SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

 [X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act
           of 1934. For the quarterly period ended: December 31, 2000

                                       OR

 [_] Transition Report Under Section 13 or 15(d) of the Securities Exchange Act
                  of 1934. For the transition period from:   to

                       Commission File Number: 000-030813

                                  AlphaRx, Inc.
                 (Name of Small Business Issuer in its Charter)

          Delaware                                       98-0177440
(State or other jurisdiction of                       (I.R.S. Employer
 incorporation or organization)                       Identification No.)

                             10-75 East Beaver Creek
                             Ontario L4B 1B8, Canada
                    (Address of principal executive offices)

       Registrant's telephone number, including area code: (905) 762-0745

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:
                         Common Stock, $.0001 par value
                                (Title of Class)

Check  whether the issuer (1) 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 [X] No [ ]

The number of outstanding  shares of  registrant's  Common Stock on February 12,
2000 was 49,388,330.

Transitional Small Business Disclosure Format. Yes [ ] No [X]

<PAGE>

                                  ALPHARx, INC.

                                   FORM 10-QSB

                                December 31, 2000

                                TABLE OF CONTENT

--------------------------------------------------------------------------------
DESCRIPTION                                                                 Page
--------------------------------------------------------------------------------
Part I              Financial Information
--------------------------------------------------------------------------------
Item 1              Financial Statements                                       3
--------------------------------------------------------------------------------
                    Unaudited Balance Sheets as of December 31,
                    2000 and 1999                                              3
--------------------------------------------------------------------------------
                    Unaudited Statements of Operations for the three
                    months ended December 31, 2000 and 1999                    5
--------------------------------------------------------------------------------
                    Unaudited Statements of Cash Flows for the three
                    months ended December 31, 2000 and 1999                    6
--------------------------------------------------------------------------------
                    Notes to the Financial Statements                          7
--------------------------------------------------------------------------------
Item II             Management's Discussion and Analysis of Financial
                    Condition and Results of Operations                        8
--------------------------------------------------------------------------------
Part II             Other Information                                         11
--------------------------------------------------------------------------------
SIGNATURE PAGE                                                                12
--------------------------------------------------------------------------------


2
<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

                                  ALPHARx, INC.
                                  -------------
                          (A Development Stage Company)

                                 BALANCE SHEETS
                        As of December 31, 2000 and 1999

                                   (Unaudited)

                                     ASSETS

                                                     December 31   December 31
                                                         2000         1999
                                                      ---------     --------
CURRENT ASSETS
    Cash                                              $   (3017)    $ 69,816
                                                      ---------     --------
     TOTAL CURRENT ASSETS                                 (3017)      69,816

PROPERTY, PLANT & EQUIPMENT, at cost
      Less accumulated deprecation of $14,238(note 4)    68,855
      Less accumulated deprecation of $7,403                           3,672
                                                                    --------

OTHER ASSETS
    Deposit                                              15,000
    Investment                                           46,408       46,408
                                                      ---------     --------
TOTAL ASSETS                                          $ 127,246     $119,896
                                                      =========     ========

See accountant's review report
The accompanying notes are an integral part of this statement


3
<PAGE>

                      LIABILITIES AND SHAREHOLDERS' EQUITY
                        As of December 31, 2000 and 1999

                                                     December 31    December 31
                                                         2000           1999
CURRENT LIABILITIES

   Accounts payable and accrued liabilities          $    29,479    $    13,871
                                                                    -----------
   Accrued Interest                                          949
                                                     -----------
        TOTAL CURRENT LIABILITIES                         30,428         13,871

LONG-TERM LIABILITIES

   Loan Payable                                            4,000
   Loan from Shareholders (note 7)                       132,365
                                                         -------
        TOTAL LONG-TERM LIABILITIES                      136,365

SHAREHOLDER'S EQUITY

Common Stock, common, $ 0.0001 par value,
  Authorized 100,000,000 shares, issued and
  outstanding 49,388,330 shares (note 5)             $     4,939
  Additional paid-in capital                           1,374,291
  Deficit                                             (1,418,777)
                                                     -----------
Common Stock, common, $0.001 par value,
  Authorized 100,000,000 shares, issued and
  outstanding 4,712,833 shares                                      $     4,713
  Additional paid in capital                                          1,148,658
  Deficit                                                            (1,047,346)
                                                                    -----------
TOTAL SHAREHOLDER'S EQUITY                               (39,547)       106,025
                                                     -----------    -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY           $   127,246    $   119,896
                                                     ===========    ===========

See accountant's review report
The accompanying notes are an integral part of this statement


4
<PAGE>

                                  ALPHARx, INC.

                          (A Development Stage Company)

                             STATEMENT OF OPERATIONS
              FOR THE THREE MONTHS ENDED DECEMBER 31, 2000 and 1999
                                   (Unaudited)

                                                            December 31
                                                        2000           1999
                                                        ----           ----
SALES                                              $          0    $          0

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES            132,134          40,427

      LOSS FROM OPERATION                              (132,134)        (40,427)
                                                   ------------    ------------

OTHER INCOME
  Interest Income                                  $         10    $         27
  Other Income                                                              903
                                                   ------------    ------------
                                                             10             930
      LOSS BEFORE INCOME TAXES                         (132,124)        (39,497)

INCOME TAX                                                    0               0
                                                   ------------    ------------
NET LOSS                                           $   (132,124)   $    (39,497)
                                                   ============    ============
BASIC AND DILUTED NET LOSS PER SHARE               $    (0.0002)   $     (0.001)

WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING                                49,388,330       4,712,500

See accountant's review report
The accompanying notes are an integral part of this statement


5
<PAGE>

                                  ALPHARx, INC.

                          (A Development Stage Company)

                            STATEMENTS OF CASH FLOWS
              FOR THE THREE MONTHS ENDED DECEMBER 31, 2000 and 1999
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                  December 31
                                                               2000         1999

<S>                                                        <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
        Net Loss                                           $(132,124)   $ (39,497)
        Depreciation Amount                                    3,179          877

        Adjustments to reconcile note income to net cash
        Cash provided by operating activities:
           Changes in assets and liabilities:
           Increase (Decrease) in Accounts Payable               639       (5,155)
           Increase in Accrued Interest                          949
        Increase in Prepaid and Deposit                      (15,000)
         Increase in Loan from Shareholders                  130,000
         Increase in Loan Payable                              4,000
                                                           ----------------------
        NET CASH USED BY OPERATIONS ACTIVITIES             $  (8,357)   $ (43,775)

CASH FLOWS FROM INVESTING ACTIVITIES
        Increase of Improvements                              (1,837)
        Purchase of Investment                                             (1,314)
          Acquisition of Machinery & Equipment                (6,767)
                                                           ----------------------
  NET CASH USED BY INVESTING ACTIVITIES                       (8,604)      (1,314)

CASH FLOWS FROM FINANCING ACTIVITIES
        Proceeds from Issuance of Stock                                       485
        Increase in Additional Paid-In Capital                            112,858
                                                           ----------------------
        NET CASH PROVIDED BY FINANCING ACTIVITIES          $       0    $ 113,343

NET INCREASE (DECREASE) IN CASH                              (16,961)      68,254

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

CASH AS OF SEPTEMBER 30, 2000 (1999)                          13,944        1,562
                                                           ----------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                 $  (3,017)   $  69,816
                                                           =========    =========
</TABLE>

SUPPLEMENTARY DISCLOSURE:
The statement of cash flows using indirect method as defined
under Statement of Financial Accounting Standard of No. 95.
See accountant's review report. The accompanying notes are an integral part of
this statement


6
<PAGE>

                                 ALPHARx, INC.

                                  FORM 10-QSB

                               DECEMBER 31, 2000

                         NOTES TO FINANCIAL STATEMENTS

                                  (Unaudited)

1. INTERIM FINANCIAL INFORMATION

     In  the  opinion  of  management,   the  accompanying  unaudited  financial
statements  contain all necessary  adjustments,  which are of a normal recurring
nature, to present fairly the financial position of AlphaRx, Inc. as of December
31, 2000 and 1999, the results of operations for the three months ended December
31, 2000 and 1999,  and the cash flows for the three months  ended  December 31,
2000 and 1999, in conformity  with  generally  accepted  accounting  principles.
Operating  results for the three month  period  ended  December 31, 2000 are not
necessarily  indicative  of the results that may be expected for the entire year
ending September 31, 2001 or future operating periods.

     These unaudited interim financial  statements should be read in conjunction
with the financial  statements and related notes  contained in AlphaRx's  annual
report on Form 10-KSB for the year ended September 30, 2000.

2. FORMATION AND ORGANIZATION OF BUSINESS

     ALPHARX, INC. (the Company) was incorporated under the laws of the State of
Delaware on August 8, 1997. The company is still in its developing stage and had
no active business operation as of December 31, 2000.

3. BASIC AND DILUTED NET LOSS PER SHARE

     Net loss per share is computed using the weighted-average  number of shares
of common stock  outstanding.  Common stock  equivalent  shares from outstanding
stock options and warrants are not included as the effect is antidilutive.

4. LOAN FROM SHAREHOLDERS

     At December 31, 2000, the Company's  shareholder has advanced $130,000,  to
the Company.  These loans are  represented  by four separate  demand notes,  and
carry interest from 5% to 12%, and are classified as current  liabilities in the
accompanying financial statements.


7
<PAGE>

ITEM 2: MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION OR PLAN OF
OPERATION

     The following  discussion and analysis  should be read in conjunction  with
the Financial  Statements,  including the Notes thereto,  appearing in this Form
10-QSB.  Except for the historical  information  contained  herein the foregoing
discussion   contains   forward-looking   statements   that  involve  risks  and
uncertainties.  Our actual results could differ  materially from those projected
in the forward-looking statements discussed herein.

General

     We are a development  stage company  engaged in the  development of new and
proprietary drug delivery products. We have developed two types of drug delivery
systems,  the Colloidal Lipid Dispersion  System (the "CLD System") and the Self
Emulsifying  Controlled Release Tablet System (the "SECRET System" and together,
the "BCD Systems"). The CLD System is designed to deliver drugs through the skin
in order to reduce the gastrointestinal irritation that is a side effect of many
orally  administered  drugs,  and the  SECRET  System  is  designed  to  provide
continuous,  controlled  delivery of an incorporated drug. In addition,  the BCD
Systems  are  designed to improve the  bioavailability  of poorly  water-soluble
drugs.

     Since our inception in August 1997, we have devoted  substantially  all our
efforts to research  and  development  conducted  on our own behalf with the BCD
Drug Delivery Systems.  Our primary  activities since inception (August 7, 1997)
have been, in addition to research and development, establishing our offices and
research   facilities,   recruiting   personnel,   filing  patent  applications,
developing a business strategy and raising capital.

     We have experienced  significant operating losses since our inception,  and
expect to incur substantial and continuing losses for the foreseeable future. We
incurred  a net  loss of  approximately  $132,124  for the  three  months  ended
December  31,  2000,  resulting  in  an  accumulated  deficit  of  approximately
$1,418,777.  To date, we have received  only limited  revenue,  all of which has
been from interest earned from invested funds.

     We intend to  continue  investing  in the further  development  of our drug
delivery  technologies  and to actively  seek  collaborators  and  licensees  to
accelerate the development and  commercialization of products  incorporating our
BCD Drug  Delivery  Systems.  Depending  upon a variety  of  factors,  including
collaborative arrangements, available personnel and financial resources, we will
conduct  or fund  clinical  trials  on such  products  and  will  undertake  the
associated  regulatory  activities.  We will  need to  make  additional  capital
investments in laboratories  and related  facilities,  including the purchase of
laboratory and pilot scale manufacturing  equipment. As additional personnel are
hired in 2001 and beyond,  expenses can be expected to increase  from their 2000
levels.


8
<PAGE>

RESULTS OF OPERATIONS

Three months ended December 31, 2000 and 1999

     Losses for the 3 months ended  December 31, 2000 and 1999 were $132,124 and
$39,497 respectively. The increase was due to higher R&D costs.

     Research and  development for the 3 months ended December 31, 2000 and 1999
were  $61,948 and $7,392  respectively.  The  increase  was due to the hiring of
additional part time  technicians  and related  expenses,  increased  laboratory
supplies and services and equipment improvements.

     General and administrative expenses for the three months ended December 31,
2000 were  approximately  $70,186 compared to  approximately  $33,036 during the
three months ended  December  31, 1999.  The increase was due to the  additional
occupancy expense of our laboratory facility, the increased professional fee and
increased labor cost.

LIQUIDITY AND CAPITAL RESOURCES

     Since inception,  we have financed operations  principally from the sale of
Common  Stock  and  expect  to  continue  this  practice  to  fund  our  ongoing
activities.

     We   currently   do  not  have   sufficient   resources   to  complete  the
commercialization  of any of our proposed  products or to carry out our business
strategy. Therefore, we will likely need to raise substantial additional capital
to fund our  operations  sometime in the future.  We cannot be certain  that any
financing will be available when needed. Any additional equity financings may be
dilutive to our existing  shareholders,  and debt financing,  if available,  may
involve restrictive covenants on our business.

     We expect to continue to spend capital on:

     1.  research and development programs;
     2.  preclinical studies and clinical trials;
     3.  regulatory processes; and
     4.  establishment  of our  own  pilot  scale  manufacturing  and  marketing
capabilities or a search for third party manufacturers and marketing partners to
manufacture and market our products for us.

     The amount of capital we may need will depend on many factors, including :

     1. the progress, timing and scope of our research and development programs;
     2. the progress,  timing and scope of our preclinical  studies and clinical
trials;
     3. the time and cost necessary to obtain regulatory approvals;
     4. the time and cost  necessary  to establish  our own sales and  marketing
capabilities or to seek marketing partners to market our products for us;


9
<PAGE>

     5. the time and cost  necessary  to  respond  to  technological  and market
developments; and
     6. new collaborative,  licensing and other commercial relationships that we
may establish.

     The inability to raise capital would have a material  adverse effect on the
Company. We currently have no capital commitments other than the payment of rent
on our facilities lease.

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

     AlphaRx  is  a  development  stage  company.  Certain  of  the  information
contained in this document constitutes "forward-looking  statements",  including
but not limited to those with respect to the future  revenues,  our  development
strategy,  involve  known and unknown  risks,  uncertainties,  and other factors
which may cause our actual results, performance or achievements to be materially
different  from any future  results,  performance or  achievements  expressed or
implied by such forward-looking  statements. Such factors include, among others,
the risks and  uncertainties  associated with a drug delivery  company which has
not  commercialized  our  first  product,  including  a history  of net  losses,
unproven  technology,  lack of manufacturing  experience,  current and potential
competitors with significant technical and marketing resources,  need for future
capital  and  dependence  on  collaborative   partners  and  on  key  personnel.
Additionally,  we are subject to the risks and uncertainties associated with all
drug delivery companies,  including  compliance with government  regulations and
the  possibility  of patent  infringement  litigation,  as well as those factors
disclosed  in our  documents  filed  from  time to time with the  United  States
Securities and Exchange Commission.


10
<PAGE>

PART II: OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

     None.

ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS

     During the three months ended December 31, 2000,  AlphaRx has not issued or
     sold any securities  that were not  registered  under the Securities Act of
     1933, as amended.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

     Not applicable.

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

     None.

ITEM 5 - OTHER INFORMATION

     None.

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  December
          31, 2000.


                                       11
<PAGE>

                                   SIGNATURES:

     Pursuant to the  requirements of Section 12 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.

DATED: February 12, 2001

                                           ALPHARx, INC.


                                         By: /S/ Michael M. Lee
                                             --------------------------
                                             Michael M.  Lee, President

                                         Directors:


                                               /S/ Michael M. Lee
                                               -------------------------
                                               Michael M.  Lee, Director


                                               /S/ Sai Ming Wong
                                               -------------------------
                                               Sai Ming Wong, Director


                                               /S/ Joseph Schwartz
                                               -------------------------
                                               Joseph Schwartz, Director


                                               /S/ Sandro Persia
                                               -------------------------
                                               Sandro Persia, Director


                                       12