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, 2001

                                       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 8,
2002 was 53,984,723.

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


<PAGE>

                                  ALPHARx, INC.

                                   FORM 10-QSB

                                December 31, 2001


                                TABLE OF CONTENT


<TABLE>
<CAPTION>
DESCRIPTION                                                                        Page
-----------                                                                        ----
<S>            <C>                                                                 <C>
Part I         Financial Information

Item 1         Financial Statements                                                 3

               Unaudited Balance Sheets as of December 31, 2001 and 2000            3

               Unaudited  Statements  of  Operations  for the three months ended    5
               December 31, 2001 and 2000

               Unaudited  Statements  of Cash Flows for the three  months  ended    6
               December, 2001 and 2000

               Notes to the Financial Statements                                    7

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

Part II        Other Information                                                    14

SIGNATURE PAGE                                                                      15
</TABLE>



2
<PAGE>


PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS


                                  ALPHARx, INC.
                          (A Development Stage Company)

                                 BALANCE SHEETS
                        As of December 31, 2001 and 2000

                                   (Unaudited)



                                     ASSETS

                                                        December 31  December 31
                                                           2001         2000
CURRENT ASSETS

Cash                                                     $  4,626     $  (3,017)
   Loan-Kai Yi Sung                                         2,928
   Inventory                                               13,688
   Due from officer                                         1,335
                                                         --------     ---------

     TOTAL CURRENT ASSETS                                  22,577        (3,017)


PROPERTY, PLANT & EQUIPMENT, at cost

       Less accumulated deprecation of $35,367(note 4)    129,789
       Less accumulated deprecation of $14,238                           68,855
                                                                      ---------


OTHER ASSETS

   Deposit                                                               15,000
   Investment                                              46,408        46,408
                                                         --------     ---------

TOTAL ASSETS                                             $198,774     $ 127,246
                                                         ========     =========


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, 2001 and 2000


                                                        December 31  December 31
                                                           2001         2000
CURRENT LIABILITIES

   Accounts Payable and Accrued Liabilities           $    32,222     $  29,479
   Accrued Interest                                        15,285           949
   Notes Payable-Current                                  316,945
                                                      -----------     ---------
        TOTAL CURRENT LIABILITIES                         364,452        30,428

LONG-TERM LIABILITIES

   Loan Payable                                                           4,000
   Loan from Shareholders                                               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 53,984,723 shares (note 5)             $     5,398
   Additional paid-in capital                           1,828,348
   Deficit                                             (1,999,424)
                                                      -----------
Common Stock, common, $0.0001 par value,
   Authorized 100,000,000 shares, issued and
   outstanding 49,388,330 shares                                      $   4,939
   Additional paid in capital                                         1,374,291
   Deficit                                                           (1,418,777)
                                                                      ---------
TOTAL SHAREHOLDER'S EQUITY                               (165,678)      (39,547)
                                                      -----------     ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY            $   198,774     $ 127,246
                                                      ===========     =========


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, 2001 and 2000
                                   (Unaudited)


                                                               December 31
                                                          2001            2000
                                                          ----            ----
SALES                                                  $       0      $       0

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES             207,331        132,134
                                                       ---------      ---------


         LOSS FROM OPERATION                            (207,331)      (132,134)

OTHER INCOME
   Interest Income                                     $       0      $      10
   Other Income                                                0              0
                                                       ---------      ---------
                                                               0             10

         LOSS BEFORE INCOME TAXES                       (207,331)      (132,124)


INCOME TAX                                                     0              0
                                                       ---------      ---------

NET LOSS                                               $(207,331)     $(132,124)
                                                       =========      =========


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, 2001 and 2000

                                                                December 31
                                                             2001         2000
CASH FLOWS FROM OPERATING ACTIVITIES
   Net Loss                                               $(207,331)  $(132,124)
   Depreciation Amount                                        5,566       3,179

   Adjustments to reconcile  note income to net cash
     Cash provided by operating activities:
           Changes in assets and liabilities:
           Increase in Prepaid and Deposit                              (15,000)
           Increase (Decrease) in Accounts Payable            4,445         639
           Increase in Accrued Interest                       4,949         949
           Decrease in Payroll Liabilities                 (278,000)
           Increase in Loan Payable                                       4,000
           Increase in Due from Officer                      (1,335)
           Increase in Loan-Kai Yi Sung                      (2,928)
           Increase in Inventory                            (13,688)
           Increase (Decrease) in Loan from Shareholders                130,000
           Increase in Notes Payable-Current                 67,191
                                                          ---------   ---------
NET CASH PROVIDED/(USED) BY OPERATIONS ACTIVITIES         $(421,131)  $  (8,357)

CASH FLOWS FROM INVESTING ACTIVITIES
          Increase of Improvements                                       (1,837)
          Acquisition of Machinery & Equipment                           (6,767)
                                                          ---------   ---------
NET CASH PROVIDED/(USED) BY INVESTING ACTIVITIES          $       0      (8,604)

CASH FLOWS FROM FINANCING ACTIVITIES
       Proceeds from Issuance of Stock                          447
       Increase in Additional Paid-In Capital               441,569
                                                          ---------   ---------
NET CASH PROVIDED/(USDED) BY FINANCING ACTIVITIES         $ 442,016   $       0

NET INCREASE (DECREASE) IN CASH                              20,885     (16,961)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

CASH AS OF September 30, 2001 (2000)                        (16,259)     13,944
                                                          ---------   ---------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                $   4,626   $  (3,017)
                                                          =========   =========

SUPPLEMENTARY DISCLOSURE:
The statement of cash flows using indirect  method as defined under Statement of
Financial Accounting Standard of No. 95.


6

<PAGE>


                                  ALPHARx, INC.

                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2001


NOTE 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, 2001
and 2000, the results of operations for the three months ended December 31, 2001
and 2000,  and the cash flows for the three months  ended  December 31, 2001 and
2000, in conformity with generally  accepted  accounting  principles.  Operating
results for the three months period ended December 31, 2001 are not  necessarily
indicative  of the  results  that may be  expected  for the entire  year  ending
September 30, 2002 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  Form 10SB
registration statement.

NOTE 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, 2001.


See accountant's review report


7

<PAGE>


                                  ALPHARx, INC.

                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2001


NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of ALPHARx, INC. is presented to
assist in  understanding  the  Company's  financial  statements.  The  financial
statements  and notes are  representations  of the Company's  management  who is
responsible  for their  integrity and  objectivity.  These  accounting  policies
conform to generally accepted  accounting  principles and have been consistently
applied in the preparation of the financial statements.

Cash and Cash Equivalent

For purpose of these statements,  cash equivalent included cash on hand, cash in
bank,  and all  short-term  debt  securities  purchased with a maturity of three
months or less.

Depreciation

The company's property,  plant, and equipment are depreciated using the Modified
Accelerated  Cost Recovery  System Method,  with recovery period of 3 years & 10
years.

Property and Equipment

Property and equipment are stated at cost.  Depreciation  is calculated by using
Modified Accelerated Cost Recovery System Method for financial reporting as well
as income tax  reporting  purposes  at rates  based on the  following  estimated
useful lives:

              Automobiles                                 5 years
              Machinery and Equipment                     3 years
              Furniture and Fixtures                      7 years
              Improvements                               10 years

The company capitalizes  expenditures that materially increase assets' lives and
expense ordinary  repairs and maintenance to operating as incurred.  When assets
are sold or  disposed  or  otherwise  fully  depreciated,  the cost and  related
accumulated  deprecation  are removed  from the accounts and any gain or loss is
included in the statement of income and related earnings.


See accountant's review report


8
<PAGE>


                                  ALPHARx, INC.

                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2001

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued.)

Income Taxes

The company is a C Corporation that subjects to accrual of federal tax according
to tax laws. There is no income tax for year ended since the company was under a
development  stage and did not have  active  business  operations.  The State of
Delaware does not impose tax on corporation net income.

Research and Development (R&D)

All research and development  cost were charged to expense for the period ended.
These  costs  included  traveling  to explore  and  evaluate  new  products  and
negotiating  marketing  rights,  products  licensing,   and  various  legal  and
professional  fees incurred for preparation of patent  applications.  A total of
$42,183 R&D expense had been spent during the interim period.

NOTE 4. PROPERTY, PLANT & EQUIPMENT

                                                           Life Year
Automobiles                         $  22,067                  5
Machinery & Equipments                129,597                  3
Furniture & Fixtures                   11,656                  7
Improvements                            1,836
                                    ---------
     Less accumulated depreciation     35,367
                                    ----------
                                    $ 129,789


NOTE 5. COMMON STOCK

The Company is authorized  to issue  100,000,000  shares of common stock.  As of
December  31, 2001,  53,984,723  shares of such common stock had been issued and
outstanding, each share bears a par value of $0.0001.


See accountant's review report


9
<PAGE>


                                  ALPHARX, INC.

                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2001



NOTE 6. STOCK OPTION PLAN

The Company has a Stock Option Plan (Plan) under which officers,  key employees,
certain  independent  contractors,  and  non-employee  directors  may be granted
options to purchase  shares of the  Company's  authorized  but  unissued  common
stock.  The maximum number of shares of the Company's common stock available for
issuance  under the Plan is 8 million  shares.  As of  December  31,  2001,  the
maximum number of shares available for future grants under the Plan is 5,750,000
shares.  Under the Plan, the option exercise price and its fair market value are
determined to be $US0.01.  Options  currently expire no later than 10 years from
the grant date and generally  vest within five years.  Proceeds  received by the
Company  from  exercises  of stock  options  are  credited  to common  stock and
additional  paid-in capital.  Additional  information with respect to the Plan's
stock option activity is as follows:

                                                                     Weighted
                                                                      Average
                                                  Number of          Exercise
                                                   Shares             Price
                                                 ----------         ---------
Outstanding at June 20, 2000 (plan adoption)      5,750,000             $0.01
   Granted                                        2,875,000             $0.01
   Exercised                                              0             $0.01
   Cancelled                                              0             $0.01
                                                 ----------         ---------
Outstanding at December 31, 2001                  5,750,000             $0.01
                                                 ==========         =========
Options exercisable at December 31, 2001          2,875,000             $0.01
                                                 ==========         =========

The  Company has  elected to follow APB  Opinion  No. 25  (Accounting  for Stock
Issued to Employees) in accounting for its employee stock options.  Accordingly,
no  compensation  expense is recognized in the  Company's  financial  statements
because none of the vested options were exercised.


See accountant's review report

10

<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  $207,331  for the  three  months  ended
December  31,  2001,  resulting  in  an  accumulated  deficit  of  approximately
$1,999,424.  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 2002 and beyond,  expenses can be expected to increase  from their 2001
levels.


11

<PAGE>

RESULTS OF OPERATIONS

     The first  three  months  of fiscal  year 2002  ending  December  31,  2001
resulted in a net loss $207,331 from  operations as compared to $132,124 for the
corresponding  fiscal 2001 period.  The increase was primarily due to higher R&D
and  general   administrative   costs  as  a  result  of  spending  on  clinical
development.

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;

     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


12
<PAGE>

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.


13

<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, 2001, we have issued or sold
         an  aggregate  of  511,393  common  shares to foreign  investors  under
         Regulation  S for a total  amount of $45,931  that were not  registered
         under the Securities Act of 1933, as amended.  The Company's management
         accepted  3,960,000  restricted  shares at $0.10  each in lieu of their
         salary up to December 31, 2001.

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, 2001.


14

<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 14, 2002


                                                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