UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

                                   (Mark One)

|X|   Quarterly report pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934 for the Quarterly Period Ended March 31, 2002 or

|_|   Transition Report pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934

                         Commission File Number: 0-24736

                    BIOPROGRESS TECHNOLOGY INTERNATIONAL, INC

                            (Exact name of registrant
                          as specified in its charter)

            Nevada                                        88-0361701
(State of other jurisdiction of                (IRS Employer Identification No.)
incorporation or organization

9055 Huntcliff Trace
Atlanta, Georgia                                         30350-1735
(Address of principal executive offices)                 (Zip code)

                                 (770) 649-1133
              (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 the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days:

Yes |X| No |_|

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:

As of May 8, 2002, there were 48,439,277 shares of common stock outstanding.

<PAGE>

                                TABLE OF CONTENTS

                                                                            PAGE

PART I - FINANCIAL INFORMATION.................................................1

Item 1.  Financial Statements (Unaudited)......................................1

         Consolidated Balance Sheets for March 31, 2002 and
         December 31, 2002.....................................................1

         Consolidated Statement of Operations for the three months ended
         March 31, 2002 and 2001...............................................2

         Consolidated Statement of Cash Flow for the three months ended March
         31, 2002 and 2001 ....................................................3

Notes to Financial Statements (unaudited)......................................4

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations.................................................5

Item 3.  Quantitative and Qualitative Disclosures About Market Risk...........12

PART II - OTHER INFORMATION...................................................12

Item 6.  Exhibits and Reports on Form 8-K.....................................12

         SIGNATURES...........................................................15

<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

           BIOPROGRESS TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                           (UNAUDITED) MARCH 31, 2002

<TABLE>
<CAPTION>
                                                                   March 31, 2002    December 31, 2001
                                                                   --------------    -----------------
<S>                                                                   <C>                  <C>
                                                                      $                    $
CURRENT ASSETS
Cash and cash equivalents                                                  96,236                5,851
Marketable securities                                                     231,080              210,630
Accounts receivable                                                       125,014              193,388
Amounts due from related parties                                          457,574              484,085
Subscription receivable                                                    91,928                   --
Prepaid expenses and other current assets                               1,308,096            1,356,187
                                                                      -----------          -----------

Total current assets                                                    2,309,928            2,250,141

FIXED ASSETS
Property, plant and equipment, net                                        696,760            1,383,673

EQUITY INVESTMENTS, net                                                   925,890              559,377

INTANGIBLE ASSETS
Licenses, net                                                             924,124              958,200
Goodwill, net                                                           4,747,213            4,914,919
                                                                      -----------          -----------
TOTAL ASSETS                                                            9,603,915           10,066,310
                                                                      ===========          ===========
CURRENT LIABILITIES
Bank overdraft                                                            348,096              332,738
Accounts payable                                                        1,028,950              749,594
Amounts owed to related parties                                                --              377,219
Accrued expenses and other current liabilities                          1,390,485              880,550
Deferred revenue                                                        1,293,500            1,326,900
                                                                      -----------          -----------
Total liabilities                                                       4,061,031            3,667,001
                                                                      -----------          -----------

Redeemable convertible preferred stock, Series A, par value $1.00           4,140                3,900
Redeemable convertible preferred stock, Series B, par value $2.50         764,960              602,970
                                                                      -----------          -----------
                                                                          769,100              606,870
                                                                      -----------          -----------

STOCKHOLDERS' EQUITY Common stock, $0.001 par value:
75,000,000 shares authorized 48,311,027 shares issued
and outstanding (2001: 47,631,527)                                         48,311               47,632

Additional paid-in capital                                             25,176,371           24,724,050
Accumulated deficit                                                   (20,725,113)         (19,103,570)
Accumulated other comprehensive gain                                      274,215              124,327
                                                                      -----------          -----------
TOTAL STOCKHOLDERS' EQUITY                                              4,773,784            5,792,439
                                                                      -----------          -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                              9,603,915           10,066,310
                                                                      ===========          ===========
THE ACCOMPANYING NOTES FORM AN INTEGRAL PART OF THESE STATEMENTS

</TABLE>


                                       1
<PAGE>

           BIOPROGRESS TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                  Three Months Ended March 31,
                                                                        2002            2001
                                                                   $              $

<S>                                                                <C>            <C>
Net revenues                                                           112,211        405,152
COSTS AND EXPENSES
Costs of revenues                                                       47,405         80,117
Research and development                                                19,865        599,406
Professional fees                                                      194,985        285,200
Realized and unrealized (profit) loss on marketable securities         (20,450)       253,119
Loss on disposal of fixed assets                                       216,252             --
General and administrative expenses                                  1,018,487      1,422,076
                                                                   -----------    -----------
Total cost and expenses                                              1,476,544      2,639,918
                                                                   -----------    -----------
Loss from operations                                                (1,364,333)    (2,234,766)
Share of loss from equity investment                                   (81,865)      (106,979)
                                                                   -----------    -----------
Net loss                                                            (1,446,198)    (2,341,745)
Dividend payable and accretion of preferred stock                     (175,345)       (85,020)
                                                                   -----------    -----------
Net loss applicable to common stockholders                          (1,621,543)    (2,426,765)
                                                                   ===========    ===========
Net loss per common share                                                (0.03)         (0.05)
                                                                   ===========    ===========
Weighted average number of common shares outstanding                47,770,968     45,611,541
                                                                   ===========    ===========
</TABLE>

THE ACCOMPANYING NOTES FORM AN INTEGRAL PART OF THESE STATEMENTS.


                                       2
<PAGE>

           BIOPROGRESS TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENT OF CASH FLOW

<TABLE>
<CAPTION>
                                                                            (Unaudited)
                                                                   Three months ended March 31
                                                                        2002           2001
<S>                                                               <C>             <C>
                                                                  $               $
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                                            (1,446,198)     (2,341,745)

Adjustments to reconcile net loss to net cash
used in operating activities
Goodwill written off                                                   167,706              --
Depreciation and amortization                                          196,943         253,925
Share of loss of associate                                              81,865         106,979
Realized and unrealized (profit) loss on marketable securities         (20,450)        173,674
Loss on disposal of fixed assets                                       216,252              --


Changes in operating assets and liabilities:
Decrease in accounts receivable                                         68,374         360,909
Decrease (increase) in amounts receivable from related parties          26,511        (404,959)
Increase in prepaid expenses and other current assets                   48,091          11,956

Decrease in deferred revenue                                           (33,400)       (299,205)
Increase in accounts payable                                           279,358         450,116
Increase in accrued expenses and other current liabilities             148,074          76,219
                                                                  ------------    ------------

Net cash used in operating activities                                 (266,874)     (1,612,131)
                                                                  ============    ============

Cash flows from investing activities:
Purchases of property and equipment                                   (112,584)       (195,252)
Purchase of investments                                                     --        (214,823)
Dividends paid                                                         (13,118)             --
Amounts advanced to equity investment                                  (28,000)       (383,000)
                                                                  ------------    ------------

Net cash used in investing activities                                 (153,702)       (793,075)
                                                                  ============    ============

Cash flows from financing activities:

Proceeds from sale of preferred stock                                       --         416,684
Proceeds from sale of new units                                        361,072              --
                                                                  ------------    ------------
Net cash provided by financing activities                              361,072         416,684
                                                                  ------------    ------------
Effects of exchange rate changes on cash and cash equivalents          149,886         232,672
                                                                  ------------    ------------
Net increase (decrease) in cash and cash equivalents                    90,385      (1,755,850)

Cash and cash equivalents, at beginning of period                        5,851       3,818,717
                                                                  ------------    ------------
Cash and cash equivalents, at end of period                             96,236       2,062,867
                                                                  ============    ============
</TABLE>


                                       3
<PAGE>

           BIOPROGRESS TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARIES

                    Notes to Financial Statements (Unaudited)

In the opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation of the financial
condition of registrant have been included.

Note 1. A summary of significant accounting policies is currently on file with
the U.S. Securities and Exchange Commission in registrant's Form 10-KSB, which
is incorporated herein by reference. Certain reclassifications have been made to
the 2001 financial statements to conform to the 2002 presentation.

Note 2. The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-Q and do not include all information
and footnotes required by generally accepted accounting principles for complete
financial statements.

Note 3. In July 2001, the Financial Accounting Standards Board issued Statements
of Financial Accounting Standards No. 141, Business Combinations (FAS 141) and
No. 142, Goodwill and Other Intangible Assets (FAS 142). FAS 141 requires all
business combinations initiated after June 30, 2001 to be accounted for using
the purchase method. Under FAS 142, goodwill and intangible assets with
indefinite lives are no longer amortized but are reviewed annually (or more
frequently if impairment indicators arise) for impairment. Separable intangible
assets that are not deemed to have indefinite lives will continue to be
amortized over their useful lives (but with no maximum life). The amortization
provisions of FAS 142 apply to goodwill and intangible assets acquired after
June 30, 2001. With respect to goodwill and intangible assets acquired prior to
July 1, 2001, the Company is required to adopt FAS 142 effective January 1,
2002. The Company has applied the provisions of FAS 142 in this period. The
following table shows the effect of adopting this standard:

                                                      2002              2001

            Reported net loss                      $1,446,498       $ 2,341,745
            Goodwill amortization                     169,544          (169,544)
                                                   ----------       -----------
            Adjusted net loss                      $1,615,742       $ 2,172,201
                                                   ==========       ===========

            Reported net loss per common share     $     0.03       $      0.05
            Goodwill amortization                          --                --
                                                   ----------       -----------
            Adjusted net loss per common share     $     0.03       $      0.05
                                                   ==========       ===========

Note 4. During the first quarter the Company has entered into agreements with
various accredited investors for the issue of 679,500 shares common stock and
1,359,000 warrants, exercisable at various prices for a term of five years, for
cash consideration totaling $453,000, of which $361,072 was received in the
first quarter of 2002. The balance of $91,928 was received in the first week of
the second quarter. The agreements are pursuant to an offering by the Company
for the sale up to 600 "units" of its equity at a price of $5,000 per unit. Each
unit is comprised of 7,500 shares of unregistered common stock and 6 warrants,
each such warrant expiring on December 31, 2006 and each exercisable for 2,500
common shares at purchase prices which range from $1.00 up to $10.00. The
Company has committed to have declared "effective" the registration of the
common shares issued in this offering by September 30, 2002, or otherwise issue
an additional 1/10th unit (to a maximum of 90%) for each full month beyond that
date through such time as declaration of effectiveness has been achieved.


                                        4
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following discussion should be read in conjunction with the consolidated
financial statements and related notes thereto included elsewhere in this
Quarterly Report on Form 10-Q.

FORWARD-LOOKING STATEMENTS

Certain of the statements contained in this Quarterly Report on Form 10-Q,
including certain statements in this section, are forward-looking. In addition,
from time to time, we may publish forward looking statements relating to such
matters as anticipated financial performance, business prospects, technological
developments, new products, research and development activities and similar
matters. These statements involve known and unknown risks, uncertainties, and
other factors that may cause our or our industry's actual results, levels of
activity, performance or achievements to be materially different from any future
results, levels of activity, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among other things, those
listed under Risk Factors in the Annual Report on Form 10-KSB of the Company for
the year ended December 31, 2001, which are:

      o     our limited operating history makes evaluating our business
            difficult,

      o     our quarterly operating results may fluctuate significantly and you
            should not rely on them to predict our future performance,

      o     our business may suffer if new customers do not accept our product
            offerings,

      o     we depend on a few industries for most of our sales, and we may not
            be successful in expanding beyond those limited markets,

      o     the loss of one of our largest customers could cause our revenues to
            drop quickly and unexpectedly,

      o     we depend upon licenses with manufacturers for revenues,

      o     we need additional cash to operate our business and our viability as
            a going concern is uncertain,

      o     our stock price or our business could be adversely affected if we
            are not able to efficiently integrate acquisitions; competition
            could reduce our market share and harm our business; we need to
            continually develop new products or we risk technological
            obsolescence,

      o     we have a limited ability to protect our intellectual property
            rights and others could infringe on or misappropriate our
            proprietary rights,


                                       5
<PAGE>

      o     we depend on key personnel for our success,

      o     our founders, officers and principal stockholders have substantial
            control over our voting stock and have the ability to make decisions
            that could adversely affect our stock price,

      o     we may be subject to future product liability claims,

      o     our common stock price is likely to be volatile and could drop
            unexpectedly,

      o     if we fail to maintain our OTC Bulletin Board listing, liquidity of
            your investment will be adversely affected,

      o     and under certain circumstances, our common stock may be considered
            a penny stock which could negatively impact the market for our
            common stock.

In some cases, you can identify forward-looking statements by terminology such
as may, will, should, expect, plan, anticipate, believe, estimate, predict,
potential or continue or the negative of such terms or other comparable
terminology. Forward-looking statements are only predictions. Actual events or
results may differ materially. In evaluating these statements, you should
specifically consider various factors, including the risks outlined under Risk
Factors. Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. Moreover, neither we nor any
other person assumes responsibility for the accuracy and completeness of such
statements.

OVERVIEW

As used in this Item 2, "the Company", "we", "us" and "our" means BioProgress
Technology International, Inc. (BioProgress) and its consolidated subsidiaries.
We are a development stage company engaged primarily in the research,
development, manufacturing, marketing, sales and distribution of products that
use water soluble and biodegradable films for the dietary supplement,
pharmaceutical, recreational and cosmetic industries and other applications. Our
research and development operations are located in the United Kingdom. During
2000 and 2001, our primary focus remained on the development and
commercialization of our unique and proprietary process, the XGel(TM) Film
System (XGel(TM) FS).

Since inception, we have incurred substantial operating losses and we expect
operating losses to continue in the near term as we continue our product
development efforts, conduct trials and undertake marketing and sales activities
for the XGel(TM) FS. Our ability to achieve profitability is dependent upon our
ability to successfully execute our marketing and sales plan for the XGel(TM) FS
and various versions of XGel(TM) Film, and to complete in an efficient and
timely manner development work on other versions of the XGel(TM) FS.

We have reviewed our operations- in particular, the projects and products under
development being undertaken together with a full review of our overheads with
regard to cash burn, financial resources and the amount of funds required until
cash flow break-even. As a result of this review, projects and product
development have been re-prioritized with a view to bringing those projects to
market more quickly which will have a positive cash flow impact. As an
indication of the depth and quality of our intellectual property rights and
products in various stages of development, we did not feel that any projects
should be shelved completely, as all the projects could earn significant future
revenues for our business. We have decided to seek third party investors or
joint venture partners for certain projects to mitigate current cash outflows
and to bring these projects to commercialization more quickly.

We arranged a bank overdraft with Barclays Bank PLC for (pound Sterling)
250,000, secured by a personal guarantee given by Barry Muncaster, our Chief
Executive Officer. We also expect to receive clearance from the Internal Revenue
Service during our 2002 second quarter in respect of U.S. withholding tax on our
licenses, which will enable the receivable due from Peter Black Healthcare
Limited (Peter Black), one of our licensees, to be collected and which will be a
blanket clearance for all licenses written of a similar nature.

Our Company's directors and the directors of all of our operating subsidiaries
have taken a 66.6% pay cut for the twelve month period commencing July 1, 2001,
after which period the salaries will be reviewed. The London office, opened in
early 2001, has been closed and the Norwood Road premises were leased, then sold
this quarter to The Healthy Forum Limited. Stronger and improved internal
financial controls have been implemented and expenditure has been cut back
deeply on all except projects of the highest priority. We have gradually reduced
cash burn from operations throughout the final six months of 2001 and we intend
to closely control and plan our cash outlay moving forward. We believe that we
continue to manage our working capital effectively.

As a result of the foregoing, together with our revised financial projections,
we are seeking to raise an additional maximum of $3 million by way of the issue
of unregistered common stock and warrants, which will enable us to reach
operational cash flow break-even, estimated at between 9 to 12 months from now.
We believe that this amount may prove conservative and that, barring any
protracted delays in commissioning the first deliverable


                                       6
<PAGE>

XGel(TM) FS, such funds will be sufficient for current plans. Based on actual
sales to investors in 2002 through the date of this filing, management believes
that it will be able to raise necessary funds.

                              RESULTS OF OPERATIONS

                                     SUMMARY

Our results for the quarter ended March 31, 2002 show that we recorded certain
license fees and other income derived from agreements signed in respect of our
XGel(TM) FS. The majority of our revenue results from recognition of previously
deferred income. Other sources of income were fees for research and development
work and accrued royalties in respect of the license sold to Consolidated
EcoProgress Technologies ("EcoProgress") (VSE:CES). The decreased operating loss
of $1,364,333 in the first quarter of 2002, as compared to $2,234,766 in the
first quarter of 2001, primarily consists of research and development
expenditures, administration costs and certain non-cash items, such as
depreciation, and foreign exchange gains. The expenditure incurred by our
research and development facility located in the United Kingdom has decreased to
$557,829 in the first quarter of 2002, as compared to $1,250,061 in the first
quarter of 2001, as a direct result of management's operational review
throughout the final six months of 2001 and consolidation of operations and
cost. The results reflect the Company's continuing efforts to commercialize its
XGel(TM) FS, both in North America and Europe.

Our finances remain on budget notwithstanding the reversal from a cash balance
to a net overdraft of $251,860, which is secured by a personal guarantee
given by Barry Muncaster. We believe that during the course of the next twelve
months, our plans and the business model, together with the planned issue of up
to $3 million of unregistered common stock and warrants, and sale of common
stock to Fusion Capital, will ensure that we will be able to continue to
commercialize our XGel(TM) FS and that our financial health will strengthen.
Funds generated are expected to arise from agreements already signed, the
signing of further agreements, cash from receivables, receipt of funds from Jade
Partnership International, Inc. (Jade) and The Healthy Forum, in repayment of
their respective loans from us, our sale of unregistered common stock and
warrants, and sale of stock to Fusion capital during the forthcoming periods.

CONSOLIDATED STATEMENT OF OPERATIONS

The Company's operations were streamlined during the first quarter of 2002 and
are expected to remain stabilized at current levels in terms of manpower,
premises and other overhead throughout 2002. This has resulted in overall slight
decreases in all material headline figures in the profit and loss account.

                                    REVENUES

We generate revenues from licensing the rights to use our intellectual property
in the XGel(TM) FS, the sale of the XGel(TM) FS, and research and development
services to assist customers in gaining maximum benefit from the license.
Revenues from license arrangements and the sale of XGel(TM) FS are recognized
when there is persuasive evidence of an agreement with a customer,
collectibility is probable and the fee is fixed or determinable. Revenues from
research and development contracts are recognized ratably over the period to
which the contract relates, unless significant acceptance criteria exist. If
acceptance criteria exist, revenues are recognized upon the earlier of customer
acceptance or the expiration of the acceptance period.

The Company's total revenues decreased to $112,211 from $405,152 in the first
quarter of 2001, a decrease of 72%. A number of factors contributed to the
decrease in total revenues in the first quarter of 2002 compared with the
corresponding period in 2001, in that the only revenues generated in the first
quarter of 2002 were from the receipt of ongoing research and development
contributions from its Canadian licensee, EcoProgress, for the Trutona
International, Inc. products and deferred income from contracts entered into
during 2000.

The following is a summary of major contracts signed during 2001 and the first
quarter of 2002 that have not yet had a major impact on the revenues of the
Company but are expected to lead to the generation of material revenues later in
2002 and 2003.

On July 25, 2000, we announced that we had licensed our XGel(TM) FS to Peter
Black. Peter Black is a wholly owned subsidiary of Peter Black Holdings (LSE:
BKP). Peter Black is the United Kingdom's leading supplier and largest
manufacturer of private label vitamin, mineral and herbal supplements. In
addition, it owns several leading supplement brands and the United Kingdom's No.
2 Direct Marketing Brand. The license grants Peter Black exclusive use of the
XGel(TM) FS to produce and sell dietary supplements and non-prescription
medicines within the


                                       7
<PAGE>

United Kingdom and Republic of Ireland. In addition, Peter Black has conditional
exclusivity to serve as a contract manufacturer of dietary supplements and
non-prescription medicines within member states of the European Economic
Community and the European Free Trade Association. The license is in respect of
one XGel(TM) FS. Additional XGel(TM) FS, if and when ordered by Peter Black,
will require the purchase of additional licenses. Consideration paid for the
license remains confidential at this time. In addition, an annual license fee is
payable in respect of the license for the period of ten years or the life of the
patent, whichever is the longer term. We have recognized no revenues to date in
respect of the Peter Black agreements, as certain revenue recognition criteria
have not yet been met. All cash received to date is included within the deferred
income balance at March 31, 2002. On March 26, 2002 subsequent to the period of
this report, we announced that Peter Black Healthcare Limited had accepted the
XGel(TM) Film System under contract. Further, that such acceptance had triggered
a contract for a second system. In addition, we announced that Peter Black
Healthcare Limited had executed an option to acquire 5 NRobe(TM) versions of the
XGel(TM) Film System. Subsequent to this announcement and prior to the date of
this report, Peter Black Healthcare increased to 10 the number of NRobe(TM)
XGel(TM) Film Systems under option.

During June 2001, we commenced user trials of our flushable and biodegradable
ostomy pouch. We believe that initial feedback from users is extremely
encouraging. As a result of the feedback received during Q3 of 2001, we produced
a large batch of ostomy pouches in order to expand the number of trials with a
view toward collecting sufficient data to determine the efficacy of the current
design. During the period covered by this report, and following receipt and
study of the data collected from trials during Q4 of 2001, we determined that
our ostomy pouch has sound commercial potential. We are currently investigating
various commercial prospects for the ostomy pouch including, but not limited to
the sale of a distribution license to one of the world's leading companies in
the ostomy product market.

On July 10, 2001 we completed four agreements with a Spanish pharmaceutical
company, Farmasierra, S. L., for: the sale of a full scale XGel(TM) FS; the sale
of a license to use our patents in respect of the XGel(TM) technology; the
future supply of additional XGel(TM) FS; and, the future supply of XGel(TM) Film
for use with the XGel(TM) FS. We believe that the technology covered by these
agreements may revolutionize the pharmaceutical industry. The pharmaceutical
industry currently uses two types of gelatin-based dosage forms: gelatin soft
capsules for liquids and two-piece hard gelatin capsules for powders. These two
processes exist because the soft capsule process is essentially wet, and
therefore not suitable for use with powders. With the development of a powder
fill version of the XGel(TM) FS, pharmaceutical companies will be able to employ
just the one process to deliver both liquid and powder products. Further, our
Septum technology enables both liquids and powders to be combined in a single
capsule and to be released at different times and or sites in the digestive
system. We have recognized no revenues to date in respect of the Farmasierra
agreements.

On July 9, 2001, we extended our product development agreement with The Boots
Company PLC (Boots) and negotiated ongoing commercial terms to enable new
product concepts to enter consumer trials. The Product Development Agreement was
executed in October 2000 to develop a range of innovative new consumer products
utilizing BioProgress' unique XGel(TM) FS encapsulation technology. On November
28, 2001, we announced that we had reached a commercial agreement with The Boots
Company plc (LSE: BOOT) whereby The Boots Company would use our XGel(TM) Film
System to produce samples for consumer trials of an innovative oral dosage form.

On March 28, 2002, following 18 months development work and evaluation studies,
we executed an agreement with Worldwide Consumer Medicines, a division of
Bristol-Myers Squibb Company, in respect of a novel application of the XGel(TM)
FS. For commercial reasons the specific products and categories are
confidential.

On April 2, 2002 we announced that we executed stage three of our first Product
Development Agreement with Boots following successful consumer acceptability
trials of the newly developed products. The Product Development Agreement was
first executed in October 2000 and proceeded to stage two during November of
last year. The aim of the Product Development Agreement is to develop a range of
innovative new consumer products utilizing our unique XGel(TM) FS encapsulation
technology. For commercial reasons the specific products and categories are
confidential.

We are continuing to work with major international corporations engaged in
pharmaceuticals, consumer durables and confectionery products to determine the
suitability of the XGel(TM) FS to replace traditional encapsulation processes
and, in some cases, to facilitate new product development not possible with
competitive technologies.

                                COST OF REVENUES

Our cost of revenues decreased from $80,117 in 2001 to $47,405 in 2002. The cost
for 2002 primarily consisted of expenditures made by our recently acquired (in
2001) ProDesign Technologies Limited division, including direct labor of
$25,643. The remaining expense in 2002 included materials purchased by PTL in
satisfaction of a


                                       8
<PAGE>

consulting contract and direct materials purchased for use in the XGel(TM) film
system. The cost for the 2001 quarter were primarily comprised of direct labor
and materials cost related to development contracts, the largest being our
collaboration with Proctor and Gamble in development of XGel(TM) FS variants. We
do not expect to incur material cost of revenue expense until we begin shipment
of XGel(TM) FS to customers, or unless we enter into additional revenue based
consulting and development agreements with our customers.

                      RESEARCH AND DEVELOPMENT EXPENDITURE

Research and development expenditure in first quarter of 2002 decreased by 97%
from $599,406 in 2001 to $19,865 in 2002. The reason for the decrease in 2002 is
a result of the increased research and development efforts, not currently funded
by customers, in developing new variations of the XGel(TM) FS- specifically, the
ingestible products prototype machines and film developments. During 2002 and
the latter quarters of 2001, we took several major steps toward commercializing
the XGel(TM) FS. During 2002 and 2001, we have expensed as operating costs most
continuing research and development expenditures not funded by customers, and
intend to capture as cost of revenues only those expenses directly related to
inventory of equipment and sale thereof and identifiable costs of consulting
engagements.

                                PROFESSIONAL FEES

Professional fees decreased by 32% to $194,985 in first quarter of 2002 from
$285,200 in the first quarter of 2001. The amount during 2001 is caused largely
by increased corporate advice fees related to leverage of our capital structure
and other potential equity transactions.

        REALIZED AND UNREALIZED (PROFIT) LOSS ON MARKETABLE SECURITIES.

A gain of $20,450 was incurred during the first quarter of 2002 as compared to a
loss of $253,119 in 2001. We have now disposed of the majority of our holdings
in marketable securities, with EcoProgress comprising the only remaining
investment. The holdings in 2001 were sold to provide working capital and the
downwards movements in the capital markets meant that significant losses were
realized.

                        LOSS ON DISPOSAL OF FIXED ASSETS

In connection with the sale on March 28th, 2002 of our Norwood Road property to
The Healthy Forum Limited, we recorded a loss on disposal of certain freehold,
furniture and fixtures totaling $216,252 during the 2002 first quarter. The
company sold assets with a net book value of $636,626 for total consideration of
$420,374. This consideration was in the form of a note receivable.

                       GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses have decreased to $1,018,487 in the first
quarter of 2002 from $1,422,076 in the first quarter of 2001, a decrease of
28%. The material balances classified within general and administrative
expenses are discussed below:

Directors and senior management costs. Payments in relation to directors and
senior management services have decreased to $132,397 during the first quarter
of 2002 from $510,228 during the first quarter of 2001. Since July 1, 2001, the
salaries of directors were cut by two thirds and all bonus provisions reversed
for a period of twelve months, at which time the salaries will be reviewed
again. Management also continues to pursue other cost cutting measures, and has
accepted of resignation from our Chief Financial Officer, James T.C. Longley,
subsequent to the 2002 quarter end. Mr. Longley's responsibilities are being
absorbed by both existing personnel and an outsourced consultant for the
foreseeable future, which is expected to result in lower cost overall during our
upcoming second quarter.

Amortization and depreciation. Amortization and depreciation costs have
increased in the first quarter of 2002. The charge during the first quarter of
2002 was $364,649 compared to $253,925 in the first quarter of 2001. The
increase is due in part to increased depreciation resulting from higher fixed
asset levels which have resulted from our purchase of ProDesign Technology
Limited ("PTL") in June of 2001, but also due to the write-off of the goodwill
of $167,706 which arose upon that acquisition. Such write-off was deemed
appropriate in the current quarter as a result of the significantly reduced
headcount, revenue and operations of the PTL division. The charge for
amortization of goodwill that arose following the reverse acquisition of
Bioprogress Technology Limited in 1998 in 2002 is $nil compared to $169,544 in
2001. The Company has applied the provisions of SFAS 142 and accordingly has not
booked any amortization in respect of this goodwill as no impairment has
occurred.

Staff related costs. Staff related costs, which consist primarily of salary
costs (other than directors and senior management), recruitment, and traveling
have increased to $236,159 in 2002 from $238,770 in 2001. This increase is a
result of increases in the headcount as we develop different variations of the
XGel(TM) FS and an increase in traveling costs.

Other general and administrative costs. Other costs within the general and
administrative area have decreased to $285,282 in the first quarter of 2002 from
$419,153 in the first quarter of 2001. The following are the major reasons for
the changes:


                                       9
<PAGE>

Foreign exchange losses during the first quarter of 2002 were $124,904 . In the
comparable quarter of 2001, foreign exchange losses were $320,631. As cash
balances have been reducing, the Company has not been as adversely affected by
adverse foreign currency fluctuations.

Other expenses within this category, which include such items as office
overheads (rent, stationery, maintenance and similar categories) decreased in
line with expectations due to the Company's review of operations in 2001 and
implementation during 2002.

General administration charges are likely to stabilize or slightly decrease
during the forthcoming quarters of 2002 as a result of our review of operations
and cost reduction measures and controls implemented in late 2001. We continue
to make efforts to minimize day-to-day overheads and periodic reviews of
overhead costs continue to be undertaken internally.

                              LOSS FROM OPERATIONS

The result of the above is that a loss from operations of $1,364,333 was
generated in the first quarter of 2002 compared to a loss of $2,234,766 in the
first quarter of 2001, which represents a decrease of 39%. We expect that costs
will stabilize or slightly decrease during the forthcoming quarters as a result
of management review of operations and cost reduction measures and controls
implemented in late 2001 and as the frequency in delivery of machines increases.
There is currently $1,293,500 of deferred income that is expected to be released
during 2002 and beyond as revenue recognition criteria are met.

                       SHARE OF LOSS OF EQUITY INVESTMENT

During 2000, we invested an initial $50,000 in The Healthy Forum. We continue to
offer financial support by way of loan. The Healthy Forum has been formed to
build a global well-being brand in the complimentary medical and specialty food
sectors. The principal products of The Healthy Forum are feminine hygiene,
beneficial foods and vitamins, minerals and supplements. During the first
quarter of 2002, we have taken a charge to profit and loss in respect of our
share of the losses of The Healthy Forum of $81,865, as compared to $106,979 in
the first quarter of 2001. In April 2001, we invested an additional $75,000 in
The Healthy Forum increasing our shareholding from 29.9% to 46.6%. Additionally,
we provided The Healthy Forum with cash loans throughout since that time,
including first quarter, 2002 advances totaling $28,000, and accepted a note
receivable for 420,378 for their purchase on March 28, 2002 of our property at
Norwood Road, March, Cambridgeshire, UK. Comparatively, we loaned The Healthy
Forum an additional $130,500 during the first quarter of 2001.

                           PROVISION FOR INCOME TAXES

No provision has been made for income taxes in 1999, 2000 or 2001 or the first
quarter of 2002 as a result of the losses we have incurred. We have provided a
100% valuation allowance against the deferred tax asset arising on the net
operating losses due to the uncertainty of their ultimate realization.

                 DIVIDENDS PAYABLE AND ACCRETION OF COMMON STOCK

During the first quarter of 2002 a charge of $162,230 was recorded, as compared
to $85,020 for the first three months in 2001, for accretion of preferred stock
to increase the loss available to common shareholders. This is incurred due to a
substantially increased issuance of Series B Preferred Stock during 2001, with
the difference that arises between the subscription price and redemption value
being charged to equity. Dividends of $13,115 were paid during the first quarter
of 2002 compared to nil in the prior year.

LIQUIDITY AND CAPITAL RESOURCES

Since its inception, we have financed our operations primarily through the sale
of preferred stock to accredited investors. As at March 31, 2002 and December
31, 2001, we had a net bank overdrafts which totaled $251,860 and $326,887,
respectively, compared to cash and cash equivalents of $2,062,867 on March 31,
2001.

During the first quarter of 2002, we received $nil from sale of Series B
Preferred Stock shares at par value as compared to $416,684 from the sale of
Series B Preferred Stock during the first quarter of 2001. These proceeds have
been used for general working capital purposes, including research & development
and the building, design and upgrade of further plant and machinery for our new
Hostmoor location.

In December, 2001 we entered into a common stock purchase agreement with Fusion
Capital Fund II, LLC a Chicago based institutional investor, whereby Fusion
Capital has agreed to buy up to $6.0 million of our common


                                       10
<PAGE>

stock. The commencement of the funding is subject to certain conditions
including the effectiveness of a registration statement. The proceeds from the
funding will be used for working capital and general corporate purposes. We have
the right to control the timing and the amount of stock sold to Fusion Capital.
The purchase price of the shares to be sold to Fusion Capital will be based upon
the market price of our common stock at the time of sale without any fixed
discount. BioProgress intends to periodically evaluate market conditions and its
capital needs in order to determine the timing and the amount of stock it will
sell to Fusion Capital. We intend to sell shares of common stock to Fusion
Capital opportunistically only under favorable market conditions.

Starting in February, 2002 and through May 8th, 2002, the Company has entered
into agreements with various accredited investors for the issue of 807,750
shares common stock and 1,615,500 warrants, exercisable at various prices for a
term of five years, for cash consideration totaling $538,500, of which $361,072
was received in the first quarter of 2002. The agreements are pursuant to an
offering by the Company for the sale up to 600 "units" of its equity at a price
of $5,000 per unit. Each unit is comprised of 7,500 shares of unregistered
common stock and 6 warrants, each such warrant expiring on December 31, 2006 and
each exercisable for 2,500 common shares at purchase prices which range from
$1.00 up to $10.00. The Company has committed to have declared "effective" the
registration of the common shares issued in this offering by September 30, 2002,
or otherwise issue an additional 1/10th unit (to a maximum of 90%) for each full
month beyond that date through such time as declaration of effectiveness has
been achieved.

Subsequent to the period of this report, we received $600,000 from our customers
in respect of various agreements executed during the period.

Management believes that the aforementioned actions and activities by themselves
will generate sufficient cash to fully meet its working capital requirements for
the 12 months following the date of this report. However, any material delay in
completing the production of the various XGel(TM) FS or ability to bring a
registration statement effective could have a material adverse effect on our
cash flow and may require us to seek additional financing.

We are in discussion with several parties regarding joint ventures, license
agreements and distribution agreements for its XGel(TM) FS and derived products.
We also continue to investigate a number of other long-term funding scenarios
and opportunities.

No guarantee can be given that any additional financing we may require would be
available on terms acceptable to us, or at all.


                                       11
<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The following discussion about our market risk disclosures involves
forward-looking statements. Actual results could differ materially from those
projected in the forward-looking statements. We are exposed to market risk
related to changes in interest rates and foreign currency exchange rates. We do
not use derivative financial instruments for speculative or trading purposes.

                         FOREIGN CURRENCY EXCHANGE RISK

With sales and services offices in the United States and the United Kingdom, we
face exposure to adverse movements in foreign currency exchange rates. These
exposures may change over time as business practices evolve and could have a
material adverse impact on our financial results. Historically, our primary
exposure has been non-dollar-denominated operating expenses and sales by our
U.K. subsidiary. The introduction of the Euro as a common currency for members
of the European Monetary Union, of which the United Kingdom is not a member,
occurred in January 1999. To date, we have not seen any impact of the Euro on
foreign exchange exposure. We are prepared to hedge against fluctuations in the
British Sterling, Euro or other foreign currency if the exposure becomes
material. As of March 31, 2002, our material non-dollar-denominated assets and
liabilities primarily consisted of cash, accounts receivable and accounts
payable denominated in British Sterling.

                           PART II - OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

a. Exhibits

The following exhibits are included herein:

3.1 (c)     Articles of Incorporation and Amendments. (4)

3.1 (d)     Articles of Incorporation and Amendments. (5)

3.2 (b)     Bylaws. (2)

4.1         Specimen stock certificate. (1)


                                       12
<PAGE>

10.1        =Partnership Agreement dated October 20, 1993, among the Company,
            Costner Industries, Inc., a California corporation, Jack Bitterly
            and Steve Bitterly. (1)

10.2        Asset Purchase Agreement dated October 20, 1993, among the Company,
            the Partnership, Jack Bitterly, Steve Bitterly, Bruce Swartout, U.S.
            Flywheel, Inc., a California corporation and Sunbird Technologies,
            Inc. (1)

10.3        U.S. Flywheel Systems Unit Purchase Agreement dated July 16, 1994,
            between the Company and Costner Industries, Inc. (1)

10.4        Straight Note dated October 21, 1993, between the Company and
            Sunbird. (1)

10.5        Consulting Agreement dated October 20, 1993, between the Partnership
            and Bruce Swartout. (1)

10.6        Asset Purchase Agreement dated May 31, 1996, changing name and
            domicile to Nevada and reverse splitting outstanding capitalization
            and increasing authorized capital. (2)

10.7        Reorganization Agreement between the Company and Famous Sam's. (2)

10.8        Liquidating Trust. (2)

10.9        Recision Agreement. (4)

10.10       Reorganization Agreement between the Company and BioProgress
            Technology. (4)

10.11       Acquisition Agreement - DHA Nutrition (5)

10.12(a)    Acquisition Agreement - BioProgress Limited (UK) (5)

10.12(b)    Amendment to Acquisition Agreement - BioProgess Limited (UK) (5)

10.13       Employment Agreement - Barry J. Muncaster (5) 10.14 Employment
            Agreement - James T. C. Longley (5)

10.15       Employment Agreement - Malcolm D. Brown (5)

10.16       Employment Agreement - Edward I. Nowak (5)

10.17       Employment Agreement - Graham Hind (5)

10.18       Professional Services Agreement - The Jade Partnership
            International, Inc. (5)

10.19       Professional Services Agreement - Company and Ormiston-Gore
            Limited (5)

10.20       Professional Services Agreement - BTL and Ormiston-Gore Securities
            Securities Limited (5)

10.21       TruTona Purchase Agreement (5)

10.22       EcoProgress License (5)

10.23       Employment Agreement - Gregory L. Bowers (6)

10.24       Exclusive Evaluation Agreement, dated February 18, 2000 between the
            Company and the Fortune 500 company (6)

10.25       Technology Collaboration Agreement for the Development of
            Non-Gelatin Paintballs, dated March 7, 2000 between the Company and
            JT USA (6)

10.26       Agreement for Supply of Prototype Machine, dated July 24, 2000
            between the Company and Peter Black (7)

10.27       Machine Supply Agreement, dated July 24, 2000 between the Company
            and Peter Black (7)

10.28       Patent License Agreement, dated July 24, 2000 between the Company
            and Peter Black (7)

10.29       Guarantee by BTL in favor of Peter Black, dated July 24, 2000 (7)


                                       13
<PAGE>

10.30       Option Agreement - Barry J. Muncaster (7)

10.31       Option Agreement - Edward Nowak (7)

10.32       Option Agreement - Gregory L. Bowers (7)

10.33       Option Agreement - Graham R.M. Hind (7)

10.34       Option Agreement - James T.C. Longley (7)

10.35       Option Agreement - Larry C. Shattles (7)

10.36       Option Agreement - Malcolm D. Brown (7)

10.37       Stock Purchase Agreement - Fusion Capital (7)

10.38       Premises lease - Hostmoor property (8)

10.39       Agreement to lease - Hostmoor property (8)

10.40       Agreement for Supply of Prototype Machine, dated July 10th, 2001
            between the Company and Farmasierra, S.A. (8)

10.41       Machine Supply Agreement, dated July 10th, 2001 between the Company
            and Farmasierra, S.A. (8)

10.42       Patent License Agreement, dated July 10th, 2001 between the Company
            and Farmasierra, S.A. (8)

10.43       Film Supply Agreement, dated July 10th, 2001 between the Company and
            Farmasierra, S.A. (8)

10.44       Consultant Supply Agreement, dated July 10th, 2001 between the
            Company and Farmasierra, S.A. (8)

10.45       2002 Common Stock Offering of up to 600 units, including
            warrants (8)

99.1        Letter to commission pursuant to temporary Note 3T


(1)   Filed as an exhibit to the Company's Registration Statement on Form 10-SB
      dated August 23,1994, or October 21, 1994 (Registration No. 0-24736).

(2)   Filed as an exhibit to the Company's Form 10-KSB for the year ended
      December 31, 1995.

(3)   Filed as an exhibit to the Company's Form 10-KSB for the year ended
      December 31, 1996.

(4)   Filed as an exhibit to the Company's Form 10-KSB for the year ended
      December 31, 1997.

(5)   Filed as an exhibit to the Company's Form 10-KSB for the year ended
      December 31, 1998.

(6)   Filed as an exhibit to the Company's Form 10-KSB for the year ended
      December 31, 1999.

(7)   Filed as an exhibit to the Company's Form 10-KSB for the year ended
      December 31, 2000.

(8)   Filed as an exhibit to the Company's Form 10-KSB for the year ended
      December 31, 2001.

b. Form 8-K

The Company did not file any current report on Form 8-K during the three months
ended March 31, 2002.


                                       14
<PAGE>

SIGNATURES

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

                   BioProgress Technology International, Inc.
                                  (Registrant)


Date: May 20, 2002                  By:  /s/ Barry J. Muncaster
                                         ---------------------------------------
                                                   Barry J. Muncaster
                                                 Chief Executive Officer
                                          (Signing on behalf of the registrant
                                           and as principal financial officer)

                                  End of Filing


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