##### Table of Contents



UNITED STATESSECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB

|            |  |                                                                                                                                     
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------
|Mark One    |  |                                                                                                                                     
|           
|           
|           
|           
|(CHECK BOX) |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001

OR

|      |  |                                                                                                                                      
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------
|(BOX) |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM            TO

Commission File No. 1-14416
BIGMAR, INC.(Exact name of small business issuer as specified in its charter)

|                                                                                  |  |                                                
|--------------------------------------------------------------------------------- |  | -----------------------------------------------
|Delaware
(State or other jurisdiction of
incorporation or organization)           |  | 31-1445779
(I.R.S. Employer Identification No.)
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |  |                                                
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|9711 Sportsman Club Road
Johnstown, Ohio
(Address of principal executive offices) |  | 43031
(Zip Code)                               

Issuers telephone number, including area code: (740) 966-5800

Indicate by checkmark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 (CHECK BOX) NO (BOX)

As of August 13 2001, 10,168,973 shares of common stock of the issuer were
outstanding.

1



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TABLE OF CONTENTS



|                                                                                              |                                                                                                                                                       |  |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I: FINANCIAL INFORMATION                                                                
|Item 1 Financial Statements                                                                  
|                                                                                              | Consolidated Condensed Balance Sheets as of June 30, 2001 (Unaudited) and December 31, 2000.                                                         
|                                                                                              | Consolidated Condensed Statements of Operations for the                      quarters and six month periods ended June 30, 2001 and 2000 (Unaudited).
|                                                                                              | Consolidated Condensed Statements of Cash Flows for the six months ended June 30, 2001 and 2000 (Unaudited).                                         
|                                                                                              | Consolidated Statements of Comprehensive Loss for the quarters                      and six month periods ended June 30, 2001 and 2000 (Unaudited).  
|                                                                                              | Notes to the Consolidated Condensed Financial Statements (Unaudited).                                                                                
|Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations.
|Part II OTHER INFORMATION:                                                                   
|Item 2(c) Changes in Securities Recent Sales of Unregistered Securities.                    
|Item 5 Other Information.                                                                    
|Item 6 Exhibits and Reports on Form 8-K.                                                     
|                                                                                              | Signatures.                                                                                                                                          



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##### Table of Contents



BIGMAR, INC. AND SUBSIDIARIES

Index

|                                                                          |                                                                                                                                  |  |    |    | 
|------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------- |  | -- | -- | 
|Part I FINANCIAL INFORMATION:                                             |                                                                                                                                  |  |    |   
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          |                                                                                                                                  |  |    |   
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Item 1 Financial
Statements.                                              |                                                                                                                                  |  |    |   
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          |                                                                                                                                  |  |    |   
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Consolidated Condensed Balance Sheets as of June 30, 2001
(Unaudited) and December 31, 2000.                                     |  |    | 3  | 
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          |                                                                                                                                  |  |    |   
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Consolidated Condensed Statements of Operations for the
quarters and six month periods ended June 30, 2001 and 2000
(Unaudited). |  |    | 4  | 
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          |                                                                                                                                  |  |    |   
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Consolidated Condensed Statements of Cash Flows for the six
months ended June 30, 2001 and 2000 (Unaudited).                     |  |    | 5  | 
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          |                                                                                                                                  |  |    |   
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Consolidated Statements of Comprehensive Loss for the quarters
and six month periods ended June 30, 2001 and 2000 (Unaudited).   |  |    | 6  | 
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          |                                                                                                                                  |  |    |   
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Notes to the Consolidated Condensed Financial Statements
(Unaudited).                                                            |  |    | 7  | 
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          |                                                                                                                                  |  |    |   
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Item 2 Managements Discussion and Analysis of Financial Condition and                                                           |  |    |    | 
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Results of Operations.                                                    |                                                                                                                                  |  | 12 |   
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          |                                                                                                                                  |  |    |   
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Part II OTHER INFORMATION:                                                |                                                                                                                                  |  |    |   
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          |                                                                                                                                  |  |    |   
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Item 2(c) Changes in Securities Recent Sales of Unregistered Securities. |                                                                                                                                  |  | 19 |   
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          |                                                                                                                                  |  |    |   
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Item 5 Other Information.                                                 |                                                                                                                                  |  | 19 |   
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          |                                                                                                                                  |  |    |   
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Item 6 Exhibits and Reports on Form 8-K.                                  |                                                                                                                                  |  | 19 |   
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          |                                                                                                                                  |  |    |   
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Signatures.                                                                                                                      |  |    | 20 | 

2



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##### Table of Contents






PART I: FINANCIAL INFORMATION




Item 1. Financial Statements




BIGMAR, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets

|                                     |                                                                                                                                                                                                                                                           |                            |                           |                   |           |             |            |             |         |           |            | 
|------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------------------------- | ----------------- | --------- | ----------- | ---------- | ----------- | ------- | --------- | ---------- | 
|                                     |                                                                                                                                                                                                                                                           |                            |                           |                   |           | June 30     |            | December 31
|                                     |                                                                                                                                                                                                                                                           |                            |                           |                   |           | 2001        |            | 2000       
|                                     |                                                                                                                                                                                                                                                           |                            |                           |                   |           |             |            |            
|                                     |                                                                                                                                                                                                                                                           |                            |                           |                   |           | (Unaudited) |            |             |         |          
|Assets                               |                                                                                                                                                                                                                                                           |                            |                           |                   |           |             |            |            
|                                    
|                                    
|                                    
|                                    
|Current assets:                      |                                                                                                                                                                                                                                                           |                            |                           |                   |           |             |            |            
|                                    
|                                    
|                                    
|                                    
|                                     | Cash and cash equivalents                                                                                                                                                                                                                                 |                            | $                         | 357,007           |           |             | $          | 72,971      |        
|                                    
|                                    
|                                    
|                                    
|                                     | Accounts receivable, net                                                                                                                                                                                                                                  |                            |                           | 1,772,260         |           |             |            | 1,872,657   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Accounts receivable, related party                                                                                                                                                                                                                        |                            |                           | 84,849            |           |             |            | 141,107     |        
|                                    
|                                    
|                                    
|                                    
|                                     | Inventories                                                                                                                                                                                                                                               |                            |                           | 2,173,634         |           |             |            | 2,638,999   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Prepaid expenses and other current assets                                                                                                                                                                                                                 |                            |                           | 149,339           |           |             |            | 119,792     |        
|                                     |                                                                                                                                                                                                                                                           |                            |                           |                   |           |             |            |            
|                                     |                                                                                                                                                                                                                                                           |                            | Total current assets      |                   |           | 4,537,089   |            |             |         | 4,845,526 |           
|                                    
|                                    
|                                    
|                                    
|Property, plant and equipment, net   |                                                                                                                                                                                                                                                           |                            | 11,647,827                |                   |           |             | 13,387,698 |            
|                                    
|                                    
|                                    
|                                    
|Intangibles and other assets, net    |                                                                                                                                                                                                                                                           |                            | 214,962                   |                   |           |             | 283,617    |            
|                                     |                                                                                                                                                                                                                                                           |                            |                           |                   |           |             |            |            
|                                     |                                                                                                                                                                                                                                                           |                            |                           | Total             |           | $           | 16,399,878 |             |         | $         | 18,516,841 | 
|                                     |                                                                                                                                                                                                                                                           |                            |                           |                   |           |             |            |            
|Liabilities and Stockholders Equity |                                                                                                                                                                                                                                                           |                            |                           |                   |           |             |            |            
|                                    
|                                    
|                                    
|                                    
|Current liabilities:                 |                                                                                                                                                                                                                                                           |                            |                           |                   |           |             |            |            
|                                    
|                                    
|                                    
|                                    
|                                     | Accounts payable                                                                                                                                                                                                                                          |                            |                           | 2,208,648         |           |             |            | 3,023,463   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Notes payable                                                                                                                                                                                                                                             |                            |                           | 278,707           |           |             |            | 2,481,301   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Current portion of long-term debt                                                                                                                                                                                                                         |                            |                           | 562,988           |           |             |            | 626,940     |        
|                                    
|                                    
|                                    
|                                    
|                                     | Due to related party                                                                                                                                                                                                                                      |                            |                           | 1,039,383         |           |             |            | 1,238,781   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Accrued expenses and other current liabilities                                                                                                                                                                                                            |                            |                           | 1,445,702         |           |             |            | 1,060,965   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Deferred revenue                                                                                                                                                                                                                                          |                            |                           | 3,455,964         |           |             |            | 0           |        
|                                     |                                                                                                                                                                                                                                                           |                            |                           |                   |           |             |            |            
|                                     |                                                                                                                                                                                                                                                           |                            | Total current liabilities |                   |           | 8,991,392   |            |             |         | 8,431,450 |           
|                                    
|                                    
|                                    
|                                    
|Long-term debt                       |                                                                                                                                                                                                                                                           |                            | 4,927,537                 |                   |           |             | 9,642,459  |            
|                                     |                                                                                                                                                                                                                                                           |                            |                           |                   |           |             |            |            
|                                     |                                                                                                                                                                                                                                                           |                            |                           | Total liabilities |           |             | 13,918,929 |             |         |           | 18,073,909 | 
|                                     |                                                                                                                                                                                                                                                           |                            |                           |                   |           |             |            |            
|Stockholders equity:                |                                                                                                                                                                                                                                                           |                            |                           |                   |           |             |            |            
|                                    
|                                    
|                                    
|                                    
|                                     | Preferred stock ($.001 par value; 5,000,000 shares
authorized; 1,000,000 designated as Series A
and 10,000 designated as B): Series B Preferred
Stock, 7,000 and 1,000 shares issued and
outstanding at June 30, 2001 and December 31,
2000, respectively |                            |                           | 7                 |           |             |            | 1           |        
|                                    
|                                    
|                                    
|                                    
|                                     | Common stock ($.001 par value; 30,000,000 shares
authorized; 10,168,973 shares issued and
outstanding at June 30, 2001 December 31,
2000 respectively)                                                                                                    |                            |                           | 10,169            |           |             |            | 10,169      |        
|                                    
|                                    
|                                    
|                                    
|                                     | Additional paid-in capital                                                                                                                                                                                                                                |                            |                           | 34,672,618        |           |             |            | 29,023,791  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Retained earnings (deficit)                                                                                                                                                                                                                               |                            |                           | (30,258,728       | )         |             |            | (27,448,377 | )      
|                                    
|                                    
|                                    
|                                    
|                                     | Cumulative translation adjustment                                                                                                                                                                                                                         |                            |                           | (1,943,117        | )         |             |            | (1,142,652  | )      
|                                     |                                                                                                                                                                                                                                                           |                            |                           |                   |           |             |            |            
|                                     |                                                                                                                                                                                                                                                           | Total stockholders equity |                           |                   | 2,480,949 |             |            |             | 442,932 |          
|                                     |                                                                                                                                                                                                                                                           |                            |                           |                   |           |             |            |            
|                                     |                                                                                                                                                                                                                                                           |                            |                           | Total             |           | $           | 16,399,878 |             |         | $         | 18,516,841 | 
|                                     |                                                                                                                                                                                                                                                           |                            |                           |                   |           |             |            |            

See accompanying notes to consolidated condensed financial statements.

3



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##### Table of Contents






BIGMAR, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Operations
(Unaudited)

|                                                                             |                                     |                          |            |                             |           |                           |            |         |           |      |            |           |           |   |            |           |           | 
|---------------------------------------------------------------------------- | ----------------------------------- | ------------------------ | ---------- | --------------------------- | --------- | ------------------------- | ---------- | ------- | --------- | ---- | ---------- | --------- | --------- | - | ---------- | --------- | --------- | 
|                                                                             |                                     |                          |            | Three months ended June 30, |           | Six months ended June 30,
|                                                                             |                                     |                          |            |                             |           |                          
|                                                                             |                                     |                          |            | 2001                        |           | 2000                      |            | 2001    |           | 2000
|                                                                             |                                     |                          |            |                             |           |                           |            |         |           |     
|Net sales                                                                    |                                     | $                        | 2,217,480  |                             |           | $                         | 2,115,739  |         |           | $    | 4,508,708  |           |           | $ | 3,895,460  |          
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Cost of goods sold                                                           |                                     |                          | 2,066,326  |                             |           |                           | 1,888,117  |         |           |      | 3,969,506  |           |           |   | 3,168,282  |          
|                                                                             |                                     |                          |            |                             |           |                           |            |         |           |      |            |           |           |   |            |          
|Gross margin                                                                 |                                     |                          | 151,154    |                             |           |                           | 227,622    |         |           |      | 539,202    |           |           |   | 727,178    |          
|                                                                             |                                     |                          |            |                             |           |                           |            |         |           |      |            |           |           |   |            |          
|Operating expenses:                                                          |                                     |                          |            |                             |           |                           |            |         |           |      |            |           |           |   |            |          
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|                                                                             | Research and development            |                          |            | 647,546                     |           |                           |            | 516,772 |           |      |            | 1,389,860 |           |   |            | 1,436,946 |          
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|                                                                             | Selling, general and administrative |                          |            | 848,531                     |           |                           |            | 855,187 |           |      |            | 1,674,373 |           |   |            | 1,580,532 |          
|                                                                             |                                     |                          |            |                             |           |                           |            |         |           |      |            |           |           |   |            |          
|                                                                             |                                     | Total operating expenses |            |                             | 1,496,077 |                           |            |         | 1,371,959 |      |            |           | 3,064,233 |   |            |           | 3,017,478 | 
|                                                                             |                                     |                          |            |                             |           |                           |            |         |           |      |            |           |           |   |            |          
|Operating loss                                                               |                                     |                          | (1,344,923 | )                           |           |                           | (1,144,337 | )       |           |      | (2,525,031 | )         |           |   | (2,290,300 | )        
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Other income (expense), net                                                  |                                     |                          | (6,152     | )                           |           |                           | 116,981    |         |           |      | (10,970    | )         |           |   | 113,206    |          
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Interest expense                                                             |                                     |                          | (186,968   | )                           |           |                           | (211,447   | )       |           |      | (425,105   | )         |           |   | (442,309   | )        
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Gain (loss) on foreign currency
transactions                                 |                                     |                          | 40,673     |                             |           |                           | (56,452    | )       |           |      | 150,755    |           |           |   | 11,958     |          
|                                                                             |                                     |                          |            |                             |           |                           |            |         |           |      |            |           |           |   |            |          
|Loss before income taxes and
extraordinary item                              |                                     |                          | (1,497,370 | )                           |           |                           | (1,295,255 | )       |           |      | (2,810,351 | )         |           |   | (2,607,445 | )        
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Income taxes (benefit)                                                       |                                     |                          |           |                             |           |                           |           |         |           |      |           |           |           |   |           |          
|                                                                             |                                     |                          |            |                             |           |                           |            |         |           |      |            |           |           |   |            |          
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Loss before extraordinary item                                               |                                     |                          | (1,497,370 | )                           |           |                           | (1,295,255 | )       |           |      | (2,810,351 | )         |           |   | (2,607,445 | )        
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Extraordinary item-Gain on extinguishment
of debt, net of income taxes of $0 |                                     |                          |           |                             |           |                           |           |         |           |      |           |           |           |   | 361,837    |          
|                                                                             |                                     |                          |            |                             |           |                           |            |         |           |      |            |           |           |   |            |          
|Net loss                                                                     |                                     | $                        | (1,497,370 | )                           |           | $                         | (1,295,255 | )       |           | $    | (2,810,351 | )         |           | $ | (2,245,608 | )        
|                                                                             |                                     |                          |            |                             |           |                           |            |         |           |      |            |           |           |   |            |          
|Preferred stock dividends                                                    |                                     |                          | 118,416    |                             |           |                           |           |         |           |      | 163,333    |           |           |   |           |          
|                                                                             |                                     |                          |            |                             |           |                           |            |         |           |      |            |           |           |   |            |          
|Net loss applicable to common stockholders                                   |                                     | $                        | (1,615,786 | )                           |           | $                         | (1,295,255 | )       |           | $    | (2,973,684 | )         |           | $ | (2,245,608 | )        
|                                                                             |                                     |                          |            |                             |           |                           |            |         |           |      |            |           |           |   |            |          
|Basic and diluted loss per share from
continuing operations                  |                                     | $                        | (0.15      | )                           |           | $                         | (0.14      | )       |           | $    | (0.28      | )         |           | $ | (0.28      | )        
|                                                                             |                                     |                          |            |                             |           |                           |            |         |           |      |            |           |           |   |            |          
|Basic and diluted extraordinary gain per
share                               |                                     | $                        |           |                             |           | $                         |           |         |           | $    |           |           |           | $ | 0.04       |          
|                                                                             |                                     |                          |            |                             |           |                           |            |         |           |      |            |           |           |   |            |          
|Basic and diluted net loss per share                                         |                                     | $                        | (0.15      | )                           |           | $                         | (0.14      | )       |           | $    | (0.28      | )         |           | $ | (0.24      | )        
|                                                                             |                                     |                          |            |                             |           |                           |            |         |           |      |            |           |           |   |            |          
|Basic and diluted net loss per share
applicable to common stockholders       |                                     |                          | (0.16      | )                           |           |                           | (0.14      | )       |           |      | (0.29      | )         |           |   | (0.24      | )        
|                                                                             |                                     |                          |            |                             |           |                           |            |         |           |      |            |           |           |   |            |          
|Weighted average shares outstanding                                          |                                     |                          | 10,168,973 |                             |           |                           | 9,570,640  |         |           |      | 10,168,973 |           |           |   | 9,287,862  |          
|                                                                             |                                     |                          |            |                             |           |                           |            |         |           |      |            |           |           |   |            |          

See accompanying notes to consolidated condensed financial statements.

4



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##### Table of Contents






BIGMAR, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
(Unaudited )



|                                                                              |  |                             |            |   |  |      |            |  
|----------------------------------------------------------------------------- |  | --------------------------- | ---------- | - |  | ---- | ---------- | -
|                                                                              |  | Six Months
   Ended June 30
|                                                                              |  |                            
|                                                                              |  | 2001                        |            |   |  | 2000
|                                                                              |  |                             |            |   |  |     
|Cash flow from operating activities:                                         
|Net Loss                                                                      |  |                             | (2,810,351 | ) |  |      | (2,245,608 | )
|Adjustments to
reconcile net loss to net cash used in operating activities:   |  |                             |            |   |  |      |           
|Depreciation and
amortization                                                 |  |                             | 717,211    |   |  |      | 846,651   
|Issuance of
warrants                                                          |  |                             |           |   |  |      |          
|Unrealized
foreign exchange (gains)                                           |  |                             | (152,091)  |   |  |      | (9,796)   
|Changes in
operating assets and liabilities:                                 
|(Increase)
decrease in accounts receivable                                    |  |                             | (40,015    | ) |  |      | 166,337   
|Increase in
accounts receivable related parties                               |  |                             | (170       | ) |  |      | (75,852    | )
|(Increase)
decrease in inventories                                            |  |                             | 206,409    |   |  |      | (138,939   | )
|Increase in
prepaid expenses and other current assets                         |  |                             | (41,841    | ) |  |      | (15,761    | )
|Decrease in
accounts payable                                                  |  |                             | (539,066   | ) |  |      | (12,090    | )
|Decrease in due
to related parties                                            |  |                             | (44,228    | ) |  |      |          
|Increase in
deferred revenue                                                  |  |                             | 3,636,364  |   |  |      |          
|Increase in
accrued expenses and other current liabilities                    |  |                             | 449,146    |   |  |      | 204,467   
|                                                                             
|Net
cash provided by (used in) operating activities                           |  |                             | 1,381,368  |   |  |      | (1,280,591 | )
|                                                                              |  |                             |            |   |  |      |           
|Cash flows from investing activities:                                        
|Purchase of
property, plant and equipment                                     |  |                             | (251,028   | ) |  |      | (127,734   | )
|                                                                              |  |                             |            |   |  |      |           
|Net
cash used in investing activities                                         |  |                             | (251,028   | ) |  |      | (127,734   | )
|                                                                              |  |                             |            |   |  |      |           
|                                                                             
|Cash flows from financing activities:                                        
|Short-term
borrowings                                                         |  |                             | 380,289    |   |  |      |          
|Long-term
borrowings                                                          |  |                             |           |   |  |      | 2,597,296 
|Proceeds from
borrowing from related party                                    |  |                             |           |   |  |      | 1,030,303 
|Repayment of
short term debt                                                  |  |                             | (2,471,838 | ) |  |      | (199,013   | )
|Repayment of
related party loan                                               |  |                             | (100,000   | )
|Repayment of
long-term borrowings                                             |  |                             | (4,438,704 | ) |  |      | (3,901,004 | )
|Preferred stock
redemption                                                    |  |                             | (1,012,833 | )
|Proceeds from
issuance of common stock and warrants                           |  |                             |           |   |  |      | 2,011,700 
|Proceeds from
issuance of preferred stock and warrants, net of offering costs |  |                             | 6,825,000  |  
|                                                                              |  |                             |            |   |  |      |           
|Net
cash provided (used) by financing activities                              |  |                             | (818,086   | ) |  |      | 1,539,282 
|                                                                              |  |                             |            |   |  |      |           
|Effect of exchange rates on cash                                              |  |                             | (28,218    | ) |  |      | 10,708    
|                                                                              |  |                             |            |   |  |      |           
|Net increase (decrease) in cash and cash
equivalents                          |  |                             | 284,036    |   |  |      | 141,665   
|Cash and cash equivalents, beginning of period                                |  |                             | 72,971     |   |  |      | 155,855   
|                                                                              |  |                             |            |   |  |      |           
|Cash and cash equivalents, end of period                                      |  | $                           | 357,007    |   |  | $    | 297,520   
|                                                                              |  |                             |            |   |  |      |           
|Supplemental disclosure of cash flow
information:                            
|Cash paid during
the period for:                                             
|Interest                                                                      |  | $                           | 394,773    |   |  | $    | 439,846   
|Income taxes                                                                  |  | $                           |           |   |  | $    |          

See accompanying notes to consolidated condensed financial statements.

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BIGMAR, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Loss
(Unaudited)

|                                               |                                                                                                          |   |                             |          |                           |   |            |         |      |   |            |          |   |   |            |          |  
|---------------------------------------------- | -------------------------------------------------------------------------------------------------------- | - | --------------------------- | -------- | ------------------------- | - | ---------- | ------- | ---- | - | ---------- | -------- | - | - | ---------- | -------- | -
|                                               |                                                                                                          |   | Three months ended June 30, |          | Six months ended June 30,
|                                               |                                                                                                          |   |                             |          |                          
|                                               |                                                                                                          |   | 2001                        |          | 2000                      |   | 2001       |         | 2000
|                                               |                                                                                                          |   |                             |          |                           |   |            |         |     
|Net loss                                       |                                                                                                          | $ | (1,497,370                  | )        |                           | $ | (1,295,255 | )       |      | $ | (2,810,351 | )        |   | $ | (2,245,608 | )       
|                                              
|                                              
|                                              
|                                              
|Other comprehensive income (loss),
net of tax: |                                                                                                          |   |                             |          |                           |   |            |         |      |   |            |          |   |   |            |         
|                                              
|                                              
|                                              
|                                              
|                                               | Foreign currency translation adjustments,
net of, income taxes of $0 in both
2001 and 2000, respectively |   |                             | (189,566 | )                         |   |            | 101,815 |      |   |            | (800,465 | ) |   |            | (215,615 | )
|                                               |                                                                                                          |   |                             |          |                           |   |            |         |      |   |            |          |   |   |            |         
|Comprehensive loss                             |                                                                                                          | $ | (1,686,936                  | )        |                           | $ | (1,193,440 | )       |      | $ | (3,610,816 | )        |   | $ | (2,461,223 | )       
|                                               |                                                                                                          |   |                             |          |                           |   |            |         |      |   |            |          |   |   |            |         

See accompanying notes to consolidated condensed financial statements.

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BIGMAR, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements

(1) BASIS OF PRESENTATION

Bigmar, Inc. (the Company) is a Delaware corporation that owns 100% of the
outstanding common stock of two Swiss corporations, Bioren, SA (Bioren) and
Bigmar Pharmaceuticals, SA (Pharmaceuticals), and 100% of the outstanding
common stock of a Delaware corporation, Bigmar Therapeutics, Inc.
(Therapeutics).

In the opinion of management, the accompanying unaudited financial statements
include all adjustments necessary to present fairly the Company and its
subsidiaries financial position at June 30, 2001 and December 31, 2000, and
the results of operations, cash flows and comprehensive income for all periods
presented. The results of the interim periods are not necessarily indicative of
the results to be obtained for the entire fiscal year.

For a summary of significant accounting policies (which are consistent with
those in place at December 31, 2000) and additional financial information, see
Bigmar, Inc.s Annual Report on Form 10-KSB, for the year ended December 31,
2000. The 10-KSB should be read in conjunction with these financial
statements.

The consolidated financial statements include the accounts of the Company and
its subsidiaries, all of which are wholly owned. All significant intercompany
accounts and transactions have been eliminated.

The financial statements of subsidiaries outside the United States are stated
using the local currency as the functional currency. Assets and liabilities of
these companies are translated at the rates of exchange at the balance sheet
date. The resulting translation adjustments are included in accumulated and
other comprehensive loss. Income and expenses are translated at average rates
of exchange for the period.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The construction of the Companys
pharmaceutical manufacturing plant in Barbengo, Switzerland and the process of
obtaining regulatory approvals have consumed a substantial amount of the
Companys resources. The manufacturing plant received regulatory approval in
February 1999 from the United States Food and Drug Administration (FDA) and
the Intercantonal Office for the Control of Medications (IKS) in Switzerland
to manufacture and sell certain injectible pharmaceutical products in the
United States and Switzerland. As a result, the Company anticipates that these
operations will begin to generate cash to help fund its expansion and further
planned research and development activities. During the six-month period ending
June 30, 2001, the Company received approximately $6.8 million in proceeds from
the private placements of preferred stock and warrants. The Company anticipates
raising additional funds during 2001 through private stock offerings and
through additional bank

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borrowings. However, there can be no assurance that the Company will be
successful in these efforts.

(2)  INVENTORIES

The components of inventory at June 30, 2001 and December 31, 2000 are as
follows:

|               |       |   |               |           |                   |   |           |           | 
|-------------- | ----- | - | ------------- | --------- | ----------------- | - | --------- | --------- | 
|               |       |   | June 30, 2001 |           | December 31, 2000
|               |       |   |               |           |                  
|Raw Materials  |       | $ | 1,021,408     |           |                   | $ | 1,169,320 |          
|              
|              
|              
|              
|Finished Goods |       |   | 1,152,226     |           |                   |   | 1,469,679 |          
|               |       |   |               |           |                   |   |           |          
|               | Total |   | $             | 2,173,634 |                   |   | $         | 2,638,999 | 
|               |       |   |               |           |                   |   |           |          

(3) AGREEMENT WITH BAXTER AG

On May 17, 2001, the Company signed a supply and distribution and an asset
purchase agreement with Baxter AG (Baxter). The purpose of the agreements is
to allow Baxter to gradually take over and carry on the intravenous solutions
business at Bioren (a wholly owned subsidiary of Bigmar, Inc.). Under the
agreement, Bigmar retains ownership of the plant and will continue to produce
and sell other products including various pain management and antibacterial
products.

Asset Purchase Agreement

Baxter agrees to purchase many of the assets of Bioren and obtains exclusive
distribution rights as defined in the agreement. The assets include all
specifications and know-how related to the production, all documentation
related to clinical trials for the products, all rights related to trademarks,
all finished goods at the date of closing equal to $425,000, and all agreements
with suppliers and customers. Assets do not include the plant and equipment.
Consideration to be paid totals $6,840,000 to be paid as follows: $3,990,000
at closing, $1,710,000 on May 17, 2002 and $1,140,000 on May 17, 2003. The
fees are nonrefundable once paid except in the event of breach, as defined,
prior to year 4.

Supply and Distribution Agreement

The Company will continue to manage the manufacturing process at Bioren.
Baxter commits to purchasing a minimum amount of product per year and retains
exclusive distribution rights for the products produced. Prices of the
products are defined in the agreement. Baxter is required to buy at least 10
million units during the four year period (amounts each year defined in the
agreement) after the signing of the agreement. After four years, no minimums
exist. In addition, Bioren is also reimbursed by Baxter for various services
as defined in the agreement including: warehousing and distribution, marketing
and sales, and customer service.

The service portion of the supply and distribution agreement expires in June
2005, however Baxter can extend it through May 2007. The distribution rights
to distribute Biorens products expire June 2006 but can also be extended
through May 2007. The exclusive distribution rights to distribute the products
under the agreement expire in June 2006, but can be extended through May 2011.

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The Company has elected to defer the $3,990,000 received at closing, except for
the amount related to the sale of inventory at $425,000. This amount is
included in deferred revenue at June 30, 2001. Management is currently
assessing the impact of refund/termination provisions in the contract and the
Companys ability to respond to these provisions. Until such
time, the asset purchase amounts will remain in deferred revenue. However, once this
determination is made, the Company plans on recognizing the revenue over the period of the agreements.

(4) LONG-TERM DEBT

As of June 30, 2001, the Company had various notes, bonds, mortgages and other
borrowings totaling approximately $6.8 million, including $1.9 million that is
short term in nature. These monies were used to partially fund the acquisition
of Bioren, to acquire, construct, and equip the manufacturing facility and to
fund ongoing research and development and product registration activities. In
February 2001, the Company repaid $4.0 million convertible notes and related
interest pursuant to a private placement of preferred stock and warrants.
During May 2001, the Company extinguished $2.0 million of its short-term debt
and related interest of $11,922.

(5) COMMON STOCK ISSUED

On December 21, 2000, the Company executed an agreement with Banca del Gottardo
to issue 1,000 shares of Series B Convertible Preferred Stock, $0.001 par value
per share, for $1,000,000. On February 27, 2001, the Company redeemed these
shares of preferred stock for $1,012,833 and reissued 7,000 shares of Series B
preferred stock and a warrant for the purchase of 1,400,000 shares of the
Companys common stock for $2.00 per share for a total of $7 million.

In connection with the February issuance, the Company was required to use the
proceeds as follows:



| |  |  | $4,160,000 was paid to Banca del Gottardo to pay off the $4 million
8% convertible debt and related interest;
| | - |  | -------------------------------------------------------------------------------------------------------------
|
| |  |  | $1,012,833 was used to redeem the original preferred stock plus
cumulative dividends;                        
|
| |  |  | $175,000 was paid as fees to the Bank for offering costs;                                                    

The remaining amount was deposited for working capital purposes with the
Company.

The following is a discussion of each of the major
terms of the Series B Preferred
Stock:



| | - |  | Cumulative Dividends The preferred stock has dividends of $70 per
share per annum. Such dividends shall be cumulative and shall be due
and payable annually in arrears. Cumulative dividends were
approximately $163,000 at June 30, 2001.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | - |  | Liquidation Preference The preferred has a liquidation preference
of $1,000 per share, plus all accrued plus unpaid dividends.                                                                                                            

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| | - |  | Redemption The Corporation may on or after January 1, 2003
redeem, from any source of funds legally available, the Series B
Preferred Stock. The redemption price shall be the conversion price
(see below).                                                                                                                                                                                                                                                                                                                                                                              
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | - |  | Voting Rights The preferred shareholders have no voting rights.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | - |  | Conversion The preferred is convertible at any time to common
stock prior to December 31, 2005. At that point, it automatically
converts into common stock. The conversion price shall initially be
$2.50 per share through December 31, 2001. Between January 1, 2002
through December 31, 2005, the Series B Conversion price shall be 90
percent of the 20 tracking day average closing price of the Common
Stock prior to the date the certificate is surrendered for conversion.
At no time will the Series B conversion price be less than $2.00 per
share of common stock.         
|
| | - |  | Warrant The agreement has a detachable warrant to purchase common
stock of the Company. The warrant is exercisable at any time prior to
February 2006 and the exercise price is $2.00 per share. In addition,
the Company may call all or part of the unexercised warrants at a price
of $2.50 per share at any time. Upon receipt of the call notice, Banca
del Gottardo may either exercise the unexercised warrants or surrender
the warrants to the Company for the $2.50 per share payment. The
Company determined the warrant to be valued at $1,778,000 as of the
date of issuance.

(6) SEGMENT DATA

The Company manages its business segments primarily on a geographic basis with
each location representing a distinct segment. The Companys reportable
segments are comprised of the following: Bioren, located in Couvet,
Switzerland; Pharmaceuticals,

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located in Barbengo, Switzerland; and the Companys Corporate Headquarters,
located in Johnstown, Ohio, U.S.A.

The Company evaluates the performance of its segments based on segment
profit/(loss). Segment profit/(loss) for each segment includes sales and
marketing expenses, certain research and development expenses, and overhead
charges directly attributable to the segment. Segment profit/(loss) excludes
certain expenses which are managed outside the reportable segments. Costs
excluded from segment profit primarily consist of corporate expenses, other
research and development charges for the testing of products targeted for U.S.
markets, as well as other general and administrative expenses which are
separately managed.

The Company does not include intercompany transfers between segments for
management reporting purposes. Summary information by segment for the six
months and three months ended June 30, 2001 and 2000 is as follows:

SIX MONTHS ENDED JUNE 30, 2001

|                                     |  |        |           |                 |  |           |            |       |  |  |          |   |  |  |            |  
|------------------------------------ |  | ------ | --------- | --------------- |  | --------- | ---------- | ----- |  |  | -------- | - |  |  | ---------- | -
|                                     |  | BIOREN |           | PHARMACEUTICALS |  | CORPORATE |            | TOTAL
|                                     |  |        |           |                 |  |           |            |      
|Sales  International                |  | $      | 3,404,509 |                 |  |           | 1,104,199  |       |  |  |         |   |  |  | 4,508,708  |  
|                                    
|                                    
|                                    
|                                    
|Gross Margin                         |  |        | 615,212   |                 |  |           | (76,010    | )     |  |  |         |   |  |  | 539,202    |  
|                                    
|                                    
|                                    
|                                    
|Operating expenses and other
expense |  |        | (906,989  | )               |  |           | (1,638,763 | )     |  |  | (803,801 | ) |  |  | (3,349,553 | )
|                                     |  |        |           |                 |  |           |            |       |  |  |          |   |  |  |            |  
|Segment Loss                         |  |        | (291,777  | )               |  |           | (1,714,773 | )     |  |  | (803,801 | ) |  |  | (2,810,351 | )

SIX MONTHS ENDED JUNE 30, 2000

|                                     |  |        |           |                 |  |           |            |       |  |  |            |   |  |  |            |  
|------------------------------------ |  | ------ | --------- | --------------- |  | --------- | ---------- | ----- |  |  | ---------- | - |  |  | ---------- | -
|                                     |  | BIOREN |           | PHARMACEUTICALS |  | CORPORATE |            | TOTAL
|                                     |  |        |           |                 |  |           |            |      
|Sales  International                |  | $      | 2,939,474 |                 |  |           | 955,986    |       |  |  |           |   |  |  | 3,895,460  |  
|                                    
|                                    
|                                    
|                                    
|Gross Margin                         |  |        | 708,270   |                 |  |           | 18,908     |       |  |  |           |   |  |  | 727,178    |  
|                                    
|                                    
|                                    
|                                    
|Operating expenses and other
expense |  |        | (752,194  | )               |  |           | (1,090,088 | )     |  |  | (1,130,504 | ) |  |  | (2,972,786 | )
|                                     |  |        |           |                 |  |           |            |       |  |  |            |   |  |  |            |  
|Segment Loss                         |  |        | (43,924   | )               |  |           | (1,071,180 | )     |  |  | (1,130,504 | ) |  |  | (2,245,608 | )

Pharmaceuticals loss includes a $361,837 extraordinary gain from extinguishment of debt.

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THREE MONTHS ENDED JUNE 30, 2001

|                                     |  |        |           |                 |  |           |          |       |  |  |          |   |  |  |            |  
|------------------------------------ |  | ------ | --------- | --------------- |  | --------- | -------- | ----- |  |  | -------- | - |  |  | ---------- | -
|                                     |  | BIOREN |           | PHARMACEUTICALS |  | CORPORATE |          | TOTAL
|                                     |  |        |           |                 |  |           |          |      
|Sales  International                |  | $      | 1,824,250 |                 |  |           | 393,230  |       |  |  |         |   |  |  | 2,217,480  |  
|                                    
|                                    
|                                    
|                                    
|Gross Margin                         |  |        | 234,247   |                 |  |           | (83,092  | )     |  |  |         |   |  |  | 151,154    |  
|                                    
|                                    
|                                    
|                                    
|Operating expenses and other
expense |  |        | (391,405  | )               |  |           | (789,313 | )     |  |  | (467,806 | ) |  |  | (1,648,524 | )
|                                     |  |        |           |                 |  |           |          |       |  |  |          |   |  |  |            |  
|Segment Loss                         |  |        | (157,158  | )               |  |           | (872,405 | )     |  |  | (467,806 | ) |  |  | (1,497,370 | )

THREE MONTHS ENDED JUNE 30, 2000

|                                     |  |        |           |                 |  |           |          |       |  |  |          |   |  |  |            |  
|------------------------------------ |  | ------ | --------- | --------------- |  | --------- | -------- | ----- |  |  | -------- | - |  |  | ---------- | -
|                                     |  | BIOREN |           | PHARMACEUTICALS |  | CORPORATE |          | TOTAL
|                                     |  |        |           |                 |  |           |          |      
|Sales  International                |  | $      | 1,476,562 |                 |  |           | 639,177  |       |  |  |         |   |  |  | 2,115,739  |  
|                                    
|                                    
|                                    
|                                    
|Gross Margin                         |  |        | 325,871   |                 |  |           | (98,248  | )     |  |  |         |   |  |  | 227,623    |  
|                                    
|                                    
|                                    
|                                    
|Operating expenses and other
expense |  |        | (293,861  | )               |  |           | (565,640 | )     |  |  | (663,377 | ) |  |  | (1,522,878 | )
|                                     |  |        |           |                 |  |           |          |       |  |  |          |   |  |  |            |  
|Segment Income (Loss)                |  |        | 32,010    |                 |  |           | (663,888 | )     |  |  | (663,377 | ) |  |  | (1,295,255 | )




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

The following is managements discussion of significant factors that affected
the Companys interim financial condition and results of operations. This
should be read in conjunction with Managements Discussion and Analysis of
Financial Condition and Results of Operations included in the Companys Annual
Report on Form 10-KSB for the year ended December 31, 2000.

Research and Development

In July 2001, the Company received approval from the Intercantonal Office for
the Control of Medications (IKS) to market a specialty injectable preparation
of Bupivacaine in Switzerland in three dosage strengths and two different
presentations. Five different products of Bupivacaine will be marketed in the
ready to use polypropylene infusion bag and five in glass vials. Bupivacaine
HCl is a long-acting local anesthetic used for caudal, epidural or peripheral
nerve block. Although injectable Bupivacaine was approved by the FDA in 1972,
Biorens easy-to-use pre-mix solution delivered in the IV infusion bag is the
first such formulation of the drug.

In May 2001, the Company received approval from Brazils Agencia Nacional de
Vigilancia Sanitaria (ANVS) to market Methotrexate and Leucovorin Calcium in
Brazil. The Methotrexate products are used in the treatment of various
neoplastic diseases. The

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Leucovorin products diminish toxicity and counteract the effects of impaired
methotrexate elimination and inadvertent over dosages of folic acid
antagonists.

In April 2001, the Company announced that production for clinical trials
commenced under its supply agreement with Novuspharma. Novuspharma is an
Italian biotechnology company specializing in novel cancer therapies. The
Company currently manufactures BBR 2778 for non-Hodgkins lymphoma and BBR 3464
for non small-cell lung cancer (U.S. and Europe) and ovarian and gastric
cancers (Europe) under its supply agreement with Novuspharma. Novuspharma
anticipates the commencement of U.S. Phase II trials in pancreatic cancer
patients in the near future.

In April 2001, the Company received approval from the Intercantonal Office for
the Control of Medications (IKS) to market Nitroglycerin in Switzerland. To
the best of the managements knowledge, Bioren is the first company worldwide
to market Nitroglycerin in a ready-to-use infusion bag. Nitroglycerin is a
vasodilator proven to be a mainstay therapy in the management of angina
pectoris. Nitroglycerin is also used to control preoperative hypertension, to
produce controlled hypotension during surgical procedures, to treat
hypertensive emergencies and to treat congestive heart failure associated with
coronary thrombosis.

Marketing and Sales

In the second quarter of 2001, the Company completed a distribution agreement
with Baxter A.G. (Baxter), based in Volketswil, Switzerland. The distribution
agreement gives to Baxter exclusive rights to market Biorens standard
intravenous solutions products throughout Switzerland and Liechtenstein for a
minimum period of 4 years. Terms of the agreement call for Bioren to continue
to manufacture the Pre-Mix Solutions for Baxter and Baxter is contractually
obligated to purchase from Bioren a minimum of 10 million units of product over
the next four years. In addition, Bioren will provide Baxter regulatory support
for the products throughout the four-year period of the agreement. The
agreement also provides Baxter first refusal rights for other geographic
distribution areas as well as other products currently sold or under
development stage by Bioren.

The Company plans to continue to develop commercial partnerships in other
countries for current registered products and sign significant distribution
agreements with major pharmaceutical companies for new products.

Production

The Company intends to devote additional capital resources to increase the
production capacity in the next 12 months, especially in the field of
lyophilized products. The Company believes its manufacturing concept is
attractive to a number of pharmaceutical companies and hopes to fund some of
its manufacturing growth needs through joint ventures with other pharmaceutical
companies, although no contractual agreements are in place as of June 30, 2001.

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Certain statements in this report constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995
including, without limitation, statements regarding future cash requirements
and statements which include words such as expect, anticipate, hope,
intend, and other similar words. Such forward-looking statements involve
known and unknown risks, uncertainties, and other factors, which may cause the
actual results, performance or achievements of the Company, or industry
results, to be materially different from any future results, performance or
achievements expressed or implied in such forward-looking statements. Such
factors and risks include, but are not limited to the following: delays in
product development, problems with clinical testing, failure to receive
regulatory approvals, lack of proprietary rights and changes in business
strategy. These risk factors and their associated impact on the Company are
discussed in greater detail in the Companys Form 10-KSB for the 2000 fiscal
year. Many of the factors that will determine results and values are beyond
the Companys ability to control or predict. For those statements, the Company
claims the protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995.

Results of Operations

Sales

The Company reported net sales of $2,217,000 for the second quarter of 2001,
representing an increase 4.8% over sales of $2,116,000 for the same quarter of
2000. On a local currency basis, sales increased by 8.3% due to higher sales
volume in the European markets. A stronger US Dollar against the Swiss Franc
adversely affected revenues during the second quarter of 2001. The average
exchange ratio of Swiss Franc to US Dollar during the second quarter 2001 was
     .572 as compared to .598 in 2000. This resulted in a lower revenue calculation
in US Dollars. Without taking into account the exchange rate increase, sales
levels would have increased by 11.1% or $235,000 for the second quarter of 2001
compared to the second quarter of 2000.

For the six-month period ended June 30, 2001 net sales increased by $613,000 or
15.7% over the same period in 2000. The rise in sales resulted from new
customers and new products. Without taking into account the exchange rate
increase, sales levels would have increased by 19.6% or $763,000.

The Company expects product sales to increase in 2001 compared to 2000
resulting from the continued growth of the Companys existing product lines as
well as from introductions of new products, which are currently awaiting
approval. The Company expects several of their new products to be approved for
sale by regulatory agencies in Europe, the United States and South America
during 2001. In addition, the Company anticipates higher volumes in sales at
Bioren due to its agreement with Baxter.

Gross Margin

Gross margin decreased from approximately $228,000 for the second quarter of
2000 to $151,000 for the second quarter of 2001, a 33.7% decline. For the
six-month period ended June 30, 2001, gross margin amounted to $539,000,
compared with $727,000 in the prior year. The gross margin was at
approximately 12.0% for the first half of 2001,

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compared to approximately 18.7% for the prior year. The decrease in the gross
margin percent was somewhat due to a different product mix resulting in lower
unit margins of certain products. However, most of the decrease can be
attributed to the Companys agreement with Baxter as the selling prices to Baxter
are lower than those that the Company typically would receive selling to end
customers.

Operating Expenses

Operating expenses increased from approximately $1,372,000 for the second
quarter of 2000 to $1,496,000 for the second quarter of 2001, a 9%
increase.
For the six month period ended June 30, 2000 and June 30, 2001 respectively,
operating expenses increased from approximately $3,017,000 to $3,064,000, an
increase of 1.5%. Research and development expenses decreased by $47,000 in the
same six-month period due to activities surrounding the Companys efforts in
the prior year to develop new drug product formulations. Selling, general and
administrative expenses increased by $94,000 in the same six-month period,
primarily due to higher administrative expenses.

Other Income and Expenses

Other expense was $6,000 in the second quarter of 2001 compared with an income
of $117,000 in the same period of 2000. For the six-month period ended June
30, 2001, other expense was $11,000 compared with an income of $113,000 in the
prior year.

Interest expense

Interest expense decreased $17,000 from the
six-month period ended June 30,
2000 to the same period of 2001, due to a decrease of total debt in the first
half of 2001, as compared to the first half of 2000.

Gain, Loss on Foreign Currency Transactions

Foreign exchange gains amounted to $151,000 for the
six-month period ended
June 30, 2001, compared to a gain of $12,000 in the prior year during the same
time period. Fluctuations are due primarily to changes in the exchange rates
between the Swiss Franc and the U.S. Dollar.

The Company recorded an extraordinary gain during the first quarter 2000 due to
the forgiveness of $362,000 in long-term debt from a Swiss bank.

Net Loss

As a result of all of the foregoing, the Companys net loss for the six-month
period ended June 30, 2001 amounted to $2,810,000 or ($0.28) per share on a
basic and diluted basis versus $2,246,000 during the same period of 2000 or
($0.28) per share on a basic and diluted basis. Net loss for the quarter ended
June 30, 2001 was $1,497,000 in comparison to a net loss of $1,295,000 in the
comparable quarter ended June 30, 2000.

Liquidity and Capital Resources

As of June 30, 2001 and December 31, 2000, the Company had cash and cash
equivalents of $357,000 and $73,000, respectively. The Companys working
capital was a $4.5

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million deficit and $3.6 million deficit at June 30, 2001 and December 31,
2000, respectively.

The Company has incurred and will continue to incur substantial expenditures
for research and development activities related to bringing its products to the
commercial market. The Company intends to devote significant additional funds
to product development, formulation, clinical testing, product registration,
and other activities required for regulatory review of generic oncological
products. The amount required to complete such activities depends upon the
outcome of regulatory reviews and the number of new products the Company plans
to add during the year. The regulatory bodies may require more testing than is
currently planned by the Company. There can be no assurance that the Companys
generic oncological products will be approved for marketing by the FDA or any
foreign government agency, or that any such products will be successfully
introduced or achieve market acceptance.

Property, plant and equipment totaled $11.6 million and $13.4 million at June
30, 2001 and at December 31, 2000, respectively. Additions were approximately
$251,000 whereas depreciation expense was $717,000.

As of June 30, 2001, the Company had various notes, bonds, mortgages and other
borrowings totaling approximately $6.8 million including $1.9 million that is
short term in nature. These monies were used to partially fund the acquisition
of Bioren, to acquire, construct, and equip the manufacturing facility and to
fund ongoing research and development and product registration activities.

During the first quarter of 2001, pursuant to a private placement transaction
with Banca del Gottardo, the Company raised $6,825,000 after bank commission of
2.5% or $175,000, which was applied: to repay $4 million convertible notes and
related interest and to repurchase 1,000 shares of Series B Convertible
Preferred Stock including accrued dividends. Net proceeds were applied to
working capital and general corporate purposes.

The Company anticipates that additional capital funding together with cash from
operations will be required to sustain operations through December 2001.
However, there can be no assurance that events affecting the Companys
operations will not result in the Company depleting its funds before that time.
Management is currently discussing additional financing with a number of
financial institutions and investors, but there are no assurances that the
Company will be able to obtain additional financing or that such financing, if
available, will be available on acceptable terms.

The Swiss Federal Code of Obligation provides that at least 5% of a Swiss
companys net income each year must be appropriated to a legal reserve until
such time as this reserve is equal to 20% of the companys paid-in share
capital. In addition, 10% of any distribution made by a company in excess of a
5% dividend must also be appropriated to the legal reserve. The reserve of up
to 5% of share capital is not available for distribution to stockholders.

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The results of the Companys operations are affected by changes in exchange
rates between the United States and Swiss currencies. Changes in exchange
rates between currencies may negatively impact the Companys results of
operations, specifically, net sales and gross profit margins from international
operations. In addition, the dollar-value equivalent of anticipated cash flows
could also be adversely affected. When the Company determines that this risk
has become significant, the Company may attempt to manage that risk by using
hedging techniques.

RECENTLY ISSUED ACCOUNTING STANDARDS

In July 2001, the FASB issued Statement N°. 141, Business Combinations, and
Statement N°. 142, Goodwill and Other Intangible Assets. Statement 141 requires
that the purchase method of accounting be used for all business combinations
initiated after June 30, 2001 as well as all purchase method business
combinations completed after June 30, 2001. Statement 142 will require that
goodwill and intangible assets with indefinite useful lives no longer be
amortized, but instead tested for impairment at least annually in accordance
with the provisions of Statement 142. Statement 142 will also require that
intangible assets with estimable useful lives be amortized over their
respective estimated useful lives to their estimated residual values, and
reviewed for impairment in accordance with SFAS N°. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of.
The Company has not determined what impact these new pronouncements will have
on its accounting for its intangible assets.

Quantitative and Qualitative Disclosures About Market Risk

On January 1, 1999, 11 member countries of the European Union (Switzerland
excluded) established fixed conversion rates between their existing sovereign
currencies, and adopted the Euro as their own common legal currency. The Euro
is currently trading on currency exchanges and the legacy currencies will
remain legal tender in the participating countries for a transition period
between January 1, 1999 and December 31, 2001. Between January 1, 2002 and
July 1, 2002, the participating countries will introduce Euro notes and coins
and withdraw all legacy currencies so that they will no longer be available.
Based on current information and managements current assessment, the Company
does not expect that the Euro conversion will have a material adverse effect on
its business or financial condition.

In the normal course of business, operations of the Company are exposed to
fluctuations in currency values. These fluctuations can vary the costs of
financing, investing, and operating activities. The Company does not have any
programs in place to control these risks.

The Companys foreign currency risk exposure results from fluctuating currency
exchange rates, primarily the fluctuation of the U.S. dollar against the Swiss
Franc (Sfr). The Company faces transactional currency exposures that arise
when its foreign subsidiaries (or the Company itself) enter into transactions
denominated in currencies other than their local currency. The Company also
faces currency exposure that arises from translating the results of its Swiss
operations to the U.S. dollar at exchange rates that have fluctuated from the
beginning of the period. The Company does not have any programs in place to
control these risks.

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The table below provides information about the Companys financial instruments
by functional currency and presents such information in U.S. dollar
equivalents:

|                             |                 |                       |  |                        |         |      |  |      |         |      |  |      |           |            |  |  |         |   |  |  |         |   |  |  |           |  
|---------------------------- | --------------- | --------------------- |  | ---------------------- | ------- | ---- |  | ---- | ------- | ---- |  | ---- | --------- | ---------- |  |  | ------- | - |  |  | ------- | - |  |  | --------- | -
|                             |                 |                       |  | Expected Maturity Date
|                             |                 |                       |  |                       
|                             |                 |                       |  | 2001                   |         | 2002 |  | 2003 |         | 2004 |  | 2005 |           | Thereafter
|                             |                 |                       |  |                        |         |      |  |      |         |      |  |      |           |           
|(US$ Equivalent)             |                 |                       |  |                        |         |      |  |      |         |      |  |      |           |            |  |  |         |   |  |  |         |   |  | 
|                            
|                            
|                            
|                            
|except average interest rate |                 |                       |  |                        |         |      |  |      |         |      |  |      |           |            |  |  |         |   |  |  |         |   |  | 
|                            
|                            
|                            
|                            
|                             |                 |                       |  |                        |         |      |  |      |         |      |  |      |           |            |  |  |         |   |  |  |         |   |  | 
|                            
|                            
|                            
|                            
|                             | Liabilities     |                       |  |                        |         |      |  |      |         |      |  |      |           |            |  |  |         |   |  |  |         |   |  |  |          
|                            
|                            
|                            
|                            
|                             | Long-Term Debt: |                       |  |                        |         |      |  |      |         |      |  |      |           |            |  |  |         |   |  |  |         |   |  |  |          
|                            
|                            
|                            
|                            
|                             |                 | Fixed Rate ($US)      |  | $                      |        |      |  |      |        |      |  |      |          |            |  |  |        |   |  |  |        |   |  |  |          |  
|                            
|                            
|                            
|                            
|                             |                 | Average interest rate |  |                        |        |      |  |      |        |      |  |      |          |            |  |  |        |   |  |  |        |   |  |  |          |  
|                            
|                            
|                            
|                            
|                             |                 | Fixed Rate (Sfr)      |  | $                      | 947,603 |      |  |      |        |      |  |      | 1,672,242 |            |  |  |        |   |  |  |        |   |  |  |          |  
|                            
|                            
|                            
|                            
|                             |                 | Average interest rate |  |                        | 5.0     | %    |  |      |        |      |  |      | 4.0       | %          |  |  |        |   |  |  |        |   |  |  |          |  
|                            
|                            
|                            
|                            
|                             |                 | Variable Rate (Sfr)   |  | $                      | 423,634 |      |  |      | 507,246 |      |  |      | 340,022   |            |  |  | 228,540 |   |  |  | 117,057 |   |  |  | 2,201,784 |  
|                            
|                            
|                            
|                            
|                             |                 | Average interest rate |  |                        | 6.0     | %    |  |      | 5.9     | %    |  |      | 5.7       | %          |  |  | 5.3     | % |  |  | 4.2     | % |  |  | 4.0       | %

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BIGMAR, INC. AND SUBSIDIARIES




PART II. OTHER INFORMATION




Item 2(c). Changes in Securities  Recent Sales of Unregistered Securities

On February 28, 2001, the Company issued 7,000 shares of Series B Convertible
Preferred Stock, $0.001 par value per share and warrants at $2.00 for the
purchase of 1,400,000 shares of the Companys Common Stock, $0.001 par value
per share, to Banca del Gottardo via a private placement offering. Proceeds
from the sale of shares after bank commission of 2.5% or $175,000 totaled
$6,825,000 and were applied to repay $4 million convertible notes and related
interest and to repurchase 1,000 shares of Series B Convertible Preferred Stock
including accrued dividends. Net proceeds will be applied to working capital
and general corporate purposes.

The above-described offering of Preferred Stock and warrants was made pursuant
to an exemption from registration under Regulation S.




Item 5. Other Information

In August 2001, the Company decided to initiate a
stock repurchase program. Management believes that the Companys common stock is significantly
undervalued and presents an attractive investment opportunity for the Company.
Up to $500,000 of the Companys funds may be used to repurchase its common
stock in the open market. The time and price of the repurchases as well as the
amount of shares involved have not yet been determined.




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 June 30, 2001.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

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|August 13, 2001 |  |                                      
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|                |  | BIGMAR, INC                          
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|                |  | Registrant                           
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|                |  | By: /s/ Philippe J.H. Rohrer         
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|                |  | Philippe J.H. Rohrer                 
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|                |  | Chief Financial Officer and Treasurer

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