for purposes of
determining the presence of a quorum at the Annual  Meeting.  In the election of
directors,  abstentions or broker nonvotes have no effect on the outcome. Broker
nonvotes occur when a person holding shares through a bank or brokerage  account
does not provide  instructions  as to how his or her shares  should be voted and
the broker does not exercise discretion to vote those shares.


Page 1

<PAGE>




PROXIES

         Shares for which proxy cards are properly executed and returned will be
voted at the  Annual  Meeting  in  accordance  with the  instructions  specified
thereon. If the proxy does not specify how the shares represented thereby are to
be voted,  the proxy will be voted "FOR" the election of each of the nominees to
the Board of  Directors,  unless the  authority to vote for the election of such
director is withheld. You may revoke or change your proxy at any time before the
Annual  Meeting by filing with the  Secretary  of the  Company at the  Company's
offices at 6355 Topanga Canyon Boulevard,  Suite 510, Woodland Hills, California
91367, a notice of revocation or another signed proxy with a later date. You may
also revoke your proxy by attending the Annual Meeting and voting in person.

SOLICITATION

         The  Company  will bear the  entire  cost of  solicitation  of  proxies
including preparation,  assembly,  printing and mailing of this proxy statement,
the proxy card and any additional information furnished to Stockholders.  Copies
of  solicitation  materials  will  be  furnished  to  banks,  brokerage  houses,
fiduciaries  and  custodians  holding  in their  names  shares of  Common  Stock
beneficially  owned by others to forward to such beneficial  owners. The Company
may reimburse persons  representing  beneficial owners of Common Stock for their
costs of forwarding  solicitation materials to such beneficial owners.  Original
solicitation of proxies by mail may be supplemented by telephone,  telecopier or
personal solicitation by directors,  officers or other employees of the Company.
No  additional  compensation  will be  paid  to  directors,  officers  or  other
employees for such services.

DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS

         Proposals which Stockholders wish to be considered for inclusion in the
proxy  statement  and  proxy  card for the  Company's  2004  Annual  Meeting  of
Stockholders must be received by the Secretary of the Company no later than July
31,  2004,  and must  comply  with the  requirements  of Rule  14a-8  under  the
Securities Exchange Act of 1934, as amended.

                              ELECTION OF DIRECTORS

         In  accordance  with  the  Company's  Bylaws  for  the  purpose  of the
election,  the Board of Directors has fixed the number of directors constituting
the Board at nine (9) as of the date of the Annual Meeting.  There are currently
ten  Directors.  The Board of Directors has proposed that the following nine (9)
nominees be elected at the Annual  Meeting,  each of whom will hold office until
his successor shall have been elected and qualified:  Joseph A. Bellanti,  M.D.,
John M.  Bendheim,  Edmond F.  Buccellato,  Alexander  L.  Cappello,  Richard P.
Kiphart,  Lawrence Loomis, Thomas J. Pernice,  Boris Skurkovich,  M.D. and Simon
Skurkovich, M.D. Unless otherwise instructed, it is the intention of the persons
named as  proxies  on the  Company  proxy  card to vote  shares  represented  by
properly executed proxies for the election of such nominees.  Although the Board
of Directors  anticipates  that the nine (9) nominees will be available to serve
as  directors  of the  Company,  if any of them should be unwilling or unable to
serve,  it is intended  that the proxies  will be voted for the election of such
substitute  nominee or nominees as may be  designated by the Board of Directors.
Each person nominated for election has agreed to serve if elected.

Page 2

<PAGE>

RECOMMENDATION OF THE BOARD OF DIRECTORS

THE BOARD OF DIRECTORS  RECOMMENDS A VOTE FOR THE ELECTION OF THE NINE  NOMINEES
LISTED BELOW.

Joseph A. Bellanti, M.D.     Alexander L. Cappello        Thomas J. Pernice
John M. Bendheim             Richard P. Kiphart           Boris Skurkovich, M.D.
Edmond F. Buccellato         Lawrence Loomis              Simon Skurkovich, M.D.

CURRENT DIRECTORS

         Among the ten current directors,  nine have indicated their interest to
continue to serve. Leonard Millstein,  Ph.D., has indicated his intention not to
seek  reelection  to the Board of  Directors.  Set forth  below is a list of the
current directors and a brief biography of each current member.

<TABLE>
<CAPTION>
               NAME                  AGE                 POSITION HELD                                  DIRECTOR SINCE
               ----                  ---                 -------------                                  --------------

<S>                                    <C>                                                                <C>
Simon Skurkovich, M.D..........        80     Chairman Emeritus, Director, and                            November, 1985
                                                  Director of Research and Development
Edmond F. Buccellato...........        58     Chairman of the Board, President and                        November, 1995
                                                  Chief Executive Officer, Director (3)
Thomas J. Pernice..............        41     Treasurer and Secretary, Director (2)(3)(4)                    April, 2001
Alexander L. Cappello..........        47     Director (1)(3)                                                  May, 2000
Lawrence Loomis................        61     Director (2)(3)(4)                                          December, 1986
Leonard Millstein, Ph.D........        61     Director (2)                                                December, 1986
Boris Skurkovich, M.D..........        48     Director (2)(3)(4)                                          December, 1986
John M. Bendheim...............        50     Director (1)(3)                                                 June, 2000
Richard P. Kiphart.............        62     Director (1)(2)(4)                                              June, 2002
Joseph A. Bellanti, M.D........        69     Director                                                     October, 2003
---------------------------
</TABLE>
(1)     Member of the Audit Committee.
(2)     Member of the Compensation Committee.
(3)     Member of the Executive Committee.
(4)     Member of the Nominating Committee.

         JOSEPH A. BELLANTI, M.D. Since October 2003, Dr. Bellanti has served as
a member  of the  Board  of  Directors.  Dr.  Bellanti  joined  the  faculty  of
Georgetown  University School of Medicine in 1963 and is currently  Professor of
Pediatrics and  Microbiology-Immunology and Director of the International Center
for  interdisciplinary  Studies of Immunology at Georgetown  University  Medical
Center.  In addition to teaching medical students and residents,  as well as his
continuing  direct  patient  care of  children  and adults  exhibiting  the full
spectrum of allergic and immunologic  disorders,  Dr. Bellanti has been actively
engaged    in    research    dealing    with    antimicrobial    immunity    and
immunologically-mediated  diseases and has  published  more than 400  scientific
articles and abstracts.  He is editor of the well-known  textbook  "Immunology,"
published by W.B.  Saunders Co. He was editor in chief of  "Pediatric  Research"
from 1974 to 1984 and editor of "Annals of Allergy"  from 1982 to 1989.  For his
achievements  in allergy and  immunology,  Dr.  Bellanti has  received  numerous
awards,  including two from the American College of Allergy and Immunology;  the

Page 3

<PAGE>

Humanitarian  Award  for  "excellence  and  service  and  teaching  of  clinical
immunology" in 1974, and the  Distinguished  Fellow Award in 1981. Dr.  Bellanti
was  President  of the Society  for  Pediatric  Research  (1980),  President  of
INTERASMA (1987-90), President of the American College of Allergy and Immunology
(1991-92),  President of the  Association  of Medical  Laboratory  Immunologists
(1974-84);  Editor of "Annals of Allergy" (1980-89). He is the recipient of many
national and  international  honors,  most recently  receiving the Honoris Causa
from the University of Palermo,  Italy (1992).  He received his M.D. degree from
the  University of Buffalo,  trained in immunology at the  University of Florida
School of Medicine and continued his studies as a research  virologist at Walter
Reed Army Institute of Research, Washington D.C.

         JOHN M. BENDHEIM - Since June 2000, Mr. Bendheim has served as a member
of the Board of Directors.  For more than five years, Mr. Bendheim has served as
President  of  Bendheim  Enterprises,  Inc.,  a real estate  investment  holding
company.  Mr. Bendheim was Chairman of the Cedars-Sinai  Medical Center Board of
Governors in Los  Angeles,  California  from 2000 to 2001.  He received his B.S.
degree  in  Business  Administration  in 1975 and his  M.B.A.  in 1976  from the
University of Southern California.

         EDMOND F. BUCCELLATO - Since October,  2002, Mr.  Buccellato has served
as Chairman of the Board, and since April,  2001, he has served as President and
Chief Executive Officer.  Mr. Buccellato served as President and Chief Operating
Officer of the Company  from  September  1, 2000 to December  12,  2000,  and he
served as Chief Executive Officer from 1995 to August 31, 2000. He has served as
a member of the Board of Directors since 1995. He was co-founder,  member of the
Board of Directors  and Vice  President of Finance of Phase  Medical,  Inc.,  an
infusion  therapy  company  sold  to  Becton  Dickinson  in  1994.  He was  also
co-founder,  member of the Board of Directors  and Vice  President of Finance of
Synergistic  Systems,  Inc., a company that became the largest  medical  billing
company in the western  United  States.  He also is co-founder and member of the
Board of Directors of Polymer Safety,  LLC, a manufacturer of synthetic  medical
and  industrial  examination  gloves and  co-founder  and member of the Board of
Directors  of  Physicians'  Choice  LLC,  a  medical  billing  company.  He is a
shareholder of Buccellato & Finkelstein,  Inc., a public  accountancy  firm. Mr.
Buccellato received his undergraduate degree from California State University at
San Diego, and his graduate degree from the University of Southern California.

         ALEXANDER L. CAPPELLO  -Since May, 2000,  Mr.  Cappello has served as a
member of the Board of  Directors.  Mr.  Cappello also served as Chairman of the
Board from April,  2001,  through  October,  2002. Mr.  Cappello is Chairman and
Chief  Executive  Officer of Cappello  Group,  Inc.,  a merchant  banking  firm,
facilitating equity and project financing since 1975. Currently,  he is a Member
of the Board of Directors of the following:  Cappello Group,  Inc.,  Chairman of
the  International  Board of the  Young  Presidents'  Organization  (YPO),  RAND
Corporation (Center for Middle East Public Policy),  CytRx Corporation (NASDAQ),
Board of Governors - USC, USC Marshall  School Greif Center for  Entrepreneurial
Studies Board,  USC Marshall School of Business Board,  Chairman of the Board of
Catholic Big Brothers of Los Angeles,  member  Independent  Colleges of Southern
California  (ICSC) Board.  He received his B.S.  Degree in finance (Order of the
Palm) from the University of Southern California in 1977.

Page 4


<PAGE>

         Formerly,  Mr.  Cappello  was a Member of the Board of Directors of the
following;  Koo Koo Roo, Inc.  (NASDAQ),  Arcus Data  Security,  Inc.  (NASDAQ),
Maritime Bank of California  (OTC),Geothermal Resources International - Chairman
(AMEX),  ORFA Corp of  American  Board  (NASDAQ),  Summa  Medical  Corp  (AMEX),
Executive Publications, Inc., and The Joffrey Foundation.

         RICHARD P.  KIPHART - Since  June,  2002,  Mr.  Kiphart has served as a
member of the Board of Directors.  Mr. Kiphart is the Head of Corporate  Finance
for the investment firm of William Blair & Company,  L.L.C. Mr. Kiphart has been
with  William  Blair for over 36  years.  Mr.  Kiphart  received  his B.A.  from
Dartmouth College and his M.B.A. from Harvard Business School.

         LAWRENCE  LOOMIS - Since 1986, Mr. Loomis has served as a member of the
Board of  Directors.  Mr. Loomis is President  and majority  shareholder  of New
Horizons Diagnostics,  Inc., a company that develops  bacteriological  screening
methods,  monoclonal  antibodies  for  detection of various  infectious  disease
agents, and rapid bacterial and viral assay kits. Prior to founding New Horizons
Diagnostics, Inc. in 1980, Mr. Loomis was in charge of the Immunology Department
for BBL, a division of Becton  Dickinson.  Mr. Loomis received his undergraduate
degree  in  chemistry  from New  York  University  and his  graduate  degree  in
Chemistry from City University.

         LEONARD  MILLSTEIN,  PH.D. - Since 1986, Dr.  Millstein has served as a
member of the Board of Directors.  Dr. Millstein  received his MSCE and Ph.D. in
civil  engineering from Moscow State  Construction  University in 1964 and 1974,
respectively.  After  immigrating to the United States in 1978, he held teaching
positions at Howard  University in Washington D.C. and Johns Hopkins  University
in  Baltimore,  Maryland.  He has over 200  publications  and is a member of the
American Concrete  Institute and American Society of Civil Engineers.  From 1981
to the  present,  he has been a CEO of Radcon  Products,  a company  involved in
manufacturing of proprietary concrete sealants.  From 1990 until the present, he
has been a Chairman of the Board of TTLTIC, a private consulting company.

         THOMAS J. PERNICE - Since April,  2001,  Mr.  Pernice has served as the
Treasurer  and  Secretary  of the  Company  and as a  member  of  the  Board  of
Directors.   Mr.  Pernice  is  President  of  Modena  Holding   Corporation,   a
communications,  business  development and political  consulting  company.  From
January  1999 to August  2002,  he was a  consultant  and  managing  director of
Cappello Group,  Inc., a merchant banking firm. Prior to founding Modena Holding
Corporation,  Mr. Pernice served as a senior  corporate  executive in government
and  industry  for more than 17 years.  Most  recently,  he was Vice  President,
Public Affairs and a corporate officer for Dole Food Co. Inc.,  reporting to the
chairman and CEO, David H. Murdock,  formerly (NYSE:DOL) and now privately held.
He also served in similar  capacities  for the  conglomerate  of privately  held
business  interests of Mr.  Murdock,  including  Castle & Cooke Inc. real estate
company, formerly (NYSE:CCS).  Prior to joining Dole Food Co., Inc., Mr. Pernice
served in the White House for more than seven  years on the senior  staff of the
Bush-Quayle   Administration  and  as  a  staff  assistant  in  the  Reagan-Bush
Administration. Mr. Pernice earned a Bachelor of Arts degree from the University
of Southern California in 1984.

         BORIS  SKURKOVICH,  M.D. - Since 1986,  Dr.  Skurkovich has served as a
member of the Board of Directors,  and from that same date until  December 2000,
he was a Vice  President  of the  Company.  He completed a clinical and research

Page 5


<PAGE>

fellowship at the Maxwell  Finland  Laboratory for Infectious  Diseases,  Boston
City  Hospital,  Boston,  Massachusetts,  and  presently is a professor at Brown
University   Medical  School.  He  has  collaborated  with  his  father,   Simon
Skurkovich,  M.D., on the  development of the Company's  treatment of autoimmune
diseases.  Dr.  Skurkovich  received  his M.D.  from the  Moscow  State  Medical
Institute.

         SIMON SKURKOVICH,  M.D. - Since April,  2001, Dr. Skurkovich has served
as Director of Research and  Development.  From 1985 until  September  2000, Dr.
Skurkovich  served as Chairman of the Board of  Directors.  He has been  granted
five  patents in Russia,  and eight in the United  States.  He is the creator of
immune preparations from human blood against antibiotic  resistant bacteria that
saved thousands of lives in the Soviet Union and Eastern Europe.  In Russia,  he
was  professor  and  Chief of the  Immunology  Laboratory  of the  Institute  of
Hematology and Blood  Transfusion and was awarded gold and silver medals for his
scientific  discoveries.  His laboratory  also was awarded the nation's  highest
honor, the Lenin Prize, for his patented work. Dr. Skurkovich  received an M.D.,
Ph.D.  and a doctorate in medical  sciences  (D.Sc.) from Pirogov  State Medical
Institute  in Moscow.  He has  written  more than 200  articles  for  scientific
publications.

COMPENSATION OF DIRECTORS

         Directors  did not receive any  compensation  for serving as members of
the Board of Directors for the year ended December 31, 2002,  except as provided
below.  The Board has not  implemented  a plan to award options or shares to any
Directors, except pursuant to the Stock Bonus Plan and the OEI Plan. All current
directors  who served  during 2002 (total of 9) were  awarded  stock  options in
January, 2003, for 20,000 shares each (options for a total of 180,000 shares) at
an exercise price of $0.21 per share,  exercisable for ten years.  The aggregate
fair value of the options  granted to the  directors  was  estimated  at $34,200
using the Black  Scholes  option  price  method,  all of which was  recorded  as
director fees for fiscal year 2002.

BOARD COMMITTEES AND MEETINGS

         During the year ended  December 31, 2002, the Board of Directors held 4
meetings  (including special meetings),  and each incumbent director attended at
least 75% of such  meetings,  except  Alexander  L.  Cappello,  who had  excused
absences.  During the year ended December 31, 2002, the Audit Committee held one
meeting and the Compensation  Committee held one meeting.  Board members receive
no  compensation  for attendance at meetings except  reimbursement  of expenses.
During  the  fiscal  year  2002,  the Board at large  served  as the  Nominating
Committee.

COMMITTEES OF THE BOARD

         During  the  fiscal  year  2002,  the  Board  of  Directors  had  three
Committees.

         The  Executive  Committee,  comprised  of John M.  Bendheim,  Edmond F.
Buccellato,  Alexander L. Cappello, Lawrence Loomis, Thomas J. Pernice and Boris
Skurkovich,  M.D., did not meet during the 2002 fiscal year.  This Committee has

Page 6

<PAGE>

the Company's  authority to manage business and affairs between  meetings of the
Board of Directors.

         The  Audit  Committee,  comprised  of John M.  Bendheim,  Alexander  L.
Cappello and Richard P.  Kiphart,  met one time during the 2002 fiscal year with
representatives of our independent  auditors and financial  management to review
accounting,  control,  auditing  and  financial  reporting  matters.  The  Audit
Committee has the  responsibilities set forth in its Charter with respect to the
quality and integrity of the Company's  financial  statements;  the  independent
auditor's  qualifications  and  independence;  the  performance of the Company's
independent  auditors;  and  preparing the annual Audit  Committee  Report to be
included in the Company's proxy  statement.  The Audit  Committee's  Charter was
included as an appendix to the Company's Proxy Statement dated October 25, 2002.

         The Compensation Committee,  comprised of Richard P. Kiphart,  Lawrence
Loomis, Leonard Millstein, Ph.D., Thomas J. Pernice and Boris Skurkovich,  M.D.,
met one time  during  the 2002  fiscal  year.  The  compensation  Committee  has
responsibilities   with  respect  to  overseeing  overall  Company  compensation
policies and their  specific  application to principal  officers  elected by the
Board and to members of the Board.

         In September,  2003, the Board designated the Nominating Committee. The
Nominating  Committee  has the  responsibilities  set forth in its Charter  with
respect to  identifying  individuals  qualified to become  members of the Board;
recommending  to the  Board  when new  members  should  be  added to the  Board;
recommending  to the Board  individuals  to fill  vacant  Board  positions;  and
recommending  to the Board the director  nominees for the next annual meeting of
stockholders. The Nominating Committee's Charter is attached as Appendix A.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The  Company is  currently  indebted  to Simon  Skurkovich,  M.D.,  the
Company's Chairman Emeritus of the Board of Directors,  and Director of Research
and Development in the amount of $127,631.

         During fiscal year 2002, the Company paid $14,700 to Boris  Skurkovich,
M.D., for  consulting  services,  and paid $26,698 to New Horizons  Diagnostics,
Inc.,  of which  Director  Lawrence  Loomis  is the  majority  shareholder,  for
production of monoclonal antibodies. During fiscal year 2002, the Company paid a
$60,000 fee in cash to  Lawrence  Loomis in  connection  with the  placement  of
$3,000,000 principal amount of the Company's  Convertible Notes. Amy Buccellato,
daughter  of Edmond  F.  Buccellato,  is  employed  by the  Company  for  office
administration services and received an aggregate salary of $7,118 during fiscal
year 2002.

         The Company leases,  on a  month-to-month  lease,  approximately  3,500
square feet of commercial building space at a monthly base rent of $6,110 from a
company owned by Lawrence  Loomis.  During fiscal year 2002, the Company paid no
rent pursuant to such lease. The Company leases office space on a month-to-month
lease from  Buccellato & Finkelstein,  Inc., of which Edmond F.  Buccellato is a
shareholder,  at a monthly rate of $700.  During  fiscal year 2002,  the Company

Page 7

<PAGE>

paid no rent to Buccellato & Finkelstein,  Inc.  pursuant to the lease, but paid
Buccellato  &  Finkelstein,   Inc.  $16,689  for  accounting  services  and  tax
preparation.

         Alexander L.  Cappello is the brother of Gerard K.  Cappello,  the sole
shareholder,  president and chief  executive  officer of Cappello  Capital Corp.
which was retained by the Company in January,  2000 to render financial advisory
and investment  banking  services and thereupon was granted warrants to purchase
4,685,135  shares of Common Stock at $0.15 per share.  Such  warrants  have been
assigned to certain  individuals,  including  Alexander  L.  Cappello.  Cappello
Capital  Corp.  raised  $1,510,500  in  convertible  subordinated  debt  for the
Company, was paid $124,981 in fees and expenses related thereto, and was granted
an option to purchase  $151,050  principal  amount of  Convertible  Debt at par,
which option has been  assigned to certain  individuals  including  Alexander L.
Cappello.  Thomas J. Pernice was formerly a managing director of Cappello Group,
Inc., a merchant  banking  firm,  which is owned by Alexander L.  Cappello.  Mr.
Pernice was assigned a portion of the foregoing warrants and options.

         John M.  Bendheim,  Edmond F.  Buccellato,  Alexander  L.  Cappello and
Richard P. Kiphart  each  beneficially  own the  Company's  Convertible  Debt or
Convertible  Notes, upon which the Company is indebted to such  individuals,  as
more  specifically  set forth in the section  captioned  "Voting  Securities And
Principal Holders Thereof" in this Proxy Statement.

         Effective February 26, 2003, the following  directors and officers sold
to the  Company  the number of shares of Company  Common  Stock set forth in the
chart  below  for the  purpose  of  enabling  the  Company  to  comply  with the
Sarbanes-Oxley  Act of 2002,  which  enacted  new laws  that  prohibit  loans to
directors and officers.  The shares were  repurchased  in full  satisfaction  of
certain indebtedness owed to the Company in the principal amount,  together with
accrued interest, set forth opposite such person's name below. Such indebtedness
arose in  connection  with the sale of shares of Common  Stock  pursuant  to the
Company's  Stock Bonus Plan in January  2000.  For the purpose of the  February,
2003 share repurchase,  the disinterested  members of the Board of Directors set
the purchase price at $0.15 per share.

                                     Amount of Indebtedness     Number of Shares
                                     ----------------------     ----------------
                                             Repaid             Repurchased
                                             ------             -----------

          Edmond F. Buccellato             $ 90,213.08             601,421
          Boris Skurkovich, M.D.           $ 90,213.08             601,421
          Lawrence Loomis                  $ 60,142.05             400,947

FAMILY RELATIONSHIPS

         The only  relationship  between any directors or officers  known to the
Company  is  that  Simon   Skurkovich  is  father  to  Boris   Skurkovich,   and
father-in-law to Leonard Millstein.

Page 8

<PAGE>

INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

         During the past five years, to the knowledge of the Company, no present
or former director,  executive  officer or person nominated to become a director
or an executive  officer of the Company has been the subject matter of any legal
proceedings,  including bankruptcy,  criminal proceedings, or civil proceedings.
Further,  no legal  proceedings  are known to be  contemplated  by  governmental
authorities  against any  director,  executive  officer and person  nominated to
become a director.

                 VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

         The following  table sets forth  information  known to the Company with
respect  to  the  beneficial  ownership  of the  Company's  Common  Stock  as of
September 30, 2003, by (i) all persons who are beneficial owners of five percent
(5%) or more of the Company's  Common Stock,  (ii) each director and nominee for
director,  (iii) the  executive  officers of the  Company;  and (iv) all current
directors and executive officers of the Company as a group.  Except as otherwise
indicated,  the Company believes that the beneficial  owners of the Common Stock
listed below,  based on information  furnished by such owners,  have sole voting
and investment power with respect to such shares.

<TABLE>
<CAPTION>
                                                NUMBER OF SHARES
                                               INCLUDING OPTIONS,
                                             WARRANTS AND CONVERTIBLE                                  PERCENTAGE OF
         NAME AND ADDRESS OF OWNER                  SECURITIES              POSITION AT COMPANY         SHARES (12)
----------------------------------------     ----------------------     ------------------------      -------------
<S>                                               <C>                   <C>                              <C>
Richard P. Kiphart                                13,528,584 (1)                  Director                24.23%
222 W. Adams St.
Chicago, IL 60606

Boris V. Skurkovich, M.D................           6,250,599(2)                   Director                14.76%
18 Blaisdell Ave.
Pawtucket, RI 02860

Leonard Millstein, Ph.D.................           3,696,809(3)                   Director                 8.70%
Ellen Millstein
1677 Calle Alta
La Jolla, CA 92037

Simon Skurkovich, M.D...................           2,421,770(4)              Chairman Emeritus,            5.59%
802 Rollins Avenue                                                       Director, and Director of
Rockville, MD 20852                                                             Research and
                                                                                Development

Alexander L. Cappello...................           2,068,508(5)                   Director                 4.66%
1299 Ocean Avenue
Suite 306
Santa Monica, CA 90401

Thomas J. Pernice.......................           1,338,599(6)           Treasurer and Secretary,         3.07%
847 Chautauqua Boulevard                                                          Director
Pacific Palisades, CA 90272
</TABLE>


Page 9


<PAGE>

<TABLE>

<S>                                               <C>                   <C>                              <C>
Edmond F. Buccellato....................           1,283,372(7)            Chairman of the Board           3.00%
6355 Topanga Canyon                                                         President and Chief
   Boulevard, Suite 510                                                      Executive Officer
Woodland Hills, CA 91367                                                          Director

Lawrence Loomis.........................           1,154,053(8)                   Director                 2.73%
9110 Red Branch Road
Columbia, MD 21045

Joseph A. Bellanti, M.D.                            470,000(9)                    Director                 1.10%
Georgetown University Medical Center
3800 Reservoir Road
Washington, D.C. 20057


John M. Bendheim .......................            342,623(10)                   Director                   *
2001 S. Barrington Street
Suite 100
Los Angeles, CA 90025

William M. Finkelstein..................            407,160(11)              Chief Financial Officer         *
6355 Topanga Canyon Boulevard, Suite 510
Woodland Hills, CA 91367

All officers and directors as a group(12)           32,962,077                                            54.22%
</TABLE>

(1) Shares held in the name of Richard P.  Kiphart  include the right to acquire
2,274,352  shares,  upon the  conversion  of  $568,588  principal  amount of the
Company's 2002 Subordinated Convertible Pay-In-Kind Notes due September 30, 2004
("2002  Convertible Notes Due 2004") and the right to acquire 11,234,232 shares,
upon the  conversion  of  $2,808,558  principal  amount  of the  Company's  2002
Subordinated  Convertible  Pay-In-Kind Notes Due June 1, 2006 ("2002 Convertible
Notes Due 2006") and options to purchase up to 20,000  shares of Common Stock at
an exercise price of $0.21 per share.

(2) Shares held in the name of Boris Skurkovich  include shares held in his name
(1,404,829),  and shares held in the name of Carol Marjorie  Dorros  (1,935,000)
and Samuel  Aaron  Skurkovich  (2,880,770)  and options to purchase up to 10,000
shares of Common Stock at an exercise  price of $0.25 per share and up to 20,000
shares of Common Stock at an exercise price of $0.21 per share.

(3) Leonard and Ellen Millstein are husband and wife. Shares held in their names
comprise shares held in his name (415,100), shares held in her name (2,563,359);
shares held in the name of William Millstein  (688,350  shares),  and options to
purchase up to 10,000  shares of Common Stock at an exercise  price of $0.25 per
share  share and up to 20,000  shares of Common  Stock at an  exercise  price of
$0.21 per share. Dr. Millstein and Mrs. Millstein disclaim beneficial  ownership
of the shares held in the other's  name and  disclaim  that they are part of any
"group" for SEC purposes.**

Page 10

<PAGE>

(4) Shares held in the name of Simon  Skurkovich  include options to purchase up
to  300,000  shares of Common  Stock at an  exercise  price of $0.10 per  share,
options to purchase up to 623,000 shares of Common Stock at an exercise price of
$0.10 per share,  and options to purchase up to 10,000 shares of Common Stock at
an exercise  price of $0.25 per share and up to 20,000 shares of Common Stock at
an exercise  price of $0.21 per share.  Simon  Skurkovich is the father of Boris
Skurkovich and Ellen Millstein but disclaims  beneficial ownership of the shares
attributed  to both of them and  disclaims  that the three of them are part of a
"group" for SEC purposes.

(5) Shares held in the name of Alexander L.  Cappello  include  warrants held in
his name to purchase  100,000  shares of Common  Stock at an  exercise  price of
$0.25 per share,  warrants  assigned by Cappello  Capital  Corp.  ("CCC") to the
Alexander  L. and Linda  Cappello  Family  Trust  ("Family  Trust") to  purchase
1,598,216  shares  of Common  Stock at an  exercise  price of $0.15  per  share,
options to purchase up to 10,000 shares of Common Stock at an exercise  price of
$0.25 per share and options to purchase up to 20,000  shares of Common  Stock at
an  exercise  price of $0.21 per share.  Also  includes  the right of the Family
Trust to acquire  132,596  shares of Common Stock upon  conversion  of Company's
Convertible  Subordinated Debt due September 30, 2004 ("Convertible  Debt"), and
the right to acquire  207,696  shares of Common Stock upon exercise of an option
to purchase up to $51,924  principal  amount of Convertible  Debt at par and the
conversion of such Convertible Debt.

(6) Shares held in the name of Thomas J.  Pernice  include  warrants to purchase
100,000 shares of Common Stock at an exercise price of $0.25 per share, warrants
assigned  by CCC to  purchase  1,042,443  shares of Common  Stock at an exercise
price of $0.15 per share,  options  to  purchase  up to 10,000  shares of Common
Stock at an  exercise  price of $0.25 per share and  options to  purchase  up to
20,000  shares of Common  Stock at an exercise  price of $0.21 per share.  Also,
includes the right to acquire 166,156 shares of Common Stock upon exercise of an
option to purchase up to $41,539 principal amount of Convertible Debt at par and
the conversion of such Convertible Debt, which option CCC assigned to him.

(7) Shares held in the name of Edmond F. Buccellato  comprise shares held in the
name of the Buccellato Living Trust (17,000 shares), shares held in the names of
Edmond F. and Leana J.  Buccellato  Living Trust  (813,719  shares),) and shares
held in the name of Buccellato & Finkelstein,  Inc.  (88,334  shares).  Includes
options to purchase up to 105,543 shares of Common Stock at an exercise price of
$0.10 per share,  options to purchase up to 50,000  shares of Common Stock at an
exercise  price of $0.10 per share,  options to purchase up to 50,000  shares of
Common Stock at an exercise price of $0.20 per share;  options to purchase up to
10,000 shares of Common Stock at an exercise  price of $0.25 per share,  options
to purchase up to 20,000  shares of Common  Stock at an exercise  price of $0.21
per share and the  right to  acquire  128,676  shares of Common  Stock  upon the
conversion of $32,169  principal amount of the Company's 2002 Convertible  Notes
Due 2004.

(8) Includes shares held in the names of Lawrence  Loomis  (924,053  shares) and
New Horizons  Diagnostics,  Inc. (200,000 shares), and options to purchase up to
10,000 shares of Common Stock at an exercise  price of $0.25 per share and up to
20,000 shares of Common Stock at an exercise price of $0.21 per share.

(9) Shares held in the name of Joseph A.  Bellanti  comprise  shares held in the
name of the I Care Foundation, Inc.

(10) Shares held in the name of John M. Bendheim  comprise  warrants to purchase
100,000 shares of Common Stock at an exercise price of $0.25 per share,  and the
right to acquire  132,180 shares of Common Stock upon  conversion of Convertible
Debt held by a trust for the benefit of his minor child, 80,443 shares of Common

Page 11

<PAGE>

Stock held in trust for certain  nieces and nephews,  and options to purchase up
to 10,000 shares of Common Stock at an exercise  price of $0.25 per share and up
to 20,000 shares of Common Stock at an exercise price of $0.21 per share.

(11) Shares held in the name of William M. Finkelstein include 318,826 shares of
Common Stock held in his name and 88,334 shares of Common Stock held in the name
of Buccellato & Finkelstein,  Inc.;  however,  Mr. Buccellato  presently retains
voting power and investment power over such shares.

(12) Includes  2,940,659 shares of Common Stock underlying  warrants,  1,403,453
shares of Common Stock underlying  options and 13,769,440 shares of Common Stock
underlying  outstanding  Convertible  Debt, 2002 Convertible  Notes Due 2004 and
2002  Convertible  Notes Due 2006, and 373,852 shares of Common Stock underlying
options to acquire Convertible Debt.

------------------------------------------------------------------------------
* Represents less than 1% of the outstanding shares of Company Common Stock.
**The Company has been unable to verify with Dr. Leonard Millstein his current
    holdings of Company Common Stock.

                               EXECUTIVE OFFICERS

         As of the date of this Proxy Statement, the following individuals serve
as executive officers of the Company:

         EDMOND F.  BUCCELLATO,  58. Since October 8, 2002,  Mr.  Buccellato has
served as Chairman of the Board;  and since April,  2001,  he also has served as
President and Chief Executive  Officer.  Mr.  Buccellato served as President and
Chief  Operating  Officer of the Company from  September 1, 2000 to December 12,
2000,  and he served as President  and Chief  Executive  from 1995 to August 31,
2000.  He has served as a member of the Board of  Directors  since 1995.  He was
co-founder,  member of the Board of Directors  and Vice  President of Finance of
Phase Medical,  Inc., an infusion  therapy  company sold to Becton  Dickinson in
1994.  He was  also  co-founder,  member  of the  Board  of  Directors  and Vice
President  of Finance of  Synergistic  Systems,  Inc., a company that became the
largest  medical  billing  company  in the  western  United  States.  He also is
co-founder  and  member of the Board of  Directors  of  Polymer  Safety,  LLC, a
manufacturer  of  synthetic  medical  and  industrial   examination  gloves  and
co-founder  and member of the Board of  Directors of  Physicians'  Choice LLC, a
medical billing company. He is a shareholder of Buccellato & Finkelstein,  Inc.,
a public accounting firm. Mr. Buccellato received his undergraduate  degree from
California  State  University  at San Diego,  and his  graduate  degree from the
University of Southern California.

         SIMON  SKURKOVICH,  M.D.,  80. Since April,  2001,  Dr.  Skurkovich has
served as Director of Research and Development.  From 1985 until September 2000,
Dr. Skurkovich served as Chairman of the Board of Directors. He has been granted
five  patents in Russia,  and eight in the United  States.  He is the creator of
immune preparations from human blood against antibiotic  resistant bacteria that
saved thousands of lives in the Soviet Union and Eastern Europe.  In Russia,  he
was  professor  and  Chief of the  Immunology  Laboratory  of the  Institute  of
Hematology and Blood  Transfusion and was awarded gold and silver medals for his
scientific  discoveries.  His laboratory  also was awarded the nation's  highest
honor, the Lenin Prize, for his patented work. Dr. Skurkovich  received an M.D.,

Page 12


<PAGE>

Ph.D.  and a doctorate in medical  sciences  (D.Sc.) from Pirogov  State Medical
Institute  in Moscow.  He has  written  more than 200  articles  for  scientific
publications.

         WILLIAM M.  FINKELSTEIN,  44. Since April,  2001, Mr.  Finkelstein  has
served as Chief  Financial  Officer.  For the past  eight  years,  he has been a
shareholder of Buccellato & Finkelstein,  Inc., a public  accountancy  firm. Mr.
Finkelstein  received his undergraduate degree in Accounting from the University
of Houston in 1982 and became licensed as a certified public accountant in 1984.
He is a member of the American  Institute of Certified Public  Accountants,  and
the California Society of Certified Public Accountants.

                       COMPENSATION OF EXECUTIVE OFFICERS

         The  following  table sets forth the  compensation  paid by the Company
since January 1, 2000 through December 31, 2002, for the Chief Executive Officer
of the Company and the Company's other executive  officers who were  compensated
during the year ended December 31, 2002 (the "Named Executive Officers"):

<TABLE>
<CAPTION>
                                                   Summary Compensation Table

                                                                       RESTRICTED
  NAME AND PRINCIPAL                                    OTHER ANNUAL   STOCK          SECURITIES         LTIP         ALL OTHER
       POSITION                   SALARY      BONUS     COMPENSATION    AWARD(S)      UNDERLYING       PAYOUTS      COMPENSATION
                         YEAR       ($)        ($)           ($)          ($)      OPTIONS/SARS(#)       ($)             ($)
------------------      -----    --------   --------    -------------  -------     ----------------  ------------  --------------
<S>                      <C>       <C>          <C>       <C>                           <C>               <C>            <C>
Edmond F. Buccellato...
Chief Executive          2002      $91,500      $0        $ 63,000         *            $3,800            $0             $0
Officer (1)(4)           2001      $84,000      $0           $0                         $2,150            $0             $0
                         2000      $72,500      $0           $0                           $0              $0             $0
Paul J. Marangos.......
Chief Executive          2001      $35,000      $0        $ 10,000                      $7,800            $0             $0
Officer (2)(5)           2000      $40,000   $ 25,000        $0                           $0              $0             $0

Simon Skurkovich.......
Chairman Emeritus,       2002      $84,000      $0        $ 39,996         *            $3,800            $0             $0
Director of Research     2001      $60,000      $0           $0                         $2,150            $0             $0
& Development (3)(4)     2000      $30,000      $0           $0                           $0              $0             $0
</TABLE>

* - See "Compensation of Directors" below
------------------------------------

(1) Mr.  Buccellato was the Chief Executive  Officer of the Company prior to the
hiring  of Dr.  Marangos.  Since  April,  2001,  Mr.  Buccellato  has  served as
President and Chief  Executive  Officer of the Company.

(2) Dr.  Marangos  joined  the  Company  in August  2000 at an annual  salary of
$120,000.  In addition,  he was paid a signing bonus of $25,000. In April, 2001,
Dr. Marangos resigned as an officer and employee of the Company.

(3) Dr.  Skurkovich  also  served as the  Chairman of the Board prior to August,
2000.

(4) During  January,  2003, the Company issued stock options to purchase  20,000
shares of Company  Common Stock  exercisable at $0.21 per share to each director
for services rendered during the year ended December 31, 2002. The fair value of
the stock  options  received by each  director was estimated at $3,800 using the
Black Scholes  option price method.  During  January,  2002,  the Company issued
stock options to purchase  10,000 shares of Company Common Stock  exercisable at
$0.25 per share to each  director  for services  rendered  during the year ended
December 31, 2001.  The fair value of the stock  options was estimated at $2,150
using the Black Scholes option price method.

(5) During May, 2001, the Company  issued to Dr.  Marangos  warrants to purchase
100,000 shares of Company Common Stock at $0.25 per share for his service on the
Board of  Directors.  The warrants  expire in May,  2005.  The fair value of the
warrants was estimated at $7,800 using the Black Scholes option price method.

Page 13


<PAGE>

         For  the  year  ending  December  31,  2003,  the  salaries  of  Edmond
Buccellato and Dr. Simon Skurkovich have been set at $180,000.00 each.

         During  fiscal year 2002,  William M.  Finkelstein  did not receive any
compensation directly from the Company,  although the Company paid to Buccellato
&  Finkelstein,  Inc.,  the  sum of  $16,689  for  accounting  services  and tax
preparation. Mr. Finkelstein and Mr. Buccellato are shareholders of Buccellato &
Finkelstein, Inc.

         There  are no  retirement,  pension,  or profit  sharing  plans for the
benefit of the Company's officers and directors.

OPTION/SAR GRANTS TO EXECUTIVE OFFICERS

         During  January,  2003,  the Company  issued stock  options to purchase
20,000 shares of Company Common Stock exercisable at $0.21 per share, and during
January 2002,  stock options to purchase  10,000 shares of Company  Common Stock
exercisable at $0.25 per share,  including in each case Edmond F. Buccellato and
Dr. Simon Skurkovich as described in the Summary Compensation Table above.

         During  May,  2001,  the  Company  issued to Dr.  Marangos  warrants to
purchase  100,000 shares of Company Common Stock  exercisable at $0.25 per share
for  his  service  on the  Board  of  Directors  as  described  in  the  Summary
Compensation Table above.

<TABLE>
<CAPTION>

                 AGGREGATED OPTIONS/SAR EXERCISES IN FISCAL YEAR
                  ENDED DECEMBER 31, 2002 AND DECEMBER 31,2002
                                OPTION/SAR VALUES
                                                                                                 VALUE OF UNEXERCISED
                                                                                                     IN-THE-MONEY
                                                                   NUMBER OF UNEXERCISED        OPTIONS/SARS AT FY-END
                       SHARES ACQUIRED                             SECURITIES UNDERLYING           ($) EXERCISABLE/
        NAME           ON EXERCISE (#)   VALUE REALIZED ($)      OPTIONS/SARS AT FY-END(#)         UNEXERCISABLE(2)
                                                               EXERCISABLE/ UNEXERCISABLE(1)
  ----------------     ----------------  ------------------   -------------------------------    ---------------------

<S>                          <C>                <C>                 <C>                             <C>
Edmond Buccellato             0                  $0                  105,543                         $ 11,610
                                                                      50,000                            5,500
                                                                      50,000                              500
                                                                      10,000                            N/A
                                                                      20,000                            N/A


Simon Skurkovich              0                  $0                  300,000                         $ 33,000
                                                                     623,000                           68,530
                                                                      10,000                              N/A
                                                                      20,000                              N/A
</TABLE>
(1) All options were exercisable as of December 31, 2002
(2)  Determined on the basis of the share closing price of $0.21 on December 31,
2002, as published by Commodity Systems, Inc. available through Yahoo! Finance.

Page 14

<PAGE>

<TABLE>
<CAPTION>
EQUITY COMPENSATION PLAN INFORMATION AS OF DECEMBER 31, 2002
---------------------------------------------- ------------------------ --------------------------- -------------------------
                                                                                                      NUMBER OF SECURITIES
                                                                                                    REMAINING AVAILABLE FOR
                                                NUMBER OF SECURITIES                                 FUTURE ISSUANCE UNDER
                                                  TO BE ISSUED UPON     WEIGHTED-AVERAGE EXERCISE     EQUITY COMPENSATION
                                                     EXERCISE OF           PRICE OF OUTSTANDING         PLANS (EXCLUDING
                                                OUTSTANDING OPTIONS,      OPTIONS, WARRANTS AND     SECURITIES REFLECTED IN
                                                 WARRANTS AND RIGHTS              RIGHTS                   COLUMN (A)
---------------------------------------------- ------------------------ --------------------------- -------------------------
                                                         (a)                       (b)                          (c)
---------------------------------------------- ------------------------ --------------------------- -------------------------
<S>                                                 <C>                           <C>                     <C>
EQUITY COMPENSATION PLANS APPROVED BY
SECURITY HOLDERS                                       440,000(1)                 $0.25                   4,060,000(1)
---------------------------------------------- ------------------------ --------------------------- -------------------------
EQUITY COMPENSATION PLANS NOT APPROVED BY
SECURITY HOLDERS(2)                                  9,200,000(3)                 $0.05                     800,000(3)
---------------------------------------------- ------------------------ --------------------------- -------------------------
</TABLE>

(1) This figure  excludes stock options  granted by the Company during  January,
2003, to each director,  to purchase 20,000 shares of the Company's Common Stock
at $0.21  per share  (aggregate  180,000  stock  options),  including  Edmond F.
Buccellato and Simon Skurkovich,  M.D., as described in the Summary Compensation
Table for director services rendered during the year ended December 31, 2002.
(2) Stock Bonus Plan
(3)  This  figure  excludes  1,603,787  shares  of the  Company's  Common  Stock
repurchased  by the Company as of  February  26,  2003,  from an officer and two
directors, in satisfaction of outstanding notes receivable,  issued by the three
individuals  in  consideration  for shares  issued to them under the Stock Bonus
Plan on January 11, 2000.  Such notes were due and payable on December 31, 2002,
and could not be extended under provisions of federal  legislation  known as the
Sarbanes-Oxley  Act of 2002.  These shares are now available for future issuance
under the Stock Bonus Plan.

EQUITY COMPENSATION AND LONG-TERM INCENTIVE PLAN AWARDS

         The Company  adopted a Stock Bonus Plan ("Stock Bonus Plan") in January
2000 and reserved 10,000,000 shares of Common Stock to be issued thereunder,  of
which  9,200,000  shares were granted as of December 31, 2002.  During the first
quarter of 2003,  the  Company  repurchased  1,603,787  shares of the  Company's
Common Stock (as described in footnote 3 above),  which shares  currently remain
available for future issuance under the Stock Bonus Plans. In December 2000, the
Board of Directors  approved the Company's  2000 Omnibus  Equity  Incentive Plan
("OEI  Plan")  and  reserved  4,000,000  shares  of  Common  Stock to be  issued
thereunder to employees,  consultants and directors, subject to annual increases
equal to the lesser of 2.5% of the then  outstanding  shares of Common  Stock or
250,000 shares. As of December 31, 2002 and September 30, 2003, respectively, no
shares have been granted under the OEI Plan. As of December 31, 2002, options to
purchase approximately 440,000 shares had been granted under the OEI Plan. Prior
to January,  2001,  the Company  granted  other  stock  options and  warrants to
purchase  Company  Common  Stock which were not  granted  pursuant to any equity
compensation  plan. During fiscal year 2002, the Company granted warrants to two
advisors to purchase up to 239,400 shares of Common Stock in connection with the
sale of  subordinated  convertible  pay-in-kind  notes,  which warrants were not
granted pursuant to any equity  compensation  plan. The warrants are exercisable
for ten years and have an exercise price of $0.25 per share.

REPORT OF THE AUDIT COMMITTEE

         As more  fully  described  in its  charter,  the  purpose  of the Audit
Committee is to assist the Board of  Directors  in its general  oversight of the
Company's financial reporting, internal controls and audit functions.

Page 15

<PAGE>

         The  Audit  Committee  members  are  not  professional  accountants  or
auditors,  and their  functions  are not intended to duplicate or to certify the
activities of management and the Company's  independent  auditor.  The Committee
serves a board-level  oversight role, in which it provides  advice,  counsel and
direction  to  management  and the  auditors  on the  basis  of  information  it
receives, discussions with management and the auditors and the experience of the
Committee  members in business,  financial and  accounting  matters.  Management
represented  to  the  Committee  that  the  Company's   consolidated   financial
statements  were  prepared in  accordance  with  generally  accepted  accounting
procedures. In this connection, the Audit Committee has done the following:

         o Reviewed and discussed the Company's audited financial statements for
the year  ended  December  31,  2002,  with  the  Company's  management  and the
independent auditors;

         o Discussed with Williams & Webster,  P.S.,  the Company's  independent
accountants,  the matters  required to be  discussed  by  Statement  on Auditing
Standards No. 61 (Codification of Statements on Auditing Standards), as amended;
and

         o Received written  disclosure  regarding  independence from Williams &
Webster,  P.S.  as  required  by  Independent  Standards  Board  Standard  No. 1
(Independence  Discussions with Audit  Committees) and discussed with Williams &
Webster, P.S. its independence.

         Based on the foregoing and subject to the  limitations  on the role and
responsibilities  of the Committee  referred to above and in the Audit Committee
Charter,  the Audit  Committee  recommended  to the Board of Directors  that the
audited financial  statements be included in the Company's Annual Report on Form
10-KSB/A for the year ended December 31, 2002 ("Annual Report").

         As of the filing of the Company's Annual Report, Alexander L. Cappello,
John M. Bendheim and Richard Kiphart served on the Company's Audit Committee and
those directors  currently serve on the Audit Committee.  Although the Company's
securities are not quoted on Nasdaq, the Company has elected to apply the Nasdaq
rules  regarding the definition of  "independence"  for the members of the Audit
Committee who recommended that the audited  financial  statements be included in
the Company's Annual Report. Under the Nasdaq rules,  directors John M. Bendheim
and Richard Kiphart qualified as "independent."  Director  Alexander L. Cappello
would not likely be deemed "independent," because of the aggregate value of cash
fees,  warrants  and options of the Company he received in fiscal years 2000 and
2001 by  assignment  from Cappello  Capital  Corp.,  an investment  banking firm
retained by the  Company  from  January,  2000,  through  January,  2002,  which
received  such fees,  warrants  and  options in  connection  with the  Company's
private  placement of Convertible Debt in 2000 and other services.  The Board of
Directors  determined to appoint Alexander L. Cappello to the Audit Committee in
the best interests of the Company and its Stockholders due to his management and
financial expertise involving  publicly-held  companies,  among other expertise.
Based upon current  Nasdaq rules,  John M.  Bendheim,  Alexander L. Cappello and
Richard P. Kiphart have financial sophistication, although none of the committee
members may  currently  qualify as a "financial  expert" for purposes of new SEC
rules, adopted pursuant to the Sarbanes-Oxley Act of 2002.


Page 16

<PAGE>




AUDIT AND NON-AUDIT FEES

         For the fiscal year ended December 31, 2002, fees for services provided
by the Company's auditors, Williams & Webster, P.S., were as follows:

          A. Audit  Fees.  Audit fees billed by  Williams & Webster,  P.S.  with
respect to the fiscal year 2002 audit and quarterly reviews were $29,500.

          B.  Financial  Information  Systems  Design  Implementation  Fees.  No
services were  performed by, or fees  incurred to,  Williams & Webster,  P.S. in
connection with financial  information  design and  implementation  projects for
fiscal year 2002.

          C. All Other Fees.  All other fees billed by Williams & Webster,  P.S.
with respect to fiscal year 2002 were $3,900.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

         Ownership of and  transactions  in Company stock by executive  officers
and  directors of the Company are required to be reported to the SEC pursuant to
Section 16 of the Securities  Exchange Act of 1934, as amended.  On February 27,
2003, John M. Bendheim,  a Director,  filed a Form 5 reporting,  as trustee of a
trust for his minor daughter,  additional accrued convertible debt, and on March
13, 2003,  he filed a Form 4 reporting  the grant of options to purchase  20,000
shares of Company  Common Stock.  On October 8, 2003, he filed an amended Form 4
reporting his beneficial interest in 80,443 shares of Common Stock as trustee of
trusts for the benefit of certain  nieces and  nephews.  On February  26,  2003,
Edmond F. Buccellato, a Director and executive officer, filed a Form 4 reporting
the grant of options to purchase 20,000 shares. On March 20, 2003,  Alexander L.
Cappello, a Director,  filed an amended Form 5 reporting the grant of options to
purchase 20,000 shares. On March 14, 2003, Richard P. Kiphart, a Director, filed
a Form 5 reflecting  additional accrued convertible debt and reporting the grant
of options to purchase 20,000 shares of Company Common Stock. On March 14, 2003,
Lawrence  Loomis,  a Director,  filed a Form 4 reporting the grant of options to
purchase  20,000  shares of Company  Common  Stock.  On June 13,  2003,  Leonard
Millstein,  Ph.D.,  a Director,  filed an amended Form 5 reporting  the grant of
options to purchase  20,000 shares of Company  Common Stock,  but has omitted to
file any report  regarding the sale of  approximately  400,000 shares of Company
Common Stock. On March 21, 2003, Thomas J. Pernice,  a Director,  filed a Form 5
reporting  the grant of  options to  purchase  20,000  shares of Company  Common
Stock. On March 20, 2003,  Boris  Skurkovich,  M.D., a Director,  filed a Form 4
reflecting  gifts of Company  Common Stock  effective  February 13, 2003, to his
wife and minor son and the grant of options to purchase 20,000 shares of Company
Common Stock. On March 13, 2003, Simon Skurkovich, M.D. filed a Form 4 reporting
the grant of options to purchase 20,000 shares of Company Common Stock.


Page 17

<PAGE>

                                  ANNUAL REPORT

         Enclosed with this Proxy  Statement is a copy of the  Company's  Annual
Report on Form  10-KSB/A  for the year ended  December  31,  2002,  and filed in
April, 2003.

                                  OTHER MATTERS

         The  Company  knows of no other  matters  that  will be  presented  for
consideration  at the Annual Meeting.  If any other matters properly come before
the Annual  Meeting,  the persons named as proxies on the enclosed proxy card or
their  substitutes will vote such proxy in accordance with their discretion with
respect to such matters.

                              AVAILABLE INFORMATION

         The Board of Directors adopted a new written charter for the Nominating
Committee, a copy of which is attached as Appendix A hereto.

         The Board of Directors adopted a Code of Ethics and Business Conduct, a
copy of which is attached as Appendix B hereto.


Dated: October 27, 2003


Page 18

<PAGE>


                                   APPENDIX A
                                   ----------

                                     CHARTER

                 NOMINATING COMMITTEE OF THE BOARD OF DIRECTORS

                            ADVANCED BIOTHERAPY, INC.

             Adopted by the Board of Directors on September 25, 2003

Purpose
-------

The  Nominating  Committee  (the  "Committee")  of the Board of  Directors  (the
"Board")  assists the Board in fulfilling  its fiduciary  responsibilities  with
respect  to the  oversight  of the  Company's  affairs  in the  areas  of  Board
membership matters.

The  Committee  shall have the  authority to undertake  the specific  duties and
responsibilities  described  below and the  authority  to  undertake  such other
duties as are assigned by law, the Company's  certificate  of  incorporation  or
bylaws or by the Board.

Membership
----------

The Committee shall be composed of at least three (3) members of the Board,  one
of whom shall be designated by the Board as the Chairperson of the Committee.

Each member of the Committee  shall be free from any  relationship  that, in the
judgment  of the Board,  would  interfere  with his or her  exercise of business
judgment as a Committee member.

Meetings and Procedures
-----------------------

The Committee shall hold at least one (1) regularly scheduled meeting each year.

In discharging its responsibilities, the Committee shall have the sole authority
to, as it deems appropriate,  select,  retain and/or replace, as needed,  search
firms used to identify director candidates and other outside advisors, including
advisors  on  director  compensation,  to  provide  independent  advice  to  the
Committee.

The Committee  shall maintain  written  minutes or other records of its meetings
and activities. Minutes of each meeting of the Committee shall be distributed to
each member of the Committee  and other  members of the Board.  The Secretary of
the Company shall arrange for the retention of the original  signed  minutes for
filing with the corporate records of the Company.

Page 1

<PAGE>

The Chair of the Committee shall report to the Board  following  meetings of the
Committee and as otherwise requested by the Chairman of the Board.

Responsibilities
----------------

The Committee shall be responsible for:

1.       Monitoring  the  independence  of Board  members and the overall  Board
         composition.

2.       Determining Board membership qualification standards.

3.       Reviewing the  performance  of the Board as a whole taking into account
         committee charters, and general governance principles.

4.       Evaluating the composition,  size, structure and practices of the Board
         on a periodic basis.

5.       a.       identifying   and   recommending   to  the   Board   qualified
                  individuals for Board membership;

         b.       considering  and  recommending  to the Board nominees to stand
                  for election at the annual meeting of stockholders,  including
                  considering recommendations from stockholders; and

         c.       recommending to the Board director  nominees to fill vacancies
                  as they arise.

The Committee  shall review and reassess the  Committee's  charter on a periodic
basis and submit any recommended changes to the Board for its consideration.

The Committee  shall perform such other  functions and have such other powers as
may be necessary or convenient in the efficient discharge of the foregoing.

Page 2


<PAGE>

                                   APPENDIX B
                                   ----------

                            ADVANCED BIOTHERAPY, INC.

                       CODE OF ETHICS AND BUSINESS CONDUCT

             ADOPTED BY THE BOARD OF DIRECTORS ON SEPTEMBER 25, 2003

INTRODUCTION

         We are  committed  to  maintaining  the highest  standards  of business
conduct and  ethics.  This Code of Ethics and  Business  Conduct  (this  "Code")
reflects the business  practices  and  principles  of behavior that support this
commitment.  We  expect  every  employee,  officer  and  director  to  read  and
understand  this  Code  and its  application  to the  performance  of his or her
business responsibilities.  References in this Code to employees are intended to
cover  officers  and, as  applicable,  members of the Board of  Directors,  i.e.
"directors."

         Officers are expected to develop in employees a sense of  commitment to
the spirit, as well as the letter,  of this Code.  Officers are also expected to
ensure that all agents and  contractors  conform to Code  standards when working
for or on behalf of Advanced  Biotherapy,  Inc. (the "Company").  The compliance
environment  within  each  officer's  assigned  area of  responsibility  will be
considered in evaluating the quality of that individual's  performance.  Nothing
in this Code alters the employment at-will policy of the Company.

         This Code cannot possibly  describe every practice or principle related
to honest and ethical conduct.  This Code addresses conduct that is particularly
important to proper dealings with the people and entities with whom we interact,
but reflects only a part of our commitment.  The Company may, from time to time,
adopt additional  policies that supplement or amplify this Code in certain areas
and such policies should be read in conjunction with this Code.

         Action by members of your immediate family, significant others or other
persons who live in your household also may potentially result in ethical issues
to the  extent  that they  involve  the  Company's  business.  Consequently,  in
complying  with this Code,  you should  consider not only your own conduct,  but
also that of your immediate family members, significant others and other persons
who live in your household.

         The  integrity and  reputation  of the Company  depends on the honesty,
fairness and  integrity  brought to the job by each person  associated  with us.
Unyielding personal integrity is the foundation of corporate integrity.

         You should not hesitate to ask questions  about whether any conduct may
violate  this Code,  voice  concerns  or clarify  gray  areas.  Section 13 below
details the compliance  resources  available to you. In addition,  you should be
alert to  possible  violations  of this  Code by  others  and  report  suspected
violations,  without fear of any form of  retaliation,  as further  described in
Section 13. Any employee who violates the  standards in this Code maybe  subject
to disciplinary  action,  up to and including  termination of employment and, in
appropriate cases, civil legal action or referral for criminal prosecution.



Page 1
<PAGE>




1.       LEGAL COMPLIANCE

         Obeying the law,  both in letter and in spirit,  is the  foundation  of
this Code. Disregard of the law will not be tolerated.  Violation of domestic or
foreign laws,  rules and regulations  may subject an individual,  as well as the
Company,  to civil and/or criminal  penalties.  You should be aware that conduct
and records,  including emails, are subject to internal and external audits, and
to discovery  by third  parties in the event of a  government  investigation  or
civil litigation. It is in everyone's best interests to know and comply with our
legal and ethical obligations.

         RESEARCH AND DEVELOPMENT COMPLIANCE

         The research and development of pharmaceutical products is subject to a
number of legal and  regulatory  requirements,  including  standards  related to
ethical research  procedures and scientific  misconduct.  We expect employees to
comply with all such requirements and standards.

2.       INSIDER TRADING

         Employees who have access to confidential (or "inside") information are
not permitted to use or share that information for stock trading purposes or for
any other purpose  except to conduct our business.  All  non-public  information
about the Company or about  companies  with which we do  business is  considered
confidential  information.  To use material non-public information in connection
with buying or selling securities,  including "tipping" others who might make an
investment decision on the basis of this information,  is not only unethical, it
is illegal.  Employees  must  exercise  the utmost care when  handling  material
non-public information.

3.       INTERNATIONAL BUSINESS LAWS

         Our  employees are expected to comply with the  applicable  laws in all
countries to which they travel,  in which they operate and where we otherwise do
business,  including  laws  prohibiting  bribery,  corruption  or the conduct of
business with specified  individuals,  companies or countries.  The fact that in
some countries  certain laws are not enforced or that violation of those laws is
not  subject  to  public  criticism  will  not  be  accepted  as an  excuse  for
noncompliance.  In addition, we expect employees to comply with U.S. laws, rules
and  regulations   governing  the  conduct  of  business  by  its  citizens  and
corporations outside the U.S.

         These  U.S.  laws,  rules  and  regulations,  which  extend  to all our
activities outside the U.S., include:

         o    The Foreign  Corrupt  Practices Act, which  prohibits  directly or
              indirectly  giving  anything of value to a government  official to
              obtain or retain business or favorable treatment, and requires the
              maintenance  of  accurate  books  of  account,  with  all  company
              transactions being properly recorded;

         o    Export Controls,  which restrict travel to designated countries or
              prohibit or restrict the export of goods,  services and technology
              to designated  countries,  denied persons or denied  entities from
              the U.S., or the  re-export of U.S.  origin goods from the country
              of  original  destination  to such  designated  countries,  denied
              companies or denied entities; and



Page 2
<PAGE>




4.       CONFLICTS OF INTEREST

         Conflicts  of  interest  can  arise  in  virtually  every  area  of the
operations of the Company.  You must avoid personal interests that conflict with
interests  of the Company,  or that might  influence or even appear to influence
your  judgment or actions in performing  your duties.  We  acknowledge  that the
non-employee  members  of our  Board of  Directors  may have  various  business,
financial,   scientific  or  other  relationships  with  existing  or  potential
collaborators,  suppliers or competitors.  Any actual or potential  conflicts of
interest  relating to any of these  relationships of our non-employee  directors
that  have been  disclosed  to our Board of  Directors  shall not be  considered
violations  of this  Code and  shall  not  otherwise  require  a  waiver  of any
provisions  of  this  Code.  Notwithstanding  the  foregoing,  if the  Board  of
Directors  affirmatively  determines that any such  relationship is inconsistent
with the  director's  responsibilities,  it shall so advise the director and the
shall terminate the relationship as promptly as practical.

         Thus, you should not have any business, financial or other relationship
with collaborators,  suppliers,  or competitors that might impair or even appear
to impair the independence of the Company.  The word "appear" is very important.
Even where there is no actual  conflict of interest,  the  appearance  of such a
conflict is damaging  because it can undermine trust among employees and cost us
the  respect  of  collaborators,  suppliers,  or  competitors  and others in our
industry.

         If you have any questions  about a potential  conflict or if you become
aware of an actual or potential conflict, you should discuss the matter with the
Chief Financial Officer, the Chief Executive Officer or the Audit Committee,  as
appropriate.  Officers may not authorize  conflict of interest  matters  without
first  seeking the approval of the Chief  Executive  Officer and filing with the
Chief Executive Officer a written description of the authorized activity. If the
Chief  Executive  Officer is involved in the potential or actual  conflict,  you
should  discuss the matter with the Chairman of the Company's  Audit  Committee.
Factors that may be considered  in  evaluating a potential  conflict of interest
are, among others:

         o        whether it may interfere with the employee's job  performance,
                  responsibilities or morale;

         o        whether the employee has access to confidential information;

         o        whether   it  may   interfere   with   the  job   performance,
                  responsibilities or morale of others within the organization;

         o        any potential adverse or beneficial impact on our business;

         o        any   potential   adverse   or   beneficial   impact   on  our
                  relationships  with  our   collaborators,   license  partners,
                  suppliers or other service providers;

         o        whether it would enhance or support a competitor's position;

         o        the  extent  to which it would  result in  financial  or other
                  benefit (direct or indirect) to the employee;

         o        the  extent  to which it would  result in  financial  or other
                  benefit  (direct  or  indirect)  to one of our  collaborators,
                  license partners, suppliers or other service providers; and

         o        the  extent to which it would  appear  improper  to an outside
                  observer.

Page 3
<PAGE>

         EXAMPLES OF POTENTIAL CONFLICTS

         The  following are examples of  situations  that may,  depending on the
facts and circumstances, involve conflicts of interests:

         o    Employment by (including  consulting  for) or service on the board
              of a competitor,  collaborator, license partner, supplier or other
              service provider.  Activity that enhances or supports the position
              of a competitor  to the  detriment  of the Company is  prohibited,
              including employment by or service on the board of a competitor.

         o    Owning,  directly or indirectly,  a significant financial interest
              in any entity that does business, seeks to do business or competes
              with us. In  addition  to the  factors  described  above,  persons
              evaluating  ownership  for conflicts of interest will consider the
              size and nature of the investment;  the nature of the relationship
              between the other entity and the Company; the employee's access to
              confidential  information and the employee's  ability to influence
              the Company's decisions.  If you would like to acquire a financial
              interest of that kind, you must seek approval in advance.

         o    Soliciting  or  accepting  gifts,  favors,  loans or  preferential
              treatment from any person or entity that does business or seeks to
              do business  with us. See Section 8 for further  discussion of the
              issues involved in this type of conflict.

         o    Soliciting  contributions  to any  charity  or for  any  political
              candidate from any person or entity that does business or seeks to
              do business with us.

         o    Taking personal advantage of corporate opportunities.  See Section
              5 for further  discussion  of the issues  involved in this type of
              conflict.

         o    "Moonlighting," or providing services to another entity (including
              employment,   consulting   or  serving  as  a  director)   without
              permission.  This  requirement  does not apply to our non-employee
              directors.

         o    Conducting Company related business  transactions with your family
              member, significant other or person who shares your household or a
              business  in which  you  have a  significant  financial  interest.
              Material   related-party   transactions   approved  by  the  Audit
              Committee and involving any executive  officer or director will be
              publicly disclosed as required by applicable laws and regulations.

         o    Exercising supervisory or other authority on behalf of the Company
              over a co-worker who is also a family member. The Chief Compliance
              Officer and/or the Audit Committee will assess the advisability of
              reassignment.

         LOANS

         Loans to, or guarantees of  obligations  of,  employees or their family
members by the Company  could  constitute  an improper  personal  benefit to the
recipients   of  these  loans  or   guarantees,   depending  on  the  facts  and
circumstances.  Some loans are expressly  prohibited by law and  applicable  law
requires  that our  Board of  Directors  approve  all loans  and  guarantees  to
employees. As a result, all loans and guarantees by the Company must be approved
in advance by the Audit Committee.


Page 4
<PAGE>

5.       CORPORATE OPPORTUNITIES

         You may not take personal advantage of opportunities that are presented
to you or discovered by you as a result of your position with us or through your
use of  corporate  property  or  information,  unless  authorized  by the  Chief
Executive  Officer or the Company's Audit Committee,  as described in Section 4.
Even opportunities that are acquired privately by you maybe questionable if they
are related to our existing or proposed lines of business.  Participation  in an
investment or outside  business  opportunity  that is related to our existing or
proposed  lines of business must be  pre-approved  by the Audit  Committee.  You
cannot use your  position  with us or  corporate  property  or  information  for
improper personal gain, nor can you compete with us in any way.

6.       MAINTENANCE  OF  CORPORATE  BOOKS,  RECORDS,  DOCUMENTS  AND  ACCOUNTS;
         FINANCIAL INTEGRITY; PUBLIC REPORTING

         FINANCIAL REPORTING AND ACCOUNTING

         The  integrity  of our  records  and public  disclosure  depends on the
validity, accuracy and completeness of the information supporting the entries to
our books of account.  Therefore,  our corporate and business  records should be
completed  accurately and honestly.  The making of false or misleading  entries,
whether  they  relate  to  financial  results  or  test  results,   is  strictly
prohibited.  Our records  serve as a basis for  managing  our  business  and are
important in meeting our  obligations to  stockholders,  collaborators,  license
partners, suppliers,  creditors,  employees and others with whom we do business.
As a result, it is important that our books, records and accounts accurately and
fairly reflect, in reasonable detail, our assets,  liabilities,  revenues, costs
and expenses, as well as all transactions and changes in assets and liabilities.
We require that:

         o        no entry be made in our books and records  that  intentionally
                  hides or disguises the nature of any  transaction or of any of
                  our  liabilities,  or  misclassifies  any  transactions  as to
                  accounts or accounting periods;

         o        transactions be supported by appropriate documentation;

         o        the terms of commercial  transactions be reflected  accurately
                  in the  documentation  for  those  transactions  and all  such
                  documentation  be  reflected   accurately  in  our  books  and
                  records;

         o        employees comply with our system of internal controls; and

         o        no cash or other assets be  maintained  for any purpose in any
                  unrecorded or "off-the-books" fund.

         Our accounting  records are also relied upon to produce reports for our
Board of  Directors,  management,  stockholders  and  creditors,  as well as for
governmental  agencies.  In  particular,  we rely upon our  accounting and other
business and  corporate  records in preparing  the periodic and current  reports
that we file with the SEC.  These  reports must provide  full,  fair,  accurate,
timely and understandable  disclosure and fairly present our financial condition
and results of operations. Employees who collect, provide or analyze information
for or otherwise  contribute in any way in preparing or verifying  these reports
should  strive  to  ensure  that  our  financial   disclosure  is  accurate  and
transparent  and that our  reports  contain  all of the  information  about  the
Company that would be important to enable  stockholders and potential  investors


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to assess the  soundness  and risks of our business and finances and the quality
and integrity of our accounting and disclosures. In addition:

         o    no employee may take or authorize  any action that would cause our
              financial  records or financial  disclosure to fail to comply with
              generally   accepted   accounting   principles,   the   rules  and
              regulations  of the  SEC  or  other  applicable  laws,  rules  and
              regulations;

         o    all employees must cooperate fully with our accounting department,
              as well as our  independent  public  accountants and outside legal
              counsel,  respond to their  questions with candor and provide them
              with  complete  and accurate  information  to help ensure that our
              books and records,  as well as our reports filed with the SEC, are
              accurate and complete; and

         o    no employee should knowingly make (or cause or encourage any other
              person to make) any false or  misleading  statement  in any of our
              reports  filed  with  the  SEC or  knowingly  omit  (or  cause  or
              encourage any other person to omit) any  information  necessary to
              make the disclosure in any of our reports accurate in all material
              respects.

         Any employee who becomes  aware of any departure  from these  standards
has a  responsibility  to  report  his or her  knowledge  promptly  to the Chief
Financial  Officer,  the Chief Executive Officer and, if appropriate,  the Audit
Committee.

         SELECTIVE DISCLOSURE

         The federal  securities  laws  prohibit  the  selective  disclosure  of
financial and other  corporate  information.  It is the policy of the Company to
disclose important corporate events by means of a press release or a filing with
the SEC, and to refrain from  selectively  disclosing  nonpublic  information to
securities  analyst or members of the media.  Section 11 describes  our policies
related to media/public discussions.

         RESPONSE TO BOARD OF DIRECTORS

         Any written request for  information,  financial or otherwise,  made by
any director or officer of the Company,  or written  questions or concerns about
Company practices, made by any director or officer, addressed to the Chairman of
the  Board,  any  chairman  of a Board  committee  or the  Company's  Compliance
Officer, is to be responded to by the Company or its representatives  within ten
business days after receipt of such written communication.

         REPORTING OF EXPENSES

         All expense items  associated  with travel or local  business  matters,
including airfare, hotel expenses, taxi/limousine services, car rental, business
meals and  entertainment,  must be accurately and fully documented on an expense
report  (whether  or not  they  are  paid  directly)  with  applicable  receipts
attached.  The documentation should include  identification of the collaborator,
license partner or supplier involved, if applicable,  and a brief description of
the business matter that required the expense.



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7.       FAIR DEALING

         We strive  to do  business  fairly  and  honestly.  We intend to obtain
advantages  over our  competitors  through  superior  performance,  not  through
unethical or illegal business practices.  Acquiring proprietary information from
others through  improper means,  possessing  trade secret  information  that was
improperly obtained, or inducing improper disclosure of confidential information
from  past or  present  employees  of other  companies  is  prohibited,  even if
motivated by an intention to advance our  interests.  If information is obtained
by mistake that may constitute a trade secret or other confidential  information
of another business, or if you have any questions about the legality of proposed
information  gathering,  you must consult the Chief Financial Officer, the Chief
Executive Officer, or if appropriate,  the Audit Committee, as further described
in Section 13.

         You are  expected  to  deal  fairly  with  our  collaborators,  license
partners, suppliers, employees and anyone else with whom you have contact in the
course of performing  your job. No employee may take unfair  advantage of anyone
through misuse of confidential information,  misrepresentation of material facts
or any other unfair dealing practice.

         Employees  involved in  procurement  have a special  responsibility  to
adhere to  principles  of fair  competition  in the  purchase  of  products  and
services  by  selecting   suppliers  based   exclusively  on  normal  commercial
considerations, such as quality, cost, availability, service and reputation, and
not on the receipt of special favors.

8.       GIFTS, ENTERTAINMENT AND MEALS

         Business  entertainment,  gifts and meals are meant to create  goodwill
and  sound  working  relationships  and  not to  gain  improper  advantage  with
collaborators,  license  partners or  suppliers  or  facilitate  approvals  from
government  officials.  Unless  express  permission  is received  from the Chief
Financial  Officer,  the  Chief  Executive  Officer,  or  the  Audit  Committee,
entertainment,  gifts and meals  cannot be offered,  provided or accepted by any
employee  unless  consistent  with  customary  business  practices  and  not (a)
excessive in value,  (b) in cash, (c)  susceptible of being construed as a bribe
or kickback or (d) in violation of any laws. Note that the test is not whether a
particular gift, meal or other benefit was actually provided to obtain favorable
treatment,  but whether it might give the appearance of having been provided for
that reason. This principle applies to our transactions everywhere in the world,
even where the practice is widely  considered "a way of doing  business."  Under
some statutes, such as the U.S. Foreign Corrupt Practices Act (further described
in Section 3),  giving  anything of value to a government  official to obtain or
retain business or favorable  treatment is a criminal act subject to prosecution
and  conviction.   With  respect  to  government  employees,  no  gifts,  meals,
entertainment or benefits whatsoever may be provided to such employees.

9.       CONSIDERATION TO ALL EMPLOYEES

         You have a fundamental responsibility to show respect and consideration
for all your fellow employees. This means that fellow employees should be at all
times be  treated  fairly and with  dignity.  In  addition,  their  beliefs  and
concerns should be respected.

10.      CONFIDENTIALITY

         One of our  most  important  assets  is our  confidential  information.
Employees who have received or have access to  confidential  information  should
take  care to  keep  this  information  confidential.  Confidential  information
includes  but is not  limited  to, (a) trade  secrets,  inventions,  mask works,
ideas, processes,  formulas,  source and object codes, scientific or other data,
programs,  other  works  of  authorship,  know-how,  improvements,  discoveries,


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developments,  designs  and  techniques,  (b)  information  regarding  plans for
research,  development,  new products,  marketing and selling,  business  plans,
budgets  and  unpublished  financial  statements,  licenses,  prices  and costs,
suppliers and customers,  and information  regarding the skills and compensation
of other  employees  of the Company and (c) similar  information  received  from
third parties such as our  suppliers,  licensors and  corporate  partners.  This
information  may be protected by patent,  trademark,  copyright and trade secret
laws.

         Except when disclosure is authorized or legally mandated,  you must not
share  confidential  information  of  our  collaborators,  license  partners  or
suppliers with third parties or others within the Company who have no legitimate
business  purpose for receiving that  information.  Doing so would  constitute a
violation of the  proprietary  information  and  inventions  agreement  that you
signed upon joining us. Improper use or distribution of this  information  could
also be illegal and result in civil liability and/or criminal penalties.

         You should also take care not to  inadvertently  disclose  confidential
information.   Materials  that  contain   confidential   information,   such  as
presentations,  memos, notebooks,  computer disks and laptop computers should be
stored  securely.   Unauthorized   posting  or  discussion  of  any  information
concerning our business, information or prospects on the Internet is prohibited.
You may not discuss our business,  information  or prospects in any "chat room,"
regardless  of whether you use your own name or a  pseudonym.  Be cautious  when
discussing  sensitive  information  in public places like  elevators,  airports,
restaurants.  All the Company emails,  voicemails and other  communications  are
presumed  confidential  and should not be forwarded  or  otherwise  disseminated
outside of the Company, except where required for legitimate business purposes.

         In  addition  to  the  above  responsibilities,  if  you  are  handling
information  protected  by any  privacy  policy  published  by us, then you must
handle that information solely in accordance with the applicable policy.

11.      MEDIA/PUBLIC DISCUSSIONS

         It is our  policy  to  disclose  material  information  concerning  the
Company  to  the  public  only  through   specific  limited  channels  to  avoid
inappropriate  publicity  and to ensure  that all those with an  interest in the
Company will have equal access to  information.  All inquiries or calls from the
press and financial  analysts should be referred to the Chief Executive Officer.
We have designated our Chief Executive Officer as our official  spokesperson for
financial matters, marketing, technical and other related information.  Unless a
specific exception has been made by the Chief Executive Officer,  he is the only
person who may communicate with the press on behalf of the Company.

12.      WAIVERS

         Any  waiver  of this  Code for  executive  officers  (including,  where
required  by  applicable  laws,  our  principal  executive  officer,   principal
financial officer (or persons performing similar functions)) or directors may be
authorized only by our Board of Directors or the Audit Committee of the Board of
Directors and will be disclosed to stockholders as required by applicable  laws,
rules and regulations.



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13.      COMPLIANCE STANDARDS AND PROCEDURES

         COMPLIANCE RESOURCES

         To facilitate  compliance with this Code, we have implemented a program
of Code  awareness,  training and review.  We have  established  the position of
Compliance  Officer to oversee this program.  The Compliance Officer is a person
to whom you can address any questions or concerns.  The Compliance Officer,  our
Chief  Executive  Officer,  can be reached at (818)  883-6716.  In  addition  to
fielding  questions or concerns  with respect to  potential  violations  of this
Code, the Compliance Officer is responsible for:

         o        investigating possible violations of this Code;

         o        training new employees in Code policies;

         o        conducting  annual  training  sessions  to refresh  employees'
                  familiarity with this Code;

         o        distributing  copies of this Code  annually  via email to each
                  employee with a reminder that each employee is responsible for
                  reading, understanding and complying with this Code;

         o        updating  this Code as needed and  alerting  employees  to any
                  updates, with appropriate approval of the Audit Committee,  to
                  reflect  changes in the law,  the  Company  operations  and in
                  recognized  best  practices,  and  to  reflect  the  Company's
                  experience; and

         o        otherwise  promoting an atmosphere of responsible  and ethical
                  conduct.

         You  should  feel free to discuss  your  concerns  with the  Compliance
Officer. If you are uncomfortable  speaking with the Compliance Officer,  please
contact the Chairman of the Company's Audit Committee.

         CLARIFYING QUESTIONS AND CONCERNS; REPORTING POSSIBLE VIOLATIONS

         If you encounter a situation or are  considering a course of action and
its appropriateness is unclear, discuss the matter promptly with your supervisor
or the  Compliance  Officer;  even the  appearance  of  impropriety  can be very
damaging and should be avoided.

         OBLIGATION TO REPORT POSSIBLE VIOLATIONS

         If you are aware of a suspected or actual  violation of Code  standards
by others,  you have a responsibility to report it. You are expected to promptly
provide a compliance resource with a specific  description of the violation that
you believe has occurred,  including any  information you have about the persons
involved and the time of the violation.

         NO REPRISALS

         Whether you choose to speak with the Compliance Officer,  you should do
so without  fear of any form of  retaliation.  We will take prompt  disciplinary
action  against any employee  who  retaliates  against you, up to and  including
termination of employment.


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         CONFIDENTIALITY

         Employees must promptly  report any complaints or  observations of Code
violations to the Compliance  Officer.  The Compliance  Officer will investigate
all reported  possible Code  violations  promptly and with the highest degree of
confidentiality  that  is  possible  under  the  specific  circumstances.   Your
cooperation in the  investigation  will be expected.  As needed,  the Compliance
Officer will consult with outside legal counsel, and the Audit Committee.

         DISCIPLINE

         If the  investigation  indicates  that a  violation  of this  Code  has
probably  occurred,  we will take such  action as we believe  to be  appropriate
under the  circumstances.  If we determine that an employee is responsible for a
Code  violation,  he or she will be  subject to  disciplinary  action up to, and
including,  termination of employment and, in appropriate cases, civil action or
referral for criminal prosecution. Appropriate action may also be taken to deter
any future Code violations. Such disciplinary actions may also be taken (A) when
an employee  fails to report or  withholds  relevant  information  concerning  a
violation  of such  standards,  laws or  regulation,  or (B) when there has been
inadequate supervision or lack of diligence by a supervisor,  in connection with
a violation of such standards, laws, or regulations.


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