##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

FORM 10-Q

|  |  |                                                                                    
|- |  | -----------------------------------------------------------------------------------
|x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF SECURITIES EXCHANGE ACT OF 1934

For Quarter Ended    April 30, 2001

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

For the Transition Period From ____to____

Commission File Number 0-22011

Bionutrics, Inc.
(Exact name of registrant as specified in its charter)

|                                |  |                      
|------------------------------- |  | ---------------------
|Nevada                          |  | 86-0760991           
|                                |  |                      
|(State or other jurisdiction of |  | I.R.S. Employer      
|                               
|                               
|                               
|                               
|incorporation of organization)  |  | Identification Number

|                                                  |  |           
|------------------------------------------------- |  | ----------
|2425 E. Camelback Rd., Suite 650 Phoenix, Arizona |  | 85016     
|                                                  |  |           
|(Address of principal executive offices)          |  | (Zip code)

|                                                    
|----------------------------------------------------
|602-508-0112                                        
|                                                    
|(Registrants telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

YES XNO

Indicate the number of shares outstanding of each of the issuers classes of
common stock, at the latest practical date.

|                          |  |                                 |  | 
|------------------------- |  | ------------------------------- |  | 
|CLASS                     |  | OUTSTANDING AS OF JUNE 14, 2001 | 
|Common                    |  | 4,593,169                       | 
|                         
|                         
|                         
|                         
|Par value $.001 per share





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TABLE OF CONTENTS



|                                                                                       |                                                      |  |  |  |  |  |  | 
|-------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  |  | 
|Part I. Financial Information                                                     Page
|ITEM I.      Condensed Consolidated Financial Statements (Unaudited):                 
|                                                                                       | Condensed Consolidated Balance Sheets               
|                                                                                       | Condensed Consolidated Statement of Operations      
|                                                                                       | Condensed Consolidated Statements of Cash Flows     
|                                                                                       | Notes to Condensed Consolidated Financial Statements
|ITEM 2. Management's Discussion and Analysis                                          
|PART II  OTHER INFORMATION                                                           
|ITEM 2(c)           Changes in Securities:                                            
|ITEM 4              Submission of Matters to a Vote of Security Holders               
|ITEM 6                  Exhibits and Reports on Form 8-K                              
|SIGNATURES                                                                            



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##### Table of Contents



BIONUTRICS, INC.
INDEX TO QUARTERLY REPORT
ON FORM 10-Q

|                              |                                                                 |                                                      |    |      |  | 
|----------------------------- | --------------------------------------------------------------- | ---------------------------------------------------- | -- | ---- |  | 
|                              |                                                                 |                                                      |    | Page | 
|                              |                                                                 |                                                      |    |      | 
|Part I. Financial Information
|                             
|                              | ITEM I.Condensed Consolidated Financial Statements (Unaudited):
|                             
|                             
|                             
|                             
|                              |                                                                 | Consolidated Balance Sheets                          |    | 3    |  | 
|                             
|                             
|                             
|                             
|                              |                                                                 | Consolidated Statements of Operations                |    | 4    |  | 
|                             
|                             
|                             
|                             
|                              |                                                                 | Consolidated Statements of Cash Flows                |    | 5    |  | 
|                             
|                             
|                             
|                             
|                              |                                                                 | Notes to Condensed Consolidated Financial
Statements |    | 6    |  | 
|                             
|                             
|                             
|                             
|                              | ITEM 2.Managements Discussion and Analysis                     |                                                      | 8  |      | 
|                             
|Part II. Other Information   
|                             
|                              | ITEM 2(c)Changes in Securities                                  |                                                      | 13 |      | 
|                             
|                             
|                             
|                             
|                              | ITEM 4Submission of Matters to a Vote of Security Holders       |                                                      | 13 |      | 
|                             
|                             
|                             
|                             
|                              | ITEM 6Exhibits and Reports on Form 8-K                          |                                                      | 14 |      | 
|                             
|                             
|                             
|                             
|                              | SIGNATURE                                                       |                                                      | 15 |      | 

2



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##### Table of Contents









Bionutrics, Inc.
Condensed Consolidated Balance Sheets




---

|                                                                                       |                                                                                                                            |                      |                            |             |             |           |             |             |           |           | 
|-------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------- | -------------------- | -------------------------- | ----------- | ----------- | --------- | ----------- | ----------- | --------- | --------- | 
|                                                                                       |                                                                                                                            |                      |                            |             | April 30,   |           | October 31,
|                                                                                       |                                                                                                                            |                      |                            |             | 2001        |           | 2000       
|                                                                                       |                                                                                                                            |                      |                            |             | (Unaudited)
|                                                                                       |                                                                                                                            |                      |                            |             |            
|ASSETS                                                                                
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|CURRENT ASSETS:                                                                       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Cash and cash equivalents                                                              |                                                                                                                            | $                    | 82,623                     |             |             | $         | 711,563     |            
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Trade receivables net of allowance for bad debts of $48,239
and $48,239, respectively |                                                                                                                            |                      | 32,903                     |             |             |           | 16,845      |            
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Inventory                                                                              |                                                                                                                            |                      | 56,207                     |             |             |           | 100,401     |            
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Prepaids and other current assets                                                      |                                                                                                                            |                      | 39,114                     |             |             |           | 62,383      |            
|                                                                                       |                                                                                                                            |                      |                            |             |             |           |             |            
|                                                                                       |                                                                                                                            | Total Current Assets |                            |             | 210,847     |           |             |             | 891,192   |          
|                                                                                       |                                                                                                                            |                      |                            |             |             |           |             |            
|PROPERTY net of accumulated depreciation of $351,720
and $342,573, respectively       |                                                                                                                            |                      | 6,329                      |             |             |           | 15,474      |            
|                                                                                       |                                                                                                                            |                      |                            |             |             |           |             |            
|LONG-TERM RECEIVABLES                                                                  |                                                                                                                            |                      | 263,071                    |             |             |           | 263,071     |            
|                                                                                       |                                                                                                                            |                      |                            |             |             |           |             |            
|OTHER ASSETS:                                                                         
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Patent applications and other related costs net of accumulated
amortization of $191,160 and $177,328, respectively        |                      |                            | 378,305     |             |           |             | 392,137     |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Investment in InCon Processing, LLC                                                                                        |                      |                            | 2,378,951   |             |           |             | 2,544,494   |          
|                                                                                       |                                                                                                                            |                      |                            |             |             |           |             |            
|                                                                                       |                                                                                                                            | Total Other Assets   |                            |             | 2,757,256   |           |             |             | 2,936,631 |          
|                                                                                       |                                                                                                                            |                      |                            |             |             |           |             |            
|TOTAL                                                                                  |                                                                                                                            | $                    | 3,237,503                  |             |             | $         | 4,106,368   |            
|                                                                                       |                                                                                                                            |                      |                            |             |             |           |             |            
|LIABILITIES AND STOCKHOLDERS EQUITY                                                  
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|CURRENT LIABILITIES:                                                                  
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Accounts payable                                                                                                           |                      | $                          | 673,007     |             |           | $           | 664,375     |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Accrued liabilities                                                                                                        |                      |                            | 637,063     |             |           |             | 590,779     |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Capital leases                                                                                                             |                      |                            | 0           |             |           |             | 2,278       |          
|                                                                                       |                                                                                                                            |                      |                            |             |             |           |             |            
|                                                                                       |                                                                                                                            |                      | Total Current Liabilities  |             |             | 1,310,070 |             |             |           | 1,257,432 | 
|                                                                                       |                                                                                                                            |                      |                            |             |             |           |             |            
|STOCKHOLDERS EQUITY                                                                  
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Common stock- $.001 par value authorized, 45,000,000 shares;
4,590,387 and 4,294,292 issued and outstanding, respectively |                      |                            | 4,590       |             |           |             | 4,294       |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Preferred stock- $.001 par value authorized 5,000,000 shares;
591,850 and 0 issued and outstanding, respectively          |                      |                            | 798,998     |             |           |             | 0           |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Additional paid-in capital                                                                                                 |                      |                            | 37,281,233  |             |           |             | 37,562,496  |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Receivable collectible in cash or common stock                                                                             |                      |                            | (677,117    | )           |           |             | (677,117    | )        
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Warrants                                                                                                                   |                      |                            | 934,237     |             |           |             | 874,603     |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Accumulated deficit                                                                                                        |                      |                            | (36,413,305 | )           |           |             | (34,914,137 | )        
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Common stock in treasury, at cost                                                                                          |                      |                            | (1,203      | )           |           |             | (1,203      | )        
|                                                                                       |                                                                                                                            |                      |                            |             |             |           |             |            
|                                                                                       |                                                                                                                            |                      | Total Stockholders Equity |             |             | 1,927,433 |             |             |           | 2,848,936 | 
|                                                                                       |                                                                                                                            |                      |                            |             |             |           |             |            
|TOTAL                                                                                  |                                                                                                                            | $                    | 3,237,503                  |             |             | $         | 4,106,368   |            
|                                                                                       |                                                                                                                            |                      |                            |             |             |           |             |            

See Notes to Condensed Consolidated Financial Statements

3



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##### Table of Contents



Bionutrics, Inc.
Condensed Consolidated Statement of Operations
(Unaudited)

---




|                                                     |                                     |                     |                          |         |                |          |                |           |        |            |             |           |         |            |             |           |         |            |  
|---------------------------------------------------- | ----------------------------------- | ------------------- | ------------------------ | ------- | -------------- | -------- | -------------- | --------- | ------ | ---------- | ----------- | --------- | ------- | ---------- | ----------- | --------- | ------- | ---------- | -
|                                                     |                                     |                     |                          |         | Three Months   |          | Six Months    
|                                                     |                                     |                     |                          |         | Ended April 30 |          | Ended April 30
|                                                     |                                     |                     |                          |         |               
|                                                     |                                     |                     |                          |         | 2001           |          | 2000           |           | 2001   |            | 2000       
|                                                     |                                     |                     |                          |         |                |          |                |           |        |            |            
|REVENUES:                                           
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Revenue from services               |                     | $                        | 0       |                |          | $              | 32,242    |        |            | $           | 0         |         |            | $           | 162,724   |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Revenue from product sales          |                     |                          | 34,213  |                |          |                | 43,673    |        |            |             | 57,336    |         |            |             | 100,727   |        
|                                                     |                                     |                     |                          |         |                |          |                |           |        |            |             |           |         |            |             |          
|                                                     |                                     |                     | Total gross revenues     |         |                | 34,213   |                |           |        | 75,915     |             |           |         | 57,336     |             |           |         | 263,451    |  
|                                                    
|                                                    
|                                                    
|                                                    
|DISCOUNTS AND ALLOWANCES                             |                                     |                     | 12,061                   |         |                |          | 43,649         |           |        |            | 26,696      |           |         |            | 79,921      |          
|                                                     |                                     |                     |                          |         |                |          |                |           |        |            |             |           |         |            |             |          
|                                                     |                                     |                     | Net revenues             |         |                | 22,152   |                |           |        | 32,266     |             |           |         | 30,640     |             |           |         | 183,530    |  
|                                                    
|                                                    
|                                                    
|                                                    
|COST OF REVENUES                                     |                                     |                     | 41,295                   |         |                |          | 20,299         |           |        |            | 47,890      |           |         |            | 37,681      |          
|                                                     |                                     |                     |                          |         |                |          |                |           |        |            |             |           |         |            |             |          
|                                                     |                                     | Gross (loss) profit |                          |         | (19,143        | )        |                |           | 11,967 |            |             |           | (17,250 | )          |             |           | 145,849 |           
|                                                     |                                     |                     |                          |         |                |          |                |           |        |            |             |           |         |            |             |          
|OPERATING EXPENSES:                                 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Selling, general and administrative |                     |                          | 688,453 |                |          |                | 1,002,073 |        |            |             | 1,280,776 |         |            |             | 1,527,915 |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Research and development            |                     |                          | 30,345  |                |          |                | 41,827    |        |            |             | 45,525    |         |            |             | 82,705    |        
|                                                     |                                     |                     |                          |         |                |          |                |           |        |            |             |           |         |            |             |          
|                                                     |                                     |                     | Total operating expenses |         |                | 718,798  |                |           |        | 1,043,900  |             |           |         | 1,326,301  |             |           |         | 1,610,620  |  
|                                                     |                                     |                     |                          |         |                |          |                |           |        |            |             |           |         |            |             |          
|                                                     |                                     |                     | Operating loss           |         |                | (737,941 | )              |           |        | (1,031,933 | )           |           |         | (1,343,551 | )           |           |         | (1,464,771 | )
|                                                     |                                     |                     |                          |         |                |          |                |           |        |            |             |           |         |            |             |          
|OTHER INCOME (EXPENSE):                              |                                     |                     | (57,113                  | )       |                |          | 70,919         |           |        |            | (155,618    | )         |         |            | (15,303     | )        
|                                                     |                                     |                     |                          |         |                |          |                |           |        |            |             |           |         |            |             |          
|NET LOSS                                             |                                     |                     | ($795,054                | )       |                |          | ($961,014      | )         |        |            | ($1,499,169 | )         |         |            | ($1,480,074 | )        
|                                                     |                                     |                     |                          |         |                |          |                |           |        |            |             |           |         |            |             |          
|Weighted average number of common
shares outstanding |                                     |                     | 4,558,646                |         |                |          | 4,173,679      |           |        |            | 4,487,035   |           |         |            | 4,168,611   |          
|                                                     |                                     |                     |                          |         |                |          |                |           |        |            |             |           |         |            |             |          
|Basic net loss per common share                      |                                     |                     | ($0.17                   | )       |                |          | ($0.23         | )         |        |            | ($0.33      | )         |         |            | ($0.36      | )        
|                                                     |                                     |                     |                          |         |                |          |                |           |        |            |             |           |         |            |             |          

See Notes to Condensed Consolidated Financial Statements

4



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##### Table of Contents






Bionutrics, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)

---

|                                                              |                                                  |                                           |             |                |            |      |             |         |            |  
|------------------------------------------------------------- | ------------------------------------------------ | ----------------------------------------- | ----------- | -------------- | ---------- | ---- | ----------- | ------- | ---------- | -
|                                                              |                                                  |                                           |             | Six months     |           
|                                                              |                                                  |                                           |             | Ended April 30 |           
|                                                              |                                                  |                                           |             |                |           
|OPERATING ACTIVITIES:                                         |                                                  |                                           | 2001        |                |            | 2000 |            
|                                                              |                                                  |                                           |             |                |           
|Net Loss                                                      |                                                  |                                           | ($1,499,169 | )              |            |      | ($1,480,074 | )      
|                                                             
|                                                             
|                                                             
|                                                             
|Adjustments to reconcile net loss to cash used in operations:
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Depreciation and amortization                    |                                           |             | 22,976         |            |      |             | 56,947  |           
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Loss on investment in joint venture              |                                           |             | 165,543        |            |      |             | 12,675  |           
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Stock-based compensation expense                 |                                           |             | 44,873         |            |      |             | 0       |           
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Expenses satisfied with issuance of common stock |                                           |             | 32,794         |            |      |             | 414,814 |           
|                                                             
|                                                             
|                                                             
|                                                             
|Changes in operating assets and liabilities:                 
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Trade receivables-net                            |                                           |             | (16,058        | )          |      |             | (47,237 | )         
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Inventory                                        |                                           |             | 44,194         |            |      |             | 33,427  |           
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Prepaids and other current assets                |                                           |             | 23,269         |            |      |             | (2,361  | )         
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Accounts payable                                 |                                           |             | 8,632          |            |      |             | (8,777  | )         
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Accrued liabilities                              |                                           |             | 46,284         |            |      |             | (29,086 | )         
|                                                              |                                                  |                                           |             |                |            |     
|                                                              |                                                  | Net cash used in operating activities     |             |                | (1,126,662 | )    |             |         | (1,049,672 | )
|                                                              |                                                  |                                           |             |                |            |     
|FINANCING ACTIVITIES:                                        
|                                                             
|                                                             
|                                                             
|                                                             
|Proceeds from issuance of stock and warrants                  |                                                  |                                           | 500,000     |                |            |      | 0           |        
|                                                             
|                                                             
|                                                             
|                                                             
|Proceeds from debt                                            |                                                  |                                           | 0           |                |            |      | 650,000     |        
|                                                             
|                                                             
|                                                             
|                                                             
|Repayments of debt and capital leases                         |                                                  |                                           | (2,278      | )              |            |      | (4,228      | )      
|                                                              |                                                  |                                           |             |                |            |     
|                                                              |                                                  | Net cash provided by financing activities |             |                | 497,722    |      |             |         | 645,772    |  
|                                                              |                                                  |                                           |             |                |            |     
|NET DECREASE IN CASH AND CASH EQUIVALENTS                     |                                                  |                                           | (628,940    | )              |            |      | (403,900    | )      
|                                                             
|                                                             
|                                                             
|                                                             
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                |                                                  |                                           | 711,563     |                |            |      | 680,190     |        
|                                                              |                                                  |                                           |             |                |            |     
|CASH AND CASH EQUIVALENTS, END OF PERIOD                      |                                                  | $                                         | 82,623      |                |            | $    | 276,290     |        
|                                                              |                                                  |                                           |             |                |            |     

See Notes to Condensed Consolidated Financial Statements

5



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##### Table of Contents



BIONUTRICS, INC.
Notes to Condensed Consolidated Financial Statements(Unaudited)




|         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Note A - |  | The accompanying unaudited Condensed Consolidated Financial
Statements of Bionutrics, Inc. (the Company) have been
prepared in accordance with accounting principles generally
accepted in the United States of America for interim financial
information and the instructions to Form 10-Q. Accordingly, they
do not include all the information and footnotes required by
generally accepted accounting principles for completed financial
statements. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present
fairly the financial position, results of operations and cash
flows for all periods presented have been made. The results of
operations for the six-month period ended April 30, 2001 are not
necessarily indicative of the operating results that may be
expected for the entire year ending October 31, 2001. These
financial statements should be read in conjunction with the
Companys financial statements and accompanying notes thereto as
of and for the year ended October 31, 2000. The accompanying
consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business.
The Company has incurred operating losses since inception
through April 30, 2001 of $36,413,305, which have been funded
through the issuance of stock and debt. The losses incurred to
date, the uncertainty regarding the ability to raise additional
capital and the Companys inability to generate positive cash
flows from operations may indicate that the Company will be
unable to continue as a going concern for a reasonable period of
time. Management is continuing their efforts to reposition the
Company as a product development company and as such is engaged
in discussions with several potential marketing partners
concerning new branded ingredients that the Company is
developing, including dietary supplements and functional food
products. The financial statements have been adjusted to reflect
a one-for-five reverse stock split (Note D)
|        
|NOTE B - |  | Basic net loss per share is computed by dividing net loss by the
weighted average number of common shares assumed outstanding
during the presented periods. Options and warrants are excluded
from the basic net loss per share calculation as they are
anti-dilutive.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        
|NOTE C - |  | In June 1998, the FASB issued SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities. SFAS No. 133
requires that an enterprise recognize all derivatives as either
assets or liabilities in the statement of financial position and
measure those instruments at fair value. Subsequent to the
issuance of SFAS 133, the FASB has received many requests to
clarify certain issues causing difficulties in implementation.
In                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

6



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##### Table of Contents



|         |  |                                                                                                                                                                                                                                                                                                                                  
|-------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        
|        
|        
|        
|         |  | June 2000, the FASB issued SFAS No. 138 which responds to
those requests by amending certain provisions of SFAS 133. The
statements are effective for the Companys fiscal year beginning
November 1, 2000. SFAS 133, as amended by SFAS 138, does not
have a material impact on the companys consolidated financial
statements.
|        
|NOTE D - |  | Subsequent Event  The Board of Directors and the shareholders
approved a one-for-five reverse stock split effected at the close
of business on May 29, 2001.                                                                                                                                                                    

7



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##### Table of Contents






BIONUTRICS, INC.
Managements Discussion and Analysis

The following discussion of the Companys financial condition and results of
operations includes certain forward looking statements. When used in this
report,
the words expects, intends, plans and anticipates and similar terms are
intended to identify forward looking statements that relate to the Companys
future
performance. Such statements involve risks and uncertainties. The Companys
actual results may differ materially from the results discussed here. Factors
that
might cause such a difference include, but are not limited to, those discussed
under
Business-Special Considerations in the Companys Form 10-K.

Results of Operations

Three months ended April 30, 2001 compared with three months ended April 30,
2000.

Consolidated gross revenues for the quarter ended April 30, 2001 were $34,000
versus $76,000 for the same quarter in 2000, summarized by subsidiary as
follows:

|                                  |  |                       |        |  |      |   |        | 
|--------------------------------- |  | --------------------- | ------ |  | ---- | - | ------ | 
|                                  |  | For the Quarter Ended |       
|Subsidiary                        |  | April 30,             |       
|                                  |  |                       |       
|                                  |  | 2001                  |        |  | 2000 |  
|                                  |  |                       |        |  |      |  
|Bionutrics Health Products        |  | $                     | 34,000 |  |      | $ | 44,000 | 
|                                 
|                                 
|                                 
|                                 
|LipoGenics                        |  |                       | 0      |  |      |   | 32,000 | 
|                                  |  |                       |        |  |      |  
|Total Consolidated Gross Revenues |  | $                     | 34,000 |  |      | $ | 76,000 | 
|                                  |  |                       |        |  |      |  

Bionutrics Health Products continues to experience a decline in sales due to
curtailment of advertising and support for the brand evolvE® as a
result of financial constraints. The Company does not expect
evolvE® will contribute significant revenue to its operations in
the future.

The Company is repositioning itself as a product development company and as
such is engaged in discussions with several potential marketing partners
involving evolvE® and future branded products including dietary
supplements and functional food products.

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New products will be based on new
technology extending beyond a tocotrienol platform. The Company has announced
that it is launching two new cardiovascular products under the brand names,
Vitenol E® 20/20  For Heart & Health and CARDIO-CIN
- For Heart and Health. Vitenol E is a rice bran extract and is a more
effective antioxidant than standard vitamin E. CARDIO-CIN is based on
Bionutricss patented niacin and soluble fiber composition. These products are
targeted to the cholesterol dietary supplement market.

LipoGenics revenues for the three months ended April 30, 2001 are zero compared
to the same three months in 2000 of $32,000. The revenues were attributable to
a Phase I Small Business Innovation Research (SBIR) grant from the National
Heart, Blood and Lung Institute. As this grant was completed during fiscal
year 2000, there are no revenues shown for the same period in 2001.

Cost of revenues for the three months ended April 30, 2001 was $41,000 versus
$20,000 for the same quarter in 2000. Cost of revenues for the second quarter
of 2001 was negatively impacted by the write-off of expired inventory held
under consignment.

Operating expenses for the three months ended April 30, 2001 of $719,000 were
$325,000 less than that recognized for the same quarter in 2000 of $1,044,000.
Operating expenses for the second quarter of 2000 included a $350,000 expense
relating to the issuance of common stock as consideration for consulting
services performed for the Company.

Other expense for the three months ended April 30, 2001 was $57,000 versus a
net income of $71,000 for the same quarter in 2000. This $128,000 decrease is
primarily due to the Companys loss on its investment in InCon Processing,
which is accounted for using the equity method. The Company records its share
of InCon Processings loss for the quarter as a decrease in its investment.
For the second quarter of 2000, the Company recorded its share of Incon
Processings net income as an increase in its investment.

Results of Operations for InCon Processing for the 3 months ended April 30,
2001 and 2000 are as follows:

|         |  |                |           |   |                |   |           | 
|-------- |  | -------------- | --------- | - | -------------- | - | --------- | 
|         |  | 3 months ended |           |   | 3 months ended |  
|         |  | April 30, 2001 |           |   | April 30, 2000 |  
|         |  |                |           |   |                |  
|Revenues |  | $              | 917,000   |   |                | $ | 1,695,000 | 
|        
|        
|        
|        
|Costs    |  |                | 1,037,000 |   |                |   | 1,544,000 | 
|         |  |                |           |   |                |  
|Net Loss |  | $              | (120,000  | ) |                | $ | 151,000   | 
|         |  |                |           |   |                |  

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Net loss decreased to $795,000 or $.17 per share for the three months ended
April 30, 2001 from $961,000, or $.23 per share for the quarter ended April 30,
2000 due primarily to lower operating expenses.

Six months ended April 30, 2001 compared with six months ended April 30, 2000.

Results of Operations

Trends and comments as noted for the second quarter apply also to the six month
year-to-
date comparisons.

Consolidated gross revenues for the six months ended April 30, 2001 were
$57,000
versus $263,000 for the same period in 2000 and is summarized by subsidiary as
follows:

|                           |  |                          |        |  |      |   |         | 
|-------------------------- |  | ------------------------ | ------ |  | ---- | - | ------- | 
|                           |  | For the Six months Ended |       
|Subsidiaries               |  | April 30,                |       
|                           |  |                          |       
|                           |  | 2001                     |        |  | 2000 |  
|                           |  |                          |        |  |      |  
|Bionutrics Health Products |  | $                        | 57,000 |  |      | $ | 201,000 | 
|                          
|                          
|                          
|                          
|LipoGenics                 |  |                          | 0      |  |      |   | 62,000  | 
|                           |  |                          |        |  |      |  
|Total Gross Revenues       |  | $                        | 57,000 |  |      | $ | 263,000 | 
|                           |  |                          |        |  |      |  

Bionutrics Health Products Inc. continues to experience a significant decline
in sales due to curtailment of advertising and support for the brand
evolvE® as a result of financial constraints. The Company is
repositioning itself as a product development company and recognized revenues
of $100,000 during the six months ended April 30, 2000 for services related to
its development activities.

LipoGenics revenues for the six months ended April 30, 2001 are zero compared
to the same six months in 2000 of $62,000. The revenues were attributable to a
Phase I Small Business Innovation Research (SBIR) grant from the National
Heart, Blood and Lung Institute. As this grant was completed during fiscal
year 2000, there are no revenues shown for the same period in 2001.

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Cost of revenues for the six months ended April 30, 2001 was $48,000 versus
$38,000 for the same period in 2000.

Operating expenses for the six months ended April 30, 2001 of $1,326,000 were
$285,000 less than that recognized for the same period in 2000 of $1,611,000.
Operating expenses for the six months ended 2000 included a $350,000 expense
related to the issuance of common stock as consideration for consulting
services performed for the Company.

Other expense for the six months ended April 30, 2001 was $156,000 versus
$15,000 for the same period in 2000. This increase is primarily due to the
Companys loss on its investment in InCon Processing, LLC. The gain the
Company recognized during the second quarter 2000 on its investment in InCon
Processing, LLC was essentially off-set by the loss it recognized on its
investment during the first quarter 2000.

Results of Operations for InCon Processing for the 6 months ended April 30,
2001 and 2000 are as follows:

|         |          |   |                |          |                |   |           |         |  
|-------- | -------- | - | -------------- | -------- | -------------- | - | --------- | ------- | -
|         |          |   | 6 months ended |          | 6 months ended
|         |          |   | April 30, 2001 |          | April 30, 2000
|         |          |   |                |          |               
|Revenues |          | $ | 1,733,000      |          |                | $ | 2,714,000 |        
|        
|        
|        
|        
|Costs    |          |   | 2,064,000      |          |                |   | 2,739,000 |        
|         |          |   |                |          |                |   |           |        
|         | Net Loss |   | $              | (331,000 | )              |   | $         | (25,000 | )
|         |          |   |                |          |                |   |           |        

Net loss was $1,499,000 or $.33 per share for the six months ended April 30,
2001 compared to $1,480,000 or $.36 per share for the same period in 2000.

Liquidity and Capital Resources

Net cash used in operating activities during the six-month period ended April
30, 2001 was $1,127,000 as compared to $1,050,000 during the same period in
2000.

Net cash used in investing activities during the six months ended April 30,
2001 and April 30, 2000 was $0 for both periods.

Net cash provided by financing activities totaled $498,000 for the six-month
period ended April 30, 2001 versus $646,000 from the same period in 2000. The
cash provided during the six months ended April 30, 2001 was from the sale of
common stock pursuant to an equity line of credit whereas the cash provided
during the same period ended April 30, 2000 was from the issuance of debt.

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The Company requires additional financing at the beginning of the third quarter
of the current fiscal year. The Company will require at least $3,000,000 to
support its general working capital needs such as salaries and administrative
expenses for the next 12 months as well as to fund the research and development
costs necessary to complete the launch of its recently developed products. The
Company is currently in negotiations to secure this necessary capital through
debt financing. The Company also seeks equity financing through private
placements to act as a short-term bridge while completing the debt financing.
There can be no assurance that such additional financing will be attainable, or
attainable on terms acceptable to the Company. Access by the Company to
additional capital will depend substantially upon prevailing market conditions,
and the financial condition of and prospects for the Company at the time. The
Companys ability to obtain additional capital could be negatively impacted if
it fails to meet certain established criteria necessary to maintain its listing
on the Nasdaq SmallCap Market. The Company has been notified that it has
failed to maintain a minimum bid price of $1.00 over 30 consecutive trading
days (pre-reverse stock split). The Company was given until May 7, 2001 to
demonstrate compliance. The Company subsequently received a notice that its
stock would be delisted. However, the Company has appealed to Nasdaq for a
hearing, and the delisting is stayed during the hearing period. In order to
maintain compliance with the Nasdaq listing standards, the Board of Directors
and the shareholders approved a one-for-five reverse stock split effected at
the close of business on May 29, 2001.

Management is continuing its efforts to obtain additional funds and is also
continuing its efforts to reposition the Company as a product development
company and, as such, is engaged in discussions with several potential
marketing partners involving evolvE® and future branded products,
including dietary supplements and functional food ingredients.

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##### Table of Contents



BIONUTRICS, INC.




PART II  OTHER INFORMATION







|          |  |                                                                                                                                                                                                                                                                                                                                                        
|--------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ITEM 2(c) |  | Changes in Securities:                                                                                                                                                                                                                                                                                                                                 
|         
|          |  | In March 2001, issued 6,095 shares of common stock at $3.30
per share to Research Works for investor relations
services.                                                                                                                                                                                                                               
|         
|          |  | In April 2001, issued 40,000 shares of common stock at
$5.00 per share to the Ropart Investments LLC, pursuant to
the equity draw down facility entered into on December 20,
2000. In connection with this issuance, the Company issued
4,000, 3 year warrants at an exercise price of $5.00 per
share.                                                
|         
|          |  | The above issuances were made pursuant to Section 4(2) of
the Securities Act of 1933.                                                                                                                                                                                                                                                                  
|         
|ITEM 4    |  | Submission of Matters to a Vote of Security Holders                                                                                                                                                                                                                                                                                                    
|         
|          |  | The Companys 2001 Annual Meeting of Stockholders was held
on March 21, 2001. The following nominees were elected to
the Companys Board of Directors to serve as a Class I
directors for a three-year term or until their successors
are elected and qualified (Votes In Favor and Withheld
reflect common shares on a pre-reverse stock split basis):

|                     |  |                |  |  |          |        |  | 
|-------------------- |  | -------------- |  |  | -------- | ------ |  | 
|Nominee              |  | Votes in Favor |  |  | Withheld |       
|                    
|Ronald H. Lane       |  | 17,595,610     |  |  |          | 40,520 |  | 
|                    
|                    
|                    
|                    
|Daniel S. Antonelli  |  | 17,595,610     |  |  |          | 40,520 |  | 
|                    
|                    
|                    
|                    
|William M. McCormick |  | 17,595,610     |  |  |          | 40,520 |  | 

| |  |                                                                                                                                                                            
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The following nominee was elected to the Companys Board of
Directors to serve as a Class III director for a two-year
term or until his successor is elected and qualified:

|                    |  |            |  |  |  |        |  | 
|------------------- |  | ---------- |  |  |  | ------ |  | 
|Richard M. Feldheim |  | 17,595,610 |  |  |  | 40,520 |  | 

The following directors terms of office continued after the 2001 Annual
Meeting of Stockholders:

Robert B. Goergen
            Y. Steve Henig, Ph.D.
            Milton Okin
            Fredrick Rentschler

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##### Table of Contents



Winston A. Salser, Ph.D.

The following additional item was voted upon by the Companys stockholders:

| |  |                                                                                                                                                    
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Proposal to ratify the appointment of Deloitte & Touche LLP
as the independent auditors of the Company for the fiscal year
ending October 31, 2001.

|               |  |         |  |  |           |  |  |                 |  |  |  | 
|-------------- |  | ------- |  |  | --------- |  |  | --------------- |  |  |  | 
|Votes in Favor |  | Opposed |  |  | Abstained |  |  | Broker Non-Vote | 
|              
|17,628,780     |  | 4,750   |  |  | 2,600     |  |  | 0              




|       |  |  |     |  |  |                                 
|------ |  |  | --- |  |  | --------------------------------
|ITEM 6 |  |  |     |  |  | Exhibits and Reports on Form 8-K
|      
|       |  |  | (a) |  |  | Exhibits None                  
|      
|       |  |  | (b) |  |  | Reports on Form 8-K None       

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BIONUTRICS, INC.

SIGNATURES

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

|                      |  |                                                                  
|--------------------- |  | -----------------------------------------------------------------
|                      |  | Bionutrics, Inc.
  (Registrant)                                  
|                     
|Dated:  June 15, 2001 |  | By:/s/Ronald H. Lane                                             
|                     
|                      |  | Its: Chairman of the Board,
Chief Executive Officer
and President
|                     
|                      |  | By:/s/Karen J. Harwell                                           
|                     
|                      |  | Its:Controller and Chief
Accounting Officer                      

15