U.S. 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, 2001
                                         -------------

         [ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
                  THE EXCHANGE ACT


         Commission File number: 0-19879
                                 -------


                         BioSpecifics Technologies Corp.
                         -------------------------------
        (Exact name of Small Business Issuer as Specified in Its Charter)

                  Delaware                              11-3054851
                  --------                              -----------
            (State of Incorporation)             (IRS Employer I.D. Number)

                                  35 Wilbur St.
                               Lynbrook, NY 11563
                               ------------------
                    (Address of principal executive offices)

                                 (516) 593-7000
                                 --------------
                (Issuer's telephone number, including area code)

Check whether the issuer: (1) has filed all reports required by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.

Yes [X ]  No [ ]


                      APPLICABLE ONLY TO CORPORATE ISSUERS:

         State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 4,545,516 shares of Common
Stock, $0.001 par value as of September 1, 2001.

         Transitional Small Business Disclosure Format (check one):
                                    Yes [ ] No [x]



                                  Page 1 of 14

<PAGE>
<TABLE>
<CAPTION>

                                                   INDEX

                                                                                                       Page
<S>                                                                                                     <C>

PART I - FINANCIAL INFORMATION                                                                           3


Item 1.  Financial Statements                                                                            3


Consolidated Financial Statements:


         Balance Sheets as of July 31, 2001 (unaudited) and January 31, 2001                             3


         Statements  of  Income  for the  Three  and Six  Months  Ended  July  31,  2001 and 2000
         (unaudited)                                                                                     4


         Statements of Cash Flows for the Six Months Ended July 31, 2001 and 2000 (unaudited)
                                                                                                         5


         Notes to Consolidated Interim Financial Statements (unaudited)                                  6


Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations
                                                                                                         8


Part II - Other Information                                                                             13


SIGNATURES                                                                                              14
</TABLE>

                                       2
<PAGE>
                          PART I. FINANCIAL INFORMATION
                          Item 1. Financial Statements


BioSpecifics Technologies Corp. and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>

                                                                 (Unaudited)
                                                                   July 31,       January 31,
ASSETS                                                               2001             2001
                                                                 -----------      -----------
<S>                                                              <C>              <C>
Cash and cash equivalents                                        $ 1,525,897      $   569,170
Marketable securities                                                  3,026          114,187
Accounts receivable                                                1,203,312        1,165,932
Inventory                                                          1,155,418        1,930,044
Income tax refund receivable                                         150,000          150,000
Prepaid expenses and other current assets                             24,773           27,946
                                                                 -----------      -----------
   Total current assets                                            4,062,426        3,957,279

Property, plant, and equipment - net                               5,244,385        4,893,167
Deferred tax assets                                                  136,206          136,206
Due from related parties                                             128,280          128,280
Other assets                                                          28,812           28,812
                                                                 -----------      -----------

TOTAL ASSETS                                                     $ 9,600,109      $ 9,143,744
                                                                 ===========      ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses                            $ 1,721,452      $ 1,782,317
Notes payable to related parties                                      13,760           13,510
Deferred revenue                                                      45,000           45,000
                                                                 -----------      -----------
     Total current liabilities                                     1,780,212        1,840,827

Minority interest in subsidiaries                                    247,948          239,448

STOCKHOLDERS' EQUITY
Series A Preferred stock, $.50 par value; 700,000
  shares authorized; none outstanding                                   --               --
Common stock, $.001 par value; 10,000,000 shares authorized;
4,906,896 shares issued at July 31, 2001 and
4,891,146 shares issued at January 31, 2001                            4,907            4,891
Additional paid-in capital                                         3,785,109        3,748,375
Retained earnings                                                  6,663,069        6,358,331
Accumulated other comprehensive income                                17,577           18,151
Treasury stock - 361,380 shares, at cost                          (1,911,237)      (1,911,237)
Notes receivable from chairman                                      (987,476)      (1,155,042)
                                                                 -----------      -----------
    Stockholders' equity                                           7,571,949        7,063,469

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                       $ 9,600,109      $ 9,143,744
                                                                 ===========      ===========
</TABLE>

See accompanying notes to consolidated financial statements.

                                       3
<PAGE>
Biospecifics Technologies Corp. and Subsidiaries
Consolidated Statements of Income
<TABLE>
<CAPTION>

                                                              Unaudited                       Unaudited
                                                         Three months ended                Six months ended
                                                              July 31,                          July 31,
                                                       2001              2000             2001            2000
                                                    --------------------------------------------------------------
Revenues:
<S>                                                 <C>              <C>              <C>              <C>
   Net sales                                        $ 1,561,116      $ 1,585,578      $ 3,772,318      $ 2,575,383
   Royalties                                            597,728          478,813        1,178,998          928,011
                                                    -----------      -----------      -----------      -----------
                                                      2,158,844        2,064,391        4,951,316        3,503,394
                                                    -----------      -----------      -----------      -----------

Costs and Expenses:
   Cost of sales                                      1,223,604          763,570        3,123,092        1,243,357
   Selling, general and administrative                  512,565          702,225          962,153        1,254,552
   Research and development                             291,663          364,951          567,784          776,630
                                                    -----------      -----------      -----------      -----------
                                                      2,027,832        1,830,746        4,653,029        3,274,539
                                                    -----------      -----------      -----------      -----------

Income from operations                                  131,012          233,645          298,287          228,855

Other income (expense)
  Investment and other income (loss)                      6,923         (144,994)          17,965         (201,509)
  Interest expense                                       (1,930)          (1,262)          (3,014)          (2,845)
                                                    -----------      -----------      -----------      -----------
                                                          4,993         (146,256)          14,951         (204,354)
                                                    -----------      -----------      -----------      -----------

Income before taxes and minority interest               136,005           87,389          313,238           24,501
Income tax benefit                                            0            5,930                0            2,900
                                                    -----------      -----------      -----------      -----------
Income before minority interest                         136,005           93,319          313,238           27,401
Minority interest in net income of subsidiaries          (6,000)          (5,900)          (8,500)          (5,900)
                                                    -----------      -----------      -----------      -----------
Net income                                          $   130,005      $    87,419      $   304,738      $    21,501
                                                    ===========      ===========      ===========      ===========


Basic net income per common share                   $      0.03      $      0.02      $      0.07      $      0.01
                                                    ===========      ===========      ===========      ===========


Weighted-average common shares outstanding            4,534,373        4,529,766        4,532,095        4,529,766
                                                    ===========      ===========      ===========      ===========


Diluted net income per common share                 $      0.03      $      0.02      $      0.07      $      0.00
                                                    ===========      ===========      ===========      ===========

Weighted-average common and dilutive
potential common shares outstanding                   4,644,808        4,557,671        4,601,244        4,586,121
                                                    ===========      ===========      ===========      ===========
</TABLE>



See accompanying notes to consolidated financial statements

                                       4
<PAGE>
BioSpecifics Technologies Corp. and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>

                                                                            (unaudited)
                                                                         Six months ended
                                                                            July 31,
CASH FLOWS FROM OPERATING ACTIVITIES:                                 2001             2000
                                                                  -----------      -----------
<S>                                                               <C>              <C>
  Net income                                                      $   304,738      $    21,501
  Adjustments to reconcile net income
  to net cash provided by/(used in) operating activities:
    Depreciation                                                      194,500           76,242
    Options issued for services                                        30,000                0
    (Gain) loss on marketable securities - net                          1,320          344,122
    Minority interest in income of subsidiaries                         8,500            5,900
    Deferred tax assets                                                     0          (58,966)
  Changes in operating assets & liabilities:
    Accounts receivable                                               (37,380)         474,496
    Marketable securities - net                                       109,841         (265,505)
    Inventory                                                         774,626          107,631
    Prepaid and other current assets                                    3,173           60,885
    Accounts payable & accruals                                       (60,865)        (327,304)
    Income taxes payable                                                    0           55,604
    Increase in deferred revenue                                            0          421,978
                                                                  -----------      -----------
      Net cash provided by operating activities                     1,328,453          916,584
                                                                  -----------      -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Decrease (increase) in notes receivable from chairman - net         167,566         (276,045)
  Advances to related parties                                               0           (8,250)
  Expenditures for plant, property and equipment                     (545,718)      (1,695,790)
                                                                  -----------      -----------
      Net cash used in investing activities                          (378,152)      (1,980,085)
                                                                  -----------      -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Increases in notes payable to related parties                           250                0
  Exercises of stock options                                            6,750                0
                                                                  -----------      -----------
      Net cash provided by financing activities                         7,000                0
                                                                  -----------      -----------

EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS                    (574)            (906)
                                                                  -----------      -----------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                      956,727       (1,064,407)

  CASH AND EQUIVALENTS:
  Beginning of Period                                                 569,170        4,221,447
                                                                  -----------      -----------
  End of Period                                                   $ 1,525,897      $ 3,157,040
                                                                  ===========      ===========

SUPPLEMENTAL DISCLOSURE
  Cash paid during period for interest                            $     3,016      $     2,845
                                                                  ===========      ===========
  Cash paid during period for income taxes                        $     1,188      $     9,414
                                                                  ===========      ===========
</TABLE>

See accompanying notes to consolidated financial statements

                                       5
<PAGE>



                BIOSPECIFICS TECHNOLOGIES CORP. AND SUBSIDIARIES
               NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                                  JULY 31, 2001
                                   (UNAUDITED)

1.  Description of Business and Basis of Presentation
    -------------------------------------------------

The accompanying consolidated financial statements include the accounts of
BioSpecifics Technologies Corp. (the "Company"), its 97.2% majority-owned
subsidiaries, Advance Biofactures Corp. ("ABC") and Advance Biofactures of
Curacao N.V. ("ABC - Curacao") and its wholly-owned subsidiary, Biospecifics
Pharma GmbH ("Bio Pharma") of Germany. All significant intercompany transactions
and balances have been eliminated in consolidation.

The Company produces a fermentation-derived enzyme named Collagenase ABC (the
"product" or "enzyme") that is licensed by the U.S. Food and Drug Administration
(the "FDA") and is indicated for topical debridement of dermal ulcers and burn
wounds. The Company operates a production facility in Lynbrook, New York (the
"Lynbrook Plant or Facility") and in Curacao, Netherlands Antilles (the "Curacao
Plant or Facility"). The Company is also researching and developing additional
products derived from this enzyme for potential use as pharmaceuticals.

The Company derives most of its net sales of product revenues and all of its
royalty revenues from one customer, Knoll Pharmaceutical Company ("KPC"). KPC
acts as the Company's contract manufacturer by compounding the product into
Collagenase Santyl(R) (Santyl(R)), an ointment used to treat various types of
skin wounds, particularly chronic dermal ulcers and severely burned areas. The
Company and KPC are parties to a licensing agreement expiring in August 2003
providing KPC with exclusive rights to market Santyl(R) in North America in
exchange for purchases of the product and royalties on KPC's Santyl(R) sales to
distributors. The license agreement has an automatic ten-year renewal clause
unless KPC elects not to renew the agreement. The rest of the Company's revenues
come from product sales to pharmaceutical companies in Brazil and India.

In January 2000, pursuant to a sublicense and assignment agreement, KPC
sublicensed its rights to Smith & Nephew, Inc. ("S&N") with the consent of ABC.
Under the sublicense, KPC will continue to purchase the product from the Company
and manufacture Santyl(R). S&N will market the Santyl(R). In connection with the
sublicense, the Company entered into several contemporaneous agreements with KPC
and S&N. These agreements included one allocating responsibility under the KPC
Agreement among ABC, KPC, and S&N for both the sublicense and license period.
Another agreement imparts certain obligations upon ABC to address the FDA issues
concerning the Curacao and Lynbrook manufacturing facilities. (See "Liquidity,
Capital Resources, and Changes in Financial Condition".) KPC will assign its
license rights in the KPC Agreement to S&N in the event of FDA approval of a
compliance program being undertaken by ABC. If the license rights are assigned
to S&N, the KPC agreement will be automatically extended at that time until
2013.

In March 2001, KPC became an indirect wholly owned subsidiary of Abbott
Laboratories ("Abbott"). Therefore, all references, which in the past were made
to "KPC", have been changed to "Abbott".


                                       6
<PAGE>


2.  Interim Financial Statements
    ----------------------------

In the opinion of management, the accompanying consolidated financial statements
of the Company have been prepared in accordance with accounting principles
generally accepted in the United States of America for interim financial
information and reflect all adjustments, consisting of normal recurring accrual
adjustments, considered necessary to present fairly, in all material respects,
the Company's consolidated balance sheet as of July 31, 2001, the consolidated
statements of income for the three and six months ended July 31, 2001 and 2000,
and consolidated statements of cash flows for the six months ended July 31, 2001
and 2000.

The results of operations for interim periods are not necessarily indicative of
the results to be expected for an entire fiscal year, and the results for the
current interim period are not necessarily indicative of results to be expected
in other interim periods. These interim financial statements should be read in
conjunction with the Company's Form 10-KSB for the fiscal year ended January 31,
2001.

3.  Net income per share
    --------------------

Basic net income per share ("EPS") excludes dilution and is computed by dividing
earnings available to common stockholders by the weighted-average number of
common shares outstanding for the period. Diluted EPS reflects the dilution that
would occur if common stock equivalents were exercised or converted into common
stock or resulted in the issuance of common stock that then shared in the
earnings of the Company. During the three months ended July 31, 2001 and 2000,
dilutive common stock options included in diluted EPS amounted to 110,435, and
27,905, respectively. During the six months ended July 31, 2001 and 2000,
dilutive common stock options included in diluted EPS amounted to 69,149 and
56,355, respectively.

4.  Segment Information
    -------------------

The Company is engaged in one segment, specifically research, development and
production of pharmaceutical products. Operations in this business segment take
place in one location in the United States of America, one location in Curacao,
Netherlands Antilles, and one location in Germany. As of July 31, 2001,
identifiable assets in the United States of America approximated $4.1 million
and identifiable assets in Curacao, Netherlands Antilles approximated $5.5
million. For the three months and six months ended July 31, 2001, total revenues
derived from Abbott in the United States of America approximated $1.9 million
and $4.6 million, respectively, and $255,000 and $352,000, respectively from
customers in Brazil and India. For the three and six months ended July 31, 2000,
total revenues derived from KPC in the United States of America approximated
$3.0 million and $1.8 million, respectively, and $482,000 and $234,000,
respectively from customers in Brazil and India. There are minimal assets and
operations in Germany.

5.  Stockholders' equity and other comprehensive income
    ---------------------------------------------------

The change to stockholders' equity during the periods presented include
increases to retained earnings due to net income. Increases in common stock and
additional paid in capital include the issuance of common stock for services,
fully vested and non-forfeitable stock options granted to non-employees, and the
issuance of common stock resulting from the exercise of stock options. Other
comprehensive income represents gains and losses resulting from translation of
foreign subsidiaries' assets and liabilities into the U.S. dollar at period-end
exchange rates, and revenues and expenses into the U.S. dollar at average
exchange rates during the respective periods.

6.  Liquidity and Financial Condition
    ---------------------------------

See "Liquidity, Capital Resources, and Changes in Financial Condition" for a
discussion about the Company's response to FDA inspectional observations and its
effect on the Company's financial condition.


                                       7
<PAGE>

Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

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

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
--------------------------------------------------------------------------------

Information provided by the Company or statements contained in this report or
made by its employees, if not historical, are forward looking information, which
involve uncertainties and risk. The Company cautions readers that important
factors may affect the Company's actual results and could cause such results to
differ materially from forward-looking statements made by or on behalf of the
Company.

Such factors include, but are not limited to, government regulation, the ability
of the Company to complete the renovation of its production facilities and
comply with the Form 483 and FDA Letter, the Company's estimate that its
inventory of product is sufficient until the renovated facilities can release
product again, changing market conditions, the impact of competitive products
and pricing, the timely development and approval by the FDA and foreign health
authorities of potential products in development, market acceptance of the
Company's potential products, and other risks detailed herein and in other
filings the Company makes with the Securities and Exchange Commission. Further,
any forward looking statement or statements speak only as of the date on which
such statements were made, and the Company undertakes no obligation to update
any forward looking statement or statements to reflect events or circumstances
after the date on which such statement or statements were made.

The Company incorporates by reference the Management's Discussion and Analysis
of Financial Condition and Results of Operations set forth in its Form 10-KSB
for the fiscal year ended January 31, 2001.

                    THREE MONTHS ENDED JULY 31, 2001 AND 2000
                    -----------------------------------------

Net sales - Net sales for the three months ended July 31, 2001 and 2000 were
$1,561,116 and $1,585,578 respectively, representing a decrease of $24,462 or
2%.

During both periods the Company delivered Collagenase ABC from inventory that
was produced prior to the voluntary closure and renovation of production
facilities that began in March 2000 ("previously produced work in process
inventory"). The timing of deliveries to Abbott depends upon when the final
stage processes for this previously produced work in process inventory are
complete. The Company does not anticipate that there will be any deliveries of
Collagenase ABC to Abbott during the fiscal third quarter that will end October
31, 2001 because remaining previously produced work in process inventory will
not have completed final stage processing by that time. The Company anticipates
that some of this inventory will be completed and delivered to Abbott during the
fiscal fourth quarter of the year ending January 31, 2002, although there can be
no assurance that it will be able to do so.

Royalties - Royalties for the three months ended July 31, 2001 and 2000 were
$597,728 and $478,813 respectively, representing an increase of $118,915 or 25%.
As reported to the Company by Abbott, S&N sold greater amounts of Collagenase
Santyl(R) Ointment, on which the royalty is earned, during the three months
ended July 31, 2001 than it did in the year ago period.
We consider the calendar year 2000 to have been a transition year in which S&N
began marketing Collagenase Santyl(R) Ointment, as discussed in Note 1 to the
Company's Consolidated Interim Financial Statements.

                                       8
<PAGE>

Cost of sales - Cost of sales for the three months ended July 31, 2001 and 2000
were $1,223,604 and $763,570, respectively, representing an increase of
$460,034, or 60%. The gross profit margin decreased to 22% during the three
months ended July 31, 2001 compared to 52% for the 3 months ended July 31, 2000
due to sales of higher cost previously produced work in process inventory,
declining levels of this inventory being processed in the final stages, and
provision for potential warranty costs. During the quarter ended July 31, 2001,
the Company began producing new inventory at the renovated Curacao facility
(which is subject to FDA approval, as described below), besides continuing the
processing of previously produced work in process inventory. This new inventory
and future production should absorb more of the Company's production costs in
future quarters.

From March 2000 to April 30, 2001, the Company renovated its Collagenase ABC
production facilities and thus could not produce any new inventory (see
"Liquidity, Capital Resources, and Changes in Financial Position"). Production
costs, primarily wages, benefits, and production overhead during that period
were allocated to the Company's previously produced work in process inventory
that was and still is being processed, but at more limited levels than could be
during normal production.

Starting in May 2001, the Company resumed Collagenase ABC enzyme production at
its renovated facility in Curacao at a limited level. The Company cannot sell
the enzyme it is now producing at the renovated facility to Abbott until the FDA
approves a supplement (the "supplement') to ABC's Establishment License. While
we allocated certain production costs to this new inventory, the Company is
dependent on the FDA's approval of the renovated plant in Curacao for the
resumption of normal operations. See "Liquidity, Capital Resources, and Changes
in Financial Condition".

Selling, general and administrative - Selling, general and administrative
("SG&A") expenses for the three months ended July 31, 2001 and 2000 were
$512,565 and $702,225, respectively, representing a decrease of $189,660 or 27%.
During the prior year quarter ended July 31, 2000, the Company engaged, to a
greater extent versus the current period, consultants to assist in responding to
FDA inspectional observations on FDA's Form 483 ("483's") from FDA inspectors,
and the associated costs were included in SG&A. In addition, production lab
personnel were more highly involved in the immediate response effort in the
prior year period as compared to the current period. Those costs usually
allocated to production are included in SG&A. The Company anticipates that into
the foreseeable future consultation costs and involvement of its lab personnel
in responding to the 483s will continue, however at reduced amounts. See
"Liquidity, Capital Resources, and Changes in Financial Condition".

Research and development - Research and development ("R&D") expenses for the
three months ended July 31, 2001 and 2000 were $291,663 and $364,951,
respectively, representing a decrease of $73,288, or 20%. During the quarter
ended July 31, 2001, mid-stage clinical trial in the U.S. for Dupuytren's
disease and Peyronie's disease were mostly completed, hence the decline in
expense. The Company anticipates that R&D expenses may begin to increase again
as trials for Dupuytren's and Peyronie's diseases advance to new phases.

Other income (loss)- net - Other income (loss)- net for the three months ended
July 31, 2001 and 2000 was $4,993 and ($146,256) respectively. The increase of
$151,249 was primarily due to the recognition of losses in the year ago period
from decreasing values of equity securities held as trading security
investments. There was an insignificant level of funds available for investment
during the three months ended July 31, 2001 versus the year ago period due to
expenditures for renovation of facilities.

                                       9
<PAGE>

Income tax benefit - The income tax benefit for the three months ended July 31,
2001 and 2000 was $0 and $5,930, respectively, a decrease of $5,930. The Company
recognized tax credits for research and development in the year-ago period.

                     SIX MONTHS ENDED JULY 31, 2001 AND 2000
                     ---------------------------------------

Net sales - Net sales for the six months ended July 31, 2001 and 2000 were
$3,772,318 and $2,575,383, respectively, representing a $1,196,935, or 46%
increase. The increase was due to a 63% increase in deliveries of Collagenase
ABC to Abbott in the United States, and a 37% increase in deliveries to
pharmaceutical companies in countries outside the United States.

As explained above, during both periods the Company delivered Collagenase ABC
from inventory that was produced prior to the voluntary closure and renovation
of production facilities that began in March 2000 ("previously produced work in
process inventory"). The timing of deliveries to Abbott depends upon when the
final stage processes for this previously produced work in process inventory are
complete. The Company does not anticipate that there will be any deliveries of
Collagenase ABC to Abbott during the fiscal third quarter that will end October
31, 2001 because remaining previously produced work in process inventory will
not have completed final stage processing by that time. The Company anticipates
that some of this inventory will be completed and delivered to Abbott during the
fiscal fourth quarter of the year ending January 31, 2002, although there can be
no assurance that it will be able to do so.

Royalties - Royalties for the six months ended July 31, 2001 and 2000 were
$1,178,998 and $928,011, respectively, representing a $250,987 or 27% increase.
As reported to the Company by Abbott, S&N sold greater amounts of Collagenase
Santyl(R) Ointment, on which the royalty is earned, during the three months
ended July 31, 2001 than it did in the year ago transition period of 2000, the
year when S&N began marketing Collagenase Santyl(R) Ointment, as discussed in
Note 1 to the Company's Consolidated Interim Financial Statements.

Cost of sales - Cost of sales for the six months ended July 31, 2001 and 2000
were $3,123,092 and $1,243,357, respectively, representing an increase of
$1,879,735 or 151% due to higher net sales, and a lower gross profit margin. The
gross profit margin decreased to 17% during the six months ended July 31, 2001
compared to 52% for the 6 months ended July 31, 2000 due to sales of higher cost
previously produced work in process inventory, declining levels of this
inventory being processed in the final stages, and provision for potential
warranty costs. During the quarter ended July 31, 2001, the Company began
producing new inventory at the renovated Curacao facility, besides continuing
the processing of the previously produced work in process inventory. This new
inventory and future production should absorb more of the Company's production
costs in future quarters. Because of the resumption of production, the profit
margin during the three months ended July 31, 2001 improved to 22%, as discussed
above.

From March 2000 to April 30, 2001, the Company renovated its Collagenase ABC
production facilities and thus could not produce any new inventory (see
"Liquidity, Capital Resources, and Changes in Financial Position"). Production
costs, primarily wages, benefits, and production overhead during that period
were allocated to the Company's previously produced work in process inventory
that was and still is being processed, but at more limited levels than could be
during normal production.

Starting in May 2001, the Company resumed Collagenase ABC enzyme production at
its renovated facility in Curacao at a limited level. The Company cannot sell
the enzyme it is now producing at the renovated facility to Abbott until the FDA
approves a supplement (the "supplement') to ABC's Establishment License. While
we allocated certain production costs to this new inventory, the Company is
dependent on the FDA's approval of the renovated plant in Curacao for the
resumption of normal operations. See "Liquidity, Capital Resources, and Changes
in Financial Condition".


                                       10
<PAGE>

Selling, general and administrative - SG&A expenses for the six months ended
July 31, 2001 and 2000 were $962,153 and $1,254,552, respectively, representing
a $292,399, or 23% decrease. As explained above, during the prior year six month
period ended July 31, 2000, the Company engaged, to a greater extent versus the
current period, consultants to assist in responding to FDA inspectional
observations on FDA's Form 483 ("483's") from FDA inspectors, the cost of which
were included in SG&A. In addition, production lab personnel were more highly
involved in the response effort in the prior year period as compared to the
current year period. Those costs usually allocated to production are included in
SG&A. The Company anticipates that into the foreseeable future consultation
costs and involvement of its lab personnel in responding to the 483s will
continue, however at reduced amounts. See "Liquidity, Capital Resources, and
Changes in Financial Condition".

Research and development - R&D expenses for the six months ended July 31, 2001
and 2000 were $567,784 and $776,630, respectively, representing a decrease of
$208,846 or 27%. During the six months ended July 31, 2001, mid-stage clinical
trial in the U.S. for Dupuytren's disease and Peyronie's disease were mostly
completed, hence the decline in expense. The Company anticipates that R&D
expenses may begin to increase again as trials for Dupuytren's and Peyronie's
diseases advance to new phases.

Other income (loss) - net - Other income (loss) - net for the six months ended
July 31, 2001 and 2000 was $14,951 and ($204,354), respectively. The increase of
$219,305 was due primarily the recognition of losses in the year ago period from
decreasing values of equity securities held as trading security investments.
There was an insignificant level of funds available for investment during the
six months ended July 31, 2001 versus the year ago period due to expenditures
for renovation of facilities.

Income tax benefit - The income tax benefit for the six months ended July 31,
2001 and 2000 was $0 and $2,900, respectively, a decrease of $2,900. The Company
recognized tax credits for research and development in the year-ago period.

LIQUIDITY, CAPITAL RESOURCES AND CHANGES IN FINANCIAL CONDITION
---------------------------------------------------------------

The Company's primary source of working capital is from operations, which
includes sales of product, royalties, and periodic license fees. At July 31,
2001, the Company had working capital of approximately $2.3 million, which
includes cash and cash equivalents, and marketable securities of approximately
$1.5 million. The principal sources of cash during the six months ended July 31,
2001 were $1.3 million from operating activities, and net repayment of notes due
from chairman of approximately $167,000. The principal use of cash during the
six months ended July 31, 2001 was approximately $546,000 used to purchase
plant, property and equipment for the Curacao and Lynbrook facilities.

The Company's manufacturing facilities in New York and Curacao are registered
with, and licensed by, the FDA. As previously disclosed, in January and March of
1999, ABC was issued a List of Inspectional Observations on FDA Form 483 (the
"Form 483") from FDA inspectors, citing numerous inspectional observations
relating to deficiencies in the Company's compliance with FDA regulations at its
Lynbrook, New York and Curacao, Netherlands Antilles facilities. In addition, in
May 1999, ABC received a letter from the FDA (the "FDA Letter") citing certain
inspectional observations relating to deficiencies at its Lynbrook, New York
facility, Curacao, Netherlands Antilles facility, and contract manufacturing
facility at KPC.

The FDA Letter advised ABC that the FDA would institute formal proceedings to
revoke ABC's Establishment License to manufacture Collagenase Santyl(R) Ointment
unless ABC provided satisfactory assurances to the FDA, including submitting to
the FDA a comprehensive plan of corrective action to address the observations
listed in the Form 483 and the FDA Letter, and otherwise demonstrate compliance
with applicable regulatory requirements.

                                       11
<PAGE>

The Company provided the FDA with a plan of corrective action and had a number
of meetings with the FDA to discuss the plan of corrective action and the
renovation of the Curacao production facility. ABC has submitted a number of
periodic updates to the FDA on progress under the plan. ABC hired outside
consultants and employed additional staff for its reorganized Quality Unit. The
Company has retained an outside consulting firm with expertise in FDA regulatory
compliance matters to assist in developing and implementing the corrective
action plan.

The Company produced the enzyme Collagenase ABC (the "enzyme"), the active
ingredient in Collagenase Santyl(R) Ointment, at its Lynbrook and Curacao
facilities. The Company started extensive renovations at the Curacao facility in
March 2000, which resulted in the suspension of enzyme production there.
Production at the Curacao facility resumed in May 2001. The Company also
voluntarily suspended the production of the enzyme at the Lynbrook facility,
although final stage testing on previously produced work in process inventory
continues there.

The Company has spent approximately $5.4 million through July 31, 2001 in new
equipment and leasehold improvements and anticipates it could invest
approximately $120,000 more to completion. This investment is intended to
address matters described in the Form 483 and the FDA Letter, as well as to
modernize and ensure the efficiency of the Company's production process in the
future. During the fiscal year ended January 31, 2000 the Company had spent
approximately $1,000,000 for professional fees and other expenses in connection
with the remediation of the FDA's deficiency observations, approximately
$215,000 during the fiscal year ended January 31, 2001, and approximately
$55,000 during the six months ended July 31, 2001. The Company estimates it
could spend an additional $150,000 in professional fees in connection with the
remediation of the FDA's deficiency observations.

Although renovations at the Curacao and Lynbrook facilities were substantially
completed by May 2001 and resumed production in Curacao, the Company cannot
release enzyme now being produced at these facilities for sale as a
pharmaceutical to Abbott until the FDA approves a supplement (the "supplement')
to ABC's Establishment License. As part of the approval process for the
supplement, the FDA will conduct an inspection of the Curacao facility and
inspect the Lynbrook facility. In anticipation of the renovation and suspension
of manufacturing operations, the Company accumulated an inventory of the
product, which it continues to test, and estimates Abbott can use to contract
manufacture Collagenase Santyl(R) Ointment into the second quarter of calendar
2002. In the opinion of the Company, this would permit Abbott to supply S&N with
the ointment into the third quarter of calendar 2002 (or the second quarter of
our fiscal year ending January 31, 2003).

While the Company believes that it has made considerable progress in addressing
the FDA concerns addressed in the Form 483 and the FDA Letter, if the Company is
unable to further address these matters in a timely manner, there may be delays
in the delivery of the product produced in the renovated facilities to Abbott
for use to contract manufacture Collagenase Santyl(R) Ointment. Such delays
could have a material adverse effect on the Company's future operating results.

The Company, through its subsidiary ABC - Curacao, has arranged for a two-year,
non-amortizing loan of $450,000 at 6.5% interest from Korpodeko, a Curacao
development corporation established to develop industry on the island of
Curacao. The entire principal would become due two years after the loan is drawn
down. In connection with this loan, ABC-Curacao has agreed it will pledge as
collateral substantially all of the Company's assets located in Curacao, with a
book value of approximately $4.3 million. The Company has also agreed it would
guarantee the Korpodeko loan. The Company expects to draw down this loan during
the third calendar quarter of 2001 (or the third quarter of our fiscal year
ending January 31, 2002).


                                       12
<PAGE>

The Company, through its subsidiary, ABC-Curacao, also maintains a line of
credit with a Netherlands Antilles bank under which the bank will lend up to
$110,000 to ABC-Curacao, with interest at the bank's prime lending rate (12% at
April 30, 2001).
Drawings under the line of credit would be secured by investment assets and cash
on deposit at the bank, is payable on demand, and is guaranteed by ABC-New York.

The Company believes that its capital resources, together with anticipated
proceeds from the sales of available inventory and related royalty income, are
adequate to sustain the business at least through July 31, 2002. In addition,
the Company also believes that it has made substantial progress in addressing
the FDA's inspectional observations and that it may be able to resume normal
operations during the first quarter of calendar year 2002 (or the first quarter
of our fiscal year ending January 31, 2003). However, the Company is dependent
on the FDA's approval of its renovated plant in Curacao for the resumption of
normal operations and the release for sale of Collagenase ABC enzyme.

Although management believes that the Company's capital resources are adequate
and that it has made satisfactory progress toward completing the Corrective
Action Plan and addressing the FDA's concerns, there can be no assurance that
unforeseen circumstances will not have a material adverse effect on the
Company's financial condition and that the cost of completing the renovation of
the Lynbrook and Curacao plants will not exceed management's estimates. In
addition there can be no assurance that the FDA will not have additional
inspectional observations that could result in the delay of completing the
Corrective Action Plan or that the FDA will approve the renovated plant and
permit the Company to resume its normal operations at all. In July 2001, we
retained a strategic advisor with experience in biotechnology joint ventures and
alliances to assist us in evaluating strategic opportunities. There can be no
assurance that we will be able to enter into any joint ventures or alliances
with other companies in the healthcare industry.

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS
--------------------------

For a discussion of the Company's progress concerning inspectional observations
from the U.S. Food and Drug Administration, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Liquidity, Capital
Resources, and Change in Financial Condition."

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------------------------------------------------------------

(a.) The annual meeting of stockholders was held August 7, 2001. The purpose of
the meeting was to elect three directors of the Company, and approve the
BioSpecifics 2001 Stock Option Plan.

(b.) The directors elected at the stockholders' meeting were Henry Morgan, John
Lane and Louis Lasagna, MD., whose terms expire in 2004. The other directors
whose terms of office as director continued after the meeting are Thomas L.
Wegman and Paul Gitman, MD whose terms expire in 2003, and Edwin H. Wegman and
Rainer Friedel, MD., whose terms of office expire in 2002.

(c.) The results of the shareholder voting were as follows:

Election for Directors:             Votes For            Votes Withheld
---------------------------         ---------            --------------
Henry Morgan                        4,252,358               47,000
John Lane                           4,252,358                2,550
Louis Lasagna, MD.                  4,252,358               44,550

Approval of the BioSpecifics
2001 Stock Option Plan           Votes For    Votes Against     Votes Withheld
----------------------           ---------    -------------     --------------
                                 2,731,750       253,054           4,245



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<PAGE>




                                   SIGNATURES



In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.


                                            BioSpecifics Technologies Corp.
                                                     (Registrant)



Date:    September 19, 2001



By: /s/Edwin H. Wegman
    ---------------------------------------
         Edwin H. Wegman
         Chairman and President




Date:    September 19, 2001



By: /s/Albert Horcher
    ---------------------------------------
         Albert Horcher
         Treasurer, Principal Financial and
         Chief Accounting Officer


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