<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

(MARK ONE)

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

                For the quarterly period ended SEPTEMBER 30, 1999

                                       OR

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

             For the transition period from __________ to __________

                         Commission File Number 0-21846

                              BISHOP EQUITIES, INC.
             (Exact name of registrant as specified in its charter)

             NEVADA                                      13-3632859
  (State or other jurisdiction of                     (I.R.S. Employer
   incorporation or organization)                     Identification No.)


       7825 FAY AVENUE, SUITE 200
           LAJOLLA, CALIFORNIA                                92037
  (Address of Principal Executive Office)                   (Zip Code)

        Registrant's telephone number, including area code (619) 456-5777

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes  X   No
                                             ----    ----

         As of September 30, 1999, the registrant had 2,595,000 shares
outstanding of its Common Stock, $.001 par value.


<PAGE>

<TABLE>
<CAPTION>

PART I.  FINANCIAL INFORMATION
<S>                                                                                                 <C>
     Item 1.  Consolidated Financial Statements:

     Consolidated Balance Sheets (unaudited) at September 30, 1999
     and March 31, 1999............................................................................  3

     Consolidated Statements of Operations (unaudited) for the
     three months ended September 30, 1999 and 1998................................................  4

     Consolidated Statements of Cash Flows (unaudited)
     for the three months ended September 30, 1999 and 1998........................................  5

     Notes to Consolidated Financial Statements....................................................  7

     Item 2.  Management's Discussion and Analysis of
     Financial Condition and Results of Operations................................................. 11


PART II.  OTHER INFORMATION........................................................................ 13


SIGNATURES    ..................................................................................... 14
</TABLE>


                                       2
<PAGE>

                                     PART I

                              FINANCIAL INFORMATION

ITEM 1.       FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
                                                          SEPTEMBER 30,        MARCH 31,
                                                              1999               1999
As of                                                     (UNAUDITED)
                                                       ----------------     ---------------
<S>                                                     <C>                 <C>
ASSETS
CURRENT ASSETS
       Cash and cash equivalents                        $    29,381         $     3,052
                                                       -------------       -------------
         Total current assets                                29,381               3,052

PROPERTY AND EQUIPMENT, NET                                  33,048              33,608

OTHER ASSETS
Patents, net                                                 41,327              45,413
Deferred loan costs, net                                     12,291                --
                                                       -------------       -------------
         Total other assets                                  53,618                --

         Total assets                                   $   116,047              82,073
                                                       =============       =============
LIABILITIES
Current liabilities
       Accounts payable:
         Trade                                          $   322,531         $   252,178
         Related parties                                    238,125             158,306
       Notes payable                                        212,500             310,008
       Accrued liabilities                                  205,908              63,577
       Due to stockholder                                   325,835               2,500
                                                       -------------       -------------
         Total current liabilities                        1,304,899             786,569

STOCKHOLDERS' EQUITY (DEFICIT)
       Common Stock - $.001 par value                         2,595               2,595
         25,000,000 shares authorized, 2,595,000
         shares issued and outstanding
       Additional paid in capital                         2,690,750           2,739,943
       Retained earnings (deficit)                       (3,882,197)         (3,447,034)
                                                       -------------       -------------
         Total stockholders' equity (deficit)            (1,188,852)           (704,496)
                                                       -------------       -------------
         Total liabilities and
           stockholders' equity (deficit)               $   116,047              82,073
                                                       =============       =============
</TABLE>


                             SEE ACCOMPANYING NOTES.
                                       3
<PAGE>

CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT

<TABLE>
<CAPTION>

                                                 FOR THE THREE          FOR THE SIX        CUMULATIVE DURING
                                                 MONTHS ENDED           MONTHS ENDED       DEVELOPMENT STAGE
                                                 SEPTEMBER 30,          SEPTEMBER 30,           THROUGH
                                                     1999                   1999             SEPTEMBER 30,
                                                  (UNAUDITED)           (UNAUDITED)           (UNAUDITED)
                                                 -------------          -------------      -----------------
<S>                                              <C>                   <C>                <C>
REVENUE
   Grant income                                   $      ---           $       ---            $ 1,424,012
   Subcontract income                                    ---                   ---                 73,746
   Sale of research and development                      ---                   ---                 35,810
   Other income                                          ---                   ---                 17,225
   Interest Income                                       ---                   ---                 17,415
                                                 -------------          ------------       ---------------
         Total revenue                                   ---                   ---              1,568,208

EXPENSES
   Personnel costs                                    116,606               204,693             3,052,189
   Research and development consultation                 ---                   ---                240,463
   Subcontract expense                                   ---                   ---                195,964
   Contractual costs                                     ---                   ---                192,112
   Equipment and maintenance                             ---                   ---                164,699
   Rent and office expense                             18,758                34,158               449,845
   Professional fees                                   38,923               104,652               421,632
   Miscellaneous                                        3,502                 3,520               101,823
   Depreciation                                         2,439                 4,764               128,584
   Travel and meetings                                  5,631                 9,471               126,888
   Insurance                                            6,271                 6,271                63,582
   Laboratory supplies                                   ---                   ---                 99,733
   Interest                                             4,190                 4,805                95,566
   Amortization                                         3,502                 5,545                40,272
   Consulting                                          36,137                36,137                36,137
   Loan acquisition fees                               21,000                21,000                21,000
   Dues and subscription                                 ---                   ---                 13,596
                                                 -------------          ------------       ---------------
         Total expenses                               256,959               435,016             5,444,085
                                                 -------------          ------------       ---------------
LOSS BEFORE INCOME TAXES                             (256,959)             (435,016)           (3,875,877)

PROVISION FOR INCOME TAXES                                 91                   147                 6,320
                                                 -------------          ------------       ---------------
NET LOSS                                          $  (257,050)          $  (435,163)          $(3,882,197)
                                                 =============          ============       ===============
PER SHARE:
   Net loss                                       $     (0.10)          $     (0.17)          $     (3.01)
                                                 =============          ============       ===============
   Weighted average number of
    common shares outstanding                       2,595,000             2,595,000             1,290,357
                                                 =============          ============       ===============
</TABLE>


                             SEE ACCOMPANYING NOTES.

                                       4
<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                FOR THE THREE        FOR THE SIX           CUMULATIVE
                                                                MONTHS ENDED         MONTHS ENDED            DURING
                                                                SEPTEMBER 30,        SEPTEMBER 30,         DEVELOPMENT
                                                                    1999                 1999             STAGE THROUGH
                                                                 (UNAUDITED)          (UNAUDITED)       SEPTEMBER 30, 1999
                                                              -----------------    ----------------   ----------------------
<S>                                                           <C>                  <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES
 Net loss                                                        $  (257,050)        $  (435,163)          $(3,882,197)
 Adjustments to reconcile net loss to net cash
  used by operating activities:
   Depreciation                                                        2,439               4,764               128,584
   Amortization                                                        3,502               5,545                40,272
   Deferred compensation forgiven                                       ---                 ---                217,223
 Changes in liabilities in noncash operating activities:
  Increase (decrease) in liabilities:
    Accounts payable                                                  71,775             101,021               491,655
    Accrued expenses                                                  62,547             139,789               270,604
    Deferred compensation                                              8,012              15,827               325,834
                                                              --------------------------------------------------------------
       Net cash used by operating activities                        (108,775)           (168,217)           (2,408,025)

CASH FLOWS FROM INVESTING ACTIVITIES
 Purchase of property and equipment                                   (4,204)             (4,204)             (161,632)
 Loan acqusition costs                                               (13,750)            (13,750)              (13,750)
 Purchase of patents                                                    ---                 ---                (80,740)
                                                              --------------------------------------------------------------
       Net cash used by investing activities                         (17,954)            (17,954)             (256,122)

CASH FLOWS FROM FINANCING ACTIVITIES
 Increase in loan payable - stockholders                             152,500             212,500               582,884
 Advances from subsidiary                                               ---                 ---                122,100
 Proceeds from issuance of common stock                                 ---                 ---              1,988,544
                                                              --------------------------------------------------------------
       Net cash provided by financing activities                     152,500             212,500             2,693,528

NET INCREASE IN CASH                                                  25,771              26,329                29,381
CASH, BEGINNING                                                        3,610               3,052                  ---
                                                              --------------------------------------------------------------
CASH, ENDING                                                     $    29,381         $    29,381           $    29,381
                                                              ==============================================================
SUPPLEMENTAL DISCLOSURES OF CASH
  FLOW INFORMATION
   Cash paid during the year for:
    Interest                                                     $      ---          $       ---           $    23,580
    Income taxes                                                        ---                  ---                 5,812

SUPPLEMENTAL DISCLOSURES OF NONCASH
 INVESTING AND FINANCING ACTIVITIES
   Loans converted to common stock
     of Hemex                                                    $      ---          $       ---           $   367,882
                                                              ==============================================================
   Net assets of entities acquired in exchange
    for the issuance of common stock                             $      ---          $       ---           $   119,014
                                                              ==============================================================
</TABLE>

                             SEE ACCOMPANYING NOTES.

                                       5
<PAGE>

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>

                                                  COMMON STOCK                   PAID IN         ACCUMULATED
                                            SHARES            AMOUNT             CAPITAL           DEFICIT              TOTAL
                                        -----------------------------------------------------------------------------------------
<S>                                     <C>                <C>                <C>                <C>                <C>
BALANCE AT MARCH 31, 1999                 2,595,000        $     2,595        $ 2,759,659        $(3,447,034)       $  (684,689)

 Prior period adjustment (Note 10)             ---                ---             (68,909)              ---             (69,000)

 Net loss for the six months ended
  September 30, 1999                           ---                ---                ---            (435,163)          (435,163)
                                        -----------------------------------------------------------------------------------------
BALANCE AT SEPTEMBER 30, 1999             2,595,000        $     2,595        $ 2,690,750        $(3,882,197)       $(1,188,852)
                                        =========================================================================================
</TABLE>

                             SEE ACCOMPANYING NOTE.


                                       6
<PAGE>

BISHOP EQUITIES, INC. (D/B/A AETHLON MEDICAL, INC.)
   AND SUBSIDIARIES (A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 1999

NOTE 1:               SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
         PRINCIPLES OF CONSOLIDATION

              The consolidated financial statements include the accounts of
              Bishop Equities, Inc. (doing business as Aethlon Medical, Inc.)
              (Bishop) and its wholly owned subsidiaries, Hemex, Inc. (Hemex)
              and Aethlon, Inc. (Aethlon) (collectively the Company). All
              significant intercompany balances and transactions have been
              eliminated.


         NATURE OF BUSINESS
              Bishop, which was formerly a non-operating public shell, is the
              parent company to Aethlon and Hemex. Aethlon was incorporated on
              June 24, 1998 to acquire proprietary medical device technologies
              with the ability to be developed and commercialized on an
              international basis. Hemex was incorporated on January 31, 1984
              and is a start-up research and development company involved in
              developing the Hemopurifier, a medical device that removes toxic
              metals present in the bloodstream.

              To date the Company is in the initial stage of its operations and
              has not yet engaged in any commercial activities.

       ESTIMATES

              The preparation of the financial statements in conformity with
              generally accepted accounting principles requires management to
              make estimates and assumptions that affect the reported amounts of
              assets and liabilities and receipts and expenditures during the
              reporting period. Actual results could differ from estimates.

         FAIR VALUE OF FINANCIAL INSTRUMENTS

              The carrying amount reported in the balance sheets approximate
              fair value.

         ACCOUNTING STANDARDS CHANGES

              Effective fiscal 1998, the Company adopted SFAS 131, Disclosures
              about Segments and Related Information, which establishes
              standards for the way public companies report information about
              operating segments in both interim and annual financial statements
              and related disclosures.

              The Company is currently organized, managed and internally
              reported as one segment. The segments are determined based on
              differences in products, production processes and internal
              reporting. The segment operates entirely within the United States.

         NET LOSS PER COMMON SHARE

              In accordance with SFAS 128, dual presentation of basic and
              diluted earnings per share is required on the face of the
              statement of operations. Net loss per share is based upon the
              weighted average number of common shares outstanding during the
              periods presented. Outstanding stock options, warrants and
              convertible debentures have not been considered common stock
              equivalents because their assumed exercise would be anti-dilutive.

         EQUIPMENT AND DEPRECIATION

              Equipment is recorded at cost. Depreciation has been determined
              using the straight-line method over the estimated useful lives of
              the assets. Depreciation expense for the six-months and
              three-months ended September 30, 1999 was $4,764 and $2,439,


                                       7
<PAGE>

              respectively. Accumulated depreciation as of September 30, and
              June 30, 1999 amounted to $128,584 and $126,145, respectively.

         PATENTS AND AMORTIZATION

              Three patents were acquired in December 31, 1994 from a
              stockholder in exchange for a note payable in the amount of
              $80,140. The patents are being amortized on the straight-line
              method over their remaining lives. The patents expire between the
              years 2003 through 2005. Amortization for the six-months and
              three-months ended September 30, 1999 was $4,086 and $2,043,
              respectively. Accumulated amortization as of September 30, and
              June 30, 1999 amounted to $38,813 and $36,770, respectively.

         DEFERRED LOAN COSTS

              Deferred loan costs are the fees paid to a private placement
              company for the units sold. These costs are being amortized on a
              straight-line basis over the term of the related debt - one year.
              Amortization expense for the six-months and three-months ended
              September 30, 1999 was $1,459 and $1,459, respectively.
              Accumulated amortization as of September 30 and June 30, 1999
              amounted to $1,459 and $-0-, respectively.


         RESEARCH, DEVELOPMENTAL AND ORGANIZATIONAL COSTS

              Research, developmental and organizational costs are expensed
              as incurred.

         INCOME TAXES

              Income taxes are computed in accordance with Financial Accounting
              Standards Board Statement No. 109, Accounting for Income Taxes.
              Deferred taxes are provided on temporary differences arising from
              assets and liabilities whose bases are different for financial
              reporting and income tax purposes. Differences in basis for which
              deferred taxes are provided relate primarily to cost associated
              with research and development.

NOTE 2:                         FINANCIAL CONDITION

              On March 10, 1999, Bishop acquired the outstanding stock of two
              privately held Development Stage Enterprises, Hemex and Aethlon,
              in order to pursue its commitment to become a significant
              developer and manufacturer of medical device technologies (see
              Note 3). Hemex has developed a proprietary and patented technology
              for the extracorporeal removal of toxic materials from the blood,
              and has completed its first clinical trial of one application of
              this technology. Aethlon was formed as a medical device
              acquisition company, whose mission will now be carried forward by
              Bishop. Management intends to seek other acquisitions in related
              medical device technologies while in the near term concentrating
              on the commercialization of the Hemex Hemopurifier(TM) product
              line. It is expected that, subject to FDA approval,
              commercialization of this product will begin on a limited basis in
              late 2000.

              Since the acquisition of Hemex and Aethlon, the Company has
              undertaken an offering of short-term debt in the amount of
              $750,000. The Company has received proceeds of $250,000 from this
              offering through November 9, 1999. The Company has also received a
              letter from a major investment bank agreeing to use its best
              efforts in leading the private placement of the Company's common
              stock in the amount of $5 million to $7 million beginning in
              September 1999. Management believes that the financing provided by
              these two offerings, should they be completed, will be sufficient
              to meet the Company's cash needs, including the commercialization
              of the Hemopurifier products, for at least three years. Additional
              financing may be required in the case of further acquisitions.

              Management has several strategies for the conservation of capital
              while it is a


                                       8
<PAGE>

              Development Stage Enterprise. Management will invest
              principally in research and product development, and to a lesser
              extent in marketing planning and development. Strategic
              partnerships and subcontracting relationships are planned for
              direct sales, distribution and manufacturing activities related to
              the Hemex product line. Careful management of general and
              administrative expenses, including the use of part-time experts in
              specific functions, will minimize "burn rate" during the
              pre-revenue phase.

              The Company has sustained substantial operating losses in recent
              years, and expects to do so for two additional years, and its
              current liabilities exceed its current assets by $1,275,508 at
              September 30, 1999. Management believes that the actions described
              above will provide the basis for the Company to transition from a
              Development Stage Enterprise and commence principal operations,
              but can offer no assurances that its present plans will be
              sufficiently successful to enable the Company to continue to
              operate as a going concern.

NOTE 3:                            CAPITAL TRANSACTION

              In February 1999, Bishop (a non-operating public shell) entered
              into a merger agreement with Hemex and Aethlon whereby Bishop
              issued 1,350,000 and 825,000 shares of its common stock to Hemex
              and Aethlon, respectively, in exchange for 100 percent of their
              outstanding shares. Hemex and Aethlon survived as the operating
              entities and wholly-owned subsidiaries of Bishop. Bishop, which is
              currently doing business as Aethlon Medical, Inc., is in the
              process of formally changing its name to Aethlon Medical, Inc.

              As a result of the merger, the Hemex shareholders became the
              majority owners of the Company and have effective operating
              control. Accordingly, the transaction has been accounted for as a
              reverse acquisition whereby Hemex is deemed to be the accounting
              acquirer of Bishop and Aethlon through the issuance of stock for
              their net monetary assets, followed by a recapitalization. The
              assets and liabilities of Aethlon and Bishop have been recorded at
              their historical cost, which approximated their fair market value.


NOTE 4:                                  LEASES

              The Company rents laboratory space from the University of Buffalo
              Foundation and office space in California, on a month to month
              basis. Total rent expense for the six-months and three-months
              ended September 30, 1999 was $26,191 and $13,085, respectively.


NOTE 5:                             DEFERRED COMPENSATION

              The Company has deferred compensation agreements with two of its
              present employee/ stockholders and two former
              employee/stockholders. The terms of the agreements require the
              Company to compensate the individuals the amount owed as soon as
              the Company has funds available. To facilitate the capital
              transaction described in Note 3, the employees have agreed to
              accept a discounted amount as full payment of the compensation
              originally deferred. As a result, the deferred compensation
              liability presented in the accompanying financial statements has
              been discounted by 40 percent, reflecting the amount of funds
              management estimates will be available to satisfy the payment of
              the deferred compensation. The difference between the full amount
              owed and the discounted amount has been recorded as an increase in
              additional paid in capital. This additional paid in capital
              amounted to $-0- for each of the six-months and three-months ended
              September 30, 1999. Deferred compensation expense for the


                                       9
<PAGE>

              six-months and three-months ended September 30, 1999 was $15,822
              and $8,012, respectively.

NOTE 6:                              NOTES PAYABLE
<TABLE>
<CAPTION>
                                                                                           SEPTEMBER 30,   JUNE 30, 1999
                                                                                               1999
                                                                                           -------------   -------------
<S>                                                                                        <C>             <C>
              Notes payable stockholders - one year notes with interest payable
              quarterly at 12 percent per annum. At the option of the
              stockholders, these loans are convertible on the same terms of
              the private placement debt offering as described below. During the
              quarter ended September 30, 1999, $25,000 of these notes were
              converted

                                                                                                $ 35,000        $ 60,000
                                                                                           -------------   -------------
                                     Balance brought forward                                      35,000          60,000


                                                                                           SEPTEMBER 30,   JUNE 30, 1999
                                                                                               1999
                                                                                           -------------   -------------

                                     Balance brought forward                                      35,000          60,000

              Private placement debt offerings - the Company entered into an
              agreement to issue up to $750,000 of debt in units of $25,000.
              Each unit will contain a 12 percent interest rate and warrants to
              purchase 12,500 shares of common stock at a price of five dollars
              per share for a five-year term. The warrants may be called by the
              Company upon meeting certain per share market price goals.
              Warrants outstanding at September 30, 1999 were 62,500

                                                                                                 125,000            ---

                   Notes payable - terms of the notes call for payment of
                   principal and interest at 10 percent per annum due in one
                   month and on demand anytime thereafter.                                        52,500            ---
                                                                                           -------------   -------------
                            Total                                                              $ 212,500        $ 60,000
                                                                                           -------------   -------------
                                                                                           -------------   -------------
</TABLE>

                  Interest expense related to these loans for the six-months and
                  three-months ended September 30, 1999 was $4,805 and $4,190,
                  respectively.

NOTE 7:                                  INCOME TAXES

                  The Company has elected under Internal Revenue Code, Section
                  174, to capitalize for income tax purposes all research and
                  development expenditures incurred in conjunction with its
                  product development process. Net costs associated with the
                  research and development process amount to approximately
                  $3,556,000 at June 30, 1999. When the Company realizes
                  benefits from such expenditures, the costs will be amortized
                  over a period of 60 months.

                  A valuation allowance has been provided for 100 percent of the
                  deferred tax asset as realization of the asset is contingent
                  upon Food and Drug Administration approval of the Hemopurifier
                  and the Company generating sufficient taxable income to offset
                  the research and development amortization expenses.


                                       10
<PAGE>

                  The Company's deferred tax assets consist of:
<TABLE>
<CAPTION>
                                                             SEPTEMBER 30, 1999            JUNE 30, 1999
                                                             ------------------            -------------
<S>                                                          <C>                           <C>
                  Federal:
                           Deferred tax asset                      $ 546,000                 $ 501,000
                           Valuation allowance                       546,000                   501,000
                                                             ------------------            -------------
                                                                     $   --                  $     --
                                                             ------------------            -------------
                                                             ------------------            -------------

                  State:
                           Deferred tax asset                      $ 291,000                 $ 267,000
                           Valuation allowance                       291,000                   267,000
                                                             ------------------            -------------
                                                                   $     --                  $     --
                                                             ------------------            -------------
                                                             ------------------            -------------
</TABLE>

NOTE 8:                              RELATED PARTY TRANSACTIONS

                  In addition to the stockholder loans payable, the officers of
                  the Company and other related entities regularly pay expenses
                  on behalf of the Company. The officers also advance the
                  Company funds to cover short-term working capital shortages.
                  These non interest-bearing amounts have been included as
                  accounts payable - related parties in the accompanying
                  financial statements.

NOTE 9:                            COMMITMENTS AND CONTINGENCIES

                  On April 1, 1999, the Company granted to its President options
                  to purchase 412,500 shares of common stock at an exercise
                  price of $3 per share. The options vest 18 months from the
                  grant date and expire five years from the vesting date.

NOTE 10:                                PRIOR PERIOD ADJUSTMENT

                  Prior to the business combination, a subsidiary incurred
                  additional professional fees in the amount of $69,000. This
                  result of this adjustment is to increase accounts payable -
                  related party and increase the additional paid in capital
                  related to the issuance of stock for the acquisition of the
                  subsidiary.



ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

FINANCIAL CONDITION

The Company experienced a net increase in cash of $25,771 during the second
quarter of Fiscal Year 2000 ending on September 30, 1999. Cash of $100,000 was
provided by the proceeds from a private placement of 12-month notes bearing
interest of 12%, and $52,500 was provided by additional borrowings bearing
interest of 10%. Cash of $108,775 was used to fund certain current operating
expenses related to the reorganization of the Company after the acquisition of
Aethlon, Inc. and Hemex, Inc. in March, 1999, as well $13,750 of expenses
related to the private placement of one year notes.

During the second fiscal quarter of 1999, the Company's accounts payable
increased by $71,775, principally for legal and accounting fees related to
reorganization activities, the development of a Web site and other presentation
materials, and certain intellectual property activities. Deferred compensation
earned but not taken by three officers during the quarter increased by $38,667.

The principal cash requirements for the balance of Fiscal Year 2000 will be (1)
for completion of the reorganization of the Company, including filling certain
scientific and business positions, leasing a


                                       11
<PAGE>

larger office and laboratory facility for the Hemex, Inc. subsidiary, and the
purchase of laboratory and business equipment, (2) for expenses related to
completion of the aforementioned debt offering, as well as a planned private
placement of the Company's common stock in the amount of $5 million to $7
million, and (3) for the start of clinical trials and other expenses related
to the development and commercialization of the Hemex line of medical devices
for the extracorporeal removal of metal intoxicants from the blood.

The implementation of the Company's business plan is dependent upon its ability
to raise capital. The Company has undertaken a private placement of $750,000
principal amount of 12-month notes bearing interest at 12% per annum. The
company has also received a letter from an investment banker agreeing to use its
best efforts to sell at least $5.0 million of the Company's common stock in a
private placement anticipated to commence in January 2000. The Company believes
that the successful completion of these offerings will satisfy the Company's
anticipated cash requirements related to the development of the Company and of
the Hemex subsidiary business and products for three years; however, additional
financing may be required in the case of further acquisitions, or to develop
other technologies.

RESULTS OF OPERATIONS

The Company is in the initial stages of its operations and has not yet
engaged in any commercial  activities.  As a development  stage  enterprise,
the  company  had no  revenue  in the  quarter  ended  September  30,  1999.
From inception, revenue has been $1,568,000, of which $1,424,000 was grant
income.

Expenses in the quarter ended September 30, 1999 were $256,959. Expenses for
the first six months of Fiscal Year 2000 were $435,016, and from inception to
September 30, 1999 were $5,444,085.

The net loss for the quarter ended September 30, 1999 was $257,050 or $.010 per
common share. The loss from inception to September 30, 1999 was $3,882,197 or
$3.01 per common share.

YEAR 2000 MATTERS

The inability of computers, software, and other equipment utilizing
microprocessors to recognize and properly process date fields containing a two
digit year reference such as "00" for the year 2000 is commonly referred to as
the Year 2000 issue. Any of the Company's computer programs that utilize two
digit years may recognize "00" as the year 1900 rather than the year 2000. Such
recognition problems could cause disruptions of operations, including the
inability to perform essential business tasks.

The Company has identified all significant applications that could require
modification to address the Year 2000 issue. Testing of these applications is
complete, and no modification has been found necessary.

The Company has no third party vendors whose inability to comply with the Year
2000 issue would disrupt the management and operations of the Company.

FORWARD LOOKING STATEMENT

All statements, other than statements of historical fact, included in this Form
10-QSB are, or may be deemed to be, "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended ("the
Securities Act"), and Section 21E of the Securities Exchange Act of 1934 ("the
Exchange Act"). Such forward-looking statements involve assumptions, known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance, or achievements of Bishop Equities, Inc.("the Company") to
be materially different from any future results, performance, or achievements
expressed or implied by such forward looking statements contained in this Form
10-QSB. Such potential risks and uncertainties include, without limitation,
completion of the Company's capital-raising activities, FDA approval of the
Company's products, other regulations, patent


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<PAGE>

protection of the Company's proprietary technology, product liability
exposure, uncertainty of market acceptance, competition, technological
change, and other risk factors detailed herein and in other of the Company's
filings with the Securities and Exchange Commission. The forward-looking
statements are made as of the date of this Form 10-QSB and the Company
assumes no obligation to update the forward-looking statements, or to update
the reasons actual results could differ from those projected in such
forward-looking statements.

                                    PART II

                               OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

              Not Applicable

ITEM 2.  CHANGES IN SECURITIES

         Not Applicable

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         Not Applicable

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

         Not Applicable

ITEM 5.  OTHER INFORMATION

         Not Applicable

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

          Not Applicable


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<PAGE>

                                 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.

                                       BISHOP EQUITIES, INC.


Date:  November 12, 1999               By: /s/ James A. Joyce
                                          -------------------------------------
                                          James A. Joyce, Chairman of the Board


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