<PAGE>
                                  UNITED STATES
                       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 June 30, 2002

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
                     For the transition period from ____________ to ____________

                           Commission File No. 0-11472

                             DONLAR BIOSYNTREX, INC.
 -------------------------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

             Nevada                                        87-0380088
 ------------------------------                 --------------------------------
(State or other jurisdiction of                (IRS Employer Identification No.)
 incorporation or organization)


              6502 South Archer Road, Bedford Park, Illinois 60501
              ----------------------------------------------------
                    (Address of principal executive offices)

                                 (708) 563-9200
                                  -------------
                           (Issuer's telephone number)


 -------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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 [ ]

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

<PAGE>
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS

The number of shares outstanding of the registrant's common stock as of June 30,
2002 was 48,816,740.

Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]


<PAGE>

                                      INDEX

<TABLE>
<CAPTION>

<S>       <C>                                                                                     <C>
PART I.       FINANCIAL INFORMATION

          1.    Financial Statements

                Condensed and Consolidated Balance Sheet as of
                June 30, 2002                                                                      2

                Condensed and Consolidated Statements of Operations
                for the three months and six months ended June 30, 2001 and 2002                   3

                Condensed and Consolidated Statement of Shareholders' Deficit
                for the six months ended June 30, 2002                                             4

                Condensed and Consolidated Statements of Cash Flows
                for the six months ended June 30, 2001 and 2002                                    5

                Notes to Condensed and Consolidated Financial Statements                           6

          2.    Management's Discussion and Analysis or Plan of Operation                          10

PART II.      OTHER INFORMATION

          6.    Exhibits and Reports on Form 8-K                                                   13

</TABLE>



<PAGE>


                          PART I FINANCIAL INFORMATION

ITEM 1 - Financial Statements


























                                       2
<PAGE>

DONLAR BIOSYNTREX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
JUNE 30, 2002

--------------------------------------------------------------------------------

                                     ASSETS

Current assets
  Cash                                                             $     50,378
  Receivables, less allowance for doubtful accounts of $16,997          475,285
  Inventories, net                                                    1,265,410
  Prepaid expenses                                                      142,208
                                                                   ------------

          Total current assets                                        1,933,281

Property and equipment, net                                           9,131,943
Other assets                                                            275,095
                                                                   ------------

                                                                   $ 11,340,319
                                                                   ============

--------------------------------------------------------------------------------

                      LIABILITIES AND SHAREHOLDERS' DEFICIT

Current liabilities
  Current portion of convertible debt                              $  2,549,472
  Short term notes payable                                            7,995,932
  Accounts payable                                                      495,482
  Accrued expenses                                                    6,557,087
                                                                   ------------

          Total current liabilities                                  17,597,973

Notes payable                                                         9,000,000
Convertible debt                                                     21,236,419

Shareholders' deficit
  Preferred stock, $.0001 par value                                     197,797
  Common stock, $.0001 par value                                           --
  Additional paid-in capital                                         59,422,082
  Stock subscriptions receivable                                        (31,987)
  Accumulated deficit                                               (96,081,965)
                                                                   ------------

          Total shareholders' deficit                               (36,494,073)
                                                                   ------------

                                                                   $ 11,340,319
                                                                   ============

    The accompanying notes are an integral part of this unaudited condensed
                     consolidated balance sheet statement.


                                       3
<PAGE>

DONLAR BIOSYNTREX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                   FOR THE THREE MONTHS            FOR THE SIX MONTHS
                                                                     ENDED JUNE 30,                  ENDED JUNE 30,
                                                                  2002            2001            2002            2001
                                                              ------------    ------------    ------------    ------------

<S>                                                           <C>             <C>             <C>             <C>
Revenues                                                      $  1,014,403    $    626,747    $  1,892,087    $  1,232,520

Cost of revenue                                                    752,072         632,464       1,610,059       1,418,154
Research and Development                                           133,216         208,317         270,152         479,648
Selling, general and administrative                                255,087       2,369,171       1,029,543       4,034,124
                                                              ------------    ------------    ------------    ------------

          Total operating expenses                               1,140,375       3,209,952       2,909,754       5,931,926
                                                              ------------    ------------    ------------    ------------

Loss from operations                                              (125,972)     (2,583,205)     (1,017,667)     (4,699,406)

Other income (expense)
  Interest income                                                      151              27             260           8,954
  Interest expense                                              (1,610,401)     (1,486,073)     (2,977,696)     (4,049,433)
  Debt conversion expense                                             --              --          (289,655)           --
  Gain on disposal of fixed assets                                    --              --            74,478            --
  Other                                                            139,507            --           160,743            --
                                                              ------------    ------------    ------------    ------------

          Total other expense                                   (1,470,743)     (1,486,046)     (3,031,870)     (4,040,479)
                                                              ------------    ------------    ------------    ------------

Loss before income taxes                                        (1,596,715)     (4,069,251)     (4,049,537)     (8,739,885)
Provision for income taxes                                            --              --              --              --
                                                              ------------    ------------    ------------    ------------

          Net loss before extraordinary item                    (1,596,715)     (4,069,251)     (4,049,537)     (8,739,885)

Extraordinary loss on retirement of debt                              --              --        (1,212,120)           --
                                                              ------------    ------------    ------------    ------------

          Net loss                                              (1,596,715)     (4,069,251)     (5,261,657)     (8,739,885)

Preferred stock dividends and beneficial conversion premium           --              (656)           --            (1,312)
                                                              ------------    ------------    ------------    ------------

          Net loss applicable to common shares                  (1,596,715)     (4,069,907)     (5,261,657)     (8,741,197)
                                                              ------------    ------------    ------------    ------------

Per common share:
Basic:
  Net loss                                                           (0.03)          (0.09)          (0.11)          (0.20)

Diluted:
  Net loss                                                           (0.03)          (0.09)          (0.11)          (0.20)

Weighted average shares of common stock outstanding:
  Basic                                                         48,816,740      44,548,500      47,875,579      44,032,167
  Diluted                                                       48,816,740      44,548,500      47,875,579      44,032,137
</TABLE>



    The accompanying notes are an integral part of these unaudited condensed
                            consolidated statements.



                                       4
<PAGE>

DONLAR BIOSYNTREX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED JUNE 30,

-------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                   2002            2001
                                                               ------------    ------------
<S>                                                            <C>             <C>
Cash flows from operating activities
 Net loss                                                      $ (5,261,657)   $ (8,739,885)
 Adjustments to reconcile net loss to net cash
  used in operating activities
   Depreciation and amortization                                    542,343         693,375
   Issuance of Common Stock for services                             27,536            --
   Compensation expense related to options and warrants                --         2,040,020
   Interest expense related to amortization of debt discount      2,007,544       2,224,500
   Debt conversion expenses                                         289,655            --
   Gain on disposal of fixed assets                                 (74,478)           (360)
   Change in assets and liabilities
      Receivables                                                    29,628        (155,761)
      Inventories                                                   576,834         403,252
      Prepaid expenses and other assets                              (9,594)        272,324
      Accounts payable                                           (1,002,911)        625,280
      Accrued expenses                                             (399,980)      1,177,307
                                                               ------------    ------------

       Net cash used in operating activities                     (3,275,080)     (1,459,948)

Cash flows from investing activities
 Proceeds from sale of property and equipment                       103,942           4,278
 Purchase of property and equipment                                (117,970)        (94,113)
                                                               ------------    ------------

       Net cash used in investing activities                        (14,028)        (89,835)

Cash flows from financing activities
 Principal repayments of convertible notes                      (17,111,948)       (135,498)
 Proceeds from issuance of convertible notes                     20,970,107          50,000
 Principal repayments of notes payable                             (263,000)           --
 Proceeds from notes payable                                         11,000            --
 Issuance of common stock                                              --           714,593
 Proceeds from exercise of stock options and warrants                  --            49,000
 Deferred financing costs                                          (270,419)           --
                                                               ------------    ------------

       Net cash provided by financing activities                  3,335,740         678,095
                                                               ------------    ------------

Net (decrease) increase in cash and cash equivalents                 46,632        (871,688)

Cash and cash equivalents at beginning of period                      3,746         876,434
                                                               ------------    ------------

Cash and cash equivalents at end of period                     $     50,378    $      4,746
                                                               ============    ============

Supplemental disclosure of cash flow information:
 Interest paid                                                 $     28,184    $    643,571
 Income tax paid                                                       --              --

</TABLE>


    The accompanying notes are an integral part of these unaudited condensed
                            consolidated statements.



                                       5
<PAGE>

DONLAR BIOSYNTREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' DEFICIT
SIX MONTHS ENDED JUNE 30, 2002

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                Series A                     Series B
                                               Common Stock                 Preferred stock               Preferred stock
                                          Shares          Amount        Shares          Amount        Shares          Amount
                                        ------------   ------------   ------------   ------------   ------------   ------------
<S>                                       <C>          <C>             <C>           <C>             <C>          <C>

Begin Balance                             45,816,740   $    --              39,124   $    191,057           449    $      6,740

Issuance of capital stock                  3,000,000        --             --             --             --             --
Amortization of Deferred Compensation        --             --             --             --             --             --
Debt conversion expenses                     --             --             --             --             --             --
Cancellation of stock options                --             --             --             --             --             --
Net Loss                                     --             --             --             --             --             --
                                        ------------   ------------   ------------   ------------   ------------   ------------

End Balance                               48,816,740   $    --              39,124   $    191,057           449    $      6,740
                                        ============   ============   ============   ============   ============   ============



<CAPTION>
                                        Additional
                                          paid-in         Stock        Deferred      Accumulated
                                          capital      Subscription   Compensation     Deficit          Total
                                        -----------    ------------   ------------   ------------   ------------
<S>                                        <C>           <C>           <C>            <C>            <C>

Begin Balance                           $58,575,407    $    (31,987)  $   (115,208)  $(90,820,308)  $(32,194,299)

Issuance of capital stock                   898,070         --             --             --             898,070
Amortization of Deferred Compensation       --              --             115,208        --             115,208
Debt conversion expenses                    289,655         --             --             --             289,655
Cancellation of stock options              (341,050)        --             --             --            (341,050)
Net Loss                                    --              --             --          (5,261,657)    (5,261,657)
                                        -----------    ------------   ------------   ------------   ------------

End Balance                             $59,422,082    $    (31,987)  $    --        $(96,081,965)  $(36,494,073)
                                        ===========    ============   ============   ============   ============
</TABLE>




    The accompanying notes are an integral part of this unaudited condensed
                            consolidated statement.


                                       6
<PAGE>

Notes to Condensed Consolidated Financial Statements

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    The accompanying unaudited condensed consolidated financial statements of
Donlar Biosyntrex Corporation ("Donlar Biosyntrex") and subsidiaries (the
"Company") have been prepared in accordance with instructions to Form 10-QSB
and, therefore, do not include all information and footnotes necessary for a
fair presentation of financial position, results of operations and cash flows in
conformity with accounting principles generally accepted in the United States of
America. For further information refer to the Consolidated Financial Statements
and footnotes included in Donlar Biosyntrex's Annual report on Form 10-KSB for
the year ended December 31, 2001.

    In management's opinion, the unaudited condensed consolidated financial
statements include all adjustments, consisting only of normal recurring
adjustments except as discussed below, which the Company considers necessary for
a fair presentation of the results for the period. Operating results for the
period presented are not necessarily indicative of the results that may be
expected for the entire year.

    The accompanying unaudited condensed consolidated financial statements have
been prepared assuming that the Company will continue as a going concern. As of
June 30, 2002, the Company had an accumulated deficit of $96,081,965, a
shareholders' deficit of $36,494,073 and has had substantial recurring losses.
The consolidated operations of the Company have not achieved profitability and
the Company has relied upon financing from the sale of its equity securities,
liquidation of assets and debt financing to satisfy its obligations. These
conditions raise substantial doubt about the ability of the Company to continue
as a going concern. The unaudited condensed consolidated financial statements do
not include any adjustments that might result from the outcome of these
uncertainties.

    The Company's ability to continue as a going concern is subject to the
attainment of profitable operations or obtaining necessary funding from outside
sources. Management's plan with respect to this uncertainty includes
reorganizing the Company and converting debt to equity, increasing sales of
existing products to attempt to attain a positive cashflow, evaluating new
products and markets, and minimizing overhead and other costs. However, there
can be no assurance that management will be successful.

EQUITY TRANSACTIONS

    In January 2001, the Company's majority shareholder, Donlar Corporation,
sold 1,500,000 shares of its common stock to an investor for $714,593. Since
November 3, 2000, the financial statements of the Company include the activity
of both the Company and Donlar. Accordingly, for accounting purposes, the
issuance of these shares has been treated as a Company transaction.

    In January 2001, the Company entered into an agreement with a media
relations firm. This agreement was for a period of one year, and Donlar
Biosyntrex issued the firm a warrant to purchase 1,250,000 shares of its common
stock at an exercise price of $0.01


                                       7
<PAGE>

per share. This warrant could only be exercised if, in the Company's opinion,
the media relations firm satisfied its obligations under the agreement. This
agreement and the warrant were cancelled in April 2001 when the Company entered
into a new agreement effective January 20, 2001 with the same media relations
firm. The term of the new agreement is one year and Donlar Biosyntrex issued
500,000 shares of its common stock to the media relations firm in connection
with the execution of the agreement. The Company recorded $468,750 of general
and administrative expenses upon the execution of the agreement, which is the
fair value of the stock issued as of that date. Additionally, in April 2001,
Donlar Biosyntrex issued the media relations firm 750,000 shares of its common
stock which are being held in an escrow account by the media relations firm
until satisfaction of the terms of the agreement. The fair value of these
750,000 shares was recorded as deferred expense in the amount of $703,125,
representing the fair market value of the shares as of the date of the
agreement, January 20, 2001. This amount was being amortized over one year, the
life of the agreement, as adjusted for changes in fair value over the term of
the agreement. The Company believes that the conditions for release of the
750,000 shares from escrow have not been satisfied by the media relations firm
and the Company has requested return of the shares.

     In March 2001, an investment advisor exercised a warrant to purchase
400,000 shares of Donlar Biosyntrex common stock for $0.01 a share, pursuant to
its August 2000 agreement with the Company.

     In March 2002, Donlar Biosyntrex issued 2,000,000 shares of its common
stock to the same investment advisor in satisfaction of a two year agreement,
under which the advisor was entitled to $15,000 per month for 24 months. This
agreement was terminated after fifteen months, and in lieu of additional
payments under the agreement, Donlar Biosyntrex issued to the investment advisor
2,000,000 shares of its common stock in full satisfaction of the Company's
obligations to the advisor under the agreement. The fair value assigned to the
shares was $0.40 per share, the closing price of the shares at the date of the
agreement, for consulting expense of $800,000.

    In February 2002, Donlar Biosyntrex issued a total of 1,000,000 shares of
its common stock to two investor relations firms as payment for services
rendered pursuant to agreements with these firms. The fair value assigned to the
shares was $0.40 per share, the closing price of the shares at the date of the
agreement, for consulting expense of $400,000.

DEBT TRANSACTIONS

    In the first quarter of 2002, the Company began implementing a plan which is
intended to significantly restructure its debt and capital structure in order to
eliminate a substantial portion of its debt and to ultimately result in the
merger of Donlar and Donlar Biosyntrex (the "Restructuring Plan"). The
Restructuring Plan is scheduled to be completed in September 2002.

    As part of the Restructuring Plan, on March 18, 2002, the Company entered
into a Bridge and Consolidated Term Loan Agreement with Tennessee Farmers Life
Insurance


                                       8
<PAGE>

Company (the "Loan Agreement"). Pursuant to the terms of the Loan Agreement, the
Company obtained a bridge loan facility in the amount of $2,127,000 to be used
to refinance certain short term debt, provide working capital, pay certain
accounts payable creditors and pay expenses of the transaction.

    In addition, the terms of existing loans to the Company in the original
principal amount of approximately $17.64 million were restated to the total
amount of $19.20 million, reflecting the original amount of the loans and
accrued, unpaid interest thereon (the "Restated Loans"). Each of the loans is
collateralized by substantially all of the assets of the Company.

    Loans under the bridge loan facility bear interest at a rate of eleven
percent (11%) per annum with one half of such interest payable on a quarterly
basis on the last business day of March, June, September and December and the
other half payable at maturity on March 18, 2003.

    The Restated Loans are divided into two loans. The first such loan is in the
principal amount of approximately $10.18 million, bears interest at a rate of
nine percent (9%) per annum until March 18, 2003, at which time such interest is
payable, and thereafter bears interest at eleven percent (11%) per annum payable
on a quarterly basis on the last business day of March, June, September and
December. The principal balance of the loan is payable in equal quarterly
installments of not less than $222,500 commencing on March 31, 2003 and
thereafter on the last business day of March, June, September and December. Any
remaining unpaid principal and interest is payable on March 31, 2007. The second
such loan is in the principal amount of $9.0 million, bears interest at a rate
of one percent (1%) per annum, but neither interest nor principal is payable
until the first to occur of one of certain events described in the Loan
Agreement, the latest of which is March 18, 2005, after which time the interest
that has accrued is payable in full within thirty (30) days and thereafter is
payable quarterly on the last business day of March, June, September and
December together with principal payments of not less than $222,500. Any
remaining unpaid principal and interest is payable on March 31, 2007.

    As a condition of the loans and as part of the Restructuring Plan, Donlar
and Donlar Biosyntrex have agreed to use their best efforts to merge on or
before July 7, 2002 (the "Merger"). The date for completion of the Merger has
been extended to September 1, 2002. The merged company is referred to as the
Combined Company. In the Merger, each share of the Donlar Biosyntrex common
stock other than shares owned by Donlar will be exchanged for 0.26 shares of the
common stock of the Combined Company. As a result of the Merger and related
transactions described herein, Donlar Biosyntrex's shareholders (other than
Donlar) will collectively receive approximately 4.04 million shares of the
Combined Company common stock representing approximately 19.44% of the shares of
common stock of the Combined Company outstanding following the Merger and
approximately 4.32% of the shares of common stock on a fully diluted basis. The
Merger requires the approval of a majority of the respective shareholders of
Donlar and Donlar Biosyntrex.



                                       9
<PAGE>

    The Company also made numerous representations, warranties and covenants in
the Loan Agreement. Among the covenants, the Company agreed to limit its ability
to incur additional indebtedness, make any investments or loans, pay dividends,
purchase, redeem or issue capital stock or sell or encumber assets. In addition,
the Company agreed to sell or discontinue the nutritional and nutraceuticals
business on or before March 18, 2003.

    There can be no assurance that the Company will be able to comply with the
covenants and events of default in the Loan Agreement, some of which events of
default are entirely beyond its control. Each of the loans made or restated
pursuant to the Loan Agreement is subject to acceleration and the application of
higher default rates of interest in the event the Company defaults in the
payment of principal or interest when due, breaches any covenants contained in
the Loan Agreement that are not remedied within five calendar days or any other
specified event of default occurs.

    Each of the loans is convertible at the option of the holder at any time
prior to repayment into common stock of Donlar Biosyntrex and, subsequent to the
Merger, into common stock of the Combined Company. Loans made under the bridge
loan facility convert into the Combined Company common stock at a rate of one
share per $0.29 of outstanding principal amount of the loans. The Restated Loans
convert into the Combined Company common stock at a rate of one share per $0.68
of outstanding principal amount of the loans. The conversion rates are subject
to antidilution protection. The holders of the loans have certain registration
rights with respect to the shares issuable upon conversion.

    In the first quarter of 2002, the Company also reached agreements with
Willis Stein and Partners, L.P. and Star Polymers, L.L.C. (collectively the
"Willis Stein Group") to (i) exchange $9.0 million of original principal amount
of notes plus accrued interest for shares of a new series of senior convertible
preferred stock with a stated liquidation value of $9.0 million and convertible
into approximately 13.23 million shares of the Combined Company common stock and
(ii) exchange all of the equity securities held by the Willis Stein Group in
Donlar for 1.0 million shares of the Combined Company common stock. The
foregoing exchanges are subject to the satisfaction of certain conditions
precedent. The Willis Stein Group also agreed to vote its shares of voting stock
of Donlar in favor of the Merger.

    The Company also reached an agreement in 2002 with Dr. Robert Gale Martin
("Martin"), a director of the Company, to (i) exchange approximately $9.9
million of original principal amount of notes plus accrued interest for shares
of senior convertible preferred stock with a stated liquidation value of $9.0
million and convertible into approximately 13.23 million shares of the Combined
Company common stock, (ii) relinquish rights to receive royalty payments from
the Company and all of his equity securities in the Company in exchange for 5.0
million shares of the Combined Company common stock and (iii) surrender for
cancellation any warrants to purchase shares of Donlar common stock for a
warrant to purchase 3.0 million shares of the Combined Company common stock at
an exercise price of $0.68 per share. Martin also agreed to vote his shares of
voting stock of Donlar in favor of the Merger.



                                       10
<PAGE>

    To further eliminate debt from the Company's balance sheet, the Company has
reached agreement with the holders of convertible notes issued in 1998 and 2000
in the approximate principal amount of $1.9 million, to exchange those notes for
shares of senior convertible preferred stock with a stated liquidation value
equal to the total principal amount of the notes. The senior convertible
preferred are convertible into approximately 2.8 million shares of the Combined
Company common stock.

    In the first quarter of 2002, the Company recorded a debt conversion expense
of $289,655 in connection with the bridge loan transaction. This debt conversion
expense was incurred as a result of the price for converting the bridge loan
into Donlar Biosyntrex common stock of $0.29 per share being below the market
price of the Donlar Biosyntrex common stock as of the date of the loan
agreement, which was $0.33 per share.

    The Restated Loans are convertible at a rate of $0.68 per share into common
stock of the Combined Company. The Restated Loans meet the criteria for new
debt. Because there are no induced conversion features associated with the
transaction, no beneficial conversion expense was recorded.


ITEM 2 - Management's Discussion and Analysis or Plan of Operation

Forward Looking Statements

    This report and the documents incorporated by reference in this report
contain forward-looking statements. These forward-looking statements are based
on management's current expectations, estimates and projections about the
Company's industry, management's beliefs and certain assumptions made by the
Company. These statements are not guarantees of future performance and are
subject to certain risks, uncertainties and assumptions that are difficult to
predict. Therefore, the Company's actual results could differ materially from
those expressed or forecasted in any forward-looking statements as a result of a
variety of factors, including those set forth in "Description of Business." The
Company undertakes no obligation to update publicly any forward-looking
statements for any reason, even if new information becomes available or other
events occur in the future.


Description of Business

    From 1997 until November of 2000, the Company was primarily engaged in the
distribution and sale of nutritional and nutraceutical products. Donlar
Biosyntrex's principal products were biologic nutraceutical supplements and
sports and nutrition bars. As a result of transactions that were completed in
2000 and in early 2001, all of the operational activities of Donlar Corporation
are now conducted by its subsidiary, Donlar Biosyntrex. For a description of the
acquisition of Donlar Biosyntrex by Donlar, see "Notes to Condensed Consolidated
Financial Statement" in Donlar Biosyntrex's Annual Report on Form 10-KSB for
2001. The former Donlar businesses are now Donlar Biosyntrex's principal
businesses and Donlar Biosyntrex is phasing out its nutritional and



                                       11
<PAGE>

nutraceutical business. Donlar Biosyntrex's marketing, sales, distribution and
administrative operations are conducted from Donlar's headquarters in Bedford
Park, Illinois, and its manufacturing operations are conducted from Donlar's
Peru, Illinois facility.

    Donlar Biosyntrex's reorganized businesses are conducted through three
product lines:

    -    BioPolymers, consisting of the performance chemicals business acquired
         from Donlar;

    -    AgriSciences, consisting of the agricultural business acquired from
         Donlar; and

    -    Optim Nutrition, consisting of Donlar Biosyntrex's nutritional and
         nutraceuticals business (being phased out).

    Donlar Biosyntrex current business is the production and marketing of
products initially developed by Donlar. Historically, Donlar began as a research
and development company to exploit the possibilities of developing,
manufacturing and marketing a new family of biodegrable polymers known as
thermal polyaspartates (TPA). Although there was no market at the time of
Donlar's inception for a new so-called "green chemistry," Donlar concluded that
a market would develop if the technology and products were available. It also
determined that the development of this technology and market would also require
substantial capital.

    It took about ten years and the use of extensive capital to reach the point
of commercialization whereby Donlar Biosyntrex's products and markets are
protected by a global intellectual property portfolio of patents. The products
are manufactured in a modern plant capable of producing high quality products at
low cost and are sold in a marketplace where Donlar Biosyntrex's TPA products
can compete on a cost/performance basis with conventional chemicals.

    As a result of this historical development, Donlar Biosyntrex' revenues from
the sale of its products increased from $1.4 million in 2000 to $2.4 million in
2001. Commercialization of the products began approximately two years ago
focusing on the building of three market's in oil production, agriculture and
detergents.

Results of Operations

    Comparison of the three months ended June 30, 2002 with the three months
    ended June 30, 2001.

    During the three months ended June 30, 2002, the Company had revenues of
$1,014,403, compared to $626,747 for the comparable three-month period in 2001.
The increase in revenues was due to growth in sales, principally in the oil
field market.



                                       12
<PAGE>

    Cost of revenues was $752,072 for the three months ended June 30, 2002,
compared to $632,464 for the same period in 2001. This increase in cost of
revenues is related to increased sales offset by decreased staff in the
manufacturing area, as well as, other cost reductions at the manufacturing
facility in Peru, Illinois.

     Operating expenses were $1,140,375 for the three-month period ended June
30, 2002, compared to $3,209,952 for the three month period ended June 30, 2001.
This decrease is due to decreased staff, as well as other cost reductions
related to consulting, outside research products, professional fees and travel
expenses, and a $329,300 reversal attributable to the cancellation of stock
options which had previously been expensed.

    Interest expense increased from $1,486,073 for the three-month period ended
June 30, 2001 to $1,610,401 for the same period of 2002. This increase was due
to increased debt during the 2002 period.

    During the three months ended June 30, 2002, the Company had a net loss of
$1,596,715 compared to a net loss of $4,069,251 for the three months ended June
30, 2001. This decrease in the net loss was attributable primarily to the
increased sales in conjunction with cost reductions related to operations of the
company.

    Comparison of the six months ended June 30, 2002 with the six months ended
    June 30, 2001.

    During the six months ended June 30, 2002, the Company had revenues of
$1,892,087, compared to $1,232,520 for the comparable six-month period in 2001.
The increase in revenues was due to growth in sales, principally in the oil
field market.

    Cost of revenues was $1,610,059 for the six months ended June 30, 2002,
compared to $1,418,154 for the same period in 2001. This increase in cost of
revenues is related to increased sales offset by decreased staff in the
manufacturing area, as well as, other cost reductions at the manufacturing
facility in Peru, Illinois.

     Operating expenses were $2,909,754 for the six-month period ended June 30,
2002, compared to $5,931,926 for the six month period ended June 30, 2001. This
decrease is due to decreased staff, as well as other cost reductions related to
consulting, outside research products, professional fees and travel expenses,
and a $329,300 reversal attributable to the cancellation of stock options which
had been previously expensed.

    Interest expense decreased from $4,049,433 for the first six months of 2001
to $2,977,696 for the first six months of 2002. This decrease was due to a
decrease in the amortization of debt discount.

    During the six months ended June 30, 2002, the Company had a net loss of
$5,261,657 compared to a net loss of $8,739,885 for the six months ended June
30, 2001. This decrease in the net loss was attributable primarily to the
decrease in interest expense and increased sales offset by the acceleration of
debt discount amortization related to the debt restructuring.



                                       13
<PAGE>

Liquidity and Capital Resources

    Historically, the Company has been unable to finance its operations from
cash flows from operating activities. As of June 30, 2002, the Company had cash
of $50,378. As a result of the recent agreement with certain creditors to
restructure principal and interest payments, the Company was able to pay current
operating expenses in the fourth quarter of 2001 and the first and second
quarter of 2002. In March of 2002, the Company obtained additional bridge
financing in connection with the restructuring of its debt, but has no other
plans for its continued financing. The Company, under its bridge financing, has
a quarterly interest payment of approximately $21,000 due on the last business
day of each quarter. The Company intends to carefully control its use of cash
for the balance of 2002. As a long-term matter, the Company will require
additional financing to maintain operations. The Company believes based on its
current budget and sales that it will be able to pay its expenses for the next
year other than payments under its bridge financing from Tennessee Farmers Life
Insurance Company due in March 2003 and it plans to enter into additional
negotiations with Tennessee Farmers regarding such payments.

    In the first six months of 2002, the Company had a net increase in cash and
cash equivalents of $46,632, compared to a net decrease in cash and cash
equivalents in the same period of 2001 of $871,688. The increase in cash was the
result of increased sales and reduced operating costs.

    The Company increased its cash flows used in operations from $1,459,948 in
the first six months of 2001 to $3,275,080 in the same period in 2002, due to
the use of loan proceeds to reduce accounts payable and accrued expenses in the
2002 period.

    Cash flows used in investing activities decreased to $14,028 in the first
six months of 2002 from $89,835 in the same period in 2001. This is due to the
Company limiting its capital expenditures.

    Cash flows provided by financing activities increased from $678,095 during
the first six months of 2001 to $3,335,740 in the same period in 2002. The cash
from financing activities in 2002 resulted from borrowing activities in the 2002
period.


PART II OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

(a)  Exhibits.

         Exhibit No.     Exhibit Description
         -----------     -------------------

         2.1$$$          Stock Purchase Agreement, dated as of August 7, 2000,
                         between Biomune Systems, Inc. and Donlar Corporation.



                                       14
<PAGE>
         2.2$$$         Asset Purchase Agreement, dated as of August 7, 2000,
                        between Biomune Systems, Inc. and Donlar Corporation.

         3.1+           Amended and Restated Articles of Incorporation

         3.2+           Amended and Restated Bylaws (adopted March 22, 1996)

         3.3+           Certificate and Statement of Determination of Rights and
                        Preferences of Series A 10% Cumulative Convertible
                        Preferred Stock

         3.4+           Certificate and Statement of Determination of Rights and
                        Preferences of Series B 10% Cumulative Convertible
                        Non-Voting Preferred Stock

         3.5+           Certificate and Statement of Determination of Rights
                        and Preferences of Series D 8% Cumulative Convertible
                        Non-Voting Stock

         3.6+           Certificate of Amendment to the Designation of Rights
                        and Preferences Related to Series A 10% Cumulative
                        Convertible Preferred Stock

         3.7+           Certificate and Statement of Determination of Rights
                        and Preferences of Series C 8% Cumulative Convertible
                        Non-Voting Preferred Stock

         3.8++          Certificate and Statement of Determination of Rights
                        and Preferences of Series E, 8% Cumulative Convertible
                        Preferred Stock

         3.9++          Certificate of Amendment of Determination of Rights and
                        Preferences of Series F, 8% Cumulative Convertible
                        Preferred Stock

         3.10++         Amendment to Determination of Rights and Preferences of
                        Series F Preferred

         3.11++         Certificate and Statement of Determination of Rights
                        and Preferences of Series G, 8% Cumulative Preferred
                        Stock

         3.12++         Amendment to Designation of Rights and Preferences of
                        Series G Preferred



                                       15
<PAGE>
         3.13++        Certificate and Statement of Determination of Rights
                       and Preferences of the Series J, 8% Cumulative
                       Convertible Preferred Stock

         4.1**         Form of Common Stock Certificate

         4.3**         Form of Series A 10% Cumulative Convertible Preferred
                       Stock Certificate

         4.4*          Form of Series B 10% Cumulative Convertible Preferred
                       Stock Certificate

         4.5#          Form of Series D 8% Cumulative Convertible Preferred
                       Stock Certificate

         4.6+          Form of Series C 8% Cumulative Convertible Preferred
                       Stock Certificate

         4.7++         Form of Series E Certificate

         4.8++         Form of Series F Certificate

         4.9++         Form of Series G Amendment

         4.10++        Form of Series J Certificate

         4.11%%        Bridge and Consolidated Term Loan Agreement, dated
                       March 18, 2002, among the Company, Donlar and Tennessee
                       Farmers Life Insurance Company

         10.43*        Lease Agreement

         10.77#        1995 Stock Incentive Plan

         10.82#        Amended 1995 Stock Incentive Plan

         10.123$$      1999 Stock Option and Incentive Plan of Biomune
                       effective as of January 1, 1999

         10.130@       Capital Contribution, Assignment and Assumption
                       Agreement

         10.131@@      Form of Consulting Agreement with Peter Frugone

         10.132@@@     Form of Consulting Agreement with Media Relations
                       Strategy, Inc.


                                       16
<PAGE>
         10.133@         Form of Consulting Agreement with Peter Frugone

         10.134%%        Form of Employment Agreement dated September 7, 2001,
                         between the Company and Robert P. Pietrangelo

         10.135%%        Form of Employment Agreement dated July 1, 1996,
                         between Donlar and Larry Koskan

         99.1            Statement of Chief Executive Officer Pursuant to
                         Section 1350 of Title 18 of the United States Code

         99.2            Statement of Controller and Chief Accounting Officer
                         Pursuant to Section 1350 of Title 18 of the United
                         States Code

-------------------------------------------

         #    Incorporated by reference to Biomune's Periodic Report on Form
              10-K/A for the fiscal year ended September 30, 1995.

         *    Incorporated by reference to Biomune's Periodic Report on Form
              10-KSB for the fiscal year ended September 30, 1994.

         **   Incorporated by reference to Biomune's Periodic Report on Form
              10-K for the fiscal year ended September 30, 1993 and the two
              month period ended November 30, 1993.

         ***  Incorporated by reference to Biomune's Periodic Report on Form
              10-K for the fiscal year ended September 30, 1992.

         +    Incorporated by reference to Biomune's Periodic Report on Form
              10-KSB for the fiscal year ended September 30, 1996.

         ++   Incorporated by reference to Biomune's Periodic Report on Form
              10-KSB for the fiscal year ended September 30, 1998.

         $$   Incorporated by reference to Biomune's Periodic Report on Form S-8
              filed on February 2, 2000.

         $$$  Incorporated by reference to Biomune's Periodic Report on Form 8-K
              filed on August 15, 2000.

         @    Incorporated by reference to Biomune's Periodic Report on Form 8-K
              filed on January 22, 2001.

         @@   Incorporated by reference to Biomune's Periodic Report on Form S-8
              filed on May 2, 2001.


                                       17
<PAGE>

         @@@  Incorporated by reference to the Company's Quarterly Report on
              Form 10-QSB for the quarter ended March 31, 2001.

         %    Incorporated by reference to the Company's Proxy Statement filed
              on June 20, 2001.

         %%   Incorporated by reference to the Company's Annual Report on Form
              10-KSB for the fiscal year ended December 31, 2001.


(b)  Reports on Form 8-K.

None.

                                   SIGNATURES

    In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                           DONLAR BIOSYNTREX CORPORATION


Dated: August 14, 2002                     By: /s/ Larry P. Koskan
                                              -------------------------------
                                               Larry P. Koskan, President and
                                               Chief Executive Officer












                                       18