================================================================================
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)

| X |    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934

         For the quarterly period ended   July 31, 2000
                                          -------------

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

         For the transition period from              to
                                        ------------    ------------


                         Commission file number 0-15489
                                                -------

                            Quest BioTechnology, Inc.
                            -------------------------
        (Exact name of small business issuer as specified in its charter)

            Michigan                                    38-2656058
            --------                                    ----------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

      321 Fisher Building,  3011 W. Grand Blvd., Detroit, Michigan   48202
      --------------------------------------------------------------------
                    (Address of principal executive offices)

                                 (313) 873-0200
                                 --------------
                           (Issuer's telephone number)


     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.

 Yes  X  No
     ---    ---

     As of July 31, 2000, the registrant had 4,007,079 shares of its Common
Stock, $.01 par value outstanding.

     Transitional Small Business Disclosure Format (Check One):  Yes    ; No X
                                                                     ---    ---
================================================================================
<PAGE>
                         Part 1 - Financial Information

Item 1 - Financial Statements

                   QUEST BIOTECHNOLOGY, INC. AND SUBSIDIARIES
                      (A Company in the Development Stage)
            Consolidated Statement of Financial Position (unaudited)

                                                              July 31,
                                                                2000
                                                              --------
          ASSETS

          Current Assets:

          Cash                                                $ 54,547
          Interest Receivable                                    5,743
          Pepaid Expenses                                          358

          Note Receivable                                      187,500
                                                              --------
          Total Current Assets                                 248,148
                                                              --------

          Equipment, net of accumulated
          depreciation of $56,320                                  844
                                                              --------
          Other Assets:

          License agreements net of
          accumulated amortization of $29,705                      295
                                                              --------
          Total Other Assets                                       295
                                                              --------

          TOTAL  ASSETS                                       $249,287
                                                              ========

         The accompanying notes are an integral part of these statements

                                       1
<PAGE>

                   QUEST BIOTECHNOLOGY, INC. AND SUBSIDIARIES
                      (A Company in the Development Stage)
       Consolidated Statement of Financial Position (unaudited) continued

<TABLE><CAPTION>
                                                                                  July 31,
                                                                                    2000
                                                                                -----------
<S>                                                                 <C>              <C>
          LIABILITIES AND SHAREHOLDERS' DEFICIT

          Current Liabilities:

          Settlement Agreement Payable                                          $   200,000

          Accrued liabilities:
               Legal and professional                               20,679
               Other                                                 2,853
               Interest - Other                                     30,223
               Affiliate                                            26,742           80,497
                                                               -----------      -----------

          Total Current Liabilities                                                 280,497
                                                                                -----------
          Minority interest in subsidiary                                           186,903
                                                                                -----------
          Total Liabilities                                                         467,400
                                                                                -----------
          Shareholders' Deficit:
          Preferred Stock, no par value, 10,000,000
          shares authorized and unissued                                                 --

          Common Stock, $.01 par value, 20,000,000
          shares authorized, 4,007,079 shares
          issued and outstanding                                                     40,071

          Additional Paid-In Capital, Common Stock                                8,906,088

          Deficit accumulated during the development stage                       (9,164,272)
                                                                                -----------
          Total Shareholders' Deficit                                              (218,113)
                                                                                -----------
          TOTAL LIABILITIES AND
          SHAREHOLDERS' DEFICIT                                                 $   249,287
                                                                                ===========
</TABLE>

         The accompanying notes are an integral part of these statements

                                       2
<PAGE>

                    QUEST BIOTECHNOLOGY, INC AND SUBSIDIARIES
                      (A Company in the Development Stage)
                Consolidated Statements of Operations (unaudited)

<TABLE><CAPTION>
                                                                                                                      Cumulative
                                                             For the Three Months          For the Nine Months           from
                                                                Ended July 31,               Ended July 31,            Inception
                                                                                                                     July 11, 1983
                                                                                                                        through
                                                              2000           1999          2000           1999       July 31, 2000
                                                          -----------    -----------    -----------    -----------    -----------
<S>                                                       <C>            <C>            <C>            <C>
OPERATING REVENUES:
       Revenue from sublicense and sublicense fees        $      --      $     5,000    $      --      $     5,000    $ 3,141,750
       Research and development fee affiliate                    --             --             --             --      $   295,000
                                                          -----------    -----------    -----------    -----------    -----------
       Total Operating Revenue                                   --            5,000           --            5,000      3,436,750
                                                          -----------    -----------    -----------    -----------    -----------
OPERATING EXPENSES:
       Research and development                                  --             --             --             --          695,597
       General & administrative                                28,590         14,623         91,104         47,313      8,377,245
                                                          -----------    -----------    -----------    -----------    -----------
       Total Operating Expenses                                28,590         14,623         91,104         47,313      9,072,842
                                                          -----------    -----------    -----------    -----------    -----------
       OPERATING  LOSS                                        (28,590)        (9,623)       (91,104)       (42,313)    (5,636,092)
                                                          -----------    -----------    -----------    -----------    -----------
OTHER INCOME (EXPENSE)
       Interest income                                          5,743           --            5,743           --          646,437
       Interest expense                                          --             --             --             --         (960,044)
       Provision for possible loss (Note 8)                      --             --             --             --         (550,000)
       Write-off of goodwill (Note 2)                            --             --             --             --         (425,895)
       Write-off of patents (Note 2)                             --             --             --             --          (59,097)
       Reimbursable interest expense                             --             --             --             --          179,349
       Net loss on disposal of equipment                         --             --             --             --           (1,044)
       Write-off of abandoned offering costs                     --             --             --             --         (283,810)
       Equity in loss of unconsolidated affiliate                --             --             --             --       (2,469,500)
                                                          -----------    -----------    -----------    -----------    -----------
       Other Income/Expense - Net                               5,743           --            5,743           --       (3,923,604)
                                                          -----------    -----------    -----------    -----------    -----------
       Loss before Income Taxes                               (22,847)        (9,623)       (85,361)       (42,313)    (9,559,696)

       Provision for Income Taxes                                --             --             --             --           20,000

                                                          -----------    -----------    -----------    -----------    -----------
       Loss before Extraodinary items                         (22,847)        (9,623)       (85,361)       (42,313)    (9,579,696)

       Extraordinary items                                       --             --             --             --          415,425
                                                          -----------    -----------    -----------    -----------    -----------
        Net Loss                                          $   (22,847)   $    (9,623)   $   (85,361)   $   (42,313)   $(9,164,271)
                                                          ===========    ===========    ===========    ===========    ===========
 Loss before Extraodinary items per share of Comm. Stk    $     (0.01)   $      --      $     (0.02)   $     (0.02)   $     (4.85)

 Effect of Extraodinary items per share of Comm. Stk      $      --      $      --      $      --      $      --      $      0.21
                                                          -----------    -----------    -----------    -----------    -----------
 Net Loss per share of Common Stock                       $     (0.01)   $      --      $     (0.02)   $     (0.02)   $     (4.64)
                                                          ===========    ===========    ===========    ===========    ===========
Weighted Average number of Common Shares
Outstanding                                                 4,007,079      2,412,079      4,007,079      2,412,079      1,975,668
                                                          ===========    ===========    ===========    ===========    ===========
</TABLE>

           The accompanying notes are an integral part of these statements

                                       3
<PAGE>
                   QUEST BIOTECHNOLOGY, INC. AND SUBSIDIARIES
                       A Company in the Development Stage
                Consolidated Statements of Cash Flow (unaudited)
<TABLE><CAPTION>
                                                                                   From
                                                                                 Inception
                                                      For the Nine Months       July 11, 1983
                                                         Ended July 31,           Through
                                                      2000           1999       July 31, 2000
                                                   -----------    -----------    -----------
<S>                                                <C>            <C>            <C>
CASH, BEGINNING OF PERIOD                          $     2,644    $     1,444
                                                   -----------    -----------    -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net Loss                                          (85,361)       (42,313)    (9,164,271)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
     Depreciation and amortization                       1,710          1,710        542,457
     Equity in loss of unconsolidated affiliate           --             --        2,469,500
     Write-off of note receivable                         --             --            5,000
     Write-off of deferred offering costs                 --             --          283,810
     Write-off of organization costs                      --             --            7,251
     Write-off of deferred patent costs                   --             --           (2,058)
     Write-off of other deferred costs                    --             --              131
     Loss on disposal of equipment                        --             --            1,044
     Provision for possible loss                          --             --          550,000
     Write-off of goodwill                                --             --          425,895
     Write-off of patents                                 --             --           59,097
     Extraordinary items                                  --             --         (415,425)
     Contribution of capital Management Services          --             --          100,000
Change in current assets and liabilities net of
business interest acquired:                               --             --
     Account receivable                                 (3,912)           455       (789,593)
     Note receivable                                  (187,500)          --          (43,015)
     Prepaid expenses                                     (358)          --             (365)
     Current portion of long-term debt                    --             --           15,413
     Accrued liabilities                              (135,656)        40,689      1,575,607
Increase in minority interest in subsidiary              4,230          4,230        186,903
Issuance of common stock in non cash transaction        90,000           --        1,735,593
Other items, net                                          --             --          (88,046)
                                                   -----------    -----------    -----------
Net cash used in operating acitivities                (316,847)         4,771     (2,546,072)
                                                   -----------    -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of equipment                                --             --          (82,860)
     Proceeds from sale of equipment                      --             --            1,000
     Note receivable                                      --             --       (1,000,000)
     Increase in patents                                  --             --          (21,046)
     Increase in deferred acquisition costs               --             --         (237,544)
     Increase in deferred offering costs                  --             --         (297,144)
     Increase in deferred patent costs                    --             --          (87,113)
     Increase in other assets                             --             --          (31,700)
                                                   -----------    -----------    -----------
Net cash used in investing activities:                    --             --       (1,756,407)
                                                   -----------    -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
     Payments for redemption of debt                      --             --         (440,559)
     Proceeds from issuance of debt                       --             --        1,151,246
     Issuance of common stock                          368,750           --        3,645,339
                                                   -----------    -----------    -----------
Net cash provided by financing activities              368,750           --        4,356,026
                                                   -----------    -----------    -----------
INCREASE /DECREASE IN CASH                              51,903          4,771         53,547
                                                   -----------    -----------    -----------
CASH, END OF PERIOD                                $    54,547    $     6,215    $    54,547
                                                   ===========    ===========    ===========
</TABLE>
         The accompanying notes are in integral part of these statements

                                       4
<PAGE>

                   QUEST BIOTECHNOLOGY, INC. AND SUBSIDIARIES
                      (A Company in the Development Stage)
             Notes to Consolidated Financial Statements (Unaudited)

(1)      GENERAL
         -------

         Except as the context otherwise indicates, the term the "Company"
refers to Quest BioTechnology, Inc. and its subsidiaries.

         In the opinion of management, the accompanying unaudited financial
statements include all adjustments considered necessary for a fair presentation.
For further information, refer to the audited financial statements and footnotes
included in the Company's Annual Report on Form 10-KSB-A for the year ended
October 31, 1999.

(2)      INTEREST PAYMENTS ON DEBT OBLIGATIONS
         -------------------------------------

         Interest payments in relation to the Company's debt obligations
amounted to $556,939 cumulative since inception. No interest payments were made
during the nine months ended July 31, 2000 or 1999.

(3)      COMMITMENTS AND CONTINGENCIES
         -----------------------------

GOING CONCERN
-------------

         The Company's ability to continue as a going concern is contingent upon
its ability to raise additional funds to support its activities. The Company is
currently evaluating potential merger and or acquisition candidates with the
help of consultants. To date, no merger and or acquisition agreement has
occurred.

         During fiscal 1997, the Company's Sublicense Agreements pertaining to
it's Recombinant Monoclonal Antibody terminated. The Company expects no further
revenue from this technology.

         During fiscal 1996, the remaining patents pertaining to the Company's
blood substitute technologies expired. The Company expects no future revenue
from its existing blood substitute technologies.

         The Company is presently reevaluating its corporate objectives. Added
sublicense and license agreements could provide the Company with additional
working capital. The Company is also in the process of evaluating various ways
to generate additional working capital in areas unrelated to sublicense and
licensing activities. However, there is no assurance that additional funds can
be raised by the Company.

                                       5
<PAGE>

                   QUEST BIOTECHNOLOGY, INC. AND SUBSIDIARIES
                      (A Company in the Development Stage)
             Notes to Consolidated Financial Statements (Unaudited)


(3)      COMMITMENTS AND CONTINGENCIES - CONTINUED
         -----------------------------------------

LITIGATION
----------

         On April 11, 1994, the Rupp & Bowman Company, the creditor pertaining
to the Company's current portion of long-term debt amounting to $500,000 filed a
complaint against the Company in the State of Michigan Circuit Court for the
County of Oakland. The complaint demanded payment of the $500,000 and related
accrued unpaid interest and legal fees.

         On September 27, 1995, the Company was added as a defendant through an
amendment to a complaint filed in the United States Bankruptcy Court for the
Northern District of Texas Dallas Division by Jeffrey H. Mims, Chapter 7 Trustee
for the Rupp and Bowman Company ("Trustee") against Jack McConnaughy, Eugene
Ivan Schuster, Bert R. Williams, Sr., Quest BioTechnology, Inc., Venture Funding
Ltd., Michigan National Bank and Highland Park Services, Inc. The Rupp and
Bowman Company was a major creditor of AM.

         Pursuant to this complaint the Trustee sought judgement against the
Company and Eugene I. Schuster, the Company's President pertaining to the
Company's above mentioned current portion of long-term debt amounting to
$500,000 plus related accrued unpaid interest and applicable legal fees.

         In addition, the Trustee sought judgement against the Company, the
Company's President, Venture and the Rupp and Bowman Company in the amount of
$2,725,000 plus interest and applicable legal fees. The $2,725,000 is composed
of $2,050,000 and $675,000, respectively, loaned by the Rupp and Bowman Company
and the Company to AM through participation in the permanent post-petition
financing between AM and its primary lender. The Trustee was relating the
$675,000 loaned to AM by the Company to the above mentioned current portion of
long-term debt in the amount of $500,000 plus interest and applicable legal fees
in the event that this debt was not extinguished through other means.

         On May 24, 1996, the court, in a separate action, ordered that Venture,
the Company and the Company's President, Eugene I. Schuster, should recover a
total judgment amount of $2,002,010 plus interest from Bert Williams, Sr.,
President of the Rupp and Bowman Company. The Company's portion of this judgment
was to offset the total amount of the Company's total debt associated with the
above mentioned complaint.

         On June 20, 1996, the Bankruptcy Court dismissed the above mentioned
complaint except for that portion of the complaint pertaining to the Company's
current portion of long-term debt in the amount of $500,000.

                                       6
<PAGE>

                   QUEST BIOTECHNOLOGY, INC. AND SUBSIDIARIES
                      (A Company in the Development Stage)
             Notes to Consolidated Financial Statements (Unaudited)

(3) COMMITMENTS AND CONTINGENCIES - CONTINUED
    -----------------------------------------

LITIGATION - CONTINUED
----------------------

         On October 25, 1996, a final judgment was entered by the Bankruptcy
Court ordering the recovery of the sum of $724,207 with interest thereon at the
rate of 5.64 percent plus the plaintiff's further court costs from the Company
and the Company's President jointly and severally. The final judgment also
provided that if no appeal was taken by any defendant to the District Court, a
credit would be allowed on this judgment in the amount of $20,000. If an appeal
was taken by any defendant to the District Court but not to the Fifth Circuit
Court of Appeals, the defendants would be entitled to a credit amounting to
$10,000. If an appeal was taken to the District and the Fifth Circuit Court but
not to the United States Supreme Court, the defendants would be entitled to a
credit of $5,000.

         On October 31, 1996, the Company and the Company's President filed a
motion to vacate the final judgment and modify the findings.

         The Company's President and Venture urged the Bankruptcy Court to issue
an order abstaining from hearing further matters pertaining to this proceeding
transferring this proceeding to the U.S. District Court in California.

         The Bankruptcy Court dismissed Michigan National Bank and Highland Park
Services, Inc., a creditor and the successor company of the Rupp & Bowman
Company, respectively, pertaining to the counterclaims filed by the Company's
President and Venture, who appealed this order of dismissal with the Dallas
District Court. The Trustee also took a cross-appeal pertaining to the
Bankruptcy Court's dismissal of the claim against the Company and the Company's
President and Venture in the amount of $2,725,000 plus interest and applicable
legal fees as mentioned above.

         On November 21, 1996, the Bankruptcy Court refused to vacate the final
judgment and modify its findings pertaining to the Bankruptcy Court ordering the
recovery from the Company and the Company's President jointly and severally the
sum of $724,207 plus interest and the plaintiff's court costs as described
above. The Company and the Company's President filed objections to the final
judgment and appealed the order to the District Court, Northern District of
Texas, Dallas Division. The appeal was denied.

         On January 13, 1997, the Company, the Company's President, Venture and
Jack McConnaughy filed extensive counter claims against the Trustee and Michigan
National Bank. These counterclaims were intended to be used only as set off
claims.

         An appeal was subsequently filed in the United States Court of Appeals,
Fifth Circuit and was denied on April 8, 1997. The Fifth Circuit Court indicated
that it would consider the issue only after the lower court issued a final
judgment on all issues presented.

                                       7
<PAGE>

                   QUEST BIOTECHNOLOGY, INC. AND SUBSIDIARIES
                      (A Company in the Development Stage)
             Notes to Consolidated Financial Statements (Unaudited)

(3) COMMITMENTS AND CONTINGENCIES - CONTINUED
    -----------------------------------------

LITIGATION - CONTINUED
----------------------

         On September 4, 1997, the United States District Court for the Northern
District of Texas, Dallas Division, set aside the Bankruptcy Court's conclusions
of law and proposed judgment in the proceedings of June 20, 1996 and October 25,
1996 and remanded these issues along with the Plaintiff's defenses and off-set
claims to the Bankruptcy Court for further proceedings and a recommendation. The
District Court also remanded to the Bankruptcy Court certain of the significant
counterclaims of the Plaintiff for further proceedings and either a
recommendation or determination.

         On June 10, 1998 the Company, the Company's President and Venture began
settlement discussions with the Trustee.

         On July 1, 1998 a Settlement and Release Agreement was entered into by
the Company, the Company's President, Venture Funding, Jeffrey Mims - Chapter 7
Trustee and Michigan National Bank. In the agreement the Company, the Company's
President and Venture agreed to collectively pay the Trustee the total sum of
$240,000.

         The Settlement Agreement required that: (1) Within two days from the
date the agreement was fully executed, $25,000 be deposited with the Company's
attorneys for distribution to the Trustee. (2) Within five days from the date on
which the Bankruptcy Court issued an order approving the Settlement and the
Settlement became final and non appealable, the Company, the Company's President
and Venture collectively pay to the Trustee the total sum of $215,000. MNB was
to receive $51,000 from the $215,000 payment made to the Trustee. However, the
$25,000 payment was not made within the two days stipulated thus, nullifying the
Agreement.

         On August 25, 1998, an Amendment to the Settlement and Release
Agreement was reached. In the amended Agreement the Company, the Company's
President and Venture agreed to pay the Trustee the total amount of $350,000,
plus post judgment interest. The judgment was entered by the Bankruptcy Court
any earlier than January 1, 1999 and was never to be entered if the Trustee
received payment by any of the following dates:

                DATE                                SETTLEMENT AMOUNT
                ----                                -----------------
         August 31, 1998                               $240,000
         September 30, 1998                             245,000
         October 31, 1998                               255,000
         November 30, 1998                              265,000
         December 31, 1998                              275,000
         January 1, 1999 or after                       350,000 plus interest

                                       8
<PAGE>

                   QUEST BIOTECHNOLOGY, INC. AND SUBSIDIARIES
                      (A Company in the Development Stage)
             Notes to Consolidated Financial Statements (Unaudited)

(3) COMMITMENT AND CONTINGENCIES - CONTINUED
    ----------------------------------------

LITIGATION - CONTINUED
----------------------

MNB will receive $51,000 plus 40% of any amount above $240,000 received by the
Trustee.

         On January 4, 1999, based on the Amendment to the Settlement and
Release Agreement, a final judgement of $350,000 including interest at 4.513%
per annum was awarded to the Trustee. Venture made payments totaling $90,000 to
the Trustee on behalf of the Company from April 1999 through January 2000.

         The Company extinguished this debt that it had to Venture with the
issuance of Common Stock valued at $0.125 per share. At Venture's request, the
720,000 shares of Common Stock was issued to the following parties designated by
Venture:
         Monis Schuster, Director/Secretary of the Company, received 180,000
shares of Common Stock and, JAS LLC received the remaining 540,000 shares of
Common Stock. JAS LLC is a company owned by the children of Eugene Schuster, the
former Chairman, Chief Executive Officer, President and Director of the Company.
         Eugene Schuster, Monis Schuster and Eugene Schuster's children are
owners of Venture Funding, Ltd., a principal shareholder of the Company.

         During the third quarter of fiscal 2000, the Company made payments
totaling $30,000 to the Trustee. As of July 31, 2000 the outstanding balance due
to the Trustee is $200,000.













                                       9
<PAGE>

                   QUEST BIOTECHNOLOGY, INC. AND SUBSIDIARIES
                      (A Company in the Development Stage)

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
------

RESULTS OF OPERATIONS
---------------------

THE THREE AND NINE MONTHS ENDED JULY 31, 2000 COMPARED TO THE THREE AND NINE
MONTHS ENDED JULY 31, 1999
--------------------------

Quest BioTechnology, Inc. ("Quest") is in the development stage of its
operations and was formed in February 1986 to acquire, develop and commercialize
biotechnological and human health care products and processes, and to acquire
ownership interests in entities that own such products and processes. Quest's
primary activities to date consist of the acquisition of all of the common stock
of PolyCell, Inc. ("PolyCell"), the merging of Hunt Research Corporation and
ICAS Corporation into Quest Blood Substitute, Inc. ("QBS"), a majority owned
subsidiary of Quest, and the acquisition of a 35.4 percent common stock
ownership interest in AM Diagnostics, Inc. ("AM") through Quest's wholly owned
subsidiary Quest American, Inc. By October 31, 1991, the Company's common stock
ownership interest in AM declined to 33.5 percent, and the Company wrote off its
entire investment in AM amounting to $2,469,500. PolyCell, also a development
stage company, was formed in July 1983 to develop and commercialize a
proprietary technology which biologically produces bifunctional monoclonal
antibodies primarily for cancer, cardiovascular and autoimmune therapy and
diagnostic applications. QBS, a development stage company, was formed in
September 1986 to develop and commercialize a series of hemoglobin-based health
care products for use as oxygen carrying fluids. Quest, through its
subsidiaries, PolyCell and QBS, entered into agreements with several health care
companies sublicensing and licensing the technologies of PolyCell and QBS.
However, the agreements pertaining to QBS' blood substitute patents have expired
due to the expiration of the blood substitute patents. PolyCell's sublicense
agreements pertaining to its Recombinant Monoclonal Antibody technology have
terminated and the Company does not expect to execute any new sublicense
agreements with regards to this technology. SEE FINANCIAL CONDITION.

         No operating revenues were earned for the nine months ended July 31,
2000. This is in comparison to $5,000 in revenues earned for the same period in
fiscal 1999. The decline in revenues is due to the termination of the Company's
Sublicense Agreements pertaining to its Recombinant Monoclonal Antibody during
fiscal 1997 and the expiration of the Company's blood substitute patent's during
fiscal 1996. The Company expects no future revenue from its blood substitute
technologies. Interest income of $5,743 was earned for the period.

         Net loss of $85,361 was recognized for the nine month period ended July
31, 2000 compared to a net loss of $42,313 for the same period in fiscal 1999.
The increase in net loss is due to the Company's loss of revenues previously
stated and an increase in general and administrative expenses. Increases in
general and administrative expense is primarily due to auditing, travel and
professional expenses amounting to $21,250, $16,400 and $4,995 respectively.
Travel expenses are being incurred by the Company because it is seeking
potential merger and or acquisition candidates.


                                       10
<PAGE>

                   QUEST BIOTECHNOLOGY, INC. AND SUBSIDIARIES
                      (A Company in the Development Stage)

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION - CONTINUED
------

FINANCIAL CONDITION
-------------------

JULY 31, 2000 COMPARED TO JULY 31, 1999
---------------------------------------

         Cash requirements for the Company's operations during the nine months
period ended July 31, 2000 were met from the sale of Eight Hundred Seventy Five
Thousand (875,000) shares of Common Stock, with a par value of $.01. The
proceeds from the sale of these shares totaled $368,750; total par value of
$8,750 and a paid in excess of par equal to $360,000. Six Hundred Twenty Five
Thousand (625,000) of these shares are from the exercise of warrants issued to
consultants in December 1999 (250,000 shares at $.125 per share) and February
2000 (375,000 shares at $.40 per share). On April 14, 2000 the Company loaned
and established a note receivable in the amount of $187,500 with Wavemat Inc., a
Delaware Corporation located in Plymouth, Michigan. The note bears an interest
rate of 1% above the Prime Rate and is payable in two years. In consideration of
this loan to Wavemat Inc., the Company will receive a seven year Warrant to
purchase One Million (1,000,000) shares of Wavemat's common stock at an exercise
price of $.01 per share. At the time of this agreement Wavemat's common stock
did not have a reported price on NASD or OTCBB. Monis Schuster, the
Secretary/Director of the Company is the CEO and Member of the Board of Wavemat
Inc. He is also President, and a shareholder in Venture Funding, Ltd., a
principal shareholder of the Company, and of Wavemat Inc.

         No revenues were earned for the three-month period ended July 31, 2000.
This is in comparison to the $5,000 in revenues earned for the same period in
fiscal 1999. The revenues earned in fiscal 1999 represent the last of the
Company's sublicense and licensing fees. The Company expects no future revenues
from these activInterest income of $5,743 was earned for the period.

         General and administrative expenses for the three-month period ending
July 31, 2000 was $28,590 compared to $14,623 for the same period in fiscal
1999. The 48% increase in general and administrative expenses is primarily due
to travel expenses of $8,762 that the Company incurred as part of its efforts to
secure a merger and or acquisition candidate. To date, no merger or acquisition
has been made.

         See Note 3 to the Consolidated Financial Statements for disclosures
relating to litigation pertaining to the Company.

         During fiscal 1997, the Company's sublicense agreements pertaining to
its Recombinant Monoclonal Antibody technology terminated. The Company expects
no future revenues from this source.

                                       11
<PAGE>

                   QUEST BIOTECHNOLOGY, INC. AND SUBSIDIARIES
                      (A Company in the Development Stage)

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION - CONTINUED
------

FINANCIAL CONDITION- CONTINUED
------------------------------

JULY 31, 2000 COMPARED TO JULY 31, 1999 - CONTINUED
---------------------------------------------------

         During fiscal 1996, the remaining patents pertaining to the Company's
blood substitute technologies expired. The Company expects no future revenue
from its blood substitute technologies.

         As indicated in Note 3 to the Consolidated Financial Statements, the
Company's ability to continue as a going concern is contingent upon its ability
to raise additional funds to support its activities. The Company is currently
evaluating potential merger and or acquisition candidates with the help of
consultants. To date, no merger and or acquisition agreement has occurred.

         As of July 31, 2000, the Company had a negative working capital
position of $32,349 compared to a negative working capital position of $411,676
on October 31, 1999.

























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<PAGE>

                   QUEST BIOTECHNOLOGY, INC. AND SUBSIDIARIES
                      (A Company in the Development Stage)

                           PART II - OTHER INFORMATION

ITEM 5.  CHANGES IN SECURITIES AND USE OF PROCEEDS.
------

         During the nine month period ended July 31, 2000 the Company sold Eight
Hundred Seventy Five Thousand (875,000) shares of Common Stock with a par value
of $.01 per Share. Six Thousand Two Hundred Twenty Five (625,000) of the shares
are from the exercise of warrants issued to consultants in December 1999
(250,000 shares at $.125 per share) and February 2000 (375,000 shares at $.40
per share). The proceeds from these sales totaled $368,750. To date, these
proceeds have provided the Company with working capital. The Company has loaned
and established a note receivable amounting to $187,500 with Wavemat Inc., a
Company located in Plymouth, Michigan. The note bears interest at the rate of 1%
above Prime and is for a period of two years. As consideration for this loan to
Wavemat Inc., the Company will receive a seven year Warrant to purchase One
Million (1,000,000) Shares of Wavemat's Common Stock at an exercise price of
$.01 per share. At the time of this agreement Wavemat's Common Stock did not
have a reported price on NASD or the OTCBB. Monis Schuster, the
Secretary/Director of the Company is CEO and Member of the Board of Wavemat Inc.
He is also the President and a partner in Venture Funding, Ltd., a principal
shareholder of the Company, and of Wavemat Inc.
         Monis Schuster, the Secretary/Director of the Company is CEO, Member of
the Board, and a minority shareholder of Wavemat Inc. He is also President and a
partner in Venture Funding, Ltd., a principal shareholder of the Company, and of
Wavemat Inc.

         On February 2, 2000 the Company's Board of Directors voted to issue
Venture Funding, Ltd., a Warrant for 2,000,000 shares of Common Stock par value
$.01 at an exercise price of $.3125, the market price of the Company's common
stock on this date. The warrant is exercisable six months from the date of grant
and expires seven years from the date of grant. The warrant is granted in
consideration of Venture's considerable investment in the Company since the
Company's inception. Venture Funding, Ltd., is a principal shareholder of the
Company and Monis Schuster, the Company's Secretary and Director, is the
President of Venture. He is also a partner in Venture Funding, Ltd.

         On February 11, 2000, the Company's Board of Directors voted to issue
warrants immediately exercisable to the following consultants as follows:

         A warrant for 375,000 shares of Common Stock, valued at $0.40 per share
to be issued to a consultant working to secure merger/acquisition candidates and
financing for the Company in Europe. (This warrant was exercised March 2000.)

         Warrants for 500,000 and 350,000 shares of Common Stock valued at $0.50
per share to be issued to consultants working to secure merger/acquisition
candidates and financing for the Company.



                                       13
<PAGE>

                   QUEST BIOTECHNOLOGY, INC. AND SUBSIDIARIES
                      (A Company in the Development Stage)

                           PART II - OTHER INFORMATION

ITEM 5.  CHANGES IN SECURITIES AND USE OF PROCEEDS - CONTINUED
------

         A warrant for 1,000,000 shares of Common Stock valued at $1.00 per
share to be issued to a consultant working to secure merger/acquisition
candidates and financing for the Company in Europe.

         These warrants expire seven years from the date of grant.

         The Board also voted to waive the six-month exercise period for a
warrant previously issued on December 30, 1999. The warrant was for 250,000
shares of Common Stock valued at $0.125 per share, and was issued to a
consultant working with the Company to secure merger/acquisition candidates.
(This Warrant was exercised April 2000.)

         The proceeds from these warrants will be used by the Company to support
its efforts to acquire a merger and or acquisition candidate, and working
capital.

         On February 18, 2000 the Company's Board of Directors voted to issue a
warrant to a consultant for 500,000 shares of Common Stock, par value $.01 at an
exercise price of $.5156. The warrant is exercisable six months from the date of
grant and expires seven years from the grant date. The warrant is in
consideration of legal services being provided to the Company.

         On April 16, 2000 the Company's Board of Directors voted to give Jack
Faxon, a Board member since the Company's inception, a bonus of $7,000. The
bonus was granted in consideration of Jack Faxon's long and trusted service to
the Company.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
------
                  (a)      Exhibits:

                           None.

                  (b)      Reports on Form 8-K:

                           No reports on Form 8-K were filed during the quarter
                           ended July 31, 2000.




                                       14
<PAGE>


                                   SIGNATURES

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

                                        QUEST BIOTECHNOLOGY, INC.
                                        -------------------------
                                               Registrant

Date:   September 13, 2000              /s/ Todd M. Schuster
                                        --------------------
                                        Todd M. Schuster, Acting Chairman of the
                                        Board, Acting President and Acting Chief
                                        Executive Officer and Director (Acting
                                        Principal Executive Officer)

Date:   September 13, 2000              /s/ Lorna M. O. Anderson
                                        ------------------------
                                        Lorna M. O. Anderson,
                                        Chief Financial Officer
                                        (Principal Financial Officer)




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