---

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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

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FORM 10-Q

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

For Quarter Ended July 31, 2002

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

For the Transition Period From  to

Commission File Number 0-22011

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

|Nevada                                             |  | 86-0760991                                         
|-------------------------------------------------- |  | ---------------------------------------------------
|(State or other jurisdiction
organization)         |  | I.R.S. Employer incorporation
Identification Number
|2415 E. Camelback Rd., Suite 700, Phoenix, Arizona |  | 85016                                              
|(Address of principal executive offices)           |  | (Zip code)                                         

602-508-6069(Registrant's telephone number, including area code)

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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 ý    NO o

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 SEPTEMBER 10, 2002
|-------------------------------- |  | ------------------------------------
|Common Par value $.001 per share |  | 4,352,600                           
|                                 |  |                                     

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---

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

|                              |           |                                                      |                                                                                       | Page
|----------------------------- | --------- | ---------------------------------------------------- | ------------------------------------------------------------------------------------- | ----
|Part I. Financial Information |           |                                                     
|                              | ITEM I.   |                                                      | Condensed Consolidated Financial Statements (Unaudited):                              |     
|                              |           | Condensed Consolidated Balance Sheets                |                                                                                       | 3   
|                              |           | Condensed Consolidated Statements of Operations      |                                                                                       | 4   
|                              |           | Condensed Consolidated Statements of Cash Flows      |                                                                                       | 5   
|                              |           | Notes to Condensed Consolidated Financial Statements |                                                                                       | 6   
|                              | ITEM 2.   |                                                      | Management's Discussion and Analysis of Financial Condition and Results of Operations |     
|                              | ITEM 4.   |                                                      | Controls and Procedures                                                               |     
|Part II. Other Information    |           |                                                     
|                              | ITEM 6    |                                                      | Exhibits and Reports on Form 8-K                                                      |     
|                              | SIGNATURE |                                                      | 12                                                                                   

2

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BIONUTRICS, INC.        CONDENSED CONSOLIDATED BALANCE SHEETS

|                                                                                |                                                                                                                                                            | July 31,
2002                        |           | October 31,
2001 |          
|------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------ | --------- | ---------------- | ---------
|
|ASSETS                                                                          |                                                                                                                                                            |                                      |           |                  |          
|CURRENT ASSETS:                                                                 |                                                                                                                                                            |                                      |           |                  |          
|                                                                                | Cash and cash equivalents                                                                                                                                  |                                      | $         | 170,841          |          
|                                                                                | Trade receivablesnet of allowance for bad debts of $305,000 and $305,000, respectively                                                                    |                                      |           | 1,950            |          
|                                                                                | Inventory                                                                                                                                                  |                                      |           | 35,200           |          
|                                                                                | Prepaids and other current assets                                                                                                                          |                                      |           | 24,546           |          
|                                                                                |                                                                                                                                                            |                                      |           |                  |          
|                                                                                |                                                                                                                                                            | Total current assets                 |           |                  | 232,537  
|                                                                                |                                                                                                                                                            |                                      |           |                  |          
|PROPERTYnet of accumulated depreciation of $358,047 and $354,886, respectively |                                                                                                                                                            |                                      | 0         |                  |          
|                                                                                |                                                                                                                                                            |                                      |           |                  |          
|OTHER ASSETS:                                                                   |                                                                                                                                                            |                                      |           |                  |          
|                                                                                | Patents and other related costsnet of accumulated amortization of $225,740 and $204,993, respectively                                                     |                                      |           | 343,725          |          
|                                                                                | Investment in InCon Processing, LLC                                                                                                                        |                                      |           | 2,365,151        |          
|                                                                                |                                                                                                                                                            |                                      |           |                  |          
|                                                                                |                                                                                                                                                            | Total other assets                   |           |                  | 2,708,876
|                                                                                |                                                                                                                                                            |                                      |           |                  |          
|TOTAL                                                                           |                                                                                                                                                            | $                                    | 2,941,413 |                  | $        
|                                                                                |                                                                                                                                                            |                                      |           |                  |          
|LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY                                  |                                                                                                                                                           
|CURRENT LIABILITIES:                                                            |                                                                                                                                                            |                                      |           |                  |          
|                                                                                | Accounts payable                                                                                                                                           |                                      |           | 1,614,415        |          
|                                                                                | Accrued salaries and benefits                                                                                                                              |                                      |           | 474,043          |          
|                                                                                | Other accrued liabilities                                                                                                                                  |                                      |           | 555,818          |          
|                                                                                | Notes payable                                                                                                                                              |                                      |           | 1,254,500        |          
|                                                                                |                                                                                                                                                            |                                      |           |                  |          
|                                                                                |                                                                                                                                                            | Total current liabilities            |           |                  | 3,898,776
|                                                                                |                                                                                                                                                            |                                      |           |                  |          
|STOCKHOLDERS' (DEFICIT) EQUITY                                                  |                                                                                                                                                            |                                      |           |                  |          
|                                                                                | Preferred stock$.001 par valueauthorized 5,000,000 shares; 591,850 and 591,850 issued and outstanding, respectively (liquidation preference of $798,998) |                                      |           | 798,998          |          
|                                                                                | Common stock$.001 par valueauthorized, 45,000,000 shares; 4,352,600 and 4,352,600 issued and outstanding, respectively                                   |                                      |           | 4,352            |          
|                                                                                | Additional paid-in capital                                                                                                                                 |                                      |           | 37,825,837       |          
|                                                                                | Warrants                                                                                                                                                   |                                      |           | 633,332          |          
|                                                                                | Accumulated deficit                                                                                                                                        |                                      |           | (40,219,882      | )        
|                                                                                |                                                                                                                                                            |                                      |           |                  |          
|                                                                                |                                                                                                                                                            | Total stockholders' (deficit) equity |           |                  | (957,363 
|                                                                                |                                                                                                                                                            |                                      |           |                  |          
|TOTAL                                                                           |                                                                                                                                                            | $                                    | 2,941,413 |                  | $        
|                                                                                |                                                                                                                                                            |                                      |           |                  |          

See
Notes to Condensed Consolidated Financial Statements

3

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BIONUTRICS, INC.        CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

|                                                     |                                               | Three Months
Ended July 31,  |           | Nine Months
Ended July 31, |         
|---------------------------------------------------- | --------------------------------------------- | ---------------------------- | --------- | -------------------------- | --------
|
|REVENUES:                                            |                                               |                              |           |                            |         
|                                                     | Revenue from product sales                    |                              | $         | 7,740                      |         
|                                                     |                                               |                              |           |                            |         
|                                                     |                                               | Total gross revenues         |           |                            | 7,740   
|DISCOUNTS AND ALLOWANCES                             |                                               |                              | 0         |                            |         
|                                                     |                                               |                              |           |                            |         
|                                                     |                                               | Net revenues                 |           |                            | 7,740   
|                                                     |                                               |                              |           |                            |         
|COST OF REVENUES                                     |                                               |                              | 1,890     |                            |         
|                                                     |                                               |                              |           |                            |         
|                                                     | Gross (loss) profit                           |                              |           | 5,850                      |         
|                                                     |                                               |                              |           |                            |         
|OPERATING EXPENSES:                                  |                                               |                              |           |                            |         
|                                                     | Selling, general and administrative           |                              |           | 278,064                    |         
|                                                     | Research and development                      |                              |           | 0                          |         
|                                                     |                                               |                              |           |                            |         
|                                                     |                                               | Total operating expenses     |           |                            | 278,064 
|                                                     |                                               |                              |           |                            |         
|                                                     |                                               | Operating loss               |           |                            | (272,214
|                                                     |                                               |                              |           |                            |         
|OTHER INCOME (EXPENSE)                               |                                               |                              |           |                            |         
|                                                     | Equity in the loss of Incon Processing, L.L.C |                              |           | (146,618                   | )       
|                                                     | Interest (expense) income                     |                              |           | (12,408                    | )       
|                                                     |                                               |                              |           |                            |         
|                                                     |                                               | Total other income (expense) |           |                            | (159,026
|                                                     |                                               |                              |           |                            |         
|NET LOSS                                             |                                               | $                            | (431,240  | )                          | $       
|                                                     |                                               |                              |           |                            |         
|Basic and diluted net loss per common share          |                                               | $                            | (0.10     | )                          | $       
|                                                     |                                               |                              |           |                            |         
|Weighted average number of common shares outstanding |                                               |                              | 4,352,600 |                            |         
|                                                     |                                               |                              |           |                            |         

See
Notes to Condensed Consolidated Financial Statements

4

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BIONUTRICS, INC.        CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

|                                                          |                                                                                           | Nine Months
Ended July 31,        |                                          
|--------------------------------------------------------- | ----------------------------------------------------------------------------------------- | --------------------------------- | -----------------------------------------
|
|OPERATING ACTIVITIES:                                     |                                                                                           |                                   |                                          
|                                                          | Net Loss                                                                                  |                                   | $                                        
|                                                          | Adjustments to reconcile net loss to cash used in operating activities:                   |                                   |                                          
|                                                          |                                                                                           | Depreciation and amortization     |                                          
|                                                          |                                                                                           | Equity in loss of joint venture   |                                          
|                                                          |                                                                                           | Stock-based compensation expense  |                                          
|                                                          | Changes in operating assets and liabilities:                                              |                                   |                                          
|                                                          |                                                                                           | Trade receivablesnet             |                                          
|                                                          |                                                                                           | Inventory                         |                                          
|                                                          |                                                                                           | Prepaids and other current assets |                                          
|                                                          |                                                                                           | Accounts payable                  |                                          
|                                                          |                                                                                           | Accrued liabilities               |                                          
|                                                          |                                                                                           |                                   |                                          
|                                                          |                                                                                           |                                   | Net cash used in operating activities    
|                                                          |                                                                                           |                                   |                                          
|FINANCING ACTIVITIES:                                     |                                                                                           |                                   |                                          
|                                                          | Proceeds from issuance of stock and warrants                                              |                                   |                                          
|                                                          | Proceeds from debt                                                                        |                                   |                                          
|                                                          | Repayments of debt and capital leases                                                     |                                   |                                          
|                                                          |                                                                                           |                                   |                                          
|                                                          |                                                                                           |                                   | Net cash provided by financing activities
|                                                          |                                                                                           |                                   |                                          
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS      |                                                                                           |                                   | 69,881                                   
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD            |                                                                                           |                                   | 100,960                                  
|                                                          |                                                                                           |                                   |                                          
|CASH AND CASH EQUIVALENTS, END OF PERIOD                  |                                                                                           | $                                 | 170,841                                  
|                                                          |                                                                                           |                                   |                                          
|SUPPLEMENTAL DISCLOSURES OF NONCASH FINANCING ACTIVITIES: |                                                                                           |                                   |                                          
|                                                          | Expiration of warrants and reclassification to additional paid in capital                 |                                   | $                                        
|                                                          |                                                                                           |                                   |                                          
|                                                          | Settlement of accrued liabilities and debt through issuance of common and preferred stock |                                   |                                          
|                                                          |                                                                                           |                                   |                                          

See
Notes to Condensed Consolidated Financial Statements

5

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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 complete 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 three-month and nine-month periods ended July 31, 2002 are not necessarily indicative of the operating results that may be expected for the entire year ending October 31, 2002. The accompanying unaudited condensed consolidated financial
statements should be read in conjunction with the Company's consolidated financial statements and accompanying notes thereto as of and for the year ended October 31, 2001. The unaudited condensed 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 July 31, 2002 of $40,219,882,
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 raise
substantial doubt about whether the Company will be able to continue as a going concern for a reasonable period of time.
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|NOTE B | Basic and diluted net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the presented periods. Options, warrants, convertible debt and preferred stock are excluded from the diluted net
loss per share calculation as they are anti-dilutive.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|NOTE C | In June 2002, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 146,Accounting for Costs Associated with Exit or Disposal Activities. SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. The Statement is effective for disposal activities that are initiated after December 31,
2002. The Company does not expect this SFAS to have a material effect on its financial position or results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

6

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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.

Three months ended July 31, 2002 compared with three months ended July 31, 2001.

Results of Operations

Consolidated net revenues for the quarter ended July 31, 2002 were $8,000 versus $13,000 for the same quarter in 2001.

Bionutrics
Health Products continues to sell its remaining evolvE® inventory, which is currently being re-packaged. 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 future branded products including dietary supplements and functional food products. New products will be based on new technology extending beyond a
tocotrienol platform. The Company has announced that it has 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. However, they are not currently
being marketed because of the Company's lack of resources.

Cost
of revenues for the three months ended July 31, 2002 was $2,000 versus $8,000 for the same quarter in 2001. This reduction is due to lower sales volume of evolvE.

Operating
expenses for the three months ended July 31, 2002 of $278,000 were $273,000 less than that recognized for the same quarter in 2001 of $551,000. This reduction reflects
the Company's decrease in corporate activity as a result of cash constraints.

Equity
in the loss of InCon Processing, LLC was $147,000 for the three months ended July 31, 2002 compared to $118,000 for the same period in the prior year. The Company
records its share of InCon Processing's loss and income using the equity method.

InCon
Processing has a fiscal year-end of August 31. The Company's equity in the joint venture's operations for the three months ended May 31, 2002 and
May 31, 2001 are included in the Company's statement of operations as if they had the same fiscal quarter. Results of Operations for InCon Processing for the 3 months ended
May 31, 2002 and 2001 are as follows:

3 Months ended
May 31, 2002

3 Months ended
May 31, 2002Revenues

$
538,000

$
773,000Expenses


831,000


1,010,000Net loss (income)

$
(293,000
)
$
(237,000
)


Interest
expense was $12,000 for the three months ended July 31, 2002 compared to 7,000 for the same period in the prior year. This $5,000 increase is due to the interest expense
associated with the funds borrowed under the multiple advance non-revolving note.

7

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Net
loss decreased to $431,000 or $.10 per basic and diluted share for the three months ended July 31, 2002 from $672,000, or $.15 per basic and diluted share for the quarter
ended July 31, 2001 due primarily to lower operating expenses.

Nine months ended July 31, 2002 compared with nine months ended July 31, 2001.

Results of Operations

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

Consolidated
net revenues for the nine months ended July 31, 2002 were $24,000 versus $44,000 for the same period in 2001.

Bionutrics
Health Products Inc. continues to sell its remaining evolvE® inventory. The Company is repositioning itself as a product development company and as such is
engaged in discussions with potential marketing partners involving future branded products including dietary supplements and functional food products.

Cost
of revenues for the nine months ended July 31, 2002 was $12,000 versus $56,000 for the same period in 2001 due to decreased sales volume. Additionally, cost of revenues for
the nine months ended 2001 was negatively impacted by the write-off of expired inventory held under consignment.

Operating
expenses for the nine months ended July 31, 2002 of $1,513,000 were $364,000 less than that recognized for the same period in 2001 of $1,877,000. This reduction reflects
the Company's decrease in activity as a result of cash constraints.

Equity
in the loss of InCon Processing, LLC was $364,000 for the nine months ended July 31, 2002 compared to $241,000 for the same period in the prior year. The Company
records its share of InCon Processing's loss and income using the equity method.

InCon
Processing has a fiscal year-end of August 31. The Company's equity in the joint venture's operations for the nine months ended May 31, 2002 and
May 31, 2001 are included in the Company's statement of operations as if they had the same fiscal period. Results of Operations for InCon Processing for the 9 months ended May 31,
2002 and May 31, 2001 are as follows:

9 Months ended
May 31, 2002

9 Months ended
May 31, 2001Revenues

$
1,860,000

$
2,768,000Expenses


2,588,000


3,251,000Net loss

$
(728,000
)
$
(483,000
)


Interest
expense for the nine months ended July 31, 2002 was $154,000 versus income of $3,000 for the same period in 2001. This $157,000 difference is due to the interest expense
associated with the issuance of the multiple advance non-revolving note.

Net
loss was $2,019,000 or $.46 per basic and diluted share for the nine months ended July 31, 2002 compared to $2,129,000 or $.47 per basic and diluted share for the same period
in 2001.

Liquidity and Capital Resources

Net cash used in operating activities during the nine-month period ended July 31, 2002 was $602,000 as compared to $1,346,000 during the same
period in 2001. This decrease is due primarily to the Company's cash conservation efforts.

8

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The
Company did not generate any cash from investing activities during the nine months ended July 31, 2002 and July 31, 2001.

Net
cash provided by financing activities totaled $672,000 for the nine-month period ended July 31, 2002 versus $646,000 from the same period in 2001. The cash
provided during the nine months ended July 31, 2002 was from the issuance of debt whereas the cash provided during the same period in the previous year was from both the sale of common stock as
well as debt proceeds.

In
October 2001, the Company executed an amended and restated consolidated multiple advance non-revolving note to borrow up to $700,000 from certain directors, a
stockholder and an unrelated party. The amount borrowed on October 31, 2001 was $583,000. The note agreement required a fixed interest payment of $140,000 if the full $700,000 were borrowed.
The Company computed interest expense based on 20% of the amount borrowed over the period borrowed regardless of the number of days outstanding. The note payable is secured by the assets of the
Company. The note was payable in full on January 2, 2002 and is convertible, at the option of the lenders, into shares of the Company's common stock at the rate of $1.00 per share. On
January 30, 2002, the note was amended to increase the amount that could be borrowed to $860,000, the fixed interest payment to $172,000 if the full $860,000 were borrowed, and to extend the
due date to March 1, 2002. On April 9, 2002, the note was amended to increase the amount that can be borrowed to $1,154,500, the fixed interest payment to $230,900 if the full $1,154,500
were borrowed, and to extend the due date to June 1, 2002. On July 10, 2002, the note was amended to increase the amount that can be borrowed to $1,300,000, the fixed interest payment to
$260,000 if the full $1,300,000 is borrowed, and to extend the due date to January 10, 2003. As of September 10, 2002, the amount borrowed under the note was $1,254,500.

In
August, 2001, the Company entered into a stock purchase agreement with Pharmaceutical Marketing Brands, Inc. (PMB), as nominee, for the purchase of 49% of the Company and
options to purchase 5,000,000 shares of common stock at $1.00 per share, for $5 million. This agreement was amended on October 5, 2001, to assign PMB's rights, as nominee, to its
principal HealthSTAR Holding LLC and to provide for an increase in the investment from $5 million to a minimum of $6.5 million up to a maximum of $10 million at $1.00 per
share of common stock and for the Company to sell such shares directly to institutional and or accredited investors subject to a voting agreement among the parties. This agreement for the purchase of
49% of the Company's common stock by HealthSTAR Holdings LLC is no longer in place and such agreement has been cancelled. The Company has agreed with HealthSTAR Communications, Inc., an
affiliated company of HealthSTAR Holding LLC, to form an alliance for the commercialization and promotion of its technology and products. As part of the alliance, HealthSTAR
Communications, Inc. will attempt to "place" the Company's products with pharmaceutical and other "marketing partners" who will in turn compensate the Company through royalty and other fees.
HealthSTAR Communications, Inc. will also be compensated by the marketing partners for the promotion of those products and the Company will participate in the fees paid HealthSTAR
Communications, Inc. for that promotion. The Company expects any purchase of its common stock by HealthSTAR Holdings LLC (or HealthSTAR Communications, Inc.) will be less than
1,000,000 shares at $1.00 per share for $1,000,000. Issues relating to such a purchase are being addressed by the parties and no decision has been reached at this time and there is no assurance that
any such agreement will be reached.

The
Company previously indicated it was negotiating the private sale of 10,000,000 shares of its common stock to an investor at the price of $1.10 per share. The sale as discussed was
expected to contain a shareholder agreement with certain provisions relating to a shareholder voting agreement and restrictions on future resale of the shares. This sale has not taken place as of
September 12, 2002 and the parties are still reviewing the matter with the intent of completing the transaction. There can be no assurance that this private placement will proceed as discussed
or that it will close and provide the Company with the indicated cash.

9

---

In
September 2000, the Company and Justicia Holdings Ltd. entered into a common stock Purchase Agreement for the future issuance and purchase of shares of the Company's
common stock. The Agreement establishes what is sometimes termed as an equity line of credit or an equity draw down facility. The Agreement permits the company, in its discretion, and subject to
certain restrictions, to sell up to an aggregate of 800,000 shares, with the maximum amount for each sale not to exceed $1,000,000 each month, based on a formula of weighted average price and total
trading volume for a given period. The period during which the Company can make such sales is two years beginning upon the effective date of a registration statement for the resale of the shares. The
price is based on the volume weighted average daily price of the Company's common stock for the 22 trading days following a draw down notice. Drawdowns are available every 29 trading days. The current
stock price and trading volume severely limit the amount available to the Company at any one drawdown period. The common stock purchase agreement with Justicia Holdings Ltd limits the Company's
ability to sell its securities for cash at a discount to the market price pursuant to an equity line type financing for 24 months from the effective date of the registration statement filed on
December 28, 2000 or 60 days after the entire 800,000 shares have been purchased. The Company is not permitted to drawdown on the equity line until the registration statement filed on
Justicia's behalf becomes effective. The Company is uncertain about the action it will take in the future concerning this agreement. There is no assurance that the required registration statement for
the sale of stock per this agreement will become effective or that the Company will realize any cash proceeds from such a sale.

The
Company requires additional financing of at least $4,000,000 to achieve its minimum corporate goals over the next 12 months. The Company is currently in negotiations to secure
this necessary capital through equity private placements as well as debt financing. The Company does not at this time have any committed sources of financing, other than the Justicia equity line of
credit, the terms of which currently prohibit the Company from drawing down any funds. There can be no assurance that additional financing will be attainable on terms acceptable to the Company, or at
all, at such time as the Company's needs may require. Access to additional capital will depend substantially upon prevailing market conditions, and the Company's financial condition and prospects at
the time. On July 18, 2001, the Company's common stock was delisted from the Nasdaq SmallCap Market, and the shares are currently quoted on the OTC Bulletin Board. As a result, activity in the
Company's common stock has declined substantially, which could adversely affect the Company's ability to raise necessary capital. Such additional financing may not be attainable, or attainable on
terms acceptable to the Company. Access 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 has made application for a loan in the amount of $5,000,000 to a lender that specializes in loans secured by intellectual properties. If the Company were successful in
obtaining this loan, it would receive up to $5,000,000 (less closing costs and points estimated to total $350,000) and would be required to place as much or more than $5,000,000 of debt on its
financial statement depending on the structure of the loan. The terms of this agreement are presently being discussed. There is no assurance the Company will succeed in obtaining this loan or that, if
successful in obtaining the loan that the terms and conditions will be as described herein.

The
loan would be secured by a "pod" of patents owned by the Company's subsidiary, LipoGenics, Inc. If the Company defaults on the loan's interest payments, loan repayment or
other material provisions of the loan agreements, the lender would be entitled to foreclose on the collateral and, in such case, the Company would lose such patents and all associated rights. The loss
of these patents could have a material adverse effect on the Company.

Controls and Procedures

Since May 1, 2002, there have been no significant changes in our internal controls or in other factors that could significantly affect those controls.

10

---



BIONUTRICS, INC.

PART IIOTHER INFORMATION

ITEM 6Exhibits and Reports on Form 8-K



11

---





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) |                                                              | 
|----------------------------- | ------------------------------------------------------------ | 
|By:                           | /s/RONALD H. LANERonald H. Lane                              | 
|Title:                        | Chairman of the Board, Chief Executive Officer and President | 
|Date:                         | September 12, 2002                                           | 
|By:                           | /s/KAREN J. HARWELLKaren J. Harwell                          | 
|Title:                        | Controller and Chief Accounting Officer                      | 
|Date:                         | September 12, 2002                                           | 

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CERTIFICATION

I,
Ronald H. Lane, certify that:

|Date: September 12, 2002 |  |                                                                                             
|------------------------ |  | --------------------------------------------------------------------------------------------
|                         |  | /s/RONALD H. LANERonald H. Lane Chairman of the Board, Chief Executive
Officer and President

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CERTIFICATION

I,
Karen J. Harwell, certify that:

|Date: September 12, 2002 |  |                                                                            
|------------------------ |  | ---------------------------------------------------------------------------
|                         |  | /s/KAREN J. HARWELLKaren J. Harwell Controller and Chief Accounting
Officer

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EXHIBIT INDEX

|Exhibit Number |  | Description of Exhibit                                                                                                                                                  
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 10.60  |  | Third Amended and Restated Consolidated Multiple Advance Non-Revolving Note, dated July 10, 2002                                                                        
|Exhibit 10.61  |  | Amendment No. 2 to Amendment No. 1 to Amended and Restated Loan and Stock Pledge Agreement, dated July 10, 2002                                                         
|Exhibit 10.62  |  | Amendment No. 2 to Amendment No. 1 to Amended and Restated Security Agreement, dated July 10, 2002                                                                      
|Exhibit 99.1   |  | Certification of the Chief Executive Officer of the Registrant, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|Exhibit 99.2   |  | Certification of the Chief Financial Officer of the Registrant, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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